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Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim Fox.

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Speaker 1: Along with my co host Lisa Abramowitz. Each day we

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Speaker 1: bring you the most important, noteworthy, and useful interviews for

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Speaker 1: you and your money, whether you're at the grocery store

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Speaker 1: or the trading floor. Find the Bloomberg p m L

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Speaker 1: Podcast on Apple Podcasts, SoundCloud, and Bloomberg dot com. Lisa,

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Speaker 1: you know, if you want to send billions of dollars

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Speaker 1: around the world as a corporation, there are banking systems

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Speaker 1: and relationships that are already set up to do that

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Speaker 1: and to do that compliantly and efficiently. But let's say

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Speaker 1: you want to just move two hundred dollars around the world.

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Speaker 1: The gentleman who we have next is our guest, knows

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Speaker 1: all about that business. His name is Ogilan Almeida. He

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Speaker 1: is the president of Global Money Transfer at Western Union.

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Speaker 1: Thank you very much for being here, Thank you for

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Speaker 1: having me. Maybe just to explain to people, first of all,

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Speaker 1: was I accurate in describing a little bit about the business,

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Speaker 1: And maybe you can build that out as a little

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Speaker 1: story about describing some particular money flow that exists in

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Speaker 1: the world that people may not know about. I think

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Speaker 1: it was perfect that that's exactly what we do. I mean,

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Speaker 1: we make it viable to sound smaller amounts of money

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Speaker 1: across the globe today operating two hundred countries, sixteen thousand corridors,

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Speaker 1: a hundred thirty currencies and it's amazing. Corridors. Maybe just

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Speaker 1: explain how you use that term. YEA corridors is when

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Speaker 1: you talk about one country to another countries. For example,

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Speaker 1: US to Bangladesh is one corridor. Bangladesh to US is

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Speaker 1: another corridor. So it is the origin and the destiny

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Speaker 1: of the money. Uh. And it's amazing to see those flows.

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Speaker 1: And we have corridors like um Way to Paxtan to India,

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Speaker 1: um In Toronto, corridors in Africa. But the beauty of

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Speaker 1: the business is not only about the money flow, but

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Speaker 1: it's about the people flow because we can track people

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Speaker 1: flow around the globe based on the dynamics of the corridors. Well,

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Speaker 1: given that we've heard so much protectionist rhetoric recently from

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Speaker 1: a number of different governments and attempts to restrict immigration,

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Speaker 1: have you seen that in your flows and is that

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Speaker 1: something that is somewhat of a headwind for the business. Yes,

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Speaker 1: we we uh we're pretty for we have been oparating

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Speaker 1: for the last six five years, so in those years

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Speaker 1: we have seen countries interblocks, countries living blocks. More protection

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Speaker 1: is less protection list. We know that there is a

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Speaker 1: relation about growth and protectionism, so countries get more protectionists

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Speaker 1: when there's no growth and and living That has been

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Speaker 1: also very very useful for us, so we can in

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Speaker 1: some way hedge the risks. So for example, if there

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Speaker 1: is an issue in certain corridor, we still have the

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Speaker 1: other hundred fifty nine point nine thousand corridors to to explore,

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Speaker 1: so it's always like a trade off. Thank today we

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Speaker 1: don't see the world more protectionalist than before. We see

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Speaker 1: pockets of protectionists, but overall it's not one sweeping movement

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Speaker 1: across all of the different channels. But talking about moving

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Speaker 1: money from one place to another in a secure channel

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Speaker 1: really raises the question of bitcoin and ethereum and some

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Speaker 1: of these digital currencies that have been started in order

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Speaker 1: to transfer money easily no matter where you are in

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Speaker 1: the world. How has that affected what Western Union? Does?

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Speaker 1: We know? We are we are we are the market

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Speaker 1: leaders in retail, the market leaders in digital around the globe,

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Speaker 1: but they're very humble we look into those startups as

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Speaker 1: as learning for us, and we're very close a lot

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Speaker 1: of them at this point. For example, you think about

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Speaker 1: bitcoin is just not regulated and this still has lots

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Speaker 1: of risks related to that. So we are falling and seeing, um,

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Speaker 1: what's happening behind that. On the other side, blockchain, which

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Speaker 1: is the technology behind that, that's a tremendou success and

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Speaker 1: it's working very well and going to other industries so forth.

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Speaker 1: So we have being a lot of attention all those things,

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Speaker 1: and that we we we we pay attention on the startups,

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Speaker 1: we pay attention on the new stuff that is coming along,

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Speaker 1: and we have always the option of copying with our

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Speaker 1: scale or buying. So how do you respond to those

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Speaker 1: people who want to understand the pricing model that you

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Speaker 1: have because the consumative consumer business has been under intense competition. Yeah,

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Speaker 1: I think that that's that's a great point that the

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Speaker 1: prices is really dictated by the market today. Right. We

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Speaker 1: have been gaining market share in the last years, which

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Speaker 1: chose me that our value equation is working well. But

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Speaker 1: you're gonna see very different prices around the globe. For example,

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Speaker 1: in corridors that are more competitive, you're gonna see very

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Speaker 1: low price incuraters that are not the competitive the price

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Speaker 1: is higher. So it's all about competition. I want to

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Speaker 1: go back to something that you said that you would

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Speaker 1: consider buying some of these competitors. Is that on Western

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Speaker 1: Union's radar to possibly purchase one of these digital currencies.

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Speaker 1: We're always open, we are always I'm not digital currencies

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Speaker 1: that any any play or any new chnology that comes,

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Speaker 1: like a your own net for example, any any any

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Speaker 1: kind of different technology that comes. I think our net

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Speaker 1: is not a new technology by itself, but if we

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Speaker 1: feel like there's something new that is easier to buy

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Speaker 1: than just to create what kind of thing? What kind

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Speaker 1: of thing today? To have you to tell the truth,

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Speaker 1: there is nothing very clear how or rather that it's

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Speaker 1: going to be very new that we cannot um copy

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Speaker 1: and paste. So for example, five years ago or ten

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Speaker 1: years ago, we're very we're not that strong on digital.

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Speaker 1: And then we start to see the movement of the industry,

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Speaker 1: the move of the consumer. Before you continue, I'm trying

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Speaker 1: to understand, does that mean that you actually were just

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Speaker 1: taking money cash and shipping it across the seas. No,

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Speaker 1: it was that wasn't what you're talking about. What are

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Speaker 1: you talking about when you say that? Just thank you

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Speaker 1: for that. We we separate the business in two parts.

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Speaker 1: One is originated by cash, so when you enter a

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Speaker 1: location of us and put the cash over there and

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Speaker 1: then the money it is digital, but it is originating cash.

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Speaker 1: And there is another part that is originally directly from

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Speaker 1: an account. So you enter our wood dot com site

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Speaker 1: or our app and you send money directly from your

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Speaker 1: account debit card, credit card or Apple pay for example,

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Speaker 1: so you can send that. So digital, I'm talking about

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Speaker 1: origination in digital. That origination digito was not really a

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Speaker 1: real factor ten years ago. Then everything started five years ago.

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Speaker 1: Our business was in Bryonic on that then we start

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Speaker 1: learning around the globe and today we are the market

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Speaker 1: leaders after five years, growing more than the industry. So

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Speaker 1: we have not seen yet something very new enough for

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Speaker 1: us in the market, so we would acquire. At this point,

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Speaker 1: I think that we don't see any any disruption, an

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Speaker 1: important disruption. Thank you so much for joining us. Truly

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Speaker 1: a fascinating business and marketing. Gilon all made a president

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Speaker 1: of Global money Transfer at Western Union. He's based in

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Speaker 1: an airplane, but I guess technically in Miami We've been

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Speaker 1: hearing a lot about the very hot housing market in

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Speaker 1: the US over the past few years, and yet construction

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Speaker 1: workers still are not building enough homes to say demand.

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Speaker 1: Construction starts for new homes have declined for three straight

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Speaker 1: months and permits were at a one year low in May. UH.

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Speaker 1: This raises a lot of questions, and who better to

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Speaker 1: answer them other than Logan Moda Shapi. He's senior loan

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Speaker 1: officer at a MC lending group and he comes to

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Speaker 1: us UH now from Irvine, California. Logan, can you give

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Speaker 1: this a sense of what this sort of restraint is

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Speaker 1: all about with respect to housing starts and does it

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Speaker 1: point to even higher prices going forward? Well, first, I

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Speaker 1: disagree with the thesis that the housing market is very

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Speaker 1: hot and strong, and I would UH focus on new

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Speaker 1: home sales. You know, the reason why housing starts hasn't

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Speaker 1: hit the fifty year moving average at one point five

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Speaker 1: million is that if you look at new home sales

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Speaker 1: you adjusted to population using a six month moving average,

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Speaker 1: it's below five of the last six recessions. So why

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Speaker 1: would the builders build more single family homes when monthly

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Speaker 1: supply for them is higher in this cycle than in

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Speaker 1: the previous cycle. So it makes sense to me why

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Speaker 1: the builders aren't building because the demand isn't there. And

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Speaker 1: if you look at existing home sales today, it came

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Speaker 1: in at five point six two million, you know, but

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Speaker 1: still uh, if you look at mortgage demand, it's still

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Speaker 1: back to level. So there's there's nothing that warrants a

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Speaker 1: strong hot housing market if you base it on mortgage

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Speaker 1: demount on cash buyers. Yet the cash buyers are very strong,

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Speaker 1: even even this year's but there's nothing out there in

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Speaker 1: the new home sales data or the mortgage application data

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Speaker 1: to warrant a a very strong housing cycle. Alright. So

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Speaker 1: having said that, maybe you can extrapolate and connect that

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Speaker 1: with perhaps some other bits of conventional wisdom that you

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Speaker 1: think are not necessarily accurate. Well, number one, we don't

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Speaker 1: have the demographics in the cycle to have a strong

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Speaker 1: housing market. We're very young still. Uh. Second, there is

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Speaker 1: no tight lending out there. Uh. Letting standards are very liberal.

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Speaker 1: It's just that housing affordability is not as good as

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Speaker 1: it appears. The the the the economists run a model

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Speaker 1: that basically assumes everybody has down and because interest rates

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Speaker 1: are two percent lower in this cycle than the previous cycle.

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Speaker 1: It alleviates that affordability, but still bigger homes, bigger mortgage payments,

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Speaker 1: bigger down payments. It's very hard, especially for young buyers

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Speaker 1: to have even three and a half to five percent down,

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Speaker 1: especially in coastal cities, to have that kind of a

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Speaker 1: marketplace where they would be pushing up demand and then

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Speaker 1: you know, move up buyers would actually you know, be

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Speaker 1: able to go up because I think move up buyers

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Speaker 1: are are the area that needs to be focused on.

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Speaker 1: It's very difficult for them to move up because they

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Speaker 1: had they don't have enough selling equity yet. And this

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Speaker 1: is why you see sales numbers where it's at right now,

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Speaker 1: and again why the builders are not building U homes

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Speaker 1: as much as some people think they should. You know,

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Speaker 1: logan as you speak and thinking about some of the

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Speaker 1: buildings that I have seen coming up in a variety

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Speaker 1: of places across Manhattan and Brooklyn and the Bronx, and

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Speaker 1: I think about how different some of the large metropolitan

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Speaker 1: areas are from other places in the United States, And

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Speaker 1: I'm wondering, have you ever seen a housing market in

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Speaker 1: the US as bifurcated as the one that we're seeing today. No,

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Speaker 1: and it goes straight into the inequality issue. The inequality

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Speaker 1: issue in this country is really between home owners and renters.

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Speaker 1: It's not so much of the one percent versus. To

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Speaker 1: be a homeowner, you really have to be the strong

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Speaker 1: educated middle class. And you see that in the wage data.

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Speaker 1: You know, since the nine college educated Americans are really

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Speaker 1: making much more money than those who never went to college,

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Speaker 1: and that gap. Those are your homeowners. And this is

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Speaker 1: why the builders are always building for them, because if

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Speaker 1: you look at it, new homes, new home construction is

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Speaker 1: bigger and bigger and bigger homes. That's not going to

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Speaker 1: help housing affordability by building bigger and bigger homes, but

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Speaker 1: they're making a market really for that strong educated middle class.

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Speaker 1: And for the rest you don't even have. You know,

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Speaker 1: all the rental units are in theory luxury units. They're

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Speaker 1: not even building cheap, affordable rental units. So there's your

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Speaker 1: inequality right there. It's basically the rich versus the poor,

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Speaker 1: and it's basically homeowners versus renters. Now, Logan a mc

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Speaker 1: Lending has been sort of checking on mortgage mortgage industry

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Speaker 1: in California since not what right, Okay, and I'm wondering

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Speaker 1: if you could then describe now from an investor's point

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Speaker 1: of view, what are some of the best investments in

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Speaker 1: the worst investments when it comes to listening to experts

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Speaker 1: tell you about real estate, Well, right now, rental UH,

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Speaker 1: rent inflation is cool and off. We've we've built a

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Speaker 1: lot of rental units over the last few years, and

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Speaker 1: we're almost at the point to where dem graphics are

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Speaker 1: gonna be favored for ownership in a few years. So

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Speaker 1: you see rent inflation cooling up. So if you're looking to,

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Speaker 1: you know, pay up for a rental unit, be mindful

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Speaker 1: of that um because unit sales are so low for

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Speaker 1: new homes. You know, the entire builder index could still

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Speaker 1: have legs in a few years out there because unit

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Speaker 1: sales are still low. So it depends on what you

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Speaker 1: want to pay for the builders out there. But again,

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Speaker 1: the housing cycle should be better in a few years.

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Speaker 1: But if you believe in this hot housing market or

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Speaker 1: that there's some over investment thesis in housing, you know,

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Speaker 1: you're you're you're laying a trap for you know, uh,

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Speaker 1: for sales to come down. And I just I can't

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Speaker 1: see a very major barish thesis for housing because it

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Speaker 1: isn't very strong. It's still very low. Mortgage demand per

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Speaker 1: the mortgage purchase application data is still at levels and

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Speaker 1: two thousand seventeen has been one of the weakest years

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Speaker 1: year over year in terms of mortgage demand growth, but

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Speaker 1: still old cycle high demand, just not quite there with

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Speaker 1: any unit sale growth for new homes or existing homes.

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Speaker 1: I want to thank you very much. Logan Mata Shami.

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Speaker 1: He is a senior loan officer a MC Lending group

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Speaker 1: in Irvine, California. You can follow him on Twitter at

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Speaker 1: Logan Mota Shami. Well, we want to learn a little

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Speaker 1: bit more about a big change in the ms c

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Speaker 1: I Global Index because China is now part of the club.

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Speaker 1: And here to tell us about it is Brendan Hearn.

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Speaker 1: He is the chief investment officer at Crane Shares. Brendan,

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Speaker 1: how important is this? What what are some of the

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Speaker 1: specific ramifications? Well, the ultimately means there's gonna be a

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Speaker 1: lot more China in investors portfolios in the years to come. Uh,

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Speaker 1: the supertanker doesn't turn on a dime, So that's yesterday's

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Speaker 1: and now sent with just the orders coming down from

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Speaker 1: from the captain to start turning that wheel. But but

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Speaker 1: China is going to grow from about of m s

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Speaker 1: c I emerging markets to well over in the years

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Speaker 1: to come. You know, one thing that I don't understand,

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Speaker 1: Brendan is the construction of indexes. People think that they

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Speaker 1: are investing in passive funds, and yet it's a very

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Speaker 1: active decision to decide whether or not to bring Chinese

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Speaker 1: domestic shares into the index and how much to include

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Speaker 1: as well. I mean, what do you draw from this

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Speaker 1: process and whether people are actually getting exposure in proportion

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Speaker 1: to the actual shares outstanding. Now, it's it's a great

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Speaker 1: question list because I think in general we talked about

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Speaker 1: the growth of passive investment vehicles and next funds and

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Speaker 1: ETFs on a daily basis, there's very little examination of

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Speaker 1: the index methodologies that dictate how those trillions are actually invested.

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Speaker 1: So in the case of m s c I, their

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Speaker 1: Global Investible Market Indices methodology. G It's about a hundred

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Speaker 1: and seventy two pages long and I'm probably the only

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Speaker 1: person who's actually read it. Um So, so I think

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Speaker 1: there you know you you you can do your homework

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Speaker 1: and understand the thought process that drives some of these changes.

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Speaker 1: But it is true. There is there is a human

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Speaker 1: element and a lot in the case of m s

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Speaker 1: c I is the will and desire of their clients

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Speaker 1: as well as the ability to implement. And that's what

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Speaker 1: really sparked the change was the great work to Hong

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Speaker 1: Kong stock Exchanges done in implementing the Connect Trading program. Well, Brendon,

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Speaker 1: will this inclusion improve the China A share investment rules? Well,

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Speaker 1: I think it's certainly. We got to this point of

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Speaker 1: starting to including M s c I definition of Shanghai

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Speaker 1: and sins and names because of the openness of the

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Speaker 1: Chinese regulators UH to abide by some of the UH

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Speaker 1: rules that MSc had asked for, as well as the

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Speaker 1: implementation of this Connect Trading program, which provides a much

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Speaker 1: greater level of acts us versus the historical quota program.

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Speaker 1: So so so we have this great trajectory and great

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Speaker 1: projection of continued access as well as in further adapting

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Speaker 1: to institutional standards globally. Brendan people estimate that this change

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Speaker 1: in the M s c I indexes will funnel hundreds

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Speaker 1: of billions of dollars into Chinese shares that wouldn't have

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Speaker 1: otherwise gone UH do you expect this to lift the

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Speaker 1: valuations or does it sort of highlight the interconnectedness of

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Speaker 1: the financial system that could become a problem should there

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Speaker 1: be a hard landing in China. Well, that's a good question.

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Speaker 1: I mean I think I think ultimately yes, I mean,

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Speaker 1: hundreds of billions of dollars are going to go into

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Speaker 1: uh the securities that that we hold today at Crane

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Speaker 1: shares um kind of self serving and highly behy us.

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Speaker 1: But you know that that will take time. This isn't

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Speaker 1: gonna happen overnight. It's going to take many, many years.

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Speaker 1: It could take between five and ten years for the

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Speaker 1: full inclusion of msdis definition of Shanghai and Shenzen Um. Ultimately,

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Speaker 1: you know that probably will have a benefit in potentially

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Speaker 1: raising the markets there. That's but but certainly the world

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Speaker 1: is interconnected today, and uh this market has been very

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Speaker 1: low correlated because it's been ring fence from from globalized funflows,

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Speaker 1: and that that will change in the years to come. Well,

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Speaker 1: you know, it's interesting. Part of our reporting from China

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Speaker 1: includes comments from the company called Spring Air and Spring Airlines.

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Speaker 1: This is a budget carrier in China, and says the

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Speaker 1: decision to be included in the ms c I UH index.

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Speaker 1: UH is both an incentive and pressure, and it talks

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Speaker 1: about how it will now increase transparency and boost corporate governance.

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Speaker 1: That's got to be a good thing. Oh, I think

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Speaker 1: without question, this puts a very high onus UM index

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Speaker 1: funds and exchange traded funds will mechanically by the securities

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Speaker 1: within the m s c I China a International UH

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Speaker 1: into which are k B A is benchmark too. At

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Speaker 1: the same time, active managers are going to be evaluating

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Speaker 1: picking amongst those two twenty names that will be added

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Speaker 1: next next year. So so I think I think it

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Speaker 1: is a good thing. The market will institutionalized, just as

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Speaker 1: the market as institutionalized here over the last several decades.

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Speaker 1: So that's I think it is a net net positive

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Speaker 1: for both China as well as investors globally. Brendon to

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Speaker 1: hear and thank you so much for joining us. It's

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Speaker 1: always terrific to speak with you. Brendon to her and

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Speaker 1: his chief investment officer of Crane Funds Advisors, the investment

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Speaker 1: manager for Crane shares Et f S, which is based

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Speaker 1: in New York. This is a tremendous change with China's

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Speaker 1: domestic shares being accepted into the m s c I

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Speaker 1: Index for Emerging Markets in particular, and you know, Pim,

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Speaker 1: I've got to wonder how much this will lead to

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Speaker 1: selling of other securities that are already in the index

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Speaker 1: that are going to be taken out in order to

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Speaker 1: make room for China uh, and and whether there's enough

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Speaker 1: incoming flows to emerging markets stock funds that will offset

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Speaker 1: that definite. That's why I like you, because you always

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Speaker 1: find the there's and the losers. Yeah, I mean there's

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Speaker 1: gonna be there's gonna be some kind of shakeout perhaps

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Speaker 1: or perhaps this flood of CASHU will continue. Well this year,

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Speaker 1: we've heard a lot of angst about whether we've seen

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Speaker 1: a bubble in tech stocks, But our next guest says,

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Speaker 1: not only is there not a bubble, but frankly, tech

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Speaker 1: stocks are cheap. David Kodla joins US now. He chief

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Speaker 1: executive officer and chief investment strategist at Mainstay Capital Management,

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Speaker 1: with about two billion dollars under management in Grand Blanc, Michigan. David,

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Speaker 1: how can you say that many tech shares are actually cheap? Well,

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Speaker 1: I don't know if I want to qualify it as

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Speaker 1: cheap as much as I think they're not overly expensive,

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Speaker 1: and and and our messages is poor investors to stay

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Speaker 1: with tech stocks, don't be shaken out. This past week

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Speaker 1: or so, we saw weakness in in tech names, not

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Speaker 1: based on fundamentals, just a correction in price. They've come

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Speaker 1: a long way, uh this year, but when we look

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Speaker 1: at the evaluations, we hear a lot of people talking

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Speaker 1: about the prices being the highest ever higher than in

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Speaker 1: two thousand, But valuations are really still quite low. Trailing

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Speaker 1: earnings for the tech sector in two thousand at the peak,

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Speaker 1: we're at seventy times earnings. Now we're only about twenty

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Speaker 1: three and a half times earnings, a little bit richer

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Speaker 1: than the S and P five hundred, but this is

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Speaker 1: where the growth is. This is where we see secular growth.

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Speaker 1: We're not dependent on cyclical forces. So we think it's

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Speaker 1: important that investors stay with the tech names. All right,

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Speaker 1: we'll give us some of those names. Explain the thesis

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Speaker 1: and the strategy and what you came up with. Well,

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Speaker 1: we all we all know the fang stocks that have

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Speaker 1: been talked about so much, and those are the big Facebook, Amazon's,

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Speaker 1: the big half, the leaders. We do own them all okay,

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Speaker 1: and you're not selling and we're not selling, all right,

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Speaker 1: we're not helling, so you know. And also, uh, you know,

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Speaker 1: through you can own that through xl K to E

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Speaker 1: t F, you can own the triple queues which give

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Speaker 1: you a lot of the big calf names, which you

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Speaker 1: can also own an open end fund like to row

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Speaker 1: Price Technology to ro Priced Global Technology, which is a

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Speaker 1: global fund, so it has some of the tech names

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Speaker 1: abroad like Ali, Baba, ten Cent, which have lower valuations

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Speaker 1: and further to run. So in a in a in

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Speaker 1: a global fund like that, you get some of the

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Speaker 1: lower valuations where uh, we know that the valuations of

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Speaker 1: the U S tech names have have run up, but

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Speaker 1: we think that you stay with that sector. What would

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Speaker 1: you have to see to make your second guess that

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Speaker 1: and actually start selling your tech shares. I think that

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Speaker 1: right now, when we look at the overall market, really

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Speaker 1: what we would be more concerned about is a broader

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Speaker 1: stock market correction. We had the so called Trump trade

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Speaker 1: earlier this year, or the reflation trade that's kind of

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Speaker 1: gone by the wayside. Uh. We think that large cap

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Speaker 1: growth is the place to be right now, and what

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Speaker 1: would change our outlook would really be concerned about the

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Speaker 1: stock market in general, but what could actually do that?

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Speaker 1: I mean, right now, we've seen political instability around the world,

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Speaker 1: We've seen geopolitical conflict. We've seen questions about how quickly

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Speaker 1: the US can grow. The FED is seems dead set

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Speaker 1: on hiking interest rates. What what more do we need

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Speaker 1: for there to be a sell off? Our biggest concern

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Speaker 1: is the FED and the rate at which they hike rates. Um,

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Speaker 1: we've had three quarter point rate hikes in the last

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Speaker 1: seven months or the last six months, and that's not

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Speaker 1: a quick pace by historical standards, even though it seems

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Speaker 1: like a quicker pace than we've had the past several years. Obviously,

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Speaker 1: the concern is is that they raised fast enough or

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Speaker 1: high enough in the of economic data. And then economic

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Speaker 1: data when we look at inflation peaked in February and

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Speaker 1: inflation has come down, wage or jobs growth is slowing.

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Speaker 1: The hard economic data is not pointing to the need

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Speaker 1: for higher rates, and we're seeing the FED we think

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Speaker 1: rays for structural reasons rather than based on economic data.

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Speaker 1: They've basically signaled that if they do that too fast,

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Speaker 1: too far, too fast, we get what we call a

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Speaker 1: FED event, which creates a market event or even worse.

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Speaker 1: We've seen the yield curves, whether it's to two to ten,

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Speaker 1: two to thirty five to thirties flattening, and the closer

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Speaker 1: we get to flattening or an inversion, we have the

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Speaker 1: risk of recession. Well, I was going to say that

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Speaker 1: that is exactly so what you were describing earlier when

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Speaker 1: we were speaking with Jerome Schneider, But he didn't think

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Speaker 1: that we were heading towards recession. He thought that you're

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Speaker 1: going to just see is that the FED is trying

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Speaker 1: to normalize as quickly as possible. Uh, and you are

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Speaker 1: seeing that flattening as a result. Indeed, you know, maybe

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Speaker 1: if you could just focus then on all right, we

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Speaker 1: buy this scenario. There are no shocks to this system

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Speaker 1: that at least haven't been discussed at least right now. Right.

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Speaker 1: I mean, you're talking about the FED. We know that

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Speaker 1: that could go cross on. But the thing that really

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Speaker 1: sent sent the market down, and you know it was,

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Speaker 1: was the Lehman Brothers bankruptcy, the you know, the unknown

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Speaker 1: unknown for giving that, do you think stocks can go

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Speaker 1: much higher this year? I think stocks will continue you

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Speaker 1: go higher. We still see upside of the stock market

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Speaker 1: through year and and into next year. We have strong

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Speaker 1: earnings earnings growth UH through the last earning season, looking

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00:24:45,680 --> 00:24:48,600
Speaker 1: at six and a half percent earnings growth for the

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Speaker 1: next quarter, strong earnings growth through and as long as

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00:24:53,800 --> 00:24:56,720
Speaker 1: those earnings come through, we think the stock market goes higher.

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00:24:56,760 --> 00:24:59,520
Speaker 1: We have room to run, even though valuations are a

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00:24:59,560 --> 00:25:03,480
Speaker 1: little bit stretched. The political events in Washington, d C.

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Speaker 1: We saw a sell off for one day in the

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00:25:05,920 --> 00:25:09,440
Speaker 1: market recover UM. There's always the risk of a black

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00:25:09,480 --> 00:25:14,240
Speaker 1: Swan event, a geopolitical event, outside event that impacts the

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00:25:14,280 --> 00:25:16,840
Speaker 1: market for a day, a week, a month, But when

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00:25:16,880 --> 00:25:20,439
Speaker 1: we look at underlying fundamentals, we're still bullish on stocks.

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Speaker 1: You know, David, when I speak with investment managers, one

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Speaker 1: of the most consensus trades is Europe by Europe stocks.

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Speaker 1: Are you on that train? We are on that training

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00:25:31,800 --> 00:25:35,919
Speaker 1: of our kets. We like Europe and emerging markets. UH,

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00:25:36,080 --> 00:25:40,080
Speaker 1: specifically Europe and emerging markets. Europe we like because they're

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00:25:40,480 --> 00:25:43,760
Speaker 1: they're not as far along in this cycle as we

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00:25:43,880 --> 00:25:46,680
Speaker 1: are UM, but we're seeing earnings growth come through. So

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00:25:46,760 --> 00:25:49,480
Speaker 1: we have lower valuations in Europe than we have in

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00:25:49,560 --> 00:25:53,200
Speaker 1: the US with earnings growth coming through. So we like

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Speaker 1: Europe specifically an h F we like that not for

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Speaker 1: the faint of heart f EU, which invests in UH

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Speaker 1: the europe Stock fifty, which has done you know, very

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Speaker 1: well this year. In emerging markets, we have a CAPE

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00:26:07,480 --> 00:26:11,359
Speaker 1: ratio of about fourteen cyclically adjusted price to earnings ratio

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00:26:11,960 --> 00:26:14,720
Speaker 1: versus thirty for the S and P five hundred. Here

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Speaker 1: in the US, specifically, we like India within emerging markets.

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Speaker 1: At EATF we like their skin s C I N

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Speaker 1: get skin in the game. Interesting combination. Thank you very

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00:26:25,880 --> 00:26:29,760
Speaker 1: much for joining us. David Kudla is the chief executive

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00:26:29,800 --> 00:26:33,440
Speaker 1: and the chief investment strategist for Mainstay Capital Management. He's

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00:26:33,480 --> 00:26:37,800
Speaker 1: got more than two billion under management based in Grand Blank, Michigan,

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00:26:37,920 --> 00:26:41,560
Speaker 1: and he can be followed on Twitter at David Underscore

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Speaker 1: k U d L a very interesting technology select sector

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00:26:45,880 --> 00:26:47,760
Speaker 1: of course, the x l K and then the tro

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Speaker 1: Price Global Technology p r G t X is the symbol.

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Speaker 1: Thanks for listening to the Bloomberg P and L podcast.

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00:26:57,760 --> 00:27:00,840
Speaker 1: You can subscribe and listen to interviews at full Podcasts,

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00:27:01,040 --> 00:27:04,879
Speaker 1: SoundCloud or whatever podcast platform you prefer. I'm pim Fox.

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00:27:05,040 --> 00:27:08,320
Speaker 1: I'm on Twitter at pim Fox. I'm on Twitter at

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00:27:08,480 --> 00:27:11,520
Speaker 1: Lisa Abramo wits one before the podcast. You can always

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00:27:11,560 --> 00:27:13,560
Speaker 1: catch us worldwide on Bloomberg Radio