Surveillance: Expect Higher Rates, Bianco Says

Wrapped around sixty six pages from James Diamond. Right now, Jim Bianco joins us with Bianco Research in Chicago with a wonderful overview on the market. Jim, I assume you haven't read the sixty six pages of uh of Mr Diamond. It's wide ranging as you would imagine. Let's look right now at one of the quotes from Jamie Diamond. Let's zoom in on a quote on Zoom. Jim Bianco's lived with Zoom. Lisa Bramowitz has lived with Zoom. I am zoom free. I'm really please to say that, but let's

look at Jamie Diamond on Zoo. Most professionals learn their job through an apprenticeship model, which is almost impossible to replicate in the Zoom world. Over time, this drawback could dramatically undermine character and culture. Remote work virtually eliminates spontaneous learning and creativity because you don't run into Jim Bianco at the coffee machine. I mean there it is old school, Uh, Jim Bianco. Do you think we returned to our offices of old Uh? Sort of. I'm gonna push back on

that quote a little bit. I'm gonna say, yes, um, it is. You know, human interaction. Human contact is important, but not I don't think in the form that Jamie Diamond is suggesting that, you know, ten hours a day in an office, sitting in a little room by yourself,

working at a computer in a service sector job. I think that we're gonna have to rethink what the office is and rethink I we go to the office we've just shown as an economy over the last year, we can produce the economy just fine, all working remotely, and I agree we need more human contact. Look, I want nothing more than to go to a weekly field game again.

But I also recognize that maybe I don't need to go to one of those gigantic buildings in the center of a major city and spend forty fifty hours a week there as well too, there's going to have to be a rethink is to what exactly does the office mean? And it sounds like some people are not there yet as far as having that conversation, what does the bianco creative destruction then? And how do you prosper from it? What is your investment strategy given what this pandemic has wrought?

And in the boom economy recovery, I think the biggest thing with the boom economy has been all of this stimulus. Uh, you know, the mailing of checks that we've had. We've got the savings rate at a sixty year high. We've got everybody itching to get out. That's what everybody says right now, and I think it's very true. And when they do, I think we're going to start to see spending go. That's what everybody says, and then we'll have to have a real conversation about inflation. It's too early

to have that conversation about inflation. The base effect of dropping off March and April of last year and seeing the year over year numbers go up a lot is literally going to start next week. And the checks that we just recently mailed out have only been a couple of weeks old. So I think as we move forward, we're going to have a conversation about inflation and whether or not we see it. If we see it, it's

going to have to accelerate the FED. If we don't see inflation, it's going to open the conversation to modern monetary theory and more money being spent at a higher rate than we're already doing it right now, what's the nature of the pickup in inflation that you're looking for? And this is important because we've seen inflation of certain key goods. But what is the important increase in inflation that you need to see to say this the sign of something different. I think it's probably going to be

that companies are going to raise their prices. Look, we've known now for the last twenty five years. If you're a manager of a real company, not a Wall Street company, let's define those two uh and you raise your price. You raise your price for washing machines, or you raise your price for sweaters. You're on the second page of a Google search on lowest the highest price. You don't

sell anything, you lose market share. Everybody has been droned into don't ever raise your price because of that, uh consequence, If we get to the point where there's a demand pull that so many people are wanting stuff that we start seeing prices start to reraise, then in FED speak, we've unanchored inflation and we could then start to talk about whether or not it is actually here for the first time in a quarter century. I think that's a real possibility as we move forward, that we could see

that unanchoring of inflation. So we're seeing tenure yields today go down there, well down their recent highs, which raises a question a whether they are under pricing this reality that you're talking about. Where could tend your treasury yields conceivably go if you see those inflationary pressures that you're talking about, Well, I think they could go higher now.

I'm not surprised that they're falling right now because they've had a relentless rise for the last several months and have been you know, over sold in terms of prices, and that we're seeing a correction in there. But I also would argue that when interest rates go up, it's neither bullish or bearsh for the stock market. It depends on why if they're going up, because the nartive right now is we're reopening, We're gonna have massive real growth,

We're gonna have more earnings. That's fine. Interest rates could go up and it won't bother the economy or the financial or the stock market, if you will. But if interest rates are going up because of inflation, and that's a loss of purchasing power, your dollar buys less than a year than it buys, now, that's a problem for the economy and for the stock market. And we're going

to continue to have that debate. The meantime, I think rates are gonna go higher like they have over the next several months, like they like they have over the previous several months, and we're going to continue have this debate whether it's reflation or real growth or inflation. I mean, I hate to say it to James Diamond, Jim Bianco, but the read of the morning is Brian Schapatta Bloomberg, not Jamie Diamond and JP Morgan. Where Chapatta tears apart

the idea of wages aren't going up? Are you seeing wage inflation in Chicago? And to the point, is that really what's gonna happen here? A surprise into the end of the year, finally wage inflation gets back to three is percent. Yeah, you know, it's hard to say whether or not you're seeing it right now, but that's gonna be. The question is whether or not you do see wage inflation as we move forward. If you do, then you might see a bigger robust job market because a lot

of people are sitting on the sidelines. They don't need to go back to work. They are being they've been given stimulus checks, they've been given an extra kicker in unemployment insurance, so they're sitting around waiting until all of that runs out. If we do see wage inflation, I think then, like I said, it would would fast forward everything like the FED and the thinking in the market. But right now it's too early to say that we've seen it. But I think that's gonna be the second

half of the year question. Jim Biako, thanks so much. Go cubs Bianco Research in Chicago. We planned on doing this and we didn't understand that it would be a sixty six page letter by Mr Diamond. Certainly a tour de force, but you need the right guest at the right time, and that can always be Robert Albertson on banking with Piper Sandler his leadership at Goldman Sachs decades ago, and Bank Research out of Carnegie Mellon and Harvard. Were

honored that Robert Albertson could join us this morning. Robert Albertson, you and I used to look at M D n A and it was a good way to fall asleep. Where did we go from Robert Williams of M and T Bank to a sixty six page missive from James Diamond? How did we get to these long letters? I think it, Uh, it's a personality. Partly. He is a very analytical person, and yet he has a way with words, and he recognizes analysis towards limits and the possibility of analysis paralysis

if I would suggest it. But he is a tune to so many different things and has pretty reasonable comments about all of them. Within the comments you mentioned to us before this conversation, you were zeroing in on his view back to the nineties seventies. Why is now for James Diamond like the nineteen seventies. Well, he's it's sort of unlike the nineteen seventies. He's basically saying we had

a recovery out of the seventies recessions. Without quantitative easy and uh, we've had quantitative easying this time around her and hasn't done much. So I think he's pointed to the wash with liquidity mistake in terms of monetary policy. There also is a question here of what his political ambitions are given the tone of this letter. He is talking about dysfunction. He said, Americans know that something has gone terribly wrong, and they blame this country's leadership, the elite,

the powerful, the decision makers. This is completely appropriate for who else to blame? A lot of people have looked to the financial sector. Is this just a defense of the banking industry or is this something more an engagement that goes beyond just from the c suite into government. I think you have two ways to look at it. First of all, I would not be surprised to see him turn up somewhere in government in a high roll,

and I think he would be excellent at it. The second point is he is from banking, which has been the most criticized sector I can think of, and and we have just gone through the most shocking recession in memory, and the banking industry has shown no credit problems. Uh. It is it is remarkable. Uh, that the underwriting of this business has gotten to where it is and the risk control. So he's proven something in a very tough area. I think he'd like to prove it in a more

public policy way. He also talked about his Fortress balance sheet to your point about how it emerged very much as a stalwart during this pandemic. There's a question also of what's next. And he made a big point about fintech. How about is the big competitor going forward? And he actually talked about potential acquisitions in that space. What kind of tie up could you see with JP Morgan? What

kind of fintech company? Well, frankly, it's a little hard to come up with that because they have their own budget on their own syntech operation, which which is pretty powerful. Um, they're also a complex organization and a lot of what without eric fintech isn't really appropriate for JP Morgan. Having said that, uh, I think he's very focused on what it can do in retail banking number one, UH, and I think that's kind of obvious to all of us, but also number two in terms of what what what

can be done with artificial intelligence. Mr Diamond making clear he's not a fan of Zoom meetings is Robert Albertson is not a fan of zoom meetings. Robert Albertson, let's go there right now. As Mr Diamond talks about fortitude. This is a scathing statement, folks. On leadership. It goes on for two pages. For order to this attribute often is missing in leaders. They need to have a fierce resolve to act. It means driving change, fighting bureaucracy and politics,

and taking ownership and responsibility. Mr Diamond goes on to say ability to face facts in a cold blooded, honest way. Leaders emphasize and negatives at management meetings and focus on what can be approved. That Robert Albertson sounds like best practices for every leadership out there right now. How do you move forward with that negative statement? How do you go into a bank management meeting with negative analysis to

come to a positive outcome? That's a good question. Um, I think, uh, I think the real answer is embedded in what he's done and what he's achieved and why he's achieved it. And uh, if you look at the importance of analysis and facts in almost any industry, they are critically important. We all know that they seem to be absolutely uh devoid in the political sector. Uh, taking positions,

making arguments that are financially wrong. Uh. You almost need a pop out there to control what the politicians are allowed to say. Robert elbertson a two part question, how does banking respond to James Diamond? How does American banking respond to this juggernaut, and very importantly, how does European banking respond to James Diamond. I'm not sure the European banking system will ever respond to the American banking system successes.

They seem to be mired in their own history and legacy and they don't seem to be able to get out of it. But having said that, in terms of the U. S. Banking system, I think most people look up to him. Uh. They know they're not him in terms of their vehicle, but they recognize what he says

is critical. And if you if you want to talk about being a good corporate citizen, all you have to do is go into some small community bank and see what they're really doing in that market that is community oriented to recognize their they're pretty much singing the same songs he is. In terms of giving back, there's a question of whether banks are going to take more risk right now given their fortress balance sheets and given the robust economic outlook, or whether they'll pare it back to

avoid getting ahead of the economic cycle. And this really seems to be attention beneath Jamie Diamond's letter as well, because he talks about the dynamism of the economy, the economic boom pop possibly lasting till the end of three with all the spending and q E, but also talking about pockets of froth that he didn't specify. Can you talk about how banks are handling this, How high is the pressure to push further into risk to get returns at a time of economic dynamism a norm as high

as you would think. They are very proud of coming out of what we went through in one piece, and I don't think they wanted to spoil that. I don't think underwriting standards are going to change. They are starved for long growth. The key here is if we have an infrastructure package that plus the last bill we have, we have enough trillions in the economy to dry have a huge capital expenditure cycle, investment cycle. Everything so far has been on the consumer side, UH, and the stimulus

has been aimed at that. Now we're shifting it to the commercial side that has great power that could really make even better year than most people. Don't look look that far and see that yet. But if we get this infrastructure package, Uh, it's it's right, It's right up Jamie's alley of fiscal spending. It could really, it could really knock the cover off the ball. Could drive our

economy into the eight or nine percent range. It could drive rates up for sure, and inflation all understood and accepted. Can you talk about where rates would have to go to make this as lucrative as you expect for banks? Because this is something Jamie Diamond has been very clear about. He sees benchmark ten year treasury yields going a lot higher. He's been wrong year after year. What's your view in terms of how high they have to go to make

this equation makes sense? Well, I'm wrong with him and have been wrong for years. Uh. The history of the long term interest rate cycle is that it averages about what nominal GDP growth is. And if we got six or seven percent GDP growth and two or three percent inflation, Uh, you come up with a crazy number for the tenure. I would argue that it's going to get to at least a three percent level UH in fairly short order. The banks really care more about what happens to the

short end of the spectrum. They need the FED funds rate to get moving UH and and not stay at zero. And I think that's actually going to occur this year, not next year. A lot of people think it won't happen. And I don't blame him, because that's what the sharing that keeps saying. Robert Albertson, thank you so much, Good health to you. With Piper Sandler, of course on this day of Mr Diamond's letter, wonderful to get decades of

perspective from uh. Mr Albertson, Right now we reset and we can do that with Christen Bitterly of City Group Private Bank, someone who has to explain to people to find the courage. Kristin, thank you so much for joining. I really want to go right away to a wonderful phrase you have, which is the du that cash is punitive, and yet I know cash is punitive. I don't want to be in it, but I'm afraid to go. How do you move from this wall of cash and the

fear of missing out to get into the market. What's the first step. It's so hard. So I think the first step is actually looking at the data. The reason that we have this association that cash is safe and and cash is where I go when I don't know what to do, kind of predates the global financial crisis, right, So if you look at pre global financial crisis, if you were sitting in cash on a post inflationary basis, you were earning about three percent per anum, not knocking

it out of the park, but that's all right. Post global financial crisis, you're basically losing one per annum. And that's where we're at right now. So holding onto cash is basically guaranteed to lose value over the next twelve months. So do you assume do you assume on a real yield analysis that other asset classes are inflated? I mean, do you carry it right over to say not so much that you know, I don't want to be inflammatory.

There's an equity bubble, but elements of the equity market are bubblelicious because I can't get a real yield in punitive cash. I think there's so I think if you look at the overall levels of equity markets, it doesn't really tell the full story. So when we're talking about the level of the SMP five dred being north of four thousand, which seems pretty incredible given the year that we've had, it doesn't tell you what's going on beneath

the surface. And this is pretty intuitive, but one of the induseries that we track at City is called Pure Value. So it's one of our indicaes that what it does, in a very simple sense, is it takes the stocks that are in the SNP five hundred and it basically ranks them according to their exposure to value as a factor. It's long the top fifty percent of those stocks, short the bottom fifty. So it's a it's a basic outperformance

in terms of value. And so what we saw in March was that was the strongest performance It was north of six percent that we've seen since second quarter of two thousand nine. So that to me is when you're looking at what's going on under the surface, is very different in terms of opportunities to put capital to work and delineating between those winners and losers in this environment. So Christian, you're not just saying that cash is more

punitive than game stop shares. You're saying that people need to be investing in equities on an active level. This is everybody coming on and saying this is the year of active investment. Okay, great, but when you talk about allocations, what are you recommending. So there's a couple of things that I think we need to keep in mind this battle between as I was just saying value and growth. There's two trends that are driving the market right now.

One is the mean reversion, right, so this is that catch up trade, that idea that you had COVID defensives COVID cyclicals, and basically the COVID cyclicals are catching up because of this reopening of the economy. The question there, which is why earnings are super important, is how much further can they go? So looking at some of these factors in value in these COVID cyclicals that have had tremendous performance, how much higher can they go? So an

area that we like there is actually global healthcare. So global healthcare is one of those sectors. And it's ironic, right, it's underperformed the past twelve months from a PE standpoint, It's basically at its lowest levels on a relative basis to global equities and over ten years, it has an attractive dividend yield. So that's an area that we like. Um, But I think what's going to happen going into earnings is people are really going to pay attention to fundamental factors.

They're going to pay attention to has inflation actually creeped into any of these earnings? So I think we could get some surprises which would create some buying opportunities. Okay, next couple of weeks. So in other words, you're saying, wait for the pullbacks and their potentially be some opportunities to get some potential returns that are bigger. I'm wondering on credit, we're looking right now at credit spreads that are the tightest they've been since two thousand and seven,

certainly in the high yield space. And when you start talking talk about petitive cash, do you start to talk about people taking perhaps more risk than they're getting banged for their buck? Are you recommending that people follow this trade or pull back and go perhaps they're into equities or into treasuries and nothing in between. And so yeah, so that that three hundred basis points spread right kind of going through that was something that that is is

pretty symbolic and significant. I think a lot of people are looking at this in terms of comparing it overall high yield to equities and saying, well, if we're looking at on a relative basis, there could be an additional fifty basis points, are a hundred basis points. We're not quite there yet. We're definitely delineating in terms of the sector analysis within high yield. But another area, just talking about equities again, so UK equities is another area that's

been largely ignored. We're looking outside the US in terms of trying to create some of this yield where you can get three and a half percent there. And again, valuations look very attractive, Christen, enough that you and Lisa would know this. But the longer you're going far away. You bought Dominion of Richmond, Virginia. You bought it, you held it, you never sold it, and it's been a

solid thirty ten year high single digit return. I just request Dominion Energy of Richmond, seventeen thousand employees, big three percent dividend yield, not with much dividend growth, and it's below the thirty year regression trend line. Our utilities of

vailue here for those scared stiff. I think there's a place for it, but I honestly think within dividends and looking at dividends, this is not about just searching out for high dividend paying companies, because what you want to do is look through to the underlying balance sheet and

make sure that they have a strong balance sheet. So when we build global dividend portfolio is what we're looking at is not just historical dividends, but also the ability to continue paying those dividends and grow those dividends going forward, which really gets into more of a credit and free cash flow analysis than anything else. And you get some pretty broad diversification part of this energy and utilities, but you actually get financials, healthcare, even technology. I feel so anciently.

So I was trying to go Graham, Dot and Coddle, and Kristen just crushed me with the modern free cash flow analysis. I was just totally crushed their. Lisa, Well, hopefully you can recover in the next few minutes and hopefully we can drag you out of the whole. I will say, Kristen, we got to end the conversation, perhaps

crushing Tom even more in talking about taxes. Uh, you know that you deal with a lot of wealthy individuals and right now are looking at potential policy changes in the US, the increased taxes on the wealthiest, particularly in New York State, but beyond on a federal level. How is this affecting the investment strategies of the people who you work with. You know what's interesting, it's not priced

into the market at all. So another thing, and this goes back several years ago, when we have the tax reform. We started monitoring basically kind of the tax winners and tax losers in terms of the tax reform, and so looking at the reversion of that trade in terms of increasing the corporate tax rate. Basically you haven't seen anything

play out within the market. So for people who are interested as these talks progress in terms of expressing a view from an entry point standpoint, that's actually pretty attractive in terms of what it could mean from a personal standpoint and how you invest. I think putting it into context, when we did have those tax hikes, and I think we have to go back to nineteen seven and the impact of that on the overall market, and it looked

like on average it was about five percentage points. So in that sense, kind of putting it into perspective as to what that impact could be. I think is helpful. And then in the larger rates environment, we don't see a lot of either trading around that or investing around that at this point in time. Kristin, thank you so much. Christin Biddley, they're sharp from City Group Private. Thanks right now. And I guess this is an important discussion. This is something that Lisa and I are in our pre show

meeting said is really top of pile. Forget about the I m F. Forget about James Diamond. How do you travel with the young Hellian's Mercedes Carna Phone is in charge of family psychiatry for the Brando, Wits and Keene households and joins us this morning from Chicago. You know, Mercedes, let's cut to the chase here, and this is important. We make a joke about it, uh, ill mannered brats that they are. But you say traveling with children is risky.

I don't understand that. Why is that risky in this pandemic? You know, it's really tough. I think we're all eager to get out. I mean, I've been home with these children now for you know, fourteen or fifteen months. I'd like to go um and you know where is. My husband and I are vaccinated, and our older adult family members are now vaccinated. My children aren't. So if I take them with us, then I'm exposing them to risk of these new variants which seem to really infect children.

Then what do we do on that? I mean everything we've talked about today and frankly this week on the show, Mercedes, that is the single boldest statement I've heard. Are you saying we cannot open up this nation because of true medical risk to our children? Well, you know, I think an estimate was that of our population is children. We're all racing towards this heard immunity, and we're estimating that we need to get sent of our population vaccinated. We

are not currently eligible for vaccination. And children do contract COVID, and children do spread COVID. You know, while they don't have as severe of outcomes as adults, they do get it, and so we're going to continue to see it circulate. I want the nation to open up. I want out of my basement. I want out, you know, I want to go somewhere warm, But there still remains a risk to me taking the children with us. All right, so

let's talk about what works. I mean, can you stick a mask on them, bring them into the plane, and basically say, wash your hands a lot and you'll be fine. I mean, what do we actually know still at this point about how to prevent it in order to live your life to some degree as more people get vaccinated. You know, absolutely, you know the mitigation measures that have have held us up this long masking distancing. Um, you know those those measures are still in effect. And so

it is fine. You know, you can make sure your children wear a mask, make sure they know not to lick the back of the plane seat in front of them. Um. And you can make the trip, yeah, don't do that. Um,

you can make the trip as safe as possible. But you have to be adherent to this and and and you know, if your state has travel quarantine rules when you go somewhere whereas vaccinated individuals don't have to quarantine, you may not send your children back to school or on play dates after they come back from a state on a quarantine. So let's talk about some of the science behind this first. I'd like to get your sense on how severe the diseases some of these variants could

be for children. And also the idea of kids aged twelve to fifteen getting vaccinated before the school year starts. Again, how likely is that? Given our advisor for the key to the Brahm Boys households, there you go, were Sad's help us. Yeah, you know, um, I think we do have to keep the risks in perspective. Children contract COVID, they do become ill from COVID, but by and laws, the leading cause of hospitalization and death and children are

unintentional injuries. So let's think about that. Certainly your child can contract COVID, the likelihood that they'll be hospitalized from a car accident, a bicycle accident remains higher. So you know, it is all in perspective, but you know, you never know. You don't want your child to be that child. I do look forward to the progress that we're making in vaccination of younger children. The twelve to fifteen year olds

are soon to become eligible. You think about sports leagues and performance theater and the things that are really important to the mental health of children. Mercedes, I just want to know if they can do a day trip to Sephora. I mean, that's all aslutely I got. You know, we talked to all sorts of muckety MUCKs on this show. You get more mail than anyone. This in from Western Indiana, Baby Charles, is not a hell you in. We were

sorry if we insulted anybody in West Indiana. And also they go on to say Baby Charles must see Turks and Caikos. Mercedes cut to the chase. I need to travel this weekend. It's on the Gulf Stream. I'm taking Baby Charles to the Turks and Caikos. Is that a wise thing to do? Seriously? You know what, Everything was a calculated risk, and I would never deign to say somebody absolutely shouldn't do something. And it's a terrible idea.

The likelihood of your child becoming severely ill is low, but it does happen, you know if and just be aware, you know, you could end up getting quarantined down in Turks and Coast and not be able to come back if somebody tests positive down there. Well, because then you get locked in your room. Oh that's terribly pool. Yeah, they'll send an email back, Mercedes, go away, and you're giving them away. You're giving them away too many ideas. Oh,

I'm sorry, Charles, is a headache. I can't come back, you know, doing my public health best and I was I had to quarantine. In the accounts, I read a not fun Mercedes Carnathan go away with Northwestern and seriously their university professor of profunitive medicine. She is literally best in class. I'm talking about the social aspects, the hardcore medical data aspects of what this means for society. David Rubenstein joins the Carlisle Group and of course is a

claim peer to peer conversations. I'm Bloomberg, I believe tonight at nine pm and David, thank you, thank you for so doing this interview. Because Westmore is one of the great screw ups of all time. His father died at three years old, He had a really difficult childhood, finally ended up in military academy, and a switch went off at Johns Hopkins. What did Westmore do in that path? And when he finally got to Johns Hopkins, what was

the switch that got him going? He decided to turn his life around and became a Rhodes scholar at Johns Hopkins, went to Oxford, got a degree at Oxford, and then just started to give his time to the military, and he went to Afghanistan as a officer there, served in several years in Afghanistan, came back and got involved with another other activities. But now for the last four years been running robin Hood and he will at the end of May. And then he was playing the run for

governor of Maryland. I mean this is absolutely extraordinary, folks, to all of you on radio and television. This is the kid that turned it around and made good of it. What has he done at robin or the foundation, Let's be cleared, David. I believe robin Hood every year gives all the money away. It's a true conduit for charity. Yes, the financial community basically puts up all the money for the administrative costs. All the donations of them are actually

go are given away every year. It's about four or five hundred million dollars a year. And uh, this is going to largely uh deal with the poverty problems in New York City and the environment and the environment environs around New York City. UM, and it has been replicating other parts of the country as well. And robin Hood has been the the i'd say, the signature type of anti poverty action that the financial community can claim a good deal of credit for for helping to get started.

Is Westmore electable? No African American has been elected statewide in Maryland, uh um, other than his lieutenant governor on a governor's ticket. So you know, Maryland's a democratic state, has a large black population. Obviously you would appeal to more than than blacks. But he's a Democrat and I there are a lot of people seeking the nomination, So too early to say. He's never run for office before, but he was certainly a strong, articulate candidate, no doubt

about that. James Diamond today, David Rubinstein kiss six. I'd love to see you David Rubinstein sixties six page annual letter. That would be great. David. Mr Diamond out with a letter and he talks about fortitude is being part of leadership. What is the fortitude you've observed from Westmore? Well, he's overcome some some real disadvantages of life. He was handed hand handcuffed by police when he was eleven or twelve,

sent to a military academy. Was you know, had some real challenges as a youth, but then turned it around it at Johns Hopkins and went on to Rhodes Scholarship, and now at the age of forty three, I think he has a pretty promising political career ahead of him if he wants to pursue that, and I think he will. David of was down on this day where Mr Diamond writes his annual letter. There's been lots of discussion about Jamie Diamond is appointed or elected political official? Can CEOs

like James Diamond become politicians in this modern America? It's tough because now everything you've ever done over twenty years or so has looked at every business deal, every transaction. So it's more complicated to to do that as an elected official. Maybe as an appointed official it might be a little bit easier. What do you see, David right now? On travel? The other great thing we see and Mr Diamond was talking about this the opening up of America,

the international economy much delayed as well. What does Carlisle observe in the opening up of America as we end this pandemic. Let me just give you my own observation. My observations are that people want to go back and to their office, maybe not five days a week. People want to go back and travel, maybe not as much as before. I think vacation travel and leisure travel will

come back ahead of business travel. Business travel will come back, but probably not at the pace that it once was, where you would fly around the world for a half hour meeting. I think that probably can be done through zoom or the equivalent. But I do think people have a pent up desire to go back and meet with other people and see the rest of the world they

haven't seen for last year or so. What is the character of higher yields that you see I've done so much, you know, the narrowness of internal rates to return on a transaction or a combination. But what do higher yields due to the mindset of C e O s and C class officers. Well, higher yields, uh, you know, obviously make people a little bit nervous because it means that, uh, you know, inflation might be around the corner, and we

haven't had serious inflation for for quite a while. People are worried about modest inflation relative to what we have in the nineteen seventies. I do think the U. S economy is in pretty good shape because of the stimulus we've had. Within the enormous amount of stimulus we've had. It's difficult for the US economy not to grow at five or six percent this year, and I suspect next year I'll be in pretty good shape as well. Who

can predict two or three years down the road. We'll probably have some inflation, but I don't think it's gonna be reflation. It's gonna be anything close to what we've seen in the companies. David rubin Stein, thank you so much, greatly appreciated. Congratulations on a spirited original interview with Westmore of Robin Hood the charity. Westmore really a unique person. Look for that tonight. Peer to Peer Conversations. Nine pm, uh,

this evening. 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 S