1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:21,240 Speaker 1: on Apple car Play or Android Auto with the Bloomberg 4 00:00:21,320 --> 00:00:24,880 Speaker 1: Business app. Listen on demand wherever you get your podcasts, 5 00:00:25,280 --> 00:00:27,240 Speaker 1: or watch us live on YouTube. 6 00:00:27,920 --> 00:00:29,760 Speaker 2: Let's start off strong here we get the thoughts about 7 00:00:29,800 --> 00:00:31,960 Speaker 2: where we're going on these markets. Sema Sho, chief global 8 00:00:31,960 --> 00:00:35,240 Speaker 2: strategist at Principal Asset Management. She's based in London, but 9 00:00:35,280 --> 00:00:38,839 Speaker 2: she's getting ready to do like a Midwest America trip. 10 00:00:39,080 --> 00:00:39,720 Speaker 3: Good for her. 11 00:00:39,880 --> 00:00:42,800 Speaker 2: I mean East Lansing, Michigan. I have a soft spot 12 00:00:42,840 --> 00:00:45,360 Speaker 2: in my her for East Lansing, the state capital Michigan, 13 00:00:45,560 --> 00:00:48,919 Speaker 2: Des Moines, Iowa, another great town. Seema, thanks so much 14 00:00:48,960 --> 00:00:51,360 Speaker 2: for joining. You're giving us a little time here in 15 00:00:51,360 --> 00:00:54,040 Speaker 2: New York City. What's the conversation you're having with your 16 00:00:54,040 --> 00:00:55,760 Speaker 2: clients as you come through the US and meeting with 17 00:00:55,800 --> 00:00:56,560 Speaker 2: your clients. 18 00:00:56,240 --> 00:00:59,480 Speaker 4: These days, Hellie, thanks for having me so. The main 19 00:00:59,520 --> 00:01:02,360 Speaker 4: conversation is of course around the FED. That has to 20 00:01:02,400 --> 00:01:05,319 Speaker 4: be the key conversation. And actually it's interesting because what 21 00:01:05,360 --> 00:01:07,360 Speaker 4: we had seen is that over the previous six months 22 00:01:07,400 --> 00:01:09,800 Speaker 4: there really wasn't a conversation about the FED, no one 23 00:01:09,920 --> 00:01:12,679 Speaker 4: was talking about interest rates, and now, of course that 24 00:01:12,760 --> 00:01:16,360 Speaker 4: conversation is completely turned on its head, questioning about inflation, 25 00:01:16,480 --> 00:01:18,600 Speaker 4: whether the rate hikes are coming, and then of course 26 00:01:18,640 --> 00:01:19,880 Speaker 4: if the market can digest that. 27 00:01:20,560 --> 00:01:22,240 Speaker 5: So do you think Kevin a Ware's just the biggest 28 00:01:22,319 --> 00:01:25,679 Speaker 5: change is more policy or communication or maybe both? 29 00:01:26,400 --> 00:01:28,200 Speaker 4: I think could be both. I mean, I think communication 30 00:01:28,319 --> 00:01:30,360 Speaker 4: is obviously at the moment it is the key one, 31 00:01:30,800 --> 00:01:33,240 Speaker 4: and we did see that actually without the communication, the 32 00:01:33,280 --> 00:01:35,760 Speaker 4: market puts more emphasis on the dots, which is the 33 00:01:35,800 --> 00:01:38,200 Speaker 4: exact opposite of what he wanted. But I think as 34 00:01:38,200 --> 00:01:39,800 Speaker 4: we go down the line, as we get towards the 35 00:01:39,880 --> 00:01:43,280 Speaker 4: end of the year, policy really could have some meaningful changes. 36 00:01:43,360 --> 00:01:44,399 Speaker 4: So much it's going to depend on. 37 00:01:44,400 --> 00:01:45,120 Speaker 5: That task force. 38 00:01:45,480 --> 00:01:48,040 Speaker 4: So you know, we're going to be thinking about volatility 39 00:01:48,040 --> 00:01:50,000 Speaker 4: in the next few months around what happens to rates. 40 00:01:50,360 --> 00:01:53,440 Speaker 4: But then at the end of the year there's a 41 00:01:53,480 --> 00:01:57,200 Speaker 4: significant potential for a pretty big market moves around what 42 00:01:57,240 --> 00:01:58,560 Speaker 4: happens from those task forces. 43 00:01:58,920 --> 00:02:00,320 Speaker 3: See what's your inflation call. 44 00:02:01,000 --> 00:02:03,240 Speaker 2: These days, we've seen oil come down, as it seems 45 00:02:03,240 --> 00:02:05,880 Speaker 2: like we may have some progress here on some peace 46 00:02:05,880 --> 00:02:08,440 Speaker 2: and negotiations in Middle East, what's your inflation call overall. 47 00:02:08,760 --> 00:02:11,320 Speaker 4: Yeah, so we've got headline CPR, for example, at around 48 00:02:11,440 --> 00:02:15,080 Speaker 4: four point two percent by year end. The ore price 49 00:02:15,160 --> 00:02:17,160 Speaker 4: coming down certainly helps, but we do think that there's 50 00:02:17,240 --> 00:02:20,040 Speaker 4: structural inflation. It's going to come down further through twenty 51 00:02:20,120 --> 00:02:22,400 Speaker 4: twenty seven. We do think it gets pretty close to 52 00:02:22,440 --> 00:02:25,720 Speaker 4: two percent, but still above and the main reason for 53 00:02:25,720 --> 00:02:28,040 Speaker 4: that is there are some other structural drivers behind inflation 54 00:02:28,080 --> 00:02:30,440 Speaker 4: which are not going to be disappearing anytime soon, mainly 55 00:02:30,480 --> 00:02:33,119 Speaker 4: around the AI capex build out. So this is still 56 00:02:33,120 --> 00:02:36,000 Speaker 4: a high inflation environment. We think that the FED is 57 00:02:36,040 --> 00:02:37,560 Speaker 4: going to stay in hold, but I have to say, 58 00:02:37,919 --> 00:02:40,400 Speaker 4: you know, clearly the risks around a potential hike have 59 00:02:40,560 --> 00:02:43,959 Speaker 4: increased since last week, and so that is something which 60 00:02:43,960 --> 00:02:44,919 Speaker 4: is a life edge for US. 61 00:02:45,120 --> 00:02:46,920 Speaker 2: Hi e Sema, thank you so much for journsh'ming to 62 00:02:46,919 --> 00:02:49,760 Speaker 2: go to Switzerland right now. Seem cheap global strategist for 63 00:02:49,840 --> 00:02:51,440 Speaker 2: phusible Global Investment to stay with us. 64 00:02:51,520 --> 00:02:53,960 Speaker 3: More from Bloomberg Surveillance coming up after this. 65 00:03:02,880 --> 00:03:06,480 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live 66 00:03:06,520 --> 00:03:09,720 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 67 00:03:09,760 --> 00:03:13,440 Speaker 1: Applecarplay and Android auto with the Bloomberg Business app, or 68 00:03:13,600 --> 00:03:15,040 Speaker 1: watch us live on YouTube. 69 00:03:15,160 --> 00:03:19,480 Speaker 2: David Katz, Joints, President and Chief investment Officer, Matrix Asset Advisors. 70 00:03:19,880 --> 00:03:22,560 Speaker 3: David, how do you guys think about small cap stocks 71 00:03:22,600 --> 00:03:23,040 Speaker 3: these days? 72 00:03:23,280 --> 00:03:26,679 Speaker 6: Well, small caps have underperformed large caps for quite some time, 73 00:03:26,800 --> 00:03:29,000 Speaker 6: so we think they are due to start to do better. 74 00:03:29,080 --> 00:03:31,840 Speaker 6: You're starting to see it now. You know, a lot 75 00:03:31,840 --> 00:03:34,240 Speaker 6: of that has come from smaller AI type plays that 76 00:03:34,280 --> 00:03:37,480 Speaker 6: have done well within the small cap space. But we 77 00:03:37,520 --> 00:03:39,360 Speaker 6: think if you look at the next two to four 78 00:03:39,440 --> 00:03:42,640 Speaker 6: years of interest rates ever start trending lower, economy starts 79 00:03:42,640 --> 00:03:44,520 Speaker 6: to pick up. Small caps are selling in a much 80 00:03:44,560 --> 00:03:48,240 Speaker 6: more reasonable valuation than the large caps and megacaps. 81 00:03:48,520 --> 00:03:50,520 Speaker 5: What to you is the most crowded trade in the 82 00:03:50,560 --> 00:03:52,840 Speaker 5: market right now? Or should I even ask that? And 83 00:03:52,880 --> 00:03:53,760 Speaker 5: it's AI. 84 00:03:55,080 --> 00:03:58,200 Speaker 6: Exactly So, it's AI, but it no longer is AI 85 00:03:58,440 --> 00:04:00,880 Speaker 6: like the Googles and the Amazons of the world. It's AI. 86 00:04:01,000 --> 00:04:05,160 Speaker 6: The semiconductors and those benefici areas. The pricing has gone crazy. 87 00:04:05,240 --> 00:04:08,000 Speaker 6: Prices are up one hundred two hundred percent. As a result, 88 00:04:08,120 --> 00:04:11,240 Speaker 6: earnings and profitability and margins are rough very significantly for 89 00:04:11,280 --> 00:04:13,720 Speaker 6: a lot of chip companies, and they're being valued as 90 00:04:13,720 --> 00:04:15,960 Speaker 6: if it's going to stay up there forever. As a result, 91 00:04:16,000 --> 00:04:18,960 Speaker 6: they're selling it very very rich valuations, and we think 92 00:04:19,000 --> 00:04:21,080 Speaker 6: that that's an area to be wory about. We would 93 00:04:21,120 --> 00:04:23,600 Speaker 6: not be throwing new money into the chip area of 94 00:04:23,640 --> 00:04:24,479 Speaker 6: AI right now. 95 00:04:24,960 --> 00:04:27,400 Speaker 2: So when you see an IPO seventy five billion dollars 96 00:04:27,400 --> 00:04:31,000 Speaker 2: of SpaceX, the biggest of all time and whatnot, you've 97 00:04:31,000 --> 00:04:32,400 Speaker 2: got Anthropic in the pipeline. 98 00:04:32,400 --> 00:04:35,040 Speaker 3: We've got open AI in a pipeline again, a jillion 99 00:04:35,080 --> 00:04:37,160 Speaker 3: dollar ie. Because does I tell you anything about the 100 00:04:37,240 --> 00:04:40,039 Speaker 3: nature of the market. Is it light cycle? Is it frothy? 101 00:04:40,160 --> 00:04:42,320 Speaker 3: Is it just sign of a healthy market? How do 102 00:04:42,320 --> 00:04:43,280 Speaker 3: you think about it? All three? 103 00:04:43,760 --> 00:04:46,200 Speaker 6: It's healthy, you're able to sell these things. But it 104 00:04:46,240 --> 00:04:49,480 Speaker 6: definitely is frothy right now. If you look at chat 105 00:04:49,600 --> 00:04:52,400 Speaker 6: EBT and you look at Anthropic, they're looking to be 106 00:04:52,480 --> 00:04:55,560 Speaker 6: about a one trillion dollar company. Microsoft right now sells 107 00:04:55,600 --> 00:04:59,279 Speaker 6: it about three point two trillion dollars. There isn't a 108 00:04:59,279 --> 00:05:01,640 Speaker 6: big mode in a lot of these AI companies. As 109 00:05:01,640 --> 00:05:05,760 Speaker 6: you see Claude is now dominating CHATCHBT. Things change. So 110 00:05:05,839 --> 00:05:08,360 Speaker 6: we think that ultimately you're paying a lot for those 111 00:05:08,400 --> 00:05:11,200 Speaker 6: companies and we think there probably is better opportunity in 112 00:05:11,240 --> 00:05:13,960 Speaker 6: the Googles and Microsofts of the world, because you're not 113 00:05:14,000 --> 00:05:17,080 Speaker 6: getting a AI startup at a low valuation, you're getting 114 00:05:17,080 --> 00:05:18,600 Speaker 6: it at a top valuation. 115 00:05:19,080 --> 00:05:22,600 Speaker 5: You do warrant, though, that AA sentiment could peak before fundamentals. 116 00:05:22,640 --> 00:05:24,200 Speaker 5: Do you think we're getting close to that point. 117 00:05:25,120 --> 00:05:27,200 Speaker 6: We don't know when that point's going to come, but 118 00:05:27,240 --> 00:05:29,919 Speaker 6: that's exactly the point. Typically the stocks are going to 119 00:05:29,920 --> 00:05:32,360 Speaker 6: go down three to six months before the fundamentals start 120 00:05:32,400 --> 00:05:36,120 Speaker 6: to slow. We don't think we're at that point yet, 121 00:05:36,240 --> 00:05:37,880 Speaker 6: but we do think you'll probably get there in the 122 00:05:37,880 --> 00:05:40,280 Speaker 6: next six to eighteen months. And we think that from 123 00:05:40,320 --> 00:05:43,320 Speaker 6: a stock price valuation, they're much better opportunities in the 124 00:05:43,360 --> 00:05:45,960 Speaker 6: market in other areas that are not caught up in 125 00:05:46,000 --> 00:05:46,680 Speaker 6: the excitement. 126 00:05:47,600 --> 00:05:48,960 Speaker 2: What are you doing in the bond market? Do you 127 00:05:48,960 --> 00:05:50,919 Speaker 2: take credit risk cure or do you just clip a 128 00:05:50,920 --> 00:05:52,800 Speaker 2: four point two percent coupon on the two year? 129 00:05:53,400 --> 00:05:56,279 Speaker 6: We clipped the four point two percent coupon in the 130 00:05:56,320 --> 00:05:58,240 Speaker 6: two year. We don't think you want to take credit risk, 131 00:05:58,279 --> 00:06:00,479 Speaker 6: and we don't think you want to take duration. We'd 132 00:06:00,520 --> 00:06:03,599 Speaker 6: focus on one the five years. You're getting a good return. 133 00:06:03,640 --> 00:06:07,039 Speaker 6: We think Ultimately, inflation is a longer term problem. The 134 00:06:07,120 --> 00:06:09,480 Speaker 6: budget deficit is a longer term problem. The FED losing 135 00:06:09,520 --> 00:06:11,920 Speaker 6: its autonomy is a problem. So as a result, we're 136 00:06:11,960 --> 00:06:15,280 Speaker 6: a little bit wary about longer term bonds. Short term bonds, though, 137 00:06:15,279 --> 00:06:16,680 Speaker 6: we think, is a lot that you get that four 138 00:06:16,680 --> 00:06:17,760 Speaker 6: point two percent return. 139 00:06:18,160 --> 00:06:21,520 Speaker 5: You've been bullish all year mostly. What's stopping you from 140 00:06:21,560 --> 00:06:24,159 Speaker 5: being even more bullish today, Well. 141 00:06:24,040 --> 00:06:26,360 Speaker 6: We're sort of counterintuitive. The fact that the market's gone 142 00:06:26,440 --> 00:06:28,360 Speaker 6: up so much this year and the last three and 143 00:06:28,400 --> 00:06:30,440 Speaker 6: a half years, and now sales at twenty three times 144 00:06:30,520 --> 00:06:33,520 Speaker 6: earnings means that there's less upside. We think if the 145 00:06:33,560 --> 00:06:37,440 Speaker 6: market regresses to the normal valuation that you're more limited. 146 00:06:37,480 --> 00:06:39,799 Speaker 6: We think earning growth is very good. An interesting fact, 147 00:06:40,160 --> 00:06:42,839 Speaker 6: a hyper earnings growth twenty percent or more. Earnings growth 148 00:06:42,920 --> 00:06:46,640 Speaker 6: has generally not been an ideal market to make optimal returns, 149 00:06:46,720 --> 00:06:49,520 Speaker 6: usually zero to five percent, five to ten percent better 150 00:06:49,520 --> 00:06:51,560 Speaker 6: for stock market returns. So the fact that we have 151 00:06:51,600 --> 00:06:53,760 Speaker 6: great earning growth doesn't mean that you're gonna have great 152 00:06:53,760 --> 00:06:56,719 Speaker 6: stock market returns, especially going forward, because you've already gotten 153 00:06:56,920 --> 00:06:58,960 Speaker 6: a year's worth of returns in six months. 154 00:06:59,320 --> 00:07:01,560 Speaker 2: Gives name two that you like, right, now because it's 155 00:07:01,560 --> 00:07:03,560 Speaker 2: got to be hard to pick individual names given some 156 00:07:03,560 --> 00:07:04,480 Speaker 2: of the runs we've had. 157 00:07:04,360 --> 00:07:06,520 Speaker 3: But a lot of names have not participated. 158 00:07:06,680 --> 00:07:08,360 Speaker 6: Well, that's the thing, you know, there are certain parts 159 00:07:08,360 --> 00:07:10,120 Speaker 6: of the market that are very expensive. There are lots 160 00:07:10,160 --> 00:07:12,360 Speaker 6: of parts of the market that are very inexpensive. So 161 00:07:12,400 --> 00:07:14,600 Speaker 6: even though we think the market is originally priced, lots 162 00:07:14,640 --> 00:07:17,720 Speaker 6: of opportunities. We like healthcare companies like a Metronic or 163 00:07:17,720 --> 00:07:21,600 Speaker 6: a Thermo Fisher real attractive, we think, you know, also 164 00:07:21,680 --> 00:07:26,800 Speaker 6: consumer staples. You know, companies like Constellation brands pretty attractive. 165 00:07:27,080 --> 00:07:30,800 Speaker 6: Tyson Foods, which is a protein play, is doing quite well. 166 00:07:31,280 --> 00:07:34,120 Speaker 3: They're getting some protein free studio protein acting. 167 00:07:34,320 --> 00:07:37,800 Speaker 2: That's what the kids are doing. It's chicken, it's meat. 168 00:07:37,840 --> 00:07:39,520 Speaker 2: I mean, what are you guys talking about. Go ahead, 169 00:07:39,560 --> 00:07:40,480 Speaker 2: I know you've got to go there. 170 00:07:41,080 --> 00:07:43,920 Speaker 6: But basically with the GLP ones, yeah, people are not 171 00:07:44,040 --> 00:07:46,880 Speaker 6: eating as much of carbohydrates, but they do need more 172 00:07:46,920 --> 00:07:49,320 Speaker 6: and more protein. And the fact that you're having problems 173 00:07:49,360 --> 00:07:51,560 Speaker 6: with the beef market now means more people are going 174 00:07:51,600 --> 00:07:54,640 Speaker 6: to go to chicken. Tyson food benefits by any of that, 175 00:07:54,680 --> 00:07:56,880 Speaker 6: and it's selling it twelve times earnings, three and a 176 00:07:56,920 --> 00:07:58,680 Speaker 6: half percent yields so there are lots of things out 177 00:07:58,720 --> 00:08:00,920 Speaker 6: there that are good if you have a long time 178 00:08:00,960 --> 00:08:04,480 Speaker 6: horizon and you don't mind being in boring stocks. 179 00:08:05,040 --> 00:08:08,080 Speaker 5: So much of the enthusiasm is coming from the back 180 00:08:08,120 --> 00:08:10,720 Speaker 5: of strong corporate earnings. But do you think investors are 181 00:08:10,760 --> 00:08:14,360 Speaker 5: becoming a little bit complacent about the geopolitical risk coming 182 00:08:14,360 --> 00:08:15,200 Speaker 5: from the Middle East? 183 00:08:15,600 --> 00:08:16,080 Speaker 3: We think so. 184 00:08:16,320 --> 00:08:19,640 Speaker 6: You know, you still have the Iran conflict going on 185 00:08:19,720 --> 00:08:22,320 Speaker 6: in terms of they possibly a resolution, but you have 186 00:08:22,400 --> 00:08:25,760 Speaker 6: problems this weekend again with closing the straits. Yet stocks 187 00:08:25,760 --> 00:08:28,080 Speaker 6: are up sixteen percent in the last two months. There 188 00:08:28,080 --> 00:08:30,120 Speaker 6: are at a higher level than when the conflict started. 189 00:08:30,400 --> 00:08:32,360 Speaker 6: So we do think there is a lot of optimism 190 00:08:32,440 --> 00:08:35,640 Speaker 6: and people are ignoring the possible shortfalls. Again, that doesn't 191 00:08:35,640 --> 00:08:37,440 Speaker 6: mean we're bearish, but we do think that you're going 192 00:08:37,520 --> 00:08:39,400 Speaker 6: to be in a trading range. We would not chase 193 00:08:39,400 --> 00:08:41,800 Speaker 6: the market here. If the market were to pull back 194 00:08:41,840 --> 00:08:44,440 Speaker 6: five to ten percent, we'd start to buying on that dip. 195 00:08:44,720 --> 00:08:47,360 Speaker 6: If it goes up five percent, you'd want to look 196 00:08:47,360 --> 00:08:49,280 Speaker 6: at things that have done real well and take some problems. 197 00:08:49,679 --> 00:08:51,280 Speaker 2: David, I'm not going to call you old, but you've 198 00:08:51,320 --> 00:08:53,040 Speaker 2: been around the block once or twice, been. 199 00:08:52,960 --> 00:08:55,840 Speaker 5: Around experience, experience Veteran Alan. 200 00:08:55,640 --> 00:08:57,160 Speaker 3: Greenspan passed away this morning. 201 00:08:57,320 --> 00:09:00,280 Speaker 2: Impact on the markets in general to FED in particular, gular, 202 00:09:01,040 --> 00:09:03,040 Speaker 2: What are your thoughts as you think about the tenure 203 00:09:03,080 --> 00:09:04,640 Speaker 2: of Ellen green spinning FED. 204 00:09:04,720 --> 00:09:08,280 Speaker 6: He was an extraordinarily smart person, did very good things, 205 00:09:08,440 --> 00:09:11,400 Speaker 6: different time. He's not been involved, as you know, for 206 00:09:11,520 --> 00:09:13,080 Speaker 6: quite some time, so it's not going to affect the 207 00:09:13,120 --> 00:09:16,680 Speaker 6: markets now, but the markets should pay, you know, a 208 00:09:16,760 --> 00:09:18,880 Speaker 6: nice respect to him because he really did a good 209 00:09:18,920 --> 00:09:20,240 Speaker 6: job and was a really smart guy. 210 00:09:20,440 --> 00:09:22,600 Speaker 2: Absolutely, all right, Dave, thank you so much for joining us. 211 00:09:22,640 --> 00:09:27,120 Speaker 2: David Catz, President and Chief investment Officer Matrix Asset Advisors. 212 00:09:26,840 --> 00:09:29,920 Speaker 3: Stay with us. More from Bloomberg Surveillance coming up after this. 213 00:09:38,840 --> 00:09:42,439 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 214 00:09:42,480 --> 00:09:45,640 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 215 00:09:45,720 --> 00:09:49,400 Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or 216 00:09:49,559 --> 00:09:51,040 Speaker 1: watch us live on YouTube. 217 00:09:51,240 --> 00:09:53,959 Speaker 2: John mclithwait joins us here, editor in chief of Bloomberg News. 218 00:09:54,080 --> 00:09:57,160 Speaker 2: He is in our London office at the moment. John, 219 00:09:57,200 --> 00:09:59,880 Speaker 2: talk to us about your thoughts here on Alan Greenspan, 220 00:10:00,160 --> 00:10:04,360 Speaker 2: such an extraordinary career, spending so many years, so many 221 00:10:04,440 --> 00:10:08,560 Speaker 2: presidencies and reshaping kind of the Federal Reserve. Love to 222 00:10:08,559 --> 00:10:11,360 Speaker 2: get your thoughts on mister green and his passing. 223 00:10:13,040 --> 00:10:15,800 Speaker 7: Well, first, obviously it's a sad day in that respect. 224 00:10:16,920 --> 00:10:18,880 Speaker 7: I think he, you know, Greenspan was one of the 225 00:10:18,880 --> 00:10:25,720 Speaker 7: great central bankers a multiple different levels. Really very very intelligent, 226 00:10:27,720 --> 00:10:30,800 Speaker 7: also kind of very cryptic in terms of the way 227 00:10:30,840 --> 00:10:34,560 Speaker 7: he often communicated to people. But I think he also 228 00:10:34,600 --> 00:10:38,439 Speaker 7: had this very long sort of intellectual history, goes back 229 00:10:38,480 --> 00:10:40,800 Speaker 7: all the way to the fact that he was involved 230 00:10:41,000 --> 00:10:44,160 Speaker 7: with him Anne Rand and stuff like that. He went 231 00:10:44,200 --> 00:10:48,839 Speaker 7: through different kind of intellectual fashions and on the whole 232 00:10:48,920 --> 00:10:51,080 Speaker 7: he ran the economy pretty well. There will always be 233 00:10:51,080 --> 00:10:54,960 Speaker 7: people who question, you know, how much his loosening set 234 00:10:55,040 --> 00:10:57,679 Speaker 7: up the kind of financial crisis, but you know, there 235 00:10:57,720 --> 00:10:59,920 Speaker 7: were other factors at work there as well. It wasn't 236 00:11:00,120 --> 00:11:03,640 Speaker 7: just him. So I think he will he goes as 237 00:11:03,679 --> 00:11:05,160 Speaker 7: a giant of central banking. 238 00:11:06,800 --> 00:11:08,840 Speaker 5: What do you think is the biggest legacy that he 239 00:11:09,320 --> 00:11:12,000 Speaker 5: left us with, especially now as the Federal Reserve and 240 00:11:12,120 --> 00:11:16,200 Speaker 5: questions about it independence continue to hound markets and investors. 241 00:11:17,920 --> 00:11:21,720 Speaker 7: That's a good point. I think he was a very 242 00:11:21,760 --> 00:11:26,640 Speaker 7: strong advocate of Central Bank independence. I mean, sometimes you 243 00:11:27,160 --> 00:11:31,600 Speaker 7: forget these things that you forget how different the world 244 00:11:31,800 --> 00:11:34,680 Speaker 7: was at one time. But the fact that you ended 245 00:11:34,720 --> 00:11:38,560 Speaker 7: up with Paul Volka, Alan Greenspan, obviously people like Ben 246 00:11:38,600 --> 00:11:44,880 Speaker 7: Bananke afterwards. The whole presumption of what they did was 247 00:11:44,960 --> 00:11:49,000 Speaker 7: that the Federal Reserve should be separate and independent. In 248 00:11:49,040 --> 00:11:51,120 Speaker 7: places like Britain where I am at the moment, you know, 249 00:11:51,160 --> 00:11:54,960 Speaker 7: that was also a more recent things. It's this is 250 00:11:55,040 --> 00:11:58,800 Speaker 7: not something that has always been there. It's a kind 251 00:11:58,840 --> 00:12:01,920 Speaker 7: of reputation has to be built. And it's interesting the 252 00:12:01,920 --> 00:12:04,760 Speaker 7: way that Jay Powell has managed to sort of defend that, 253 00:12:04,880 --> 00:12:09,960 Speaker 7: I think actually relatively successfully against Donald Trump's attempts to 254 00:12:11,320 --> 00:12:13,000 Speaker 7: sort of intervene in that area. 255 00:12:13,679 --> 00:12:16,160 Speaker 2: John, like the switch gears here a little bit and 256 00:12:16,160 --> 00:12:18,920 Speaker 2: focus a little bit on what's happening where you are 257 00:12:19,000 --> 00:12:21,320 Speaker 2: right now in Great Britain. Here Starmer said he would 258 00:12:21,320 --> 00:12:23,720 Speaker 2: step down in Britain's Prime Minister, paving the way for 259 00:12:23,800 --> 00:12:25,040 Speaker 2: Anny Burnham. 260 00:12:24,640 --> 00:12:26,520 Speaker 3: To succeed him. John, I'll al for you to just 261 00:12:26,520 --> 00:12:27,839 Speaker 3: give us a little perspective here. 262 00:12:27,920 --> 00:12:31,120 Speaker 2: It was just two years ago that mister Starmer won 263 00:12:31,160 --> 00:12:33,680 Speaker 2: the office seemingly with some pretty broad support. 264 00:12:34,200 --> 00:12:36,439 Speaker 3: What happened in the past two years. 265 00:12:37,840 --> 00:12:39,800 Speaker 7: Well. The interesting thing is that people like me always 266 00:12:39,880 --> 00:12:42,960 Speaker 7: used to be rude about the Italians for their degree 267 00:12:43,000 --> 00:12:46,120 Speaker 7: of political volatility. But what seems to have happened is 268 00:12:46,160 --> 00:12:49,560 Speaker 7: that England Britain has become more like Italy, and Italy 269 00:12:49,640 --> 00:12:53,120 Speaker 7: has become more like Britain, with Georgia Maloney now holding 270 00:12:53,200 --> 00:12:57,679 Speaker 7: on to power quite solidly. I think when you look 271 00:12:57,720 --> 00:13:02,240 Speaker 7: at Starmer, a lot of people, me included, thought that 272 00:13:02,360 --> 00:13:06,319 Speaker 7: he knew exactly what to do. You know, he came in, 273 00:13:06,880 --> 00:13:10,679 Speaker 7: it seemed, with a very efficient campaign. He seemed to 274 00:13:10,679 --> 00:13:14,120 Speaker 7: be heading towards being a kind of Blair Part two. 275 00:13:15,520 --> 00:13:18,560 Speaker 7: He seemed to be friendly to business, especially with his 276 00:13:19,320 --> 00:13:24,160 Speaker 7: Chancellor Rachel Reeves. And really I think it shows two things. 277 00:13:24,280 --> 00:13:26,880 Speaker 7: One is that Britain is much harder to govern than 278 00:13:26,880 --> 00:13:32,400 Speaker 7: it was before Brexit, certainly, and secondly that you know, 279 00:13:32,920 --> 00:13:35,560 Speaker 7: but it wasn't just that. I think he just didn't 280 00:13:35,640 --> 00:13:39,160 Speaker 7: come in with an idea about what exactly he was 281 00:13:39,200 --> 00:13:42,599 Speaker 7: going to do. He was quite sure footed overseas in 282 00:13:42,720 --> 00:13:45,000 Speaker 7: terms of foreign policy. I think he handled Donald Trump 283 00:13:45,080 --> 00:13:48,600 Speaker 7: on the whole relatively well. Although Trump made a predictably 284 00:13:48,679 --> 00:13:52,040 Speaker 7: catty comment about him yesterday. But on the whole he 285 00:13:52,080 --> 00:13:55,040 Speaker 7: did that quite well. But at home he always seemed 286 00:13:55,040 --> 00:13:58,319 Speaker 7: at see. He got into trouble almost immediately with a 287 00:13:58,640 --> 00:14:01,240 Speaker 7: silly thing to do with kind of c expenses. He 288 00:14:01,320 --> 00:14:05,840 Speaker 7: then did this thing to do with pensioners and the 289 00:14:05,880 --> 00:14:09,400 Speaker 7: winter fuel pavement, which sounds like something rather archaic but 290 00:14:09,480 --> 00:14:12,800 Speaker 7: effectively as a way to help people keep warmer in 291 00:14:12,840 --> 00:14:15,960 Speaker 7: the winter. That kind of blew up. But on the 292 00:14:15,960 --> 00:14:20,080 Speaker 7: other hand they hit him, and especially Rachel Reeves really 293 00:14:20,120 --> 00:14:23,600 Speaker 7: did quite a lot of damage to the idea that 294 00:14:23,720 --> 00:14:26,640 Speaker 7: this new version of a labor party was something to 295 00:14:26,640 --> 00:14:29,440 Speaker 7: could get on with business. So he ended up losing 296 00:14:29,480 --> 00:14:32,720 Speaker 7: on both sides, and suddenly in between this he started 297 00:14:32,760 --> 00:14:37,560 Speaker 7: being kind of outsmarted by his own MPs. Normally, when 298 00:14:37,600 --> 00:14:40,640 Speaker 7: you come in with a massive majority, you know that 299 00:14:40,640 --> 00:14:43,720 Speaker 7: should be a sign of strength. But in a strange way, 300 00:14:43,800 --> 00:14:48,400 Speaker 7: that that sheer number gave people room to rebel when 301 00:14:48,440 --> 00:14:50,920 Speaker 7: they wanted to, and that made it very difficult. So yes, 302 00:14:50,960 --> 00:14:54,000 Speaker 7: it does show that Britain is very hard to govern, 303 00:14:54,480 --> 00:14:56,760 Speaker 7: but I think most people would admit that Starmer didn't 304 00:14:56,800 --> 00:14:59,960 Speaker 7: make He certainly didn't govern as well as he can. 305 00:15:00,040 --> 00:15:01,920 Speaker 7: Campaign to become prime Minister. 306 00:15:02,560 --> 00:15:05,280 Speaker 5: And do you think that Andy Burnham will he be 307 00:15:05,400 --> 00:15:08,520 Speaker 5: seen as a continuity candidate or a change candidate. I'm 308 00:15:08,560 --> 00:15:10,520 Speaker 5: just thinking of what the biggest policy difference is we 309 00:15:10,560 --> 00:15:13,640 Speaker 5: could see under a potentially Burnham premiership. 310 00:15:14,840 --> 00:15:18,200 Speaker 7: That's a really good question. The answer is, we don't know. 311 00:15:18,960 --> 00:15:23,960 Speaker 7: He's emerging with something that you people talk about Manchester Manchsterism, 312 00:15:24,080 --> 00:15:27,840 Speaker 7: and it's a bit like an American governor coming in 313 00:15:27,960 --> 00:15:31,080 Speaker 7: to be coming into the White House where people tried 314 00:15:31,160 --> 00:15:33,720 Speaker 7: desperately to work out, you know, what they did in 315 00:15:33,760 --> 00:15:37,200 Speaker 7: Texas or what they did in California, and then trying 316 00:15:37,240 --> 00:15:38,920 Speaker 7: to work out how they could apply that to the 317 00:15:38,960 --> 00:15:43,000 Speaker 7: federal government. With one massive difference is that you know 318 00:15:43,040 --> 00:15:45,800 Speaker 7: that when you become president you have to go through 319 00:15:45,800 --> 00:15:48,720 Speaker 7: lots of campaigns and things. In this case, kind of 320 00:15:48,880 --> 00:15:51,560 Speaker 7: the basic starting point is Andy Burnham has been a 321 00:15:51,600 --> 00:15:54,960 Speaker 7: successful mayor of Manchester. It's quite a long career in 322 00:15:55,000 --> 00:15:59,840 Speaker 7: the Labor Party, and he's enormously more popular than Kirstar, 323 00:16:00,120 --> 00:16:02,120 Speaker 7: so let's give him a go. But nobody, as you 324 00:16:02,200 --> 00:16:06,560 Speaker 7: point it out, really knows exactly what he thinks. To 325 00:16:06,640 --> 00:16:09,520 Speaker 7: the left, he's saying, look, I want to take people 326 00:16:09,600 --> 00:16:11,960 Speaker 7: talk about the way he sort of nationalized the buses 327 00:16:12,840 --> 00:16:16,600 Speaker 7: in Manchester to the right. When people talk at Mansterism, 328 00:16:16,600 --> 00:16:18,840 Speaker 7: it's really about quite a lot, doing quite a lot 329 00:16:18,880 --> 00:16:22,560 Speaker 7: of things with business and working out how to kind 330 00:16:22,600 --> 00:16:24,720 Speaker 7: of boost growth in that way, and that again has 331 00:16:24,760 --> 00:16:27,480 Speaker 7: been something that Starmer has not been good at. So 332 00:16:27,800 --> 00:16:30,680 Speaker 7: at the moment he is a kind of blank slate 333 00:16:31,360 --> 00:16:34,880 Speaker 7: which works brilliantly if you're running to be something, because 334 00:16:34,920 --> 00:16:39,040 Speaker 7: everyone can paint their hopes, dreams, fantasies on you and 335 00:16:39,080 --> 00:16:40,760 Speaker 7: think that you're going to be all these things at 336 00:16:40,760 --> 00:16:44,080 Speaker 7: the same time. But at this precise moment he really 337 00:16:44,120 --> 00:16:47,840 Speaker 7: needs as a plan and a direction and then to 338 00:16:47,840 --> 00:16:50,000 Speaker 7: say look, we're going in this way, and he really 339 00:16:50,040 --> 00:16:52,920 Speaker 7: needs to bring the kind of parliamentary party behind him. 340 00:16:53,360 --> 00:16:54,160 Speaker 3: John, thank you so much. 341 00:16:54,200 --> 00:16:56,400 Speaker 2: We really appreciate getting your thoughts here and your perspective. 342 00:16:56,480 --> 00:16:58,480 Speaker 2: John mcadd wait. He is the editor in chief of 343 00:16:58,520 --> 00:17:02,920 Speaker 2: Bloomberg News. He is in Bloomberg's London headquarters at Queen 344 00:17:03,040 --> 00:17:06,040 Speaker 2: Victoria Street there giving us some thoughts on the passing 345 00:17:06,040 --> 00:17:10,960 Speaker 2: of Alan Greenspan one hundred what a nice life there 346 00:17:11,000 --> 00:17:13,200 Speaker 2: of full life, and then as well as the latest 347 00:17:13,240 --> 00:17:14,359 Speaker 2: on the changes. 348 00:17:14,520 --> 00:17:17,600 Speaker 3: In Stay with us more from Bloomberg Surveillance coming up 349 00:17:17,960 --> 00:17:18,399 Speaker 3: after this. 350 00:17:27,320 --> 00:17:30,920 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live 351 00:17:30,960 --> 00:17:34,119 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 352 00:17:34,200 --> 00:17:37,600 Speaker 1: Apple Karplay and Android Auto with the Bloomberg Business app, 353 00:17:37,800 --> 00:17:39,439 Speaker 1: or watch us Live on YouTube. 354 00:17:39,640 --> 00:17:41,080 Speaker 2: Come back to these markets. We do that with a 355 00:17:41,560 --> 00:17:44,119 Speaker 2: somebody does this stuff for a living. Molly Parni, partner 356 00:17:44,160 --> 00:17:47,399 Speaker 2: and president at Jackman Asset Management. She's a graduate of 357 00:17:47,520 --> 00:17:50,360 Speaker 2: Williman Mary University. I was just on the campus. 358 00:17:50,160 --> 00:17:52,840 Speaker 3: Of Wayman Mary a couple weeks ago. Beautiful as ever 359 00:17:52,920 --> 00:17:56,480 Speaker 3: down there in Williamsburg. It's a great place to visit. Molly. 360 00:17:56,560 --> 00:17:57,960 Speaker 3: Let's talk about these markets here. 361 00:17:58,359 --> 00:18:00,800 Speaker 2: You throw a lot of a black swam in the 362 00:18:00,840 --> 00:18:04,040 Speaker 2: form of an Iranian war, you throw all kinds of 363 00:18:04,080 --> 00:18:08,480 Speaker 2: geopolitical unrest at there, but corporate America continues to come 364 00:18:08,560 --> 00:18:10,760 Speaker 2: through with very strong earnings. 365 00:18:10,880 --> 00:18:11,880 Speaker 3: Is it as simple as that? 366 00:18:13,480 --> 00:18:18,359 Speaker 8: It sounds simple, doesn't It's it's unbelievable. But you know, 367 00:18:18,480 --> 00:18:20,880 Speaker 8: these things can go up into the right for quite 368 00:18:20,920 --> 00:18:25,120 Speaker 8: some time until until they don't. And we've all, i mean, 369 00:18:25,119 --> 00:18:30,000 Speaker 8: we've invested through the dot com, the telecom boom, and 370 00:18:30,080 --> 00:18:33,040 Speaker 8: bust all of what we saw through the Actually, it's 371 00:18:33,080 --> 00:18:36,600 Speaker 8: interesting that the S and P two thousand to twenty 372 00:18:36,680 --> 00:18:37,800 Speaker 8: ten was flat. 373 00:18:38,200 --> 00:18:40,560 Speaker 9: It was like it was flat because they pulled forward. 374 00:18:40,400 --> 00:18:42,760 Speaker 8: All the returns in the dot com bubble, and it 375 00:18:42,800 --> 00:18:45,480 Speaker 8: took that long for the market to actually move up again. 376 00:18:45,480 --> 00:18:48,000 Speaker 8: It's just we haven't seen that in a very long time. 377 00:18:48,280 --> 00:18:52,359 Speaker 8: We've instead seen mid twenties returns every year, seems like 378 00:18:52,560 --> 00:18:53,760 Speaker 8: for several years. 379 00:18:54,680 --> 00:18:57,679 Speaker 5: What about memory cycle? Your notes lean heavily on that. 380 00:18:57,720 --> 00:19:01,159 Speaker 5: Do you think AI has permanently changed memory cycle or 381 00:19:01,280 --> 00:19:05,600 Speaker 5: our investors still underestimating the risk of yet again another downturn. 382 00:19:06,480 --> 00:19:07,679 Speaker 9: Yeah, it's a great question. 383 00:19:07,960 --> 00:19:12,240 Speaker 8: We have a pretty substantial position in Samsung, which we think, 384 00:19:12,560 --> 00:19:14,280 Speaker 8: like we like to do at Yakman, we like to 385 00:19:14,320 --> 00:19:18,120 Speaker 8: get exposure without paying for it. We focus very much 386 00:19:18,200 --> 00:19:20,640 Speaker 8: on the price that we pay for investments, and here 387 00:19:20,680 --> 00:19:25,440 Speaker 8: we get to participate in AI without having to pay 388 00:19:25,440 --> 00:19:27,240 Speaker 8: the multiples that we're seeing in some of the other 389 00:19:27,359 --> 00:19:28,600 Speaker 8: memory players. 390 00:19:28,800 --> 00:19:29,800 Speaker 9: We're actually looking at. 391 00:19:29,880 --> 00:19:32,480 Speaker 8: You can you can invest in Samsung and in three 392 00:19:32,560 --> 00:19:36,760 Speaker 8: years of their forecast you will you'll make the market cap. 393 00:19:36,960 --> 00:19:39,960 Speaker 8: So so there is there is risk and memory it's 394 00:19:40,040 --> 00:19:43,320 Speaker 8: historically been a very cyclical industry boom bus cycles, et cetera, 395 00:19:43,359 --> 00:19:46,960 Speaker 8: et cetera. Uh, until until this giant tail wind came along. 396 00:19:47,480 --> 00:19:51,800 Speaker 8: And uh and it's driving all kinds of purchases price. 397 00:19:51,840 --> 00:19:54,640 Speaker 8: I mean they're taking price there. Uh, I mean they're 398 00:19:54,680 --> 00:19:57,880 Speaker 8: they're big booking out capacity. They're we're hearing things that 399 00:19:58,240 --> 00:20:02,920 Speaker 8: some some customers are even helping to fund capacity build out. 400 00:20:03,000 --> 00:20:05,320 Speaker 8: So it's it's quite a big deal. We didn't see 401 00:20:05,320 --> 00:20:09,200 Speaker 8: that in our thesis. We actually invested in Samsung and 402 00:20:09,560 --> 00:20:12,119 Speaker 8: at the size when we thought it was just a good, 403 00:20:12,720 --> 00:20:16,359 Speaker 8: really inexpensive memory player, and then this giant tailwind shows up, 404 00:20:16,400 --> 00:20:18,560 Speaker 8: turns out to be one of the bottlenecks and all 405 00:20:18,600 --> 00:20:20,920 Speaker 8: the AI build out and it's a really nice place 406 00:20:20,960 --> 00:20:21,119 Speaker 8: to be. 407 00:20:22,280 --> 00:20:25,399 Speaker 2: So how do you think about value when when you 408 00:20:25,400 --> 00:20:26,600 Speaker 2: look at an individual name? 409 00:20:26,640 --> 00:20:28,800 Speaker 3: Is it relative to the peer group? It's a relative 410 00:20:28,840 --> 00:20:31,480 Speaker 3: to the earnings you guys forecast. 411 00:20:31,480 --> 00:20:33,359 Speaker 2: How do you guys think about values when you think 412 00:20:33,359 --> 00:20:34,440 Speaker 2: about entering into a name. 413 00:20:35,440 --> 00:20:38,600 Speaker 8: Yeah, well we have we have a really interesting well 414 00:20:39,000 --> 00:20:41,120 Speaker 8: it feels like a lost art because we're actually looking 415 00:20:41,160 --> 00:20:43,800 Speaker 8: at the business itself. We're looking for what kind of 416 00:20:43,840 --> 00:20:47,080 Speaker 8: free cash flow does a company generate, and we look 417 00:20:47,160 --> 00:20:49,680 Speaker 8: back a very long period of time to be able 418 00:20:49,720 --> 00:20:52,280 Speaker 8: to tell how does it behave in different market cycles 419 00:20:52,560 --> 00:20:55,320 Speaker 8: and in different kind of economic environments. And so we've 420 00:20:55,359 --> 00:20:58,040 Speaker 8: got we've got a portfolio built with companies that we 421 00:20:58,200 --> 00:21:01,040 Speaker 8: own and we're and we're the kind of of we're 422 00:21:01,040 --> 00:21:04,760 Speaker 8: thinking as an owner when we make these investments. So 423 00:21:04,800 --> 00:21:06,720 Speaker 8: for Samsung, when we're looking at a three to four 424 00:21:06,720 --> 00:21:10,040 Speaker 8: times kind of payback on the total market cap, that's 425 00:21:10,040 --> 00:21:12,600 Speaker 8: the kind of bargains that we're looking for in the 426 00:21:12,680 --> 00:21:14,280 Speaker 8: very best names in our portfolio. 427 00:21:14,560 --> 00:21:15,680 Speaker 9: But it's always looking. 428 00:21:15,440 --> 00:21:19,240 Speaker 8: At forward forward rates of return, the free cash flow 429 00:21:19,280 --> 00:21:21,879 Speaker 8: that these companies can generate, and how much risk we 430 00:21:21,960 --> 00:21:24,040 Speaker 8: have to take to make some of these investments. 431 00:21:24,119 --> 00:21:25,919 Speaker 9: You can think about like a triple A bond. 432 00:21:26,520 --> 00:21:28,800 Speaker 8: You have very little risk in a triple A bond, 433 00:21:28,920 --> 00:21:31,399 Speaker 8: so you actually get paid less, right, But at the 434 00:21:31,400 --> 00:21:34,440 Speaker 8: same time, if you have a riskier investment, you ought 435 00:21:34,480 --> 00:21:36,480 Speaker 8: to be paid more in for a great return to 436 00:21:36,520 --> 00:21:39,159 Speaker 8: be compensating for that risk. And it's that some of 437 00:21:39,160 --> 00:21:42,160 Speaker 8: how we've generated our returns through some pretty tough tough 438 00:21:42,160 --> 00:21:44,679 Speaker 8: cycles over their thirty year history of Yakman. 439 00:21:45,359 --> 00:21:48,800 Speaker 5: How are you thinking about diversification within equities and even 440 00:21:49,040 --> 00:21:52,080 Speaker 5: across that within the fixed income market, because it seems 441 00:21:52,080 --> 00:21:54,199 Speaker 5: like it's getting harder and harder to diversify. 442 00:21:55,560 --> 00:21:57,560 Speaker 8: Yeah, it's a pretty, it's a pretty. There's a lot 443 00:21:57,600 --> 00:21:59,800 Speaker 8: of crowded trades out there, for sure. 444 00:21:59,800 --> 00:22:01,720 Speaker 9: Actually we don't. We're actually generalists. 445 00:22:01,720 --> 00:22:05,120 Speaker 8: We approach investing like we own the business and uh, 446 00:22:05,160 --> 00:22:07,600 Speaker 8: and so we have a variety of different companies across 447 00:22:07,640 --> 00:22:11,080 Speaker 8: different industries, and we actually are quite comfortable taking some 448 00:22:11,200 --> 00:22:15,919 Speaker 8: outsized investments in companies that we believe strongly in. So 449 00:22:15,960 --> 00:22:17,959 Speaker 8: you'll see names in our portfolio that are that are 450 00:22:18,000 --> 00:22:20,840 Speaker 8: much larger than the rest because we're looking we see 451 00:22:20,920 --> 00:22:24,919 Speaker 8: just a sort of an outsized opportunity in those in 452 00:22:24,960 --> 00:22:26,120 Speaker 8: those investment pieces. 453 00:22:26,359 --> 00:22:29,119 Speaker 2: All right, Samsung, the high tech, I get that. How 454 00:22:29,119 --> 00:22:32,639 Speaker 2: about U Haul that seems low tech, but give us 455 00:22:32,640 --> 00:22:33,320 Speaker 2: that story. 456 00:22:34,280 --> 00:22:36,040 Speaker 9: Yeah, it's pretty, it's pretty low tech. 457 00:22:36,520 --> 00:22:38,040 Speaker 8: I don't know if you've ever rent to the U 458 00:22:38,040 --> 00:22:40,800 Speaker 8: haul and took it on the road, but it's uh, 459 00:22:40,840 --> 00:22:42,760 Speaker 8: we love it because every time we see a U 460 00:22:42,760 --> 00:22:47,520 Speaker 8: haul drip truck driving around, it's advertising the company and uh, 461 00:22:47,600 --> 00:22:51,720 Speaker 8: you know, it's it's like Kleenex. Right, These trucks are ubiquitous. 462 00:22:51,840 --> 00:22:55,879 Speaker 8: They've got like this gigantic network, you know, of different 463 00:22:55,920 --> 00:22:58,840 Speaker 8: offices all over the country. And then they started building 464 00:22:58,840 --> 00:23:01,840 Speaker 8: into the self storage business. And the self storage business 465 00:23:02,000 --> 00:23:03,480 Speaker 8: is one where you have to put in a lot 466 00:23:03,480 --> 00:23:06,879 Speaker 8: of capital up front, the units are not least and 467 00:23:06,920 --> 00:23:08,840 Speaker 8: so you've got this sort of j curve effect as 468 00:23:08,880 --> 00:23:11,520 Speaker 8: you get into the self storage business. But slowly but 469 00:23:11,600 --> 00:23:13,880 Speaker 8: surely they've been using the cash flows from the truck 470 00:23:13,920 --> 00:23:17,040 Speaker 8: business to build out what's what's one of the leading 471 00:23:17,320 --> 00:23:21,960 Speaker 8: self storage UH properties in the country. Right, they're not 472 00:23:22,440 --> 00:23:25,320 Speaker 8: they're not very good at breaking out their product lines, 473 00:23:25,720 --> 00:23:28,480 Speaker 8: the lines of business, kinds of accounting. So it's actually 474 00:23:28,600 --> 00:23:31,119 Speaker 8: takes a bit of work to really understand the trucking 475 00:23:31,160 --> 00:23:34,080 Speaker 8: business versus self storage. But based on a recent there's 476 00:23:34,119 --> 00:23:37,360 Speaker 8: a there was a recent UH self storage company UH 477 00:23:37,880 --> 00:23:39,200 Speaker 8: basically the number five in the market. 478 00:23:39,240 --> 00:23:42,080 Speaker 9: If you apply those kinds of metrics, you get the truck. 479 00:23:41,840 --> 00:23:45,480 Speaker 8: Business for free, because it's it's very it's a very 480 00:23:45,520 --> 00:23:47,760 Speaker 8: it's a great business and very much kind of owner 481 00:23:47,840 --> 00:23:51,560 Speaker 8: occupied because the family owns and controls a huge portion 482 00:23:51,640 --> 00:23:52,320 Speaker 8: of the company. 483 00:23:52,600 --> 00:23:54,960 Speaker 3: Got it, Molly, thanks so much for joining us. Always 484 00:23:54,960 --> 00:23:55,840 Speaker 3: fascinating discussion. 485 00:23:55,880 --> 00:23:59,360 Speaker 2: Molly Peroni, partner and president of Yachtsman Asset Management. 486 00:23:59,600 --> 00:24:04,439 Speaker 1: This is the Bloomberg Surveillance Podcast, available on apples, Spotify, 487 00:24:04,560 --> 00:24:08,840 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 488 00:24:08,960 --> 00:24:12,399 Speaker 1: seven to ten am Eastern on Bloomberg dot com, the 489 00:24:12,520 --> 00:24:16,520 Speaker 1: iHeartRadio app tune In, and the Bloomberg Business app. You 490 00:24:16,560 --> 00:24:19,919 Speaker 1: can also watch us live every weekday on YouTube and 491 00:24:20,119 --> 00:24:21,880 Speaker 1: always on the Bloomberg terminal