WEBVTT - Single Best Idea with Tom Keene: Amanda Lynam & Greg Boutle 

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<v Speaker 1>Bloomberg Audio Studios, podcasts, radio news, a single best.

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<v Speaker 2>Idea, and this is what surveillance is about. When we

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<v Speaker 2>started doing this a zillion years ago, it was about

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<v Speaker 2>the intellectual abilities of these guests and touching upon the

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<v Speaker 2>secret sauce, the pixie dust of why they were at

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<v Speaker 2>a given bank, a given university, a given investment shop

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<v Speaker 2>around the world. And this is part of doing economics, finance, investment,

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<v Speaker 2>and indeed international relations. Major shout out today to Henrietta

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<v Speaker 2>Trees on Short Time Veda Partners on all the news

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<v Speaker 2>out of Washington. I thought, just a great job by

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<v Speaker 2>the Bloomberg team working literally overnight, Stephen Dennis leading our

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<v Speaker 2>coverage on Capitol Hill, with Zach Cohen and Josh Wing

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<v Speaker 2>Grove out at the White House as well many others.

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<v Speaker 2>It's just a huge team response. But we started with

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<v Speaker 2>bonds and equity and what you're going to hear here

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<v Speaker 2>our windows into the way these people really talk when

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<v Speaker 2>they don't dumb it down. For Tom Keene, here's a

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<v Speaker 2>mandolin on Blackrock with the linkage here of accounting, an

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<v Speaker 2>incentive and debt new issuance.

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<v Speaker 3>There are two things to consider. One is a lot

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<v Speaker 3>of these companies are still in a net cash position,

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<v Speaker 3>which is important. So they're adding debt to their capital structure,

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<v Speaker 3>but their leverage is still incredibly low because they have

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<v Speaker 3>all of this cash on their balandcyet. The question is

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<v Speaker 3>why that's left over from the pre twenty seventeen era

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<v Speaker 3>when cash was generated overseas and then it needed to

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<v Speaker 3>be taxed to be repatriated back to the US. So

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<v Speaker 3>there's still some cash over there is the point. The

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<v Speaker 3>second point is that there's a bit of an upper

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<v Speaker 3>bound to how big these capital structures can get. So

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<v Speaker 3>in our note, which you know we outline, we estimate

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<v Speaker 3>that if you look at just like the mag seven

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<v Speaker 3>X Tesla, so removing autos, there's probably an incremental four

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<v Speaker 3>hundred billion plus of incremental debt capacity if you just

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<v Speaker 3>increase the gross leverage by half a turn, really modest,

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<v Speaker 3>that's a really large number. But we don't expect that

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<v Speaker 3>to be utilized because these capital structures, we think cannot

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<v Speaker 3>get that large, and also that deck capacity will just

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<v Speaker 3>be used gradually over time for strategic opportunity.

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<v Speaker 2>Absolutely brilliant, Just to put one idea in here, it's

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<v Speaker 2>like foreign exchange every day, even as smart as you are,

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<v Speaker 2>you have to go. Okay, it's euros as compared to dollars,

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<v Speaker 2>but it's dollars as compared again basic stuff and the

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<v Speaker 2>amandelidum world. What is so interesting is traditional finance, but

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<v Speaker 2>using it applied across these technology juggernauts. It's not the

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<v Speaker 2>same math, it's not the same microeconomics, it's not the

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<v Speaker 2>same Fabosi or is v body up Austin University. It's

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<v Speaker 2>something original going on right now. As we see with

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<v Speaker 2>these billion dollar transactions of thirty year paper that seemed

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<v Speaker 2>to be sold on five phone calls. One of those

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<v Speaker 2>phone calls may go to B and P. Perry by

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<v Speaker 2>other French giant. Greg Boudel has been just wonderful in equities,

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<v Speaker 2>in the derivative dynamics of the equity market. Here Greg

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<v Speaker 2>Boudel with enthusiasm.

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<v Speaker 4>Well, essentially, what we've seen is this kind of pocket

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<v Speaker 4>of turbulence. The last couple of weeks government shutdown has

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<v Speaker 4>been a part of it. We think is kind of

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<v Speaker 4>positioning led that the market got a bit of ahead

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<v Speaker 4>of itself in September with this kind of real reach

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<v Speaker 4>for upside, this exuberant rally. But what we've seen out

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<v Speaker 4>of the last say three or four weeks, is a

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<v Speaker 4>pullback inequities, pick up in volatility at a time when

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<v Speaker 4>the newsflow that we have had, the bottom up newsflow

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<v Speaker 4>has actually been very strong.

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<v Speaker 2>Earnings.

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<v Speaker 3>We've just been through kind of the vast majority of earnings.

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<v Speaker 4>Were they good enough for this market? Were they good

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<v Speaker 4>enough for you and your call on this market?

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<v Speaker 3>Yeah?

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<v Speaker 4>I think they were a really good earning season. I mean,

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<v Speaker 4>you can start with the large cap tech and I

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<v Speaker 4>think one of the best ways to look at the

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<v Speaker 4>lens of earnings and distill the information is what did

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<v Speaker 4>all the analysts do that cover the stocks with next

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<v Speaker 4>year's numbers? And they took all of those numbers higher.

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<v Speaker 4>So they digested that news, from the calls, from the releases,

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<v Speaker 4>and they increased their forecast.

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<v Speaker 2>Good Bottle b MP pery by with a really terse

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<v Speaker 2>optimistic note. On podcasts, We're on an Apple on Spotify,

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<v Speaker 2>on YouTube podcasts. It's single best idea