1 00:00:00,040 --> 00:00:02,640 Speaker 1: Who you put your trust in matters. Investors have put 2 00:00:02,680 --> 00:00:07,040 Speaker 1: their trust and independent registered investment advisors to the two 3 00:00:07,040 --> 00:00:10,680 Speaker 1: and four trillion dollars. Why learn more and find your 4 00:00:10,760 --> 00:00:26,360 Speaker 1: independent advisor dot com. Welcome to the Bloomberg Surveillance Podcast. 5 00:00:26,760 --> 00:00:30,480 Speaker 1: I'm Tom Keene with David Gura. Daily we bring you 6 00:00:30,520 --> 00:00:35,560 Speaker 1: insight from the best in economics, finance, investment, and international relations. 7 00:00:35,960 --> 00:00:40,559 Speaker 1: Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and 8 00:00:40,640 --> 00:00:48,120 Speaker 1: of course on the Bloomberg He was trying to get 9 00:00:48,120 --> 00:00:51,239 Speaker 1: the Tiffany's next to the Trump Tower and it was 10 00:00:51,280 --> 00:00:53,640 Speaker 1: a little hard to get there through the security for 11 00:00:53,840 --> 00:00:57,600 Speaker 1: the President elect, so Dennis Gartment decided to darken the door. 12 00:00:59,200 --> 00:01:02,120 Speaker 1: You guys will apparently let anybody on this show nowadays help, yes, 13 00:01:02,240 --> 00:01:07,520 Speaker 1: help the liberals of America with the surprise of the election. 14 00:01:07,680 --> 00:01:11,479 Speaker 1: I would suggest a Virginia, North Carolina guy like you 15 00:01:11,920 --> 00:01:18,040 Speaker 1: really wasn't all that surprised, assist the progressives Listening people 16 00:01:18,120 --> 00:01:19,920 Speaker 1: need to get in an airplane and fly over the 17 00:01:19,959 --> 00:01:22,000 Speaker 1: great fly over part of the United States and just 18 00:01:22,080 --> 00:01:25,360 Speaker 1: go there and go there. It actually is quite civilized. 19 00:01:25,360 --> 00:01:28,000 Speaker 1: You'd be surprised. They are very nice well, it's well 20 00:01:28,040 --> 00:01:31,479 Speaker 1: spoken area tite people living in Peoria who are reasonably 21 00:01:31,520 --> 00:01:34,360 Speaker 1: well read, who are cognizant of what goes on in 22 00:01:34,360 --> 00:01:37,399 Speaker 1: the rest of the country and are different than the coasts. 23 00:01:37,400 --> 00:01:40,520 Speaker 1: But that's that's indeed what happened. So it was not 24 00:01:40,600 --> 00:01:42,839 Speaker 1: all that surprising. Maybe you wrote about this this morning. 25 00:01:42,959 --> 00:01:47,160 Speaker 1: Some of them want a thirty five percent tariff on 26 00:01:47,319 --> 00:01:52,040 Speaker 1: bad elites like you sending jobs abroad and others, including 27 00:01:52,160 --> 00:01:55,520 Speaker 1: leadership of the GOP and the How's go Maybe not? 28 00:01:55,760 --> 00:01:58,560 Speaker 1: Maybe not? Where are the checks and balances to Mr 29 00:01:58,640 --> 00:02:02,480 Speaker 1: Trump's rhetoric excesses. I think Mr Ryan is a check 30 00:02:02,520 --> 00:02:05,800 Speaker 1: in a balance to Mr Trump's rhetorical excesses. If there 31 00:02:05,880 --> 00:02:08,080 Speaker 1: is a problem with Mr Trump, it is that this 32 00:02:08,160 --> 00:02:10,959 Speaker 1: propensity on the part of of of he and others 33 00:02:10,960 --> 00:02:13,520 Speaker 1: around him too to put into effect or talk at 34 00:02:13,600 --> 00:02:16,160 Speaker 1: least about a thirty five percent tariff. What a what 35 00:02:16,200 --> 00:02:18,760 Speaker 1: a silly notion that would be? How detrimental that would 36 00:02:18,760 --> 00:02:22,200 Speaker 1: be to the economy in general. Yes, two small groups 37 00:02:22,200 --> 00:02:24,360 Speaker 1: of people to to the labor unions, it makes sense. 38 00:02:24,760 --> 00:02:26,280 Speaker 1: But you have to remember you put a thirty five 39 00:02:26,320 --> 00:02:28,880 Speaker 1: percent tariff on a television and suddenly you are spending 40 00:02:28,880 --> 00:02:32,600 Speaker 1: thirty percent more to buy that television, and that's the problem. 41 00:02:32,639 --> 00:02:35,640 Speaker 1: Hopefully that shall not happen. Hopefully we do not take 42 00:02:35,680 --> 00:02:38,080 Speaker 1: a chapter out of the middle of the nineteen thirties 43 00:02:38,120 --> 00:02:42,760 Speaker 1: when tariffs, the smooth Holliday tariff, took a medium term 44 00:02:42,800 --> 00:02:45,520 Speaker 1: and rather substantive recession and turn it into a depression. 45 00:02:45,560 --> 00:02:48,440 Speaker 1: Hopefully there are wiser voices around. But on balance, I 46 00:02:48,480 --> 00:02:51,160 Speaker 1: got to tell you there's a greater sense of of 47 00:02:51,160 --> 00:02:53,760 Speaker 1: of optimism out in the great flyover part of the 48 00:02:53,840 --> 00:02:55,880 Speaker 1: United States, and there had been a mere three weeks ago. 49 00:02:56,000 --> 00:02:59,079 Speaker 1: It's demonstrable. How do you judge Donald Trump's willingness to 50 00:02:59,120 --> 00:03:02,600 Speaker 1: be checked and balanced? In this week since the presidential election, 51 00:03:02,639 --> 00:03:05,320 Speaker 1: We've watched his Twitter feed with with great interest, But 52 00:03:05,360 --> 00:03:07,080 Speaker 1: you know, you you wonder if he's that quick to 53 00:03:07,120 --> 00:03:09,840 Speaker 1: respond to what the media is saying, for instance, how 54 00:03:09,880 --> 00:03:11,680 Speaker 1: well he's going to be able to have a conversation 55 00:03:11,720 --> 00:03:13,840 Speaker 1: about smart trade policy that does the great fear, isn't it? 56 00:03:14,600 --> 00:03:16,640 Speaker 1: And and actually I put that in my newslet this morning. 57 00:03:16,680 --> 00:03:19,400 Speaker 1: Won't somebody around him please stop this man from tweeting? 58 00:03:19,840 --> 00:03:21,880 Speaker 1: The problem is, it doesn't appear that anybody's gonna have 59 00:03:21,880 --> 00:03:24,680 Speaker 1: the power to stop him. Please Milannia, stop this man 60 00:03:24,800 --> 00:03:28,960 Speaker 1: from tweeting. I'll jokes aside, though, I mean here here, 61 00:03:29,240 --> 00:03:31,280 Speaker 1: you know he has the potential to do some real damage. 62 00:03:31,280 --> 00:03:32,880 Speaker 1: I mean you must have been watching what he was 63 00:03:32,880 --> 00:03:35,120 Speaker 1: was saying about China, about Taiwan with us. I was 64 00:03:35,120 --> 00:03:37,680 Speaker 1: not as dismayed about what he said about China as 65 00:03:37,760 --> 00:03:41,360 Speaker 1: as other people were and are. I'm far more dismayed 66 00:03:41,360 --> 00:03:44,400 Speaker 1: about the the intention last week, or the decision last 67 00:03:44,400 --> 00:03:47,360 Speaker 1: week to push Carrier to do what they did, to 68 00:03:47,360 --> 00:03:49,120 Speaker 1: to push UTX to do what it had to do, 69 00:03:49,600 --> 00:03:51,640 Speaker 1: and then to talk two or three days later about 70 00:03:51,640 --> 00:03:55,839 Speaker 1: once again putting tariffs into effect. That that is bothersome. 71 00:03:56,280 --> 00:03:58,080 Speaker 1: As long as we can avoid that, and I think 72 00:03:58,120 --> 00:04:00,000 Speaker 1: we shall avoid that. As long as we can avoid that, 73 00:04:00,040 --> 00:04:02,200 Speaker 1: things will be fine. I I talk up Dennis how 74 00:04:02,240 --> 00:04:04,240 Speaker 1: you're one of the few people that actually put your 75 00:04:04,280 --> 00:04:07,440 Speaker 1: tick by tick TA track record out to the public. 76 00:04:07,520 --> 00:04:11,440 Speaker 1: It's been a brutal year for people gaming uh the market. 77 00:04:11,600 --> 00:04:16,719 Speaker 1: Now you enjoy Fortres's diamond three point one standard deviation 78 00:04:16,839 --> 00:04:20,279 Speaker 1: moonshot on a monthly chart. The last time it did 79 00:04:20,320 --> 00:04:23,279 Speaker 1: that was from the Quiet of two thousand five, which 80 00:04:23,320 --> 00:04:27,800 Speaker 1: isn't even comparable. What does Dennis Gartman do if you 81 00:04:27,920 --> 00:04:30,960 Speaker 1: buy and hold the banks and you've gotten this gift, 82 00:04:31,279 --> 00:04:32,960 Speaker 1: do you stay with him? I think you have to. 83 00:04:33,040 --> 00:04:36,200 Speaker 1: I think there's something that is that is tectonic that 84 00:04:36,240 --> 00:04:38,479 Speaker 1: really has occurred to things the banks are going to 85 00:04:38,560 --> 00:04:41,000 Speaker 1: do so much better over the course of the next five, six, 86 00:04:41,040 --> 00:04:44,159 Speaker 1: seven years, and to something I've been arguing about. To 87 00:04:44,200 --> 00:04:46,600 Speaker 1: put it into simplistic terms, I I think that we're 88 00:04:46,640 --> 00:04:49,080 Speaker 1: going to see the trumping for lack of a better term, 89 00:04:49,360 --> 00:04:51,760 Speaker 1: of the Mahoning Valley, the place where Steele was born 90 00:04:51,800 --> 00:04:54,560 Speaker 1: in the United States, compared to Silicon Valley. I think 91 00:04:54,560 --> 00:04:58,080 Speaker 1: it means that if the Trump administration means anything, it 92 00:04:58,120 --> 00:05:01,400 Speaker 1: does in fact mean infrastructure rebuilding and simple things are 93 00:05:01,440 --> 00:05:03,359 Speaker 1: going in down. Okay, but you come on, you invented this. 94 00:05:03,440 --> 00:05:06,479 Speaker 1: Donald Trump took the lesson from you. If it drops 95 00:05:06,480 --> 00:05:10,559 Speaker 1: on my foot, you own that fraend line. Yeah, what 96 00:05:10,839 --> 00:05:15,160 Speaker 1: is taking so long for that to happen? He ain't 97 00:05:15,200 --> 00:05:18,760 Speaker 1: president yet. Okay, it's that simple. He's not president yet 98 00:05:19,160 --> 00:05:21,880 Speaker 1: and it will probably be with the whole concept of 99 00:05:21,880 --> 00:05:25,039 Speaker 1: shovel ready is an utter misnomer. The shovels are ready, 100 00:05:25,400 --> 00:05:27,599 Speaker 1: but it takes a long time. Given the fact that 101 00:05:27,640 --> 00:05:30,040 Speaker 1: all those products or projects have to be done at 102 00:05:30,040 --> 00:05:33,240 Speaker 1: state and local levels. Federal government can try to do something. 103 00:05:33,480 --> 00:05:36,480 Speaker 1: Federal government can set the standard. Federal government can fund 104 00:05:36,480 --> 00:05:38,360 Speaker 1: a bit of it, but that the mass funding has 105 00:05:38,400 --> 00:05:40,760 Speaker 1: to come from the state and from the local, from localities, 106 00:05:41,000 --> 00:05:42,600 Speaker 1: and it takes a long time to get that that 107 00:05:42,680 --> 00:05:45,800 Speaker 1: kind of thing passed through those various legislatures. It will 108 00:05:45,839 --> 00:05:48,320 Speaker 1: take time, but it is time to buy the things 109 00:05:48,320 --> 00:05:50,000 Speaker 1: that if you drop them on the on your foot 110 00:05:50,279 --> 00:05:52,560 Speaker 1: shell hurt. And I have to admit I think that's 111 00:05:52,560 --> 00:05:56,360 Speaker 1: an interesting and simple but a correct mnemonic device. Dennis 112 00:05:56,360 --> 00:05:58,280 Speaker 1: Goverment with us. We thank all the hate mail for 113 00:05:58,360 --> 00:06:02,159 Speaker 1: coming in on guard. He is the pinata of the street. 114 00:06:02,200 --> 00:06:04,800 Speaker 1: Here's here's the hate mail, David Girl from one de 115 00:06:05,080 --> 00:06:09,080 Speaker 1: Cass down in Florida. Don Cass says, I'm short in 116 00:06:09,160 --> 00:06:12,760 Speaker 1: the banks. I don't agree with Dennis. Why how do 117 00:06:12,760 --> 00:06:14,919 Speaker 1: you respond to a guy like Cass who, on a 118 00:06:15,000 --> 00:06:18,760 Speaker 1: trading basis has been short this great bull market and 119 00:06:18,839 --> 00:06:21,240 Speaker 1: now he loads the boat and shorts the banks. Yeah, 120 00:06:21,240 --> 00:06:23,240 Speaker 1: but he's getting his golf games getting so much better. 121 00:06:24,040 --> 00:06:27,080 Speaker 1: He sent me a scorecard. They had three birdies in 122 00:06:27,080 --> 00:06:29,560 Speaker 1: a row. Well done, Douggie, well done, and we said 123 00:06:29,560 --> 00:06:32,719 Speaker 1: good morning to Mr Cass. Seriously, folks, dot Cass very 124 00:06:32,760 --> 00:06:36,280 Speaker 1: cautious to short on the banks after the huge service. David, 125 00:06:36,760 --> 00:06:38,520 Speaker 1: I'm eager to talk to you about oil. Since we 126 00:06:38,600 --> 00:06:41,840 Speaker 1: last spoke, we had this OPEC production cut agreement. How 127 00:06:41,839 --> 00:06:44,200 Speaker 1: optimistic are you that that's going to be uphilm It 128 00:06:44,240 --> 00:06:46,600 Speaker 1: won't be upheld. I mean, if history shows anything, it 129 00:06:46,680 --> 00:06:49,960 Speaker 1: shows you that all OPEC decisions, all OPEC cuts in 130 00:06:50,000 --> 00:06:53,040 Speaker 1: the past have always been overridden. They cheat, it's just 131 00:06:53,080 --> 00:06:55,560 Speaker 1: a fact. Are they cheating right now? Well, the interesting 132 00:06:55,600 --> 00:06:58,680 Speaker 1: thing is they began the cut from an already ramped 133 00:06:58,760 --> 00:07:02,919 Speaker 1: up September October in early November production, So the cut 134 00:07:03,040 --> 00:07:04,680 Speaker 1: is actually going only going to take you back to 135 00:07:04,800 --> 00:07:08,640 Speaker 1: October levels of production. Two, they will cheat, that's just 136 00:07:08,680 --> 00:07:10,679 Speaker 1: a matter of that. That's only a matter of time. 137 00:07:11,200 --> 00:07:14,960 Speaker 1: The the new agreement doesn't go into effect till January one. 138 00:07:15,240 --> 00:07:17,720 Speaker 1: I suspect it by March we will see a a 139 00:07:17,920 --> 00:07:21,040 Speaker 1: rather substantive amount of cheating. And it doesn't even take cheating, 140 00:07:21,320 --> 00:07:23,280 Speaker 1: It takes us. We are going to continue to be 141 00:07:23,680 --> 00:07:26,680 Speaker 1: larger and ever greater producers of crude oil fifty two 142 00:07:26,720 --> 00:07:29,080 Speaker 1: dollars w T I with a four dollar contango to 143 00:07:29,120 --> 00:07:31,480 Speaker 1: the one year gives you fifty six dollars for one 144 00:07:31,560 --> 00:07:33,760 Speaker 1: year crude and they're going to sell We need more, 145 00:07:33,920 --> 00:07:38,160 Speaker 1: jan can we get We need an additive jargon. What 146 00:07:38,200 --> 00:07:41,160 Speaker 1: did you just say to the contango? The contango is 147 00:07:41,200 --> 00:07:44,440 Speaker 1: the carrying charge, it's the cost. It's the tangible of 148 00:07:44,440 --> 00:07:47,040 Speaker 1: a tangible asset. And crude is indeed a tangible asset. 149 00:07:47,520 --> 00:07:49,920 Speaker 1: And and for the one year, it's the one year forward. 150 00:07:50,000 --> 00:07:52,160 Speaker 1: The crude oils trades right now at about two dollars 151 00:07:52,160 --> 00:07:54,800 Speaker 1: and fifty cents premium to spot. That gives you a 152 00:07:54,840 --> 00:07:58,239 Speaker 1: fairly comfortable hedge double arrangement. And I guarantee the banks 153 00:07:58,280 --> 00:08:02,400 Speaker 1: are telling every E n P producer produce hedge, earned 154 00:08:02,400 --> 00:08:05,000 Speaker 1: the carrying charge, and produce crude oil. What did the 155 00:08:05,280 --> 00:08:07,200 Speaker 1: way that that meeting went down tell you about the 156 00:08:07,240 --> 00:08:09,520 Speaker 1: future of this organization? The future of OPEC. I think 157 00:08:09,520 --> 00:08:12,360 Speaker 1: the future of OPEC is doomed for for no other reason. 158 00:08:12,680 --> 00:08:15,040 Speaker 1: The smartest guy in the room at OPEC is the 159 00:08:16,000 --> 00:08:19,080 Speaker 1: Deputy Crown Prince, and he's made it clear he understands 160 00:08:19,400 --> 00:08:21,960 Speaker 1: thirty years from now, crude oil prices will be zero. 161 00:08:22,000 --> 00:08:24,840 Speaker 1: There it will be worthless. Something else will have supplanted 162 00:08:24,880 --> 00:08:27,400 Speaker 1: crude oil. He understands that, and he intends to sell 163 00:08:27,440 --> 00:08:30,040 Speaker 1: his crude before that. Joseph Knight, in another world from 164 00:08:30,080 --> 00:08:35,200 Speaker 1: you of international relations, is adamant about American exceptionalism. Sure, 165 00:08:35,400 --> 00:08:38,440 Speaker 1: I want you to state for US, and it permeates 166 00:08:38,440 --> 00:08:43,120 Speaker 1: your newsletter the DEFEATUS of America. What do they get wrong? 167 00:08:43,200 --> 00:08:46,120 Speaker 1: And particularly where do they get wrong? In capitalism? They 168 00:08:46,160 --> 00:08:49,600 Speaker 1: get everything wrong. They get, for example, the one thing. 169 00:08:49,640 --> 00:08:51,320 Speaker 1: There are certain things in this world that you can 170 00:08:51,360 --> 00:08:52,800 Speaker 1: count on, but you can count on the fact that 171 00:08:52,840 --> 00:08:56,680 Speaker 1: every year drought in rain out, America's farmers are going 172 00:08:56,720 --> 00:08:59,200 Speaker 1: to produce more and better crops every single year than 173 00:08:59,200 --> 00:09:02,160 Speaker 1: they did the year before. Our technology drives that fact. 174 00:09:02,600 --> 00:09:04,520 Speaker 1: We are now producing don't hold me to the number, 175 00:09:04,840 --> 00:09:07,560 Speaker 1: but perhaps four to five times more soybeans on the 176 00:09:07,559 --> 00:09:09,520 Speaker 1: same ancorage than we did a mere thirty years ago. 177 00:09:09,800 --> 00:09:11,800 Speaker 1: We will produce more ten years from now than we 178 00:09:11,880 --> 00:09:14,840 Speaker 1: produce now. We have learned through technology how to drill 179 00:09:14,920 --> 00:09:18,760 Speaker 1: for crude oil so much more efficiently, so much at 180 00:09:18,840 --> 00:09:22,040 Speaker 1: a at a much greater pace, with a greater success ratio. 181 00:09:22,160 --> 00:09:25,920 Speaker 1: They the defeatist miss what we do. We are the 182 00:09:25,960 --> 00:09:28,600 Speaker 1: greatest minds in the country when in the world, when 183 00:09:28,600 --> 00:09:30,920 Speaker 1: it comes to production. We enjoy the morning with Dennis 184 00:09:30,920 --> 00:09:33,360 Speaker 1: Gartman of the Gartman Letter. No, we will not send 185 00:09:33,400 --> 00:09:36,040 Speaker 1: out his letter. We protect the copyright of all of 186 00:09:36,040 --> 00:09:39,760 Speaker 1: our guests and particularly the joy of Dennis Gartman's beliefs. 187 00:09:39,880 --> 00:09:43,040 Speaker 1: In the back of his newsletter, one of his foundation 188 00:09:43,160 --> 00:09:48,319 Speaker 1: beliefs is gold, not in dollar terms, but in yen 189 00:09:48,960 --> 00:09:53,360 Speaker 1: in euro terms. Uh, it's a really ugly chart. It's 190 00:09:53,559 --> 00:09:58,440 Speaker 1: the classic pop bullmarket and then a trumpion rollover to 191 00:09:58,640 --> 00:10:03,400 Speaker 1: eleven seventy two announce. Some gurus would tell me support 192 00:10:03,600 --> 00:10:09,120 Speaker 1: is nine as possible. Are you long or short the 193 00:10:09,160 --> 00:10:12,680 Speaker 1: Golden Beast? I am still long of gold in euro 194 00:10:12,920 --> 00:10:15,160 Speaker 1: terms and in end terms. I have no urge to 195 00:10:15,240 --> 00:10:17,319 Speaker 1: buy any in dollar terms because I'm a bull on 196 00:10:17,360 --> 00:10:20,720 Speaker 1: the US dollar. I'd rather own something in terms of 197 00:10:20,760 --> 00:10:23,040 Speaker 1: a currency that I think is going to devalue in 198 00:10:23,320 --> 00:10:26,640 Speaker 1: relationship relationship to the buck. But do I wish I 199 00:10:26,679 --> 00:10:28,960 Speaker 1: owned any gold at all right now? I wish I 200 00:10:29,080 --> 00:10:31,640 Speaker 1: sold a goodly portion of what I had, which is 201 00:10:31,640 --> 00:10:34,280 Speaker 1: in my retirement fund. Two or three weeks ago. Wait, 202 00:10:34,320 --> 00:10:39,720 Speaker 1: we get inflation from Mr Trump, from the Republicans in Washington, 203 00:10:40,080 --> 00:10:44,120 Speaker 1: we get inflation, gold goes up, right, not necessarily there. 204 00:10:44,160 --> 00:10:46,199 Speaker 1: There have been plenty of times when we've had inflationary 205 00:10:46,240 --> 00:10:48,720 Speaker 1: impulses and gold hasn't gone up. On the other hand, 206 00:10:48,720 --> 00:10:51,120 Speaker 1: there have been periods of deflation in the past when 207 00:10:51,120 --> 00:10:54,719 Speaker 1: gold has gone up. Gold, I think is misunderstood. I 208 00:10:54,720 --> 00:10:58,440 Speaker 1: don't think it's an inflationary harbor any longer. I think 209 00:10:58,480 --> 00:11:01,760 Speaker 1: it's simply a currency relative to other currencies. And having 210 00:11:01,760 --> 00:11:04,640 Speaker 1: started in the business in the early nineteen seventies at 211 00:11:04,679 --> 00:11:07,280 Speaker 1: dear Old n C and being now Bank of America, 212 00:11:07,840 --> 00:11:11,400 Speaker 1: when when when we traded one currency against another, I 213 00:11:11,440 --> 00:11:14,480 Speaker 1: think of gold as simply being another currency, not not 214 00:11:14,679 --> 00:11:18,520 Speaker 1: a harbor of of safety, not a a a place 215 00:11:18,559 --> 00:11:21,319 Speaker 1: of value in an inflation to mentioned the Lira a 216 00:11:21,360 --> 00:11:23,720 Speaker 1: few minutes ago, and you've written about that in your newsletter. 217 00:11:23,760 --> 00:11:26,360 Speaker 1: The moves that we've seen there, what's driving it and 218 00:11:26,920 --> 00:11:28,360 Speaker 1: what do you see is the outlook for that? You 219 00:11:28,360 --> 00:11:31,600 Speaker 1: mean the Turkish leer, Yes, exactly. Well, it's first of all, 220 00:11:31,640 --> 00:11:33,800 Speaker 1: I don't I don't trust the Turkish government under air 221 00:11:33,840 --> 00:11:35,839 Speaker 1: to one for as far as I can throw him. 222 00:11:36,320 --> 00:11:39,480 Speaker 1: Uh and and he's fighting a rear guard action. The 223 00:11:39,520 --> 00:11:41,520 Speaker 1: fact that you had the president of a of a 224 00:11:41,520 --> 00:11:44,640 Speaker 1: country come out and say they need to lower rates 225 00:11:44,640 --> 00:11:46,720 Speaker 1: and the Bank of the Central Bank has, in fact, 226 00:11:46,880 --> 00:11:49,959 Speaker 1: right within minutes raised rates tell you he's got a problem. 227 00:11:50,000 --> 00:11:53,080 Speaker 1: Where's the where's the Turkish leer going probably demonstrably lower, 228 00:11:53,520 --> 00:11:55,600 Speaker 1: if for no other reason that the dollar itself is 229 00:11:55,640 --> 00:11:58,360 Speaker 1: demonstrably strong. Looking at euro dollar right now one of 230 00:11:58,440 --> 00:12:01,000 Speaker 1: seven thirty seven, are you surprised is in light of 231 00:12:01,000 --> 00:12:02,800 Speaker 1: what we saw in Italy that it is where it is? Oh? Yeah, 232 00:12:02,800 --> 00:12:05,800 Speaker 1: I am, I'm surprised. I thought when they it looked 233 00:12:05,800 --> 00:12:07,200 Speaker 1: to me in the middle of the night after the 234 00:12:07,280 --> 00:12:09,840 Speaker 1: votes had been counted, and when I get up every 235 00:12:09,840 --> 00:12:11,640 Speaker 1: morning at one o'clock in the morning to write the letter, 236 00:12:12,120 --> 00:12:15,040 Speaker 1: and we were trading one oh five one oh five, 237 00:12:15,080 --> 00:12:18,000 Speaker 1: oh five had been given, it looked like one oh five, 238 00:12:18,080 --> 00:12:20,360 Speaker 1: the big figure was going to be given. And then 239 00:12:20,400 --> 00:12:22,839 Speaker 1: suddenly there was a defense at one oh five. Next 240 00:12:22,880 --> 00:12:26,560 Speaker 1: thing you knew, everybody who's short, including myself, ran for cover, 241 00:12:26,640 --> 00:12:28,680 Speaker 1: and the next thing, it's trading one oh seven. But 242 00:12:28,720 --> 00:12:31,000 Speaker 1: if you take a big look at the big picture 243 00:12:31,040 --> 00:12:33,160 Speaker 1: over the course of the last year, is that rally 244 00:12:33,160 --> 00:12:34,760 Speaker 1: from one oh five to one oh seven. I think 245 00:12:34,800 --> 00:12:36,520 Speaker 1: we've got a one oh seven eighty bit if I'm 246 00:12:36,520 --> 00:12:39,440 Speaker 1: not mistaken at one time yesterday. Is that is that 247 00:12:39,520 --> 00:12:42,920 Speaker 1: technically important? Now? The the lows are lower, the highs 248 00:12:42,920 --> 00:12:44,240 Speaker 1: are lower, and it still looks to me like a 249 00:12:44,240 --> 00:12:47,240 Speaker 1: bear market when you look ahead here to the the 250 00:12:47,240 --> 00:12:48,840 Speaker 1: e c B meeting this week, what's what are your 251 00:12:48,880 --> 00:12:51,480 Speaker 1: expectations terms of what we'll hear from from Mario dragging? 252 00:12:51,600 --> 00:12:53,560 Speaker 1: I think we'll hear very little. I think that I 253 00:12:53,600 --> 00:12:56,760 Speaker 1: think they'll kick the football into the next year. It's 254 00:12:56,800 --> 00:12:59,840 Speaker 1: Christmas time. Their propensity to take any action whatsoever is 255 00:13:00,000 --> 00:13:04,360 Speaker 1: extremely limited. That will be rhetoric, there will be verbal action, 256 00:13:04,440 --> 00:13:06,199 Speaker 1: but will there be any real action? I think to 257 00:13:06,440 --> 00:13:08,320 Speaker 1: But but again it goes to the back half of 258 00:13:08,360 --> 00:13:11,640 Speaker 1: your newsletter, which is essentially on the exogenous shocks. To 259 00:13:11,720 --> 00:13:15,800 Speaker 1: worry about what's your outside shock? You're worried about what 260 00:13:15,880 --> 00:13:18,240 Speaker 1: am I shot starting with European banking? But what's the 261 00:13:18,280 --> 00:13:21,280 Speaker 1: one that keeps that garment up at night at one am? 262 00:13:21,600 --> 00:13:25,640 Speaker 1: When he writes in granite and chisels out his newsletter, 263 00:13:26,160 --> 00:13:28,079 Speaker 1: the the one thing that keeps me up at night 264 00:13:28,080 --> 00:13:30,760 Speaker 1: of the Chinese and whatever they're up to in the 265 00:13:30,600 --> 00:13:33,800 Speaker 1: in in the South China Sea, that keeps me up 266 00:13:33,840 --> 00:13:36,760 Speaker 1: at night. I'm always worried about what the North Koreans 267 00:13:36,760 --> 00:13:39,200 Speaker 1: are capable of doing at any one time. They are 268 00:13:39,240 --> 00:13:42,160 Speaker 1: more Trumpian than Mr Trump is, and he at least 269 00:13:42,160 --> 00:13:44,559 Speaker 1: only tweets they actually take action at times. I I 270 00:13:44,920 --> 00:13:48,760 Speaker 1: stay awake worrying about that. Um I stay awake about 271 00:13:49,160 --> 00:13:51,360 Speaker 1: I stay awake nowadays worrying about what Mr Trump is 272 00:13:51,400 --> 00:13:53,360 Speaker 1: going to tweet out. That that bothers me a great 273 00:13:53,400 --> 00:13:56,200 Speaker 1: in far more than it probably should. One final question, 274 00:13:56,240 --> 00:13:59,000 Speaker 1: Bill Gross talks about a decade of financial repression. Can 275 00:13:59,040 --> 00:14:03,520 Speaker 1: you say the financial impression for conservative people, retirees, savers, 276 00:14:03,679 --> 00:14:05,400 Speaker 1: can you say it's over? I think it's over. I 277 00:14:05,400 --> 00:14:09,040 Speaker 1: think we're gonna see I think the honestly, I think 278 00:14:09,040 --> 00:14:11,360 Speaker 1: the thirty five year bear market in the bond market, 279 00:14:11,679 --> 00:14:14,360 Speaker 1: uh in in rates, the thirty five year bull market 280 00:14:14,360 --> 00:14:16,760 Speaker 1: in bond prices has ended. I think it ended six 281 00:14:16,800 --> 00:14:19,040 Speaker 1: months ago, and I think rates are going to be 282 00:14:19,560 --> 00:14:23,000 Speaker 1: not dramatically higher, but certainly demonstrably higher. Can we get 283 00:14:23,120 --> 00:14:25,160 Speaker 1: can we get the Fed funds, but right over the 284 00:14:25,160 --> 00:14:26,560 Speaker 1: course of the the next three or four years back to 285 00:14:26,640 --> 00:14:29,760 Speaker 1: three percent. Can we get the ten year bond tenure 286 00:14:29,800 --> 00:14:32,400 Speaker 1: note back to a five percent? Eel sure, I think 287 00:14:32,400 --> 00:14:35,040 Speaker 1: we can do that without doing any damage to the economy. 288 00:14:35,240 --> 00:14:40,480 Speaker 1: Independence bull, what's your forecast for the that will kick 289 00:14:40,520 --> 00:14:43,600 Speaker 1: off at noon? And I think that both teams will 290 00:14:43,680 --> 00:14:47,040 Speaker 1: the in the in the words, in the words of 291 00:14:47,080 --> 00:14:50,680 Speaker 1: my high school phizzed teacher Bobby Knight, the team with 292 00:14:50,720 --> 00:14:53,680 Speaker 1: the most points show win. There you go, a sound 293 00:14:53,680 --> 00:15:01,520 Speaker 1: of forecasts anytime, the surveillance that all we're trying trying 294 00:15:01,520 --> 00:15:16,920 Speaker 1: a hard. Kate Moore joins as chief equity strategist at 295 00:15:16,960 --> 00:15:20,320 Speaker 1: Black Rock. As I said to morning, Kate, let's start 296 00:15:20,360 --> 00:15:22,920 Speaker 1: with with this referendum and and the fallout from it, 297 00:15:23,000 --> 00:15:25,200 Speaker 1: so much as there is one here in US equity markets. 298 00:15:25,240 --> 00:15:28,160 Speaker 1: How how we're market participants, our investors watching what was 299 00:15:28,200 --> 00:15:29,960 Speaker 1: going on in Italy. You know, I think we've been 300 00:15:30,000 --> 00:15:32,800 Speaker 1: talking a lot about how markets have been shrugging off 301 00:15:32,960 --> 00:15:36,960 Speaker 1: recent political changes and wondering, really if that's going to 302 00:15:37,040 --> 00:15:39,480 Speaker 1: extend itself into two thousand seventeen years we get further 303 00:15:39,520 --> 00:15:42,840 Speaker 1: into European elections, you know, there's a sense at one 304 00:15:42,920 --> 00:15:44,920 Speaker 1: level that there's a bit of a narrative change, that 305 00:15:44,960 --> 00:15:47,560 Speaker 1: we're going to have more stimulus, that the people are talking, 306 00:15:47,880 --> 00:15:50,120 Speaker 1: that the government has to answer, And then there's a 307 00:15:50,160 --> 00:15:52,800 Speaker 1: sense on the other side that, you know, this doesn't 308 00:15:52,800 --> 00:15:56,840 Speaker 1: actually change meaningfully the path of the economy, particularly I 309 00:15:56,880 --> 00:15:59,200 Speaker 1: think when it comes to the market reaction to Italy. 310 00:15:59,360 --> 00:16:01,480 Speaker 1: So I don't know, is it fair to say the 311 00:16:01,520 --> 00:16:07,200 Speaker 1: markets have been schizophrenic? What one could? You know? You get, 312 00:16:07,240 --> 00:16:09,800 Speaker 1: you get this no vote at Renzy is staying on here, 313 00:16:09,800 --> 00:16:11,200 Speaker 1: but you said there's there's a lot of work to 314 00:16:11,240 --> 00:16:13,080 Speaker 1: be done here. How optimistic are you that in the 315 00:16:13,120 --> 00:16:15,720 Speaker 1: next twelve eighteen months something is going to is going 316 00:16:15,760 --> 00:16:17,760 Speaker 1: to happen or the politics going to overshadow everything that 317 00:16:17,800 --> 00:16:20,760 Speaker 1: you think. I'm pretty focused on the politics, to be fair, 318 00:16:20,800 --> 00:16:23,640 Speaker 1: I would love to tell you that I'm absolutely optimistic 319 00:16:24,000 --> 00:16:26,640 Speaker 1: that we're going to see a significant acceleration in growth, 320 00:16:26,680 --> 00:16:28,760 Speaker 1: that all of these changes end up being, you know, 321 00:16:28,800 --> 00:16:33,239 Speaker 1: just sort of blips on a longer term positive trajectory. 322 00:16:33,360 --> 00:16:35,200 Speaker 1: But you know, the thing I keep coming back to 323 00:16:35,360 --> 00:16:39,480 Speaker 1: is what this does to business confidence, what this does 324 00:16:39,600 --> 00:16:43,520 Speaker 1: to investment sentiment, you know, and whether or not given 325 00:16:43,560 --> 00:16:46,560 Speaker 1: all of this uncertainty, we actually get an increase in 326 00:16:46,640 --> 00:16:49,720 Speaker 1: spend or let's say, if you're a consumer or household 327 00:16:49,720 --> 00:16:51,960 Speaker 1: and you think about borrowing money. You know, when there's 328 00:16:52,000 --> 00:16:54,760 Speaker 1: so much political uncertainty in the future of Europe is 329 00:16:54,800 --> 00:16:58,040 Speaker 1: in question, do you really look to you know, lever 330 00:16:58,160 --> 00:17:02,920 Speaker 1: yourself up and um, you know, take advantage of this environment. 331 00:17:02,960 --> 00:17:05,879 Speaker 1: I don't know. I was going to ask you to 332 00:17:05,880 --> 00:17:08,639 Speaker 1: answerr rhetorical question. There I go. I would say, waiting 333 00:17:08,640 --> 00:17:10,800 Speaker 1: on the sidelines and be a little bit more cautious 334 00:17:11,480 --> 00:17:14,240 Speaker 1: is prudent at this point. Continue with business as usual, 335 00:17:14,320 --> 00:17:17,040 Speaker 1: but perhaps not accelerate any of your spend or investment. 336 00:17:17,040 --> 00:17:18,680 Speaker 1: From here, I'm gonna ask you if this is all 337 00:17:18,720 --> 00:17:21,639 Speaker 1: part of a continuum. We had the news out of 338 00:17:21,680 --> 00:17:24,240 Speaker 1: friends yesterday another candidate for for president there from the 339 00:17:24,280 --> 00:17:27,240 Speaker 1: socialist center left side of things. Uh. And it strikes 340 00:17:27,280 --> 00:17:29,600 Speaker 1: me that the longer this continuum gets, the more events 341 00:17:29,640 --> 00:17:32,080 Speaker 1: like this probably take upon to take less import than 342 00:17:32,080 --> 00:17:34,080 Speaker 1: they would have in the past. That's right. I wonder 343 00:17:34,080 --> 00:17:35,760 Speaker 1: if we all have a little bit of a political 344 00:17:35,800 --> 00:17:41,000 Speaker 1: news fatigue too, because um, it's been a NonStop array 345 00:17:41,080 --> 00:17:45,159 Speaker 1: of big events and you know, analysis of every politicians speech, 346 00:17:45,200 --> 00:17:47,240 Speaker 1: and we were already in that mode when it came 347 00:17:47,240 --> 00:17:50,639 Speaker 1: to policymakers, particularly on the monetary side. Um and and 348 00:17:50,680 --> 00:17:53,200 Speaker 1: now here we are trying to really discern what every 349 00:17:53,200 --> 00:17:55,119 Speaker 1: politician is trying to try and do, and you know, 350 00:17:55,320 --> 00:17:58,800 Speaker 1: their policy priorities. The one thing I would also note, though, is, 351 00:17:59,160 --> 00:18:02,440 Speaker 1: you know, all of these political changes have huge impacts 352 00:18:02,440 --> 00:18:05,640 Speaker 1: on currencies and sustained impacts on currencies, and that ends 353 00:18:05,680 --> 00:18:09,600 Speaker 1: up helping someone's relative purchasing power or uh, the earnings 354 00:18:09,600 --> 00:18:13,200 Speaker 1: of exporters. I think that may actually help the economy 355 00:18:13,320 --> 00:18:15,639 Speaker 1: in the near term, but it's really too soon to 356 00:18:15,680 --> 00:18:18,240 Speaker 1: say how sustainable that is. So you can hear me, 357 00:18:18,240 --> 00:18:20,480 Speaker 1: I'm a little bit of a skeptic. I'm a little 358 00:18:20,520 --> 00:18:22,320 Speaker 1: bit of skepter, you go. I mentioned those two big 359 00:18:22,359 --> 00:18:25,320 Speaker 1: a monetary policy events, one this week one next is 360 00:18:25,359 --> 00:18:27,960 Speaker 1: that taking on less importance is monetary policy taking on 361 00:18:28,040 --> 00:18:30,280 Speaker 1: less importance, and light of all of the politics that 362 00:18:30,280 --> 00:18:32,240 Speaker 1: we've seen, I was totally unaware that we had some 363 00:18:32,240 --> 00:18:36,720 Speaker 1: monetary policy coming up. Of course that's not of course 364 00:18:36,800 --> 00:18:39,399 Speaker 1: that's not true, But no, I think that actually, you know, 365 00:18:39,440 --> 00:18:41,320 Speaker 1: if you were to ask me between now and kind 366 00:18:41,359 --> 00:18:43,960 Speaker 1: of your end. You know what am I most focused on, 367 00:18:44,080 --> 00:18:45,919 Speaker 1: if any sort of events, it's is actually gonna be 368 00:18:45,920 --> 00:18:49,680 Speaker 1: ECB on Thursday, UM less interested in the FED next 369 00:18:49,680 --> 00:18:52,600 Speaker 1: week unless there was a meaningful shift and all of 370 00:18:52,600 --> 00:18:54,960 Speaker 1: a sudden the decided to step away and not continue 371 00:18:54,960 --> 00:18:57,560 Speaker 1: the path normalization. But I think you know what the 372 00:18:57,560 --> 00:19:00,720 Speaker 1: ECB does in terms of talking about UM bond purchases 373 00:19:00,720 --> 00:19:02,720 Speaker 1: in two thousand seventeen and onwards, whether or not they 374 00:19:02,760 --> 00:19:05,560 Speaker 1: would consider tapering or extending the program. I think that's 375 00:19:05,600 --> 00:19:09,040 Speaker 1: going to have a huge impact and will really move markets. 376 00:19:10,040 --> 00:19:13,600 Speaker 1: And there's a small meeting later this week. Small it'll 377 00:19:13,640 --> 00:19:16,840 Speaker 1: be amazing why. I can't imagine what do you will say? 378 00:19:16,840 --> 00:19:22,000 Speaker 1: It is always eagerly anticipated press conference. Good morning everyone, 379 00:19:22,119 --> 00:19:24,920 Speaker 1: David Gerr and Tom King, Kate more with us Kate 380 00:19:25,000 --> 00:19:27,680 Speaker 1: within within the rotation, You've said the word rotation four 381 00:19:27,760 --> 00:19:30,359 Speaker 1: or five times in the morning here as well. I 382 00:19:30,359 --> 00:19:34,399 Speaker 1: think we needed to define that what is rotation and 383 00:19:34,440 --> 00:19:37,680 Speaker 1: what does it mean for our listeners investment? So what 384 00:19:37,800 --> 00:19:40,400 Speaker 1: I've been talking about rotation. You're right, Tom, totally fair 385 00:19:40,440 --> 00:19:42,359 Speaker 1: to call me out on using that word a dozen 386 00:19:42,400 --> 00:19:45,119 Speaker 1: times this morning, but only one cup of tea in 387 00:19:46,119 --> 00:19:48,200 Speaker 1: what I would what I would say is this this 388 00:19:48,200 --> 00:19:51,359 Speaker 1: this rotation within the equity market happened and started to 389 00:19:51,400 --> 00:19:55,280 Speaker 1: happen before the US election. It was away from some 390 00:19:55,400 --> 00:19:58,680 Speaker 1: of the bond proxy stocks you know, broadly will say 391 00:19:58,720 --> 00:20:02,560 Speaker 1: that's utilities, tell a calm and consumer staples, and towards 392 00:20:02,560 --> 00:20:07,120 Speaker 1: some of the more value and cyclical plays, particularly towards financials, 393 00:20:07,160 --> 00:20:11,280 Speaker 1: I would say, and energy. Uh, that accelerated after the election, 394 00:20:11,359 --> 00:20:15,080 Speaker 1: and you can actually really see a meaningful departure from 395 00:20:15,160 --> 00:20:18,480 Speaker 1: first half performance, second half performance, and then you know, 396 00:20:18,600 --> 00:20:21,080 Speaker 1: super charged in the last month. That's what I'm talking 397 00:20:21,080 --> 00:20:24,720 Speaker 1: about in terms of the rotation and really away from 398 00:20:24,760 --> 00:20:29,240 Speaker 1: you know, investor darlings into sectors people had much lower 399 00:20:29,280 --> 00:20:31,440 Speaker 1: exposure to. So so help me. And maybe this goes 400 00:20:31,440 --> 00:20:33,680 Speaker 1: with a Roper merger that was just announced. I believe 401 00:20:33,760 --> 00:20:37,560 Speaker 1: Karen Moscow got that into a discussion. They're buying is 402 00:20:37,560 --> 00:20:42,960 Speaker 1: it Dell Tech? Roper Technologies? Um getting it up here 403 00:20:43,040 --> 00:20:49,280 Speaker 1: of Sarasota, Florida ten They manufactured, they distribute industrial equipment. 404 00:20:49,560 --> 00:20:51,879 Speaker 1: Those are the people Donald Trump wants to help. We 405 00:20:51,960 --> 00:20:56,320 Speaker 1: mentioned tariffs before. How do you fold the president elects 406 00:20:56,520 --> 00:21:01,120 Speaker 1: rhetoric maybe policy and actually you're estimate of his real 407 00:21:01,240 --> 00:21:06,359 Speaker 1: policy into buying acquiring shares of industrials and then here's 408 00:21:06,400 --> 00:21:09,159 Speaker 1: the hard part, and then holding them. How do you 409 00:21:09,200 --> 00:21:11,800 Speaker 1: do that, Tom, That's a great question, I would say, 410 00:21:11,800 --> 00:21:14,240 Speaker 1: because industrials are the one sector where I think there's 411 00:21:14,280 --> 00:21:17,520 Speaker 1: a huge amount of uncertainty. The market did price in 412 00:21:18,000 --> 00:21:22,119 Speaker 1: an absolutely optimistic scenario, both in terms of infrastructure spend 413 00:21:22,160 --> 00:21:26,919 Speaker 1: and on shoring. But it's really not so straightforward. And 414 00:21:26,960 --> 00:21:28,760 Speaker 1: in fact, I would just take us back a few 415 00:21:28,760 --> 00:21:32,560 Speaker 1: weeks to how companies in that that sector guided not 416 00:21:32,680 --> 00:21:36,040 Speaker 1: just for fourth quarter, the forward quarter, but also for 417 00:21:36,080 --> 00:21:38,800 Speaker 1: the next twelve months. It was very very mixed, Tom, 418 00:21:38,840 --> 00:21:41,439 Speaker 1: and I think that's what we need to recognize. We 419 00:21:41,480 --> 00:21:43,800 Speaker 1: have to also look at the policy changes. But but 420 00:21:43,800 --> 00:21:48,560 Speaker 1: but focus on the fundamentals, and um, you know, I'd 421 00:21:48,560 --> 00:21:52,080 Speaker 1: say I'm a cautious, a little bit cautious. You know, 422 00:21:52,359 --> 00:21:54,560 Speaker 1: given the recent run in the sector, market priced and 423 00:21:54,600 --> 00:21:57,080 Speaker 1: pricedent very fast, too fast. Do you think I mean 424 00:21:57,119 --> 00:21:59,600 Speaker 1: it's overshooting their bent? You know that you look at 425 00:21:59,600 --> 00:22:01,639 Speaker 1: those for couple of days post the election, and and 426 00:22:01,840 --> 00:22:04,719 Speaker 1: some of these potential policies got priced in very very 427 00:22:04,760 --> 00:22:09,440 Speaker 1: quickly and then backed off. I would say the big 428 00:22:09,440 --> 00:22:12,119 Speaker 1: example there would be large capt pharma, and you know, 429 00:22:12,240 --> 00:22:14,000 Speaker 1: kind of broad the healthcare where there was a great 430 00:22:14,000 --> 00:22:16,080 Speaker 1: amount of optimism, of a bit of a relief rally, 431 00:22:16,119 --> 00:22:17,480 Speaker 1: and then sort of a well, we don't know what 432 00:22:17,520 --> 00:22:19,680 Speaker 1: this means for affordable care, and we're still concerned about 433 00:22:19,680 --> 00:22:22,960 Speaker 1: pricing when it comes to private insurers, so you know, 434 00:22:23,119 --> 00:22:24,639 Speaker 1: a bit bit of a back off. But then some 435 00:22:24,680 --> 00:22:26,280 Speaker 1: of the stuff can has continue to run. And those 436 00:22:26,280 --> 00:22:28,960 Speaker 1: are the sectors as I mentioned before, they were already 437 00:22:29,040 --> 00:22:32,119 Speaker 1: in favor and moving ahead of the election, help us 438 00:22:32,200 --> 00:22:36,080 Speaker 1: understand the weight of the variable of trade policy. Here 439 00:22:36,560 --> 00:22:37,879 Speaker 1: a lot of people saying, we heard what he had 440 00:22:37,880 --> 00:22:39,320 Speaker 1: to say on the campaign trail, heard with Donald Trump 441 00:22:39,320 --> 00:22:40,840 Speaker 1: had to say on the campaign trail. He's going to 442 00:22:40,920 --> 00:22:43,760 Speaker 1: limit what he's said when he gets into opposit itself. 443 00:22:43,760 --> 00:22:45,320 Speaker 1: And then we see these tweets over the weekend as 444 00:22:45,359 --> 00:22:47,920 Speaker 1: you're looking ahead to the to the health of the economy, 445 00:22:47,920 --> 00:22:50,239 Speaker 1: how much is that weighing on on your outlook? I mean, 446 00:22:50,280 --> 00:22:54,160 Speaker 1: trade policy is enormous people, people, we can't separate out 447 00:22:54,240 --> 00:22:57,800 Speaker 1: what could happen to the US dollar um or what 448 00:22:57,920 --> 00:23:00,920 Speaker 1: could happen to the global supply chain or what could 449 00:23:00,960 --> 00:23:03,840 Speaker 1: happen to the average cost of goods purchased by the 450 00:23:03,880 --> 00:23:08,160 Speaker 1: average consumer who has not actually experienced significant wage gains 451 00:23:08,280 --> 00:23:12,520 Speaker 1: or any wage gains UM. And I think stuff sounds 452 00:23:12,520 --> 00:23:14,600 Speaker 1: good when it comes out, perhaps on a tweet, it 453 00:23:14,600 --> 00:23:17,119 Speaker 1: looks like it's protecting the American people. But there's a 454 00:23:17,160 --> 00:23:20,920 Speaker 1: far distance between some of that rhetoric and a positive 455 00:23:20,960 --> 00:23:24,840 Speaker 1: impact UM in terms of over someone's overall spending. Kip 456 00:23:24,920 --> 00:23:26,960 Speaker 1: more with us with black Rock. We've been talking up 457 00:23:27,000 --> 00:23:30,080 Speaker 1: a storm here. On a break, Let's talk about technology 458 00:23:30,119 --> 00:23:33,880 Speaker 1: and hydrocarbons. There's always a point where something gets stupid 459 00:23:33,960 --> 00:23:36,960 Speaker 1: within the SMP valuation, like it makes up twenty one 460 00:23:37,040 --> 00:23:41,080 Speaker 1: or eight cent or whatever the sp index. I would 461 00:23:41,080 --> 00:23:45,120 Speaker 1: suggest hydrocarbons right now aren't stupid, and I'm guessing sort 462 00:23:45,119 --> 00:23:49,879 Speaker 1: of big ugly technologies not stupid. But is technology a 463 00:23:50,040 --> 00:23:53,240 Speaker 1: value trap? What portion of the SMP is it? And 464 00:23:53,359 --> 00:23:57,280 Speaker 1: is it a value trap? Look, without question, the importance 465 00:23:57,320 --> 00:23:59,919 Speaker 1: of technology has increased, but I would say, you know, 466 00:24:00,000 --> 00:24:01,879 Speaker 1: it's hard for me to say it's a value trap. 467 00:24:02,240 --> 00:24:04,800 Speaker 1: The multiples didn't get crazy. There was actually so much 468 00:24:04,840 --> 00:24:07,480 Speaker 1: earnings growth and sales growth in that sector for a 469 00:24:07,520 --> 00:24:09,879 Speaker 1: long time it's obviously slowed a little bit and estimates 470 00:24:09,920 --> 00:24:13,000 Speaker 1: for two thousand seventeen or not as aggressive, But you know, 471 00:24:13,119 --> 00:24:16,320 Speaker 1: it is a sector I think that incorporates some real 472 00:24:16,400 --> 00:24:19,480 Speaker 1: high flying companies and some kind of older tech and 473 00:24:19,560 --> 00:24:21,720 Speaker 1: where it may pay to be a little bit more 474 00:24:21,760 --> 00:24:24,720 Speaker 1: specific and discerning. I would also say it's a sector 475 00:24:24,760 --> 00:24:28,119 Speaker 1: that was a huge consensus overweight for some time. At 476 00:24:28,119 --> 00:24:31,240 Speaker 1: a consensus overweight going into this rotation, I want to 477 00:24:31,280 --> 00:24:34,120 Speaker 1: use it for thirteen times now tom um in that 478 00:24:34,119 --> 00:24:37,080 Speaker 1: that started in the beginning apart me the second half 479 00:24:37,160 --> 00:24:40,600 Speaker 1: of of two thousand and sixteen. So it's a place 480 00:24:40,600 --> 00:24:43,280 Speaker 1: where I think people can continue to reduce their positions 481 00:24:43,280 --> 00:24:46,280 Speaker 1: in order to fund um some of their buying into 482 00:24:46,440 --> 00:24:49,000 Speaker 1: energy or into cyclicals or something kind of a more 483 00:24:49,080 --> 00:24:51,720 Speaker 1: value place. I was mentioning in terms of US bank stocks. 484 00:24:52,119 --> 00:24:54,600 Speaker 1: There was so much commentary after the election looking at 485 00:24:54,600 --> 00:24:57,520 Speaker 1: technology and specific which was down on the heels of 486 00:24:57,720 --> 00:25:00,439 Speaker 1: the election results that it was directly attributable to what 487 00:25:00,560 --> 00:25:04,880 Speaker 1: happened on November eighth. Looking looking back at the election, now, 488 00:25:05,000 --> 00:25:06,640 Speaker 1: is there anything that we've seen since that you can 489 00:25:06,680 --> 00:25:08,840 Speaker 1: tie that to or is it just the uncertainty generally 490 00:25:09,480 --> 00:25:12,200 Speaker 1: in terms of rotation. It's not that you could argue 491 00:25:12,200 --> 00:25:14,680 Speaker 1: if it was just about the election, then people should 492 00:25:14,680 --> 00:25:17,000 Speaker 1: really like a lot of these technology companies with huge 493 00:25:17,000 --> 00:25:20,280 Speaker 1: amounts of cash off shore and if that's coming back, 494 00:25:20,320 --> 00:25:22,360 Speaker 1: and it would be great to own the shares, especially 495 00:25:22,359 --> 00:25:24,320 Speaker 1: if some portion of that cash is used for buybacks 496 00:25:24,359 --> 00:25:27,240 Speaker 1: or special dividends. But I think this is really about 497 00:25:27,240 --> 00:25:29,520 Speaker 1: people getting more constructive on the banks, which were the 498 00:25:29,560 --> 00:25:32,760 Speaker 1: consensus underweight and which we had become more constructive on 499 00:25:32,840 --> 00:25:34,680 Speaker 1: and sort of had been talking about throughout the fall, 500 00:25:35,240 --> 00:25:39,199 Speaker 1: and that needing to fund um, you know, find some 501 00:25:39,320 --> 00:25:43,800 Speaker 1: place to actually, you know, to get cash to decrease 502 00:25:43,840 --> 00:25:49,080 Speaker 1: that underweight. And I don't even think we're at neutral yet. Frankly, yes, 503 00:25:49,640 --> 00:25:54,959 Speaker 1: I think so um, not meaningfully underweight, but modesty underweight. Look, 504 00:25:54,960 --> 00:25:57,720 Speaker 1: I've had a number of conversations within Black Round, outside 505 00:25:57,720 --> 00:26:01,000 Speaker 1: of Black Rock, where portfolio managers and investors have said, 506 00:26:01,320 --> 00:26:03,159 Speaker 1: you know, if they were overweight, the bank's going in 507 00:26:03,200 --> 00:26:05,720 Speaker 1: there at least neutral. They felt pretty good about it. 508 00:26:05,960 --> 00:26:09,680 Speaker 1: But the speed at which these these stocks moved has 509 00:26:09,720 --> 00:26:12,879 Speaker 1: made them cautious about doubling or trippling down. So I 510 00:26:12,920 --> 00:26:15,320 Speaker 1: think that people are still phasing into the sector. Mike, 511 00:26:15,400 --> 00:26:18,280 Speaker 1: I'll give you a phase into the sector. JP Morgan 512 00:26:18,440 --> 00:26:21,639 Speaker 1: is basically a moonshot. I mean, if you look at 513 00:26:21,680 --> 00:26:25,400 Speaker 1: it on a monthly basis, and you look at too stands. 514 00:26:25,440 --> 00:26:28,640 Speaker 1: I mean, David, it's it's where's that chart again? There 515 00:26:28,680 --> 00:26:32,080 Speaker 1: it is. It means way out past three standard deviations 516 00:26:32,119 --> 00:26:34,960 Speaker 1: on a monthly chart. It's a moon shot. I'm quite 517 00:26:35,000 --> 00:26:39,720 Speaker 1: familiar with the shape of the J. Yeah. I thought 518 00:26:39,760 --> 00:26:42,200 Speaker 1: the bank was about ready to fall apart if you left. 519 00:26:43,760 --> 00:26:46,840 Speaker 1: I hardly think that's the case. It is, Uh, it is. 520 00:26:47,000 --> 00:26:50,720 Speaker 1: It is a very very solid institution. Uh probably didn't 521 00:26:50,720 --> 00:26:53,919 Speaker 1: even notice I was gone. Um, But the point of 522 00:26:53,920 --> 00:26:56,640 Speaker 1: the matter, Jamie, Diamond were black for three weeks after 523 00:26:56,720 --> 00:27:01,240 Speaker 1: you left. I were black every day. Seriously, you're telling 524 00:27:01,240 --> 00:27:03,600 Speaker 1: me the banks are availing to make it fails. I know. 525 00:27:03,720 --> 00:27:05,919 Speaker 1: I think the banks have so many things going for 526 00:27:05,960 --> 00:27:09,520 Speaker 1: them at this point. Outstanding balance sheets which we knew, 527 00:27:10,040 --> 00:27:12,399 Speaker 1: better cash return to shareholders which we knew, which was 528 00:27:12,440 --> 00:27:16,000 Speaker 1: sort of like skeptically, um, you know, taken in by 529 00:27:16,000 --> 00:27:20,200 Speaker 1: the market. We actually also we're seeing good green shoots. 530 00:27:20,200 --> 00:27:22,119 Speaker 1: I hate using green shoots, but it's green shoots in 531 00:27:22,200 --> 00:27:27,960 Speaker 1: terms of economic excuse me, we're rotting. We're pretty constructive 532 00:27:28,000 --> 00:27:30,080 Speaker 1: on the U. S economy and actually see see good 533 00:27:30,119 --> 00:27:33,040 Speaker 1: reason to believe we're going to get an acceleration in growth, 534 00:27:33,640 --> 00:27:36,600 Speaker 1: not just because of this election, but just in terms 535 00:27:36,600 --> 00:27:41,200 Speaker 1: of overall demand um in two thousand seventeen. In addition, 536 00:27:41,400 --> 00:27:44,879 Speaker 1: if we have less regulatory pressure, I think that's a 537 00:27:45,040 --> 00:27:47,000 Speaker 1: that's a real help. And of course we've got this 538 00:27:47,040 --> 00:27:49,600 Speaker 1: reflationary theme which is steepening the yield curve, and it's 539 00:27:49,840 --> 00:27:52,840 Speaker 1: you know, going to help overall earnings. We think, especially 540 00:27:52,840 --> 00:27:54,840 Speaker 1: over the next couple of quarters. There are a lot 541 00:27:54,880 --> 00:27:57,600 Speaker 1: of things that have aligned at the same time to 542 00:27:57,720 --> 00:28:01,040 Speaker 1: make the banks an interesting by. JP Morgan is out 543 00:28:01,119 --> 00:28:04,600 Speaker 1: three standard deviations for the first time since May of 544 00:28:04,720 --> 00:28:09,160 Speaker 1: two thousand six, and then it was from extremely quiet 545 00:28:09,480 --> 00:28:13,560 Speaker 1: two thousand four, two thousand five. That's how rare the 546 00:28:13,640 --> 00:28:17,840 Speaker 1: Trump surge is for Mr Diamond. Fortress Fortress Trump, maybe 547 00:28:17,840 --> 00:28:20,119 Speaker 1: that's what we'll call JP Morgan. Kate Moore, thank you 548 00:28:20,160 --> 00:28:23,640 Speaker 1: so much. She is with Black Rock giving us wisdom 549 00:28:23,680 --> 00:28:30,440 Speaker 1: on the equity. Fortress Trump till there was yesterday. I 550 00:28:30,760 --> 00:28:34,119 Speaker 1: didn't lie this time to go across one block the 551 00:28:34,160 --> 00:28:38,520 Speaker 1: New York Place to be. He said, you're a bad influence. Yes, 552 00:28:38,560 --> 00:28:50,920 Speaker 1: I'm going to Gucci will continue. This is Bloomberg, who 553 00:28:51,000 --> 00:28:54,320 Speaker 1: you put your trust in matters. Investors have put their 554 00:28:54,320 --> 00:28:58,120 Speaker 1: trust in independent registered investment advisors to the two and 555 00:28:58,200 --> 00:29:01,720 Speaker 1: of four trillion dollars. Why they see their roles to serve, 556 00:29:02,000 --> 00:29:05,360 Speaker 1: not sell. That's why Charles Schwab is committed to the 557 00:29:05,440 --> 00:29:11,560 Speaker 1: success over seven thousand independent financial advisors who passionately dedicate 558 00:29:11,640 --> 00:29:16,400 Speaker 1: themselves to helping people achieve their financial goals. Learn more 559 00:29:16,920 --> 00:29:26,880 Speaker 1: and find your independent advisor dot com. Well, let's a 560 00:29:26,880 --> 00:29:28,760 Speaker 1: real pleasure to have a legend on the line from 561 00:29:28,840 --> 00:29:32,000 Speaker 1: Rye in New York. That's Mario Gabelly, founder of Gabelly Funds, 562 00:29:32,480 --> 00:29:35,200 Speaker 1: schooled by Dodd and Graham, joining us now by phone 563 00:29:35,240 --> 00:29:36,920 Speaker 1: from Rye. As I say, Mary, good morning, Great to 564 00:29:36,960 --> 00:29:39,920 Speaker 1: have you with us, Delighted to be here talking about stocks. 565 00:29:40,000 --> 00:29:41,680 Speaker 1: There you go. Well, let me let me ask you, 566 00:29:41,720 --> 00:29:43,600 Speaker 1: first of all, what these last few weeks have been like. 567 00:29:43,680 --> 00:29:45,720 Speaker 1: We've been talking with guests about how they processed what 568 00:29:45,760 --> 00:29:49,600 Speaker 1: happened on November going into the morning afterward. Give us 569 00:29:49,640 --> 00:29:51,360 Speaker 1: your sense of of what's happened here and how it's 570 00:29:51,400 --> 00:29:54,920 Speaker 1: changed your outlook hasn't changed anything other than the re 571 00:29:55,080 --> 00:29:58,920 Speaker 1: establishment of a basic fundamentals of allocation of capital towards 572 00:29:58,960 --> 00:30:03,320 Speaker 1: capitalism as opposed to socialism. Any event, the eboth, Hillary 573 00:30:03,360 --> 00:30:05,800 Speaker 1: and Donald were basically going to push for a couple 574 00:30:05,800 --> 00:30:07,760 Speaker 1: of areas that were fairly obvious, one of which was 575 00:30:07,840 --> 00:30:10,640 Speaker 1: infrastructure spending. The other one was military spending. So you know, 576 00:30:10,720 --> 00:30:13,840 Speaker 1: we were there and the you know, the change in 577 00:30:13,920 --> 00:30:17,520 Speaker 1: administration basically allows new changes that who is going to 578 00:30:17,640 --> 00:30:20,640 Speaker 1: run the regulatory agency like the Federal Communications Commission? What 579 00:30:20,680 --> 00:30:24,080 Speaker 1: does that mean? And things like, uh, you know banks 580 00:30:24,080 --> 00:30:27,120 Speaker 1: and consolidation in the banking industry. You bring up infrastructure, 581 00:30:27,200 --> 00:30:30,120 Speaker 1: let's start there. There was so much enthusiasm among investors 582 00:30:30,160 --> 00:30:33,000 Speaker 1: after Donald Trump was elected. A lot of people betting 583 00:30:33,000 --> 00:30:34,400 Speaker 1: on the fact that there is going to be an 584 00:30:34,440 --> 00:30:37,200 Speaker 1: infrastructure spending package. When you look at a sector by 585 00:30:37,200 --> 00:30:39,920 Speaker 1: sector basis, when you look at utilities, say, is it 586 00:30:39,960 --> 00:30:43,160 Speaker 1: oversold at this point? Well, whoa, whoa, You're you're off 587 00:30:43,200 --> 00:30:47,520 Speaker 1: the deep end. Let's talk about infrastructure. Cement, roads, bridges 588 00:30:47,680 --> 00:30:51,840 Speaker 1: inland waterway inland waterway, the the locks on the Mississippi 589 00:30:51,840 --> 00:30:54,440 Speaker 1: where our grain goes to export, like soybeans are big 590 00:30:54,440 --> 00:30:56,880 Speaker 1: export product that's got to be focused on. We've gotta 591 00:30:56,880 --> 00:31:01,320 Speaker 1: eliminate the bottlenecks and just drive around Manhattan independent of 592 00:31:01,360 --> 00:31:04,800 Speaker 1: all of that. What does infrastructure mean? It means airports 593 00:31:04,840 --> 00:31:08,400 Speaker 1: and the equipment rental companies. You or I Ashtead in London, 594 00:31:08,800 --> 00:31:11,400 Speaker 1: Herrick Rentals and has three or four others they benefit. 595 00:31:11,480 --> 00:31:14,200 Speaker 1: It's a forty five billion industry that was hidden. But 596 00:31:14,480 --> 00:31:17,120 Speaker 1: you go back a year ago, one year ago, December fifteen, 597 00:31:17,160 --> 00:31:19,520 Speaker 1: two thousand and fifteen, the US government past the five 598 00:31:19,600 --> 00:31:23,960 Speaker 1: year bill for highway fixer up called fast Fix America 599 00:31:24,040 --> 00:31:29,560 Speaker 1: Surface Transportations. Fact, like company in Chattanooga doubled before this happened. 600 00:31:29,840 --> 00:31:34,120 Speaker 1: It's called Aztec. Companies like Gento, which makes us to 601 00:31:34,120 --> 00:31:37,960 Speaker 1: get tons. Mario, how do you respond to somebody who says, Okay, 602 00:31:38,000 --> 00:31:40,880 Speaker 1: that's great, Mario, Red and barons from your listen to 603 00:31:41,000 --> 00:31:44,640 Speaker 1: on surveillance and you are are United rentals talk about 604 00:31:44,680 --> 00:31:47,920 Speaker 1: you can't make money in stocks, folks, fourteen point nine 605 00:31:47,920 --> 00:31:51,360 Speaker 1: percent per year over the last decade. How do you respond, 606 00:31:51,400 --> 00:31:54,000 Speaker 1: Mario to a person who says I didn't get in 607 00:31:54,160 --> 00:31:57,920 Speaker 1: I'm too late. Well, that's the question mark. That's always good. 608 00:31:57,920 --> 00:32:00,240 Speaker 1: I think Buffett makes the case and I'll just echo 609 00:32:00,320 --> 00:32:02,760 Speaker 1: his comments about the next ten years, America is great, 610 00:32:02,800 --> 00:32:06,960 Speaker 1: American investing will be terrific. And to the cree that 611 00:32:07,000 --> 00:32:09,320 Speaker 1: you own a company and your buy hole. Look, if 612 00:32:09,320 --> 00:32:14,160 Speaker 1: you bought Warren Buffett's company somewhere around seventy when I 613 00:32:14,160 --> 00:32:17,600 Speaker 1: started the firm, you probably compounded at any time over 614 00:32:17,600 --> 00:32:20,000 Speaker 1: the last thirty years. People would say it's of a price. 615 00:32:20,520 --> 00:32:23,520 Speaker 1: So I'm I'm think that a index fund will grow. 616 00:32:23,720 --> 00:32:27,360 Speaker 1: Tom and the active management you better, I need you 617 00:32:27,440 --> 00:32:31,400 Speaker 1: get you wound up. This morning, Mario Gabelly on the 618 00:32:31,480 --> 00:32:35,400 Speaker 1: people that say companies shouldn't do share buy backs, they 619 00:32:35,400 --> 00:32:38,760 Speaker 1: should stop financial engineering, they should go out and find 620 00:32:38,800 --> 00:32:41,800 Speaker 1: investment even if it doesn't work. That upsets you a 621 00:32:41,840 --> 00:32:45,000 Speaker 1: little bit, doesn't it? Not? Not really, I think it's 622 00:32:45,040 --> 00:32:48,719 Speaker 1: not inappropriate to allocate capital to the way a CEO 623 00:32:48,920 --> 00:32:51,720 Speaker 1: thinks to the degree that you were basically putting money 624 00:32:51,720 --> 00:32:54,280 Speaker 1: in twenty years ago and open heart furnaces because you 625 00:32:54,280 --> 00:32:56,280 Speaker 1: were in that business and you want to continue in 626 00:32:56,280 --> 00:32:59,120 Speaker 1: that business, and now that was not smart. Just think 627 00:32:59,160 --> 00:33:01,600 Speaker 1: of Cuba, Just think of China. They did the same thing. 628 00:33:02,080 --> 00:33:04,960 Speaker 1: So when you look at the American capitalistic system. You know, 629 00:33:05,000 --> 00:33:07,200 Speaker 1: you want to allow all of the errors and all 630 00:33:07,240 --> 00:33:09,880 Speaker 1: of the mistakes, allow that capital be formulated. And I 631 00:33:10,000 --> 00:33:11,920 Speaker 1: put in, I have no problem if the company is 632 00:33:11,960 --> 00:33:16,160 Speaker 1: selling value to buy, it is a thirty seconds that 633 00:33:16,160 --> 00:33:18,600 Speaker 1: we're going to come back, Mario. Is Donald Trump good 634 00:33:18,600 --> 00:33:24,000 Speaker 1: for Mario Gabelly? I think the notion of a lower 635 00:33:24,200 --> 00:33:29,720 Speaker 1: corporate taxes, global competitors for American industry, somewhat less regulation, 636 00:33:30,360 --> 00:33:34,840 Speaker 1: and the re establishment of the entrepreneurial innovation, creative innovation 637 00:33:34,840 --> 00:33:37,440 Speaker 1: that made America great is not bad for any entrepreneur 638 00:33:37,600 --> 00:33:40,840 Speaker 1: like myself and anyone else that wants to succeed. To 639 00:33:40,880 --> 00:33:44,280 Speaker 1: give you an idea of the pixie dust of Mario Gabelly, 640 00:33:44,320 --> 00:33:48,720 Speaker 1: and trust me, folks, there's years that he would rather forget. Rarely, 641 00:33:48,840 --> 00:33:51,960 Speaker 1: if ever, have I seen back to back years in 642 00:33:52,000 --> 00:33:56,200 Speaker 1: the ninety four percentile that would be the Gabelly Equity 643 00:33:56,280 --> 00:33:59,720 Speaker 1: trust A closed and fund g A B is Well, Mario, 644 00:33:59,800 --> 00:34:02,760 Speaker 1: did banks have anything to do with your two thousand 645 00:34:02,760 --> 00:34:07,080 Speaker 1: twelve two thousand thirteen excellence. No. I think it was 646 00:34:07,120 --> 00:34:10,719 Speaker 1: a combination of transactions and coming off the lackluster performance 647 00:34:10,719 --> 00:34:13,320 Speaker 1: in the prior years. Talking about banks that we're looking 648 00:34:13,360 --> 00:34:17,160 Speaker 1: at all of the banks in Virginia, South Carolina, North Carolina, Georgia, 649 00:34:17,280 --> 00:34:21,400 Speaker 1: and Florida that will be part of the consolidation effort. 650 00:34:21,440 --> 00:34:23,760 Speaker 1: So you know, anything on the two or three billion dollars, 651 00:34:23,760 --> 00:34:25,120 Speaker 1: all of a sudden they've got a new tail in 652 00:34:25,160 --> 00:34:28,200 Speaker 1: tom Well, how does it change, How does the bank 653 00:34:28,400 --> 00:34:33,520 Speaker 1: analysis dialogue change with the politics of Washington. Oh, I 654 00:34:33,680 --> 00:34:37,360 Speaker 1: think it's fairly simple. The eliminate the the they raised 655 00:34:37,360 --> 00:34:39,400 Speaker 1: the ceiling of fifty billion dollars before you have to 656 00:34:39,480 --> 00:34:43,399 Speaker 1: file a large number of extra forms and the list 657 00:34:43,480 --> 00:34:45,560 Speaker 1: is pretty simple. Anybody can just go out and get 658 00:34:45,560 --> 00:34:48,799 Speaker 1: a Russell two thousand index of banks and identify those 659 00:34:48,840 --> 00:34:51,880 Speaker 1: areas rather than be identifying them for you. But that's easy, 660 00:34:52,280 --> 00:34:54,600 Speaker 1: you know, it just requires a little oval grease. On 661 00:34:54,640 --> 00:34:56,520 Speaker 1: the other side. In the infrastructure area, one of my 662 00:34:56,520 --> 00:35:00,920 Speaker 1: favorites is case New Holland Farm Equipment Company, say construction 663 00:35:00,920 --> 00:35:04,879 Speaker 1: equipment company that trucks in Europe, which is improving, and 664 00:35:05,080 --> 00:35:07,400 Speaker 1: the stocks around eight dollars and seventy five cents and 665 00:35:07,600 --> 00:35:10,520 Speaker 1: US and C n h I and it's controlled by 666 00:35:10,600 --> 00:35:14,000 Speaker 1: the Annelli family, and I think it's quite quite attractive. 667 00:35:14,040 --> 00:35:15,919 Speaker 1: So there's a whole bunch, Tom, when you say about 668 00:35:16,000 --> 00:35:18,160 Speaker 1: entry points, what do I want to own, how do 669 00:35:18,200 --> 00:35:20,200 Speaker 1: I make money over the next three or four years, 670 00:35:20,480 --> 00:35:22,759 Speaker 1: and how do I pay lower capital gains taxes during 671 00:35:22,760 --> 00:35:25,360 Speaker 1: that period? While I'm holy it, that's what the individual 672 00:35:25,440 --> 00:35:28,600 Speaker 1: investors think about, not the professional investors, the managing tax 673 00:35:28,680 --> 00:35:31,760 Speaker 1: free money. Though Tom mentioned your prowess for for media 674 00:35:31,840 --> 00:35:34,520 Speaker 1: in particular, and our colleague David Weston sat down with 675 00:35:34,600 --> 00:35:38,279 Speaker 1: Less Moonvest the president, chairman and CEO of CBS yesterday. 676 00:35:39,000 --> 00:35:41,080 Speaker 1: I know that you have been actively watching and engaged 677 00:35:41,120 --> 00:35:44,759 Speaker 1: with the conversations about the future Vicom, the future of 678 00:35:44,840 --> 00:35:47,040 Speaker 1: CBS are you are you looking forward to Do you 679 00:35:47,040 --> 00:35:49,680 Speaker 1: want to see here a merger, a deal with both 680 00:35:49,719 --> 00:35:51,520 Speaker 1: these companies and do you want to see Moonvesz running 681 00:35:51,520 --> 00:35:55,680 Speaker 1: in Basically, Less is terrific, one of the great executives 682 00:35:55,680 --> 00:35:58,480 Speaker 1: in America. We have blessed this this country with so 683 00:35:58,520 --> 00:36:02,359 Speaker 1: many good CEOs. Basically, the decision is going to be made, 684 00:36:02,360 --> 00:36:05,680 Speaker 1: obviously by National Amusements. National Amusements obviously is trying to 685 00:36:05,719 --> 00:36:08,640 Speaker 1: go through the fairness. Our clients own most of the 686 00:36:08,680 --> 00:36:10,800 Speaker 1: majority of the minority in terms of voting stock in 687 00:36:10,840 --> 00:36:14,400 Speaker 1: Boat CBS and Viacom. So hopefully if there's an issue 688 00:36:14,440 --> 00:36:18,040 Speaker 1: in terms of fairness and extreme of fairness opinions or 689 00:36:18,480 --> 00:36:20,920 Speaker 1: you know, uh, we will have an important say in it. 690 00:36:21,200 --> 00:36:23,920 Speaker 1: And we're not opposed to emerging. We've gone through this 691 00:36:24,000 --> 00:36:27,680 Speaker 1: before Viacom was off from CBS. It was they bought 692 00:36:27,719 --> 00:36:31,560 Speaker 1: CBS and a lot of going things going on within them. 693 00:36:32,000 --> 00:36:35,560 Speaker 1: Within the dynamics. M is the basic idea of animal spirit. 694 00:36:35,640 --> 00:36:38,520 Speaker 1: I guess we believe. I just did a chart of 695 00:36:38,560 --> 00:36:42,040 Speaker 1: the monthly JP Morgan chart. It's a moonshot folks at 696 00:36:42,080 --> 00:36:45,279 Speaker 1: three point one standard deviations. I mean, it is a 697 00:36:45,320 --> 00:36:49,440 Speaker 1: Trump moonshot on the equity markets. Would you suggest M 698 00:36:49,480 --> 00:36:51,719 Speaker 1: and A. I mean, I was with you, Mario one 699 00:36:51,760 --> 00:36:54,480 Speaker 1: day and the next day Cadbury was taken out. Is 700 00:36:54,520 --> 00:36:57,200 Speaker 1: that game going to continue? Well, you know, it's funny 701 00:36:57,239 --> 00:36:59,279 Speaker 1: that you mentioned Cadbury because one of the ones on 702 00:36:59,520 --> 00:37:03,320 Speaker 1: Pretende A transaction list is one that you know, Irene 703 00:37:03,400 --> 00:37:08,680 Speaker 1: Rosenfeldt went after cat Barrier and Mandale is certainly around forty. 704 00:37:09,640 --> 00:37:12,600 Speaker 1: You know, kind of an interesting consolidation play on its own. 705 00:37:12,640 --> 00:37:14,759 Speaker 1: Either they're gonna buy someone or someone will merge with 706 00:37:14,800 --> 00:37:17,520 Speaker 1: them to create scale on the global basis, Tom, how 707 00:37:17,640 --> 00:37:20,440 Speaker 1: was the the environment for the the atmosphere four mergers 708 00:37:20,440 --> 00:37:24,520 Speaker 1: and acquisitions right now? Well, it's not change. We go 709 00:37:24,640 --> 00:37:27,200 Speaker 1: through the last sixty years and we go through a 710 00:37:27,280 --> 00:37:30,040 Speaker 1: variety of cycles, and this one here, you know, may 711 00:37:30,080 --> 00:37:33,319 Speaker 1: have some tail when, particularly if you allow capital to 712 00:37:33,320 --> 00:37:36,279 Speaker 1: be flowed back to the United States and have a 713 00:37:36,320 --> 00:37:40,000 Speaker 1: corporate tax that is not based on world taxation but 714 00:37:40,160 --> 00:37:43,800 Speaker 1: territorial taxation, so that companies in the United States, particularly 715 00:37:43,840 --> 00:37:46,640 Speaker 1: big farmer utilities, will merge. You know, you get a 716 00:37:46,680 --> 00:37:49,240 Speaker 1: whole bunch of companies that will consolidate. And the entertainment 717 00:37:49,280 --> 00:37:54,400 Speaker 1: business is just another example, and content and connectivity, so 718 00:37:54,480 --> 00:37:57,000 Speaker 1: you'll see a lot of potential deals. Even this morning 719 00:37:57,000 --> 00:37:59,840 Speaker 1: where we're talking to I just tweeted that X Y 720 00:38:00,120 --> 00:38:03,719 Speaker 1: companies being taken over the cash tender offer. Mario, let's 721 00:38:03,719 --> 00:38:08,040 Speaker 1: do some job constructive job advice for our global Wall 722 00:38:08,040 --> 00:38:12,080 Speaker 1: Street audience to the young turk who's level one, level two, 723 00:38:12,200 --> 00:38:16,400 Speaker 1: level three cf A. They're doing securities analysis, either full 724 00:38:16,400 --> 00:38:19,960 Speaker 1: time or they're certainly aware of it. What is the 725 00:38:20,080 --> 00:38:23,640 Speaker 1: new new for you in terms of analyzing the company's 726 00:38:23,680 --> 00:38:27,840 Speaker 1: performance and potential. Well, we just look at how management 727 00:38:27,840 --> 00:38:30,440 Speaker 1: allocates capital. Tom, that's but nothing has changed. I mean 728 00:38:30,560 --> 00:38:34,680 Speaker 1: basically as Graham Dodd Murray Greenwald that methodology. You know, 729 00:38:34,719 --> 00:38:36,560 Speaker 1: if you want to be the CEO of a public company, 730 00:38:36,600 --> 00:38:38,480 Speaker 1: if you want to do deals in big private equity, 731 00:38:38,480 --> 00:38:40,919 Speaker 1: if you want to understand how to do merging acquisition work, 732 00:38:41,000 --> 00:38:44,400 Speaker 1: you know, the notion of doing fundamental research and sticking 733 00:38:44,400 --> 00:38:46,960 Speaker 1: to the problem is getting paid for it. Ever since 734 00:38:47,200 --> 00:38:51,160 Speaker 1: Spitzer put his rules out, it has become extraordinarily hard 735 00:38:51,200 --> 00:38:54,440 Speaker 1: for the cell side, which is a great training ground 736 00:38:54,800 --> 00:38:58,840 Speaker 1: to basically pay for analysts. And so where are the 737 00:38:58,840 --> 00:39:00,759 Speaker 1: analyst going where they do in their work? And it's 738 00:39:01,520 --> 00:39:05,200 Speaker 1: and that's the quandry. Tell me about General Electric if 739 00:39:05,200 --> 00:39:07,759 Speaker 1: it's about the CEO and allocation of capital. Has mr 740 00:39:07,880 --> 00:39:11,360 Speaker 1: mL done a good job? Well, clearly this deal with 741 00:39:11,600 --> 00:39:16,280 Speaker 1: Maker use and merging their uh you know, energy business 742 00:39:16,280 --> 00:39:18,480 Speaker 1: into that. And look at what they're doing in the 743 00:39:18,520 --> 00:39:21,759 Speaker 1: additive area with Joyce who runs their engine business making 744 00:39:21,760 --> 00:39:24,799 Speaker 1: acquisitions in Europe because he wants to get into the 745 00:39:24,840 --> 00:39:27,719 Speaker 1: three dimensional metal additive business. You know, they've got to 746 00:39:27,760 --> 00:39:31,760 Speaker 1: move capital around. They've been shrinking the cap. The stock 747 00:39:31,920 --> 00:39:35,000 Speaker 1: is a pretty good target for industrial activity on a 748 00:39:35,000 --> 00:39:37,520 Speaker 1: global basis. Clearly they're trying to figure out what they're 749 00:39:37,520 --> 00:39:40,320 Speaker 1: gonna do with their water business and obviously some other industries. 750 00:39:40,360 --> 00:39:42,880 Speaker 1: So the notion of capitalism is to allow you to 751 00:39:42,920 --> 00:39:47,280 Speaker 1: make managements, to make mistakes, and you know, make acquisitions 752 00:39:47,600 --> 00:39:50,239 Speaker 1: and also sell the investments without the same time reposition 753 00:39:50,280 --> 00:39:52,399 Speaker 1: the company for the dynamics of growth and that stay 754 00:39:52,480 --> 00:39:55,520 Speaker 1: frozen like Cuba did but fifty years I hear you're 755 00:39:55,520 --> 00:39:59,880 Speaker 1: talking about the need for tax reform, for regulatory reform, 756 00:40:00,040 --> 00:40:02,439 Speaker 1: and I wanted the degree to which you're working hard 757 00:40:02,480 --> 00:40:04,399 Speaker 1: to make sure that that Donald Trump is hearing you out. 758 00:40:04,440 --> 00:40:07,000 Speaker 1: Are are you somebody who wants your opinions known, which 759 00:40:07,080 --> 00:40:09,480 Speaker 1: we're talking about him here, But are you satisfied this 760 00:40:09,520 --> 00:40:11,440 Speaker 1: as a president elect who's listening to guys like you? 761 00:40:12,280 --> 00:40:14,359 Speaker 1: I hope, I hope he's not listening to me. There's 762 00:40:14,360 --> 00:40:15,719 Speaker 1: a lot of part of people. There are a lot 763 00:40:15,840 --> 00:40:18,279 Speaker 1: smarter people out there that can give him advice. I'm 764 00:40:18,320 --> 00:40:21,160 Speaker 1: just basically an old fashioned stock picker that has done 765 00:40:21,160 --> 00:40:23,120 Speaker 1: a fast you know, work hard for my clients, and 766 00:40:23,120 --> 00:40:25,520 Speaker 1: that's all We're gonna focus on. No politics, no sex, 767 00:40:25,600 --> 00:40:28,719 Speaker 1: no religion. But we will listen to Tom Keene and Bloomberg. 768 00:40:30,200 --> 00:40:35,680 Speaker 1: We're gonna leave it there after, you know, no, Mario, 769 00:40:35,800 --> 00:40:46,320 Speaker 1: thank you so much, Baragabilly greatly. I appreciate it. Thanks 770 00:40:46,320 --> 00:40:50,760 Speaker 1: for listening to the Bloomberg Surveillance podcast. Subscribe and listen 771 00:40:50,840 --> 00:40:56,160 Speaker 1: to interviews on iTunes, SoundCloud, or whichever podcast platform you prefer. 772 00:40:56,920 --> 00:40:59,799 Speaker 1: I'm out on Twitter at Tom Keene. David Gura is 773 00:41:00,239 --> 00:41:04,600 Speaker 1: David Gura before the podcast. You can always catch us worldwide. 774 00:41:05,000 --> 00:41:20,240 Speaker 1: I'm Bloomberg Radio. Who you put your trust in? Matters? 775 00:41:20,239 --> 00:41:24,759 Speaker 1: Investors have put their trust and independent registered investment advisors 776 00:41:25,040 --> 00:41:28,399 Speaker 1: to the two and four trillion dollars. Why Learn more 777 00:41:28,400 --> 00:41:32,040 Speaker 1: and find your independent advisor dot com