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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney alongside

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Speaker 1: my co host Matt Miller. Every business day we bring

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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along

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Speaker 1: with essential market moving news. Find the Bloomberg Markets podcast

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Speaker 1: called Apple Podcasts or wherever you listen to podcasts, and

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Speaker 1: at Bloomberg dot com slash podcast. Now we have uh

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Speaker 1: kind of a special guest right now. Barbara Corkrane joins

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Speaker 1: us from the Corkan Group. Made her famous, of course

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Speaker 1: and wealthy and she sold it. Now she is a

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Speaker 1: judge of Shark on ABC Shark Tank I believing executive

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Speaker 1: producer of that program as well, and she's also got

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Speaker 1: a webinar coming out with a T and T um

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Speaker 1: to help small businesses I guess do better. Barbara, always

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Speaker 1: a pleasure having on the program. Thank you so much

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Speaker 1: for joining us. Talk to me first about this webinar.

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Speaker 1: What are you doing? What are you doing with a

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Speaker 1: T and T today? It's actually a webinar series and

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Speaker 1: we started a good seven eight months ago. I guess

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Speaker 1: it's called Business Unusual. Its presented by a T and

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Speaker 1: T business and it's intended to help the small business

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Speaker 1: person just succeed more with what they're doing nine to

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Speaker 1: five or small business really nine to nine every day

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Speaker 1: of the week. And so we covered topics that we

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Speaker 1: hear are most in demand, that people are most confused about,

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Speaker 1: and we feel very proud that together we've been able

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Speaker 1: to really push a lot of businesses ahead and give

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Speaker 1: them a lot of support. So, Barbara, you know, it's

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Speaker 1: been obviously such an incredibly difficult time for all businesses,

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Speaker 1: particularly small businesses, over the past eighteen months. What do

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Speaker 1: you think right now is the key challenges that the

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Speaker 1: delta variant? Is it getting labor? What's the primary focus now? Well,

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Speaker 1: let me let me frame by saying, no, matter what

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Speaker 1: the focus is now, and I think that there's three

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Speaker 1: pieces that are may be equally important. Of the one

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Speaker 1: thing that strikes me more than any of the detail

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Speaker 1: is that most business owners feel the worst is behind them.

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Speaker 1: And that sounds kind of odd with all the talk

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Speaker 1: about the delta variant, but the attitude of the Delta

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Speaker 1: variant is so different. Initially with the pandemic. With the pandemic, nobody,

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Speaker 1: no one had confidence. They didn't know what was ahead,

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Speaker 1: they didn't know what it was around the corner and

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Speaker 1: they're scared to death and unable to make changes. But

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Speaker 1: now every one of those entrepreneurs that survived and came

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Speaker 1: through talk about the delta variant is we'll find a way.

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Speaker 1: We'll find a way. And then on top of that,

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Speaker 1: what is terrific now is that a lot of the

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Speaker 1: regulations are being mandated by townships, by states one on one.

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Speaker 1: But at least business people know what's expected of them,

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Speaker 1: their rules to be played by, and that gives them

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Speaker 1: great peace of mind. But the biggest problem you named

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Speaker 1: it on your list and I had to choose only

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Speaker 1: one is finding the right employees. Everybody's competing for employees,

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Speaker 1: and I don't think there's a single industry that doesn't

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Speaker 1: complain about that day in and day out. But there

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Speaker 1: is a way to skin that cat. And some of

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Speaker 1: the best businesses are having no problem at all hiring people.

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Speaker 1: So what is the way? I mean, you just have

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Speaker 1: to pay more or are you looking the wrong way?

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Speaker 1: What's what's the answer? I think I think the number

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Speaker 1: one thing is, uh, they're not People who are not

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Speaker 1: winning in this regard are not creative. The creative people

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Speaker 1: are thinking of lures. Creative wars, whether it be additional pay,

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Speaker 1: which is not that common. Frankly, from what I could see,

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Speaker 1: I think it's overplayed in the media as to how

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Speaker 1: much more businesses are willing to pay. But they're helping

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Speaker 1: to pay for education, for night courses, and more important

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Speaker 1: than that, they're giving flexibility to workers. I'm telling you,

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Speaker 1: when I look at my top performing business is making

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Speaker 1: the most money, their attitude for their employees is that

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Speaker 1: they're working for the employee. That's not a bad place

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Speaker 1: to start if they None of those guys or girls

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Speaker 1: feel like bosses at all. They're trying to figure out

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Speaker 1: what could I make you? What could I do for

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Speaker 1: you to make you happier today? And the number one

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Speaker 1: charm that can charm people to come work for you

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Speaker 1: and stay put is to give people flexibility. Because people

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Speaker 1: have been spoiled, they need to be at home for

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Speaker 1: a lot of reasons. They don't want to commit to

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Speaker 1: commuting anymore. The attitude has changed, and the employer that's

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Speaker 1: smart enough to give them exactly what they're looking for

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Speaker 1: there is cleaning up. It's every It's true of every

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Speaker 1: one of my top performing businesses. By the way, you

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Speaker 1: mentioned commuting, um and I know you're I guess you're

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Speaker 1: you're born in the Garden's date. But I think of

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Speaker 1: you as a quintessential New Yorker. What do you make

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Speaker 1: of Manhattan right now? I was there last month walking

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Speaker 1: up and down Lexington Avenue when I was shocked at

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Speaker 1: how many of the really big box businesses have closed

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Speaker 1: and are emptied out. Um, is Manhattan? Is this it?

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Speaker 1: I mean, are people saying, you know, I've had enough

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Speaker 1: of the big city and I'm out. You know, I've

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Speaker 1: lived in Manhattan long enough to never go for that,

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Speaker 1: because I've never seen it happen. I've seen the claims

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Speaker 1: along the way, O, this is it, this is it''re

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Speaker 1: going to happen. This ain't gonna happen. But one thing

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Speaker 1: I've learned about the city of New York City, it

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Speaker 1: always comes back. It's just a question of when it's

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Speaker 1: coming back and how strong it's coming back. And when

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Speaker 1: it comes back, I'll tell you I learned another thing.

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Speaker 1: It always comes back like three to one in time,

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Speaker 1: bang bang bang bang bang, and you go, WHOA, what happened?

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Speaker 1: The city is already coming back when you walk down

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Speaker 1: Madison Avenue. I'm sure I'm sure you saw, which I see.

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Speaker 1: Roughly fifty percent of the stores are empty black windows.

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Speaker 1: It's depressing, But I'm also seeing construction inside most of

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Speaker 1: those stores from new entrepreneurs, less impressive stores that are

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Speaker 1: making a go of it and getting their rent at

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Speaker 1: half price. And that's what regurgitates the city, that's what

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Speaker 1: gets it back on its feet. Because if there's one

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Speaker 1: thing that New York City does better than any of

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Speaker 1: the city in the world, that reinvents itself, it has to.

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Speaker 1: It's been forced to over the years, and it always

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Speaker 1: rises to the price. So I don't see Manhattan as

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Speaker 1: a problem everybody thinks it is. I think it's just

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Speaker 1: like every other problem we had that was going to

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Speaker 1: put away New York City that never really happened. I

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Speaker 1: think it's just a matter of short time before everyone

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Speaker 1: acknowledges it. And in fact, even apartment prices are up.

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Speaker 1: No one expected that even six months ago. Rental prices

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Speaker 1: are Everybody said, you could get a deal, and you

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Speaker 1: could you get off. Right now, it's about more expensive

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Speaker 1: to live here already. Look how fast our city rebounds.

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Speaker 1: It is the nature of the town. Yeah, So it's interesting, Barbara.

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Speaker 1: One of the things that I guess a lot of

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Speaker 1: businesses big and small learned during the pandemic is the

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Speaker 1: ability to really have a really viable digital presence, you know,

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Speaker 1: whether it's ordering online or picking up at the store,

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Speaker 1: that type of thing. For the small business operator, are

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Speaker 1: they making the necessary investments? Do you think I'm gonna

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Speaker 1: tell you something that might surprise you. The necessary investments

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Speaker 1: that small businesses have to make today to be vibrant

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Speaker 1: in the on the digital platform are next to nothing.

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Speaker 1: The costs of these improvements have come down so dramatically.

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Speaker 1: There's so many options, there's so much competition in that

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Speaker 1: space that they've actually been empowered to make changes very

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Speaker 1: radically and quickly, simply because there are so many options

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Speaker 1: is out there. One of the best things I have

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Speaker 1: personally learned because I don't ever think of technology is

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Speaker 1: my strong suit. I think of people is what I

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Speaker 1: do well with right, But from running all these business

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Speaker 1: Unusual webinar series presented by a T and T business,

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Speaker 1: I have learned that the name of the game is technology.

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Speaker 1: It used to be an extra You've got to be

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Speaker 1: on the digital space, no matter what kind of space

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Speaker 1: you're Now, no, I feel very differently it starts with digital.

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Speaker 1: And when I see all the new businesses opening, and

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Speaker 1: in fact, when I'm on Shark Tank, what I'm listening

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Speaker 1: to the pitch is the only thing I'm investing is

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Speaker 1: the people that understand the digital space. I really have

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Speaker 1: changed my whole attitude because only covid itself could have

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Speaker 1: brought about the radical speed that we've encountered lately. It

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Speaker 1: should have taken five years, but it took us dime month.

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Speaker 1: That's it. It's changed. Is all about digital. It's all

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Speaker 1: about digital. It's absolutely been compressed and we hear that

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Speaker 1: from a lot of guests as well. Barbara, great having

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Speaker 1: you on the program. Thank you so much for joining us.

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Speaker 1: Barbara Corkran as she was saying, she's got a webinar

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Speaker 1: series of a T and T business. Unusual with Barbara Corkran,

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Speaker 1: it's geared towards um well small businesses, stores, marketplaces, restaurants,

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Speaker 1: online merchants. I guess online is everything now and you

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Speaker 1: can watch it online. Her website is eight eight eight

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Speaker 1: Barbara dot com, Triple eight Barbara dot Com. Always great

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Speaker 1: to talk to, the founder of the Corkoran Group. This

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Speaker 1: is Bloomberg. Well, we've got some big spending bills winding

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Speaker 1: their way through Congress. Financial markets certainly paying attention. They're

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Speaker 1: including UH, especially the fixed income markets in municipal bond

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Speaker 1: markets as well. Michael Jesus, chief US public policy and

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Speaker 1: municipal strategist at Morgan Stanley joins us. Michael, thanks so

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Speaker 1: much for taking the time here. Again, a lot of

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Speaker 1: spending bills getting through Congress looks like they're making some progress,

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Speaker 1: at least in the House and on the Democratic side

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Speaker 1: from your perspective, UM, as a public policy I mean,

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Speaker 1: municipal strategists, what are the issues you're focusing on. Yeah,

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Speaker 1: first and foremost, it is going to be the depths

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Speaker 1: of impact, because that's what we think is going to

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Speaker 1: be the mean feed through to the economic outlook and

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Speaker 1: to the level of treasury yield. UH. In our view,

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Speaker 1: this is tracking towards a total spending number spread over

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Speaker 1: ten years that is approaching four trillion dollars. But then

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Speaker 1: the next question, I think this becomes particularly important given

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Speaker 1: that some procedural hurdles were just clear. The next question

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Speaker 1: is what types of taxes or Democrats gonna raise to

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Speaker 1: offset that spending? And then what's the remaining deficit. Our

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Speaker 1: view is that could probably get to two to two

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Speaker 1: and a half trillion dollars of new revenue to offset this.

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Speaker 1: That still means you're looking at a trillion and a

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Speaker 1: half over ten years of new deficits, and it's probably

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Speaker 1: going to be pretty front loaded given how these spending

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Speaker 1: bills have worked out in the past. So maybe it

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Speaker 1: does much as a trillion dollars over five years. All

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Speaker 1: of that, when you mix it in with our expect

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Speaker 1: station that the Fed is gonna start talking taper here, UM,

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Speaker 1: is enough to push yield higher into your end and

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Speaker 1: that's probably gonna matter a lot more than you That's

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Speaker 1: a that's a big statement considering what we've seen thus far. UM,

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Speaker 1: there's been a lot that's enough to push yield higher

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Speaker 1: and it still hasn't done it yet. Yeah, I think

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Speaker 1: that's fair. I think that's fair. Um. But we've got

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Speaker 1: a confluence of events here that we see coming together.

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Speaker 1: There's this legislative package, Uh, there's the FED taper. Also,

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Speaker 1: I think there's improvement in the trajectory of the delta

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Speaker 1: Varan covid Are. Our biotech team which is modeling this

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Speaker 1: for us UM thinks that we're basically at a plateau there.

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Speaker 1: You've also got boosters coming out over the course of

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Speaker 1: the fall, uh, and so all of that should continue

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Speaker 1: to allow consumption, activity, travel activity, etcetera. To pick up

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Speaker 1: that confluence of events to us can be pretty powerful

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Speaker 1: to push field higher, Michael. As we think about funding

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Speaker 1: all these pro rams, are we going to see a

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Speaker 1: revival of the Build America bonds uh that we had before? Yeah,

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Speaker 1: we think so. There's obviously another important interaction with the

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Speaker 1: muni market. UH. This is a program that obviously state

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Speaker 1: governments generally wants, and the Democrats in Congress have supported,

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Speaker 1: in particular Democrats in the House Ways Means Committee. Now,

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Speaker 1: originally a revival of this program was supposed to be

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Speaker 1: in the bipartisan bill. It seems to have been left

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Speaker 1: out of that bill. But this three and a half

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Speaker 1: trillion dollar budget reconciliation bill, we think we'll have plenty

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Speaker 1: of space to include that. UM. That's important because what

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Speaker 1: it does for the muni market over time is will

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Speaker 1: probably shift more of the issuance from tax exempt the

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Speaker 1: taxable market. That's probably good news for investors over the

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Speaker 1: long run because it creates some scarcity value. But we

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Speaker 1: probably take a long time before that market fully developed.

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Speaker 1: Do you see any what's the multiplier when when the

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Speaker 1: general government spends um, you know, a hundred dollars, how

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Speaker 1: much does that boost growth in terms of GDP? Yeah, Well,

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Speaker 1: obviously depends on how they're spending that hundred dollars um

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Speaker 1: our economists, and I think the consensus amongst economists is

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Speaker 1: that hard infrastructure dollar spending tends to have the highest

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Speaker 1: multiplier effect over the long run. It creates the most

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Speaker 1: potential GDP. Uh, you're sort of your next biggest bang

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Speaker 1: for your bucket is if you are taking dollars and

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Speaker 1: giving them to higher marginal propensity to consume cohorts. Right,

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Speaker 1: So a lot of the spending in this bill is

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Speaker 1: directed uh in ways that will impact middle and lower

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Speaker 1: income households UM. And then the taxes are also skewed

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Speaker 1: towards higher income individuals and corporations, which, given their current

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Speaker 1: wealth status, probably is a lower marginal inpency to consume.

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Speaker 1: And so the net effect here plus the depths to

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Speaker 1: affect our economists will probably view very favorably. Hey, Michael,

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Speaker 1: appy got you here. I love to get your thoughts

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Speaker 1: on the taxable municipal bond market has been really a

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Speaker 1: fast growing market and a good performing market as well. Yeah,

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Speaker 1: so there is in the intaxable markets generally, right, so

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Speaker 1: not just the muni market, but the corporate bond market.

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Speaker 1: There one pocket of the market that doesn't have a

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Speaker 1: lot of supply is highly rated long duration taper, something

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Speaker 1: that insurance companies need, banks, me etcetera. And muni bond

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Speaker 1: market can easily fill that demand, and it has been

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Speaker 1: increasingly over the past couple of years because that demand

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Speaker 1: pocket is there, so you brought to build America bond

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Speaker 1: program earlier. This is one of the reasons that this

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Speaker 1: type of program could create a relatively attractive source of

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Speaker 1: capital for municipalities because they can meet that demand that's

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Speaker 1: currently not being met by the corporate bond market by

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Speaker 1: and large. All Right, Michael, always great to get some

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Speaker 1: time with you. Thanks so much for joining us. Michael

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Speaker 1: zesus their chief US public policy and muni strategist at

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Speaker 1: Morgan Stanley UM. And this is, you know, a particularly

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Speaker 1: important issue to discuss as we saw and Anti Pelosi

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Speaker 1: getting getting the the Reconciliation bill UM or at least

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Speaker 1: plans for it through the House yesterday. Now that has

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Speaker 1: to go to the Senate and back to the House.

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Speaker 1: Plus we have to deal with the fifty slash one

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Speaker 1: point two trillion dollar bill. In any case, we could

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Speaker 1: be looking at four to five trillion dollars of spending

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Speaker 1: from the federal government. I guess about four trillion in

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Speaker 1: additional spending. Matt. You know, when I was a sell

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Speaker 1: side analystson going out to see clients on the West Coast,

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Speaker 1: my boss wouldn't even pay for a ticket unless I

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Speaker 1: got a meeting with TCW and Capitol Group. Those were

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Speaker 1: the lockdown meetings in Los Angeles. Uh, important folks to

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Speaker 1: chat with. Stephen Kane, He's a group managing director and

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Speaker 1: portfolio manager at t c W. Steve, thanks so much

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Speaker 1: for joining us here. We've got um jackson Hole coming

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Speaker 1: up here. I guess really on Fridays, the big day,

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Speaker 1: what are you looking for? What do you expect? What

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Speaker 1: do you hope not to hear? Well? Uh, good morning

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Speaker 1: and uh and thanks for having me. Um. Yeah. In

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Speaker 1: terms of Jackson Hole, I really wish I could give

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Speaker 1: you and the listeners some exciting prognostication or some off

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Speaker 1: consensus view. But I really think the consensus, which is

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Speaker 1: a fairly benign one UH is probably right, which is

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Speaker 1: that we're not going to get much from Chairman Powell.

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Speaker 1: He's he's likely to recognize that there's been some improvement

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Speaker 1: in the labor market, and he's probably going to balance

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Speaker 1: that with some negative concerns about the delta virus and

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Speaker 1: downside risks. UM. But the bottom line is he's most

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Speaker 1: likely going to stay away from any specifics on taper um,

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Speaker 1: and that's mainly because he wants to maintain flexibility and

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Speaker 1: really not to front run the f O m C,

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Speaker 1: which is really the standard process US by which they

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Speaker 1: make formal pronouncements on on on paper and that type

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Speaker 1: of thing. So as much as we'd like to hear

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Speaker 1: him get into the details of what substantial further progress

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Speaker 1: might mean or something along those lines, I think those

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Speaker 1: types of uh uh evolutions in the in the FED

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Speaker 1: will will occur at the September meeting most likely. What

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Speaker 1: you know, it's I don't see how they can ignore

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Speaker 1: what's going on in the housing market. It's just unbelievable, um,

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Speaker 1: especially for younger you know, first time homebuyers, good luck.

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Speaker 1: Unless you have the cash on hand, you're just not

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Speaker 1: going to get it. Um. How does the FED contribute

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Speaker 1: to that with its merches, with its mortgage bond purchases. Yeah,

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Speaker 1: I don't think the Fed is all that concerned, although

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Speaker 1: they arguably should be about the conditions in the housing

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Speaker 1: market actually the housing you know, their goal is to

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Speaker 1: provide affordable credit UM and assist in that way through

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Speaker 1: the UH purchase of agency mortgages, which are doing to

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Speaker 1: the tune of forty billion a month, so with UH

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Speaker 1: you know, thirty year mortgage rates below three um uh,

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Speaker 1: even though housing prices are high. I think they view

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Speaker 1: their job is controlling the price of credit and not

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Speaker 1: not necessarily the price of the asset UM. So it's

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Speaker 1: a little bit beyond their control, at least that's probably

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Speaker 1: how they're viewing it, all right, Stephen, Looking at the

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Speaker 1: Bloomberg terminal, here, I see the tenure at yielding one

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Speaker 1: point three. It's it's higher than it had been over

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Speaker 1: the last week or so, but still in that range

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Speaker 1: that we've seen for such a long time. Here Where

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Speaker 1: don't you and the good folks at TCW look for yield,

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Speaker 1: look for total return in this kind of market, it's

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Speaker 1: a challenge, but it bluntly we're we're a value investor here,

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Speaker 1: which means we tend to buy things as they get cheaper,

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Speaker 1: and there's not a whole lot that is cheap right now.

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Speaker 1: You've got, as you've just pointed, a very low treasury

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Speaker 1: yields um, and beyond that it's even worse as you

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Speaker 1: look to the UH, the risk markets, the corporate market,

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Speaker 1: in the high yeld market, emerging market, UH spreads and

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Speaker 1: risk premium are near all time tight. So the general

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Speaker 1: theme for us is to to begin, or we've already

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Speaker 1: been doing it, to rain in risk budgets. And what

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Speaker 1: that means is carry our durations or interest rate risk

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Speaker 1: short of benchmarks or carry um short um with the

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Speaker 1: expectations rates are going to rise, pull back on our

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Speaker 1: credit beta, which means we've been trimming UH corporate exposure,

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Speaker 1: although we do see idiosyncratically some some opportunities and specific

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Speaker 1: credits that are improving and deleveraging, but generally speaking we

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Speaker 1: have less exposure than the market. Some of the areas

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Speaker 1: we actually find a little bit of value in is

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Speaker 1: the agency mortgage back securities market. That's the Ginny Fanny

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Speaker 1: Freddie market that the FED is actively supporting through UH

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Speaker 1: asset purchases and that those purchases are creating a bit

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Speaker 1: of a distortion in the t b A or forward

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Speaker 1: delivery market that is giving additional carry to those securities

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Speaker 1: in the market. So you're getting spreads beyond what you

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Speaker 1: get in corporate bonds for a zero credit risk asset

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Speaker 1: and one that has very good liquidity. So I would

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Speaker 1: highlight that it's hard to get super excited about something

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Speaker 1: yielding you know, about one and a half percent, but

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Speaker 1: nonetheless it's still fairly attractive on a risk adjusted basis.

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Speaker 1: And then I would say, beyond that, the high quality

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Speaker 1: area of the securitized market, um, non agency mortgages, some

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Speaker 1: areas of the commercial mortgage backed securities market clos are

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Speaker 1: actually an area of the market, uh, particularly that kind

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Speaker 1: of triple A double A area that look reasonably appealing

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Speaker 1: when compared to un secure corporate credit. Just got like

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Speaker 1: twenty seconds left. But um, you agree then that rates

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Speaker 1: are going to rise when and how high? Yeah, I

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Speaker 1: think our view is the market probably has it right

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Speaker 1: at the front end of the curve, meaning you know,

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Speaker 1: when you look at two years at a at a

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Speaker 1: whopping twenty four basis points, or even the five year

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Speaker 1: at a basis points that implies a very slow gradual

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Speaker 1: pace of of FED hikes starting maybe late next year.

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Speaker 1: Where we think the risk is out the curve that

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Speaker 1: one thirty ten year or sub two thirty year. We

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Speaker 1: think it's the FED tapers, and as the market begins

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Speaker 1: to anticipate uh normalization of short term rates, you're going

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Speaker 1: to get higher rates out the curve. So we do

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Speaker 1: think you'll get tenure rates above two percent in the future. Hey, Steven,

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Speaker 1: thanks so much for joining us. We really appreciate your

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Speaker 1: thoughts on insight. Stephen Kane, Group Managing Director, Pultorlio manager

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Speaker 1: at TCW, Let's bring in Steve quick right now. He

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Speaker 1: is the CEO of Unit Space to talk to us

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Speaker 1: about UM, the future of work, how the office may change,

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Speaker 1: how the delta variant is impacting UM. The r t

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Speaker 1: O plans to use the popular new acronym for return

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Speaker 1: to Office. Steve, thanks very much for joining us UM.

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Speaker 1: Everything seems to be there's a lot of deja vou

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Speaker 1: going on right now compared to what we had at

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Speaker 1: the end of last summer. Is this the final year

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Speaker 1: you think? I certainly hope, So thanks for having me.

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Speaker 1: First of all, Yeah, I here's what I think it's

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Speaker 1: going to happen as it relates. I think it is

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Speaker 1: uh the final year. I think realistically, you know, we

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Speaker 1: could be seeing you know, and I'm no epidemiologists, but

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Speaker 1: we could be you know, we could be seeing some

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Speaker 1: rolling COVID variants you know, over the next several years.

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Speaker 1: But I think we've we've got the mechanisms is to

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Speaker 1: adapt to that hopefully alright. So you know, I think

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Speaker 1: it's interesting Steve. You know, back in September you said

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Speaker 1: that the office space would not die per se, maybe

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Speaker 1: just be smaller. I think you said maybe smaller. It's

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Speaker 1: been almost a year. Is that still kind of where

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Speaker 1: you think things are going to go here in US? Yeah,

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Speaker 1: it's it's exactly what we're seeing. I guess. We just

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Speaker 1: finished a survey with more of a hundred of Hunter

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Speaker 1: Global companies and it still looks like about is sort

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Speaker 1: of the sweet spot of range where people are looking

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Speaker 1: to reduce their their footprint, UM kind of in this

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Speaker 1: you know, this new normal. And then and then what

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Speaker 1: they're doing is, you know, they're reconfiguring, um, not just

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Speaker 1: their workplace but also some of their HR standards and

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Speaker 1: things like that to to adjust to as you said,

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Speaker 1: the the r T O the industry jargon here, because

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Speaker 1: if we get back to r T O um, and

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Speaker 1: so that's what we're still seeing. Um. You know, I

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Speaker 1: think the thing we're seeing in the US is delta

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Speaker 1: variant has has delayed that r T O by you know,

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Speaker 1: six nine days. And you've seen all those those reports

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Speaker 1: to where you know, there was a return to office

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Speaker 1: by September one, October one, and now people are saying,

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Speaker 1: let's let's look further out in the fall. Um, so

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Speaker 1: that's been that's been the return to the return to office. Um.

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Speaker 1: Do a land hasn't changed. The timing has has has changed?

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Speaker 1: Given the delta Bearriet. You know, when I was a kid,

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Speaker 1: my dad um had his own office, still has his

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Speaker 1: own office. It was great, his own whole room. You

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Speaker 1: could keep a few toys in there for the kid's visits.

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Speaker 1: He had a stereo and even a bar in the corner.

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Speaker 1: That's no longer, I mean that's been for twenty years.

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Speaker 1: Not the way it works, right. We all have cubicles

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Speaker 1: that are slightly glorified, but not really. Is it going

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Speaker 1: to get even worse going forward? Or we're gonna be

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Speaker 1: hot desking in a bullpen from now on, I would Yeah,

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Speaker 1: when you're saying that, it reminds me a madman or something. Um, yeah,

429
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Speaker 1: so yeah, but how awesome was that? By the way

430
00:23:43,720 --> 00:23:47,919
Speaker 1: that that that that was you know, enough inspiration to

431
00:23:48,000 --> 00:23:49,639
Speaker 1: get up, have him get up and going to work

432
00:23:49,680 --> 00:23:52,480
Speaker 1: at four thirty every day. You don't look forward to

433
00:23:52,560 --> 00:23:55,520
Speaker 1: going to a hot desk, do you? Yeah? No, I

434
00:23:55,840 --> 00:23:57,439
Speaker 1: so I said, I will tell you, I think it's

435
00:23:57,440 --> 00:24:00,000
Speaker 1: gonna get better. So we've we've been on this evolution

436
00:24:00,200 --> 00:24:02,760
Speaker 1: of the workplace for you know, like you said, you know,

437
00:24:02,920 --> 00:24:05,199
Speaker 1: arguably a couple of decades, but at least you know,

438
00:24:05,400 --> 00:24:08,480
Speaker 1: I've seen it upfront and close for the last decade

439
00:24:08,480 --> 00:24:12,359
Speaker 1: as we've moved to the open plan, less dedicated offices

440
00:24:12,960 --> 00:24:15,560
Speaker 1: you know, etcetera, etcetera. And so we've all seen that

441
00:24:15,640 --> 00:24:19,560
Speaker 1: what COVID has done is accelerated that evolution by you know,

442
00:24:19,720 --> 00:24:21,959
Speaker 1: we've taken ten years or further revolution and we can

443
00:24:22,000 --> 00:24:25,200
Speaker 1: press in an eighteen months. And so you know, I think,

444
00:24:25,200 --> 00:24:27,159
Speaker 1: what's you're you know, because what was preventing sort of

445
00:24:27,200 --> 00:24:30,520
Speaker 1: that true flexible working it was it was sometimes it

446
00:24:30,600 --> 00:24:33,000
Speaker 1: was concerned about technology bandwidth and kind of figured that

447
00:24:33,040 --> 00:24:35,560
Speaker 1: out in the last eighteen months that was eight people

448
00:24:35,560 --> 00:24:37,600
Speaker 1: still couldn't get their head around well, I need to

449
00:24:37,640 --> 00:24:40,280
Speaker 1: see Some people still had the mentality of I had

450
00:24:40,280 --> 00:24:42,320
Speaker 1: to see my employees to make sure they're doing the work,

451
00:24:42,320 --> 00:24:44,080
Speaker 1: and I think I was sort of people that were

452
00:24:44,160 --> 00:24:46,560
Speaker 1: last holdouts of managing employees that way have sort of

453
00:24:46,600 --> 00:24:49,439
Speaker 1: had to adapt. So we've broken down those barriers and

454
00:24:49,480 --> 00:24:51,960
Speaker 1: now now we're as we get back to work, it's

455
00:24:52,000 --> 00:24:55,640
Speaker 1: going to be about flexibility or omni working is one

456
00:24:55,640 --> 00:24:57,960
Speaker 1: of my friends likes to call it. And so I

457
00:24:58,000 --> 00:25:01,359
Speaker 1: don't think you're actually gonna be in two many cubicles

458
00:25:01,600 --> 00:25:04,760
Speaker 1: crammed in doing heads down to work. The purpose the

459
00:25:04,800 --> 00:25:06,879
Speaker 1: office is going to be it's kind of you do that,

460
00:25:07,000 --> 00:25:08,720
Speaker 1: do that work wherever you want to do that work,

461
00:25:08,720 --> 00:25:10,880
Speaker 1: whether that's at home or the train or the Starbucks

462
00:25:11,000 --> 00:25:13,320
Speaker 1: or wherever. But when you do come to the office,

463
00:25:13,760 --> 00:25:15,840
Speaker 1: it's going to be more and more about getting to

464
00:25:15,840 --> 00:25:20,840
Speaker 1: go with your colleagues, training sessions, collaboration. Mentoring has come

465
00:25:20,920 --> 00:25:23,280
Speaker 1: up a lot in our surveys where some of the

466
00:25:23,320 --> 00:25:25,560
Speaker 1: younger players aren't getting the mentoring like they do when

467
00:25:25,600 --> 00:25:27,520
Speaker 1: you're sort of in the office or pulled into a

468
00:25:27,560 --> 00:25:30,520
Speaker 1: meeting and then have a debrief, and so the purpose

469
00:25:30,560 --> 00:25:32,760
Speaker 1: of the office is going to be more around those

470
00:25:32,800 --> 00:25:36,760
Speaker 1: elements versus sort of let's let's get even closer and

471
00:25:36,760 --> 00:25:39,359
Speaker 1: heads down and crank out emails together. So I actually

472
00:25:39,359 --> 00:25:41,560
Speaker 1: think that that sort of Delbert approach is actually going

473
00:25:41,640 --> 00:25:44,960
Speaker 1: to get better or not worse. It's my view. All right, Steve,

474
00:25:44,960 --> 00:25:46,880
Speaker 1: thank you so much for joining us. We really appreciate

475
00:25:46,920 --> 00:25:48,760
Speaker 1: it's a fascinating discussion that I think a lot of

476
00:25:48,800 --> 00:25:51,960
Speaker 1: companies are having with their employees here. Um as we

477
00:25:52,000 --> 00:25:53,639
Speaker 1: get back and Labor Day seems to be one of

478
00:25:53,680 --> 00:25:56,800
Speaker 1: those kind of days where our time periods where I

479
00:25:56,840 --> 00:25:58,359
Speaker 1: think some companies are gonna want to try to get

480
00:25:58,359 --> 00:26:00,840
Speaker 1: a little bit more uh, part of a getting people

481
00:26:00,840 --> 00:26:03,119
Speaker 1: back in your office, Steve Quick, CEO of unice Space,

482
00:26:05,320 --> 00:26:08,800
Speaker 1: Let's get back to markets and focus in on what's

483
00:26:08,840 --> 00:26:12,240
Speaker 1: going on with Dave Harden. He's the CEO and chief

484
00:26:12,280 --> 00:26:15,560
Speaker 1: investment officer Summit Global Investments. They have one point eight

485
00:26:15,600 --> 00:26:19,359
Speaker 1: billion dollars of assets under management that assault Lake City

486
00:26:19,520 --> 00:26:23,080
Speaker 1: and Dave um Let's start with just the fact that

487
00:26:23,359 --> 00:26:26,000
Speaker 1: even though we're not moving a lot today, we keep

488
00:26:26,040 --> 00:26:29,879
Speaker 1: having these new records. I think fifty new record highs

489
00:26:29,920 --> 00:26:33,640
Speaker 1: this year, even as Dave Wilson shows us, the spread

490
00:26:34,280 --> 00:26:37,920
Speaker 1: between investment grade and high yield debt um and treasuries

491
00:26:38,440 --> 00:26:40,800
Speaker 1: gets wider and wider. What what are we? What are

492
00:26:40,800 --> 00:26:44,040
Speaker 1: we missing? Who help? And it's hard, it's hard to

493
00:26:44,040 --> 00:26:45,920
Speaker 1: say we're missing anything, But I tell you, it sure

494
00:26:46,000 --> 00:26:48,199
Speaker 1: feels like a right. I appreciate you have me on,

495
00:26:48,280 --> 00:26:51,200
Speaker 1: Matt and Paul. You know, I would say that these

496
00:26:51,280 --> 00:26:55,679
Speaker 1: new highs were on pace for seventy seven if it continues,

497
00:26:56,200 --> 00:26:59,000
Speaker 1: and that ties with record set in nifty four, and

498
00:27:00,240 --> 00:27:04,320
Speaker 1: so definitely interesting that we're continuing to hit new hives.

499
00:27:04,640 --> 00:27:07,960
Speaker 1: But can you really doubt it? We have a supported FED,

500
00:27:08,080 --> 00:27:10,800
Speaker 1: we have a Congress that's writing bills like you know,

501
00:27:10,840 --> 00:27:14,000
Speaker 1: they have a blank check. We have so much stimulus

502
00:27:14,080 --> 00:27:16,719
Speaker 1: going into the market right now it's hard not to

503
00:27:16,800 --> 00:27:21,240
Speaker 1: be short term positive. So I guess one of the

504
00:27:21,320 --> 00:27:24,439
Speaker 1: issues that investors are working through, Dave is kind of

505
00:27:24,480 --> 00:27:26,639
Speaker 1: where do I want to be in this market? Do

506
00:27:26,760 --> 00:27:29,679
Speaker 1: I want to stay with those growth stocks, the apples,

507
00:27:29,680 --> 00:27:31,639
Speaker 1: the amazons, the apples that have worked so well for

508
00:27:31,680 --> 00:27:33,679
Speaker 1: me for so long and have been the mainstay of

509
00:27:33,720 --> 00:27:36,560
Speaker 1: my IRA and my portfolio. Or do I want to

510
00:27:36,600 --> 00:27:39,919
Speaker 1: follow this rotation trade, which again has been a great trade,

511
00:27:40,359 --> 00:27:42,000
Speaker 1: you know in terms of the cyclicles and maybe the

512
00:27:42,080 --> 00:27:43,760
Speaker 1: small caps and things like that. How do you think

513
00:27:43,800 --> 00:27:46,440
Speaker 1: about that? Well, I think if you want to brag

514
00:27:46,440 --> 00:27:50,119
Speaker 1: about your portfolio by Christmas, then maybe staying with growth

515
00:27:50,200 --> 00:27:52,760
Speaker 1: is where you want to be, uh, you know, because

516
00:27:52,760 --> 00:27:55,720
Speaker 1: it's hard to not favor growth short term, but long

517
00:27:55,880 --> 00:27:58,920
Speaker 1: term I would favor more value. And if you can

518
00:27:59,000 --> 00:28:02,560
Speaker 1: find that very big quality company that also still has

519
00:28:02,640 --> 00:28:05,280
Speaker 1: value in it and they're out there, that's where I

520
00:28:05,280 --> 00:28:08,280
Speaker 1: would start to rotate. It's it's better to be early

521
00:28:08,440 --> 00:28:12,359
Speaker 1: to the trade a little bit than late. So you know,

522
00:28:12,440 --> 00:28:15,840
Speaker 1: as we look out, the growth is going to be hard,

523
00:28:16,640 --> 00:28:21,040
Speaker 1: inflation is coming in hotter than expectator expat expected, and

524
00:28:21,080 --> 00:28:23,480
Speaker 1: we have the possibility of taking the punch bowl away

525
00:28:23,480 --> 00:28:25,960
Speaker 1: from the FED and the quantitative easing. So if you

526
00:28:26,080 --> 00:28:30,160
Speaker 1: look out longer term, I think it's the right time

527
00:28:30,240 --> 00:28:32,840
Speaker 1: for people to start thinking about, because they have not

528
00:28:32,920 --> 00:28:36,800
Speaker 1: thought about it, whatsoever is risk and how to manage

529
00:28:36,880 --> 00:28:39,960
Speaker 1: risk and how to look at the potential dry powder

530
00:28:40,360 --> 00:28:42,920
Speaker 1: or the risk in their portfolio. And that's what we

531
00:28:43,040 --> 00:28:45,760
Speaker 1: do really well at st I is we look at

532
00:28:45,800 --> 00:28:48,280
Speaker 1: the potential risk and we say, how do we put

533
00:28:48,560 --> 00:28:52,880
Speaker 1: prudently and properly manage your portfolio. These un teamed risk

534
00:28:53,080 --> 00:28:56,160
Speaker 1: are going to hurt people in the future. All right,

535
00:28:56,200 --> 00:28:59,880
Speaker 1: so what do you, um, what do you see? It's

536
00:29:00,000 --> 00:29:02,880
Speaker 1: on it happening post Jackson Hole. You said the FED

537
00:29:03,040 --> 00:29:04,880
Speaker 1: is going to take away the punch bowl. Obviously they're

538
00:29:04,880 --> 00:29:07,480
Speaker 1: gonna at some point they have to scale back purchases.

539
00:29:08,040 --> 00:29:11,200
Speaker 1: Do they ever raise rates? I think they. I think

540
00:29:11,200 --> 00:29:13,200
Speaker 1: they're going to have to. I don't think it's going

541
00:29:13,240 --> 00:29:16,120
Speaker 1: to come right out after Jackson Hole. Um, it's it's

542
00:29:16,160 --> 00:29:17,960
Speaker 1: just too great of a place there if you've ever

543
00:29:18,000 --> 00:29:21,480
Speaker 1: been there, um to take to kind of make you relax,

544
00:29:21,720 --> 00:29:24,760
Speaker 1: And I think they're pretty relaxed. But the fact is

545
00:29:24,760 --> 00:29:28,840
Speaker 1: is that we have delta, this COVID variant that's really

546
00:29:28,920 --> 00:29:33,400
Speaker 1: hitting the workforce productivity, and so even if it doesn't

547
00:29:34,080 --> 00:29:37,040
Speaker 1: do more damage in the sense of of deaths or

548
00:29:37,360 --> 00:29:41,840
Speaker 1: severe illness, it's stopping people from being productive. And that's

549
00:29:41,880 --> 00:29:44,640
Speaker 1: what seems to be the case of inflation, and it's

550
00:29:44,680 --> 00:29:48,120
Speaker 1: causing inflation. We've got these supply chains problems. So the

551
00:29:47,760 --> 00:29:51,760
Speaker 1: real reality is is that I think that it's gonna

552
00:29:52,040 --> 00:29:54,680
Speaker 1: inflation is gonna be hotter. It's gonna put pressure on

553
00:29:54,680 --> 00:29:56,880
Speaker 1: the FED, and they're gonna have to taper a little

554
00:29:56,880 --> 00:29:59,760
Speaker 1: bit sooner than what I mean, not tap, yeah, stop

555
00:29:59,840 --> 00:30:02,920
Speaker 1: the quantitative evening a little bit sooner than what expectations

556
00:30:02,960 --> 00:30:06,120
Speaker 1: are currently out there. So I do see interest rates rising.

557
00:30:06,520 --> 00:30:10,320
Speaker 1: I do see a pressure on the FED to act. So, Dave,

558
00:30:10,600 --> 00:30:14,560
Speaker 1: where's your asset allocation? Now, you know, equities, credit, that

559
00:30:14,640 --> 00:30:19,600
Speaker 1: type of thing. You know, from an assallocation standpoint, it's

560
00:30:19,640 --> 00:30:22,320
Speaker 1: hard to say, hey, I'm really long bonds right now

561
00:30:22,360 --> 00:30:24,960
Speaker 1: with that, you know what with the ten year under

562
00:30:25,280 --> 00:30:27,600
Speaker 1: one and a half percent, right, So this is a

563
00:30:27,640 --> 00:30:29,680
Speaker 1: really difficult thing when you have a yield of like

564
00:30:29,720 --> 00:30:33,560
Speaker 1: exnmobile at six point two percent and uh, you know,

565
00:30:33,720 --> 00:30:36,640
Speaker 1: very low, shorter interest and marginal risk. So you can

566
00:30:36,680 --> 00:30:39,120
Speaker 1: get yield in a number of different ways if it's

567
00:30:39,160 --> 00:30:42,120
Speaker 1: just yield. But from an asset allocation standpoint, there's other

568
00:30:42,160 --> 00:30:45,440
Speaker 1: things to take into consideration, and that is protection. So

569
00:30:45,640 --> 00:30:47,720
Speaker 1: we do see, for you know, the kind of the

570
00:30:47,760 --> 00:30:51,680
Speaker 1: non aggressive investors that are more conservative in their portfolios

571
00:30:51,920 --> 00:30:54,880
Speaker 1: to have some allocation to credit, to have some allocation

572
00:30:55,000 --> 00:30:59,240
Speaker 1: into this bond market um because it does offer protection

573
00:30:59,640 --> 00:31:03,120
Speaker 1: and so you know there is some uh legitimacy to

574
00:31:03,160 --> 00:31:06,400
Speaker 1: that that for decades has has has done just that

575
00:31:06,720 --> 00:31:09,760
Speaker 1: offer protection. All right, Dave, thanks so much for joining us.

576
00:31:09,760 --> 00:31:11,960
Speaker 1: To really appreciate you taking the time here. Dave Harden,

577
00:31:12,080 --> 00:31:16,960
Speaker 1: CEO and Chief Investment Officer of Summit Global Investments. Thanks

578
00:31:17,000 --> 00:31:20,400
Speaker 1: for listening to the Bloomberg Markets podcast. You can subscribe

579
00:31:20,480 --> 00:31:24,240
Speaker 1: and listen to interviews with Apple Podcasts or whatever podcast

580
00:31:24,240 --> 00:31:27,800
Speaker 1: platform you prefer. I'm Matt Miller. I'm on Twitter at

581
00:31:27,840 --> 00:31:31,640
Speaker 1: Matt Miller three. On Fall Sweeney, I'm on Twitter at

582
00:31:31,680 --> 00:31:34,520
Speaker 1: pt Sweeney Before the podcast. You can always catch us

583
00:31:34,560 --> 00:31:35,960
Speaker 1: worldwide at Bloomberg Radio