America Changes Immigrants, Not the Opposite, Gutierrez Says

which is a good and beautiful thing. David Kotalk this morning mentioned a New Jersey bond and I got a lot of response negative response about New Jersey a good man to speak to on that. Peter Hayes a black rock Peter, let me rip up the script here, and that the tone of particularly New York, New Jersey, Connecticut listeners was hyper negative on the land of Chris Christie's New Jersey a good credit. Jersey has some structural problems, like some of the other states with big prinsion problems,

and that's that's where they really revolve around. So this idea of tensions being able to pay the liabilities, it seems to be getting shorter and shorter that I think that they are reckoning if if you will, um, they have to be addressed. Some states have done better jobs in the states you mentioned have not done as good a job, and New Jersey is certainly one of those, and that's reflected in market spreads. They've spread it spread out dramatically wider. So I think the market sniffed that

out and that will they default longer term? Unlikely? They are a state, they're a large economy, etcetera. But in the meantime you could see some volatility in the name. Do do the name the state? And let's not pick on New Jersey. There's X number of other states like that. Does a shop like black Rock avoid a given state or can you be choosy versus GEO general obligation and revenue paper can pick and choose? Or do you just

walk away from some of these beleaguered states? Again, I think you have to believe in the long term efficacy of a of a state. Even Illinois, who has some pretty significant problems, actually taking some steps over the last couple of months to address the pension problem. They're a long way from from home. But you know, in the meantime, yields went up dramatically with prices going down and that's

actually reversed now over the last couple of months. You can play it that way, but you're I think you're a question around g os and revenues that tosses is the bigger one revenue bond you can sort of identify a revenue stream to pay back the bond, and geos taking a bit of a political risk. Well, the Michael McKee's taking a huge risk because he's got those triple de rated ice rink bonds somewhere up by s part

of New Jersey. What's your yield on that side? It's it's like tax free and you get New Jersey Devil tickets like. But is there it's sort of a psychological put in play here that uh yeah, Illinois or some of these other states are in a lot of trouble, but really they won't default, they won't go bankrupt, and so why not take the yield? I think there's definitely that mentality in the market, and it's a bit of

a rating risk. You know, do you want to own the double D or the triple D name you get paid and compensated for it if that's what you're after, or other investors aren't comfortable with that. Type of risk, and they see a little bit more of a doomsday scenario. But states, states, first of all, don't have the ability to declare bankruptcy. So if you think about the state defaulting,

I mean, that's just not in anybody's radar screen. So I think it's a matter of that you're willing to take the risk and see some volatility and your portfolio. There's plenty of people who want the yield and willing to take the rest. Mike, I want you ask the next question, but this is too important to pass up. Peter Haste. To be clear, a fifty states, they can't do a Puerto Rico. They're different, right, that's right, territory

versus state. It's as a's part of the constitution. Now, can most portfolios or at least I mean, we'll talk black Rock, since we're talking to the man from black Rock, but can you hold triple teas or things like that? I mean, do your rules even allow you to have something that that is that close to default rating? They do, Obviously, reflating ratings are designed to reflect the fault risk of the long term ability of an issue to pay back

their debt. But yes, we we can most institutional investors can hold everything on the credit spectrum from high yield to high quality and everything on the yield curve. SU's just a matter of where do you own those type of credits. I think you have to own them inappropriate mandates who are investors understand the risks. Let me switch

from pension problems to hurricane problems. If you look at a place like Houston, or you look at a place like Miami, with the potential damage that we might see, is there a possibility, you know, do do you get a ratings change and impossibility that you might see either default or delayed payment on some bonds because the revenue is just not there if the economy is so badly damaged.

I think that that could be in very small instances, with very small issuers, you could see an interruption of payments.

We think they're very unlikely. In history tells us that you go back and look at some of the bigger hurricanes that have impacted in the Southwest Louisiana, etcetera, and you do see a bit of a downturn in economic activity for the short term, which obviously impacts revenues, but you don't see a big change in the market value of the bonds, you don't see a big change in ratings.

If it's a single standalone project and for some reason, some catastrophic event um damages the property to the extent they can't continue to build it or build it out and can't collect revenues, then that might be a little bit differently different. But most of these revenue bonds have reserved funds they can draw on the pay debt service, and we we don't see a a big impact the bonds.

That's what history has told us. Where are we positioning now on the relative yield and total return of a single double triple tax free state portfolio at Black Rock versus buying a national portfolio. That's always been a difficult concept for the public. Explain where we are now. Should I buy triple tax free whatever state or should I buy a broader national portfolio. It depends on your state.

If you're in a state like California and New York where these state income tax local income tax rates are are very high, then the opportunity cost of going out of state are pretty high. You can also diversify your portfolio in those states. There's a lot of different issuers that you can mitigate the risk and fully diverse five portfolio into g O so particularly into revenue bonds, getting

back to earlier question. But when you get down the spectrum a little bit into lower marginal tax brackets and you get into states like New Jersey getting back to that, if a little harder to fully diversify a portfolio and the opportunity cost of going national, So we advise some degree of diversification in the national and some of those other states. Vector Mike McKie, I don't know, Mike. If you see Greg Villiers note today, he devotes it entirely

to Irma, Harvey and fiscal policy. UM. I guess, Peter is a question off of Luers note is if we go to four or five deficit to GDP, does that mean a lot more issuance of municipal bond paper? It could. I mean you might even see more issuance in the near term around Hurricane Harvey, and depending on how it happens with Hurricane Irma. But clearly, if you get more deficit tests, typically what we see is we see borrowing begins to ramp up in the last couple of years.

I would say, for the last seven or eight years, we've actually seen less borrowing, less borrowing than they really should given how low rates are, but the fact that revenues are up, they've borrowed a bit less. So the the the inverse would hold true. When you look at the overall um uni market these days, how would you describe it as as as calm? I mean, it seems to be a calm portion of the market while everybody

else is trying to figure out where we go from here. Yeah, it's it's it's a really interesting question, and it gets back a little bit to what Tom was touching on as well as the returns this year. It's kind of income versus price. And if you look at the breakdown so far returns, it's almost fifty fifty. You get a little bit more from income, a little less from price, but you get about forty five percent of the returns

this year from price. And nobody was really expecting that rates have gone lower, and as a result, people have gotten more comfortable taking the race. You see a lot of money moving into long Duracian funds, a lot of money moving into high yield. People want more income when when yields are low, And I would say, yeah, the technical backdrop. We have very good demand issues remains. I would say on the low side, we're off on a year over year basis, so that dynamic does of the market.

I don't want to say complacent, but certainly at least in a pretty good spot in near term and in the meantime tragy rates continue to move lower. We had a lowering two of six yesterday in the tenure to US seven right now, and that's a lower yel of the last tournament is Peter has a black rock driving the full faith and credit yield lower. We're gonna come back with. Peter has lots to talk about about taking advantage of tax free bounds, because I know Mike's got

a lot of themes to talk about. Peter Hayes just quickly here the mechanics of a portfolio. Can you be too diversified in a municipal bond portfolio? I guess it depends what you're what your goals are. If they're total returns, there are income. I think our investment philosophy is the more diversification, the better take advantage of the you know, the audio syncrests syncratic nature of the market. That's how we find a lot of value finding that a rated

hospital in the Midwest where we like the financials. So we think there's a huge benefit in diversification. And then sometimes you can get the is one off events that I can have a big impact in your portfolio if you're not diversified. So we we prefer diversification over not being diversified. You sort of went where I wanted to go there when you mentioned the hospital thing. I'm wondering how the whole Obama Care UH thing to describe it otherwise, uh is affects what you might want to invest in.

I note that, um, the trend in hospitals has been to um, you know, to conglomerate and agglomerate whatever the word you want is roll up into one hospital. You said it exactly. That's the way that roll up. So I'm just wondering, you know, if if healthcare becomes something uh that is one way or the other more interesting. Yeah, that that's been the play really has been around consolidation. And we just saw in uh, we just saw in New Jersey merger announced yesterday between uh some health systems

and going into these larger systems. Is the way that a lot of these hospitals are actually mitigating some of their risk. You know, these standalones that have a big dependence on Medicare and Medicaid obviously becomes very vulnerable, vulnerable to changes in what happens with with a c A or not happens with a c A. And a lot of it isn't only on the hospital level, it's also

on the state levels. So for instance, for a state, they either opted in or opted out of a c A, depending on what they chose to do and what happens with ultimately with the health care law, that could mean that millions of unasured go back on their their roles and the question becomes what do they do with Then it usually puts additional budget pressure on the states, so

there's sort of a double pronged impact. Potentially, you have to think about the impact to the hospital and healthcare sector and you think about the impact of the states as well. How do you get that knowledge? I mean, if there's u t X, Rockwellcollins, there's different government stuff and everybody has a lot of pre work. But in the Peter Hayes game of municipal bonds, how are you knowledgeable on a given hospital? Here, in a given hospital,

forty miles away. It's the strength of our credit research staff, to be honest that we have a terrific team of analysts, uh that diversified by sectors. So we have healthcare analysts who's been doing it twenty plus years and and they know like four hundred hospitals. Like that healthcare analysts has tattooed to their brain the working knowledge of how many hospitals. Oh, I would say the good working knowledge of a hundred

plus hospitals. And we have a staff you know that that works underneath them and helps give a lot of the financials and information so you can disseminate and make a informed decision. But we do that for each of our sectors, whether it be airports or tow orlds, or hospitals or higher ed universities, etcetera. And you know that's

one of the strengths of our franchise. Michael, Should we ask about Legardi any day we're down like to a fifth World airport there right now while it's under construction, I would ask about with upside, with upside we're hoping so before tim and night before, but I would ask before we let you go about the impact of tax reform. You don't hear anything about UM changing the tax status of municipals for the most part, But I guess when

you open the door, anything can happen. How concerned are you that this could impact one way or another, your uh, your portfolios. It's been radio silence. If you I'm just gonna go back a little bit. Post election, you think about the the reaction of the market, I me and you just sold off quite a bit, a lot of outflows because people thought, oh, you have a one party control, there's going to be tax re forming units could be impacted. Fast forward to now, and that seems very very unlikely.

I mean when we've aside tax reformer tax cuts and that discussion for now. But when you think about the need to do infrastructure, and we've heard UM, we've heard the Secretary of Treasury UH and others, even the President himself talk about the need to push infrastructure to the states and cities actually in some respects to it more efficiently than the federal government. And what's the best place

to do that the municipal bond market. So we feel very very strongly that tax retemption of municipals will not be harmed should there be any type of tax reform. Peter Harris, thank you so much of black Rock. Just a nice briefing there on that mun Buns. You know him from Kellogs, you know him as Secretary of Commerce. But what you don't know And I love how Wikipedia puts his secretary gaudierres quote, he and his family acquired

United States citizenship? Could you acquire United States citizenship today? Given the move from Cuba to Mexico to the United States, could you get a could you become a US citizen? Today's secretary Goodier's? Uh? Well today, Actually with the new law, I suppose the right word should have been obtained. But with the new uh, the elimination of wet foot, dry foot uh, refugees from Cuba don't obtain instant UH rights to stay in the US. So no, I probably couldn't

have come over. I mean the things that your thoughts. You and I had an historic interview X number of years ago when Ted Kennedy and Orange Hatch tried to do uh, tried to do something on immigration. Have we learned anything since Kennedy Hatch, boy, we you know, we've learned that there's nothing easy about this, that it is so easy to kill this bill. It is so Uh, it is so easy to make it more complex. Uh

it is. You know, the bill we had in two thousand six was seven hundred pages long, and I was just hearing someone yesterday saying, look, you need a couple of sentences to put the DOCCA into law. No DOCCA will probably turn into, you know, a long document. So it is a complex process. I think we've learned a lot. I think one of the things we have learned is to focus, uh, not try to get everything done all

at once. And that's why I'm optimistic about this process that immigration reform will be focused on one thing, and that's the Dream Act. Well, pushback against the argument that the administration makes that the United States is a nation of laws and you cannot make policy based on executive orders. You need Congress to pass the law. And certainly the right wing Republican argument that the Dreamers are breaking the law and letting them stay is amnesty. Yeah. I mean,

I think that's a very very unfortunate point of view. Uh, you know, sort of time to step back and and look at the big picture. The reason we have so many undocumented people in the country is that our laws don't serve the economy. So our economy, our laws don't provide a legal way to bring in the workers we need to grow our businesses. So you have a couple of choices, go out of business or hire someone undocumented. Um. And that's very unfortunate that we put businesses in those

in those positions. There are some some businesses that are actually farms that have gone to Mexico, and R and D centers that have gone to Canada. And that that's the one thing that is, that's the one insight that I don't hear enough of the problem with our immigration system is our laws. And until we fix them, until Congress does its job, we're going to continue to have this problem. No matter how tall and beautiful the wall is. It is the President in a way doing the right thing,

demanding a vote from Congress. Well, you know, it's an interesting question because I think this is sort of the second best thing. Uh and and maybe this is the way to codify the Dream Act into law and uh and do it the right way. So actually the President has given this six months of life. Um and I think I think Congress can do it. You've got people like Lindsey Graham whore behind it. Paul Ryan. There are

people who want this done. People want this done. Carlo's goodyear is if I go up to Battle Creek, Michigan, an important state in the election tally was Mr Trump Secretary Clinton. There's a lot of supporters of this president worried about the bad Carlos Goodiers instead of the good Carlos Goodiers that we all know. What do you say to the people of Battle Creek who genuinely there is a changed America and they don't like it. Yeah, you know, And I on the one hand, I understand that, and

I think we need to understand each other's positions. But we have to realize that that that sense that people are coming in and they're changing the look of the country, and they're going to change our culture, and they're going to change our values. But we've been talking about that, uh for for centuries, and with each new immigrant group we get more and more nervous. We've had the N four we cut off immigration because it was you know, we were getting to or at least we reduced it dramatically.

So what we're going through today we've gone through before. The one thing we have learned is that immigrants become Americans. America changes immigrants, it's not the opposite. That's why we're so great at this, and that's why we're the greatest country in the world. People come here and they become Americans. We shouldn't worry about that. We've had enough experience with it. What would you, uh, how would you want Congress to proceed?

Should they just pass a law of say, the eight hundred people who are here can stay, we'll give them work permits and basically codify the Executive order. Or do we need a much broader reform of immigration laws? Well, eventually we do. Eventually we do need a much broader, broader reform. Um for right now, I would say focus on the Dream Act because the broader comprehensive reform is so complex and I'm not sure that can be done in six months. But the Dream Act, just that one

piece of it I think can be done. So I would urge them to focus on Dream Act. But then eventually we've got to get to broader reform. If not, we're going to continue having illegal workers or we're going to have a declining economy. Let's do one question in business, if we could, Secretary Good of yours and this is the idea of Amazon with key News. They all established in Staten Island, New York, the first New York fulfillment center two thousand, two hundred and fifty quote Newcomma. Full

time jobs for employees will be created. I guess Amazon's creative destruction. I guess I can buy corn flakes through Amazon. Where are we now in bricks and mortar America? Where are we in retail or conventional cereal eating America? It's all changing, isn't it. Yeah, they'll be retailing is going through a major transformation. Um. You know, speaking of Battle Creek, I was hearing about the mall and Battle Creek. It's

just it's a very different place. Uh. You know for people that who are in the package goods industry, who are selling through grocery stores. Uh. This really comes down to the importance of the brand, because I would assume that whole Foods will be selling whole food cereal um. And then it comes down to brand versus brand. So if any thing, brands are more, uh are more important than ever. But you do have a totally new distribution um set up, and companies are going to have to

adjust to that. There's there's no way around it, and I think every package food company in the country is looking at ways of digitizing their distribution and getting getting in line with where the trends are going. You have to go over in corn flax. Carlos Goodiers, thank you so much, particularly for your continued comments to us on America and immigration. He's a former Secretary of Commerce of the United States. Always good Michael to speak to Mr Goodyears.

He clears the air. This is a joy. Keathy Fisher, is that a story career in Wall Street? Including that gonna have jobs doing security analysis on banks? She did that at Morgan Stanley a few years that aged you didn't it? Doing bank every every ninety days? Is uh? I mean Brad Hands at Bernstein knows that every ninety days is a miracle to see if you can even get close to right. Kathy, put the microphone somewhat nearer you. It's your first time on radio. I know. Um. I

want to rip up the script here first. I want to talk about Bates College before Michael McKee dives into your work at Alliance bursting you are Bates, You bleed Bates. How are the little ivy's doing? It's back to school everybody listening to this with kids that are junior seniors in high school nationwide would kill to get into Bowden, Colby, AMers, Middlebury, Swathmore, Wesleyan, Williams, and Bates. How is Bates surviving? Is that oddest of

non stem things liberal arts college? You know you've probably read. There's a lot of debate about this topic, and more and more or people are beginning to wonder if liberal

arts colleges can survive in this environment. But many are also positing that liberal arts education actually creates the flexibility that will be needed for jobs in the future, i e. Not everyone can be an engineer, and as the world continues to change, that the tools that people learn in liberal arts education actually positioned them well for fluidity in the job market in the decades to come down. A lot of a lot of the smaller colleges that have

been more local have been shutting down. That you're exactly right, but the national small liberal arts colleges continue to see record applications because the quality of the education is indeed so good, and let's face it, they are becoming more aware of the need to provide job direction, shall we say so. I think there's more and more of a focus driven by parental may to have a focus on

what kids can do with their education when they come out. Mike, don't let Kathy know that someone from Bowden is on our teach Well, they're all excellent places and the same themes applied. Uh. Can you get a job as a liberal arts major? Uh? From Bates or Boden on Wall Street these days? Yeah? You know, I actually yes, Um. The demand for those skills is still there now. They may not be obviously they're not for the quad jobs, but for kids wanting to come in and get a

sort of trainee position. Absolutely, we're still looking for those backgrounds. Okay, off the script here, let's get back to it with Alliance Bernstein and the work they're on value for years. It's not that value has been a value trapped, but it's been a value under performer. When does value see it's day. Value has underperformed significantly in the past several years.

It's not surprising in that investors have been looking for growth in what seems to be a slow growth environment, and therefore growth stocks have really outperformed dramatically to the point where you know, there's no question it looks like a relatively expensive asset class at this point. UM lots of good companies. We still like a lot of them, but value has been quite mysterious, although if you step back, we would argue perhaps not so mysterious because think of

what has happened in recent years. There's so much uncertainty about the future for so many industries because of disruption. Whether it's retailing, whether it's banking, you name it. There's lots of questions about what the new normal will look like. And value investing requires that you can look at today's controversies and get a sense of how the company gets from today's challenges to a future that's more normal, and

therefore earnings improve. With that uncertainty we have today at what the future looks like, it's harder for investors to make that leap of faith and believe that reversion to the mean will occur the way it has in the past. Well, we're going to see, uh earnings continue to provide the lift to the market that they have or has it started. Has it sort of been priced in at this point? Yeah,

great question. Earnings, as you know, have been quite robust in the past several quarters UM, and we expect that momentum to taper off because some of it was a lift off of the depressed energy prices in fourteen and fifteen. But what I think related to value stocks's interesting is if you start to see some of the cheap value companies have better than expected earnings, of course that will be a catalyst for them. It will be very idiosyncratic. Though.

Has the FED raising rates uh and obviously changing the discount rate made a real impact in how you evaluate stocks are and it's still so little that it it doesn't matter over the long run at this stage, as you know, the increases and rates have been quite modest, and therefore it has not made a big impact. And in fact, we were what we're dealing with now is the fact that long rates have actually gone down since

year end, which is not when anyone would have expected. Well, I look at that two point zero six nine as well. David Kotak was in earlier and his arch theme as someone who's enjoyed this bullmarket is I'm sure you have is the idea of lower for longer. What does that mean away from your value place? What does it mean

for a growthiness story like Amazon? What does lower for longer mean for the high flyers, lower for longer is indeed something that catches the attention of all of us, because again, who would have guessed five years ago where race would be today? That low right and low around the globe, And and remember the we are a global economy and um, and it's unlikely that the ECB will move until the Fed moves, And so there's all kinds

of connections here that we have to think about. But if you step back and say, if you have a growing global economy, which we do, if you have a low inflation which we do, and very low interest rates which we do, you couldn't ask for a better environment for stocks of all sorts. And it does indeed encourage the growthier stocks when people are looking for something that has that growth momentum to it in a relatively slow growth environment. What has anybody at this point? Um, does

anyone stand out? Obviously you're looking at growth versus value, But within growth, is any size of company stand out at this point? That the big caps and the Dow get all the publicity, but what are we seeing below them? Well, again I would argue it's it's company by company. Uh.

For example, we do own Facebook. We don't own Amazon, and you know, um, you know we we while the Amazon story is well understood, we prefer companies where we can really get a sense of where the earnings are going over time, and as we all know, Amazon as as far away from that. Um. The valuations, of course are quite high for Amazon, and we think there's other companies that give a much more clear connection between the valuation and the future earnings potential. If the FED moves

very quickly here and we'll come back. If the FED makes strategic moves, how the market price that will be priced in a two minute space, and we'll get so called jump conditions, or can they actually manage the glide path? The expectations for the FED really cluster around a consensus that I think the FED is very aware of and

therefore trying to manage to those expectations. The last hike we had was kind of a non event, and I think you're we're expecting very significant signaling of what the FED expects to do, So we wouldn't expect too much diggeriness unless something is much more rapid than expected or or or larger than expect. Okay, there we are, Kathy Fisher, were this with Alliance Burnstein. And what I would say, folks, is there are two groups of strategists, those that strategize

and those that worked in the trenches. And I think a Tobias left city group, a guy named Gibelly. And there's just something about doing gut By Hold cell security research that makes you different. One s craw Chuck a few years ago at Bernstein. She'll admit to it every once in a while that she was an analyst, and so were you. You're a bank analyst banking today. Will we see a consolidation in US banking? Well, first of all,

I was a bank analyst many many decades ago. But it is a fast This is Albert Gallatin and you know stopped continue it was. It's a fascinating sector. As you know. UM, there are prohibitions against the larger banks getting much larger. There's a deposit cap on what you can have in terms of the ownership of deposits around the country. We do think there will be consolidation on the small end. We think that small banks will buy even smaller banks. UM. But that's the way down in

the micro cap space. UM. At the larger end of the market, it's it's It is a very interesting time because banks are really figuring out how to adapt to a very different world where technology plays a bigger role in what their clients want. As you know, there's everybody wants apps, they want immediate access to their banking services, and that's increasing costs for banks as they start to change that. But eventually it will become why is that?

How can digital be an increasing cost? All they gotta do is starts closing down the five branches on every corner. Well, first, you've got to get it right for eventually, we do agree with you, there will be an interesting time when bank branches start to close, and what that does for real estate and places like New York City will be interesting to see. But in the interim, if you're sort of doing both right, you're building your technol technological platform

while you still have the human touch. There will be a crossover point where that starts to change. But it does create interesting, uh challenges for banks as as they're dealing with both both low interest rates and the need to upgrade their technological interface with their clients. Do you buy banks at this point selectively? It's um, We we actually like some of the payments companies better some of the other financial kinds of companies. But yes, indeed we

own some banks, and um they are cheap. Unfortunately they keep getting battered by the relatively flat Yeel curve and and rates not rising to the extent that the market has been waiting. Well, do you want to buy the big banks and little banks because of the merger possibility? I will say we have one fund that actually buys very small banks because of their merger opportunities. But in our large cap portfolios we have some of the large banks. As why you didn't mention the regionals to me the

interesting story folks were guilty of this. I only talk about six banks, it seems, and you know, I get chestise for those there should be. The regionals are a huge story, aren't they. I mean they just I mean it's almost like an eighties Reducs we're waiting for Oh you know they are and they aren't. And that I

would argue, these same themes are hitting them. That you know, doing the technological investment, making sure you're doing what your clients want is of great interest, because remember, young people don't love banks. They need banking services. But if you talk to anyone who's twenty five. They're doing all their payments on Venmo, and I think there's a need to figure out how to draw those millennials into a banking relationship where the bank really does for all the directions.

He knows how the youngster walks in the room and she talks of Venmo. I have no clue what venmo is to me. It's an opportunity for you to have to have your financial information stolen by hackers. But Venmo, it's a new world. I read one survey that said that millennials would put going to a bank one notch below going to the dentist. Well, you don't have to get a shot when you go to the bank. What

about healthcare? Then? If the dentist is as part of the Affordable Care Act and the follow on, here, is there a new opportunity in healthcare. Healthcare is a very interesting sex industry group with lots of subsectors. So we would argue that hospitals are actually very attractive because of both demographics and increased demand no matter what happens with changes to Obamacare. We would also argue that biotech, for very different reasons, is in some cases attractive because there

are there is innovation? Um, there is. You might have seen the FDA approved a drug therapy for no artists that uses individual cells to attack cancer. And those kinds of therapies. Pick out one that is going to maintain its value because it's treatment actually works. Everybody rushes in the stage two tests. But you know we don't have a long run track record. Yeah, it is. It is tough,

and that's why. Um, you know, you can't make big bets on one company, but rather I think look at the history and the management acumen in having a good track record over time and recognizing that there will be some volatility in these names. Uh. It was speaking of things that come out of Washington. Uh. In your about healthcare, there was a big push to buy into stocks that might be affected by infrastructure spending, which has sort of dropped off the radar. Did you buy any of those

any sorry? Or do you think it will come around again. Most of the themes that were popular at the end of two thousand and sixteen post Trump election, of course, have dissipated this year as the likelihood of getting things past has waned. Um, everybody likes infrastructure and concept, but nobody really knows what it means, and the momentum for that has really come down a lot. What do you

see in US A Cash? I mean, it's a great theme here, the driving forces and rising dividends, share buy backs, etcetera. We all love that at seventeen thousand or fifteen thousand, Can we love US A Cash or twenty two tho. You know, one thing that's been visible is that stocks doing buy backs are not rewarded the way they used to be, because I think investors recognized they'd like to see companies doing something with a hash that leads to greater profits for the company down the road, as opposed

to just giving. There isn't a correlation of financial engineering to the idea of I mean, financial engineering was was very popular for quite some time, but I think there's a sense now that especially companies who might be levering up too much to do it, maybe it hit the end of the road. On that we see U t X c O L with fourteen times, which is a ginormous number. Anybody including U t X would say that is at this time? Is that another symbol of the

silly season to come? You know, one thing that we have been watching is the gradual increase in net debt to ebit across US companies, some sectors more than others. Um, you're not seeing that overseas, we're seeing it here. It does indeed make us pay more attention to debt burdens. But it's sort of when you think about it, with low rates for so many years, perhaps not surprising that companies have done this. Mike, the D word slips in here.

Instead of a creative, all of a sudden, we're starting to look at delutive, dilutive, deluded for we're getting that cubes the the cliche question. But when I feel compelled to ask, is um, does the good do the good times continue? Or have we peeked? Now? We seem to be on this sort of full crum point where people are trying to decide whether okay, it's time for a

correction and we're just waiting for the trigger. Uh. And the other side says, we keep having triggers and they don't knock us down, So let's just keep dancing and check Prince's words. That's the question of the hour, because as you know, this is the what we're working on, one of the longest economic and stock market recoveries. In the US since the Great Crisis, and investors understandably are looking for a pullback to occur since numbers and you know,

the data history applies, we're due. But um, when we look around the globe, we see this, you know, synchronous modest recovery that continues. Uh, and you know there's actually a bit of a real re acceleration and earnings as we've seen in recent quarters. So while we're looking very carefully for some significant imbalances and things to worry about, we simply don't see them. It will happen at some point, but we simply don't see the imbalances that at this

point would cause a pullback of size. Any pulled back and happen any time, but modest should be expected as opposed to dramatic. Kathery Fisher, thanks so much for the lines. Bernstein and wealth and equity strategy is well really across all asset questions. Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm on Twitter at Tom Keene.

David Gura Is that David Gura? Before the podcast you can always catch us worldwide. I'm Bloomberg Radio.