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Speaker 1: Welcome to the Bloomberg Markets Podcast. I'm Paul Sweeney, alongside

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Speaker 1: my co host Matt Miller. Every business day we bring

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Speaker 1: you interviews from CEOs, market pros, and Bloomberg experts, along

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Speaker 1: with essential market moving news on the Bloomberg Markets Podcast,

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Speaker 1: on Apple Podcasts or wherever you listen to podcasts, and

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Speaker 1: at Bloomberg dot com slash podcast. I've been in the

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Speaker 1: equity research game a long time on Wall Street, and

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Speaker 1: ever since I've been on the street, the folks at Keith,

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Speaker 1: Brett and Woods have been the acts in banking stocks.

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Speaker 1: And what I like about their research, Um, it's big

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Speaker 1: cap and it's small cap, and they cover it on.

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Speaker 1: If you want to get really smart on the banking biz,

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Speaker 1: you go to those folks at KBWI. There now with

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Speaker 1: Stephole Company, Chris McGrady joins us. He's head of US

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Speaker 1: bank Research. Chris, give us a sense of what your

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Speaker 1: banking call is right here. Um, you know, for just

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Speaker 1: a sector in general, people, we've seen the interest rates

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Speaker 1: rise to eight people like me. That's a good thing

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Speaker 1: for interest rate margin. But give us the expert call. Sure,

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Speaker 1: thanks for having me on. Um. Yeah, at the highest level,

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Speaker 1: higher rates are are actually very good for the banking industry,

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Speaker 1: one of the few sectors of the economy where rates

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Speaker 1: moving higher will actually expand profit margins UM. And so

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Speaker 1: our call on the group has been for the past

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Speaker 1: year that you want to own the banks. We we

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Speaker 1: made a call last September that we saw loan demand

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Speaker 1: returning after after a couple of years of absence. We

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Speaker 1: saw rates poised to move higher, and we really thought

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Speaker 1: the balance sheets were in great shape. So you put

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Speaker 1: those factors together and what you're seeing now is revenue

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Speaker 1: growth accelerating and that's leading to UM recently some better

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Speaker 1: performance in the group. So UM do you expect to continue?

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Speaker 1: I mean, how difficult is it to to look out

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Speaker 1: as the FED UM kind of fights the market, or

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Speaker 1: the markets fighting the FED, which Paul says they shouldn't do. Yeah,

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Speaker 1: visibilit it is tough, right, The markets can change on

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Speaker 1: a dime. UM. And as you've seen over the past

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Speaker 1: few days, UM inflation expectations UM coming down a bit

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Speaker 1: has actually put a bit into the market and so

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Speaker 1: visibility is improving UM and and right now we believe

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Speaker 1: that revenue growth is poised to accelerate, particularly for the

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Speaker 1: mid cap banks. UM. So you have the largest banks

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Speaker 1: which have capital markets pressures, and those those revenues are

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Speaker 1: really and have been in a recession for the past

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Speaker 1: couple of quarters. If you go down cap to your

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Speaker 1: earlier comments, we see some really strong growth emerging, and

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Speaker 1: we saw it this past quarter, and we see it

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Speaker 1: for the next several quarters. So so we think even

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Speaker 1: though inflationary pressures are with us, we think revenue growth

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Speaker 1: will accelerate and exceed that. And what you're gonna see

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Speaker 1: is expanding profit margins. What about head count? You know,

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Speaker 1: I was just walking back from the gym with a

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Speaker 1: guy who was on the buy side for the last

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Speaker 1: thirty years and he's now shifted over UM to investment

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Speaker 1: banking just because he saw the layoffs coming. And he says,

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Speaker 1: everybody on the streets sees it. You know, uh, right now, talent,

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Speaker 1: you know, good talent is hard to come by, and

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Speaker 1: so right now, UM, the employees have a lot of leverage. UM.

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Speaker 1: You know, what we've seen over the past year is

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Speaker 1: wage pressures increase UM and there maybe you know, this

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Speaker 1: is a cyclical industry. There could be layoffs over over

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Speaker 1: the cycle, but right now that the industry is fairly profitable,

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Speaker 1: they're fairly efficient, and they're figuring out how to work

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Speaker 1: in a world where it's, um, we're remote. Is part

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Speaker 1: of the part of the part of the narrative on Paul.

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Speaker 1: Weren't we just talking aboutale about bonuses, Like last year

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Speaker 1: everybody was like, pay me double and this year it's like,

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Speaker 1: please give me what you gave me last year. If

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Speaker 1: is that not the case? Chris? You know, talent is

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Speaker 1: always going to be in demand. If if if good talent.

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Speaker 1: We always want to pay for talent. Um, but there's

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Speaker 1: still choices out there. A mobility is pretty high, but um,

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Speaker 1: you know, but talent is is something that that is

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Speaker 1: at a premium right now for sure. Hey, Chris, you

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Speaker 1: know what, I'm really a fan of the kind of

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Speaker 1: the you know, the small cap, the regional banks, the

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Speaker 1: mid cap banks, and I know for that business model,

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Speaker 1: loan growth is a big revenue driver. Talk to us

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Speaker 1: about loan growth out there. Are we seeing good signs?

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Speaker 1: Where is it? Yeah, that's that's a great question. Um,

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Speaker 1: you know what we've seen over the past several quarters.

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Speaker 1: Is it building in the economy of loan demand? And

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Speaker 1: part of it's coming out of COVID part of its

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Speaker 1: inventory is being rebuilt. But what we saw last quarter

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Speaker 1: and what we see into the back half of the

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Speaker 1: year is we're seeing solid double digit loan growth and

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Speaker 1: so you put that together with the benefit of higher

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Speaker 1: rate and you get this dynamic, a one two punch

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Speaker 1: of accelerating revenue growth. So um, you know, there are

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Speaker 1: questions about whether we are late cycle and whether the

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Speaker 1: banks should should be growing this quickly, but we've been

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Speaker 1: in such an unusual period where loan demand hasn't been

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Speaker 1: with us that that we're finally starting to see it,

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Speaker 1: and we think we think the banks have learned a

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Speaker 1: lesson in terms of underwriting and the quality of the

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Speaker 1: loans are putting under bounce she Chris Villanova, how's her?

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Speaker 1: I know you played baseball there? How's the hoops team

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Speaker 1: going to be the year? It's a transition year? Transition year?

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Speaker 1: Wait a minute, that's what you some companies say about

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Speaker 1: you know there. You can't do a transition year at Villanova.

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Speaker 1: By the way, what was it like playing college baseball?

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Speaker 1: I've always been it's kind of mysterious because everybody plays

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Speaker 1: either basketball or football, you know, maybe soccer if you're

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Speaker 1: kind of a stoner. But what's the baseball crowd like,

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Speaker 1: because I've always wondered about that. You know, it's a

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Speaker 1: it's a great group of guys, um. But but make

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Speaker 1: no mistake about it's a basketball school. Um. It's been

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Speaker 1: a basketball school and and we are going to have

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Speaker 1: a good year for the basketball team. It's just our expectations.

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Speaker 1: We've been spoiled over the past decade with Jay. Yeah,

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Speaker 1: Jay right, the great, great coach retired kind of unexpectedly. There.

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Speaker 1: I wonder where he's gonna land next. Chris McGrady, thanks

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Speaker 1: so much for joining us. He's head of US bank

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Speaker 1: Research and that means something, folks, because KBW they are

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Speaker 1: focused exclusively on the banking sector, research and investment banking.

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Speaker 1: KBW now is a staple company and steples a good

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Speaker 1: regional investment bank that maybe some people don't know of,

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Speaker 1: but they've been growing. They focus on kind of the

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Speaker 1: mid size um companies out there, good investment banking, good research,

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Speaker 1: and their acquisition of k b W made them an

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Speaker 1: instant player in covering all things financial services. So good

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Speaker 1: getting Chris McGrady on there. You know, a couple of

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Speaker 1: maxims I learned early on in my careers. Don't fight

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Speaker 1: the tape and don't fight the Fed. Well, the FEDS

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Speaker 1: raising rates not good, but the tape has been going

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Speaker 1: up for the last four or five six weeks. I

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Speaker 1: don't know what's going on, but hopefully our next guest does.

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Speaker 1: Lizzie Evans, managing partner Evans may Wealth. She got her

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Speaker 1: undergraduate degree from Indiana University, so maybe she can tell us,

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Speaker 1: Matt what a hoosier is, because I have no idea

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Speaker 1: what no one knows what. Lizzie, what are you doing

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Speaker 1: with this market here? What are you telling your clients here?

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Speaker 1: Good morning, Paul and Matt. Excited to be here. UM this,

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Speaker 1: you know, I think that we've seen what's you know,

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Speaker 1: what's the out look for the markets? We've seen are

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Speaker 1: very welcome reprieve in the markets over the last six

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Speaker 1: weeks to really just an absolutely brutal first half of

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Speaker 1: the year. But you know, I think that, um, we

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Speaker 1: are certainly cautiously optimistic for the for the second half

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Speaker 1: of the year, but I expect, well, we'll volatility is

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Speaker 1: here to stay. I think we'll have a lot of

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Speaker 1: volatility surrounding inflation and economic data points. So from an

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Speaker 1: investment standpoint, I think you have to be very selective

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Speaker 1: and you have to focus on quality. Know what you own,

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Speaker 1: know why you own it? All right? So what is

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Speaker 1: quality out there? What do you want to focus on?

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Speaker 1: I think you need to, you know, you need to

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Speaker 1: be careful about making a broad call about the market

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Speaker 1: or a sector style of investment. You know. I think

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Speaker 1: if you think about how dollars will be spent if

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Speaker 1: the economy continues to soften, what what are what will

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Speaker 1: customers cut? What won't they cut? What will CFOs or

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Speaker 1: business line managers cut? What won't they cut? So, in essence,

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Speaker 1: you want to have companies that are the best, most

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Speaker 1: indispensable businesses in their particular sector or industry. All right, Lizzie,

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Speaker 1: I mean I think I'm probably like a lot of

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Speaker 1: investors where my investment outlook has kind of been shaped

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Speaker 1: by the whole time period following the Great Financial Crisis,

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Speaker 1: when my portfolio did great because I just saw an

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Speaker 1: Apple and Amazon and the Microsoft, the big growth names,

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Speaker 1: and then there was this rotation into some of the

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Speaker 1: cyclical names, maybe the reopening trades. I don't know, but

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Speaker 1: I think I just feel more comfortable in lately owning

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Speaker 1: those big cap growth names are those companies you're talking about.

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Speaker 1: Do you like my strategy? Well, I think I do.

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Speaker 1: I like the you know, particularly how much a lot

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Speaker 1: of the big mega cap text doox have been hit

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Speaker 1: since the first of the year. You know, you look

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Speaker 1: at Microsoft, Microsoft off it's high, Amazon's percent off its high,

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Speaker 1: Google's twenty three percent off its high. Disney had a

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Speaker 1: great report. Um they're really, you know, finally showing signs

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Speaker 1: of some resiliency both across parks and Disney plus or

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Speaker 1: streaming percent off its tie. So I think there are

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Speaker 1: certainly some companies that offer attractive values. But you know,

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Speaker 1: I think you want to be careful about moving in

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Speaker 1: or out of Do you have growth names and then

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Speaker 1: do you go into a more defensive play. I think

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Speaker 1: you need to have a balance because just like timing

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Speaker 1: in the market, you can't time when a style of

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Speaker 1: investment or a sector will outperform. So the key is

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Speaker 1: to know the companies you have and be selective as

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Speaker 1: opposed to just making you know, a broad call across

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Speaker 1: a style or um a sector. Is the FED driving

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Speaker 1: this market? I mean, is it all about the FED

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Speaker 1: or um? Is it really the underlying economy? And earnings.

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Speaker 1: I think all eyes have been on the FED, you know,

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Speaker 1: all year. Certainly the CPI pp I figures we've seen

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Speaker 1: this week are encouraging. You know, for the last six weeks,

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Speaker 1: if you look at the softening and commodities future pricing,

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Speaker 1: we thought we had seen peak inflation. So I think

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Speaker 1: that's certainly that combined with a good earning season and

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Speaker 1: really the market thinking we're going to have somewhat of

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Speaker 1: a catastrophic earnings season has been positive. But um, you know,

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Speaker 1: I think there is still uncertainty as it relates to

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Speaker 1: the said there's still uncertainty geopolitically. Um, there there's a

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Speaker 1: lot of risks out there. So you know, I think

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Speaker 1: that right now where someone in a sideways trading pattern,

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Speaker 1: and we're likely going to be there until the fall

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Speaker 1: when we have some more certainty. So fe're earlier point.

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Speaker 1: Know what you own, know why you own it, owned

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Speaker 1: companies that are going to continue to do well even

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Speaker 1: in periods of time when there is prolonged economic slow down.

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Speaker 1: All right, Lizzie, thanks so much for joining us. Really

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Speaker 1: appreciate getting your thoughts there. Lizzie Evans, managing partner for

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Speaker 1: Evans may Wealth. We think about the last seven days,

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Speaker 1: pretty good news on the economic front. We've had good

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Speaker 1: jobs number, We've had some better and expected inflation data

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Speaker 1: both at the consumer and producer level. Then today we

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Speaker 1: get the University of Michigan UH sentiment survey came in

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Speaker 1: better than expected in a nice improvement month the month.

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Speaker 1: So for a lot of market participants, a lot of

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Speaker 1: market watchers, the question now becomes, what is this economic

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Speaker 1: data mean to our Federal Reserve? And is our way

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Speaker 1: for them to screw it up? Maybe? Vince Signarella, Global

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Speaker 1: macro Strategistrom Bloomberg News, Hey, Fence, do you have any

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Speaker 1: opinion on this? Uh? Just a little um. Let's get

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Speaker 1: let's take a look at the fed's track record and forecasting.

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Speaker 1: And Paul, you've been on the street. If if you

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Speaker 1: traded like that, would would you have lasted long in

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Speaker 1: the trading room? So? Uh, neither would. I think we

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Speaker 1: would have probably gotten the hook after about three months

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Speaker 1: of losses because that's what the FED forecasts would have resulted.

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Speaker 1: I just want to make a point to this, I

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Speaker 1: think is a really serious point that no one on

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Speaker 1: the street is talking about at all. No one in

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Speaker 1: the media is talking about Today on the CNBC Interview,

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Speaker 1: Barkin was asked about the balance sheet and he gave

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Speaker 1: maybe the most NSS answer for the summer when he said,

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Speaker 1: we must believe the balance sheet shrinking has a tightening effect.

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Speaker 1: The real question is what is that tightening effect? And

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Speaker 1: every time a FED at representative as an asked that question,

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Speaker 1: they said, we don't know. So how in the face

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Speaker 1: of lower inflation data do you continue to high rates

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Speaker 1: blindly without knowing how the Fed's balance sheet shrinking is

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Speaker 1: going to tighten rates because they will tighten financial conditions.

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Speaker 1: I find that just uncontrocal. They always say it's a

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Speaker 1: blunt instrument, right, but it is still shocking to hear

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Speaker 1: that the FED knows so little about the effects of

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Speaker 1: it's know and that's that's actually not correct. The fact

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Speaker 1: that it's a blunt instrument is because they're in the

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Speaker 1: in the belly of the curve, not in the short

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Speaker 1: end of the curve. We grew up with um repurchase

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Speaker 1: agreements and reverse repurchase agreements, which is what the FED

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Speaker 1: did New York set did almost on a weekly basis

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Speaker 1: to try to control money supply, or realistically, the the

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Speaker 1: the base monetary base, the fat doesn't really control the

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Speaker 1: money supply, and they would do that almost on a

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Speaker 1: weekly basis and set funds. Traders always took that as

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Speaker 1: an indication of whether the said was leaning a little

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Speaker 1: barish or leading or leaning leading. Dubbish, Um, it's not

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Speaker 1: a blunt instrument. Raising the Fed funds rate is to

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Speaker 1: blunt instrument. It's shocking to me the policy they're using

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Speaker 1: to try to control us. So, Vince, what do you think,

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Speaker 1: given the economic data we've seen recently, what do you

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Speaker 1: think the Reserve should do? I think they should be

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Speaker 1: continuing to reduce the balance sheet. I think a really

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Speaker 1: good for them would be to do a reverse operation

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Speaker 1: twist and bring their purchases into the short end of

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Speaker 1: the curve where they belong, not into the belly of

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Speaker 1: the curve. And then they have two choices. If they

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Speaker 1: think things are should should be tightened, they can let

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Speaker 1: those short end maturities just roll off very comfortably. If

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Speaker 1: they think the economy needs help, they can repurchase them

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Speaker 1: very easily in the short end of the curve and

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Speaker 1: get the heck out in the middle of the market

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Speaker 1: where they don't belong. Let the market set rates where

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Speaker 1: medium term rates should be so, and why don't they?

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Speaker 1: I mean, I have no clue, to be honest, I

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Speaker 1: really don't. I don't see how they keep coming things that.

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Speaker 1: You know, they keep talking about inflation and we need

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Speaker 1: to see multiple prints with the last print was zero,

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Speaker 1: no inflation. So keep hiking rates in the face of

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Speaker 1: rolling over inflation. You know they have daily saying it's structural.

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Speaker 1: How did it become structural in six months? We've had

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Speaker 1: zero inflation to fifteen years, six months and six months

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Speaker 1: of inflation. Now it's structural. It makes no sense, I

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Speaker 1: mean to make all right, This is my suggestion to

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Speaker 1: you call Tom Keane, book a seat on the surveillance

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Speaker 1: golf stream going out to Jackson Hole and see if

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Speaker 1: you can talk some sense into these folks. What do

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Speaker 1: you think you know, if they would let me, I would,

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Speaker 1: but I think they would probably want to just bury

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Speaker 1: me somewhere in the background. They wan't want me getting

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Speaker 1: somewhere out in the desert. Is there? And if you

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Speaker 1: put your trader hat on, is there a way for

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Speaker 1: investors to make money in this market if they, like you,

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Speaker 1: think the FED is completely off base? Yeah, I think

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Speaker 1: there's a great opportunity. I think there's a couple of

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Speaker 1: things we're gonna say. I think we're seeing producer prices

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Speaker 1: fall faster than the prices that are being passed along.

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Speaker 1: We're seeing a real nice movement this morning that no

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Speaker 1: one's talking about, how import prices and export prices are

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Speaker 1: dropping considerably. That's profitable for companies on both sides of

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Speaker 1: the coin, especially the large caps, because as the market

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Speaker 1: continues to gain, the dollar is gonna fall and that's

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Speaker 1: going to give them some more leverage because those fellows

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Speaker 1: just don't hedge, and whenever the dollars goes up, they

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Speaker 1: lose money. So reversal of that trend going into the

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Speaker 1: fourth quarter, I think it's going to be positive earnings.

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Speaker 1: I think it's gonna be positive for stocks. And the

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Speaker 1: folks who are watching this rally and continue to call

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Speaker 1: it a bear market rally, I think they're gonna be

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Speaker 1: chasing this all the way through December, trying to get

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Speaker 1: their their books looking a little bit more like SMP

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Speaker 1: returns because they're gonna miss this book. So, so you're

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Speaker 1: a bold despite the fact that the FED um continues

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Speaker 1: on its hiking path, or you think that the FED

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Speaker 1: is gonna at some point um turn tail and run

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Speaker 1: back down. I think I think after September they're going

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Speaker 1: to realize they've made another policy mistake and just stop. UM.

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Speaker 1: There's really no reason to RaSE seventy five basis points September.

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Speaker 1: I believe they will, and I believe the best trade

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Speaker 1: on the street after September is going to be to

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Speaker 1: buy the short end because when the Fed realizes they've

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Speaker 1: pushed it too far, UM, the short end of the

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Speaker 1: curve is going to rally because they don't need to

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Speaker 1: be this aggressively oversold, expecting the Fed to continue to

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Speaker 1: raise raise rates. So the two year right now, let's

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Speaker 1: call that three to five. Where do you think that

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Speaker 1: goes by the end of the year. I think, for

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Speaker 1: sure back below three percent. It needs to be closer

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Speaker 1: to two point seven five. I think you'll actually see

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Speaker 1: something of an inversion between the FED funds rate and

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Speaker 1: the two year yield when as the marketers tries to

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Speaker 1: tell the Fed and insist to the Fed that it's

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Speaker 1: too tight, that you could very well push this economy

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Speaker 1: into a recession, and if they do so, they will

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Speaker 1: start to reverse and there's no way that the two

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Speaker 1: year you'll stay at these levels longer in May. I mean,

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Speaker 1: there's there's no real rush to lower, to be going

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Speaker 1: out into ten years and buying at at you know,

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Speaker 1: two point two point seven, um. But to have a

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Speaker 1: two year at three and a quarter inverted with Hen's

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Speaker 1: it doesn't make sense to me. But has the FED

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Speaker 1: always been um this political? Has there ever been? Um?

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Speaker 1: I know there's been, like high level economists at the

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Speaker 1: FED obviously, um, even in recent memory. But what about traders?

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Speaker 1: I mean, has anybody in there ever said done? No? No,

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Speaker 1: With all due respect to the Federal Reserve, they glorified academics,

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Speaker 1: I mean their college professors. They start out that way,

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Speaker 1: they've become an economist, and then they end up back

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Speaker 1: in college teaching or unless you're lucky like Bernanke or Clarada,

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Speaker 1: you joined the one percent and go work for Pimco. Well,

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Speaker 1: or I mean Powell also wasn't a professor, right, No, No,

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Speaker 1: he's probably the only one on the board, but you know,

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Speaker 1: I think he's I think they're so petrified they're going

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Speaker 1: to be tattooed with the with the burns a FED

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Speaker 1: situation of the seventies which really let inflation get out

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Speaker 1: of control, and you have to remember the difference females

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Speaker 1: two times is significant because Burns was very political. Every

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Speaker 1: time something in cp I started to rise, he instructed

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Speaker 1: the economists that defended to take it out of the equation. Alright, Vince,

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Speaker 1: awesome stuff as always. I mean that is a strong

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Speaker 1: bullish call. They're very clear. By the short end. Uh,

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Speaker 1: he's saying he's gonna see some good fourth quarter earnings

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Speaker 1: as well. We'll see here Vincegnarella, global macro strategist for

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Speaker 1: Bloomberg News, with his hot take on these markets. It's

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Speaker 1: gonna run next, guess Hugh Johnson. He's chairman of Hugh

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Speaker 1: Johnson Economics. Hugh, I was just mentioning you for the

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Speaker 1: last seven days, starting with the jobs data and then

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Speaker 1: inflation data and today with the mission sentiment. If I'm

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Speaker 1: the economy, I'm feeling pretty good here. What's what's your takeaway? Well,

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Speaker 1: it's pretty important. And it's important obviously because one of

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Speaker 1: the big focuses has been on obviously what the federal

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Speaker 1: Reserve is going to do in the future, most importantly

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Speaker 1: probably September. The focus is on September, and the question

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Speaker 1: is seventy five basis points are fifty basis points, and

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Speaker 1: then of course what happens after that, particularly when we

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Speaker 1: get to two thousand twenty three, that's really going to

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Speaker 1: determine the outcome for the economy. And and candidly that

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Speaker 1: the numbers that we're getting not so much. The employment numbers,

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Speaker 1: which were very good, are very strong, and I think

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Speaker 1: they've got a soften up and they will soften up.

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Speaker 1: But obviously the inflation numbers were well below expectations. No

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Speaker 1: matter which inflation number you look at, consumer prices and

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Speaker 1: producer prices, uh, the export and import prices today softer

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Speaker 1: than expected, and the question is will the Federal Reserve

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Speaker 1: respond to those softer numbers. Keep in mind those were

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Speaker 1: softer numbers for the month in July. We're going to

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Speaker 1: see the August numbers in September before that meeting. And

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Speaker 1: I might add importantly that taking a look at some

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Speaker 1: of the more recent sort of data and commodity prices

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Speaker 1: and particularly food prices, agriculture prices, and non agriculture prices,

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Speaker 1: you might get some more numbers inflation numbers for the

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Speaker 1: month of August in the middle of September, just before

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Speaker 1: the September twenty one meeting that are also very good

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Speaker 1: or very soft soft consumer price index numbers not only

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Speaker 1: the month, but also on a year over year basis

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Speaker 1: So the Fed, the Fed is going to have to

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Speaker 1: grapple with some really really a tough decision. September is

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Speaker 1: going to be a tough decision. Well, we were just

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Speaker 1: talking Vince Ignarella. He says he still expects the FED

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Speaker 1: to go seventy five. Even if they go fifty, um,

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Speaker 1: they're still on a pretty steep rate rise, rate hiking path.

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Speaker 1: Can they hold that up if these numbers continue this often,

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Speaker 1: especially if the um G d P numbers get softer

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Speaker 1: into or will they have to cut Let's not say

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Speaker 1: cut yet, let's just say reduce the number of increases.

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Speaker 1: The real question is I think, first of all, I

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Speaker 1: think seventy five basis points is too much in September,

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Speaker 1: and when we get there, it'll end up being fifty.

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Speaker 1: But it's a tough call. Obviously, I think fifty. And

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Speaker 1: the question is, and I think we'll see in November

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Speaker 1: and December. Really, I think the question is is when

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Speaker 1: we get into two thousand twenty three, and right now,

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Speaker 1: the consensus expectation or guests is that they're going to

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Speaker 1: start to reduce rates when we get to the second quarter,

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Speaker 1: maybe the third order, and I think that's probably a

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Speaker 1: good call, because I think we're going to see more

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Speaker 1: better inflation numbers, or inflation numbers that get more towards

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Speaker 1: their target. Forget the two percent target, but just inflation

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Speaker 1: numbers that are better. And most importantly, you're gonna get

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Speaker 1: employment numbers, which is the best measure of the economy.

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Speaker 1: You're gonna get employment numbers. They're gonna soften and soften

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Speaker 1: quite a bit as we move through two thousand twenty

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Speaker 1: two and two thousand twenty three. They're gonna it's certainly

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Speaker 1: in the in the room of public opinion, they're necessarily

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Speaker 1: going to be left with, I think no option except

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Speaker 1: to either put a whole on rates or probably start

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Speaker 1: to reduce in the second quarter of two thousand twenty three.

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Speaker 1: Things are slowing down. The economy is slowing down, inflation

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Speaker 1: is going to be coming down, and they all headed

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Speaker 1: in the right direction. But this is gonna be this

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Speaker 1: is gonna be a really tough economy for the remainder

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Speaker 1: of two thousand twenty two and twenty three. It's gonna

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Speaker 1: be kind of an on again, off again one soft

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Speaker 1: landing after another soft landing, maybe a hard landing in

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Speaker 1: there somewhere in some of the quarters. All right, Hugh, great,

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00:23:00,920 --> 00:23:04,520
Speaker 1: great stuff. As always, you've been doing us a long time.

430
00:23:04,680 --> 00:23:07,359
Speaker 1: You've got great perspective, um and we always appreciate you

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00:23:07,400 --> 00:23:09,240
Speaker 1: taking some time and sharing that with us. Hugh Johnson,

432
00:23:09,600 --> 00:23:16,440
Speaker 1: Chairman of Hugh Johnson Economics. All let's talk a little healthcare,

433
00:23:16,520 --> 00:23:19,760
Speaker 1: maybe a little biotech. Some smart people there, and boy,

434
00:23:19,760 --> 00:23:22,800
Speaker 1: they really delivered. I'm saying they they being the healthcare industry,

435
00:23:22,840 --> 00:23:26,159
Speaker 1: the farming industry, the biotech industry. Man on this COVID

436
00:23:26,240 --> 00:23:29,400
Speaker 1: nineteen vaccines. I mean, how good were those folks there?

437
00:23:29,440 --> 00:23:31,560
Speaker 1: So yeah, gotta gotta give them props, as we do.

438
00:23:31,640 --> 00:23:35,640
Speaker 1: Daphne Zohar, founder and CEO of pure Tech Health, joins us. Daphnie,

439
00:23:35,760 --> 00:23:38,080
Speaker 1: thanks for taking the time to check in with us,

440
00:23:38,280 --> 00:23:40,679
Speaker 1: talk to us about what pure tech Health is. What

441
00:23:40,720 --> 00:23:44,000
Speaker 1: are you guys doing over there? Hi? Following that, thanks

442
00:23:44,040 --> 00:23:46,000
Speaker 1: so much for having me on so up youre Tech

443
00:23:46,160 --> 00:23:49,440
Speaker 1: is a biofarma company that's dedicated to changing the treatment

444
00:23:49,480 --> 00:23:53,160
Speaker 1: paradigm for patients by bringing forward new classes of medicines

445
00:23:53,200 --> 00:23:57,800
Speaker 1: that address devastating diseases. So like what I mean when

446
00:23:57,840 --> 00:24:00,399
Speaker 1: I think of the worst cancer, obviously is there, but

447
00:24:00,480 --> 00:24:04,920
Speaker 1: Alzheimer's and Parkinson's are close behind. Yes, So we've been

448
00:24:04,960 --> 00:24:09,760
Speaker 1: working on some really serious diseases, like for example, oncology.

449
00:24:10,000 --> 00:24:13,520
Speaker 1: UM we have been working on schizophrenia. For example, one

450
00:24:13,560 --> 00:24:17,199
Speaker 1: of the programs that we invented UH and which we

451
00:24:17,280 --> 00:24:21,000
Speaker 1: advanced through a company called Kiruna, just had really stellar

452
00:24:21,040 --> 00:24:24,920
Speaker 1: results this week, which we believe could be game changing

453
00:24:25,000 --> 00:24:28,440
Speaker 1: for patients living with schizophrenia. There's twenty one million people

454
00:24:28,920 --> 00:24:33,080
Speaker 1: in the world who have schizophrenia, and many of the

455
00:24:33,119 --> 00:24:38,800
Speaker 1: existing drugs have significant issues that UM and and this

456
00:24:38,880 --> 00:24:43,919
Speaker 1: new treatment actually offers both UH potentially improved efficacy, but

457
00:24:44,040 --> 00:24:48,280
Speaker 1: also UM really doesn't have the debilitating side effect that

458
00:24:48,320 --> 00:24:50,479
Speaker 1: those other treatments have. The side effects are they just

459
00:24:50,520 --> 00:24:53,640
Speaker 1: sort of turned into zombies when they take the medicine, right, Yeah,

460
00:24:53,720 --> 00:24:56,880
Speaker 1: and also really significant weaken and you know, for UM,

461
00:24:57,320 --> 00:24:59,480
Speaker 1: if you think about it, a lot of time schizophrenia

462
00:24:59,520 --> 00:25:03,119
Speaker 1: gets diagn in early adulthood, and you know, people can

463
00:25:03,200 --> 00:25:07,360
Speaker 1: gain thirty to fifty pounds on some of the existing medication.

464
00:25:07,520 --> 00:25:10,520
Speaker 1: So UH, this is you know, we believe and many

465
00:25:10,560 --> 00:25:14,120
Speaker 1: others believe potentially a big breakthrough. And it all started

466
00:25:14,480 --> 00:25:17,600
Speaker 1: out pure tech and when we were looking at schizophrenia

467
00:25:18,160 --> 00:25:21,399
Speaker 1: and UM and this is something that we've done multiple times,

468
00:25:21,480 --> 00:25:23,760
Speaker 1: is that we'll look at an area, work with some

469
00:25:23,800 --> 00:25:27,080
Speaker 1: of the leading experts and and really think of where

470
00:25:27,119 --> 00:25:31,879
Speaker 1: we can build on validated biology but have an invented

471
00:25:31,920 --> 00:25:35,200
Speaker 1: stepth that really unlocks the new class of medicine. And

472
00:25:35,240 --> 00:25:37,280
Speaker 1: what I'm proud to say is in terms of our

473
00:25:37,280 --> 00:25:40,960
Speaker 1: track record of clinical development, our record of clinical success

474
00:25:41,040 --> 00:25:43,360
Speaker 1: is now you know, five times in the industry average,

475
00:25:43,359 --> 00:25:47,160
Speaker 1: and we've now taken twenty seven new therapeutics and therapeutic

476
00:25:47,200 --> 00:25:50,760
Speaker 1: candidates forward, of which UM sixteen or in the clinic,

477
00:25:50,800 --> 00:25:55,600
Speaker 1: and two have been granted FDA new regulatory approvals. I'd

478
00:25:55,600 --> 00:25:57,480
Speaker 1: love to to say more about pure tech, but also

479
00:25:57,520 --> 00:26:00,119
Speaker 1: happy to talk about the industry. It's just such an

480
00:26:00,160 --> 00:26:03,720
Speaker 1: exciting area. And as you mentioned, UH, the industry was

481
00:26:03,800 --> 00:26:07,000
Speaker 1: able to really change people's lives in areas like vaccines,

482
00:26:07,640 --> 00:26:11,840
Speaker 1: but we're also there are many other major needs including

483
00:26:12,000 --> 00:26:14,919
Speaker 1: you know, for example, oncology, all times disease as you

484
00:26:14,960 --> 00:26:20,439
Speaker 1: mentioned Parkinson's, rare diseases, childhood pediatric diseases, so it's an

485
00:26:20,480 --> 00:26:23,000
Speaker 1: industry that is one that's really cool to work in

486
00:26:23,440 --> 00:26:25,479
Speaker 1: because we get to work on these big problems with

487
00:26:25,520 --> 00:26:28,840
Speaker 1: smart people, as you said, UM, and it's created huge

488
00:26:28,920 --> 00:26:31,760
Speaker 1: value for patients, but I think also poised to outperform

489
00:26:31,880 --> 00:26:35,200
Speaker 1: for investors generally. So are we going to see cures

490
00:26:35,440 --> 00:26:38,040
Speaker 1: in our lifetime for these big diseases? I mean it's

491
00:26:38,119 --> 00:26:45,119
Speaker 1: something like schizophrenia or cancer curable? Yeah, well, and I

492
00:26:45,160 --> 00:26:49,639
Speaker 1: think what we've seen as a tremendous improvement in UH

493
00:26:49,840 --> 00:26:53,720
Speaker 1: moving for example, many forms of cancer from what we're

494
00:26:53,720 --> 00:26:58,840
Speaker 1: previously fatal to now you know, chronic conditions, so people,

495
00:26:59,280 --> 00:27:01,879
Speaker 1: you know, are a to live with these conditions longer.

496
00:27:01,920 --> 00:27:04,840
Speaker 1: And you know, we've seen, for example, companies like Vertex

497
00:27:04,880 --> 00:27:09,320
Speaker 1: secure cystic fibrosis in the case of UM schizophrenia. I

498
00:27:09,320 --> 00:27:12,439
Speaker 1: think this is what we saw this week, which I

499
00:27:12,480 --> 00:27:17,560
Speaker 1: think also really will impact the sector. UH is something

500
00:27:17,600 --> 00:27:21,399
Speaker 1: that could really change the lives of the one million

501
00:27:21,440 --> 00:27:23,960
Speaker 1: people who are living with schizophrenia. So I think definitely

502
00:27:24,040 --> 00:27:26,440
Speaker 1: making a change in people's lives. He definite. One of

503
00:27:26,480 --> 00:27:28,800
Speaker 1: the things I noticed, at least with this whole COVID

504
00:27:28,840 --> 00:27:31,640
Speaker 1: in the vaccines and was the speed with which they

505
00:27:31,640 --> 00:27:34,200
Speaker 1: were able to get to market, and does this mark

506
00:27:34,320 --> 00:27:40,680
Speaker 1: a change perhaps and how the FDA will approve treatments, therapeutics, vaccines,

507
00:27:40,760 --> 00:27:43,440
Speaker 1: i e. Make it faster for some of these products

508
00:27:43,560 --> 00:27:45,199
Speaker 1: to get the market, to get the testing and all

509
00:27:45,240 --> 00:27:48,560
Speaker 1: that kind of stuff. I think what we've seen is

510
00:27:48,600 --> 00:27:52,040
Speaker 1: that FDA can move really quickly when it's necessary, and

511
00:27:52,080 --> 00:27:56,320
Speaker 1: they're able to prioritize areas of importance. And recently, for example,

512
00:27:56,359 --> 00:28:00,200
Speaker 1: we saw that FDA scent really positive regulatory signal to

513
00:28:01,040 --> 00:28:04,440
Speaker 1: key areas of our sector. For example that inherto breast

514
00:28:04,480 --> 00:28:07,440
Speaker 1: cancer drug was approved in two weeks UH, and part

515
00:28:07,480 --> 00:28:09,399
Speaker 1: of that was thanks to the cancer moon shot. So

516
00:28:09,560 --> 00:28:13,960
Speaker 1: we see FDA able to move quickly when necessary. But

517
00:28:14,040 --> 00:28:16,199
Speaker 1: I also think what we saw with COVID is the

518
00:28:16,240 --> 00:28:20,840
Speaker 1: industry collaborating, people sharing data. Everything was happening in real time,

519
00:28:21,119 --> 00:28:23,959
Speaker 1: sort of for the good of humanity. And I believe

520
00:28:24,080 --> 00:28:26,719
Speaker 1: that the industry has learned from that and UH is

521
00:28:27,119 --> 00:28:29,679
Speaker 1: able to move things forward, potentially, you know, in a

522
00:28:29,720 --> 00:28:33,000
Speaker 1: more accelerated fashion. All right, Daphne Great Stuff really appreciated

523
00:28:33,040 --> 00:28:37,720
Speaker 1: Daphne's Zohark, founder and CEO pure Tech Health Trades on

524
00:28:37,760 --> 00:28:41,200
Speaker 1: the London docket change pr TC, but they are based

525
00:28:41,240 --> 00:28:43,520
Speaker 1: in Boston, Massachusett. That seems to be where a lot

526
00:28:43,560 --> 00:28:48,200
Speaker 1: of the really good biotech companies come from. Thanks for

527
00:28:48,240 --> 00:28:51,760
Speaker 1: listening to the Bloomberg Markets podcast. You can subscribe and

528
00:28:51,800 --> 00:28:55,840
Speaker 1: listen to interviews of Apple Podcasts, or whatever podcast platform

529
00:28:55,920 --> 00:28:59,240
Speaker 1: you prefer. I'm Matt Miller. I'm on Twitter at Matt

530
00:28:59,280 --> 00:29:02,280
Speaker 1: Miller nineteen seventy three, and I'm Fall Sweeney. I'm on

531
00:29:02,280 --> 00:29:05,200
Speaker 1: Twitter at pt Sweeney. Before the podcast, you can always

532
00:29:05,240 --> 00:29:07,120
Speaker 1: catch us worldwide at Bloomberg Radio