WEBVTT - Equity Optimism amid Uncertainty 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.880 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business App. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:28.000 us live on YouTube's a thrill. 0:00:28.080 --> 0:00:31.520 They have been laidler with us over the years, with 0:00:32.520 --> 0:00:36.559 HSBC and others, now with Bradesco BBI, adding equity strategy 0:00:36.640 --> 0:00:39.320 value each and every day. Ben, I just did the 0:00:39.360 --> 0:00:41.760 math here. I can do this off the Bloomberg Professional 0:00:41.840 --> 0:00:46.760 Service seventeen point five percent per year from Christmas Eve 0:00:47.520 --> 0:00:51.600 twenty eighteen. I think a Gartman on gold in Yen. 0:00:52.440 --> 0:00:56.800 There's Ladler on get into the market now Christmas Eve 0:00:56.880 --> 0:01:01.200 of twenty eighteen. Recapitulate that calm now, Are you as 0:01:01.320 --> 0:01:04.080 bullish now as you were then? Or is there a 0:01:04.160 --> 0:01:05.680 different cast to it? 0:01:06.720 --> 0:01:10.800 Definitely bullish equities, just maybe less bullish US equities. I mean, 0:01:10.840 --> 0:01:13.720 obviously it's been a sort of juggernaut since then. We've 0:01:13.760 --> 0:01:16.000 just had a twenty percent reminder in the last couple 0:01:16.040 --> 0:01:19.520 of months of why you shouldn't bet against US equities. 0:01:19.520 --> 0:01:21.080 But I do think this bill market is sort of 0:01:21.080 --> 0:01:23.959 broadening out. I do think the sort of genies out 0:01:24.000 --> 0:01:25.760 of the bottle a little bit this year, we got 0:01:25.880 --> 0:01:29.320 very crowded on sort of how big US was positioning, 0:01:29.360 --> 0:01:32.440 got very crowded. I think that was the what drove 0:01:32.560 --> 0:01:34.440 US a little bit into this cell off we had, 0:01:34.440 --> 0:01:36.160 and I think the rest of the world now now 0:01:36.200 --> 0:01:37.520 gets a bit of a look in. I think this 0:01:37.560 --> 0:01:40.120 is the healthy broadening. You have a double discount in 0:01:40.160 --> 0:01:44.240 the rest of the world, cheap currencies, cheaper cheap equity evaluations, 0:01:44.440 --> 0:01:48.160 and you know, some some positive policy, whether that's fiscal 0:01:48.200 --> 0:01:50.000 stimulus out of China or Germany. 0:01:50.000 --> 0:01:51.120 So bullish on equities. 0:01:51.120 --> 0:01:54.960 I'm looking for a more average US return from here, 0:01:55.160 --> 0:01:56.680 but stronger returns in the. 0:01:56.600 --> 0:01:57.160 Rest of the world. 0:01:57.320 --> 0:01:59.440 So we did see that move, as you mentioned, into 0:01:59.440 --> 0:02:01.600 the rest of the world earlier this year out of 0:02:01.600 --> 0:02:04.760 the US. My question is, was that a short term trade, 0:02:04.760 --> 0:02:06.800 the smart money just trying to be smart, or is 0:02:06.840 --> 0:02:07.920 that something different? 0:02:07.960 --> 0:02:10.480 Do you think, well, you certainly have history against you 0:02:10.520 --> 0:02:11.880 on that trade. I mean, the rest of the world's 0:02:11.919 --> 0:02:14.120 underperformed for fifteen years. So I feel like I'm standing 0:02:14.160 --> 0:02:17.600 in front of this sort of US freight train, you know, 0:02:17.680 --> 0:02:20.160 But these things do move in cycles. And I do 0:02:20.280 --> 0:02:22.520 just think that the genie is out of the bottle 0:02:22.560 --> 0:02:24.119 a little bit on the US. I mean, the US 0:02:24.240 --> 0:02:26.880 is sixty five percent of global equities, It's twenty five 0:02:26.919 --> 0:02:28.000 percent of global GDP. 0:02:28.800 --> 0:02:30.800 You know, I do a lot of Latin right, latam 0:02:30.880 --> 0:02:33.400 seven percent of global GDP. 0:02:33.480 --> 0:02:36.440 It's seventy basis points of global market cap, right, And 0:02:36.480 --> 0:02:39.200 you have that narrative in the rest of the world. 0:02:39.240 --> 0:02:40.560 So I do think a little bit of love goes 0:02:40.600 --> 0:02:43.080 a very long way. You do have this double currency 0:02:43.160 --> 0:02:47.640 and an equity discount, and I don't need to be 0:02:47.720 --> 0:02:49.600 very right, and I do just think that, you know, 0:02:49.639 --> 0:02:51.080 the cell off we've had in the US is at 0:02:51.120 --> 0:02:54.200 least sensitized people to the risks they're running in the 0:02:54.320 --> 0:02:56.680 US on twenty times earning sixty five percent of global 0:02:56.760 --> 0:02:58.560 market cap, and I think you get a little bit 0:02:58.560 --> 0:03:00.639 of reallocation to the rest of the world regard wardless. 0:03:00.480 --> 0:03:03.079 You mentioned Latham, I know, and you're previously if you 0:03:03.120 --> 0:03:05.880 spent a lot of time looking at the Latin American market, 0:03:06.360 --> 0:03:09.320 where do you see opportunities today in Latin America. 0:03:10.400 --> 0:03:11.959 So Brazil's the cheapest market in the world. 0:03:12.160 --> 0:03:13.680 Brazil is the cheapest thing. 0:03:13.639 --> 0:03:16.919 Anyway, you were looking at dividend yield eight times pe 0:03:17.560 --> 0:03:18.239 highest real. 0:03:18.120 --> 0:03:20.600 Interest rates in the world. As I say, a. 0:03:20.600 --> 0:03:25.040 Fraction the size of sort of of GDP, a little 0:03:25.080 --> 0:03:26.720 bit of reallocation goes a very long way. 0:03:27.200 --> 0:03:29.960 Is a value TP well, it certainly has been for 0:03:30.000 --> 0:03:30.520 a long time. 0:03:30.639 --> 0:03:33.680 I think again, we're about to get maybe rate cuts 0:03:33.680 --> 0:03:35.160 coming in Brazil at the end of the year, which 0:03:35.200 --> 0:03:36.960 I think will begin to bring those real rates down, 0:03:37.040 --> 0:03:39.920 allow those P multiples to rise, and I think more 0:03:39.920 --> 0:03:43.240 broadly across Brazil, across emerging markets, there are no tourists 0:03:43.320 --> 0:03:46.240 left right, There's no one out there telling you that you. 0:03:46.200 --> 0:03:47.880 Know, this has been a great place to be. 0:03:49.160 --> 0:03:52.480 So again I think a little bit of reallocation and 0:03:53.000 --> 0:03:55.240 these asset class that people have forgotten about for fifteen 0:03:55.280 --> 0:03:56.520 years could to come back. 0:03:56.680 --> 0:04:00.560 The magic of your career then is an incredible respect. 0:04:01.240 --> 0:04:05.960 The corporations are just life goes on. I want you 0:04:06.000 --> 0:04:11.760 to discuss the onslaught of market timing. Go to cash 0:04:12.040 --> 0:04:16.760 opinionated punditry that our listeners and viewers here each and 0:04:16.920 --> 0:04:21.360 every day they're overwhelmed with do this, do that, and 0:04:21.400 --> 0:04:25.800 you just say shut up and believe in capitalism. 0:04:24.960 --> 0:04:26.480 So turn the radio off and do nothing. 0:04:26.520 --> 0:04:28.920 No, we know that's not the way we were all here, 0:04:30.279 --> 0:04:32.960 but yes, there's definitely advantage sitting in your hands are 0:04:32.960 --> 0:04:35.640 doing nothing, And I don't want to, you know, I 0:04:35.680 --> 0:04:37.039 don't want to be down on the US here. 0:04:37.080 --> 0:04:39.159 I mean, this is not an anti US trade. This 0:04:39.320 --> 0:04:42.919 is just more average double digit US returns, not the 0:04:43.640 --> 0:04:46.360 you know this juggern order of riskless feeling riskless twenty 0:04:46.360 --> 0:04:49.839 percent a year. You know, Tech just delivered three times 0:04:49.880 --> 0:04:51.520 the earnings going through the S and P five hundred 0:04:52.440 --> 0:04:55.800 on twenty five thirty times earnings. That seems pretty good 0:04:55.800 --> 0:04:58.919 to me. Can it get dramatically more than that? You know, no, 0:04:59.040 --> 0:05:02.400 maybe not, But I certainly wouldn't want to be betting 0:05:02.440 --> 0:05:02.880 against that. 0:05:03.000 --> 0:05:04.600 And you've just had that in the last quarter. 0:05:04.880 --> 0:05:07.320 Well we've had I mean since most of our listeners 0:05:07.320 --> 0:05:10.520 and viewers can remember, Tech has been the narrative of 0:05:10.560 --> 0:05:11.760 the US stock market. 0:05:11.800 --> 0:05:12.520 Is that still the case? 0:05:12.560 --> 0:05:12.960 Do you think? 0:05:14.160 --> 0:05:17.760 I think so? As I say they're delivering the goods. 0:05:17.800 --> 0:05:19.680 You have three times the earnings going through anyone else 0:05:19.720 --> 0:05:22.080 the S and P five hundred evaluations of de rated 0:05:22.760 --> 0:05:24.719 you know you're not paying three times the multiple the 0:05:24.800 --> 0:05:26.599 s and P five hundred for these stocks, so I 0:05:26.640 --> 0:05:27.760 can absolutely. 0:05:27.360 --> 0:05:28.440 Make the case for owning them. 0:05:28.560 --> 0:05:31.320 I'm just arguing that you're not going to get the 0:05:31.360 --> 0:05:33.760 degree of our performance that you've had in recent years, 0:05:34.040 --> 0:05:36.560 and that gives the rest of the world and other sectors, 0:05:36.680 --> 0:05:38.960 you know, maybe a look in that they haven't had. 0:05:39.240 --> 0:05:42.360 Were welcome all of you acrassination and an eventful Monday. 0:05:42.440 --> 0:05:45.200 Futures are eight right now, futures of forty if I 0:05:45.240 --> 0:05:48.520 have a constructive tape here into the Key inflation report 0:05:48.800 --> 0:05:52.120 and Wednesday in the less than an hour, a conversation 0:05:52.279 --> 0:05:57.200 an extended conversation with Andrew Cromo, the former governor of 0:05:57.279 --> 0:06:00.479 the Empire State. He has chosen to run from mayor. 0:06:00.520 --> 0:06:04.240 We've been interviewing the different may world candidates and this 0:06:05.000 --> 0:06:09.799 really heated primary of the Democratic Party towards the November 0:06:09.880 --> 0:06:13.880 for election. We'll do that here in about fifty minutes. 0:06:13.920 --> 0:06:18.680 Ben Laidler with us here with Bradesco BBI. We welcome 0:06:18.760 --> 0:06:21.799 all of you across the nation. Serious ExM Apple car play, 0:06:22.520 --> 0:06:23.680 it's Apple day to day. 0:06:24.279 --> 0:06:28.280 Sure there sleep this week now he's out, he's all set. 0:06:29.160 --> 0:06:31.719 Ye, there's Apple day to day and all the busy 0:06:31.760 --> 0:06:33.040 week ahead. Pump yep. 0:06:33.080 --> 0:06:36.960 So absolutely, ben, So, how do we think about just 0:06:37.240 --> 0:06:39.640 valuation in this market? Here in the US? We've had 0:06:39.640 --> 0:06:43.520 this boy, yeah, a big twenty percent decline. We've retraced 0:06:43.720 --> 0:06:46.200 most of that here. Yes, we had a good first 0:06:46.279 --> 0:06:49.120 quarter earnings, but earnings estimates for twenty twenty five have 0:06:49.200 --> 0:06:52.919 come down. Is this an expensive market? Once again? 0:06:54.760 --> 0:06:56.400 I have no problem with these multiples, I guess I 0:06:56.440 --> 0:06:58.880 have a problem arguing though they're gonna got a lot higher. Okay, 0:06:59.000 --> 0:07:01.960 you are on twenty one times earnings, that's still above 0:07:02.400 --> 0:07:04.920 short and long term averages. It's still the most expensive 0:07:04.920 --> 0:07:07.600 market in the world. I think that's justified by these 0:07:07.640 --> 0:07:11.040 double digit earnings numbers. I have a trouble problem arguing 0:07:11.040 --> 0:07:12.680 that it's going to be dramatically higher than that, which 0:07:12.720 --> 0:07:15.000 is why I say, you know, US is fine, but 0:07:15.040 --> 0:07:17.280 it's well, you know, we're looking at a more average 0:07:17.320 --> 0:07:19.239 sort of ten percent return, which. 0:07:19.080 --> 0:07:21.400 Feels terrible when we got used to twenty. But you know, 0:07:21.520 --> 0:07:22.320 it's actually fine. 0:07:22.600 --> 0:07:25.600 It's got Cronner emails in from City Group right now. 0:07:25.640 --> 0:07:27.880 He's got it with his MIDI it's mid year. It's 0:07:27.880 --> 0:07:32.280 not American. How is Krunner doing mid year here doesn't 0:07:32.320 --> 0:07:36.680 feel like mid year. Definitely, Ben Ladlor pc he goes up, 0:07:36.680 --> 0:07:40.240 they go to sixty three hundred and SPX with a 0:07:40.280 --> 0:07:44.160 mid twenty six first take of a below Ladler sixty 0:07:44.160 --> 0:07:47.480 five hundred. I am afraid to ask Ben Laydlor middle 0:07:47.520 --> 0:07:50.320 of next year, where is your SPX? Can you give 0:07:50.320 --> 0:07:51.400 me a seven thousand? 0:07:52.640 --> 0:07:54.520 I think we can have reasonably close what's that? That's 0:07:54.640 --> 0:07:57.119 you know, fifteen ten to fifty percent from here again, 0:07:57.360 --> 0:07:59.400 I think we're going back to average. Average is good, 0:07:59.440 --> 0:07:59.840 It's just. 0:07:59.840 --> 0:08:01.840 Not what we've got used to, the last couple of years. 0:08:02.200 --> 0:08:04.200 Ben talk to us about the earnings out there, because 0:08:04.200 --> 0:08:06.200 I feel like the Fed's not going to do a 0:08:06.200 --> 0:08:08.440 whole lot for us, maybe one or two rate cuts 0:08:08.440 --> 0:08:12.360 in the foreseeable future. So I think I need earnings 0:08:12.400 --> 0:08:15.640 to really move this market higher. Seven percent earning growth 0:08:15.760 --> 0:08:18.520 this year, maybe eleven twelve percent next year. Are those 0:08:18.600 --> 0:08:20.560 numbers solid or do you think there's risk to those 0:08:20.600 --> 0:08:21.760 numbers or maybe even upside. 0:08:21.760 --> 0:08:22.120 I don't know. 0:08:23.040 --> 0:08:25.240 Yeah, I think they're reasonably solid, right. I think what 0:08:25.240 --> 0:08:28.000 we've lived through is this recession scare. I don't think 0:08:28.000 --> 0:08:29.760 we're going to get a recession. I do think we're 0:08:29.760 --> 0:08:32.760 going to get more pedestrian growth. But to Tom's earlier point, 0:08:32.840 --> 0:08:36.000 you know the survivorship bias here. The stocks that we're 0:08:36.000 --> 0:08:38.960 looking at are the best in class. They are global. 0:08:39.240 --> 0:08:41.840 There's a reason why, you know, year after year they've 0:08:41.840 --> 0:08:43.080 been able to push up margins. 0:08:43.080 --> 0:08:46.280 They're just very good at what they do. So I 0:08:46.280 --> 0:08:46.880 wouldn't want to. 0:08:46.880 --> 0:08:51.040 Get better against corporate America. I think sort of normalize growth. 0:08:51.040 --> 0:08:51.640 They're going to be out. 0:08:51.640 --> 0:08:55.439 A doctor s out on live chat and YouTube. Thank 0:08:55.480 --> 0:08:58.400 you for the live chat and YouTube. Really smart. Subscribe 0:08:58.400 --> 0:09:02.360 to Bloomberg podcasts. There to Ben Laydler, he says, look, 0:09:02.400 --> 0:09:06.320 anything over thirteen times is expensive. When we buy a 0:09:06.440 --> 0:09:10.640 twenty eight times Apple or whatever, are are we just 0:09:10.800 --> 0:09:15.320 rationalizing out the terminal value out farther where we're saying 0:09:15.640 --> 0:09:18.079 we're willing to own Apple and we really don't care 0:09:18.120 --> 0:09:20.840 about the next twenty four months. We're buying it for 0:09:20.880 --> 0:09:22.200 twenty twenty eight. 0:09:23.880 --> 0:09:25.760 As I say, forget about the future. Just look at 0:09:25.760 --> 0:09:27.679 what you've delivered in the last quarter. Three times the 0:09:27.720 --> 0:09:29.600 earnings go with the S and P five hundred. 0:09:29.240 --> 0:09:32.640 Only two times earnings versus eight ish as the numbers 0:09:32.640 --> 0:09:33.720 were working. It is amazing. 0:09:35.360 --> 0:09:38.440 I think you can justify current valuations. I'm not sure 0:09:38.440 --> 0:09:40.320 you can justify much higher, which I guess is my 0:09:40.360 --> 0:09:43.120 point for a more average US return. I totally agree 0:09:43.160 --> 0:09:44.960 on the thirteen times. Thirteen times is what you pay 0:09:44.960 --> 0:09:46.679 for the rest of the world. That's why I'm sort 0:09:46.679 --> 0:09:49.120 of bullish on the rest of the world. Again, you know, 0:09:49.160 --> 0:09:51.080 a little bit of a little bit of love goes 0:09:51.120 --> 0:09:53.080 a very long way. Maybe you just need a little 0:09:53.080 --> 0:09:55.480 bit less bad news and you get the valuation rewriting. 0:09:55.600 --> 0:09:58.400 You've already had that valuation rewriting in the US. To 0:09:58.440 --> 0:10:00.520 your point, you need earnings to keep delivering. I think 0:10:00.520 --> 0:10:02.280 they are. But you know, how do you get more 0:10:02.360 --> 0:10:04.800 upside in the US when valuations are high? In earning 0:10:04.880 --> 0:10:06.040 so already resonably high. 0:10:06.600 --> 0:10:09.199 What screens well for you guys this year? I mean 0:10:09.600 --> 0:10:11.719 that probably has changed two or three times this year. 0:10:11.760 --> 0:10:14.440 Given we've had we started the unership level, we sold 0:10:14.440 --> 0:10:17.880 off twenty percent, we've regained most of that. What's screens 0:10:17.880 --> 0:10:18.880 well for you guys these days? 0:10:20.200 --> 0:10:21.640 Again, the rest of the world I think is where 0:10:21.679 --> 0:10:24.600 you get the risk reward. Okay, growth is firming up. 0:10:24.720 --> 0:10:27.280 Interest rates have been cut you're getting some fiscal stimulus, 0:10:27.760 --> 0:10:30.559 and again you're pushing on an open door because currencies 0:10:30.600 --> 0:10:33.280 are cheap and valuations are cheat and you're getting again, 0:10:33.320 --> 0:10:34.920 you don't need a lot of money coming out of 0:10:34.960 --> 0:10:37.680 the US because the US has just got so supersized. 0:10:38.000 --> 0:10:39.679 These other markets have got so small, you know, a 0:10:39.679 --> 0:10:42.040 little bit of ferry dust. And I think that's the 0:10:42.120 --> 0:10:45.319 driver of this of this rest of the world out performance. 0:10:45.360 --> 0:10:47.320 And again I only need to be half right there. 0:10:47.640 --> 0:10:50.120 I'm not betting against the US. I'm just arguing it's 0:10:50.120 --> 0:10:52.240 a more average ten percent environment to. 0:10:52.200 --> 0:10:55.120 Finish ben And this goes to your parchment from London 0:10:55.160 --> 0:10:58.760 School of Economics and under the University of Cambridge. I 0:10:58.800 --> 0:11:02.080 think all of our listeners and viewers in America look 0:11:02.120 --> 0:11:05.199 at the cacophony of the United Kingdom right now and 0:11:05.240 --> 0:11:09.760 go what I'm talking about in newspapers. They can't fund 0:11:09.800 --> 0:11:13.040 the police. A week ago, ten days ago, it was 0:11:13.160 --> 0:11:19.080 migrants across the Channel. The election dynamics of labor reform 0:11:19.280 --> 0:11:21.880 in the United Kingdom is there is there a point 0:11:21.920 --> 0:11:25.480 out there to get to to some form of economic 0:11:26.000 --> 0:11:28.920 post Brexits stability and growth. 0:11:30.160 --> 0:11:31.520 Got a big question. I'm not going to do this 0:11:31.679 --> 0:11:34.800 justice in thirty seconds. I don't know. At least the sunshines. 0:11:34.920 --> 0:11:39.360 No, I don't know, it's at least it's priced for that. 0:11:39.760 --> 0:11:43.079 I guess it is my point. You know, the trouble 0:11:43.080 --> 0:11:45.480 in the UK is UK stocks have really know you 0:11:45.559 --> 0:11:48.640 do the UK Seventy percent of UK stock market revenues 0:11:48.640 --> 0:11:50.480 come from outside the UK, so in some ways UK 0:11:50.600 --> 0:11:53.080 companies are sort of voted with their feet a long 0:11:53.080 --> 0:11:56.480 time ago, and you know plays on the rest of 0:11:56.520 --> 0:11:56.800 the world. 0:11:56.840 --> 0:11:59.960 But my broader point, if you are on eleven twelve. 0:11:59.760 --> 0:12:03.160 Times earnings, which is what UK stocks are, you don't 0:12:03.200 --> 0:12:06.440 need good news. You just need a little bit less 0:12:06.440 --> 0:12:08.000 bad news and I will be down in the UK. 0:12:08.120 --> 0:12:10.280 But I think that's probably the narrative. You know, everybody 0:12:10.520 --> 0:12:12.880 is negative on the UK emerging market. I mean the 0:12:12.920 --> 0:12:15.360 same thing is internationally. I think that is just a 0:12:15.400 --> 0:12:18.560 broader narrative. We just end up with a little bit 0:12:18.640 --> 0:12:19.280 less find news. 0:12:19.320 --> 0:12:22.000 Things very right, Ben Laylor, we don't care. The only 0:12:22.040 --> 0:12:25.240 reason you're here is a transition from clay to grass. 0:12:25.480 --> 0:12:28.439 Can Coco do as well at Wimbledon as she did 0:12:28.440 --> 0:12:29.280 at the French Open. 0:12:29.880 --> 0:12:33.680 We're talking cricket here, No, we don't do cricket. I 0:12:33.720 --> 0:12:36.959 tried cricket with Johan writing eight years ago. No, the tenants, 0:12:36.960 --> 0:12:39.400 I mean it was it was really exciting to see 0:12:39.440 --> 0:12:43.880 Coco take take Roland girls some sports in the UK. 0:12:44.080 --> 0:12:45.920 That's something you definitely don't want to bet against. 0:12:46.000 --> 0:12:50.080 Okay, Ben Laylor, this is a joking being studio more often. Yeah, 0:12:50.120 --> 0:12:53.360 you know, talk about over how often do you get 0:12:53.400 --> 0:12:55.319 to Brazil for Bradesca. 0:12:55.240 --> 0:12:57.480 Once a quarter, once a quarter every term nation? 0:12:57.920 --> 0:13:00.800 Really interesting, Ben Laylor, thank you, thank you so much. 0:13:00.880 --> 0:13:03.440 Really one of the iconic calls in the history of 0:13:03.480 --> 0:13:08.160 Bloomberg Surveillance. On a lonely December twenty fourth of twenty eighteen, 0:13:08.240 --> 0:13:13.120 he whispered Tom by America, Ben Layler, thank you so much. 0:13:19.000 --> 0:13:22.600 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:13:22.640 --> 0:13:25.800 weekday afternoons from seven to ten am Eastern Listen on 0:13:25.880 --> 0:13:29.560 Applecarplay and Android Atto with the Bloomberg Business app, or 0:13:29.720 --> 0:13:31.160 watch us live on YouTube. 0:13:31.200 --> 0:13:35.200 We're wonder something different here with Henrietta Treys Theveda Partners. Henriette, 0:13:35.800 --> 0:13:39.600 I want to note the surprise in an Omaha mayoral 0:13:39.800 --> 0:13:45.760 race this weekend, the surprise in a San Antonio mayoral race. 0:13:46.360 --> 0:13:49.440 There seems to be a trend afoot, and I want 0:13:49.920 --> 0:13:52.080 to bring it back to the mystery of ha Kim 0:13:52.160 --> 0:13:57.239 Jeffries is a potential leader of the Democratic Party nationally. 0:13:57.520 --> 0:14:00.640 Is that possible that the gentleman from New York and 0:14:00.720 --> 0:14:03.560 from New York City would be the party leader. 0:14:04.920 --> 0:14:08.839 I wouldn't say it's just possible. I'd say it's quite likely. Ordinarily, 0:14:08.880 --> 0:14:11.640 when you have one chamber control, one party control all 0:14:11.679 --> 0:14:15.240 every chambers of Congress, you switch twenty five seats in 0:14:15.320 --> 0:14:17.640 the House of Representatives in any cycle, and that goes 0:14:17.640 --> 0:14:20.880 in both directions, Democrats and Republicans. And what happens is 0:14:20.960 --> 0:14:23.560 Americans tend to vote for change and then they don't 0:14:23.600 --> 0:14:25.920 like it when they get so when you have one 0:14:25.960 --> 0:14:28.400 party control like we have right now with Republicans and 0:14:28.440 --> 0:14:32.600 President Trump in office, we've seen how the President galvanizes 0:14:32.920 --> 0:14:35.840 the Democratic base gets turned out to go through the 0:14:35.920 --> 0:14:38.280 roof in a midterm election cycle. And so I very 0:14:38.320 --> 0:14:41.200 much expect what happened in twenty eighteen to happen here 0:14:41.240 --> 0:14:44.280 again next November. And that's what Republicans will start to 0:14:44.280 --> 0:14:46.360 pivot to as we start here. 0:14:46.760 --> 0:14:51.320 Why are the Democrats winning in Omaha, San Antonio, and 0:14:51.400 --> 0:14:53.440 percolating in other areas as well. 0:14:54.160 --> 0:14:57.000 That one was fascinating in Omaha as well. You know, 0:14:57.040 --> 0:15:00.560 they've been trying to unseat the incumbent Republican for four 0:15:00.640 --> 0:15:03.880 straight cycles, so that came as, you know, a huge 0:15:04.280 --> 0:15:07.000 thing to cheer for the Democratic Party, and they're going 0:15:07.080 --> 0:15:09.640 to continue to try to do that. I think Rammanuel 0:15:09.760 --> 0:15:13.040 made some really good points over the weekend. You know, 0:15:13.080 --> 0:15:15.840 he's obviously telegraphing that he might run for president, but 0:15:16.440 --> 0:15:19.720 have a targeting campaign, Go after individual seats and races 0:15:19.760 --> 0:15:21.680 that you think you can win with a well known 0:15:21.720 --> 0:15:24.520 candidate in that particular district, however small it is, and 0:15:24.560 --> 0:15:27.280 whether it's in San Antonio or Nebraska, go for it. 0:15:28.160 --> 0:15:30.600 Henrietta, We've seen some news coming out over the weekend 0:15:30.640 --> 0:15:34.480 from Los Angeles as it relates to immigration deportations and 0:15:34.960 --> 0:15:39.520 then protests and then President ordering the National Guard into 0:15:39.560 --> 0:15:43.960 Los Angeles. How's all of this broader immigration policy from 0:15:43.960 --> 0:15:47.440 President Trump, which has been very effective from his perspective 0:15:47.480 --> 0:15:50.480 and very quick in terms of implementation. How's that playing 0:15:50.520 --> 0:15:51.760 on Capitol Hill and in DC. 0:15:52.880 --> 0:15:55.400 I'm glad you asked. I was actually with some former 0:15:55.680 --> 0:15:58.720 members of Republican leadership at a conference we were all 0:15:58.720 --> 0:16:01.280 speaking at a few weeks back, and one of the 0:16:01.320 --> 0:16:03.960 remarks that really stuck with me was a sentiment from 0:16:04.120 --> 0:16:07.200 a former Speaker of the House or Republican member saying, 0:16:07.440 --> 0:16:09.840 the trouble with the president's immigration agenda is that he 0:16:09.960 --> 0:16:13.720 was too successful, too quickly. And it's interesting to look 0:16:13.720 --> 0:16:16.320 at the data. There's a leak shut off of flow 0:16:16.360 --> 0:16:18.800 of migrants at the southern border, and the President was 0:16:18.840 --> 0:16:21.840 just extraordinarily effective in getting his you know, close the 0:16:21.840 --> 0:16:24.000 border's tactics in place. 0:16:24.680 --> 0:16:25.560 And what that. 0:16:25.520 --> 0:16:29.000 Did, and we saw just before the situation in LA erupted, 0:16:29.080 --> 0:16:31.880 is that immigration had proceeded as a major focus of 0:16:31.920 --> 0:16:34.680 conversation on Capitol Hill, and we'd lost sight of the 0:16:34.680 --> 0:16:38.320 fact that this one big, beautiful bill includes one hundred 0:16:38.320 --> 0:16:41.680 and seventy five billion dollars just for the Judiciary Committee, 0:16:41.720 --> 0:16:44.600 which is immigration enforcement, to roll out over the next 0:16:44.600 --> 0:16:47.720 couple of years. And I think what the dynamic in 0:16:47.960 --> 0:16:52.200 LA does is it shifts the narrative away from Medicaid cuts, 0:16:52.320 --> 0:16:56.640 Medicare cuts, snap cuts, the deficit increases and positions. It's 0:16:56.640 --> 0:17:00.320 squarely where there is going to be a con certed 0:17:00.480 --> 0:17:04.520 focus and new legislation this week from the United States 0:17:04.520 --> 0:17:07.760 Senate Judiciary Committee on exactly these immigration issues. So it 0:17:07.800 --> 0:17:10.639 gives an opening for the President to revert back to 0:17:10.680 --> 0:17:13.560 something that he promised on the campaign trail has already 0:17:13.560 --> 0:17:16.240 delivered and now needs to resuscitate to our mind motors 0:17:16.240 --> 0:17:18.320 that he in fact handled it and now has to 0:17:18.359 --> 0:17:20.360 address another dust up. 0:17:21.040 --> 0:17:24.640 So where are we on this tax and spending bill, Henrietta? 0:17:24.920 --> 0:17:28.959 Obviously the House has made it its point and now 0:17:29.000 --> 0:17:30.800 it's with the Senate. What's the timing and kind of 0:17:30.800 --> 0:17:32.719 what are the big issues that we need to pay 0:17:32.760 --> 0:17:33.240 attention to. 0:17:34.080 --> 0:17:36.960 Sure this rest of this week we're going to see 0:17:37.000 --> 0:17:40.879 four different committees roll out their respective packages. This is 0:17:41.000 --> 0:17:43.560 mostly going to be on the spending sides. As I mentioned, 0:17:43.720 --> 0:17:46.320 Judiciary gets to spend one hundred and seventy five billion dollars. 0:17:46.520 --> 0:17:49.240 I believe they'll roll out their package on Wednesday or Thursday, 0:17:49.560 --> 0:17:52.480 and then next week we'll get into the Senate Finance Committee, 0:17:52.480 --> 0:17:55.399 where the big heart of the packages. That's where the 0:17:55.440 --> 0:17:57.960 Medicaid cuts are and all the tax spending and most 0:17:58.119 --> 0:18:01.680 deficit financing. I think the bill the last week of July. 0:18:02.000 --> 0:18:04.840 Henry de Trace what's the question you would ask Andrew 0:18:04.880 --> 0:18:06.639 Cuomo of New York State. 0:18:07.400 --> 0:18:10.399 Talk to me about states rights? Where does Gavin Newsom 0:18:10.480 --> 0:18:12.800 stand on states rights? I think that's what the courts 0:18:12.800 --> 0:18:13.600 are going to judge on. 0:18:14.000 --> 0:18:14.840 Ask what you would do? 0:18:15.000 --> 0:18:16.920 He was in opposition states rights all day. 0:18:17.160 --> 0:18:20.040 I promise you we will ask set Henrietta Trace. Thank 0:18:20.080 --> 0:18:21.960 you so much for Vada Partners. 0:18:22.119 --> 0:18:25.959 This is the Bloomberg Surveillance Podcast. Listen live each weekday 0:18:26.000 --> 0:18:29.040 starting at seven am Eastern on Apple Corplay and Android 0:18:29.040 --> 0:18:32.080 Auto with the Bloomberg Business App. You can also listen 0:18:32.160 --> 0:18:35.440 live on Amazon Alexa from our flagship New York station, 0:18:35.960 --> 0:18:39.840 Just say Alexa Play Bloomberg eleven thirty. 0:18:39.160 --> 0:18:43.639 Charles Canter, senior portfolio manager at Newburger Berman. He and 0:18:43.680 --> 0:18:45.800 I can go back and forth on the mistakes we've 0:18:45.840 --> 0:18:49.959 made in our career. It's a long conversation. Charles cantor, 0:18:50.400 --> 0:18:53.560 how do you have humility away from the Meg seven 0:18:54.000 --> 0:18:58.000 when you've got Warner Brothers, Discovery trying to piece together 0:18:59.359 --> 0:19:02.720 you know, the news this morning, it's a time to 0:19:02.720 --> 0:19:05.480 be humble. I guess with the other four hundred eighty 0:19:05.520 --> 0:19:06.720 three stocks, right. 0:19:07.359 --> 0:19:10.240 I think so? I think that look I think we're 0:19:10.280 --> 0:19:13.640 in a market that I would describe as kind of nuanced. 0:19:13.520 --> 0:19:17.280 It frustrates us a bunch when when folks like to 0:19:17.280 --> 0:19:20.160 think about, you know, Magnificent seven and then the other 0:19:20.200 --> 0:19:22.840 four hundred and ninety three companies. I think you want to, 0:19:23.440 --> 0:19:25.480 like we've done a whole career. Is you want to 0:19:25.560 --> 0:19:29.040 kind of look at each company company by company. We've 0:19:29.040 --> 0:19:31.280 been in an environment now for a long time where 0:19:31.960 --> 0:19:35.640