WEBVTT - Surveillance: Divided America With Haass 0:00:05.120 --> 0:00:09.200 Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keane. Along 0:00:09.240 --> 0:00:13.200 with Jonathan Ferroll and Lisa Brownwitz Jailely. We bring you 0:00:13.320 --> 0:00:18.600 insight from the best and economics, finance, investment, and international relations. 0:00:18.960 --> 0:00:23.840 Find Bloomberg Surveillance on Apple Podcast, Suncloud, Bloomberg dot com, 0:00:23.920 --> 0:00:30.080 and of course, on the Bloomberg terminal. Richard Haas a 0:00:30.200 --> 0:00:32.960 year ago his effort was my book of the summer, 0:00:33.280 --> 0:00:35.800 and that would be The World A brief introduction. I 0:00:35.840 --> 0:00:40.280 really can't say enough about it being the required brief 0:00:40.360 --> 0:00:43.040 read to get you up to speed on the inter 0:00:43.840 --> 0:00:47.640 dynamics of the world economy. Ambassador has thank you so 0:00:47.720 --> 0:00:51.519 much for joining us this morning. What do you worry 0:00:51.560 --> 0:00:55.880 about after a fourth of July. What's the thing within 0:00:55.960 --> 0:00:58.880 the entire sphere of your work with the Council on 0:00:59.000 --> 0:01:03.160 Foreign Relations? Where's your reading, where's your research where you're 0:01:03.240 --> 0:01:08.120 trying to figure something out? Tom, I could give you 0:01:08.160 --> 0:01:10.880 two answers. I could give you a very long list 0:01:10.959 --> 0:01:15.399 of international things that that worries me. You mentioned Afghanistan, 0:01:15.480 --> 0:01:19.880 there's always China. People aren't talking about North Korea hasn't 0:01:19.920 --> 0:01:22.520 gone away. There's wrong. But but but the thing that 0:01:22.560 --> 0:01:25.600 worries me most is still us. What still worries me 0:01:25.680 --> 0:01:29.800 most is how divided this country is, how our democracy 0:01:29.920 --> 0:01:33.520 is under assault from within. And that's what worries me. 0:01:33.680 --> 0:01:36.600 If we can't come together as a country, there's no 0:01:36.720 --> 0:01:39.880 way we will be able to act effectively on the 0:01:39.880 --> 0:01:43.120 world stage. You drove forward this discussion, it seems a 0:01:43.120 --> 0:01:46.560 lifetime ago. A world in disarray. So let's look at 0:01:46.920 --> 0:01:50.920 after this fourth of July and America in disarray, what 0:01:50.960 --> 0:01:54.559 do our institutions need to do to get us back 0:01:54.600 --> 0:01:59.280 on course in a better direction. Well, our institutions, some 0:01:59.360 --> 0:02:01.440 of them were arm pretty well when you think about 0:02:02.160 --> 0:02:06.600 the courts have performed admirable league. The media for the 0:02:06.640 --> 0:02:11.320 most part, has fulfilled its its role. The real problem, 0:02:11.360 --> 0:02:15.280 I think is is two things. One is Washington, UH. 0:02:15.480 --> 0:02:18.040 We're still unable, for the most part, to come together 0:02:18.120 --> 0:02:21.800 to deal with some of the challenges facing this UH country, 0:02:21.800 --> 0:02:26.920 even beyond infrastructure, things like immigration reform, dealing with budget 0:02:26.919 --> 0:02:29.240 issues and so forth. And then at the state level, 0:02:29.320 --> 0:02:35.520 the disparity in state levels of vaccination. As a real statement, 0:02:35.560 --> 0:02:38.760 shall we say about the federal system and the unevenness 0:02:39.040 --> 0:02:41.200 of how the United States is dealing with what is 0:02:41.240 --> 0:02:45.720 still the biggest challenge the country faces. Why can't we 0:02:45.760 --> 0:02:48.480 get more of a bipartisan push behind infrastructure. I mean, 0:02:48.520 --> 0:02:52.640 I know we have the seven billion dollar deal right now, 0:02:52.680 --> 0:02:56.880 but in an age of you know, trillion dollar stimulus 0:02:57.240 --> 0:03:02.960 and a country um full of patriotic politicians, why don't 0:03:03.000 --> 0:03:06.000 we get a bipartisan deal to give us an edge 0:03:06.000 --> 0:03:09.480 on our competition. Well, we may have a bipartisan deal. 0:03:09.520 --> 0:03:12.400 I think central to it it will be a narrow 0:03:12.480 --> 0:03:17.120 definition of what constitutes infrastructure. If interesting, there's there's no 0:03:17.200 --> 0:03:20.959 bipartisan support for shall we call it a broad definition 0:03:21.040 --> 0:03:24.519 of quote unquote human infrastructure? And then I think there's 0:03:24.520 --> 0:03:27.440 still questions and whatever scale legislation has passed is how 0:03:27.520 --> 0:03:29.560 you pay for it? And you're obviously going to have 0:03:29.639 --> 0:03:34.359 problems when it comes to specific tax increases. Is there 0:03:34.360 --> 0:03:38.920 ever a possibility that we get someone or a group, 0:03:39.120 --> 0:03:42.520 a big enough group, that wants to clean out the loopholes, 0:03:42.640 --> 0:03:45.800 clean out the deductions, and bring revenue higher with the 0:03:45.920 --> 0:03:48.640 with the tax base. Where it is, ever is a 0:03:48.680 --> 0:03:50.520 long time, But I don't see it. One of the 0:03:50.560 --> 0:03:54.160 rules of democracy. It's not what majorities care about, what 0:03:54.160 --> 0:03:59.440 what what drives a democracy? Are intense minorities. That's the reason. 0:03:59.480 --> 0:04:03.000 For example. But you might have the country favoring background checks, 0:04:03.040 --> 0:04:05.480 but you can't get certain things on gun control because 0:04:05.520 --> 0:04:08.440 of the intensity of minority. And by and large you 0:04:08.480 --> 0:04:11.960 have very intense minorities in favor of quote unquote loopholes, 0:04:12.200 --> 0:04:14.480 and I think it makes it very hard even though 0:04:14.800 --> 0:04:16.839 a majority of the country might be open to the 0:04:16.880 --> 0:04:19.440 sort of thing you're talking about, Dr. House. I mean, 0:04:19.480 --> 0:04:21.320 we talk about the disarray here in the U S. 0:04:21.360 --> 0:04:23.680 And of course a lot of foreign nations look at 0:04:23.680 --> 0:04:26.760 that disarray and they see opportunity where continue to be 0:04:27.360 --> 0:04:32.280 barraged by cyber attacks, presumably either at the direction or 0:04:32.320 --> 0:04:35.960 at lease with the sort of implicit uh I guess 0:04:36.040 --> 0:04:39.039 backing of foreign governments. Here you have the resurgence here 0:04:39.279 --> 0:04:42.440 of China across the world in areas where the US 0:04:42.680 --> 0:04:45.440 used to be the dominant force here. How much does 0:04:45.520 --> 0:04:48.400 the White House and the policymakers here in the US 0:04:48.720 --> 0:04:52.760 need to be concerned here about the influence or the 0:04:52.839 --> 0:04:54.880 lack of influence we may now have in some parts 0:04:54.880 --> 0:04:57.760 of the world. I think you have two areas. One 0:04:57.880 --> 0:05:00.880 is with actual or would be is The other is 0:05:00.880 --> 0:05:03.719 with allies. I think they've been more focused on trying 0:05:03.760 --> 0:05:07.000 to rebuild US relations with our friends to reduce some 0:05:07.080 --> 0:05:10.240 of the uncertainty some of the concerns there. But with 0:05:10.279 --> 0:05:14.080 the two countries you mentioned, Uh, the administration has been 0:05:14.120 --> 0:05:17.000 focused much more on China than on any other foreign 0:05:17.040 --> 0:05:21.480 policy issue. Uh. They haven't quite put together a comprehensive 0:05:21.560 --> 0:05:26.200 or coherent policy with Russia. We're going to have a test. Uh. 0:05:26.360 --> 0:05:29.040 You had the meeting in Geneva. The President put down 0:05:29.080 --> 0:05:34.440 a marker about cyber Russia continues to allow cyber operations 0:05:34.480 --> 0:05:38.520 against US that emanate from its its territory. So the 0:05:38.560 --> 0:05:42.480 real question is, are we going to act on the 0:05:42.480 --> 0:05:46.440 norm that, like in the case of terrorism, governments are 0:05:46.480 --> 0:05:49.799 held accountable for terrorist actions that come from their territory. 0:05:50.120 --> 0:05:52.560 Are we going to act on the norm that governments 0:05:52.560 --> 0:05:56.320 are also going to be held accountable from cyber actions 0:05:56.360 --> 0:05:58.839 that emanate from their territory. We're gonna find out. Do 0:05:58.920 --> 0:06:03.760 you have confidence that they'll be a diplomatic solution to this? Uh? No? Uh. 0:06:04.960 --> 0:06:07.719 I may be a diplomat by training, I don't have 0:06:07.920 --> 0:06:10.920 a lot Like you're not gonna get some Geneva convention 0:06:11.000 --> 0:06:14.240 on how to regulate cyberspace. The real question is whether 0:06:14.320 --> 0:06:17.080 you can influence, say, the cost benefit assessment of a 0:06:17.160 --> 0:06:20.760 Latin air boots and that's the real issue. Ambassador has 0:06:20.760 --> 0:06:24.320 a totally unfair question. But let's go there. It's unfair. Tuesday, 0:06:24.839 --> 0:06:28.480 Is there a Biden doctrine his secretary of state Blincoln 0:06:28.600 --> 0:06:31.640 is a president. If they delineated a distinction here that 0:06:31.720 --> 0:06:35.680 you see that you can call a Biden doctrine. No, 0:06:35.760 --> 0:06:37.760 I don't see a doctrine because the doctrine has a 0:06:37.839 --> 0:06:41.240 degree of a commonality and universality to it. On what 0:06:41.279 --> 0:06:43.600 I'm seeing, it's on what I'm seeing are certain impulses, 0:06:44.320 --> 0:06:46.960 a real one I mentioned already, which is an emphasis 0:06:47.000 --> 0:06:51.640 on rebuilding relations with allies, to a surprising emphasis on 0:06:51.720 --> 0:06:54.640 the promotion of democracy. This the idea of dividing the 0:06:54.640 --> 0:06:59.880 world between democracies and authoritarian systems. Obviously uh, fairly robe 0:07:00.080 --> 0:07:05.800 uh rhetorical and other set of responses towards towards China. Uh. 0:07:05.839 --> 0:07:09.040 There's been a re entry into multilateral organizations. But again, 0:07:09.080 --> 0:07:12.320 these are all tendencies. I don't see anything that both 0:07:12.400 --> 0:07:16.920 explains what's going on and and predicts what will go on. 0:07:17.400 --> 0:07:19.560 What is so helpful here? To the gentleman of the 0:07:19.600 --> 0:07:22.240 Council and foreign relations with US is there can always 0:07:22.240 --> 0:07:25.440 be a headline that comes out that deserves perspective from 0:07:25.520 --> 0:07:30.160 Richard hass Here's the headline, Ambassador China, US officials have 0:07:30.320 --> 0:07:34.240 phone call on Korean peninsula issue. You lead with this 0:07:34.400 --> 0:07:38.480 in our conversation this morning. Have we've been tested yet 0:07:38.520 --> 0:07:42.600 on Biden in North Korea? Or does that await it 0:07:42.680 --> 0:07:45.640 awaits hasn't happened, And there's been no what you call 0:07:45.760 --> 0:07:50.040 station identification from North Korea. Historically, we've gotten from time 0:07:50.120 --> 0:07:53.360 to time, there's been some intriguing reports about real problems 0:07:53.360 --> 0:07:56.800 with COVID inside North Korea. So one has the sense 0:07:56.840 --> 0:08:00.600 from AFAR that they've got their their handsful. But in 0:08:00.640 --> 0:08:04.440 the meantime, North Korea's nuclear capabilities and missile capabilities is 0:08:04.520 --> 0:08:07.520 steadily built up over the last decades. And I think 0:08:07.560 --> 0:08:10.840 the real question is does the Biden administration try to 0:08:10.920 --> 0:08:12.840 start some type of what you might call an arms 0:08:12.840 --> 0:08:15.720 control conversation saying, look, we want to get rid of 0:08:15.800 --> 0:08:18.640 all your nuclear weapons and missiles. We know that's not 0:08:18.640 --> 0:08:22.120 gonna happen anytime soon. Let's see if we can't slice 0:08:22.160 --> 0:08:24.120 this in a way or trunch this in a way 0:08:24.360 --> 0:08:26.560 where you get we get a bit of progress and 0:08:26.640 --> 0:08:28.920 what we want, and in exchange, you get a bit 0:08:28.960 --> 0:08:31.400 of progress and what you want, which is sanctions relief. 0:08:31.640 --> 0:08:36.000 We haven't seen that yet, Tom, but I think that's possible, Ambassador. 0:08:36.040 --> 0:08:38.520 I want to ask about Berlin. I'm here, and of 0:08:38.559 --> 0:08:42.200 course the elections are coming up in September. Does does 0:08:43.120 --> 0:08:47.560 do any of the possible outcomes change the relationship between 0:08:47.559 --> 0:08:51.840 the West and Vladimir Putin? Because until now we've been 0:08:51.880 --> 0:08:56.200 really unable to strike back at Russia, or at least 0:08:56.760 --> 0:08:59.400 if we do strike back, we're still sending billions of 0:08:59.440 --> 0:09:02.360 euros to nords Dream too, pretty soon straight to Moscow 0:09:02.400 --> 0:09:05.640 and straight to Putin's coffers. I think nords Dream was 0:09:05.679 --> 0:09:07.800 going so far that it's hard for me to imagine 0:09:07.840 --> 0:09:11.319 anyone walking it uh completely back now. I think the 0:09:11.400 --> 0:09:13.840 United States is going to have differences with pretty much 0:09:13.880 --> 0:09:18.280 whatever leadership emerges ultimately in Germany over both China and Russia. 0:09:18.679 --> 0:09:22.360 And in both cases, the German desire to have an 0:09:22.360 --> 0:09:27.280 economically led diplomacy or foreign policy will probably outpace US. 0:09:27.480 --> 0:09:29.760 And I think that's going to be an inevitable area 0:09:29.880 --> 0:09:33.560 of some friction. Ironically enough, it might be less between 0:09:33.600 --> 0:09:36.880 the US and the Greens because they're the Biden administration 0:09:36.960 --> 0:09:40.120 might find more of an overlap stemming from both environmental 0:09:40.160 --> 0:09:43.679 issues and human rights issues. Ambassador has Thank you so much, 0:09:43.760 --> 0:09:46.200 Richard Hass the force of the Council on Foreign Relations 0:09:46.200 --> 0:09:49.280 their president. I can't say enough about the required read 0:09:49.320 --> 0:09:52.199 the world A brief introduction for all of us. Really 0:09:52.240 --> 0:09:55.480 just a lovely primer, if you will, on the state 0:09:55.600 --> 0:10:03.320 of our international relations. We got the right guest at 0:10:03.320 --> 0:10:06.680 this moment. Christopher Grossanti of m Ai Capital, is a 0:10:06.720 --> 0:10:12.319 great student of the equity markets, looking for value within growthiness. Now, Chris, 0:10:12.400 --> 0:10:16.760 do you own any of these Chinese companies? We don't, Tom. 0:10:16.800 --> 0:10:19.400 We think there's a lot of opportunity here. That's that's 0:10:19.440 --> 0:10:21.800 just much simpler. And if I, if I are a 0:10:21.800 --> 0:10:25.080 wee Bow shareholder, I would be afraid. I hate to 0:10:25.120 --> 0:10:27.720 use this analogy, but I think Hong Kong was frankly 0:10:27.760 --> 0:10:31.160 taken private several months ago, and it's a it's an 0:10:31.160 --> 0:10:34.280 issue of control. I think it's not data. It's about 0:10:34.320 --> 0:10:39.400 controlling the most important, uh political and corporate entities in 0:10:39.440 --> 0:10:41.160 the country. I think you and I earn the same 0:10:41.200 --> 0:10:43.160 page on this Your job is to talk about it. 0:10:43.280 --> 0:10:45.600 My job is to ask the questions I will. We 0:10:45.679 --> 0:10:48.520 spoke to Richard Hassa, the Counsul and Foreign Relations in 0:10:48.559 --> 0:10:52.760 the last hour about an American disarray. Is this a Beijing, 0:10:52.880 --> 0:10:59.400 Chris Grosanti and capitalistic or financial disarray? No? In fact time, 0:10:59.440 --> 0:11:03.960 I think it's a Beijing that's exercising its strength, and 0:11:04.120 --> 0:11:07.360 it's UH perhaps taking advantage of an American and disarray, 0:11:07.400 --> 0:11:10.320 but it's also exercising its strength in its own playground. 0:11:10.760 --> 0:11:13.400 So um I would I would suspect we'll see more 0:11:13.440 --> 0:11:17.079 of that over the in the second half. Let's talk, Yeah, Chris, 0:11:17.240 --> 0:11:19.680 I am curious here about what the effect this could 0:11:19.679 --> 0:11:23.000 potentially have on American companies. There's been a lot of 0:11:23.040 --> 0:11:26.040 reports about some of the issues Tesla is having with 0:11:26.080 --> 0:11:30.160 regards to its relationship with Chinese authorities. Obviously, Apple and 0:11:30.200 --> 0:11:34.160 the iPhone basically wouldn't exist without its relationship with China. Here, 0:11:34.520 --> 0:11:38.520 is there a point where US investors European investors need 0:11:38.640 --> 0:11:42.439 to start being worried about the ties at those that 0:11:42.559 --> 0:11:46.920 those UH countries and those companies in those countries have 0:11:47.040 --> 0:11:50.640 with China. Yes, I'm only half joking when I say, yes, 0:11:50.640 --> 0:11:53.520 there's a point, and it was last year. I really 0:11:53.559 --> 0:11:57.440 think what this exhibits is a flexing of muscle, much 0:11:57.480 --> 0:12:00.240 more overtly than we've seen in the past. But but 0:12:00.360 --> 0:12:02.520 clearly I don't even think the Chinese have been trying 0:12:02.520 --> 0:12:05.679 to hide the ball. They want control over just about 0:12:05.720 --> 0:12:09.480 every financial transaction and and corporate move in the country. 0:12:09.559 --> 0:12:11.880 So I think it's a it's a tough place to 0:12:11.920 --> 0:12:14.520 do business. As the major tech companies have been finding out, 0:12:14.679 --> 0:12:16.640 it is a tough place to do business. It's also 0:12:16.720 --> 0:12:19.560 a relatively lucrative place to do business, all based on 0:12:19.600 --> 0:12:21.720 the size of the population and of course the growing 0:12:21.760 --> 0:12:24.120 wealth there. For a company like Apple or any sort 0:12:24.120 --> 0:12:26.800 of big tech company that wants to have a presence there. 0:12:26.960 --> 0:12:29.640 How comfortable are you, Chris, as an investor and some 0:12:29.720 --> 0:12:35.120 of those US names and being exposed to that Chinese market, Well, 0:12:35.200 --> 0:12:38.280 not terribly comfortable. I'd say. What we do try to 0:12:38.360 --> 0:12:41.560 do is pick those that can survive. A Facebook is 0:12:41.559 --> 0:12:44.720 a perfect example without it, even though as you mentioned, 0:12:44.760 --> 0:12:47.880 it's such a terrific market that you know, the rest 0:12:47.880 --> 0:12:51.000 of the world still dwarfs China by itself. So a 0:12:51.080 --> 0:12:54.640 Facebook a Google have been doing pretty well without towing 0:12:54.640 --> 0:12:57.560 the line and and basically having been mostly excluded from 0:12:57.559 --> 0:13:01.240 the marketplace, So we like that. Yeah, a number of 0:13:01.280 --> 0:13:05.000 those companies actually um threatening to pull out of business 0:13:05.000 --> 0:13:08.920 in Hong Kong if they have to tow the line. 0:13:09.040 --> 0:13:12.040 There is that a concern for you when you look 0:13:12.040 --> 0:13:16.480 at the international companies that you're invested in, how they 0:13:16.520 --> 0:13:19.600 do their business in China, how they manage that balancing act. 0:13:20.360 --> 0:13:22.680 Of course, it has to be concerned. And and I'm 0:13:22.679 --> 0:13:25.959 a great admired Richard Hassas, and I think the black 0:13:26.040 --> 0:13:28.880 swan that we may be seeing over the next few 0:13:28.960 --> 0:13:32.600 years is a real kind of hot confrontation with China, 0:13:32.640 --> 0:13:36.640 and that very much worries me. So again I would uh, 0:13:36.679 --> 0:13:39.520 it's it's on the negative side of a balance those 0:13:39.520 --> 0:13:42.720 companies that have China has a large piece of the 0:13:42.760 --> 0:13:46.440 pie for revenues and profits, but more and more, that's 0:13:46.440 --> 0:13:49.160 got to be all of the big companies you're invested in. 0:13:49.200 --> 0:13:51.520 If I think of the big banks, if I think 0:13:51.520 --> 0:13:54.120 of the big cyclicals, the car makers, you know, the 0:13:54.160 --> 0:13:57.440 equipment makers, um, if I think of the big tech companies, 0:13:57.480 --> 0:14:00.920 they all have to do business in China. It's their biggest, 0:14:01.080 --> 0:14:05.760 fastest growing market. Well, you know, I wouldn't go quite 0:14:05.800 --> 0:14:08.920 that far. Actually, I think Facebook is frankly excluded from China. 0:14:09.120 --> 0:14:12.480 Google is mostly excluded from China, and they're doing, you know, 0:14:12.520 --> 0:14:16.240 pretty darn well. So I'm not saying they can. Obviously 0:14:16.280 --> 0:14:18.360 they'd be able to grow a lot faster, but but 0:14:18.440 --> 0:14:22.400 they're doing okay as it is now. But having said that, 0:14:22.480 --> 0:14:24.360 we can't keep on going like this with you know, 0:14:24.520 --> 0:14:27.360 an divided world of people who can it be blue can't? 0:14:27.400 --> 0:14:29.960 So so there's a resolution coming. I'm just not sure 0:14:30.000 --> 0:14:32.760 it's a happy resolution. Chris, We're not having a normal 0:14:32.880 --> 0:14:35.880 Christopher Grossante interview, which is a good and beautiful thing. 0:14:35.920 --> 0:14:38.360 Thrilled to have you on with this breaking news out 0:14:38.360 --> 0:14:41.040 of China. But to bring it back to something you've 0:14:41.040 --> 0:14:45.040 been expert on and profited on, and that is Apple computer. 0:14:45.720 --> 0:14:50.240 I believe a Apple has manufacturing facilities in China. I 0:14:50.320 --> 0:14:53.920 believe be Apple has a lot of revenue coming from China. 0:14:54.720 --> 0:14:59.400 Is Apple shares or your confidence in Apple shares affected 0:14:59.800 --> 0:15:03.840 by what China does with Chinese stocks? How can they 0:15:03.880 --> 0:15:07.080 not be tombet? But I would say even greater. We're 0:15:07.120 --> 0:15:10.960 not super positive on Apple as opposed to other alternatives 0:15:10.960 --> 0:15:13.920 and technology space, simply because at the end of the day, 0:15:14.440 --> 0:15:18.040 most of its profits still come from iPhones. So look, 0:15:18.120 --> 0:15:20.920 I love Apple, I loved him cook, It's just an 0:15:21.000 --> 0:15:25.080 expensive stock at over thirty times earnings when I can 0:15:25.120 --> 0:15:29.760 get a faster growing non hardware stock like Facebook selling 0:15:29.760 --> 0:15:32.840 in the low twenties times earnings based on next concernings 0:15:33.000 --> 0:15:35.400 and and so I just think there's other better ways 0:15:35.440 --> 0:15:38.000 to play tech growth than Apple at this current time. 0:15:38.760 --> 0:15:40.880 We'll leave it there, Christmas Santi, thank you so much 0:15:40.920 --> 0:15:48.760 on China, particularly this morning with m Ai Capital. Benjamin 0:15:48.840 --> 0:15:52.400 Laidler joins us with each o their global market strategists. 0:15:52.520 --> 0:15:56.120 Smartest guy in the block right now, Ben Laidlor reaffirm 0:15:56.360 --> 0:16:01.200 a double digit two thousand, twenty one. Yeah, definitely. I 0:16:01.560 --> 0:16:05.560 think we continue to underestimate the growth recovery. I mean, 0:16:05.560 --> 0:16:07.680 we're going to go into second water ownings next week. 0:16:08.000 --> 0:16:10.840 Consensus sixty year over year, that will be the peak 0:16:10.920 --> 0:16:12.800 year over year. But I still think we're gonna beat that. 0:16:13.400 --> 0:16:16.080 And and I think the next turning story is next year. 0:16:16.320 --> 0:16:18.920 Expectations for next year just look far too low, twelve 0:16:18.920 --> 0:16:22.760 percent when you've got seven percent nominal GDP growth. So 0:16:22.800 --> 0:16:26.400 I think there's still upside to this sort of growth story. 0:16:26.440 --> 0:16:28.800 You know, pms are still you know, at sixty very 0:16:28.880 --> 0:16:31.360 very high levels. So I think the growth story has 0:16:31.600 --> 0:16:33.680 you know, has further to go. And and that's your 0:16:34.080 --> 0:16:37.040 insurance policy to the biggest risk which is out there, 0:16:37.080 --> 0:16:39.800 which is evaluations are still very high. They're gonna come 0:16:39.800 --> 0:16:43.280 down probably is the FED sort of gradually tightens here. 0:16:43.360 --> 0:16:45.360 But but I think that that sort of growth story 0:16:45.440 --> 0:16:49.800 is more than going to offset the decline evaluation. So yes, 0:16:50.000 --> 0:16:51.680 I think there's you know, you've you've you've had a 0:16:51.720 --> 0:16:54.760 remarkable first half. You're gonna make less money than that 0:16:54.800 --> 0:16:57.200 in the second half. But there's definitely a positive return 0:16:57.560 --> 0:17:00.400 on the story here, and I think people should stay invested. 0:17:00.520 --> 0:17:02.680 So Ben, when we talk about the growth obviously the 0:17:02.680 --> 0:17:05.040 economic growth here, a lot of people are starting now 0:17:05.080 --> 0:17:07.000 to sort of look at the idea that the pace 0:17:07.040 --> 0:17:09.240 of growth, earnings growth, i should say, and the pace 0:17:09.280 --> 0:17:11.520 of revenue growth for a lot of the companies, particularly 0:17:11.520 --> 0:17:14.560 here in the US, are gonna be enough to overcome 0:17:14.600 --> 0:17:17.800 any sort of concerns about the FED, inflation, etcetera, etcetera. 0:17:17.880 --> 0:17:20.639 Here are there certain pockets though of the market, certain 0:17:20.680 --> 0:17:22.959 industries that you think are gonna be a little bit 0:17:22.960 --> 0:17:27.199 more resilient than others. So you know, if you're in 0:17:27.200 --> 0:17:29.400 the bullish sort of growth camp that I am, you're 0:17:29.400 --> 0:17:31.439 looking for, you know, who gives me the most lea 0:17:31.560 --> 0:17:34.199 rage and the most exposure to this growth story, and 0:17:34.240 --> 0:17:37.720 that's that's that's the cyclicals, it's value, it's financials, it's 0:17:37.760 --> 0:17:40.240 everything that's pulled back in the last sort of muthil so, 0:17:40.240 --> 0:17:42.760 so I really think you've been given us another opportunity 0:17:42.800 --> 0:17:45.439 here to step up and buy those sort of pro growth, 0:17:46.000 --> 0:17:48.639 pro growth names. So you know, the U S earnings 0:17:48.680 --> 0:17:52.200 next week overall be probably up sort of the second quarter, 0:17:52.280 --> 0:17:54.800 but these cyclicals are gonna be up, you know, over 0:17:55.960 --> 0:17:59.119 you look internationally, you know, Europe, Canada, I mean a 0:17:59.119 --> 0:18:00.760 lot of these are the marks its which were are 0:18:00.840 --> 0:18:03.399 much more depressed. They're coming off much lower basis. You know, 0:18:03.560 --> 0:18:06.280 those overall indices are going to see a hundred percent 0:18:06.280 --> 0:18:09.520 earnings growth rate. So um, you know, I'm bullish on 0:18:09.560 --> 0:18:12.879 the sort of reopening story. You know, the world is vaccinated, 0:18:12.920 --> 0:18:15.360 so I think the reopening story is only just sort 0:18:15.400 --> 0:18:17.439 of beginning, and that's pushing growth with it, and I 0:18:17.480 --> 0:18:19.880 think the places to get exposure to that are these 0:18:19.880 --> 0:18:24.280 sort of cyclicals and and international markets. You know, our 0:18:24.400 --> 0:18:28.920 Javier Blast laid out an argument for structural supply constraints 0:18:29.359 --> 0:18:32.240 in oil pushing the price higher. Of course, we've also 0:18:32.240 --> 0:18:35.439 seen the Opeque saga do that as well. But do 0:18:35.480 --> 0:18:39.080 you see other areas where we have real structural shifts 0:18:39.119 --> 0:18:42.000 in terms of inflation. I noticed you've got the German 0:18:42.000 --> 0:18:45.480 election and the Copy Summit on your docket of things 0:18:45.520 --> 0:18:48.720 to watch. Yeah, so I think what's going on in 0:18:48.760 --> 0:18:50.840 the oil states and just sort of more broadly, the 0:18:50.920 --> 0:18:53.359 sort of green transition, this move to sort of renewables 0:18:53.359 --> 0:18:55.840 is absolutely fascinating. You know, I think all the ingredients 0:18:55.840 --> 0:18:57.960 are there for you know, for a hundred dollar oil, 0:18:58.040 --> 0:19:01.480 You've got this heavily backwardad future's curve, which is not 0:19:01.520 --> 0:19:05.920 incentivizing anybody to draw from more oil. You've got you know, 0:19:06.040 --> 0:19:09.919 you've got drigg recounts in the US which are rebounded 0:19:09.960 --> 0:19:12.159 maybe half as much as you would have expected with 0:19:12.320 --> 0:19:14.720 sort of prices, you know, at these levels. So you know, 0:19:14.760 --> 0:19:18.080 I think there's a real supply um constraints sort of 0:19:18.119 --> 0:19:20.359 coming through, and that's going to drive. You know, that 0:19:20.440 --> 0:19:23.240 potentially drives oil prices up even further. And and I 0:19:23.240 --> 0:19:26.080 actually say the same goes for the broader commodity space. 0:19:26.119 --> 0:19:28.280 I mean, we're focusing a lot on the sort of 0:19:28.320 --> 0:19:31.119 demand rebound right now, but you know, commodity has been 0:19:31.119 --> 0:19:32.879 out of favor for a decade. That means that no 0:19:32.920 --> 0:19:34.960 one's been investing in the commodity space for a decade. 0:19:34.960 --> 0:19:38.240 So I think you have real supply constraints, but it's 0:19:38.240 --> 0:19:41.040 just worth saying. You know, particularly oil, you know, the 0:19:41.119 --> 0:19:43.360 higher prices go, those are the sort of seeds of 0:19:43.640 --> 0:19:46.040 it's sort of understruction, if you like. I mean ultimately 0:19:46.040 --> 0:19:48.240 that will incentivized supply to come back to the market. 0:19:48.280 --> 0:19:50.920 That's going to incentivize but even in centirice even more, 0:19:51.359 --> 0:19:54.480 the sort of move to renewables, so you know, enjoy 0:19:54.480 --> 0:19:56.440 it while they last, but you know ultimately the market 0:19:56.480 --> 0:19:59.080 is going to adjust. Then you have been on a 0:19:59.240 --> 0:20:02.040 magical re year tear. There's just no other way to 0:20:02.080 --> 0:20:05.400 describe it. You've got other people participating in the ball market, 0:20:05.760 --> 0:20:10.080 but nobody's nailed at like you are we over emphasizing 0:20:10.160 --> 0:20:14.879 the so called rotation from technology too cyclical? Is that 0:20:15.160 --> 0:20:21.720 like emphasized too much versus just being in the market. Yeah, 0:20:21.680 --> 0:20:23.920 I think so. I mean, I think cyclicals lead here 0:20:23.960 --> 0:20:25.840 because you know, I think growth, the growth story has 0:20:25.920 --> 0:20:27.840 sort of sort of further to go. But I think, 0:20:28.920 --> 0:20:30.600 I mean, you need to be invested. I think, you know, 0:20:30.640 --> 0:20:33.120 the tech story is just a different story. It's slightly longer, terms, 0:20:33.119 --> 0:20:36.159 a bit more structural. Evaluations are obviously sort of somewhat higher. 0:20:36.840 --> 0:20:39.919 But these are you know, the Fortress balance sheets, you know, 0:20:40.160 --> 0:20:43.280 very strong growth. I mean, big Tech last quarter grew earnings. 0:20:44.720 --> 0:20:47.080 I mean, it's just mind blowing for companies that size 0:20:47.440 --> 0:20:49.720 coming off the year they'd already had. And I think 0:20:49.720 --> 0:20:52.199 it just speaks to sort of somebody some of the 0:20:52.240 --> 0:20:53.840 earnings power. So you know, we can have a debate 0:20:53.880 --> 0:20:55.600 about you know what, am I prepared to pay for 0:20:55.640 --> 0:20:58.199 these things? But I don't really have a problem with that, 0:20:58.240 --> 0:21:00.959 with that sort of earnings power, These margine, these bind sheets, 0:21:01.240 --> 0:21:04.080 you know, more dividends, more shot by backs. It's a 0:21:04.119 --> 0:21:07.680 different story, less sort of juice copy, we're saying right now, 0:21:07.720 --> 0:21:10.399 but it's it's still a very attractive story. Ben Laylor, 0:21:10.480 --> 0:21:12.959 thank you so much, greatly appreciate you getting us started 0:21:13.000 --> 0:21:16.120 here at this morning with Eutro Global Markets can't say 0:21:16.200 --> 0:21:22.200 enough about the sharpness of ters of his morning note. 0:21:23.480 --> 0:21:27.040 Tom Persella joined some RBC Capital Markets today, Tom, I 0:21:27.040 --> 0:21:31.879 did it shart of the real Atlanta wage tracker. Inflation 0:21:31.960 --> 0:21:36.040 adjusted wages are not there. Do you just presume that 0:21:36.240 --> 0:21:40.479 somehow we get inflation adjusted wage growth or is that 0:21:40.560 --> 0:21:43.520 going to be something we cannot attain in the coming 0:21:43.600 --> 0:21:46.560 quarters and years? Well, I think that Well, first of all, 0:21:46.560 --> 0:21:49.920 good morning and hope hope every had to go to holiday. Um, 0:21:49.960 --> 0:21:52.399 you know, I think it's something like that. It's going 0:21:52.440 --> 0:21:54.800 to take more time than it otherwise would in the 0:21:54.800 --> 0:21:56.960 context of we have a lot of inflation right now. 0:21:57.480 --> 0:22:00.760 Um that the fit keeps to like to keep telling 0:22:00.800 --> 0:22:03.520 us is transitory. Um. So I think in in the 0:22:03.560 --> 0:22:07.879 context of these inflationary pressures, I think it will take 0:22:08.040 --> 0:22:10.359 time for that idea to develop. But I think what 0:22:10.400 --> 0:22:12.040 we have to keep in mind is, you know, as 0:22:12.040 --> 0:22:15.520 we look at wage pressures, um, they're they're they're they're 0:22:15.600 --> 0:22:18.000 very present. Um, you know, they are starting to build. 0:22:18.040 --> 0:22:20.360 I think it will take time for them to uh 0:22:20.600 --> 0:22:24.200 push into more of a positive territory. When when you 0:22:24.359 --> 0:22:26.560 just for inflation, but um, you know, no one can 0:22:26.600 --> 0:22:28.280 deny that that that we're moving in the right direction. 0:22:28.320 --> 0:22:29.640