Surveillance: Bonds In Bubble, Says Cooperman

going to go? Are you going to go into bonds? You're going to go into anything else. You're not going to see a massive crash necessarily in stocks. At the same time you're getting inflation, you're getting these cost pressures that we heard out from General Motors. I will just say that he himself in a recent interview so that he did get a new car among others, although he treated it at two thousand and two Lexis for a Hyundai. So Leonne Cooperman, I'm sure I can talk all of that.

The supplied to me. We's got a twelve car garage, so we know that's I look at the debate here that we've got here on the equity markets right now, and it's what everybody's looking at. And I think we forget John, it's expecting out six months, nine months, a year out. What does twenty two look like? A deceleration? How big is that deceleration? We're still working our way

through so many huge distortions. And the analogy that I've used right now for the American economy, and others have shared that view too, is that it's like holding a beach ball beneath the surface. This was a mandated recession. Now the policy has changed. The beach ball is searching to the surface again and going even higher. We've got to work out what it looks like in twenty three is a return to trend growth? And what is normal

actually look like? You how many people come on the show, on other shows on networks like this and talk about the return to normal? What is normal? Oh? That's true? And that well, that's better said than when I said, John about February pre pandemic. Was that normal? And we really don't know in the hindsight of this natural disaster, John, Let's start with the oil. Seven many dollars a barrel.

Good morning, Brent, flying year today and over the last twelve months to create doing okay, right now, it's w T I sixty six handle Bongio tie by a couple of basis points. Tom want You're a dollar once Swenzi muted, price action unchanged on the day, and futures bounced back about full tents on the SMP up six tenths on the NASTAG one hundred. Very good. Now, just get right

to it, because I know you're widely anticipate this. Leon Cooperman joins us with decades of experience on Wall Street and the guys and his building of a certain wing of golden sex ages ago, someone that people hang on every word. Leon Cooperman with Omega and their family office chairman and CEO, Leah Cooperman, we want to talk about

the markets front and center. But I've got to ask you once and for all, as we have seen time after time after time, the hiding of leverage on Wall Street to get to some form of point of greed, and it always ends ugly and shakes market confidence. His arcer ghosts and all that that secret leverage that no one knew was there. Is it harmed permanently our market confidence? I think it's permanent. Everything is cyclical, you know. Uh,

it's just the evidents of greed basically. I mean the fact that after long term capital the industry would get into this kind of predicament again. I don't know what I would say so quickly, but get into the same predicament again. It's kind of surprising. And I guess they wanted to make a margin on what they lent this fellow. And uh, you know, I was saying that the more things change and more than remain the same. Late John, Hey got to catch up as always going to see

you again. What do you make of the increased demands for transparency disclosures of the hedge fund community and maybe even family offices as well off the back of that incidents. I don't get the idea of the family office, you know. I can tell everybody. I'm like Hyman Roth and Godfather too. I've only seen a hundred times. I never get tired of it. Is a scene at the airport where right before they shoot him in Ruth he said, I'm a retired executive living on a pension, and I think of myself,

I'm a retired money manager living on investment income. The bad news I no longer have this giant income I used to have when I ran a hedge fund. The good news, I have no pressure. I run my own money, So why they have the right to regulate me, uh is beyond my wildest dreams. But look, we're in a very strange environment. A lot of crazy things are going on. I think the market structure has been destroyed by a number of moves made by government, and we'll have to

just work our salves through it. In terms of the market, you know, I describe myself as a reasonably fully invested bear. The fully invested part is all cyclical, you know, given all those decades of experience that Tom attributed to me, I've said that, you know, bear markets don't come about because of maculate conception. They come about because of certain fundamental factors accelerating inflation. We don't have that hotstyle FED and we don't have that. In fact, I'd say the

FED is too accommodative. Um, you know, it comes about because we are the market smells an oncoming recession. The factors we're coming out of recession, corporate propers a terrific you know, and so uh, the normal conditions that cause the bare market are not present, and I uh. The other one I would mention is, you know, a significant geopolitical event which you can forecast, but we have plenty

to worry about China, Ran Taiwan, etcetera. But and I think the biggest plus out there is the fetest creative environment, where is there's an absence of alternatives. You know, you've you reference this when you were chatting before, but essentially there's an absence of alternatives. And what's happening is everybody's being pushed out in the risk curve. The investor that used to buy tea bills, he concluded or she concluded, I can't survive on zero, so I'm gonna take duration

and inflation risk and I'll buy tea bonds. The team bond buyers that I can't get by on one point six percent, so I'm gonna buy industrial credits. The industrial credit buyers says, I can't get buy in three percent. I'm gonna buy high yield. The high yield buyer there's no the thing as yield anymore, but the high yield biases I can't get buying five or six percent. I'm

gonna buy structure credit, cellos and stuff. Like that, which tend to have a higher yield is their moort opaque and the and then the bond guy who buys cello or a lady basically says, well, I'll tell you what the markets are hid my money and equities, and the equity person is I'm gonna put two percent in bitcoin. So everybody, everybody has been moving on the risk curve. That will change. I have to say, well, I'm reasonably heavily invested. I'm having a very good year that I

I am more focused on the longer term issues. Since I'm running my own money, I don't compete against the SMP five hundred. I'm an absolute return guy. But it seems to me if you step back and think about what's going on, it's very very clear we are barring from the future. We are barring from the future. If you had a hundred economists on your show and you asked him what is the potential real growth of the U.

S economy over time? The answer would be centered around two percent real and that you get there because one percent productivity growth, half one percent a a force growth that determines real growth. That's two percent. You speak to a bear, they'll say one and a half percent. You speak to a boat, they might say two and a percent, but the response is sent around two percent. This year, the economy in real terms, are gonna grow three to four times potential, Yet we're persistent in trying to hold

interest rates in zero. Makes no sense to me. I understand that. I'll explain why in a second. Secondly, prior to the one point nine trillion package, prior to the two trillion dollar package, prior to less ten days four trillion dollars of infrastructure spending, we've already injected into the economy a trillion dollars more of transfer payments than income that was lost. So what's really going on is very simple. Prior to the virus hitting, we had about a five

and a a half million people unemployed. That balloon to twenty three million people. It's now down to about nine and a half million people, and monetary and fiscal policy to be conducted the manner to get the unemployed back down to the five and a half million pre COVID, and they're less concerned about the long term issues with damage they might be created. So that's one thing I think we're buying from the future. That's number one it's very clear.

You know, the debt that we're racking up will have to be paid. And unless you're into m M T, which I'm not, Uh, this is going to create a long term issue. Second point I would make is there's a shift taking place to the left of government. The people in charge now are going to go for higher taxes. We're gonna have higher inflation, higher interest rates, which I think will be a straining influence on multiples. Okay, I

think inflation is will be worse than Mr Powell. Secretary Powell is assuming every company I talked to in every business I came back to New Jersey from Florida. I'm a Florida resident. I came back in New Jersey. Uh, And I had the lunch the other day at the local place called the Milburne Dinner. I asked the owner, how's businesses coming back? But I can't find labor. I can't. Finally, we're saying that again and again. We sit in the earnings,

you're hearing the reports, you're hearing the coals too. So you invested there. Let's take this conversation a little bit further. Why fully invested if you've just gone through all the issues you've just gone through well, because you know, uh, the near term outlook, the conditions that would lead to a mid decline. Like I said, you know it's accelerating inflation. We don't have that. You know, most importantly, we have a hostile FED. When you go into a beer market,

we have a fedness extremely friendly. They tell you they're gonna keep interest raised low, not only this year, but we're gonna keep below next year. I'm assuming, I'm assuming they're gonna be surprised by inflation has been more intractable, and the market is canna be surprised if the Fed will raise rates sometime in twenty two, will be forced by inflation. So that's my view, the cyclical versus secular

outlook the long term ballot. Let me explain. I got my NBA from Columbia Business School in January thirty one, sixty seven. I was broke at a loan, had a six month old child is now approaching fifty five. Okay, I had no money in the bank and I couldn't afford a vacation, so I went to work the next day. I started my career at Goldman on February first, sixty seven. The dad was roughly a thousand. Fourteen years later it was roughly a thousand, So I I think we borrowed

for the future. I expect very little action from the SMP. Everything I look at would suggests to me caution intermediate to longer term would be the rule of the day. But leon, how do you remain cautious if it's not bonds right, if cash perhaps is losing value because of inflation, if equities perhaps have borrowed from the future, Are you going more into bitcoin? No? I don't know the only

bitcoin I owned. Let me just say this on n f T bitcoin stuff like that you talked to somebody else, because I tell people that I turned seventy eight a week ago, and basically I'm too old. I don't understand that stuff. It's crazy to me. It makes no sense. I own a little bit of goal, but compared to my net worth, I owned very little. Basically, I'm basically a stock you know, a meat and potatoes guy. I'm a stock guy. Stocks make more sense than anything else

because of FED policy. But when the FED policy changes, I think the market is going to have a response to that. So when you say though that you've got your eye on the exit. What is your eye? How are you going to exit? What does that mean? Does it mean more cash? Yeah? I would say, Look in the bear market, the winner is he who loses least winds. So you know, when the market goes down, I'm gonna

lose money. I'll be worthless. I understand that every asset has been inflated by monetary policy, every asset, whether it's real estate, et cetera. You know, stocks, bonds, for sure. I think the bubble is not so much the stock market. The bubble, I think is the bondom market. And I would say this event it turns out to be wrong. You know, I've had a negative of bonds for for quite a long time. If the view turns out to be wrong and interest rates belong where they are, you

don't make double digit returns in the stock market. I believe in the capital market line where you're earning a bond has relevancy for what you should earn the stock market. So bonds belong to one a half percent, you probably earned four or five percent a year in the stock market. But what I'm looking at for the exit or traditional things, I'm looking for change and fed speak. I'm looking for

change in the posture of the Fed. I'm looking for uh, inflation, I'm looking at gold I'm looking at the overall economic activity. Let me say this, if I had to give you a list of positive and negatives, I'm more impressed by the negatives. Long ago at Golden Secs Asset Management, Leon Cooperman sat there and said, you've gotta be kidding me.

We don't own enough Apple. Leon Cooperman, I want you to talk about what Michael Mobison, one of the great thinkers on Wall Street, a credit Sueez and leg Mason, has always said, is we're gonna see this massive concentration of digital success stories. Can I be overweighted Apple or Amazon? Are they so much the fabric of this nation that you've got to own them? Well? I own them. Uh. They're not cheap stocks, but they're not expensive stocks. Nothing

is expensive if interest rates that stay here. I went back by the way and I look at the nifty fifty nineteen seventy two. In nineteen seventy two, when JP morgan Us Trust was ruling the roost, they had the philosophy only the right stock at any price. They don't care what evaluation they've paid as long as they were world class growth companies. Avon sixty five times earnings, Polaroid ninety times earnings, SiZ Roebucks thirty five times earnings, so

and so forth. The Tenua US government in nineteen seventy two or six and a half percent, the Tenua governors now one sixty Google thirty three times earnings is not an expensive stock. This is but the card of the matter, Leon Cooperman, and you are what I would call intellectually extremely constructive in your caution. You know that the financial media is overwhelmed by the gloom crew every Friday to

come out the world's coming to an end. And to their point, they're trying to avoid a polaroid or an Eastman Kodak. How do you sidestep the polaroids that won't make it? Well, that's the function of your discipline and your approach. I look at the stock market. I see three stock market. I don't see one stock market. The first stock market I see is the Fang market. And uh, you know, the market has been extraordinarily disciplined, I might add. You know, for somebody that's cautious like I am, I

have to say I'm impressed by the market action. Who's the big correction has come in the so called fangs that have no earnings, very little in the way of revenues, and they have their long on promise things like Amazon, Facebook, Microsoft, Google. They've held in very well. And then that expensive against interest rates. Okay, the secondary so they're nifty fifty today, there'll be a high failure rate, Like there was a

high failure rate in nineteen seventy two. But what ended in fifty fifty nineteen seventy two was a tenfold increase in the price of oil led to a global recession. You know, we need a recession or we need to change and FED policy to change the attitude. Until we have that, the market will play. Well. That's not gonna happen for a number of years. Maybe we're talking about an interest I don't know. I don't know what's gonna happen. Uh,

that's what the FED tells you. But I think that Mr Powell, I think he's doing a disservice frankly when he says the market is not expensive because of your interest rates are If interest rates are, we belong where they are. You don't make big returns in the stock market. You basically, you know, the world's turned upside down. Okay, So what I was saying before. The long term issues to me are number one, we're clearly barring from the

future the economy growing. Six, Real interest rates shouldn't be where they are, and we should not be injecting so much fiscal stimuluts into the economy. Whe the economy is growing off the charts. Okay. Secondly, we have a government charge and I voted for Mr Buy because I thought we need to change. Uh, you know, I voted. My value is not my pocket book. But the truth is, if you look over the next twelve months, we have more inflation, higher interest rates, you know, and higher taxes.

Not particularly bullish. Third, poem makers do we have a massive growth in debt. This nation was found in two five years ago. We had no national debt. Three years ago we had twenty trillion dollars and national debt and that's going up at the rate of like three trillion dollars a year, and that that has to be serviced, and it's going to reduce the long term growth potentially. Suddenly I hear all these concerns and you're going through them point by point, and I think it resonates with

a lot of our audience. But this falls into the should shouldn't debate a lot of the time. This is what they should do, it's what they shouldn't do. It's what they've done. And we've got to accept that, nat Lee. And you've gotta put money to work, as you always do. So the question I've got for you, it's one, are the signposts you're looking for ultimately to get you to d risk if you're fully invested now and here's a

whole long list of things you worried about. What are the signposts you're actually looking for to materialize that actually leads you to d risk to take some money off the table. I I'm listening to FED speak. Uh you know see how they when they change, you start to change. I look at the stock market, and the stock marks a high quality, leading indicator. You know, there's no indication. I mean, the market has been very disciplined in its action. I'm looking at the price of gold, which has been

undermined by bitcoin. I'm looking at inflation. I'm looking at economic growth. Lean you mentioned earlier, you're looking at the Apple is one of the stocks you own. Cast writes in he's listening down in Florida. Good morning, Mr Cass, and he wants to talk about the post pandemic softness that we will see an Apple in Amazon and the others. Are you adjusting for an Apple that stumbles after the pandemics over, I have no credentials in Apple. I sold Apple much lower. I had a nice profit. I got

out much too early. I do own uh you know, Microsoft. I do own Google. I do own some Facebook, I do own some Amazon. But I would say this another point on the cautious side for my days back as a strategist at Goldman, I recall that the stock market normally peaks in line with the peak rate of change in corporate profits. That's the second quarter. In the June profits this quarter will be up fifty. For the third quarter and fourth quarre will be up much less. They'll

be up up much less. So I'm watching a lot of a host of indicators as to when they get out, and I'm prepared to lose money because frankly, in bear markets, the winner is he will lose his lease. I'm not a big short seller. I believe in the long term outlook for what I own. I own a theene at seven point six times earnings. I owned Signal twelve and a half times earnings. I owned Mr Cooper at five times earnings. I own Google nine times earnings. So bad.

I own Navigant four and a half times earnings. You know, I'm a great believe in the capitalistic system. You know, when companies earn access returns, it attracts capacity and capital and kills returns. The energy industry is the best example. I came in to this year overweighted energy and everybody hated it was three percent the SMP. You've crushed it, and you absolutely crushed it leon when it came to

energy stocks, just real quick here there. You're talking about the fundamentals, and yet today we see that a downside surprise was met with buying action. Has a dovish fed become more important to stock valuations than fundamental growth in the economy. I think that the market structure has been destroyed. And I say that for a few reasons. When I came to Wall Street fifty odd years ago, the commissions with fifty cents of share and the vocal rule didn't exist.

So the Bob Monutions of the world, the Stanley Shop corns of the world made markets. They carried inventory, they took risk. You can't do that in the more business commissions any zero and there's no vigorous and there's no there's no reward for risk taking. So the brokerage industry don't stabilize anymore. Secondly, eight percent of the vibe used to be done in the New York Stock Exchange of the volume today has done off board and dock polls.

So the special as system doesn't stabilize. And Thirdly, for some unexplained reason, and I've written to the SEC, they ignored me, and like my wife basically really I told them, you know, in ninety eight they enacted the uptick rule to deal with abuses of the twenty nine. It have worked effectively for seventy years. Then in two thousand and seven they elimited the uptick rule, and they gave rise to a lot of these quantitative trading systems which know

nothing about value. They know everything about price. So they buy strength, they sell weakness. And when this market has a reason to go down right now, it does not have a good reason to go down. When this market has a reason to go down, to go down so fast your head's gonna spend and then you're gonna be on the following daily so we can talk about it. I knew there was a reason that you and Sam King got on, so wow, you have that incoming. Your

wifs ignore each other. Amazing. Why don't you have Cooperman's. But you know checkbook? I mean, that's what I'm something of Romega. It is the General Motors company. It has been around since nineteen o eight through various and sundry iterations and has been reinvigorated with Mary Barr. She's chairman and chief executive officer of General Motors. Here's our David Weston. Thank you very much, so Mary Bar, it's a good day for you, a good day for Will Durant to

start in General Motors all those many years ago. So looking at the numbers, one of the first things I look at is the top line, the revenue, and then the profitability. The profitability. You did so much better than anybody expected. You actually almost put a shame to analysts. At the same time, it wasn't because of increased revenue. So my real question is how did you do that? How did you get so much more money in profit out of relatively flat revenue? Well, I think it's a

it's a number of issues. First, um, strong demand for our full size trucks and SUVs. I mean the Chevrolet Silverada, the GMC Sierra on the Escalade, the Tahoe, et cetera. There is exceptionally strong demand for those products, and so I think that's what's driving a very high average transaction prices. Because the demand is so high, we've been able to

continue to be very disciplined on incentives. And then our financing unit, GM Financial has done an excellent job of taking advantage of higher use care prices and just a very strong market. We're also seeing recovery UH and and you know, returned to strong sales in China, so across

the board they contributed to the strong numbers. So you surprise perhaps some people are saying, not only will we stick with our guidance going forward for the rest of the year, but if anything, we think it's gonna towards the upper end of that guidance. At the same time, you have the problem with chips. We talked about at last quarter or something like one point five to two billion dollars being left on the table as it were.

I think that number still holds good and yet you're doing much better than some people across the street at Ford for that matter, via christ or Peugeot. Why Well, again, there's not a lot of transparency between the different automakers of what's happening. We're focused on GM and I think what's been incredible is the work that we're doing with our purchasing group, our engineering group, are manufacturing group in

sales and marketing and working with suppliers. You know, we've been working to build strong relationship with our suppliers for many, many years now, and there's just a team that is looking understanding what chips are we going to have access to, how do we allocate those to our highest demand and and products that we have limited or no ability to

recover because there's just such strong demand. We run those manufacturing operations around the clock and they're they're just being creative and doing what engineers do of problem solving and and in some cases re engineering to get the chips to the right products and to just um find every opportunity we can to build a car, trucker crossover and get it to the customer. So it's a mixed question, not just of the vehicles you sell, but also where

you direct your chips. It sounds like you want to direct it to the ones that really are the most important.

Are you getting more chips? Do you think than you would have expected, because if you're purchasing department, well, again, there's not a lot of transparent to say more than you know, we were very clear last year of what we thought the demand was going to be this year and the chips that we had ordered, and so you know, we're continuing to work with the supply base on that and again, but it's I think it's looking for every opportunity and managing it centrally and also working hand in

hand with our j V and China, so across the board we are just really being I think the team is being really scrappy and finding ways that we can build the vehicles, not only full size trucks and SUVs, but also our electric vehicle programs. And I think it's important to note that even with the challenges of the semiconductors UH shortage, there is no impact on our electric vehicles, on our autonomous vehicles and the growth initiatives that we've

been talking about this first quarter. That was one of the questions I had both for the Hummer that's coming out later this year and then the Lyric we're just coming at and sometimes the first happen next year. Is there going to be any delay because of the chip problem? Absolutely not, And I can tell you those vehicle programs are on track, and uh, I'm really excited to have customers get in those vehicles and drive them because I

think they're going to be amazed. We understand the one point five to two billion dollar number that was put up before, but can you give us some sense those those who donors the supply chain, If you had a hundred percent of the chips you needed, what percentage you getting now? Are you running at? You know? Uh, It's it's a very dynamic situation, and so uh you know again, I think it's every chip we have access to, we're making sure it gets into the vehicles where we have

really strong customer demand. But it's something that changes every day, David, So I'm not going to put a number on it. This problem isn't going away in the sense that as you go forward, you're gonna make more and more cars, they're gonna require more and more chips. What is the longer term solution to this so we don't have this sort of problem you have this year. Well, I think we are going to see recovery. We think Q two

will be the weakest for the year. We'll see some recovery, recovery in Q three, Q four UH, And we're working on a lot of long term strategies. I don't have anything to share right now, but there's a you know, a whole um menu of things that we're working on, processes that we're changing, um. So more to come later in the year of how we'll make sure we're never in this situation again. But believe me, we have a

dedicated team working on that as well. When it comes to batteries, you've sort of vertically integrated, as it were, where the joint venture where you're making your own batteries. Is there something like that perhaps that would make sense for GM. You know, I'm not going to take anything

off the table. We're going to look at what what we can do to make sure that we have the right number of automotive grade chips UH and that we it it doesn't constrain our growth because we see huge opportunity not only with the product portfolio we have today, but with the strong electric vehicle products that we have coming.

We hear some in Washington, both the Commerce Secretary and also I talked to one of your Michigan representatives, yes Or Hailey Stevens, who suggested perhaps there needs to be some co investment from the government as well as the private sector in chip production. Does that make sense for your point of view? I think making sure we have a secure supply chain um for the growth that I

think going to see it. I think it's something that we all have to work together on, and we're having regular conversations with the administration and members of Congress to find the right solution, and we'll continue to do that. In your presentation today, General Motors really lays out a fairly robust program to really go to electric vehicles and to really deal with greenhouse gases over the longer term. You have very specific targets you're setting out there. How

do you hope to achieve those? Well, I think it's making sure there's a whole ecosystem that when a customer looks at can I buy an electric vehicle, they say, I'm going to have a better experience when I buy an electric vehicle. It's going to be a beautiful vehicle. It's going to be in this segment that I want to purchase because we can't. You know, person if they want an suv or a crossover, they're not going to buy a sedan. It's got to meet them in the

market where they want. But then it's also making sure there's a robust charging infrastructure, and we're working on that as well, and that will be not only what we're doing.

For instance, we're putting charging in our workplaces, but also working with communities and then working with all the startups that are in this business connecting those We just made an announcement that we have now we're going to provide access to sixty chargers across across the country to really give confidence to customers as they buy an e V and if even if it's their only vehicle, that they're

going to have a robust charging infrastructure. And I think all those things combine, you know, beautiful vehicles, meets their needs, the right range and then charging available, customers are going to move to e v s And importantly, I think for many investors people watch your company. I saw in your presentation you expect to have the same profit margins on e V s as you have on the so

called i c E. Internal combustion engine vehicles. So as we move into the ultim platform and continue to take costs out of the battery that that is, that is our goal to to get there um and and have that break even and then move beyond. But you also have to understand there's a different cost of ownership and an electric vehicle versus versus an internal combustion engine vehicle from a you know gas uh, gas savings that you don't have to you know, fuel up. So we've got

to look at the whole equation. But we're on that journey and I'm very pleased with the work that's going on with our battery technology to continue to take cost out and increase energy density. I'm sure you're looking at supply chains that go beyond just microchips at this point as you move into e v S. Where are there possible weak spots going forward and what are you doing to address those in terms of what you need the supplies you need in order to manufacture the vast number

of electric vehicles you're anticipating. Well, you know, as we look at some of the key materials that need to go into vehicles, especially those that are quite expensive. We're looking at how do we reduce the need you know, in in each each vehicle, but then also working with trusted partners in the supply chain to make sure that we have a secure supply and that's going to allow us to grow. And so that's the work that we're a lot of it's done and a lot of it's

underway right now. So Mary, as you look forward to I say, you've said you're maintaining your guidance. If anything, you'll be at the upper end. What are the vulnerabilities, what's the sensitivity on it that might actually have you all short? Well, uh, you know, with the insights that we have right now, we believe that that guidance is correct with where we think we're going to be from a semiconductor perspective. But I think, you know, one of the things that gives us a lot of comments is

just the interest in our vehicles. The demand for our vehicles across the board, you know, whether it's a Chevy Trailblazer or a Silverado or an Escalade, you know, across our portfolio actually very strong midsized crossovers as well. So the strength of our product line UM, the services that we're providing. We continue to see growth with on stars.

So there's a lot of moving pieces that give me a lot of confidence in our ability to hit that um what we've said from a guidance perspective, and we're gonna work it every day. And finally, Mary, do you have visibility to demand for your electric vehicles? I think the Lyric, the new electric suv you can order as of September. Do you have any sense whether people want

the electric vehicles as oppose to your current vehicles. Well, we've seen, um, you know, we can see growing excuse me, growing demand for the for the bolt ev can't wait for to get the eu V, the bolt Evy into the hands of customers. Um. You know, we've sold out the Hummer um e V truck and had extremely strong demand um for quite some time for the Hummer Ev suv.

So when we start selling the Lyric, which is one of the highest customer feedback vehicles we've had of the just the beauty of that vehicle when they actually get in to see it, I expect we're going to have a strong reaction in September as well. So I'm very um uh committed to the strength of our evs. Okay, thank you so much to Mary Barr. She is the chairman and CEO of General Motors. Please brands in for Pulse whena I'm Tom Keane. What we're gonna do here?

This has been so anticipated and thank you folks for your support of having Doug casson. He's a sea breeze. We'd launch into a lot of baseball talk and all that, and we finally get to the equity markets today. I'm gonna ask one baseball question and that we're going to get to the equity markets because I know you anticipate Mr Cass's views there, particularly at this historic time for the markets. Doug cass worst hitting since nineteen game after

game with two hits, three HiT's. Should they move the mound back of foot? That doesn't apply to the Yankees standing on the six and seven, six and seven in a row. I know, but you know there's a lot of minor league action going on here with real concern over the lack of hitting in the game. Pitching domon what was wrong When my cousin Sandy, I agree it's against Marish Allen in the Games of War two to

one that it was beauty in that. The other thing is that it will help those that are concerned about long baseball games. You know. Yeah, So I'm with you. I'm with you, but I'm just I think a lot of people want to know what you think about this. Uh, it's a great season. I'm watching apomy. It's going to be a cold season for the Red Sox. Well there, you know, they dipped under six ball, but they're doing better leading in April, and as you well know, Doug,

August is more important. Let's get to the equity markets. Douglas cast you've got some real caution out there. I know you did an apple trade here, you got out of it. I want to start first with a trading mentality out two weeks, three weeks. How do you apply capital right now? Okay? Um? Paul Krueg. Krugman tweeted this morning before seven o'clock, if it should happen to rain, we have umbrellas, he quoted yelling, and he went on to say the panic pundits say she's predicting a hurricane.

The question I think a lot of investors are asking right now, as you just did with Lee Kuperman on TV earlier this morning, is whether we're in a market squall or market hurricane, or we at an important pivot point for the markets. Um, the FED to me is often wrong and ever in doubt. You just look at two thousand and eight as an example when the FED was obsessed over inflation even as the financial crisis deepened,

and there are many other examples. Misques me. I'm taking out my Jerry for wind buttons ready to go on my shirt. Um. My best proxy for inflation is the Mannheim used car indicts index. It's up fifty year over year. There's no inventory, prices through the roof. We talked to every single company as I do, and Lee Kuperman does, their bottlenecks, supply issues, higher costs of broadcast, and the

prices being accepted by consumers. UM. In the fact that Steve Matthews featuring that reporter he said, it's a huge deal. That's amazing. The question I think the question is, so are we undergoing a squal or a hurricane. Obviously a squall is less lethal, it's a sudden gust to win,

it lasts only briefly. But the sustained winds of a hurricane, on the other hand, are devastating, and if you look at history, most market corrections are quick and squa as an eighteen in February of last year being the exception. And that helps to explain why I think most short sales of trades. Shorts may protect, but long generally generate well. Leon Cooperman's point was he was a fully invested bear that he saw all of the signs of a potential

decline in markets. It might not happen now because just markets don't go down for no reason. What do you make of that? Are you also fully invested? The careful I listened very carefully to Pharaoh's interview of Lee. You know I'm a big fan. I worked for Lee for a number of years. Um Um. He said, there are as signposts to do risk. I'll tell you mine. Number one is the markets and difference to big beats TOI consensus.

I'm thinking Amazon, Zoom and even Apple. Here a m D had multiple upgrades by the analytical community last week, um a big earnings beef and beat in. The stock is down twelve dollars and the fact that the market has begun to vault in despite the ten year hanging around one point six means that The market isn't newsy. It's not going lower because of higher rates. It just

begun to weaken as demand seems to be stated. Remember David Temper famously said about a month ago that race would be contained and that in turn stocks would head higher. The opposite is current rates are being contained, but stocks are moving moving lower. The overall market is stalling, admittedly at higher levels despite strong real economic data. Markets are typically least are about rate of change. We are now likely seeing the great of change in profits and economic growth.

It's something that Lee mentioned. Finally, this is really the most important thing to me. We have basically been in a modern monetary theory position. It's been in place by the FEDS. It's shows by their indifference towards recovery and improving high frequency economic data. Now we are getting into what I described as modern physical theory, and I think in the end, all violation of the fundamental laws of

economic and financial common sense a paid for. But every both seems to think that he will unlow before the break and Tom it's easy enough to burst the bubble, but to incize the bubble with the needles so that it's subsides gradually is an operation of undebted Lisa, jump in here. You don't know who Jim Palmer is. No, I mean, I want to unpack a little bit of

what you said. The idea of the logic of markets and modern fiscal theory is what you're saying, that you're getting defensive, that you're going to cash or or please insert what you're going to in order to be defensive ahead of a surgeon inflation that forces offense hand and forces valuations that we see in equities. Lisa, I'm starting up in about two weeks a new hedge fund, Sea Breeze Capital of Partners LP. I can't wait too short.

You know. I don't know if you guys are a fan of the movie Caddy Shack, but there's there's a line when when Tye Webb is walking down with this caddy Danny Nowtan at Bushwood Country Club and he asked Danny whether he's in Russia. We're not in Russia, are we We may not be in Russia, but we soon might be in zimby way. Okay, there, come on, you mean, Doug, I get the idea of framing shorts and the you

know what makes us go here? The bullbear argument as well, but when you mentioned above what you're talking about commodity dynamics and you're talking about dollar dynamics, are you are you seeing a big figure fragility the US dollar here? The dollar is going to get killed inflation? And give me a number, Steve Roach, Steve Roaches, do we're gonna get a return of the bond vigilantes? And I guess

Tom one has to ask a fundamental question. If printing and spending money was so easy, Lisa, and without adverse economic and market ramifications, why hasn't the FED and the prior administration simply printed and spent through at the last century? Obvious there are adverse outcomes that come from undisciplined policy. Is there proof to right? And this is what I think a lot of people are watching as they're saying, Look, in two thousand and eight, we printed money and it

had no consequence. It frankly filled a hole that would have otherwise been potentially deflationary. Why is this time different? It's different because we have twenty eight point five trillion dollars in debt um. Twenty years ago we had four point eight trillion. That means to me, Lisa um that what was a hundred basis point increase in interest rates, and as a consequence, debt service is now only twenty

basis points. And the reality is that nobody knows when the twelve year bull market is going to end um. But I think that climbing valuations, rising tax as, higher rates, and increased inflation are bona fide. I've never heard that you you're you're a great optimist of America and the Los Angeles Dodgers. I've never heard you this negative. But what I want to say is, Doug, good luck with

your hedge fund. And I just you know, I remember that time, Doug, where you were out in the course as you are done in Florida, and I heard you whisper a former greenskeeper about to become Yeah, dog gast, thank you so much. Sea Breeze Partners. He's starting a new headshow on the Long Short Caddyshack fund as well, more short than long. I think I've seen caddy Shack, I'll say fourteen times. Really, this is another side of you, Tom. Yeah. It's it's art, It's crafted every sentence. This is going

to be an important conversation. David Rubinstein joins with Peer to Peer conversation conversations right now and with Carlo. What I love about Gina Romando David and just one of the great stories out there is her ability over years to just keep moving. Her father lost his job at Boulevard. I actually remember when Bovard Watch collapsed in Rhode Island, and she made good on it in venture capital and in politics. Yes, I mean, she has an incredible story.

She uh came from a blue collar family. As you point out, her father lost her job. Nonetheless, she went to Harvard, was near the top of her class, Rhodes scholar, Yale Law School, venture capitalists back in Rhode Island, she did chose not to go to New York or Washington or l A. Went back to Rhode Island and really

built a good business before she got into politics. Well, she got into politics and and you know got what I would suggest high marks in a challenging Rhode Island, and it is a Rhode Island that all agree hasn't worn out infrastructure. She's focused on that right now. That's correct infrastructure or something that Roode Island really needed. She helped reform that and also did a lot in the pension area. Elected governor twice and uh, interestingly, Um, she

chose to come to Washington. She could have stayed as a Rhode Island governor, maybe run for president down the road herself, and she she could not. She could still do that, of course, down the road, but she wanted to come to Washington release help President Biden do the kind of things he's trying to do. So she is a point person on the infrastructure plan right now, appoint

person with respect to infrastructure. Also a point person with respect to our policies with China, especially considering the record trade deficit that we just printed due to all of the imports from that nation. How does she talk about free markets but also having a national focus? Can you square these ideas well? The administration hasn't really changed a lot of the Trump trade policies yet, they haven't taken

down the the tariffs with China or the tariffs with Europe. Um. They suspect that some things may get negotiated with Europe. She implied that, but she didn't say it would get done for certain. And maybe the tariffs will come down to some extent. We don't know for certain. But right now the administration is focused domestically on the infrastructure bill, and don't really focus right now on new trade agreements.

And I don't think they really want the kind of trade agreements that President Trump negotiated or are tried to negotiate. But there's an idea here that perhaps it's behind Biden's proposals that the government can foster good spending that can generate corporate growth. How does she talk about that in terms of the commerce of the United States versus federally funded programs that are one and done well they use. Usually the Commerce Department is often taking CEOs overseas for

trade missions to build plants and factories overseas. This administration is not as focused on that. They want to make certain that companies here are building more jobs here, and that's their focus. So I don't think she's going to lead a lot of trade missions. So she didn't say she wouldn't do that right now, though she wants to get the infrastructure build through and they recognize I'll have to compromise on some parts of it, for sure, David, you have a working number on your in your head

what that compromises. I don't mean that you know the Washington parlor game, but does it come in does it ease act a little bit to get done or do you really see a much lesser statistic. Well, there are two different issues on the compromise. What's the size of the infrastructure bill going to be? And there're two different infrastructure bills, a traditional infrastructure and so called care infrastructure.

I think the administration would like more than half of what they propose, so it's unclear exactly what the number will be. The Republicans seem to be at a little bit less than half. And then the other issue is the taxes, in corporate taxes and income personal income taxes. I think the administration made it clear they're prepared to compromise on taxes for sure, but they don't want to put a number out yet until they kind of know who they're negotiating with and what the other side really wants.

I look, David at the compromise to come here an infrastructure, and it folds into capitalism in America. Should we have a more pure bill or is Gena Romando going to say we can do a more complex bill. Well, I think she's one of several players that are going to try to make a difference here. But I think right now this is something that's likely to go forward over the remainder of this year. I think the it's not going to get done that quickly. The infrastructure part is

maybe easier. The harder part is the tax part. As you know, tax legislation usually takes a year or more to get through Congress, particularly when it's dealing with tax increases. UH. Senator Mansion has said that he could support a corporate tax rate about the President's proposed um, you know, a much higher rate, but I suspect some corporate tax rate

between where it is now and will probably get done. Uh. In terms of individual tax rates, it's unclear, but I'd be surprised if there is no individual tax increase at all. I suspect will be some. David, as an investor, as the co founder and co chair of Carlisle, how much are you relying on some of this infrastructure to get done? How much would it getting done or not getting done

change your outlook and the way that you invest. Of course, infrastructure is something that the country could benefit from, and the infrastructure the President is talking about would be good for the economy. There's no doubt it. We create jobs and there's no doubt it would help in many different areas. For example, telecommunications are infrastructure on cell phone towers is really um not exactly first world. It can be much better, as we all know when when trying to use cell

phones in the the ball's dropped. There are many different things I think would help the economy, but it's hard as an investor to say, well, if this bill passes, the impact will be felt in two or three years, I'll make an investment right now take advantage of it. It's too unclear right now. Although there's a question about the optimism the balance of risks that if there isn't some sort of optimism about future growth, it's hard to

invest in assets at these valuations. Leon Cooperman just said he was a fully invested bear and talking about how he can line up all of the arguments for why markets should go down, but they just aren't right now. What's your view on that. Are you a fully invested bear or are you looking out to some of these programs and saying it could change the trajectory of this recovery. Well, of course, the economy has been pretty good uh last couple of months because of the stimulus. It's like they

continue to do pretty well for some time. Uh, the Secretary of Rate sort of walk back our comments on interest rate increases. So I suspect the markets will do well today as well, because there was some concerned yesterday about interest rate increases possibly coming along. But I'd say for the next year or so, maybe two years, hint. The economy is like to do quite well down the road two or three or four years from now. It's

hard to predict. At some point things will slow down, but the stimulus are still working its way through the economy. But David, thank you so much. Really look forward to Secretary Mundo with David Rubinstein, of course peer to peer conversations. Now joining us for a four hour conversation is Michael Faroli. He's a JP Morrigan. He has a brilliant essay out with Team Kasman on Friday on goods and services and

on this odd John economy. But Michael Faroli, I gotta rip up the script over what we saw you and I adore Benjamin Friedman of Harvard Economics. He's one of our most important thinkers. And I'm gonna go back to Benjamin Freedman The Moral Consequences of Growth, his classic book of twenty years ago, explain right now the moral consequences of debt is we wring our hands over something as strange is the debt ceiling. So I agree with where

you were going in your previous conversation. It is kind of odd to be focusing on the debt ceiling at this time. You know, certainly over the last few years, we haven't worried that much about the deficit, and at this point, as you say, Congress selects revenues, a select spending, the debt ceiling should be a residual of that, and the fact that it's a a concern is a bit a bit unique to the US. My understanding is that

this can be extended via reconciliation. So hopefully this shouldn't be too much of a headache for the market so or for the economy this year. But that's something we'll have to just wait and see. As far as I understand, looking at this Treasury refunding announcement, the auction science is the longer end left unchanged. You know, it's just a little bit higher off the back of this announcement by a couple of basis points or so. Michael, just going

into the payrolls report, this Friday. How big are you looking for that number? In America? How big are you looking north of a million? And what are the risks around some of these companies just not being able to meet the demand by not being able to hide the people. Yeah, so we're right near consensus looking for a million. We

think the risks are fairly balanced. Obviously, this morning's ADP numbers suggests there could be some downside, but as has been the case over the past twelve thirteen months, the range of uncertainty is obviously quite a bit larger than normal U There are some technical factors here in terms of how we seasonally adjust the numbers that could really skew things one way or the other. But either way

it should be a pretty big number. But I would if we have a miss of a couple hundred thousand on either side of that, I wouldn't really change my thinking about the overall course of the recovery. So expect noise, but expected to be a pretty big number. Might do you think labor shortage translates into high wages in the next couple of months? It's going to be this composition where they should in the number of Friday. But beyond that, you think it does, yeah, and I think you're right

to say the next couple of months. Right. So, when we think about some of the issues that are weighing on labor supply, one of them is working parents having to be at you know, having to be but liking to be at home in this kind of unusual schooling environment. We've had another maybe, and this is a little more controversial, that the uh, the unemployment insurance bonuses may have raised people's reservation wages and made them a little more picky

and what jobs uh they accept. You know, both of those are temporary, so school schedules should come back to normal in September. That bonus payment ends in September. But in the next few months, I do think it may be uh, you know, a little bit tight and the labor supply front, and perhaps we saw a little evidence of that last Friday. We had a much fair bit strong and unexpected employment cost index, which was kind of ignored. But but that could be one of the you know,

signs that we are facing some labor supply shortages. But I would think they're somewhat transitory nature and that they should we should loosen things up. I think as we

get into the fall and winter. Won't make you think, Michael, that they're not transitory, that perhaps there is some credence to that idea that the benefits made people a bit more picky in terms of what they're willing to accept with respect to wages in addition to rising input costs, in addition to some of the constraints supply chain issues that have caused prices to go up just generally, right, So I think we want to distinguish wages and prices for wages, We're just gonna have to you know, if

if those factors really do subside after September, then we can take stock of how data developments after September start to play out, and we're just gonna have to wait until then. I think on prices it's a little trickier. So certainly some of these bottlenecks are going to be putting off ward pressure on certain categories. Uh. You know,

I think one area that might be useful. In the past, the FED has kind of drawn attention to things like the Dallas Fed trim mean and what measures like do was strip out extreme movements both to the upside and downside to get a better measure of the central tendency of inflation. Things like that may be worth looking at. I think over the next few months, Michael. Just to

wrap up here, we got those ADP numbers. They came in disappointing, and you've got all these people coming out and saying, hey, they don't correlate with the monthly jobs report out of the government and be they're really noisy and messy, and their methodology doesn't capture people are getting rehired by the same company. What would you say in terms of the ADPs predictive ability, even in the best

of times, it hasn't been great. Um. You know, over the past year you've had misses of over a million. Obviously we've had pretty big big swings over the past year. Uh, you know, I think but given the range of missus, what we saw this morning isn't that far from what I think we and the consensus are expecting for private perils on Friday. So I would say, you know, perhaps this takes out a little bit of risk of a really huge upside or downside surprise on Friday. Michael got

to leave it. Mike, I've gotta say it's nice to see a full office. J I was just gonna say he's whipping him into order. There. It's bustling with the half of Mr the Diamond as well, Michael Ferratti. That thank you. This is the Bloomberg Surveillance Podcast. Thanks for listening. Join us live weekdays from seven to ten am Eastern on Bloomberg Radio and on Bloomberg Television each day from six to nine am for insight from the best in economics, finance, investment,

and international relations. And subscribe to the Surveillance podcast on Apple podcast, SoundCloud, Bloomberg dot com, and of course on the terminal. I'm Tom Keene, and this is Bloomberg