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the Bloomberg Terminal, and the Bloomberg Business App. Tina Fordam we can talk about. She populates Mayfair and the fancy climes of London. She joins us now for Fordham Global Insight, and far more importantly, as a visceral understanding of where the Vice president came from.
When you come out of San.
Francisco State, you understand San Francisco, Tina, from where you sit in the wild liberal progressive hell of California. Where does Vice President Harris fit in?
Well, she's a hometown girl.
I'm a San Francisco Bay Area native, but in London for twenty two years. So I think the first thought I have is that she's definitely not going to be choosing Gavin Newsom, the California governor, as her running mate, So that's off the table. She is going to try to work hard to strengthen her bona fides as a prosecutor and as a California district attorney.
She's going to try to be tough on law and order, I think.
But I think what's most important here is that what we've seen with the momentum since Biden's announcement is the huge appetite for just some energy in this race.
So is that energy? How can Vice President Hires take that energy and form a real coherent message. What do you expect to hear from her as a presidential candidate, Well, it.
Certainly looks like her operation has hit the ground running. It's if you're not online or on what we now call X, you're missing out because you can see in real time how her campaign headquarters, you know, virtually been set up with some branding echoes.
That are very familiar to gen Z and younger people.
There are a lot of you know, politically homeless people, disenfranchised constituencies, you know, never trumpers people who are who are open to ideas, and I wonder if the pressed time frame doesn't actually work a little bit to her advantage.
So what do you think I mean? I guess one of the first decisions she needs to make as a candidate is to select a vice presidential candidate. How do you think she'll go there?
Midwestern white guy. I think that that has to be the choice. I don't think it'll be Pete Bootage Edge. That's too much change, too much, you know, perceived progressiveness on one ticket. But Tom mentioned Mark Kelly, a senator from Arizona, NASA astronaut, naval officer, pilot, husband of Gabby Gifford's. He would be an interesting choice, and obviously Arizona is a key battleground state. Beasher is another interesting candidate, could
go head to head with Vance on Appalachia. There are some good names in the mix, but that's the kind of ticket that I would expect to see. Someone who would compliment Harris and ideally could deliver a big swing state.
Tina Fordham.
We are advantaged at Bloomberg with Wendy Benjaminson, who is in Washington, d C. She Folks is the definitive old school newspaper editor, supporting young reporters, nurturing people.
And I asked you this question yesterday.
Tina, you are without question the most qualified Transatlantic voice on this. In England, nobody's sweating that there's Prime Minister may or even the train wreck that was Prime Minister Trusts.
No one's sweating.
Marie La penn is a fixture within French politics or the reality of Anglo America. Paul, what was it fourteen years? I think ye is Chancellor Tina Fordham. Why does America have so much trouble electing a woman president from both party persuasions?
It's remarkable and I'm not sure guys that Americans really appreciate what an outlier we are in being seemingly unable to elect a female head of state.
As you say, the UK has had.
Three female prime ministers, one one only for a few minutes, but nevertheless, and numerous OECU D countries have.
Had so the US is an outlier.
But again, I do think the wrong question is is America ready for a black female president.
I think the question has to be in this, you.
Know, fairly high stakes race, whether the United States wants to re elect Donald Trump or wants broad political continuity, which a Harris plus Midwestern guy ticket would bring.
Tina, do you how do you think Kamala Harris will stack up against one on one against former President Trump, whether it be in debates or just the day to day messaging.
Well, the first thing is that as a former prosecutor, she's tough. You know, watch the replays of her questioning on during these Supreme Court hearings for Brett Kavanaugh. She's you know, she's perhaps not as smooth and slick as of Bill Clinton, but she's a tough questioner and respondent. What is her messaging going to be? You know, I'm not Donald Trump? Does it need to be much more
advanced than that? She's the continuity candidate? Interesting to me though, was that Trump seemed to be you know, back peddling from the next debate September tenth. Did you see that and also complaining that they want their money back?
Is they prepared for a campaign against a different guy?
This is just so important. My theme that I focus is a turnout. It's not my opinion, it's a fancy people like Tina Fordham saying turnout it really matters. Tina Fordham, how do you suggest the former president and the senator from Ohio enhance their turnout after what we saw on a ninety minute convention speech, and after all the emotion of the assassination, attempting that how do they enhance their turnout against the vice.
President, probably by stoking fear about what she might do. The difficulty for them is that they are going to have to resort to some pretty unpleasant language and tactics to do so. Do their supporters care It's hard to say, but it can't be underestimated how they will have been somewhat blindsided about this change.
In the ticket.
Now Donald Trump's the old guy in the race, and you know, can Trump continue with the momentum he's had in attracting you know, black.
Men and others.
The constituencies that were pro Obama, that came out for Obama, we're coming.
Out for Biden. Will they turn up for Harris?
That's what the next you know, six weeks in particular, is going to be about. It's also why I think the shorter time frame just helps less time for everyone to get bored.
This is this, I agree with this.
It's very British, okay, and only Tina Fordham in London. Good say that, Tina, fabulous, Thank you so much. Tina Fordham, of course, the iconic and city group Fordham Global Insights out of London, less of Benjamina, out of the Welseyon Complex is a Chatta house in London, hugely prestigious when she speaks on America, the United Kingdom and the continent. Stop or thrilled that doctor Vinja Marie could join us this morning, Leslie, the market really hasn't moved across equities, bonds,
currency's commodities. What does that signal of our political system?
Well, I guess some sense that this is going to be continuity, that there's a sort of weight and see attitude. Probably also it doesn't feel like continuity to those of us who are looking at the political world. It seems like a rather significant moment of change. But I guess you know, if you're trying to gain this out from the markets, you know that really, whether it's Joe Biden or likely Kamala Harris, the economic policy is likely to be one that's continuous.
Lord O'Neil, Jim o'neilla Goldman Sachs, with his contribution to Chatham Mouse, told me that people like you and Chathamouse are still dipping a quill in the ink pot to write when you can. And the answer, Leslie Vigemri is Trump and Harris have to.
Deal with the modern media.
This isn't Eisenhower Stevenson of nineteen fifty two. How do they deal with the speed of news today?
Now this is extraordinary. I mean in every single time somebody endorses or uses a specific word, it's on the media. And people will now be watching every move that Kamala Harris makes as she takes her campaign forward and looking to see whether the Democrats unify behind her. And they're going to do that all not only on national television, but on world television. And people are also looking to see how Donald Trump will signal his response. Clearly they're
going to have to shift their campaign strategy. I think for many people, they will be trying to get a sense of who the vice presidential candidate will be for Kamala Harris, assuming she moves forward, which certainly looks likely, and also what kind of leader she would be. What would her poly not only at home, which I think is more well known, but especially on the global stage, and here she's relatively unknown and has relatively little experience.
That said, she's had a very strong voice with some difficult moments, not least in those early days of her role as vice president when it came to immigration and the southern border.
Leslie.
Was this a good weekend for the Democratic Party? Was it a weekend where they turned the page or was it a weekend showing the disarray of the party. How do you view this past weekend? What happened?
I think the disarray for the Democratic Party played out over the last three weeks since that very difficult presidential debate, and yesterday was really a moment of clarity where President Biden made a decision that people had been waiting for and wondering about for quite some time, and where he quickly thereafter endorsed Kamala Harris. And then we saw many leading figures, including some of those who would have run
against her, saying that they supported her. And so I think people are breathing, you know, tentatively, a sigh of relief, knowing that that moment is over, understanding that there's still great certainty ahead as to whether or not she can
actually compete. And you know, we watched the Republican National Convention we watched former President Trump and Jade Vance double down on a very powerful but actually a very narrow agenda and speak really primarily to their base, and broadening that out will be the Essentially That's exactly where.
I wanted to go.
I mean, I'm playing off of fabulous research on who votes, how we vote, when we vote, from pure research and doctor vin Ja Murray. Everything's focused on Harris.
Now.
I get that, it's in the news, it's new, it's fresh, you know, ratings and all that.
Forget about it.
How does President Trump and Senator Vance move You've center off the message of Milwaukee to get the marginal vote, or do you perceive they have absolutely no interest in doing that.
I think they actually do have some interest. If you've watched President Trump move his position sort of dial it down a little bit on abortion, for example, he's tried to distance himself from a Project twenty twenty five, which many people have viewed as very radical or extreme, and so there's already signs that he recognizes. You know, Donald Trump is always looking to see where he can make
something stick and where he can get a win. He likes to think of himself as doing deals, and I suspect that they are really, you know, recalibrating in a very significant way. If they're smart, they will recognize the diversity that Jade Vance's wife brings to the broader platform. Not a of course, but that's a very significant female
presence in the platform. They're low on female presence at the top, and now with Kamala Harris on the ticket, that is a significant point of a difference between the two parties. So there's a lot of things, but they are going to be recalibrating. They clearly chose JD events in part in contrast to President Biden's age leslie.
Should voters read anything into the fact that we have not yet heard from former President Obama.
No, not at all.
President Obama is wise to know that he shouldn't get out in front of the party. He has a very specific role to play. He's tended to come in on these major decisions once he can read the room and
then try to shift it subtly. He has said that he believes that the Democrats should have a process for the next candidate, but he hasn't said an open process, and that's a very important distinction for a former president who uses his words with great care is very meticulous and a detail oriented, so I think he is waiting
to see where the party goes. The one thing that all Democrats at that level, certainly there aren't many at that level, but all Democrats know is that the most important thing, the single most important thing for the party is to choose a candidate and to be absolutely unified behind that candidate. People have watched the party disintegrate. It's looked in coherent for three weeks, and now they really need momentum if they're going to stand a chance of victory in November.
Leslie, thank you so much, doctor Vigiluary with the Chathamhouse Edward yard Denny your Denny research, and I'm not going to mince words, folks. He writes like it's still CJ. Lawrence of a few years ago, and you are advantaged with the yard Denny report that comes out. He's even got some people help with him out now he was like doing it by himself, and we're thrilled to ed jar Denny could join us now with this optimism on
the American experiment. I reframe that to begin with, Right now, do you actually model out if I extrapolate a dow Jones industrial average over fifty thousand a number of years out.
Yeah, I think we could get to sixty thousand by the end of the year that we're at forty thousand. It's not a stretch to believe that over the remaining decade we could get to sixty thousand. And I've got the S and P five hundred going to eight thousand by the end of the decades, So it's a bull market.
Look just take a look at a long term chart of the S and P five hundred, and what you see is that bear markets occur every now and then, but they don't last very long, and that the fundamental trend of the market is upwards along with the economy.
So you had to get to those kind of levels that you're talking about. Does it have to be a tech led US stock market.
No, No, it doesn't.
Though since the beginning of the decade, I've noted that there's a certain rhyming between the twenty twenties and the nineteen twenties, and I do think that there are similarities. Hopefully it doesn't end as badly as it did in the nineteen twenties, but for now I think we're in the Roaring twenty twenties. The technology and environment is very conducive to that. But look, I think every company now is a technology company that you either make it or you use it.
If you don't use it, you lose it.
So I think technology is a major driver of the economy, but it doesn't have to be the technology companies are the only ones that benefit.
We had a little bit of a I think a lot of folks are calling a rotation maybe out of some of those tech names into some other sectors, maybe even some small caps had some real strong out performance over the past couple of weeks. What did you make of that?
Yeah, well, it's been a very fusing a couple of weeks. It really started, I think on July eleventh with the better than expected CPI convincing everybody, including the Fed that they were going to lower interest rates probably in September. And so instead of just kind of debating how many rate cuts will eventually occur, now there's almost one hundred percent probability agreement that they're going to start cutting in September.
And that led to a tremendous rotation out of the Magnificent seven and into some of the smaller cap stocks. But I think the other event that occurred is the Biden administration announced that they were going to take some draconian measures against companies that sell semiconductor equipment to China. So it's been a whole mix of things going on here.
Jo Jenny, I want to go back to introductory economics at YEL. You get there and you got to toss out a core equation. Why equals C plus I plus G and you throw on international exports minus imports. You have been a multi decade optimist, There's no question about that.
You found your moments of gloom. But they're rare, rare, rare.
Once again, Atlanta GDP now a present indicator. She tells the.
Gloom crew they're wrong.
Where in that core economic function did the gloom crew get growth wrong?
Well, look, I think that it really started in twenty twenty two when the Fed started raising interest rates. March twenty two through the summer of the twenty twenty three the FED raised the Fed funds rate by five hundred and twenty five basis points from zero to five point two five percent. I think where the gloom crew was perfectly logical, wasn't expecting that that would cause a recession. It kind of makes sense. You get that kind of tightening,
you get a recession. I think what they missed, though, is that we started at zero. In other words, sure, the FED tightening, but they also normalized. I mean it was zero though, was the abnormality not five? And are quarter percent? And the economy has proven to be remarkably resilient notwithstanding that tightening.
Did you ever teach econ one O eight Yale?
I mean, Yelle has three different levels of economics. They got econ one fifteen for nerds, they got econ one ten, which is for PhD track yard Denny types, and then they got econ one O eight for theater majors.
Did you ever teach that at your Denny? Well?
What I what I would teach if they if they took me back there as a professor, is common sense. I think there's too much math being taught to economists and not enough common sense, and certainly not they don't get their hands dirty enough with the data. So much data out there that just they don't have really a real sense of it. So I think you've got to start out with the raw material, which is data. So start out with the data and then come up with the theories and the models the other way around.
And Paul's shout out here on someone that really helped form Bloomberg on the economy. In Bloomberg Surveillance, Tim Besley at Yale, before Les single handedly turned around common sense study of economic history in America. Besley at Yale was a curcible who said stop with the mathemambo jumbo and teach Jevins of the nineteenth century.
So, ed, what do you make of this this economy here? I mean, I you know, as Tom's pointing out, the Atlantic GDP number looks pretty solid, Inflation seems to be coming down. We have a FED it's probably can be cutting rates at some point. What do you tell your clients these days?
Well, I tell them that we're in a bullmarket. You know, we had a bear market back in twenty twenty two as there was widespread expectations of a recession. It turned out to be the good dough recession.
It was a no show.
And typically, you know, we get sell offs as we had last week, And the question is whether they become corrections, and they become corrections when there's peers that a recession's coming and then it doesn't show up, and then we get bear markets typically when recession does show up. What was unique about twenty twenty two is we had a bear market without the recession is showing up, and I
think we're in a bull market. I think this bull market. Look, I can't guarantee there won't be some corrections or even another bear market along the way, but yeah, I'm sort of in the Warren Buffett and Jeremy Siegeal camp that stocks are meant to be held for the long run.
Ed your Durney whether us We're going to continue an entire half hour with Edge Jenney, Paul, get one more question in with doctor your Donny.
I want to come back and talk.
About the new model of these big tech companies.
I'd love to just have your opinion on valuation. What are you telling your clients these days about the valuation of this market.
Well, I've been doing this for a while and I feel, you know, one of these biggest strategists, it's easy. You only have to predict two variables, their earnings and the valuation multiple pe and you know, getting them right, of course is the challenge. But earning seems to be easier than the pepes, like beauty is in the eyes of the beholder. I guess these days of political correctness, we
should cite a talent contest. But the reality is that the valuation multiple can be elevated as long as there's no recession up ahead here, and it's particularly elevated for the magnificence. Take them out you get something more reasonable, like eighteen or nineteen for the S and P. Four hundred and ninety three.
I am going edjar Denny Beck is a lesson, and I'm reading Michael Mobison from leg Mason and credit sueezs forward now at Morgan Stanley on our world torn asunder in finance and investment and part of that ed Yardnny and you've been brilliant at this of moving on from the conventional wisdom, say railroad stocks and Graham Dot and Coddle.
And one of the things Michael Mobison talks about is the new network effect, which is Robert Metcalf who invented the ethernet, in that the network effect of what Apple does, what Google does, what tech does is radically different than what Johnson and Johnson does, or Colgate, palm olaver Indocona copper from another time and place. Do we understand in our fear and gloom the new network effect over the last twenty thirty years.
Well, I think what the technology companies do better than anyone else's what Joseph Schumpeter called the creative destruction. They are constantly innovating, They're constantly bringing out new technologies, and as soon as they become hits that are working on destroying them by creating something new or the next version
of that technology. So frealingly competitive industry, the margins are great initially, and the margins kind of evaporate very quickly as they move on to the next iteration of the innovation. AI we all benefit from that.
Will AI creatively destruct? Well?
Artificial intelligence is certainly artificial, but I'm not convinced it's all that intelligent. But I want to be very precise about that. I think there's two versions of AI that we need to consider. One is so called open AI and the other one is something that I would call closed AI. Open AI basically is open to all the information available on the end Internet. And as we know, there's a lot of junk on the Internet, and open
AI is going to contribute to it. It's going to kind of start making up some stories and some sources, and you know, I mean, we can fact check the fact check it along the way, but it's still going to be making a lot of mistakes. Closed the eye is basically big data on steroids and speed using GPU chips as supercomputers. Elon Musk is a genius and he figured out that maybe we don't need quantum computers. Maybe we can do fast computing supercomputing with just the video
chips that in video makes. Just slap them all together and you get a supercomputer. So I think a combination of a massive amount of data placed on these supercomputers is in fact going to be a major productivity enhancser For every company that has a lot of.
Data forecast for the indexes, how much of that is earning driven versus fed driven. A lot of investors are not sure what to really focus on as we get into the meat of this earning season.
Well, I think at this point it's got to be earnings driven. It's hard to imagine that valuation multiples over time can get a lot higher than where they are already. You know, we're talking about the Magnificent seven are at a thirty forward pe.
We're talking about the s and P.
Five hundred at a twenty two forward pe and excluding the Magnificent seven, we're at about eighteen forward pe. So evaluation is already pretty rich. I don't think it necessarily has to take a dive, but I think I'm looking at earnings as being the driver of the bullmarket from here on.
Does this market for the longer term pull need a pullback here of five, ten, fifteen percent? Is that something that you expect in the I don't know, six to nine month time frame.
Yeah, well, you know, if you look at the long history of the stock market, bear markets don't happen that often, and corrections don't happen that often. I guess just over the past several years, we got used to the idea that corrections occur on a regular basis, but they're not inevitable. History shows that some bull markets had one or two they didn't have, you know, five, corrections along the way. So it's not inevitable that we have to have a
bear market. We have to have corrections, but you have to be realistic. They do happen along the way, and they're hard to forecast. The geniuses who tell you when to get out at the top more often than not, we get to tell you to get back in at the bottom.
I got to get back to the one final question answer, Donny, I got to get back to the trenches called everybody's in the trenches on this. Everybody's got a different prism, different view. And then Friday happens, and Lisa Miteo's told me this Fridays when the gloom Crew shows up, they published for the weekend, et cetera. How do you synthesize intelligent discussion from those cautious How do you read the cautious fear crew in a constructive way?
Well, I think they do a great job. The problem is they just have this bias towards being perma bears. And I guess I've been accused of being a perma bull. But I think that's a consequence of reading what the perma bears are saying and just trying to provide some balance. So if you provide some balance, you come out as a perma bull. And again, if you look at the long history of the stock market, makes more sense to
be bullish on a more often than bearish. But the crew, I think provides some very good intelligent analysis of what could possibly go wrong. And then I step in and say, okay, well where might they be wrong?
And you're Doney, Thank you so much.
Congratulations on your call from October of twenty twenty two.
I call it our Denny and Kompor.
I couldn't just say you are Denny, and it's really Andrew Slimmy who join us from Chicago this morning. Andrew, I'm gonna take a well known portfolio. You know, fifty six percent is in their top ten holdings. I'm gonna round up and down folks. Facebook fourteen percent, Nvidia eight percent, Microsoft six percent, Amazon six percent of zempic Eli Lilly three percent, Apple three percent, except they got nine percent in Berkshire Hathaway, so Apple's easily out with the Berkshire
Hathaway piece. It's six percent. Andrew, is this anyway to run a portfolio? Or do we need to get used to large cap concentration?
Good morning? Yes and no.
On the one hand, the reason for yes, this is a way to run a portfolio is I mean, a simple statistic is the Magnificent seven stocks comprise thirty percent of the SMP. But if I look at their earnings growth over the last year, they of the SMP those seven socks have comprised eighty nine percent of the earnings growth. So the point I'm trying to make is, hey, the
fundamentals of these companies validate big positions. And then because they are some of the best performing fundamentally driven socks. And so it's really tough to say, oh, you know, I should sell these socks just because they're big weights when you know, I look at what's you know, my success and over time in this business has always been focused on what companies are doing less so than you know, kind of top down. That's the yes, the know of it is no to the extent that these stocks are
all highly highly correlated to each other. They move together, and we have learned in the last week and a half that when there is a rotation, you better own stocks in your portfolio beyond just megacap Tech because you're going to hurt your investors. So yes, fundamentally, but you better go find some other good, fundamentally driven companies that are not all correlated to megacap Tech.
So you bring up the correlation, Andrew, and that brings up a risk that a lot of investors talk about, which is, well, if any of these big names whether it's an Nvidia or Microsoft disappoints, either on earnings or guidance, that could bring not only that particular security down, but also of the broader market. Is that a value concern?
Absolutely, we've learned that. I'm dating myself. I've been this business a long time. But that's what That's what caused the end of the dot com bubble is stocks. It was great and greater concentration. Socks got expensive, but most importantly,
they started missing sales estimates. They weren't that the expectation of the capex spend in the late nineties ran out of steam, and that because those stocks had such big waiting in the S and P, it brought down the S and P. Although you know, the value part of
the S and P did just fine. So yes, I think fundamentals matter, but pay attention if in fact, these companies start to say, hey, you know what, our customers aren't spending as quickly as Wall Street expected on this tech buildout, that's going to be a problem for the market.
Well, in the pandemic, terrible revenue growth thirteen percent. They rebounded in twenty twenty one forty one percent revenue growth, then ten percent, then nine percent, then twelve percent, modeling out twenty twenty five, eleven percent.
I'm sorry.
It's it's double GDP double nominal GDP revenue growth, and it accumulates over a number of years, and that's how Andrew can buy the Chicago Cubs.
That's exactly right. It's compounding and it's YouTube.
Tom.
There you go, So Andrew, it might be on sale right now, Tom, Andrew.
If I want some non tech correlated exposure and some strong earnings behind it, where.
Do I look?
Well, I mean, look at just all you have to do, very simple. Go look at what's worked, what's out before in the market since since the CPI print came out at Thursday when the market said, oh wait maybe the Fed will cut in se it is financials uh, it is industrials, right, I think following the Infrastructure Act, because I don't think it merely matters. He's president, We're gon, we're gonna, We're going to fulfill the Infrastructure Act. Those sacks have all worked. So I sit back, Oh, thank
God for our portfolios. We have understood that these megacap tech socks are doing great. But when there is a rotation, you better make sure you own some other things, and I've said for a long time I think the industrials are a great balance versus megacap tech.
How much cash in a portfolio ander right now?
Well, you know, look, I run long equity portfolios. If Tom Kem allocates to my portfolios, he's not allocating for me to carry, you know, thirty percent cash. I'm opposed to be your equity guy. I think they're I think the market is going to continue to rally until we get through the second quarter earnings, because I do think they're going to be good, but that I get nervous as we get into August because there's kind of a
lot of fundamental news. The other thing that I would tell you is at a time when seasonally it makes sense to kind of get a little bit more conservative. If you look at what's worked, not only value, but it's the highest of the high beta spots. Doesn't seem to me in the time of year you want to chase high risk thoncts.
One final question thirty seconds, how come the white socks are so much fun to watch and the cubs it's.
Like pulling teeth? What is going because of.
Cognations, because of expectations, the Cubs are ex No one expects the White Sox to do well.
It right, Andrew Sivin, thank you so much.
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