Is China's Xi the New Mao?

You can also listen to our radio show at two pm Eastern Time on Bloomberg Radio or watch us on YouTube search Bloomberg Global News. It's the video watched around the world. I watched it many times, feeling the gravity of it. And this was watching former General Secretary Hu Jintao ushered off stage, watching President g for an unprecedented third term as China's top leader, really come in and really cement his position going forward and really what China

is going to be about in the future. We've got a great voice with us to give us an idea of what China is going to be like in the future. We got Andy Brown with us. He's a partner at the Brunswick Group. He's with us right now in the Bloomberg Interactive Broker studio, and folks will hear a familiar voice because Andy joined us many many times while he was here at Bloomberg on the program. He's good to have you with us. How are you great to be back,

Thanks so much for having me. Yeah, it's really great to have you back. So a victory for she. But look how the markets are reacting right now. Just give us your overview of what you've seen transpire over the last couple of weeks. So victory for Sea, absolute triumph. Gets his third term basically if he wants it, rule of a life, packs the polit bureau standing committee with his own people. People say he's the new Mao, not in the sense that he's about to unleash chaos on China.

I mean he wants order, but in the sense of power, in the sense of prestige, in the sense of his place and history. In fact, he may actually have more leeway than Mao. Mao, after all, had to launch the cultural revolution to get control of the party. She has no rivals, no peers, and no success it. He's alone at the top. Now, what the markets are reacting to is the fact that This wasn't just a personal victory.

It was a victory for his policies, the policies that have so alarmed investors, portfolio investors as well as global companies investing in China over the last several years. And we saw that certainly play out in the market. We keep talking about the NaSTA Golden Dragon China Index on track for probably its biggest drop ever. It's down about

fift here. So how do how should investors after decades of thinking this is where companies wanted to be, to tap into um their citizen base, what a billion plus people? How should investors think about the Chinese market going forward? You know, it's so interesting. I I talked to I talked to business leaders now investing in China all the time. Just about everything they knew or thought they knew about China has turned outside down. They thought that the Chinese

system was optimized for growth and development. In fact, it's now optimized for security. China is looking inwards. They thought that Don chall Ping's open door, open reform and opening policies would continue indefinitely. She's Don Chalping's open door has turned into Si jim Ping's fortress. China. They thought that policy making would be pragmatic and predictable. It's become ideological,

almost random. They thought businesses thought that China would do everything it could to ensure a benign global environment that would facilitate China's economic rise. Wolf warrior diplomacy, ballistic missiles over Taiwan, uh An alignment with Putin's Russia ahead of the invasion of Ukraine has reversed all of that kind

of thinking. It's a very very different China. I do think about do we look back I don't know any year from how five years or not years this was the beginning of the division of the world, or maybe that was starting already, Like how do we think about this in a world where globalization was supposed to be it all that we've seen a tremendous pushback. We have to recognize that She Jimping is building a very different China.

He has a very different vision. It's a vision that prioritizes security over growth, and it comes from a fundamental place of insecurity. He believes that Chinese government believes the Party believes that they're in the early stages of a decades long struggle for supremacy against the United States that

may actually lead to conflict. And so all of these policies that you see rolled out from you know, uh, the advance of the state, the assault on the private sector UM, COVID zero, populist policies aimed at wealth redistribution, forcing billionaires to disgorge the money, UM, a more assertive foreign policy. UM. So much of this has to do with hardening the economy for the for the for for

the struggle that they feel is coming. So what does it mean for American companies that want to do business there, Apple, Nike, Disney, Tesla, just to name a few. I mean, they want access to this growing consumer base and this what well, what could end up being a wealthier consumer base. Right, So, so they have a dilemma. They're not they're not going

to leave. I mean a few are leaving, right. We saw linked in Airbnb, UM, a couple of a few companies that weren't doing much in China, had big reputational risk, weren't weren't earning many much much much money. They've they've abandoned ship, they bailed. Most companies are staying, uh and they're hedging. Uh. You know, every CEO is being leaned on now by by their boards. What is your plan B? What is your plans? C? What you do if it all goes wrong? What do you do if if the

Chinese invade uh, Taiwan. We saw this just the other day in the congressional hearings. You had politicians grilling you know, uh Jamie, Jamie Dimond, you know, uh, all of the the the you know, Brian Brian Moyne, Jane Phrase. It's like, okay, what, what's what's your plan? What would you do? You know, well, of course we would salute the flag and do what we're told to do. Right. And then somebody said to Jane Phraser, No, no, no, what what if you weren't

told what you had to do? She said, well, we would probably still we would probably still pull out. Now this is this is a very different situation from Russia, right. I mean these companies that some of them are getting forty fifties six of their global revenues out of China. I want to get right back to Andy Brown, former Bloomberg colleague. He was editorial director of Bloomberg New Economy. He has partnered Brunswick Group and uh, you know, really

looking at what's going on in the China space. He spent thirty years I think it was actually thirty five over in Asia. He was both China editor and columnist of the Wall Street Journal, UM and and he's here in our interactive broker studio. So I do wonder about President g with everything that happened over the weekend, Andy, who's there to question him? We always talk about it's important for our leaders to be questioned. So who's there? And as a result, if there is no one, what

happens in terms of China and the Chinese economy? Carol, You don't need to be a sinologist to figure out where all this goes. Uh. You know, the longer he lingers in office, the more he's going to face this autocrat's dilemma. Right. So as the autocrat ages he or she, usually he becomes more isolated, more paranoid, doesn't know where the next threat is going to come from. And as a consequence of that, the tendency is to pack themselves

around with yes men, with sickophants. He and these are not the people who are going to challenge the great leader. And as a result, course correction becomes quite a bit more difficult. Right, and for all its faults. For all its faults, democracy does have within it this capacity to shift. Course, we've seen it very very dramatical, right, ask Liz Trust Okay, uh, you know that does not that is not going to happen in in China. Ask ask you know global business

people operating over there about COVID zero. It is absolutely clear that COVID zero doesn't survive O Macron, or it can survive O Macron, but at the expense of destroying the economy. Course correction is needed when not getting it, and I think that's one of the reasons why you're

seeing the markets collapsing, the China markets collapsing today. Give us an understanding andy of surveillance in China and how the country he uses it to essentially stifle this cent because like you said, this is not the UK, This is not a prime minister who could last, you know, forty six days and then end up leaving because of the will of the people. The will of the people in many cases is not necessarily heard because it's cut

off from the rest of the world. Well, high tech surveillance is a central feature of the security state that Shijimping is building, and we we've we've seen the extreme example of that in Shin John. Everybody is profiled facial recognition, gate recognition, you know apps, building the into the telephones and so on. What's kind of freaky about these COVID zero restrictions is this new additional layer of control and surveillance UH and border control that they've built into the system.

I personally don't believe this is going away. Maybe they won't, maybe they won't practice it quite quite as extreme way. Didn't everybody have to sign up because of COVID Essentially beyond this app everybody everything, everybody has to I mean I was, I was in as you know I was. I was earlier this year in Beijing for the two Winter Olympics. I was in something called a closed loop bubble, essentially a series of protected corridors running through the whole city.

This was an extraordinary arrangement. I can't imagine any other city in the world, let alone any capital city in the world, pulling this off. But they did. But what was what was what was so unnerving about it was how effortless this all seemed. This is the Chinese operating model, you know, an immense institutional capacity, unlimited numbers of people, huge I mean virtually bottomless sums of money, and all animated by this sort of mass mobilization, whole of government effort.

That's the system that China operates on and which, by the way, it presents to the world as the efficient model for economic development. Now you point that in the right direction, alleviating poverty, and you get a great answer. You've got a great result, right, extreme poverty eliminated. You pointed in the wrong direction, for instance COVID zero or in sin jong uh, and you create a whole set

of a whole set of problems. In a sense, our problems in the West is a lack of institutional capacity, lack of will, lack of ability to get things done. In China, one might say it's the opposite. The state has too much power and control. So what do you kind of watch out for over the next I don't know, six months, twelve months, as this, as we move away from what we got from over the last couple of weeks in terms of the news flow, what is it that you'll be keeping an eye on. You know, they

don't want to tank the economy. I mean, let's let's be let's be serious, right, I mean and and having said that, you know, dictators packed themselves around with sycophants, and yes, man, I do have a lot of faith

in the institutional, technical, technocratic capacity of the China. These states they've been the bureaucratic state has as has been a feature of the efficient bureaucratic state, has been the feature of Chinese governance for thousands of years, right, So you know, I do believe that they're going to hold things together. Um, A figure like Lee Chang, who could well be the next premier, is actually very well thought of by the foreign business community, by the international business community.

He's run Drajiang province basically size of a small country in terms of the economy, ran Shanghai best city, best city in China. So I would be looking for signs that a they're going to try to figure out some endgame for COVID zero. It's not going to happen overnight. People are terrified and be something about property, and I think that is very much a problem that they could get under control. Andy Brown, thank you so much. Great to be here. Thank you so much, Carol. Thanks to him.

Andy Brown Partner Brunswick Group and as we said, a former editorial director of Bloomberg New Economy. This is Bloomberg Business Week with Carol Master and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. So we don't want to get to a Bloomberg Business Week's story found online and on the Bloomberg about the implosion of instant delivery startups that soared during the pandemic. We're going to actually zero in

on one in life after Peak Pandemic. We got Jackie de Vallo's technology reporter for Bloomberg New She wrote the piece along with Brad Stone. She's joining from running studio in Washington, d C. We also got the editor of Bloomberg Business Week with us, Joel Webber. He's in the Bloomberg Interactive Broker's studio. Joel counted one to three, only four paragraphs until I find a reference to the nineteen nineties and Cosmo dot com in here, Because when I

think of delivery implosion, I say, wait a second. We've seen this story before. Yeah, Um, we have, and but we haven't quite seen it like this. And you know the story that UM Brad and Jackie um. The company that Bread and Jackie focused on. UM it's called Go Puff, which finally I know why it's called Go Puff, you do. Um, We'll let Jackie kind of stick with one. We'll come back to what I'm sure. Um, but Go Buff has

been sort of the example. Um and with the stories ultimately about of like this instant delivery thing that became supercharged with VC dollars. Um. And now as the economy is starting to you know, not do not go up and up and up, um, some places like instant delivery maybe feel uh like a lot of money went in there, and maybe there are owas not exactly what people had hoped um. And there are some echoes of some yesterday's in including a dot com era flame out called Cosmo

dot Com. Um. But but Jackie talked to us about Go Puff because that company, um I've used if you need to get cop styrup for your kid in the middle of the night, turns out to be a pretty effective way to do that. But but maybe not to scale and go global, right, you know that's exactly it. I think what Puff really shows is that there was absolutely a demand for these kinds of service. Is when you're stuck at home, you're on the couch, you want

some last minute ice cream or chips, even beer. Uh. They've been around for quite a while now since UH and they really kind of came off the off the ground after e commerce had started to become much more

widely adopted. Amazon was kind of known for, you know, being the delivery giant back in the day, and when these two founders started the company, it was on the back of you know what about you know, in college campuses when you want you know, last minute packas a beer before a game or your tailgating, and it was really uh, you know, in a place where it made sense. You have a dense pocket of uh students who are willing to pay a dollar ninety five to get extra

snacks delivered. And this was absolutely super charged once we got into the pandemic and delivery across the board was turno charged. And when you add in all of those billions of dollars of venture capital, becomes very easy to accept the reality that, you know what, maybe we can expand at rapid pace. But what we're seeing now and not just with go Puff, but a lot of the rapid delivery companies that sprouted during the pandemic, is that

it's not a sustainable business in an inflationary environment. And when the economy is also starting to take a turn. Can we talk about the co founders and co c e O s of Go Puff and you know what their story was, because this is not their first attempt at a delivery company, even though they're not even thirty yet exactly and there they really are a fascinating pair. They're you know, very hard working in the sense that you know, they kind of started this in a really

scrappy way. They didn't know a whole time about venture capital. They it was really a bootstraps kind of attempt at you know, building a company. They ran this themselves, bought the warehouse by themselves. They hired someone to you know,

off Google to help them negotiate their first liquor license. UM. So their work ethic, I really, I think really speaks to um you know, coming out of an era where you have a delivery giant, you know, as the aspirational company that they were hoping to be one day and um but they also had a lot to learn. You know, they started doing these deliveries, um, you know, by themselves, with their own minivan, off their own money. And once you add in, you know, all the billions of venture

capital cash. Um, it got a little bit out of control, and whether it was just expanding into too many cities in the US, international expansion, just the exuberance overall that

permeated the company. UM. You know, it also shows that there's um, there's ways to kind of rein it back in and this was kind of a tough um bringing it back down to reality given the tech route just kind of you know, came out of nowhere earlier this spring, and you can see them trying to navigate the turbulence with the layoffs and you know, pivoting out of certain sectors. So we'll see where that takes them. You know, it's funny, Jackie.

This week, we're going to spend a lot of time talking about valuation because of big tech earnings that are coming out and what's the reality And I feel like they had to have kind of a reality moment when they thought about their valuation yet the tech company, but maybe not like some other tech companies that demand higher valuations. That's absolutely right. At the end of the day, they're

more like a retail company. They're not different and you know than um a convenience store just online, you're buying things at warehouse prices and selling them for a markup. But at the end of the day, you have a lot of overhead. This is a very asset heavy business. It's you know, many Amazon type warehouses everywhere, and those leases cost money, especially when you're expanding at the pace that that they were, and add in competition who's also

buying to scoop up leases. Think about New York City. How many companies we had running around here. Um, and now that they've had to shut a few of those down, Um, you know that's still something that's they have to foot the bill for. Are okay? So we talked about some things that they've gotten into, like alcohol. Um, we talked about some things that they've gotten out of. Um, what have they not gotten into that they might yet? Jackie, Well,

this is kind of the kicker, you know. It's uh it harkens back to uh, their start and it's called go Puff because they used to deliver hookah's and like hooka accessories to college students and it was exactly And the funny thing is, you know they claim that to be smokers themselves. Um. But you know, kind of bringing it back to where we are now, you're seeing Uber

and door Dash facilitating orders for cannabis deliverate. It's a kind of a touchy thing here is still because it's at the federal level that hasn't been legalized obviously, but you're seeing many states kind of take steps to embrace weed and UM for companies that want to capture the

delivery component. It's going to be a little tricky and door dash and uper still kind of inching around it in the US, but in Canada, you know, they're the ones that are offering it on their apps, and you know, whether it's someone else delivering or people can go pick it up, that app is now kind of like the center point for um, you know, transacting this kind of product that was kind of thought to be you know,

off the off the radar for a long time. For a company like go Puff, it could actually uh you know, propose a poses a new opportunity to kind of tap into a much higher margin line of business. I mean, you know, I don't know what a weed order would go for it, but certainly seems to be a little bit more lucrative than you know, uh chips and you know, sodas.

You've got the rest of everything exact, uh you know, giving way the goods here, but um, we're go puff one director said that we quoted it's our birthrate to sell it, right, Like it's so good. So we'll see if they go there or not, you know like DBD. All right, we're gonna leave with their great story. Um, Jackie, thank you so much. Jackie Deavlos. She is technology reporter at Bloomberg News from our nine one studio in Washington, DC.

A story she wrote with our Bradstone and of course our thanks to Jill Weber, editor of Bloomberg Business Week. Here in our Interactive Broker studio, you're listening to Bloomberg Business Week with Carol Messer and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio. I'm just gonna tell you we're getting a reality check big time, courtesy of our Gina

Martin Adams. We want to talk about a lot of things, and in particular, we want to talk about what's been really key growth engines for the S and P five hundred. We're talking about those megacap technology stocks which are entering the earning season. I love this story with diminished stature, so let's get into it with our Gina Martin Adams. She's Chief Equity Strategies at Bloomberg Intelligence here in our

interactive broker studio. So we want to talk about everything, Um, I do want to do you want to touch on the broader macro or do you want to go Let's let's touch on broader macro for a second. Because of work. I mean, we're going to hear about broader macro from Apple, from Microsoft, from Alphabet, Amazon, and Meta platforms this week. I mean Meta is going to talk about it a lot. I bet afee what we saw with Snap. But Gina, just bring us up to speed on how you and

the team are thinking about macro right now. Because we were talking about rates. Well, we heard from you know earlier a little earlier during the program, and um, you're saying that the era of low rates is over, at least in the short term. Yeah. I think that we need to put the pandemic in the past, right and I think that the the just the activity levels that

we've experienced in recovery will also be over. Will not see that extraordinary surge and activity reflecting the shutdown that would happened just prior, but we'll probably normalize into a pace of growth and inflation that looks very different than the pace of growth and inflame inflation that we all have become accustomed to. This is not the Great Financial Crisis recovery. This is the pandemic recovery. And every recovery

is very different, Every economic cycle is very different. If you think about the period of time just after the Great Financial Crisis where rates were abnormally low of central banks were infusing all the capital they could and with helicopter money on the economies around the world, that really reflected an environment of massive deleveraging in the financial sector. That environment is not necessary anymore. We've gone through massive

deleveraging and financials. We've gone through massive deleveraging among US households and most global households frankly over the course of ten years. So we're set up very differently for a

different type of cycle this time around. I actually think demand will remain significantly higher, will have faster growth in general GDP in economies ex China over the course of the next decade, will also have much greater supply constraints due to a combination of deglobalization as well as decarbonization efforts.

The result of that is going to be faster inflation, which means to me, faster higher interest rates than what we became accustomed to in an environment where we were deleveraging really trying to combat or fight against deflation or

disinflation for more than a decade. You know, you've been talking about this for a while, and something struck me on a conversation too on surveillance last week that just someone to who said, is going to be the norm because globalization, like that's a change, the federal funds rate

is going to be the norm. I think that's what they were talking about, yes, And then they said part of it was the prospectivegainst globalization, the demographics that we're seeing, the aging demographics and developed societies, and also climate change, the cost of that. These are things that are structurally changing within our society. All right, So we covered macro.

We've got about two now that it's talked to me about the big tech that are reporting what our expectations because we're going to get kind of evaluation reset this week, maybe to the upside and maybe the downside, and we could have it could go either way. Honestly, Carol, this is a really tricky one this season because expectations for these companies are very very low for the season itself. A third quarter beat seems very easy, yet expectations are

very high for these companies going into three. So I think it really is a matter of what the market is going to focus on. Is the market going to focus on Okay, thank god, they didn't do as bad as we hoped they would that we thought they might do in third quarter, or is it going to be about the outlook? I think the companies are pretty savvy, frankly, so they'll probably not guide us in and maybe gut us for quarter ahead and keep the same beat third quarter,

and therefore we have a little bit of relief. That seems to be basically what most of the companies are doing. They're not really touching the long term outlook. They're not giving us a ton of guidance into the long term because they don't have a lot of visibility into the long term. Instead, they're focused on the beat and then maybe what's what they see happening in the fourth quarter. Generally, what companies tend to be seeing is less bad than anticipated.

It's not all great. There's no rosy commentary out there. It's just okay, you know what, it's we're kind of surviving here, and that seems to be okay after the market is corrected as much as it has. We've been talking throughout the program about what's going on in China, and I think of one company reporting this week that obviously is a huge stake in China. That's Apple from a production standpoint and also from a manufacturer, from manufacturing

standpoint and from a sales standpoint. Um, what should we be listening for from Apple, not just when it comes to China, but when it comes to macro because they've got things everywhere. Yeah, I'm much more focused from them on the supplied side of things and how they're navigating the geopolitical relationship, the deterioration and the geopolitical relationship between the US and China. What do they see as the long term source of supply? Are they going to move

away from in the world. Can they diversify their supply chain? This is an increasing risk to Apple specifically. Uh, there's plenty of other tech companies who have diversified out of Asia or started that process. Apple has actually been a little bit slow and a little bit reticent because they've

had such good relationships in China. For so long. But there does appear to be some pretty big wind shifts at the geopolitical level, at the at the governmental level between the US and China that are going to force some change there. So how are they navigating that? Just fifteen seconds? Is there one, you know, are all big tech created equal or is there one that could report this week that could really change kind of sentiment or in terms that you think about strategy just quickly, all

of them are really really equal. Microsoft, though, is very much on my radar. Microsoft is the one company that everybody has said, nobody's touching it. It's great, it's fantastic, everything's fantastic for Microsoft. So everybody else has had some bullets thrown out, then Microsoft has not. All right, Jina Martin Adams, thank you so much of Bloomberg Intelligence, BROC Journal. Yeah, but you let me drive, no no leaves. I want to drive. It's a good question, which is the drive

to the closed for music radio? All right? Just about not in a half minutes left in today's trading session, and we've got quite a rally underway, as you heard from Charlie. We're just coming off our highs of the session that we are up by more than one percent about the SMP and the Dow Jones Industrial Average and tim we're seeing some pretty broad based buying when it comes to the SMP five we are, But what does it look like bigger picture? That's what we've been talking

about for most of the day. For that, we turned to Ben Kirby, co head of investments in the managing director at Thornburg Investment Management. They've got about thirty eight billion dollars in assets under management. Ben joins us this afternoon on the phone from Santa Fe, New Mexico. Ben, how are you. I'm great, Thanks for having me on

the show. Yeah, thanks for joining us. Okay, So we talked a little earlier about trying to understand whether or not we see the start of some sort of new rally, if it's a bear market rally, or if it's the start of a new bowl market. Um, what's your assessment. Yeah, there's a lot of a lot of factors going in both directions. So I think on the one hand, we're probably near peak hawkishness. You know, inflation is likely to uh to have been uh decelerating over you know, over

these next few months. Um, And you know, there's there's been so many Google searches on on inflation has become sort of, you know, a topic that that everyone is is focused on, so probably near peak hawkishness. That being said, the other topic that's that's trending out there is recession. So you know, even as even as we're looking to probably be near near peak rates or at least peak expectation of rates, slowing, economic growth is kind of the

offsetting force. So it'll be interesting to see how those those two forces interplay over the next few months. Are those indicators of the top when everybody's searching on inflation and recession? Can we read that as maybe, okay, yeah, everybody's worried. Everybody's nervous, and that's a sign of a top. I think it's an interesting of the bottom both actually right, So, you know, sentiment, it usually makes sense to h to lean a bit the opposite away from sentiment when it

get extremes. So at this point, sentiment is it's pretty extreme. I mean, you know, when you look at the surveys of bulls versus bears, um, there's way more bears than there have been in a in a long time relative to bowls, So that at least augurs. I think for the potential for for a snap back. How sustainable that is as the economy slows again, That's that's kind of big question. How does the FED regain credibility? I think they've I think they've mostly done at this point. You know,

they've they've been tough on the inflation uh rhetoric. The concern is that they're tightening into and already slowing economy. So I think they do risk um, you know, being behind the curve and and sort of you know, fighting fighting the battle that was really important you know, in the in the past six to twelve months. But as we look forward, you know, the war is the war

changing a little bit? All right, Let's talk names because you know, there are a few funds that you actually are involved in terms of managing, and I one thing I wanted to ask you before we get to start, what strategies are out performing right now? What makes sense? Yeah, So we we have a lot of strategies are performing at Thornberg, you know over um you know, overall we have probably of our portfolios or four and five star um on on Morning Star. So you know that means

kind of kind of top quartzile performance. I think what's outperforming broadly UM value investing is doing is doing a bit better. So you know, after a fifteen year hiatus of value investing really kind of being in being in hiding, you know, we're seeing a lot of the rotation out of higher growth sectors and into into more value sensitive sector So, you know, one of the portfolios that I co manages, the Thormburg Investment Income Builder, there's a global

multi asset income oriented portfolio. It has more of a value bias. So you know, average stock is yielding five and a half percent, the bondary yielding about nine um, and the p on that portfolio is about eight times next year, that portfolio is out performing the vast majority of peers this year, but also over you know, three

or five and ten year period. So I think it makes a lot of sense right now, as as we are in this tightening phase, as we are in this slowing economic environment, to be to be pretty pretty cautious UM and this this portfolio with you know, high dividend yield, I think, is it really a pretty good place to be positioned? Is that because I'm going back to the value versus growth debate here I mean, Carol forgiving. But every year we've heard that values coming back, right, But

is this time different then? Because of the high rate environment that we're in. What we just talked about with Tina Martin Adams a few minutes ago, that we're kind of going back to the nineties when it comes to rates. I think every environment is a little bit different. But the fact that for the last decade, company that we're losing money have been able to continue accessing capital markets,

either dead or equity capital markets. You know, you can you can have a product that sells at a negative growth growth margin and you can just isisue new shares and sort of keep that keep engine going until the Kassa capital gets expensive and the Cossa capital has gotten a lot more expensive, which means a lot of those those high flyers who are able to you know, live on on very cheap funding for a decade. Uh, they're not now having to come to cash. They now actually

have to find a way to make a profit. And we're discovering that some of those business models might not hold up in a higher rate environment. Hey, I want to ask you, and I know you have a couple of names that you're interested in, but time on semi conductor manufacturing has been a big position for you guys with all the news out of China, are you are you having a rethink, kind of come to Jesus moment maybe on on semi or not yet just curious, you know,

not not yet. In a holistic way, we have reduced the position size just because they have been such an now performer. You know, it got to be kind of a mid single digit percent of the portfolio, so we you know, we reduced it down to kind of a low single digit percent. It's it's a really tough tough question because I want Sammy is one of the most

important companies in the world. They have majing, amazing competitive mantages um but the geopolitical definitely has the ability to keep that multiple down and and to kind of create that left tail risk that we have a hard time gauging if you had to pick. I know, you've got some energy names that you like. We just have about thirty seconds left here, Chesapeake Energy, Total Energies. You still like the energy sector just quickly we do. Capex has

been low for a long time. There's there there's been a lot of under investment in energy, infrastructure and energy development. So we think having some exposure to that is interesting. These companies, especially a company like Total, is going to generate a lot of cash flow over the next two years and they're going to pay it back as dividends.

It's a good place to uh to hide out. We think, Yeah, I just feel like this applied demand metrics will certainly be in the favor for Big Energy, which has been an out performer Pimisle for the last couple of years. Hey, Ben Kirby Um really appreciate this and really enjoyed it, co head of investments and managing director at Thornburg Investment Management, roughly thirty eight billion in ass it's under management, and he was joining us on the phone from Santa Fe,

New Mexico. That was interesting. I'm gonna talk about value. That was really interesting, right, Like, is that conversation different now for this for years? Maybe? Right? Everything. Thanks for listening to Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or Bloomberg dot com, and you can also listen to our radio show at two pm Eastern on Bloomberg Radio or watch us on YouTube. Search to Bloomberg Global News