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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern

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Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business app.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: Joining us now he is the Mayor of New York City.

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Speaker 2: We have a two hour conversation to squeeze into a

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Speaker 2: polite twenty minutes. And there are many many taught us

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Speaker 2: to talk of. I want to talk of the immediate news.

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Speaker 2: My father came home to College Point Long Island. In

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Speaker 2: the distance was LaGuardia. What a celebration for New York

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Speaker 2: the rebuilding of LaGuardia. Halfway there is Bayside High School

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Speaker 2: where you used to darken the door, and let's not

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Speaker 2: mince words, it was a challenge Mayor Adams.

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Speaker 3: A few years ago.

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Speaker 2: I want you to speak right now to the teachers

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Speaker 2: of Bayside High School who went with the other guy

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Speaker 2: yesterday in their union endorsement.

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Speaker 4: Well, when you look at what we were able to

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Speaker 4: accomplish here in the city, we've outpaced the state, and

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Speaker 4: reading and math got so much more to do. But

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Speaker 4: also we're developing the fullness of our children, teaching them meditation,

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Speaker 4: breathing exercises, healthier food to eat, so our children are

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Speaker 4: not only academically smart, but we want them to be

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Speaker 4: emotionally intelligent. And at the same time of what we

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Speaker 4: have done in our educational system for one hundred and

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Speaker 4: thirty thousand children in pre K three K of the

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Speaker 4: universal after School program and paid our teachers a dawn

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Speaker 4: Good union contract to make sure that they're having a

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Speaker 4: wage that they deserve.

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Speaker 2: My youngest child, afterthought, went to a school with eleven

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Speaker 2: languages in first grade. You have Ackman and Lobe wall

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Speaker 2: Street support. They talked charter schools, Can you reaffirm here

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Speaker 2: a better education system away from union dynamics and the

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Speaker 2: silliness of it all.

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Speaker 4: It's so important when you think about when a parent

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Speaker 4: drops their child off to school, they're not asking if

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Speaker 4: it's a charter school, if it's a baroq, if it's

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Speaker 4: a body school. They want a quality education in a

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Speaker 4: safe environment.

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Speaker 5: And that is what we've produced.

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Speaker 4: And you know, union heads don't always speak on behalf

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Speaker 4: of the rank and file teachers population of I know

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Speaker 4: those teachers appreciate what I have done as the mayor

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Speaker 4: and what this administration has done, and many of those

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Speaker 4: teachers will be voting for me.

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Speaker 5: Mister mayor.

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Speaker 6: What statement were the Democratic voters making when they selected

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Speaker 6: mister Mandani in the primary? Maybe here in New York

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Speaker 6: City certainly, but maybe even n Ashley.

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Speaker 4: Let's let's examine this, and I think that's something that

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Speaker 4: has been not really understood. Nine percent of voters voted,

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Speaker 4: nine percent, ninety one percent.

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Speaker 5: They have yet to speak.

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Speaker 4: Two point five million Democrats, a million independents, of several

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Speaker 4: hundred thousand Republicans. This is the moment when we're going

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Speaker 4: to see what New Yorkers want. Do you want someone

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Speaker 4: who just fund defunded, just band police departments. Do you

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Speaker 4: want someone that's telling high end commerners to leave our

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Speaker 4: city without understandity economics that they bring. Do you want

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Speaker 4: to stop our progress and one of the healthiest economies

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Speaker 4: we've ever had and public safety? He wants to empty

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Speaker 4: Reikers Island, seventy four hundred of the most dangerous people

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Speaker 4: in our city. He wants to empty Rykers Island and

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Speaker 4: have them come back to the communities that they offended.

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Speaker 5: And so New Yorkers are going to be able to

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Speaker 5: hear clear.

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Speaker 4: Messages of what the future looks like and what that

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Speaker 4: future looks like under him.

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Speaker 6: Current polling Slingshot strategies have mister Moundani at first at

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Speaker 6: thirty five percent of the vote, Governor Cuomo second at

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Speaker 6: twenty five percent, mister Sliov fourteen percent, and you at

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Speaker 6: eleven percent. What does that poll tell you? What do

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Speaker 6: you need to do to change those?

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Speaker 4: It tells me to listen to polls twenty one They

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Speaker 4: had me thirteen percent behind Andrew Yang, thirteen percent behind

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Speaker 4: Andrew Yang. And we're not calling him, but you may.

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Speaker 3: Not find Governor of Cuomo. What do you need? Have

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Speaker 3: you spoken to Governor Cuomo yet?

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Speaker 5: In this communicated with him several times.

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Speaker 4: Andrew has a history of doing things when it comes

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Speaker 4: down to African American candidates. He did it to Carl

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Speaker 4: McCall when he ran for governor. He did it to

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Speaker 4: David bat Patterson when he who spoke recently exactly he

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Speaker 4: did it. He did it to Charlie King when Charlie

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Speaker 4: King ran for ag He did it to Keith Wright.

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Speaker 5: He has a history and I think that reporting or no.

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Speaker 4: Sabotage in the racing trying to compel them to get

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Speaker 4: out of the race. He underestimated Eric Adams, a former

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Speaker 4: cop that knows what a bully looks like. And I

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Speaker 4: am going to complete this race. My campaign has just started.

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Speaker 4: I have not been campaigning and not have an opportunity

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Speaker 4: to speak to voters.

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Speaker 3: You're going to complete this.

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Speaker 2: Let's be clear for us, particularly for our national audience.

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Speaker 2: Eric Adams with us here at this interesting time for

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Speaker 2: the city and a course for the nation is well.

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Speaker 2: Thank you for joining Bloomberg surveillance on television in radio,

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Speaker 2: Mayor Adams. But the critical distinction here is the timeline

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Speaker 2: to the election. When does the Adams Cuomo tension need

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Speaker 2: to get fixed to come to an efficacious outcome for

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Speaker 2: the people against mister mcdonnie.

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Speaker 5: Think about this for a moment.

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Speaker 4: Andrew knew that Madonnie was going to be on the

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Speaker 4: ballot on a Brokens family party line.

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Speaker 5: He knew that.

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Speaker 4: He knew I was going to be as a Democrat

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Speaker 4: on my own line. He knew that, so why would

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Speaker 4: he also do an independent line. He created this scenario

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Speaker 4: because he thought by doing so, he can force me.

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Speaker 2: Saying that Andrew Croomo created mister Mucdoni's campaign.

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Speaker 4: He created this scenario that created an opportunity to divide

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Speaker 4: the vote instead of being unified around Madonni. This was

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Speaker 4: his creation and it's typical of how he creates these scenarios.

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Speaker 5: We're not going to succumb to that.

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Speaker 4: He had his chance, twenty five million dollars he spent,

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Speaker 4: he got his message out, he didn't campaign, he didn't

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Speaker 4: go out and interact with voters.

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Speaker 5: He created it.

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Speaker 4: Now it's time for me to have an opportunity and

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Speaker 4: we will win and beat him.

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Speaker 6: Has Governor Cuomo asked you not to run, or if

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Speaker 6: you asked Governor Cuomo not to.

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Speaker 4: Run both when he spoke, we both interacted and I

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Speaker 4: said you should step aside.

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Speaker 5: For the good of this city.

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Speaker 4: We both agreed the city were move in the wrong

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Speaker 4: direction under the primary winner, and I think he should

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Speaker 4: do the right thing.

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Speaker 6: If he doesn't do the right thing. From your perspective,

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Speaker 6: would you run as a Republican?

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Speaker 4: No, Curtis lee Or is a Republican primary winner. He's

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Speaker 4: the winner of that party. It's too late to switch

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Speaker 4: that right now. I'm going to give votes from all

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Speaker 4: New Yorkers because when New York is one safe street.

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Speaker 4: They're not asking if they're a Democrat or Republican. They

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Speaker 4: want their street safe.

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Speaker 2: The constant, the Mayor of our interviews and Surveillance, has

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Speaker 2: been committed to talking about this debate. But it's national

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Speaker 2: ramifications and you mentioned it earlier. The New York Police

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Speaker 2: Department is a general rule. I'm speaking as an amateur.

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Speaker 2: We're three thousand down on the body count of the

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Speaker 2: New York Police Department. What are you going to do

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Speaker 2: day one on a second term mayor to get the

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Speaker 2: NYPD back to a forward motion.

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Speaker 4: Well, that urgency can't happen on the re election is

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Speaker 4: happening now. We're in the place to bring on four

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Speaker 4: thousand more offices by way they're starting now. We have

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Speaker 4: a class that's in now. By the end of the year,

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Speaker 4: we're going to be substantially higher. And part of the

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Speaker 4: problem is a lot of the large classes. We saw

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Speaker 4: a lttrition, We saw a lot of offices retirement. That

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Speaker 4: is why I was imperative as the mayor that I

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Speaker 4: settled a good contract with our union members.

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Speaker 2: Eric Adams with us here the Mayor of New York City.

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Speaker 2: Welcome all your nationwide. How you listen on your commute.

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Speaker 2: Good Morning ninety FM and Washington ninety two nine FM

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Speaker 2: in Boston, of course, Bloomberg eleven three to zero here

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Speaker 2: in New York on YouTube, our new digital platform. Mayor

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Speaker 2: Adams watches every day. Subscribe to Bloomberg Podcast.

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Speaker 6: Paul, mister Mary, let's talk about immigration right off the

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Speaker 6: tip of Manhattan. We've got the Statue of Liberty that

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Speaker 6: means a lot to a lot of New Yorkers. How

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Speaker 6: do you think about immigration in this city and maybe

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Speaker 6: how does that different from what President Trump thinks about Well,

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Speaker 6: and you're.

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Speaker 4: Right, that statue represents a lot, and particularly when you

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Speaker 4: look at the fact that my nineteen year uncle died

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Speaker 4: to protect the right of being an American and Vietnam War.

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Speaker 4: But think about this one moment coming here. You should

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Speaker 4: not be inflicting violence on undocumented New Yorkers or documented

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Speaker 4: New Yorkers. We manage a humanitarian crisis with two hundred

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Speaker 4: and thirty seven thousand microcin or silmce seecret and I

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Speaker 4: once slept on our streets. Every one of those children

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Speaker 4: were educated in our school system. And I'm going to

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Speaker 4: coordinate with federal authorities to go after those who are

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Speaker 4: dangerous at the Veniceth whaling gang members we took down

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Speaker 4: that were selling drugs, forcing women into prostitution who were undocumented.

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Speaker 4: The law does not allow us to collaborate for civil enforcement.

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Speaker 4: We won't do that, but we will collaborate to go

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Speaker 4: after dangerous people.

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Speaker 2: I should mention again Good Morning on Bloomberg Television with

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Speaker 2: Katie Greifeld in Snli Bassk as.

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Speaker 3: Well Mary Adams. Here's the headline.

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Speaker 2: I talked to Laura Aamais and this is just so

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Speaker 2: important within her expertise of this city. The LA Times

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Speaker 2: heavily armed immigration agents to send on LA's MacArthur Park.

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Speaker 2: If I'm having a beverage at the Sunset Tower Hotel,

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Speaker 2: I look across the opulence of LA to a really

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Speaker 2: tough part of town. And the other day we saw

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Speaker 2: military enforcement wrapped around these deportations and ice marching across

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Speaker 2: MacArthur Park in Los Angeles. The critics to you will say,

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Speaker 2: you're in Trump's back pocket. How are you going to

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Speaker 2: push against the president and his administration? If we have

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Speaker 2: those tensions in New York.

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Speaker 4: You know, one of the best saying is if you

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Speaker 4: tell a lie long enough, you think it's true, but

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Speaker 4: we need to deal with the facts here. We took

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Speaker 4: this administration to court on things we thought were wrong,

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Speaker 4: more than any mayor in the country, more than any

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Speaker 4: mayor in the country.

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Speaker 5: But when I.

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Speaker 4: Needed the President to lift the stop broke order on

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Speaker 4: a multi billion dollar wind farm project in Sunset Park,

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Speaker 4: fifteen hundred union jobs, five hundred thousand homes would have

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Speaker 4: benefited from I flew to Washington, had a healthy conversation

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Speaker 4: with him. He lifted the stopbroke order. Same relationship I

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Speaker 4: had with President Biden. Ten trips to Washington, two meetings

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Speaker 4: with the President to deal with law enforcement officer. I

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Speaker 4: nicknamed myself the Biden of Brooklyn. I work with presidents

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Speaker 4: out on war. With presidents. I have to deliver for

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Speaker 4: the City of New York, and it would be irresponsible

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Speaker 4: for any mayor not to do that.

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Speaker 2: But under the granularity of the selection in this it's

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Speaker 2: like Lindsey in the nineteen eighties or something I got

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Speaker 2: it can't keep tracking. Is Adam's an independent and Democrat

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Speaker 2: or Republican?

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Speaker 3: What is wait, we don't know this.

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Speaker 2: He's an independent mayor Adams. My team is listening to

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Speaker 2: this interview and there has to be a clarification of

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Speaker 2: your relationship with the President of the United States. When

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Speaker 2: will we see that.

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Speaker 5: I think you're seeing it now.

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Speaker 4: You're seeing a mayor that's defending and fighting for his

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Speaker 4: city in a responsible way. New York City is the

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Speaker 4: largest city in America. And if you're going to be

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Speaker 4: the mayor of that city and you are unwilling to

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Speaker 4: communicate with the President of the United States, if it's

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Speaker 4: Biden or Donald Trump, if it's a Democrat or Republican,

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Speaker 4: that's irresponsible. Governor Ku went to Washington several times. Mayors

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Speaker 4: across the country are going to Washington, and so for

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Speaker 4: anyone that states that the mayor of the largest city

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Speaker 4: in the country should not be communicating with the White House,

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Speaker 4: that's irresponsible. You're not delivering for your city. I must

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Speaker 4: deliver for New York. That is my primary goal, and

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Speaker 4: that's who I respond to.

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Speaker 6: Mister Merrick in terms of delivering for New York. New

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Speaker 6: York City cost of living has always been a key issue.

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Speaker 5: What is the plan?

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Speaker 7: Is there a solution here?

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Speaker 6: Because every day people keep coming into this island of Manhattan,

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Speaker 6: how do we house them all?

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Speaker 4: Twenty twenty one, when I ran for office, the top

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Speaker 4: issue was public safety and housing.

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Speaker 5: Follow that.

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Speaker 4: The reason you're seeing other conversations come on the floor

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Speaker 4: in this election is because we solved the public safety problem.

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Speaker 4: You see was Commissioner tish, we have the lowest numbers

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Speaker 4: of our state.

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Speaker 3: Let me interrupt. I will state where I live, folks.

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Speaker 2: I can state it's not as bad as it was

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Speaker 2: eighteen months ago. I still don't like it. But Mayor Adams,

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Speaker 2: I'm gonna cut you some slack here. It's better than

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Speaker 2: it was.

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Speaker 4: Four point six million people take our subway system every day.

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Speaker 4: We have an average of five felonies to day we

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Speaker 4: had a four point six million. These police officers are

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Speaker 4: doing an amazing job of keeping us safe. But the

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Speaker 4: issue of affordability, I know it so well. I grew

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Speaker 4: up in poverty. The primary winner grew up in luxury.

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Speaker 4: Yet that same luxury he grew up in. He stating

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Speaker 4: that we should not have a financial ecosystem. I want

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Speaker 4: the person that drives a limousine to have prosperity in

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Speaker 4: the city, and the person assists in the back of

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Speaker 4: the limousine, that's the city I want to live in.

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Speaker 2: Cheering again learns briefing me on this is you came

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Speaker 2: into office and there was a scandal. That scandal that

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Speaker 2: I don't even know. It's old news for me. It's

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Speaker 2: water well under the bridge. But there's a zeitgeist now

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Speaker 2: that you need to get a new team as the

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Speaker 2: next mayor, maybe involving some.

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Speaker 3: Of those people in limousines.

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Speaker 2: You're teamed up with Acman Lobe and the others within

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Speaker 2: the financial business. If the other guys elected Mandami, everywhere Johnna,

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Speaker 2: they move into Coral Gables or to Miami.

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Speaker 7: Oh both.

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Speaker 3: This is Sirian Manor. This is serious, tough.

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Speaker 2: You've got a mandate for five How many millions of

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Speaker 2: people are under your watch?

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Speaker 4: Eight point five million New York is three hundred and

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Speaker 4: twenty thousand employees.

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Speaker 2: I want you to talk to the one hundred thousand

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Speaker 2: fancy people in those limousines right now.

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Speaker 3: How are you going to get them not to move

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Speaker 3: to Florida.

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Speaker 4: Well, first of all, we're going to win this race,

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Speaker 4: and in my re election, we're going to continue what

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Speaker 4: we have done in New York. As we talk about

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Speaker 4: this business channel here, we have more jobs in the

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Speaker 4: city in the city's history, more small businesses in the

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Speaker 4: city's history. Bond raiders raised our bond as they saw

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Speaker 4: us navigate out of COVID migrance.

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Speaker 5: And asylum seekers crimes.

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Speaker 4: When you take twenty two thousand illegal guns off the

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Speaker 4: streets one hundred thousand illegal vehicles that were used in

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Speaker 4: current criminal behavior, you have stabilized the city. The economic

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Speaker 4: stimulus package of the city is public safety.

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Speaker 6: Well, mister Marrick, given where the polls have you now,

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Speaker 6: whether you believe the polls or not, what is your

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Speaker 6: path to victory?

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Speaker 5: Do you believe voters? New voters?

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Speaker 4: Ninety one percent of the voters did not participate in

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Speaker 4: this election. We have a substantial number. We're going to

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Speaker 4: register a million new voters over the next few months.

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Speaker 4: And everyone is talking about the excitement that is felt

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Speaker 4: over the primary winner. What they're missing is the excitement

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Speaker 4: that I am seeing every day of those who say

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Speaker 4: this can't happen.

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Speaker 6: How do you run against mister Monami? I'm sorry, how

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Speaker 6: would you run against him? How will you run against him?

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Speaker 5: You have to do it in layers.

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Speaker 4: You have to look at the various communities. And when

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Speaker 4: I say communities, I'm not talking about a geographical location.

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Speaker 4: I'm talking about issues. I met with two hundred and

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Speaker 4: fifty bodega and supermarket owners yesterday, a government run supermarket.

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Speaker 5: Would devastate their business.

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Speaker 4: I met with two hundred and fifty of the seven

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Speaker 4: hundred thousand small property owners. Can you imagine telling a

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Speaker 4: small property owner that you can never raise the rent

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Speaker 4: so that your rent rolls no longer equal the repairs

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Speaker 4: of the building. Those small property owners are going to

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Speaker 4: lose their property. All of these different communities are now

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Speaker 4: waking up and realizing what his policies would do to

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Speaker 4: them individually.

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Speaker 2: I'm going to make this the final question and come

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Speaker 2: full circle to where we are before.

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Speaker 3: And we'll again it.

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Speaker 2: Well, thank you so much on Bloomberg Television and worldwide

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Speaker 2: for being with us. The distinction of this campaign is

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Speaker 2: the kid you were and it was a train wreck.

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Speaker 3: When did your life turn around?

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Speaker 5: Well?

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Speaker 2: How old were you when your childhood became you as

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Speaker 2: a police officer? What was the age where the tip

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Speaker 2: about twenty?

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Speaker 5: About nineteen years old?

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Speaker 2: The parents of that nineteen year old bratt, whoever they

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Speaker 2: are today, Okay, they are voting for the tradition.

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Speaker 3: Of Mario Cuomo.

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Speaker 2: How do you get them to shift from Mario Cuomo's

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Speaker 2: son over to Eric Adams, how do you get that

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Speaker 2: conservative black public safety electorate to turn and vote for you?

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Speaker 5: Well, they voted for me in twenty twenty one.

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Speaker 4: And remember this as we reflect when this see election

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Speaker 4: of you know, my first job at twelve years old

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Speaker 4: as a paperboy, then becoming a dishwasher, then working in

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Speaker 4: the firelroom of Blue Cross, Blue Shield, rooking in the

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Speaker 4: fowl and Pete. Mit you that long leg legacy of

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Speaker 4: blue collar work is helping me understand the needs of

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Speaker 4: the working class people in the city.

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Speaker 3: Mary Adams, thank you so much for joining Bloomberg.

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Speaker 5: Great to be appreciate it.

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Speaker 2: He is Eric Adams of New York City.

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Speaker 1: Here you're listening to the Bloomberg Surveillance Podcast. Catch us

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Speaker 1: live weekday afternoons from seven to ten am Eastern Listen

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Speaker 1: on Applecarplay and Android Otto with the Bloomberg Business app,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: Julian Emmanuel working with Eda Hyman at Evercourt Isi. You

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Speaker 2: people have seen a grinding equity market before. How do

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Speaker 2: you interpret it and how do you get on board

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Speaker 2: a grinding market?

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Speaker 3: I can't catch up to.

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Speaker 8: It's an incredible challenge. In fact, this is one of

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Speaker 8: these times where whether you're overinvested just write or underinvested.

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Speaker 8: And I promise that if you feel under invested, you

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Speaker 8: feel bad. But there's emotion going on here, okay, and

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Speaker 8: so what you really need to do is focus out

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Speaker 8: on the long term because, let's face it, at this

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Speaker 8: point with the market, grinding stocks are very expensive.

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Speaker 2: Take us some of the trenches of isi. You're sitting

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Speaker 2: there April second, April third, April Ford Liberation Day. Ed,

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Speaker 2: heyman's got the big fat black pen in his hand,

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Speaker 2: and you guys are trying to create a newsletter.

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Speaker 3: What did you say in early April?

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Speaker 8: So there were two things that gave us conviction that

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Speaker 8: you should be a buyer in April number one, Ed

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Speaker 8: and the Econ team never ever thought there was going

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Speaker 8: to be a recession. And in fact, we do a

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Speaker 8: Friday webinar that a thousand clients to an intel.

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Speaker 2: Ed jymend does into a webinar.

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Speaker 8: It doesn't the best thirty minutes on Wall Street. And

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Speaker 8: I know you all you know want that title.

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Speaker 3: Wall Street Week was never.

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Speaker 2: A webinar with Uguiser continue.

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Speaker 8: But at that time that week in April, eighty one

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Speaker 8: percent of our clients thought we were either in a

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Speaker 8: recession or one would start in the second half, and

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Speaker 8: the data was never there. And from the strategy side,

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Speaker 8: we saw the volatility explode to levels that really were

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Speaker 8: consistent with past turnarounds at the same time the volume exploded.

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Speaker 8: At the same time the bear sentiment was just off

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Speaker 8: the charts. And those combinations, particularly the idea of no recession,

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Speaker 8: means you gotta buy.

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Speaker 6: Four elements that kill a structurable market. That's in your

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Speaker 6: note here today. What are those Are any of them

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Speaker 6: out there?

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Speaker 8: None of them are out there at the moment, Paul,

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Speaker 8: which is why again it's such a challenge here and

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Speaker 8: why frankly, stocks have become as expensive as they are.

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Speaker 8: The rebound from that sentiment trough in April because we

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Speaker 8: knew there wasn't going to be recession. We still don't

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Speaker 8: think there's a recession. We do think that there's a

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Speaker 8: slowdown that continues in the second half. The second is

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Speaker 8: what we would call an uncooperative fed cooperative.

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Speaker 5: We mean hiking.

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Speaker 8: Look, they're not gonna hike. There's no inflation reading we

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Speaker 8: can see in the next several months, however high where

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Speaker 8: they will hike. They may cut less, but they're not hiking.

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Speaker 8: The third would be longer term yield spiking. Let's face it,

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Speaker 8: the ten year yield, it's yeah, four thirty every day

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Speaker 8: of the week for the last two years.

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Speaker 5: And that's how it is.

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Speaker 8: And that's a good thing, and that's part of why

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Speaker 8: investors have had enough confidence to bid up stocks. And

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Speaker 8: then the last one is the one that we think

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Speaker 8: that eventually will end the bullmarket cycle, and that's a

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Speaker 8: period of fomo and capital markets activity. Every single bullmarket

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Speaker 8: has that. In the late stages, you're starting to see

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Speaker 8: a little bit of fomo and frankly, the capital market

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Speaker 8: cycle is percolating.

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Speaker 2: But the capital market cycle, when we blow up, it's

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Speaker 2: always Paul Sweeney's four.

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Speaker 7: I mean, I think about the late nineties.

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Speaker 6: I was front center there, folks. Valuation boy, this market

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Speaker 6: seems expensive to me, and I'm not sure the earnings

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Speaker 6: growth is out there to support it. What do you

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Speaker 6: say to those folks.

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Speaker 8: We say the following. Okay, it is expensive, there's no

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Speaker 8: question about it. But when you actually look at the

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Speaker 8: set of circumstances that cause the roller coaster to have

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Speaker 8: the scary ride down and now the grind back up.

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Speaker 8: This has happened a number of times in the past

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Speaker 8: when you haven't had a recession, eighteen months later the

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Speaker 8: market is on average twenty six percent higher. But the

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Speaker 8: flip side of that, and where we think people need

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Speaker 8: to be cognizant now, is there are pullbacks. It comes

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Speaker 8: with volatility.

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Speaker 3: Look Julian at.

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Speaker 2: This, and it's the heritage of Ed Hymen over decades.

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Speaker 2: And I think what mister Hyman would say is, you

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Speaker 2: know what American companies adapt if they're adapting, and particularly

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Speaker 2: away from the tech darlings, are they adapting to margin

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Speaker 2: leveling or persistency or dare I say margin expansion? Because

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Speaker 2: of AI and general productivity.

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Speaker 5: No question about it.

446
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Speaker 8: AI is a tailwind. But actually what's more interesting if

447
00:23:13,200 --> 00:23:16,160
Speaker 8: you look on the screen today at the positive response

448
00:23:16,240 --> 00:23:19,520
Speaker 8: in the airline stocks, and that is a tribute to

449
00:23:19,560 --> 00:23:22,560
Speaker 8: the fact that if you go back to April, all

450
00:23:22,640 --> 00:23:27,240
Speaker 8: of those companies were appropriately cautious in their guidance and

451
00:23:27,320 --> 00:23:30,240
Speaker 8: in this environment, when you set the bar low enough

452
00:23:31,000 --> 00:23:34,840
Speaker 8: and you get results that in other conditions might be

453
00:23:35,040 --> 00:23:38,520
Speaker 8: good or you know, but these you know, really beat

454
00:23:38,600 --> 00:23:43,359
Speaker 8: expectations and basically confirming the fact, as you said, that

455
00:23:43,520 --> 00:23:48,160
Speaker 8: planes are full and frankly, technology is one of those

456
00:23:48,240 --> 00:23:50,240
Speaker 8: areas that the airlines are exploded.

457
00:23:51,520 --> 00:23:55,080
Speaker 6: Do I love this one? If you use options, you

458
00:23:55,200 --> 00:23:58,800
Speaker 6: buy options when the VIX is low like now. You

459
00:23:58,880 --> 00:24:02,200
Speaker 6: buy stocks when the VIX is high, like in April

460
00:24:02,200 --> 00:24:05,240
Speaker 6: twenty five and August twenty four. So we're buying options

461
00:24:05,240 --> 00:24:08,040
Speaker 6: now because we've got the Tom Keen memorial vix blow

462
00:24:08,080 --> 00:24:09,000
Speaker 6: sixteen right.

463
00:24:09,280 --> 00:24:14,600
Speaker 8: So basically, again, this is the way that you keep

464
00:24:14,640 --> 00:24:17,720
Speaker 8: your emotions in check. When stocks are trading close to

465
00:24:17,760 --> 00:24:20,960
Speaker 8: twenty five times earnings and we know they're expensive, they

466
00:24:21,000 --> 00:24:24,679
Speaker 8: can get more expensive cause those elements causing the end

467
00:24:24,720 --> 00:24:27,639
Speaker 8: of the old market aren't there. But you buy options

468
00:24:27,760 --> 00:24:32,080
Speaker 8: a because if the market runs away, you're participating and

469
00:24:32,119 --> 00:24:34,440
Speaker 8: be there cheap enough that if the market pulls back,

470
00:24:34,600 --> 00:24:35,040
Speaker 8: we're head.

471
00:24:35,320 --> 00:24:36,320
Speaker 3: This is great, Paul.

472
00:24:36,440 --> 00:24:40,000
Speaker 2: With Edheiman and Julian Emmanuel, it's like Mandalorian.

473
00:24:40,400 --> 00:24:41,920
Speaker 3: I mean they're sitting there and.

474
00:24:41,840 --> 00:24:44,920
Speaker 2: They're in a meeting with their interns, and Edheimen's going

475
00:24:45,240 --> 00:24:49,600
Speaker 2: this is the way, Julian Emanuel, thank you so much.

476
00:24:49,960 --> 00:24:53,880
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

477
00:24:53,880 --> 00:24:56,920
Speaker 1: starting at seven am Eastern on Apple Corplay and Android

478
00:24:56,920 --> 00:24:59,880
Speaker 1: Auto with the Bloomberg Business app. You can also listen

479
00:25:00,119 --> 00:25:03,320
Speaker 1: live on Amazon Alexa from our flagship New York station.

480
00:25:03,880 --> 00:25:06,680
Speaker 1: Just say Alexa play Bloomberg eleven thirty.

481
00:25:06,600 --> 00:25:08,679
Speaker 2: R ander sheets from London in with us that with

482
00:25:08,800 --> 00:25:12,840
Speaker 2: Morgenstein and the chief process at Strategy is really really

483
00:25:12,960 --> 00:25:18,120
Speaker 2: competent at the architecture, the underlying mathematics of.

484
00:25:18,080 --> 00:25:19,920
Speaker 3: The of Global Wall Street.

485
00:25:19,920 --> 00:25:22,399
Speaker 2: We're thrilled at Andrew could are you still based in London?

486
00:25:22,480 --> 00:25:22,960
Speaker 5: Are you here?

487
00:25:23,520 --> 00:25:26,360
Speaker 7: I'm still based in London. It's you're visiting, visiting.

488
00:25:26,119 --> 00:25:29,840
Speaker 3: Okay, great. What is the integrity of the market right now?

489
00:25:29,840 --> 00:25:33,280
Speaker 2: When you look at you know, the four derivatives co movements,

490
00:25:33,280 --> 00:25:36,000
Speaker 2: if you will, not crotosis in that, but if you

491
00:25:36,160 --> 00:25:40,760
Speaker 2: just look at the underlying financial architecture of the market,

492
00:25:40,960 --> 00:25:41,960
Speaker 2: is it normal now?

493
00:25:42,480 --> 00:25:42,680
Speaker 5: Well?

494
00:25:42,720 --> 00:25:46,400
Speaker 7: I do think we've still seen up until recently still

495
00:25:46,440 --> 00:25:49,320
Speaker 7: a lot of uneven leadership. You know, I think you've

496
00:25:49,359 --> 00:25:52,480
Speaker 7: had this this real tension between on the surface, what

497
00:25:52,560 --> 00:25:55,520
Speaker 7: seems like an incredibly strong market equities at all time highs,

498
00:25:55,560 --> 00:25:59,159
Speaker 7: credit at kind of near cycle lows, and yet that

499
00:25:59,200 --> 00:26:02,440
Speaker 7: equity strength has been more narrow, that equity strength has

500
00:26:02,440 --> 00:26:06,320
Speaker 7: been more defensive in quality lead, and that remains our

501
00:26:06,400 --> 00:26:08,639
Speaker 7: view at Morgan Stanley. We prefer the US over the

502
00:26:08,640 --> 00:26:11,320
Speaker 7: rest of the world. We prefer large caps over small caps.

503
00:26:11,359 --> 00:26:14,560
Speaker 7: We've still had that quality bias, as I still think

504
00:26:14,600 --> 00:26:16,760
Speaker 7: the market still has to go through a period where

505
00:26:16,800 --> 00:26:20,359
Speaker 7: growth is decelerating the second half. So this is still

506
00:26:20,400 --> 00:26:23,159
Speaker 7: I think a constructive backdrop in the sense that you know,

507
00:26:23,280 --> 00:26:25,800
Speaker 7: like we just heard from Julian, we also don't think

508
00:26:25,800 --> 00:26:28,080
Speaker 7: we see a recession this year. We do think the

509
00:26:28,119 --> 00:26:30,560
Speaker 7: FED is going to cut more than the market expects

510
00:26:30,640 --> 00:26:33,440
Speaker 7: through the end of twenty twenty six, but those FED

511
00:26:33,440 --> 00:26:35,480
Speaker 7: cuts don't arrive in twenty twenty five in our view,

512
00:26:35,520 --> 00:26:37,960
Speaker 7: and that that will still I think accourge equality by it.

513
00:26:38,280 --> 00:26:40,560
Speaker 2: I saw somebody yesterday and I want to say Michael Feroli,

514
00:26:40,640 --> 00:26:42,600
Speaker 2: but I'm not sure. Oh, they're not looking for a

515
00:26:42,600 --> 00:26:45,360
Speaker 2: cut till December. When's your first cut?

516
00:26:45,400 --> 00:26:46,920
Speaker 7: Our first cut we don't have until the end of

517
00:26:46,920 --> 00:26:50,520
Speaker 7: the first quarter of twenty twenty six. In twenty twenty.

518
00:26:50,240 --> 00:26:55,480
Speaker 6: Six, let him so, Andrew, we saw some movement, some

519
00:26:55,600 --> 00:26:59,640
Speaker 6: pronounced movement of flows out of the US into rest

520
00:26:59,640 --> 00:27:02,400
Speaker 6: of the war, including European equities.

521
00:27:02,400 --> 00:27:03,120
Speaker 5: Earlier this year.

522
00:27:04,440 --> 00:27:07,399
Speaker 6: Was that a trade Is that a longer term play.

523
00:27:07,440 --> 00:27:08,639
Speaker 6: How do you guys see that when you talk to

524
00:27:08,680 --> 00:27:09,159
Speaker 6: your clients.

525
00:27:09,320 --> 00:27:12,400
Speaker 7: Yees, So I do think you have kind of multiple,

526
00:27:13,280 --> 00:27:17,480
Speaker 7: multiple factors kind of overlapping there. So I think we

527
00:27:17,560 --> 00:27:21,719
Speaker 7: are in the dollar bear camp, and more so than

528
00:27:21,760 --> 00:27:24,919
Speaker 7: I think the consensus. We at Morgan Stanley are forecasting

529
00:27:24,960 --> 00:27:27,800
Speaker 7: the dollar too. We can buy by eight percent from

530
00:27:27,880 --> 00:27:31,080
Speaker 7: here over the next twelve months. So but we don't

531
00:27:31,080 --> 00:27:34,880
Speaker 7: think that's necessarily investors, you know, fleeing the US per se.

532
00:27:35,000 --> 00:27:37,919
Speaker 7: We think that is investors realizing that the dollar just

533
00:27:38,000 --> 00:27:40,720
Speaker 7: doesn't have the defensive characteristics that usually did.

534
00:27:40,960 --> 00:27:41,960
Speaker 6: What thing is that do you think?

535
00:27:42,240 --> 00:27:45,320
Speaker 7: I think it's a mixture that US policy has become

536
00:27:46,000 --> 00:27:50,040
Speaker 7: more uncertain, trade policy has become more uncertain. US growth

537
00:27:50,400 --> 00:27:53,320
Speaker 7: relative the rest of the world has become worse on

538
00:27:53,359 --> 00:27:57,159
Speaker 7: our forecasts. And we also think that if the Fed

539
00:27:57,480 --> 00:27:59,800
Speaker 7: can't cut this year, and we don't think they will

540
00:27:59,840 --> 00:28:03,320
Speaker 7: be because inflation's going to re accelerate a bit as

541
00:28:03,359 --> 00:28:05,679
Speaker 7: tariffs come on, they might have to cut a lot

542
00:28:05,720 --> 00:28:07,360
Speaker 7: more next year. And if they cut a lot more

543
00:28:07,400 --> 00:28:10,160
Speaker 7: next year, that growth, that rate differential that was so

544
00:28:10,200 --> 00:28:11,680
Speaker 7: beneficial the dollar will narrow.

545
00:28:11,840 --> 00:28:15,119
Speaker 6: Okay, Globally, your cross is strategies. You're in London, you

546
00:28:15,160 --> 00:28:18,040
Speaker 6: can do anything. Where do you guys see the best

547
00:28:18,119 --> 00:28:19,080
Speaker 6: value here right now?

548
00:28:19,280 --> 00:28:23,000
Speaker 7: So, in a relatively unexciting way, we think this is

549
00:28:23,000 --> 00:28:26,800
Speaker 7: a pretty good environment for duration. We think that rates

550
00:28:26,840 --> 00:28:27,800
Speaker 7: have backed up a bit here.

551
00:28:27,920 --> 00:28:31,919
Speaker 2: We think that's French fifty years or you buying perpetuities.

552
00:28:32,240 --> 00:28:33,760
Speaker 3: What is this a Charles Dicken novel.

553
00:28:34,000 --> 00:28:36,320
Speaker 7: Well, we're actually a little bit cautious on France a

554
00:28:36,400 --> 00:28:38,560
Speaker 7: relative to the rest of Europe. But you know, I

555
00:28:38,560 --> 00:28:40,480
Speaker 7: think the ECB will continue to cut. We think the

556
00:28:40,520 --> 00:28:43,920
Speaker 7: Bank of England will cut in August. We think that Look,

557
00:28:44,080 --> 00:28:46,880
Speaker 7: Europe has ECB as a single mandate, which is inflation.

558
00:28:47,040 --> 00:28:49,840
Speaker 7: Inflation is going to continue to come down in contrast

559
00:28:49,880 --> 00:28:52,920
Speaker 7: with the US. We think that will support European duration

560
00:28:53,080 --> 00:28:55,920
Speaker 7: is you have slower growth, you have lower inflation. And

561
00:28:56,000 --> 00:28:58,160
Speaker 7: in the US we think the rate market will kind

562
00:28:58,160 --> 00:29:01,240
Speaker 7: of look through this temporary right of inflation to say, look,

563
00:29:01,240 --> 00:29:03,680
Speaker 7: the growth is going to be slowing down. These tariffs

564
00:29:03,720 --> 00:29:06,160
Speaker 7: are attacks on the consumer. Growth is going to slow.

565
00:29:06,200 --> 00:29:07,240
Speaker 7: The Fed'll have to cut more.

566
00:29:07,560 --> 00:29:09,760
Speaker 2: Let me ask you one more asset question. Then I

567
00:29:09,800 --> 00:29:12,040
Speaker 2: want to talk about London, because a huge body of

568
00:29:12,080 --> 00:29:15,320
Speaker 2: our audience pro and non pro are really curious about

569
00:29:15,320 --> 00:29:18,640
Speaker 2: the state of Andrew Sheets the city. And if I

570
00:29:18,640 --> 00:29:21,800
Speaker 2: can talk as we did with Julian Emmanuel about this

571
00:29:22,040 --> 00:29:25,840
Speaker 2: modern frenzy which was invented in the Brown math department

572
00:29:25,960 --> 00:29:29,080
Speaker 2: years ago, of trying to be smarter than the market

573
00:29:29,160 --> 00:29:34,000
Speaker 2: in market timing Andrew Sheets on the BS of market timing.

574
00:29:35,200 --> 00:29:38,320
Speaker 7: So I think what is challenging is that if we

575
00:29:38,360 --> 00:29:40,840
Speaker 7: look at trying to quantify that question, can we come

576
00:29:40,920 --> 00:29:44,040
Speaker 7: up with indicators that give us a better than average

577
00:29:44,080 --> 00:29:47,760
Speaker 7: odds of thinking about short term direction. I think what

578
00:29:47,840 --> 00:29:50,719
Speaker 7: you find, or what we've found, is that those indicators

579
00:29:50,760 --> 00:29:55,400
Speaker 7: work well or better under fear. Under extreme fear you

580
00:29:55,480 --> 00:29:58,080
Speaker 7: just your previous guests referred to kind of April second,

581
00:29:58,200 --> 00:30:02,400
Speaker 7: you can find signal that work on average more often

582
00:30:02,440 --> 00:30:05,080
Speaker 7: than not under extreme fear to give you short term

583
00:30:05,120 --> 00:30:08,520
Speaker 7: buy signals. It is very hard. We have been unsuccessful,

584
00:30:08,600 --> 00:30:11,360
Speaker 7: much less successful to give you sell signals. It's much

585
00:30:11,360 --> 00:30:14,080
Speaker 7: harder to call tops. It's much harder to find indicators

586
00:30:14,080 --> 00:30:15,120
Speaker 7: that successfully do that.

587
00:30:15,200 --> 00:30:18,400
Speaker 2: I can't bottle what you just heard for the kids

588
00:30:18,440 --> 00:30:22,000
Speaker 2: on Global Wall Street. What you heard is on the

589
00:30:22,120 --> 00:30:25,840
Speaker 2: edge of teleb one, Oh one the certitude of dealing

590
00:30:25,960 --> 00:30:30,080
Speaker 2: with a Gaussian bell curved mindset. And Andrew Sheets and

591
00:30:30,120 --> 00:30:34,280
Speaker 2: I are walking log normal. It's so hard on an

592
00:30:34,320 --> 00:30:38,840
Speaker 2: asymmetric log normal to get it right when when, when green,

593
00:30:38,880 --> 00:30:40,560
Speaker 2: spanny and quiescence is there.

594
00:30:40,840 --> 00:30:42,760
Speaker 7: And I think this is the challenge that in bowl

595
00:30:42,800 --> 00:30:45,720
Speaker 7: markets right. The reason I think that short term timing

596
00:30:45,800 --> 00:30:47,840
Speaker 7: works better under fear is that people get afraid at

597
00:30:47,840 --> 00:30:49,880
Speaker 7: the same time they panic at the same time. People

598
00:30:49,920 --> 00:30:51,440
Speaker 7: don't get euphoric at the same time.

599
00:30:51,600 --> 00:30:53,880
Speaker 2: It was great to see you in the front row

600
00:30:54,120 --> 00:30:56,720
Speaker 2: or you know, up a couple behind the celebs when

601
00:30:56,840 --> 00:30:59,520
Speaker 2: Emma went down in flames at Wimbledon. Give us a

602
00:30:59,560 --> 00:31:02,320
Speaker 2: state the city right now in London. You're one of

603
00:31:02,320 --> 00:31:06,120
Speaker 2: our most important voices there. There's this doom and gloom

604
00:31:06,120 --> 00:31:08,280
Speaker 2: woe as me the United Kingdom is going to roll

605
00:31:08,280 --> 00:31:10,720
Speaker 2: over and fall into the Channel. I don't buy it

606
00:31:10,760 --> 00:31:14,000
Speaker 2: for a minute. And Paul says it's buoyant.

607
00:31:13,720 --> 00:31:14,000
Speaker 5: Is it?

608
00:31:14,240 --> 00:31:18,120
Speaker 7: Yes? I mean we're constructive on the UK economy. I

609
00:31:18,120 --> 00:31:20,240
Speaker 7: think relative to consensus, we think the Bank of England

610
00:31:20,240 --> 00:31:23,120
Speaker 7: will cut more than expected. And look, you know we're

611
00:31:23,120 --> 00:31:25,920
Speaker 7: talking about a seven percent deficit to GDP in the US.

612
00:31:26,000 --> 00:31:28,880
Speaker 7: We're talking about five percent deficit to GDP in France,

613
00:31:29,160 --> 00:31:30,400
Speaker 7: the UK's at two and a half.

614
00:31:31,040 --> 00:31:32,000
Speaker 3: Is it too austere?

615
00:31:32,200 --> 00:31:34,200
Speaker 2: That's the heart of the matter, well as coming out

616
00:31:34,200 --> 00:31:37,680
Speaker 2: of the crisis. Are they addicted to the austerity of

617
00:31:37,720 --> 00:31:38,440
Speaker 2: an old world?

618
00:31:38,480 --> 00:31:38,720
Speaker 3: Mind?

619
00:31:38,720 --> 00:31:41,320
Speaker 7: So maybe, but that means weaker growth, That means a

620
00:31:41,320 --> 00:31:43,840
Speaker 7: Bank of England can cut more. The government has time,

621
00:31:43,920 --> 00:31:47,000
Speaker 7: the government has a large majority. And if you can

622
00:31:47,040 --> 00:31:49,680
Speaker 7: get those rates down, and we think that inflation is

623
00:31:49,720 --> 00:31:51,640
Speaker 7: going to fall more than expected in the UK over

624
00:31:51,640 --> 00:31:53,640
Speaker 7: the next twelve months, you get lower rates, you can

625
00:31:53,680 --> 00:31:56,240
Speaker 7: help stimulate a lot of those rates sensitive sectors in

626
00:31:56,280 --> 00:31:58,960
Speaker 7: the economy. And I think the UK can also benefit

627
00:31:59,120 --> 00:32:02,240
Speaker 7: some from you know, kind of global knowledge workers looking

628
00:32:02,280 --> 00:32:04,520
Speaker 7: to to move around. It's a attractive place for long

629
00:32:04,560 --> 00:32:07,400
Speaker 7: term investment. We're bullish on the UK pound for a

630
00:32:07,480 --> 00:32:08,320
Speaker 7: variety of reasons.

631
00:32:08,520 --> 00:32:10,520
Speaker 6: Tom, the next time you and I take surveillance over

632
00:32:10,520 --> 00:32:12,440
Speaker 6: to London, we're gonna go out to the docklands, out

633
00:32:12,480 --> 00:32:13,240
Speaker 6: to the Canary Whar.

634
00:32:13,600 --> 00:32:18,920
Speaker 2: It's happening than ever and we're gonna go to the docklands

635
00:32:18,320 --> 00:32:19,720
Speaker 2: still and we're.

636
00:32:19,560 --> 00:32:21,920
Speaker 6: Gonna have lunch at the gun. It's right on the

637
00:32:22,040 --> 00:32:24,240
Speaker 6: River Thames. It's a great pub and we're gonna have

638
00:32:24,640 --> 00:32:25,280
Speaker 6: lunch with Andrew.

639
00:32:25,280 --> 00:32:25,440
Speaker 2: There.

640
00:32:25,480 --> 00:32:26,240
Speaker 6: That's what we're gonna do.

641
00:32:26,640 --> 00:32:26,920
Speaker 5: Done.

642
00:32:27,120 --> 00:32:29,840
Speaker 6: Let's see, that's how we roll. Andrew is going to write,

643
00:32:30,120 --> 00:32:32,960
Speaker 6: oh yeah, yes he will. I will throw that down

644
00:32:33,040 --> 00:32:35,239
Speaker 6: and he's just not gonna worry about it. Andrew, what

645
00:32:35,360 --> 00:32:37,320
Speaker 6: is the US Federal Reserve need to do? Is a

646
00:32:37,360 --> 00:32:41,080
Speaker 6: federal reserve behind European central banks the Bank of England?

647
00:32:41,760 --> 00:32:42,440
Speaker 5: How do you view that?

648
00:32:42,760 --> 00:32:45,600
Speaker 7: So the FED is a dual mandate right full employment

649
00:32:45,760 --> 00:32:48,560
Speaker 7: and price stability, And you know you, I think you

650
00:32:48,600 --> 00:32:50,800
Speaker 7: heard this from the Fed minutes. They they're doing much

651
00:32:50,840 --> 00:32:54,360
Speaker 7: better on full employment than on price stability. They think

652
00:32:54,400 --> 00:32:56,520
Speaker 7: the economy is strong. You still have an unemployment rate

653
00:32:56,600 --> 00:32:59,920
Speaker 7: that's down in the low fours, and yet core piece

654
00:33:00,280 --> 00:33:02,800
Speaker 7: is still above their target. If our forecasts are correct,

655
00:33:02,800 --> 00:33:04,720
Speaker 7: it's going to start moving up again a little bit.

656
00:33:05,160 --> 00:33:09,080
Speaker 7: So in that context, you're not running policy that's too tight.

657
00:33:09,160 --> 00:33:11,840
Speaker 7: You're running appropriate policy, and we think that keeps them

658
00:33:11,840 --> 00:33:12,240
Speaker 7: on hold.

659
00:33:12,360 --> 00:33:13,680
Speaker 3: Can I do an audible should?

660
00:33:13,720 --> 00:33:16,560
Speaker 2: You're so darn good at this. Anderw Sheet's folks on

661
00:33:16,680 --> 00:33:20,120
Speaker 2: the pharmaceutical wave from Europe, one of the great unknowns

662
00:33:20,120 --> 00:33:24,080
Speaker 2: for Americans. Having Mike Pence of the Eli Lilly Indianapolis

663
00:33:24,120 --> 00:33:29,200
Speaker 2: on minutes ago, the former Vice president, we underestimate the

664
00:33:29,240 --> 00:33:33,280
Speaker 2: pharmaceutical wall of Europe, Ireland, the United Kingdom and the

665
00:33:33,320 --> 00:33:36,959
Speaker 2: rest of it. What are the Trump pharmaceutical tariffs going

666
00:33:37,000 --> 00:33:39,400
Speaker 2: to do to the transatlantic balance?

667
00:33:39,680 --> 00:33:44,880
Speaker 7: Well, it has an inflation channel because you know, healthcare

668
00:33:44,920 --> 00:33:47,680
Speaker 7: spending is a big part of the economy. This is again,

669
00:33:47,720 --> 00:33:50,680
Speaker 7: I think something people should consider when looking at Europe

670
00:33:50,720 --> 00:33:52,800
Speaker 7: as a market to invest in is that we talk

671
00:33:52,840 --> 00:33:55,680
Speaker 7: a lot about the concentration in the US market, A

672
00:33:55,680 --> 00:33:58,760
Speaker 7: lot of these European markets are also very concentrated with

673
00:33:58,960 --> 00:34:01,880
Speaker 7: very large cap company. He's having very large shares within

674
00:34:01,920 --> 00:34:04,840
Speaker 7: these individual markets. So you know again that that creates

675
00:34:04,840 --> 00:34:08,040
Speaker 7: some idiosyncratic risk, and ken mean that some of these

676
00:34:08,239 --> 00:34:11,560
Speaker 7: individual tariff decisions have even larger overall market impacts.

677
00:34:11,640 --> 00:34:14,040
Speaker 2: What was the name of the pup It's called the gun.

678
00:34:14,200 --> 00:34:15,680
Speaker 7: It's in dock guns right on the river.

679
00:34:15,719 --> 00:34:18,840
Speaker 2: Ten our question today, Andrew, when you grew up, you know,

680
00:34:19,480 --> 00:34:24,080
Speaker 2: just pristine at mathematics and your legend brown which Kellogg's

681
00:34:24,120 --> 00:34:25,920
Speaker 2: cereal did you partake of anymore?

682
00:34:26,000 --> 00:34:27,000
Speaker 3: Were you a fruit loops?

683
00:34:27,040 --> 00:34:27,239
Speaker 2: Guy.

684
00:34:27,640 --> 00:34:29,000
Speaker 7: I was never allowed for loops.

685
00:34:29,040 --> 00:34:30,640
Speaker 2: Now, you were never allowed, never allowed.

686
00:34:31,280 --> 00:34:33,200
Speaker 7: I was kind of a Cheerios General Mills person.

687
00:34:33,280 --> 00:34:33,840
Speaker 5: So there we go.

688
00:34:34,760 --> 00:34:36,040
Speaker 3: It's more Midwest Field.

689
00:34:36,160 --> 00:34:36,359
Speaker 5: Yep.

690
00:34:36,480 --> 00:34:38,520
Speaker 6: Absolutely, Kellogg's big bringing today.

691
00:34:38,640 --> 00:34:41,520
Speaker 2: I remember, you know, I went to college and I

692
00:34:41,640 --> 00:34:45,120
Speaker 2: was told that Raisin brand was only for adults. My

693
00:34:45,200 --> 00:34:48,640
Speaker 2: father got so sick and tired of us eating.

694
00:34:48,400 --> 00:34:49,400
Speaker 5: All the raisin bread.

695
00:34:49,640 --> 00:34:53,280
Speaker 2: I actually went to college thinking was like an adult.

696
00:34:52,960 --> 00:34:55,240
Speaker 3: Cereal ander sheets. This is special.

697
00:34:55,239 --> 00:34:57,719
Speaker 2: Thank you so much. In her studios here in New York.

698
00:34:57,800 --> 00:35:04,440
Speaker 2: He's a massive value. Add each morning to Morgan Stanley.

699
00:35:06,960 --> 00:35:10,840
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

700
00:35:10,880 --> 00:35:14,200
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

701
00:35:14,320 --> 00:35:17,160
Speaker 1: with the Bloomberg Business app. You can also watch us

702
00:35:17,200 --> 00:35:21,040
Speaker 1: live every weekday on YouTube and always on the Bloomberg terminal.

703
00:35:21,160 --> 00:35:22,920
Speaker 3: This is a joy. Let's get right to it. We

704
00:35:23,000 --> 00:35:25,719
Speaker 3: got a busy, busy schedule. Dominic two blown roads with

705
00:35:25,800 --> 00:35:26,200
Speaker 3: us right now.

706
00:35:26,200 --> 00:35:30,320
Speaker 2: I had a US credit strategy at Berkley's.

707
00:35:30,400 --> 00:35:33,000
Speaker 3: I have to take an audible here. You're out of

708
00:35:33,040 --> 00:35:35,520
Speaker 3: bear in Switzerland, right, That's right. I was there when

709
00:35:35,520 --> 00:35:36,040
Speaker 3: I was a kid.

710
00:35:36,080 --> 00:35:37,799
Speaker 2: It's where the bears are right, that's right.

711
00:35:38,000 --> 00:35:40,000
Speaker 9: That was old CD and as bears at.

712
00:35:39,840 --> 00:35:42,000
Speaker 2: The end of ancient city, and it goes back to

713
00:35:42,080 --> 00:35:43,960
Speaker 2: the heritage of Swiss mathematics.

714
00:35:44,120 --> 00:35:44,520
Speaker 9: That's right.

715
00:35:44,560 --> 00:35:47,520
Speaker 2: And the last conversation I had with the giant Alan

716
00:35:47,600 --> 00:35:52,040
Speaker 2: Kruger of Princeton, we were both reading together a biography

717
00:35:52,080 --> 00:35:56,200
Speaker 2: of Euler and the math of the time and all this, folks,

718
00:35:56,560 --> 00:36:00,279
Speaker 2: is out of Switzerland. When you bring your mathematics into

719
00:36:00,280 --> 00:36:03,920
Speaker 2: the US credit market right now, is it a normal

720
00:36:04,000 --> 00:36:06,160
Speaker 2: market with these depths and deficits.

721
00:36:06,520 --> 00:36:10,680
Speaker 10: So on the corporate bond side, the technicals are so.

722
00:36:10,520 --> 00:36:12,840
Speaker 3: Strong that and the spreads are tighter.

723
00:36:13,239 --> 00:36:16,080
Speaker 10: Spreads are tight, there's very little room for error, don't

724
00:36:16,080 --> 00:36:19,120
Speaker 10: get me wrong, but the technicals are Just give you

725
00:36:19,160 --> 00:36:22,600
Speaker 10: one number for investment rate in the US the next

726
00:36:23,080 --> 00:36:25,920
Speaker 10: July August. The next two months, we have two hundred

727
00:36:25,960 --> 00:36:29,920
Speaker 10: and twenty billion dollars of maturities and coupons. Guess what

728
00:36:30,080 --> 00:36:34,480
Speaker 10: is the highest July August issues ever twenty twenty, two

729
00:36:34,560 --> 00:36:36,920
Speaker 10: hundred and twenty billion dollars. So we would have to

730
00:36:36,920 --> 00:36:40,720
Speaker 10: get to record levels to provide some supply to the market.

731
00:36:41,040 --> 00:36:44,640
Speaker 10: So in a short term perspective, yields are fine. The

732
00:36:44,680 --> 00:36:47,480
Speaker 10: base case for macro is okay. Credit for intels are fine.

733
00:36:47,600 --> 00:36:49,040
Speaker 10: So it's disrupting this.

734
00:36:49,239 --> 00:36:51,560
Speaker 2: But Apple, can you know Apple can come out with

735
00:36:51,600 --> 00:36:53,719
Speaker 2: a two hundred and twenty billion dollars bond issue in

736
00:36:53,719 --> 00:36:54,160
Speaker 2: the world.

737
00:36:55,080 --> 00:36:55,759
Speaker 5: Twenty would be a.

738
00:36:55,680 --> 00:36:59,040
Speaker 6: Bit large, but yeah, and one phone call these guys

739
00:36:59,040 --> 00:37:01,840
Speaker 6: could get it done. Dominique, I'm looking at the I

740
00:37:02,600 --> 00:37:05,760
Speaker 6: go function on the Bloomberg terminal. Gives me nice total returns.

741
00:37:05,800 --> 00:37:09,120
Speaker 6: Across the fixed income space, US corporate high yields been

742
00:37:09,160 --> 00:37:12,120
Speaker 6: the best performance. I mean, people have no fear of

743
00:37:12,160 --> 00:37:13,600
Speaker 6: any credit risk out there, do they.

744
00:37:13,800 --> 00:37:15,440
Speaker 9: So there are differentiations.

745
00:37:15,480 --> 00:37:18,200
Speaker 10: So if you look at double bes and single bees,

746
00:37:18,239 --> 00:37:20,839
Speaker 10: people are really on on it. Again, if you look

747
00:37:20,880 --> 00:37:24,760
Speaker 10: at credit fundamentally, it looks fine. Companies have reload leverage

748
00:37:24,760 --> 00:37:27,400
Speaker 10: a little bit, interest coverage is speaking back up, and

749
00:37:27,480 --> 00:37:30,520
Speaker 10: profit margins are high. However, if you go to lower

750
00:37:30,600 --> 00:37:33,600
Speaker 10: rated stuff, the triple c's, it's not quite true. There

751
00:37:33,600 --> 00:37:36,200
Speaker 10: are different interests in there, and people are afraid of

752
00:37:36,239 --> 00:37:39,160
Speaker 10: the tailwisks, and that all happened post Liberation Day.

753
00:37:39,760 --> 00:37:43,000
Speaker 6: So where are we going for value today in the

754
00:37:43,080 --> 00:37:46,759
Speaker 6: credit space? Because smart people like you have been telling me,

755
00:37:47,360 --> 00:37:50,279
Speaker 6: spreads are tight, but I'm like, eh, spreads shreds. Let's

756
00:37:50,280 --> 00:37:51,560
Speaker 6: go buy some high yield here.

757
00:37:52,120 --> 00:37:53,160
Speaker 7: Where do you see value?

758
00:37:53,200 --> 00:37:54,960
Speaker 10: So I think you want to look at the laggards.

759
00:37:55,200 --> 00:37:57,480
Speaker 10: So the laggards, Yeah, an investment gate.

760
00:37:57,520 --> 00:37:58,680
Speaker 9: The cyclicals have lagged.

761
00:37:59,400 --> 00:38:03,879
Speaker 10: In the leverage finance side, single b loans look good

762
00:38:04,120 --> 00:38:06,439
Speaker 10: because the high bonds have you said, I've valied quite

763
00:38:06,440 --> 00:38:08,000
Speaker 10: a bit. And then if you feel a bit more

764
00:38:08,040 --> 00:38:10,360
Speaker 10: in a gutsy, go to the some triple c's that

765
00:38:10,440 --> 00:38:11,720
Speaker 10: you think are interested.

766
00:38:11,880 --> 00:38:15,640
Speaker 2: It doesn't retail and frankly, institutional basically scared stiff and

767
00:38:15,640 --> 00:38:18,200
Speaker 2: they're all buying the two year full faith and credit.

768
00:38:19,000 --> 00:38:22,640
Speaker 10: It's you know, again, you've been getting a little bit

769
00:38:22,719 --> 00:38:25,560
Speaker 10: above the treasury, not a ton compared to history, But

770
00:38:25,719 --> 00:38:27,719
Speaker 10: do you want to leave that on the side. If

771
00:38:27,760 --> 00:38:31,200
Speaker 10: you look at the volatility of returns in investment grade,

772
00:38:31,280 --> 00:38:34,719
Speaker 10: let's says this treasuries, It's likely lower in corporates than

773
00:38:34,760 --> 00:38:35,400
Speaker 10: in treasuries.

774
00:38:35,440 --> 00:38:38,279
Speaker 9: So you get high yield and lower volatility. Not bad.

775
00:38:38,360 --> 00:38:39,839
Speaker 3: We got such a busy morning, folks.

776
00:38:39,840 --> 00:38:42,200
Speaker 2: We're going a couple more questions in here with Dominique,

777
00:38:42,200 --> 00:38:44,760
Speaker 2: and we've got economic data coming out we're just gonna

778
00:38:45,120 --> 00:38:49,120
Speaker 2: glance claims full. You know, if it moves the market, well,

779
00:38:49,160 --> 00:38:53,719
Speaker 2: mention the dominie. Excuse me, Paul, two more questions of dominie.

780
00:38:53,719 --> 00:38:56,040
Speaker 6: I'm looking at the University of burn it is literally.

781
00:38:57,320 --> 00:38:57,880
Speaker 5: And Zurich.

782
00:38:58,000 --> 00:39:00,840
Speaker 6: I mean, yeah, it's awesome, right, Can we do accountable

783
00:39:00,880 --> 00:39:01,279
Speaker 6: we're doing to.

784
00:39:01,320 --> 00:39:05,080
Speaker 2: Remote from Okay, explain to me. This is how I

785
00:39:05,120 --> 00:39:08,680
Speaker 2: met John Farrow is when the SMB intervened here. The

786
00:39:08,800 --> 00:39:13,919
Speaker 2: success of Switzerland is Switzerland back to twenty fifteen, where

787
00:39:13,920 --> 00:39:18,240
Speaker 2: it's just so damn good they have to unilaterally act

788
00:39:18,320 --> 00:39:19,080
Speaker 2: to depreciate.

789
00:39:19,520 --> 00:39:20,320
Speaker 3: It's Swiss Frank.

790
00:39:20,840 --> 00:39:22,719
Speaker 10: It's you know, been doing a good job in terms

791
00:39:22,800 --> 00:39:27,120
Speaker 10: of education, in terms of deciding who goes to apprenticeship

792
00:39:27,320 --> 00:39:29,640
Speaker 10: and who goes to kind of higher education and pushing

793
00:39:29,640 --> 00:39:33,239
Speaker 10: the envelope that way. Manufacturing is strong, obviously Farma is strong,

794
00:39:33,320 --> 00:39:35,600
Speaker 10: and then obviously all the bank stuff. But to you

795
00:39:35,840 --> 00:39:38,400
Speaker 10: to your question, the locally the issue is that we

796
00:39:38,480 --> 00:39:41,600
Speaker 10: just had a colleague in Asia in effects Swiss Franks

797
00:39:41,680 --> 00:39:43,400
Speaker 10: is the only one that people want to touch.

798
00:39:43,440 --> 00:39:43,680
Speaker 9: Now.

799
00:39:43,880 --> 00:39:45,799
Speaker 10: They're afraid about many other things, so there might be

800
00:39:45,840 --> 00:39:48,439
Speaker 10: some pressure there that they have to do something indeed.

801
00:39:49,080 --> 00:39:50,359
Speaker 6: What do you think, What do you think is the

802
00:39:50,360 --> 00:39:51,160
Speaker 6: Federal Reserve.

803
00:39:51,000 --> 00:39:51,640
Speaker 5: Going to do next?

804
00:39:52,239 --> 00:39:55,000
Speaker 10: So we think that you know, inflation pressure is going

805
00:39:55,040 --> 00:39:57,680
Speaker 10: to pick up August September and gross is going to

806
00:39:57,719 --> 00:40:01,880
Speaker 10: be a one percent, so they'll do a cuts in December,

807
00:40:01,960 --> 00:40:03,720
Speaker 10: but they will wait till December to do something.

808
00:40:03,760 --> 00:40:04,600
Speaker 3: Where are you based.

809
00:40:04,960 --> 00:40:08,319
Speaker 9: I'm based in New York. I finance caraies in New York. Yeah.

810
00:40:08,360 --> 00:40:11,200
Speaker 10: You know, as I said, Berne Einstein did all these

811
00:40:11,200 --> 00:40:13,400
Speaker 10: big discoveries in Bern when it was title.

812
00:40:13,680 --> 00:40:16,080
Speaker 2: I mean, I love the book on oiler. I don't

813
00:40:16,080 --> 00:40:16,680
Speaker 2: have it in front of me.

814
00:40:16,719 --> 00:40:18,400
Speaker 9: I'm sorry, but it's great. Are there one of the

815
00:40:18,440 --> 00:40:19,600
Speaker 9: best mathematicians ever.

816
00:40:19,719 --> 00:40:22,640
Speaker 3: You know, there is this whole French you know stuffiness.

817
00:40:22,680 --> 00:40:26,000
Speaker 2: You saw that with Macron, the king over French mathematics

818
00:40:26,000 --> 00:40:29,880
Speaker 2: and the Swiss rocking it when they invented basically finance.

819
00:40:30,040 --> 00:40:30,799
Speaker 7: Look at it right now.

820
00:40:30,840 --> 00:40:35,360
Speaker 6: There's they'd love to have us there, absolutely sure, Okay, anytime.

821
00:40:35,080 --> 00:40:37,920
Speaker 2: Version nev Yeah, I mean we could look over at

822
00:40:37,960 --> 00:40:39,359
Speaker 2: the don do medi yep.

823
00:40:40,000 --> 00:40:41,240
Speaker 3: Dominique don't be a stranger.

824
00:40:41,280 --> 00:40:44,400
Speaker 2: DOMINICQ two blow had an US Credit Award winning Barclays

825
00:40:44,600 --> 00:40:45,319
Speaker 2: are there on the is.

826
00:40:45,520 --> 00:40:46,000
Speaker 5: I see that.

827
00:40:46,600 --> 00:40:50,520
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

828
00:40:50,560 --> 00:40:53,560
Speaker 1: starting at seven am Eastern on Apple Corplay and Android

829
00:40:53,600 --> 00:40:56,640
Speaker 1: Auto with the Bloomberg Business App. You can also listen

830
00:40:56,719 --> 00:40:59,879
Speaker 1: live on Amazon Alexa from our flagship New York station,

831
00:41:00,520 --> 00:41:04,040
Speaker 1: Just say Alexa Play Bloomberg eleven thirty with us.

832
00:41:04,120 --> 00:41:07,680
Speaker 2: David Sowerby thrillies in her studios. Usually it's from the Midwest.

833
00:41:07,719 --> 00:41:11,320
Speaker 2: He's one of the great optimists at American capitalism. Within

834
00:41:12,000 --> 00:41:14,840
Speaker 2: a coorra from where you sit in the Midwest, is

835
00:41:14,880 --> 00:41:17,360
Speaker 2: the American job economy still in place or does it

836
00:41:17,400 --> 00:41:18,240
Speaker 2: finally break?

837
00:41:18,600 --> 00:41:22,520
Speaker 11: It's still in place. Michigan's unemployment rate a little bit

838
00:41:22,560 --> 00:41:27,000
Speaker 11: higher than the US, but the great American success story continues.

839
00:41:27,440 --> 00:41:30,560
Speaker 11: And in particular, just look at corporate free cash flow margins,

840
00:41:30,600 --> 00:41:31,880
Speaker 11: they're still well above average.

841
00:41:32,000 --> 00:41:34,160
Speaker 2: I watched that. That's something I really look at. Nancy

842
00:41:34,239 --> 00:41:38,319
Speaker 2: Lazar sat in your seat yesterday, the great economist, and

843
00:41:38,400 --> 00:41:43,160
Speaker 2: she said, we will see a capital investment renaissance led

844
00:41:43,160 --> 00:41:44,200
Speaker 2: by your Midwest.

845
00:41:44,200 --> 00:41:44,799
Speaker 3: Do you buy it?

846
00:41:45,080 --> 00:41:50,960
Speaker 11: Absolutely? The state of Michigan twelfth most competitive state on

847
00:41:51,120 --> 00:41:52,960
Speaker 11: tax climate per the Tax filel I.

848
00:41:52,920 --> 00:41:56,000
Speaker 2: Thought you had to say NCAA football excuse higher than that.

849
00:41:56,120 --> 00:41:59,600
Speaker 11: And Nancy has been writing about that manufacturing renaissance in

850
00:41:59,600 --> 00:42:01,200
Speaker 11: the midways for a number of years.

851
00:42:01,520 --> 00:42:02,480
Speaker 9: She is spot on.

852
00:42:03,400 --> 00:42:06,360
Speaker 6: Battle Creek, Michigan. One of the greatest city names I

853
00:42:06,360 --> 00:42:09,279
Speaker 6: think there is in America. Battle Creek, Michigan. It's home

854
00:42:09,320 --> 00:42:12,400
Speaker 6: the W. K. Kellogg in company. They're in the news today.

855
00:42:12,880 --> 00:42:15,399
Speaker 6: As a Michigan person, Detroit person, what do you think

856
00:42:15,400 --> 00:42:18,120
Speaker 6: about the sale of W. K. Kellogg?

857
00:42:18,800 --> 00:42:21,600
Speaker 11: It really goes back, Paul to the fact that in

858
00:42:21,800 --> 00:42:25,279
Speaker 11: small midcaps you're gonna make your best returns buying spinoffs,

859
00:42:25,480 --> 00:42:28,799
Speaker 11: like the Bloomberg Spinoff Index. So Kellogg split into the

860
00:42:28,800 --> 00:42:32,280
Speaker 11: serial division and then they split in the second division.

861
00:42:32,320 --> 00:42:36,480
Speaker 11: Was Kelenova? I bought Kelenova. They're being acquired by Mars

862
00:42:36,560 --> 00:42:41,080
Speaker 11: at a forty five percent pium. Kellanova is pringles cheese

863
00:42:41,080 --> 00:42:45,279
Speaker 11: its and pop tarts, which rivals the earlier discussion of

864
00:42:45,360 --> 00:42:49,120
Speaker 11: apple Jack's and curios and frosted flake. So spinoffs are

865
00:42:49,120 --> 00:42:51,240
Speaker 11: a great story. It's playing out with Kellogg.

866
00:42:51,280 --> 00:42:53,760
Speaker 2: Are they boltons from our ute?

867
00:42:54,160 --> 00:42:55,920
Speaker 3: Are they? Is it the same game?

868
00:42:56,000 --> 00:42:59,319
Speaker 2: The same bankers shell game is thirty years ago.

869
00:43:00,080 --> 00:43:04,040
Speaker 11: You unlock value by spinning off divisions. Maybe the smaller

870
00:43:04,040 --> 00:43:08,360
Speaker 11: division no longer needs to feed the big company beast

871
00:43:09,000 --> 00:43:12,440
Speaker 11: stands on their own, and that's been a great success

872
00:43:12,440 --> 00:43:15,320
Speaker 11: story in small midcaps over decades.

873
00:43:16,280 --> 00:43:19,960
Speaker 6: So do you try to find companies that are about

874
00:43:20,000 --> 00:43:23,120
Speaker 6: to engage into some corporate restructuring or ones once they've

875
00:43:23,160 --> 00:43:25,880
Speaker 6: already been spun off? You try to pick one that

876
00:43:25,920 --> 00:43:26,760
Speaker 6: has the best value.

877
00:43:27,000 --> 00:43:30,200
Speaker 11: You really look at all the spinoffs that are coming,

878
00:43:30,280 --> 00:43:32,640
Speaker 11: You get the news which ones are likely to spin,

879
00:43:33,160 --> 00:43:35,759
Speaker 11: then you do the digging. Very often only two or

880
00:43:35,760 --> 00:43:39,120
Speaker 11: three analysts are following the company in the eventual spin.

881
00:43:40,400 --> 00:43:43,040
Speaker 11: People inherit the spinoff stock. They don't want to own it,

882
00:43:43,080 --> 00:43:46,680
Speaker 11: they sell it. It creates buying opportunity. So the two great

883
00:43:46,800 --> 00:43:51,160
Speaker 11: formulas are spinoffs and under followed stocks were only two

884
00:43:51,239 --> 00:43:53,040
Speaker 11: Wall Street analysts follow the company.

885
00:43:53,120 --> 00:43:55,120
Speaker 6: So where are we today in that kind of environment?

886
00:43:55,120 --> 00:43:57,160
Speaker 6: I mean, I kind of see Wall Street shrinking their

887
00:43:57,160 --> 00:43:59,480
Speaker 6: research budgets. I'm not sure. It feels like there's fewer

888
00:43:59,480 --> 00:44:03,000
Speaker 6: animals following companies in general? Does that make your job

889
00:44:03,160 --> 00:44:04,280
Speaker 6: easier harder?

890
00:44:04,360 --> 00:44:05,120
Speaker 9: How does that work?

891
00:44:05,600 --> 00:44:11,040
Speaker 11: Probably creates more alpha excess return opportunities, because how much

892
00:44:11,040 --> 00:44:13,520
Speaker 11: a value can I add with the fifty analysts who

893
00:44:13,560 --> 00:44:15,760
Speaker 11: follow Apple. But if I can dig into a company,

894
00:44:15,760 --> 00:44:18,920
Speaker 11: we're only a couple analysts followed, I can have a

895
00:44:18,960 --> 00:44:21,960
Speaker 11: more direct pipeline to the company itself, the CEO and

896
00:44:22,000 --> 00:44:25,600
Speaker 11: a CFO. They'll often ask us for advice on what

897
00:44:25,719 --> 00:44:27,440
Speaker 11: do we need to do to get our stock hire,

898
00:44:27,480 --> 00:44:29,960
Speaker 11: whether it's buy back, get out, buy backs, get out

899
00:44:29,960 --> 00:44:32,360
Speaker 11: on the road. If you're willing to do the work,

900
00:44:32,800 --> 00:44:33,759
Speaker 11: the alpha is there.

901
00:44:34,760 --> 00:44:35,640
Speaker 7: What did tariffs?

902
00:44:35,719 --> 00:44:38,160
Speaker 6: What do teriffs mean for you in your research and

903
00:44:38,200 --> 00:44:41,399
Speaker 6: now source assessment process? Is that something that is it's

904
00:44:41,480 --> 00:44:43,719
Speaker 6: kind of got to go company by company or is

905
00:44:43,760 --> 00:44:46,720
Speaker 6: it just I going to lower my valuation outlook or something.

906
00:44:47,160 --> 00:44:50,680
Speaker 11: I think it's the overused term of idiosyncratic. You really

907
00:44:50,719 --> 00:44:54,279
Speaker 11: have to analyze the company. We'll be right into that

908
00:44:54,360 --> 00:44:57,960
Speaker 11: quickly with the earnings news that are coming out. Ultimately,

909
00:44:58,200 --> 00:45:01,000
Speaker 11: these tariffs are going to cost us about three hundred

910
00:45:01,040 --> 00:45:05,200
Speaker 11: billion dollars. Maybe seventy percent gets passed down to the consumer.

911
00:45:05,760 --> 00:45:09,360
Speaker 11: So that's a tax increase. I think this this tax

912
00:45:09,480 --> 00:45:12,879
Speaker 11: permanent tax cuts make us two steps forward. Tariffs take

913
00:45:12,920 --> 00:45:15,800
Speaker 11: us one step back. It's nothing short of a tax increase.

914
00:45:15,800 --> 00:45:16,400
Speaker 11: I'm going to add to.

915
00:45:16,400 --> 00:45:18,239
Speaker 2: So sickly, and then we got to finish up with

916
00:45:18,280 --> 00:45:20,640
Speaker 2: these these bolt guns that you're you're looking at like

917
00:45:20,719 --> 00:45:23,200
Speaker 2: Kellogg and Kelenove and Jesus and Jesus.

918
00:45:23,440 --> 00:45:24,920
Speaker 3: Jesus is a Dow component.

919
00:45:26,040 --> 00:45:29,800
Speaker 2: Tell me here, David Sawerby, with the myth the misconception

920
00:45:30,560 --> 00:45:34,239
Speaker 2: of the American auto business. You're like expert in this.

921
00:45:34,760 --> 00:45:38,319
Speaker 2: What's the thing people like me get wrong about the

922
00:45:38,360 --> 00:45:41,600
Speaker 2: Midwest and auto manufacturing.

923
00:45:41,000 --> 00:45:45,480
Speaker 11: In the last In the last five to seven years,

924
00:45:45,960 --> 00:45:49,160
Speaker 11: the car company's GM in particular four to two are

925
00:45:49,200 --> 00:45:54,000
Speaker 11: better allocators of capital, generating free cash. They're not doing

926
00:45:54,800 --> 00:45:59,799
Speaker 11: misguided acquisitions like SOB or Jaguarre, you name it. They're

927
00:45:59,840 --> 00:46:03,840
Speaker 11: just better allocators a capital. GM is now again growing

928
00:46:03,880 --> 00:46:07,080
Speaker 11: the dividend. They're just managed much better tower to be

929
00:46:07,160 --> 00:46:10,920
Speaker 11: by they have been at times. You date the autos,

930
00:46:11,000 --> 00:46:14,120
Speaker 11: you tend not to marry them, and I think that's

931
00:46:14,120 --> 00:46:15,800
Speaker 11: the story with the autos. But I think Wall Street

932
00:46:15,880 --> 00:46:19,120
Speaker 11: still needs to get better on the pre cash flow

933
00:46:19,200 --> 00:46:20,680
Speaker 11: generation of autos.

934
00:46:20,800 --> 00:46:23,640
Speaker 2: I got folks to bring at the beginning of this conversation.

935
00:46:24,360 --> 00:46:28,520
Speaker 2: Jesus's one day in the middle of twenty twenty four

936
00:46:28,560 --> 00:46:33,120
Speaker 2: a year ago, enjoyed a thirty eight percent lift. Where's

937
00:46:33,160 --> 00:46:35,040
Speaker 2: the next cheese? It's a wise one.

938
00:46:35,760 --> 00:46:39,480
Speaker 11: Well, I'll give you a couple of companies. One is Ryanair.

939
00:46:39,680 --> 00:46:43,359
Speaker 11: It's a lumber read yeah, okay, mostly in the South,

940
00:46:43,400 --> 00:46:46,400
Speaker 11: a little bit in the Northwest. Headquartered in Jacksonville, Florida.

941
00:46:46,840 --> 00:46:50,759
Speaker 11: They're selling their new Zealand timber property that's going to

942
00:46:50,880 --> 00:46:53,960
Speaker 11: generate seven hundred million in cash. They're going to grow

943
00:46:54,000 --> 00:46:56,320
Speaker 11: the dividend. It's a four and a half percent dividend

944
00:46:56,400 --> 00:46:58,040
Speaker 11: yield today, so it's a little better than a ten

945
00:46:58,120 --> 00:47:01,399
Speaker 11: year when dividend growth will probably be double digits. One more,

946
00:47:02,480 --> 00:47:08,680
Speaker 11: Northwest Energy Montana, Sioux Falls, South Dakota, Yellowstone Park, free

947
00:47:08,680 --> 00:47:13,960
Speaker 11: cash flow is now turning postage party they they operate there.

948
00:47:14,360 --> 00:47:19,360
Speaker 11: They're getting better rate relief, power demand, five percent dividend yield,

949
00:47:19,440 --> 00:47:22,720
Speaker 11: free cash flow positive. Only one analyst follows the company.

950
00:47:22,760 --> 00:47:25,520
Speaker 3: They're not at Sun Valley Companies.

951
00:47:25,440 --> 00:47:26,560
Speaker 11: Falls, South Dakota.

952
00:47:28,280 --> 00:47:30,560
Speaker 3: We got to keep this going, folks, David Sawerby.

953
00:47:30,680 --> 00:47:35,960
Speaker 11: One more, how about Hulahan Loki name we've talked about before,

954
00:47:36,680 --> 00:47:40,839
Speaker 11: m and a restructuring valuation. They're number one and all

955
00:47:40,880 --> 00:47:44,719
Speaker 11: three of their business silos really a small cap name

956
00:47:44,800 --> 00:47:48,080
Speaker 11: MidCap name that people really don't follow as well, but

957
00:47:48,120 --> 00:47:53,759
Speaker 11: they are number one in their categories restructuring, valuation h M, and.

958
00:47:53,800 --> 00:47:56,200
Speaker 2: A hugely valuable David. Sorry, thank you so much.

959
00:47:57,160 --> 00:48:02,000
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,

960
00:48:02,120 --> 00:48:06,400
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961
00:48:06,520 --> 00:48:10,000
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962
00:48:10,080 --> 00:48:14,120
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963
00:48:14,120 --> 00:48:17,480
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964
00:48:17,719 --> 00:48:19,440
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