WEBVTT - Surveillance: No Recession Anytime Soon, Doll Says 0:00:09.880 --> 0:00:13.800 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane Jay Lee. 0:00:13.960 --> 0:00:17.560 We bring you insight from the best in economics, finance, investment, 0:00:18.000 --> 0:00:23.520 and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, 0:00:23.600 --> 0:00:28.560 Bloomberg dot Com, and of course on the Bloomberg Pop 0:00:28.640 --> 0:00:30.600 to All is with us. New beIN asset management chief 0:00:30.800 --> 0:00:34.080 Equity Strategistic joins us on the phone. Good morning to Bob. Morning. 0:00:34.800 --> 0:00:37.480 Is it a question of five or fifty a month? 0:00:37.560 --> 0:00:40.360 And Bob, I don't think so. We're gonna need to 0:00:40.400 --> 0:00:42.640 see a lot of weakness to get the fifty back 0:00:42.720 --> 0:00:45.559 on the table. I think the job's number at the 0:00:45.560 --> 0:00:48.159 beginning of the months told us, you know, the economy 0:00:48.240 --> 0:00:51.800 is fine. Um, so I think it's twenty five, and 0:00:51.840 --> 0:00:55.480 the debate should be what happens thereafter. The chairman was 0:00:55.520 --> 0:00:58.320 asked directly about that job's report on whether it changes 0:00:58.360 --> 0:01:01.480 anything for you him, and he answered quite directly to 0:01:01.640 --> 0:01:05.480 Bob that it changes absolutely nothing. The strike that is no. 0:01:06.000 --> 0:01:07.440 I think if you came into this a way that 0:01:07.480 --> 0:01:09.880 the chairman was uncomfortable with the outlook, and ask yourself 0:01:09.880 --> 0:01:12.160 whether the risks around the outlook of diminished in the 0:01:12.200 --> 0:01:16.160 last couple of weeks. The answer to that very simple question, Bob, 0:01:16.200 --> 0:01:19.679 was no. In yesterday's testimony, do you have any outstanding 0:01:19.760 --> 0:01:23.200 questions today? No, I I agree with what you said 0:01:23.240 --> 0:01:26.319 a few minutes ago. Day two is more more of beyond. Look, 0:01:26.440 --> 0:01:29.720 there's the inside the US. Things are going really well. 0:01:29.760 --> 0:01:34.399 The problems are a bit with manufacturing and trade and 0:01:34.440 --> 0:01:37.000 all this associated with that, and so we're you know, 0:01:37.600 --> 0:01:40.759 when you expect an economy to grow about two there's 0:01:40.800 --> 0:01:43.240 always some puts and takes. Last year, remember we grew 0:01:43.319 --> 0:01:46.080 three percent, so it was mostly good news. Now it's 0:01:46.120 --> 0:01:48.080 a little bit more mixed, and we're starting to see 0:01:48.080 --> 0:01:51.800 that with corporate re releases for second quarter earnings. There 0:01:51.800 --> 0:01:54.760 are more problems than been the last few quarters. In 0:01:54.800 --> 0:01:58.640 the pre releases, notably, they've come again more on the manufacturing, 0:01:58.720 --> 0:02:02.520 the trade side, The consumers scenes fine, and financial somewhere 0:02:02.560 --> 0:02:04.920 in the middle. Bob, good morning. You know, making jokes 0:02:04.920 --> 0:02:07.160 about being all cash and finally getting into the market, 0:02:07.160 --> 0:02:10.400 But what is your conviction on a higher equity prices 0:02:10.480 --> 0:02:13.440 from here? So this is the way I hedge it, Tom. 0:02:13.520 --> 0:02:17.240 I think the path of least resistance is still up Comma. 0:02:17.560 --> 0:02:21.079 But to think that central banks are gonna bail us 0:02:21.200 --> 0:02:24.680 out if in fact, earnings growth is going to be 0:02:24.919 --> 0:02:28.560 more flattish, I think is a tall order, So I'm 0:02:28.680 --> 0:02:32.639 I'm a bit more cautious. I wouldn't chase them, recognizing 0:02:32.680 --> 0:02:34.200 the more time to talk out the other side of 0:02:34.200 --> 0:02:36.600 my mouth path to least's resistance still up. Look, if 0:02:36.600 --> 0:02:38.280 you've got a ton of cash, you shouldn't have a 0:02:38.280 --> 0:02:41.280 ton of cash because the economy is okay, and therefore 0:02:41.360 --> 0:02:45.000 earnings are reasonably okay. I don't see big downside, but 0:02:45.040 --> 0:02:47.280 I don't see big upside. Are predictions coming too? The 0:02:47.320 --> 0:02:51.400 year were choppy and frustrating, but no recession now, to 0:02:51.440 --> 0:02:54.800 be self critical, it's better been better than choppy and frustrating, 0:02:54.840 --> 0:02:57.680 no question about it. And I don't see recession anytime soon. 0:02:57.919 --> 0:02:59.880 But what do you do with a defensive call, and 0:03:00.240 --> 0:03:03.200 I've got a one way flight or everybody's piling into 0:03:03.200 --> 0:03:06.639 defenses in the equity market that all my radars up 0:03:06.680 --> 0:03:10.680 on that, Well, okay, there there's where I'll be a contrarian. 0:03:11.200 --> 0:03:15.600 I think to trim the defensive I'm gonna call him 0:03:15.600 --> 0:03:21.960 expensive um doesn't need Ernie's growth. Um at the expense 0:03:22.080 --> 0:03:24.320 of buying some things with a little bit of hair 0:03:24.400 --> 0:03:26.800 on it. Call it the soft cyclicals. You don't have 0:03:26.840 --> 0:03:29.680 to go to the deep metal benders. We need big 0:03:29.760 --> 0:03:32.240 commodity price increases. But you there are a lot of 0:03:32.240 --> 0:03:35.440 consumer cyclicals, are a lot of cyclicals. I think you're fine. 0:03:35.640 --> 0:03:38.160 John Farrell wants to talk about the techli cyclicals with 0:03:38.200 --> 0:03:41.320 a little hair on them. What are you trying to say? 0:03:41.520 --> 0:03:48.960 What are you trying to say? So, Okay, let's let's 0:03:48.960 --> 0:03:53.360 say value cyclicals versus high P cyclicals. Like like Cisco 0:03:53.480 --> 0:03:56.320 Systems has been a good stock, there's more to go low. 0:03:56.440 --> 0:04:01.640 It's still relatively low expectsions expectations stock. Compare that to 0:04:01.720 --> 0:04:04.440 some of the stocks that have gone through the moon, 0:04:04.640 --> 0:04:07.200 and maybe their fundamentals have been really great. But I'd 0:04:07.320 --> 0:04:11.120 rather get that risk reward right rather than paying anything 0:04:11.200 --> 0:04:13.320 for good news. Chuck Robbins entertain we've done a great 0:04:13.400 --> 0:04:15.720 job over at Cisco over the last few years, Bob, 0:04:15.720 --> 0:04:17.240 and I don't think you're along with that. Coll just 0:04:17.320 --> 0:04:20.360 more broadly, even the team put out a note at 0:04:20.360 --> 0:04:22.000 the start of the year and it's ten predictions for 0:04:22.000 --> 0:04:23.760 the year ahead, and then you don't just bury it 0:04:23.920 --> 0:04:25.680 for the next twelve months and forget about it. You 0:04:25.760 --> 0:04:29.080 revisit it six months later, and you're revisiting it now. 0:04:29.520 --> 0:04:31.279 Out of the ten things you're predicted at the start 0:04:31.320 --> 0:04:34.400 of this year, Bob, what's been the most difficult to 0:04:34.480 --> 0:04:37.680 get right? To get visibility on sector? Call has been 0:04:37.720 --> 0:04:41.080 our most difficult. We thought, let me pick on our 0:04:41.440 --> 0:04:46.200 things we've gotten wrong. We thought intrasensitive defensive stocks would 0:04:46.320 --> 0:04:49.680 lag utilities and reats. That's not been the case obviously. 0:04:50.240 --> 0:04:52.159 And while we said tech would do well, we also 0:04:52.279 --> 0:04:56.039 sadly said healthcare would do well. Medicare for All drug 0:04:56.120 --> 0:04:58.360 pricing concerns have gotten in the way, so that's been 0:04:58.360 --> 0:05:01.960 a difficult call for us. Doll. We come in here 0:05:02.000 --> 0:05:03.760 in the morning, and you know, I come in pretty 0:05:03.760 --> 0:05:06.640 early and Farrell comes into about six fifty two to 0:05:06.680 --> 0:05:09.680 get ready for seven, and both of us miss gold. 0:05:09.800 --> 0:05:13.160 I mean gold. This morning, Folks is breaking out the 0:05:13.279 --> 0:05:15.880 new eyes. Good morning, Dennis Garbon, Good morning. Jeff Curry 0:05:15.880 --> 0:05:19.200 over at Golden Sex and others have been really strong 0:05:19.320 --> 0:05:21.880 on gold. Bob Doll on gold, Now, is that a 0:05:21.920 --> 0:05:25.440 Doll like investment. No, it's not. I I'm not a 0:05:25.440 --> 0:05:28.320 gold player in the up or the down. My observation 0:05:28.440 --> 0:05:31.159 is gold just gives us lessons, and I think the 0:05:31.240 --> 0:05:36.200 lesson is, hey, guys, if the central banks keep flooding 0:05:36.240 --> 0:05:40.120 the system like they are, inflation is never dead. I mean, 0:05:40.160 --> 0:05:41.800 look at wage growth in the US. I had to 0:05:41.839 --> 0:05:46.160 pick one little place. It's moving up slowly, but surely. Uh. 0:05:46.240 --> 0:05:48.720 You know, we're over three percent. You're over your average 0:05:48.720 --> 0:05:51.760 hourly earnings. Thankfully, we've got reasonable productivity, so it's not 0:05:51.839 --> 0:05:54.880 hitting margins yet, but eventually that will be a problem. 0:05:54.920 --> 0:05:57.080 And if it heads towards four percent, which it will 0:05:57.080 --> 0:05:59.800 with unemployment stays under four defends not gonna like it. 0:06:00.040 --> 0:06:03.600 Great briefing, Bob gol SMP three thousand. We both feel ancient. 0:06:03.640 --> 0:06:20.560 Thank you so much. With it be what we're gonna 0:06:20.600 --> 0:06:22.640 do now. We do this with some guests, particularly people 0:06:22.640 --> 0:06:25.320 with huge track record and skill. We're gonna do that 0:06:25.360 --> 0:06:28.880 now with Christopher Krissanti Unveilua. But Chris, I want to 0:06:28.960 --> 0:06:34.000 do mistakes and things to do best practices in investing. 0:06:34.120 --> 0:06:37.000 Let's start with the obvious. You make a bet on 0:06:37.040 --> 0:06:40.520 a company and it goes down ten percent? What do 0:06:40.600 --> 0:06:44.680 you do when a stock doesn't work out? Tom? That's it. 0:06:44.839 --> 0:06:47.840 That is the toughest question in the business. You've done 0:06:47.880 --> 0:06:50.680 all your research, you spent months and talking to the company, 0:06:50.760 --> 0:06:52.640 You placed your bet on the table, and all of 0:06:52.680 --> 0:06:55.680 a sudden, in the short term you're feeling stupid. What 0:06:55.720 --> 0:06:57.880 we do? We actually have a ten percent rule. We 0:06:58.000 --> 0:07:02.080 regroup the whole team. The guy who's doesn't who recommended 0:07:02.120 --> 0:07:03.640 the stock, doesn't even get a vote on this, but 0:07:03.680 --> 0:07:06.599 he explains what's happening. The rest of us vote whether 0:07:06.600 --> 0:07:09.280 we should cut our losses or double down. This is often, 0:07:09.320 --> 0:07:12.880 i'd say more often than not, we double down this. 0:07:15.160 --> 0:07:17.480 Oh no, no, it's more like the guillotine. If the 0:07:17.560 --> 0:07:21.040 stock goes up ten percent, right, what do you do? 0:07:21.200 --> 0:07:23.080 I know my answer. My answer is the same as 0:07:23.120 --> 0:07:25.120 Dennis Garbage. What do you do if the stock goes 0:07:25.200 --> 0:07:27.240 up ten percent? We tend to be buyers and then 0:07:27.400 --> 0:07:30.239 as well, all right, and this is anti Martin guilt. 0:07:30.280 --> 0:07:33.040 Three good morning, Ed Thorpe up in Cambridge, and this 0:07:33.080 --> 0:07:35.520 is what you do. Nobody knows. This goes up ten percent, 0:07:35.560 --> 0:07:37.600 you go, yeah, you buy more. And and it's a 0:07:37.640 --> 0:07:39.880 bunch of reasons. But we usually don't buy a whole 0:07:40.160 --> 0:07:43.440 crapload at the beginning, and we can't wait wait, can 0:07:43.480 --> 0:07:47.520 we say that on radio? Now it's too late, but 0:07:48.240 --> 0:07:51.280 we buy half often to us, I thought it was taped. 0:07:51.960 --> 0:07:53.960 We buy half a crapload and then we're off to 0:07:54.000 --> 0:07:56.560 the races. If it's up ten percent, we feel encouraged. 0:07:56.840 --> 0:07:58.760 Things are coming to For example, a great example just 0:07:58.800 --> 0:08:00.640 happened in a half hour ago to the the airlines just 0:08:00.680 --> 0:08:03.800 reported terrific earnest and and so that's something where we 0:08:03.880 --> 0:08:06.240 have a half a position and we could easily add 0:08:06.280 --> 0:08:08.960 to the star. Did you see did you just see 0:08:09.400 --> 0:08:13.040 we're live? We're live with life on air on Blimberg Radio. 0:08:13.120 --> 0:08:14.560 Chris is great to have you with us. Let's go 0:08:14.600 --> 0:08:16.520 back to that committee. You will get round the table 0:08:16.840 --> 0:08:19.680 and you vote, but the individual that recommended the stock 0:08:19.720 --> 0:08:22.040 doesn't get a vote. How important is it to take 0:08:22.080 --> 0:08:25.360 away the emotional attachment that the stock pick half? Well, 0:08:25.480 --> 0:08:28.480 that's exactly that you put the question. He's he or 0:08:28.520 --> 0:08:31.680 she is the person who has the information that we need, 0:08:32.240 --> 0:08:34.640 but they're too close to it. They're they're they're too invested. 0:08:34.679 --> 0:08:36.760 They don't want to have been seen as making a mistake, 0:08:36.920 --> 0:08:39.320 so they're pounding the table usually to buy it. So 0:08:39.679 --> 0:08:41.520 you know, we've had some tough conversations where we say 0:08:41.559 --> 0:08:43.439 no, no no, it's time to cut our losses and go. 0:08:43.880 --> 0:08:45.720 And it's just as you know, a good track record 0:08:45.720 --> 0:08:47.640 isn't just picking stuff that goes up. It's getting rid 0:08:47.640 --> 0:08:49.040 of those things that you're really going to hurt you. 0:08:49.120 --> 0:08:52.640 Next question, management shock. I'm not going to mention the 0:08:52.720 --> 0:08:56.600 company tragedy. The CEO dies Liuly in oh hair like 0:08:56.640 --> 0:08:59.040 literally dies thumbs. Thing I ever did is it didn't 0:08:59.040 --> 0:09:01.320 sell the stock. Right. What do you do when you 0:09:01.360 --> 0:09:05.280 get executive shock within a core company that you own. Well, 0:09:05.320 --> 0:09:06.839 the good thing about us is we do so much 0:09:06.880 --> 0:09:09.920 research before we go in, so we generally know who's 0:09:10.000 --> 0:09:14.840 invaluable and frankly who's expendable. So when that happens, we 0:09:15.200 --> 0:09:17.839 have an opinion. It's generally a pretty well educated one 0:09:18.000 --> 0:09:20.280 about what we should do. And we were really of 0:09:20.320 --> 0:09:23.160 the belief that management matters, like it matters who's running Apple, 0:09:23.240 --> 0:09:25.719 even though they have a great phone. John mentioned one 0:09:25.760 --> 0:09:31.880 of your great stories abou how you were advantaged. Yeah, yeah, yeah, 0:09:31.960 --> 0:09:35.440 So in are are Are we had a client who 0:09:35.520 --> 0:09:37.720 unfortunately died. I don't know if it was in o'heranon, 0:09:38.000 --> 0:09:40.800 but in January and we couldn't. The account was frozen. 0:09:40.800 --> 0:09:42.680 We couldn't touch it for the entire year. That turned 0:09:42.679 --> 0:09:45.280 out to be our best performing account that year, and 0:09:45.320 --> 0:09:47.319 it's because everything was going up and we were getting 0:09:47.320 --> 0:09:50.240 cautious and we were selling Cisco because it only tripled 0:09:50.240 --> 0:09:53.680 and value in Microsoft and so. But nine neglect is 0:09:53.720 --> 0:09:58.559 often the wisest, right, that's our big slogan. First, what's 0:09:58.640 --> 0:10:00.800 what's the lesson? What's the parallel us now with an 0:10:00.840 --> 0:10:03.520 equity market at an old time high and people start 0:10:03.559 --> 0:10:06.160 to get nervous. Yeah, you know, Jonathan, we are not 0:10:06.240 --> 0:10:10.359 seeing the valuations that scared us in We have a tailwind. 0:10:10.520 --> 0:10:13.360 The FED is accommodative. We think corporate rings are going 0:10:13.400 --> 0:10:15.240 to be fine. Delta is a great example. They're up 0:10:15.320 --> 0:10:17.920 seven percent in revenue year on year. UM So, I 0:10:18.240 --> 0:10:20.680 would say Warren Buffett had a great line. He said, 0:10:20.960 --> 0:10:22.599 there are years where I would do my clients a 0:10:22.679 --> 0:10:24.560 great service if I just went to the beach the 0:10:24.760 --> 0:10:27.160 entire year, and the ninety eight was one of those. 0:10:27.400 --> 0:10:29.400 This may be one of those. Of course, you never know. 0:10:29.720 --> 0:10:31.920 The thing is you need to be sitting there and 0:10:31.960 --> 0:10:35.040 things like Christmas Eve of two thousand eighteen, where there's 0:10:35.080 --> 0:10:37.160 opportunities and you can put a whole lot of bets 0:10:37.200 --> 0:10:40.080 on the table. This is great. I had a lawyer 0:10:40.120 --> 0:10:43.880 once I paid just the one so much money that 0:10:43.920 --> 0:10:46.880 he bought a grand Banks and he named benin neglect. 0:10:47.440 --> 0:10:50.240 Christophers Santy, it's great to see you. Thank you very 0:10:50.280 --> 0:10:53.400 much for your grassantic capital management. See really thoughtful stuff. 0:10:53.440 --> 0:10:56.360 Tomp what the equity market three three thousand yesternight? You 0:10:56.360 --> 0:11:00.720 don't come on, folks, it's Grassante's above SPX. What six 0:11:00.760 --> 0:11:05.640 months trailing? Eight months trailing? You're trailing? You're how many 0:11:05.640 --> 0:11:08.559 people walk in here they can say that seriously, it's 0:11:08.600 --> 0:11:12.760 a huge respect. Christmasani, thank you so much. Eighteen stocks, 0:11:12.800 --> 0:11:15.280 you know, value quality and all that. We don't send 0:11:15.280 --> 0:11:18.720 out his research. Go to Mr Cassani to get their research. 0:11:18.880 --> 0:11:34.240 As you choose, Lisa, you gotta bring in the next 0:11:34.280 --> 0:11:36.320 guest because my neck hurts so bad from the whip 0:11:36.440 --> 0:11:40.280 lash of the last twenty seven hours in interest rates. 0:11:40.440 --> 0:11:42.960 It's just it's just I don't know anybody in a 0:11:43.080 --> 0:11:47.160 bond managing position cannot lose money this week. I mean, 0:11:47.200 --> 0:11:48.960 I just don't know how you do it. It's I 0:11:48.960 --> 0:11:52.920 think that people are saying stay stay with longer term 0:11:52.960 --> 0:11:55.560 perspectives joining us now. I'm so happy to say, Alicia Levine, 0:11:55.720 --> 0:11:58.560 chief strategistic b in why Melon Investment Management, and we 0:11:58.600 --> 0:12:01.200 take a look at longer term. I have to wonder, 0:12:01.320 --> 0:12:04.640 do you fight what's going on right now, this sort 0:12:04.640 --> 0:12:08.040 of flight to risk in a wake of expected rate 0:12:08.200 --> 0:12:11.640 cuts or GF do you go do you go against 0:12:11.640 --> 0:12:14.280 that or do you just dive right in with everybody else. Look, 0:12:14.480 --> 0:12:16.839 you know, as we've said, you know, we feel we're 0:12:16.840 --> 0:12:21.280 in the midst of a liquidity, you know, massive liquidity globally. 0:12:21.360 --> 0:12:24.120 It's a sea of liquidity lifting all asset prices. And 0:12:24.160 --> 0:12:28.000 it really reminds me of and the reason that it 0:12:28.080 --> 0:12:31.280 does is because the fundamentals are good enough. Right, So 0:12:31.320 --> 0:12:33.240 we're not looking at a two thousand and six two 0:12:33.240 --> 0:12:36.360 thousand and seven where the real economic activity was falling 0:12:36.400 --> 0:12:39.640 off a cliff. We're looking at a softening and therefore 0:12:39.679 --> 0:12:43.680 this global liquidity is just lifting asset prices everywhere. Look 0:12:43.720 --> 0:12:47.040 at European high yield, Look at the spreads there. The 0:12:47.120 --> 0:12:51.400 ECB is going to be buying corporate bonds. Hard to 0:12:51.440 --> 0:12:53.840 lose money that way. You two are too young. During 0:12:55.320 --> 0:12:58.120 trust me, it was ugly there was some serious sweat 0:12:58.160 --> 0:13:01.559 on the beach. Alicia, this real simple. As we lift 0:13:01.640 --> 0:13:05.120 prices with this wall of money, are we lifting them 0:13:05.160 --> 0:13:10.720 into a leverage condition like August? So I think the 0:13:10.760 --> 0:13:16.080 conditions for bubbles are present in that if we don't 0:13:16.120 --> 0:13:18.600 see a pickup in the real economy, we don't see 0:13:18.679 --> 0:13:22.480 corporates being able to bring profits to the bottom line, 0:13:22.920 --> 0:13:26.160 we don't see some de leveraging. If we don't see that, 0:13:26.240 --> 0:13:32.400 then the the the the circumstances for a bubble are present, 0:13:32.480 --> 0:13:36.880 but they're not there yet. Okay, where specifically, where's the 0:13:36.880 --> 0:13:40.959 most vulnerable spot for bubbles? So the Fed's actions today 0:13:41.040 --> 0:13:44.080 are going to support the riskiest parts of the market. 0:13:44.160 --> 0:13:46.560 So you're talking about leverage finance, You're talking about the 0:13:46.640 --> 0:13:50.240 leverage loan area, You're talking about the high yield area. 0:13:50.600 --> 0:13:55.560 So that's going to support those areas the most because 0:13:55.600 --> 0:13:58.960 companies can refinance at lower rates, so they're not at 0:13:59.040 --> 0:14:01.679 risk as much. And so that's where I would see 0:14:01.880 --> 0:14:04.640 the risk. But the difference today than ten years ago 0:14:04.880 --> 0:14:08.080 during the global financial crisis is the risk on the 0:14:08.160 --> 0:14:10.800 leverage loan side is now owned privately and not by 0:14:10.840 --> 0:14:13.320 the banks. You don't get a systemic boomerang. Here's what 0:14:13.320 --> 0:14:15.839 I'm struggling with. People have been raising concerns about the 0:14:15.880 --> 0:14:19.080 leverage finance area for about eight years now, and people 0:14:19.120 --> 0:14:21.200 have been concerned and those concerns have not come to 0:14:21.200 --> 0:14:23.640 fruition again and again and again, and here we are, 0:14:23.920 --> 0:14:26.560 and yes there has been a huge rally, but there's discretion. 0:14:26.600 --> 0:14:29.560 You're seeing dispersion and returns among names that are winning 0:14:29.600 --> 0:14:31.840 and those that are losing. What are you looking for 0:14:32.000 --> 0:14:34.120 to say now is the time that we can call 0:14:34.200 --> 0:14:36.920 this a bubble. It's dangerous, get out. But I think 0:14:36.920 --> 0:14:40.520 if you look at the more um the sectors that 0:14:40.560 --> 0:14:42.720 are most at risk, and we've just been talking offline 0:14:42.760 --> 0:14:45.800 about retail, and retail really is the sector that's most 0:14:45.840 --> 0:14:49.600 at risk here on the leverage side and still still 0:14:49.800 --> 0:14:54.040 because you know, fundamental customer behavior has changed. And if 0:14:54.040 --> 0:14:55.920 you look at a bad Bath and Beyond for instance, 0:14:55.920 --> 0:14:57.880 I mean, this is a company bad Bath and beyond it, 0:14:58.720 --> 0:15:03.600 Bath and Beyond Um she audition. Tom just gave me 0:15:03.680 --> 0:15:06.760 this thank I you know, look, I mean, here's a 0:15:06.800 --> 0:15:10.800 company that clearly did not change its business model even 0:15:10.880 --> 0:15:14.000 as the world around it changed. And there are plenty 0:15:14.040 --> 0:15:16.360 of retail companies out there that in the sense of 0:15:16.480 --> 0:15:21.320 walking zombies because of this global sea of liquidity and money. 0:15:21.680 --> 0:15:26.200 Is this bond market a walking zombie? That's the arch question. 0:15:26.720 --> 0:15:30.400 That's a great question. It's a great question. I'll come 0:15:30.480 --> 0:15:33.280 up with something as good as bad now. I mean, 0:15:33.480 --> 0:15:36.800 it's it's not the Night of the Living Dead. But look, 0:15:36.840 --> 0:15:42.360 a few and and corporates can cover their debts right now. 0:15:42.400 --> 0:15:45.240 But the risk always was when you raise rates too 0:15:45.320 --> 0:15:48.200 high and yields got too high, how in the world 0:15:48.240 --> 0:15:50.880 was this going to be refinanced going down the road, 0:15:51.120 --> 0:15:54.080 I'll say this, the corporate tax cut is no longer 0:15:54.120 --> 0:15:58.800 talked talked about. This is continuing to provide cash flow 0:15:58.880 --> 0:16:02.480 for all these corporates. On the investment grade side, you're fine, right, 0:16:02.840 --> 0:16:07.359 I have to wonder going forward, how much do investors 0:16:07.400 --> 0:16:10.840 have to lower their returns expectations in order not to 0:16:10.880 --> 0:16:13.200 take excessive risk and get caught with their pants down 0:16:13.200 --> 0:16:16.760 when the market does decline. You know, that's a great question. 0:16:16.760 --> 0:16:19.480 I mean on the equity side right now, that it 0:16:19.560 --> 0:16:22.840 seems to be that the market just it's levitating upward. 0:16:22.880 --> 0:16:25.080 And the pain, the pain trade is the short right, 0:16:25.640 --> 0:16:27.160 you know, because you were coming in short and you 0:16:27.240 --> 0:16:29.400 were selling and going into cash. That's the pain trade. 0:16:29.840 --> 0:16:32.680 So clearly expectations are removing higher. And the truth of 0:16:32.680 --> 0:16:35.720 the matter is if you look at twelve months forward multiples, 0:16:35.840 --> 0:16:38.440 yes they're high, but they're not crazy. I mean they're 0:16:38.480 --> 0:16:41.640 fully valued, right so they're not excessively valued right now? Okay, 0:16:41.680 --> 0:16:43.800 so sp X three thousand, What does b N y 0:16:43.840 --> 0:16:46.840 melon do for someone with cash to deploy? What do 0:16:46.880 --> 0:16:48.520 you do right now? So I think you have to 0:16:48.520 --> 0:16:51.760 buy US equities? I mean, you know, I you have 0:16:51.800 --> 0:16:53.600 to buy US equities. But you have to hedge. So 0:16:53.680 --> 0:16:56.800 you have to hedge with with with fixed income, and 0:16:56.840 --> 0:16:59.000 you have to hedge with different strategies. And you should 0:16:59.000 --> 0:17:01.160 definitely be an alter natives right now. But you have 0:17:01.200 --> 0:17:06.120 to buy equity, so you know, hard assets, real estate, gold, 0:17:07.920 --> 0:17:10.560 I'm not a gold buck. I like real estate. I 0:17:10.680 --> 0:17:15.560 like I'm a New Yorker born in bread. Bitcoin why not? 0:17:17.160 --> 0:17:19.560 Bitcoin is being used as a head for the debasing 0:17:19.600 --> 0:17:23.639 of currencies globally. And don't forget the word debasing comes 0:17:23.640 --> 0:17:26.359 from the fact that you know, we were all on 0:17:26.400 --> 0:17:29.560 the gold standard, and if you added you know, jump 0:17:29.640 --> 0:17:32.119 to the base metal, you had less value. Can we 0:17:32.160 --> 0:17:34.280 get a headline up B and Y Melon says we're 0:17:34.280 --> 0:17:37.200 going to the bitcoin standard. Does that work? Please don't? 0:17:42.560 --> 0:17:45.159 Alicia Levin, thank you so much for being with us. 0:17:45.160 --> 0:17:50.879 Alicia Levin always a last two strategies investment management with 0:17:50.960 --> 0:18:07.240 some real talk. We need to go because finally, the 0:18:07.280 --> 0:18:09.720 weather here is actually lovely today in New York, but 0:18:09.760 --> 0:18:13.120 it's more lovely in Sun Valley. Idoh. Our colleague Paul 0:18:13.160 --> 0:18:17.560 Sweeney is at the Allen and Company's Scale event. Because 0:18:17.600 --> 0:18:21.680 everyone is scaling up with a scale event. They're all arriving, Paul, 0:18:21.760 --> 0:18:25.560 everybody looks exceptionally casual. They've all got their knapsacks on 0:18:25.640 --> 0:18:29.720 their back. What's in the knapsacks? What's in the knapsack? 0:18:29.840 --> 0:18:32.800 I think is you know a lot of I think 0:18:32.960 --> 0:18:37.040 people are really starting to figure out, um, this technology 0:18:37.080 --> 0:18:41.680 is really impacting the traditional media, communications, entertainment businesses. We've 0:18:41.680 --> 0:18:44.280 seen it over the last you know, certainly dozen years 0:18:44.400 --> 0:18:46.200 or so, but I think it's really coming home to 0:18:46.280 --> 0:18:48.280 roosts for a lot of these companies as they see 0:18:48.760 --> 0:18:51.360 you know, a T and T, a telecommunications company by 0:18:51.440 --> 0:18:56.320 Time Warner Media Company, Disney doubling down. Technology companies such 0:18:56.359 --> 0:19:01.320 as Facebook, UH and Google really becoming big players in 0:19:01.320 --> 0:19:03.200 the in the media space. In fact, I booked the 0:19:03.240 --> 0:19:07.480 media mogul John Malone about how media companies should interact 0:19:07.560 --> 0:19:10.560 with technology companies such as Google and Facebook. Here's what 0:19:10.600 --> 0:19:15.800 you had to say. They've changed the world and they're 0:19:15.840 --> 0:19:19.359 the disruptors. Now we were disruptors and at our youth. 0:19:20.280 --> 0:19:22.920 Now they're the disruptors. We have to figure out how 0:19:22.960 --> 0:19:26.439 to position ourselves to adapt to the changing world that 0:19:26.480 --> 0:19:30.879 they're changing. Uh, you're not going to fight them, so 0:19:30.960 --> 0:19:34.199 you better you better accept them as a as a 0:19:34.280 --> 0:19:40.040 fact and then adjust your physitioning. We're seeing a lot 0:19:40.040 --> 0:19:42.360 of you know, come here to Sun Valley. It's it's 0:19:42.359 --> 0:19:45.800 a mixture Tom and LEAs of some of the traditional 0:19:45.840 --> 0:19:48.320 media companies, whether it's a newspaper company, a broadcaster, or 0:19:48.320 --> 0:19:52.320 a cable network, custom of the new technology companies obviously, um, 0:19:52.359 --> 0:19:54.760 you know the Google's and the Facebook of the world, 0:19:54.760 --> 0:19:57.359 but also somebody comes that you really haven't really heard 0:19:57.359 --> 0:20:00.399 of before, but you know, their new technolo ologies and 0:20:00.400 --> 0:20:04.400 they're really starting to impact the way consumers consume entertainment 0:20:04.480 --> 0:20:07.200 and communications in general. And I think you know, these 0:20:07.200 --> 0:20:09.480 companies here, these CEOs are just trying to figure out 0:20:09.560 --> 0:20:11.399 how it all works and how they need to adapt 0:20:11.440 --> 0:20:15.760 their business models. So does adapting mean basically understanding that 0:20:15.760 --> 0:20:18.760 everybody's cutting the cord and not relying on on this 0:20:18.840 --> 0:20:21.960 sort of thirty second advertisement spot anymore? Is that the 0:20:22.200 --> 0:20:24.000 is that? Is that what adapting means? Or does it 0:20:24.040 --> 0:20:27.920 mean uh, something deeper about the way people uh sort 0:20:27.920 --> 0:20:31.159 of cater Yeah, yeah, it's interesting. I think you're absolutely right. 0:20:31.160 --> 0:20:33.480 At least it's certainly about that, the corp cutting thing. 0:20:33.480 --> 0:20:35.639 It's really an issue that's been on the minds of 0:20:35.680 --> 0:20:37.959 these companies for the last three or four years. And 0:20:38.240 --> 0:20:41.440 you know, I think the most notable example of what 0:20:41.520 --> 0:20:45.440 that means for these companies is Disney's acquisition of Century Fox. 0:20:45.480 --> 0:20:47.640 They're saying, we just need to get bigger to get 0:20:47.680 --> 0:20:50.359 more content so we can go direct to our consumers 0:20:50.400 --> 0:20:52.879 with our content. Is there anybody there from Hawkins Indiana? 0:20:54.600 --> 0:20:58.760 I'm not sure, Paul nobody cares about all this investment 0:20:58.880 --> 0:21:01.720 mumbo jumbo. Aren't they all there looking for the next 0:21:01.720 --> 0:21:06.080 script like Stranger Things? Um, it's you know, it's interesting. 0:21:06.119 --> 0:21:08.480 There's a lot of content creators here, you know, even 0:21:08.520 --> 0:21:11.240 some of the all the studios you're here, Uh, there's 0:21:11.280 --> 0:21:13.399 a lot of creative people here, the people that you 0:21:13.440 --> 0:21:16.720 know are coming up with all these great streaming services 0:21:16.800 --> 0:21:19.560 and and so on, and all the big movie studios 0:21:19.640 --> 0:21:21.960 are here as well, so you know there's gonna be 0:21:22.160 --> 0:21:25.440 There's five hundred scripted television shows on television right now 0:21:25.560 --> 0:21:28.320 versus about two d and fifty ten years ago. So 0:21:28.600 --> 0:21:30.359 it's never been a better time to be in the 0:21:30.600 --> 0:21:33.840 content creator. But but is the basic thrust of all 0:21:33.880 --> 0:21:37.320 these fancy money people and the creative people gluing my 0:21:37.440 --> 0:21:40.439 kids to the modern digital space? Is it all just 0:21:40.520 --> 0:21:43.240 simply find the next Game of Thrones, find the next 0:21:43.280 --> 0:21:46.879 Stranger Things. I think it's I think it's more about that. 0:21:46.960 --> 0:21:49.080 That's that's It's always been a hit driven business. You're right, 0:21:49.119 --> 0:21:51.520 it's always been a content driven business. But I think 0:21:51.560 --> 0:21:54.240 the real question now is how do I deliver my 0:21:54.400 --> 0:21:57.560 content to my consumers in a way that I can 0:21:57.600 --> 0:22:00.399 maximize my revenue. Is because it used to just be 0:22:00.520 --> 0:22:03.639 I would just rely upon Brian Roberts Comcast to pipe 0:22:03.640 --> 0:22:06.439