Surveillance: G-7 Leaders' Summit

expert on a Pacific rim as well. I want to do the calculus today, Bill Lee. And of course we don't do differential equations on Friday, we do simple math. G twenty takeaway G seven. I believe as a G thirteen. Nobody talks about how does a G thirteen Eastern year up in the red? How do they observe this G

seven meeting. They're anxiously looking at what the G seven is doing with the corporate tax deal that they've come up with to say that the smaller countries have to start to raise their tax rates, like Ireland and some of the smaller countries that have developed the model, to say we're gonna develop our country by attracting foreign multinationals to our country by lowering our our corporate tax rate. That is going to go by the wayside because they

have come up. That's going to be a challenge. Uh. The other thing they're looking at is how on earth are we going to deal with China and the G seven. The G seven already are in a mess in trying to find a way to cooperatively deal with China. Uh, China's a customer, China's a big input into their production lighting, but but no human rights. How do we live up

to our values of human rights and worker rights? You know, I AMSUSA believe that Michael Milken, taking advantage of William Lee and Employment dialed one Bill Lee and said Bill Lee on that tax prep plan isn't dead on arrival. Every port we see from Hungary, from Ireland is major pushback. They want to exempt the city of London, which is absolutely absurd. Is it dead on arrival? Well, it's it's dead in the sense that no one really agrees firmly that the corporate tax is the best space to use

the finance government spending. One of the greatest controversial economists who bears the cost of paying the corporate text and and studies have ranged from as low as workers paying to as much as workers paying and and and most studies show at least over so raising the corporate taxes pushes the burden of paying the tax more on the workers. And that's a very big controversy that that has yet

to be settled. And for the G seven to rely on the corporate taxes space to finance government expenditures is a real political wild card. Well, just to elaborate a little bit, bill some people would push back and say, actually, if you look at corporate profits, they've increased dramatically. Why couldn't it come out of that rather than from the workers? Mean,

why is that the as a person who's paying for it? Well, the I think the political movement now is to stay away from taxing workers, especially lower paid workers, and so we want to try to tap tap into the resources that the very rich have. The question is the corporate tax the best vehicle to do that? Because so much of the corporate tax is shifted into consumers, workers, and

people other than the owners of capital. We already know that corporate taxes are unfair in the sense that it's a double tax sessue the course the taxing the corporate income at the source as well as at the shareholder level in taxing dividends. So so those questions of incidents have played economists for generations and there's no clear answer, and all is polluted by a lot of politics that that that governed, right, So let's let's try to strip

out the politics and use an empirical example. And I'm looking at President Trump's tax cuts, and you'd expect the reverse to be true if that were the case, that a tax cut should juice growth and give more money to the workers. Is that what happened, Well, what happened with the textbook with the Trump administration is that so much of the corporate profits that were released went into share shared by box. Uh. Now, the question is that

the shared bock backs lead to more investment. If you look at the data UM and the research that I've done, UH, it shows that the share bike backs actually lead to more investment, but there's a huge lag, almost as long as three to four years before we see that investment take place. Right now, we have the highest level investment

in the US for for many many years. Bill one of the biggest problems with UM corporate tax beyond the double taxation issue, which I'm not sure everyone UM has fully wrapped his or her head around, is what companies do to try and avoid it. Often here in the U S or here in the U S. I'm in Berlin, but my home in the US UM they try and avoid it with debt financing. So we're basically pushing these

companies into UM some more risky financing. UM Solutions Does that turner round when you see the tax cut at least have pointed out well. One of the things that Mike has always emphasized to me is the corporate capital structure really matters, and pushing people into more debt finance

has the impact of changing the shape of investment. Investment now goes into more safe projects because the one thing that death holders wanted to get their money back, They couldn't share less that profits lead to more investments that lead to more productivity. They just want to get their money back. So if you tell a borrower, UH, take my money, but make sure you give it back to me, all he's gonna do is to invest in the same

projects that work in the past. We're not going to get the innovative investments that we need to draw productivity and raise the standard of living among workers and the rest of the world. Well, let's talk about the possibility of getting a global minimum tax. We've already heard reports that the UK wants to exempt the City of London, and the City of London has a bigger GDP than

the Republic of Ireland. If we all start asking for these little loophole holes, is it going to be possible to get the kind of blanket global minimum tax that they've set out for in the first place. This is the slippery slope of getting exemptions and loopholes, And this is the one thing that has made the tax system in the United States and the rest of the world fail, which is that creates so many loopholes that regardless of what you do with the rate, the amount of revenue

you raise is actually much less than anticipated. So, Bill, we're talking about the corporate tax rate, and the backdrop of this is a huge question mark about the trajectory of the global economy, whether we're heading into an inflationary period, whether it's going to be disinflationary post the pandemic boost boost that we're getting from consumer prices Where do you stand on this, especially as we see the bond market

way in and say inflation is not a concern. Well, Lisa, we I think are seeing the face of the new shape of inflation in the post pandemic world. Supply side induced price jumps. Now, price jumps that clear the market

because of supply shortages, to me, is not inflation. It's not regardless inflation but of fit or any other central bank Inflation of the sort that they worry about is the corrosive increase in wages, costs, and prices that firms fail to be able to keep up with that that erode profit margins and and and worker and savings and and and worker wages. That's kind of corrosive continuing rise in prices that exceed expectations is the sort of thing

that everyone is watching for. But there's no sign that the supply side price jumps, which is not inflation, uh, is going to lead to that corrosive continuing inflation that we had in the seventies. Billy, I want to end on your wheelhouse, which is the Pacific rim Every indication I see is of a pricing for boom. Now they haven't had the fiscal stimulus the United States of America has. But do you frame out over the next twelve twenty four,

thirty six months a Pacific RIM boom. I would love to, but the kind of supply size, shortage, overhang and the overhang of Chi in the Pacific RIM is really distorting the picture of where growth it's going to come from. The Pacific RIM has so much depended upon China as an intermediary and also as a final demand market that with without China coming online and and and being a locomotive for the Pacific, it's going to be very difficult

for the rest of the country's to grow. Right now, China has a dual strap, dual strategy of investing in itself, developing inst domestic markets, and almost withdrawing from the world except in very strategic ways. Strategic ways is to dominate the supply chain in technology. Their phrase is so sensitive and so current. I mean, we could talk to almost

Travidas about it. But Bill Lee to say that China is withdrawing from the world, and yet our listeners and viewers are are familiar with the expansion of the South China see and of the Belt in the Road initiative, which is it. They're withdrawing their domestic markets from the

world because they want to develop their technologies. They're expanding the military political influence in the world because they want to be recognized as a large country power and and yet still have the benefits of w t O emerging market status. They want to have their cake and eat it too. And that's the tension that said is going to have to deal with pairing these two ideas together, this idea of where inflation is going and the fate

of China. I'm wondering how much the change in China's economy is going to feature in the world inflation outlook. The idea that China was the factory to the world, it was the low cost factory, and it was importing disinflation overseas. Now we have a very different China, a lot wealthier, with drawing liquidity, trying to upgrade itself into developed market status. How much does that reverse this disinflationary

trend that we've seen over the past twenty years. That's a great question least because what we see about the new face of inflation in China is happening right there. The factory prices have gone up by uh and all down to the supply chain. In China, we see more and more pricing increases, and yet at the simmer level

we see prices going up at one. So what we see is a profit margin squeeze because the Chinese don't want to destroy the domestic economy, and they're putting in price controls at the factory level to contain a lot of these commodity price jumps. And I think that's a very successful way that they're implementing to try to limit the follow through of price jumps, preventing it from spiraling into the corrosive inflation we had in the seventies. Billy,

thank you so much, greatly, greatly appreciated. With Michael Milkin in the Milk and Institute their chief economists right now on G seven and on these markets. It is thrilling to give you your beach reading for the summer. It's not a secret that my book of the summer is two thousand thirty four. It is by Elliot Ackerman and James Travitis. It is absolutely stunning. This is a scary,

dangerous book. It reeks of a Netflix movie. And maybe will see that not your usual expectation from Admiral Stevinus, but there is it is a triumph, the author joins us. This morning, the former NATO commander James to vinis, I want to go to the work of Richard hass And is wonderful the world, and particularly John Muzheimer from the

University of Chicago, and it's your fault. They suggest with respect that the G seven world and that the NATO countries overreached and expanded too far east too quickly for Mr Putin and Russia. Did NATO in Europe overreach to pick up Eastern European countries? I don't think so. It's always easy in hindsight to say, hey, we could, we would oh we should have done something differently. Um, But if I could rewind the clock to the days when the when the wall fell, you've got to remember the

zeitgeist for the moment. They were not NATO tanks rolling into Prague. There were not NATO aircraft flying over Warsaw. Those countries were begging to join NATO, and they wanted to join NATO because they've been under the boot of the Soviet Union. I don't see in a real world where we could have just said, now you stay over there. We would have delivered them back to Russia would have been a bad moment in my view long agoing far away Admiral King and his gentlemen with their courage folks.

The Tom Anks movie of this year on the courage of the Navy across the North Atlantic in nineteen forty one, James Travitas, they got together off I believe Newfoundland and did the Atlantic Charter. Now we have the politicians with the TV moment doing a new Atlantic charter. Is there any substance to this new Atlantic Charter? I don't think there's anything new in the new Atlantic Charter, but that's okay. What it reaffirms is this Transatlantic bridge that frankly has

been a little creaky for the last four years. Now it's a gay strength gaining air speed. And I think in this post bregsit moment, it makes geo political sense to kind of draw a line under that relationship between the United States and the United Kingdom. I'll close Tom by saying, even as we're having this conversation, what ship is at sea? The sixty thousand ton aircraft carrier Queen

Elizabeth with British escorts, British submarines, British auxiliary ships. We would call that a carrier strike group, and it's headed to the Indian Ocean and into the South China Sea. They're a good ally to have James Travinus in your book two thousand thirty four, folks, And I'm gonna be honest, it's so damn good. I'm gonna be very careful here not to give it away, but the heart and soul of two thousand thirty four in our modern technology is

a lack of communication. It starts in that opening scene in the South China. See how does this G seven set up a communication process too? Of void your two thousand thirty four, um, First and foremost it's about cyber and cyber security and protecting our networks and by the way, protecting undersea cables as well. That comes up in the book. It's this, uh, putting together the technologies of cyber of space, of undersea control, all of that has to be protected.

That's a job not just for NATO, because NATO's in the end a regional alliance. That's a job for all the democracies. I think that's going to be a significant part of the conversation today in Cornwall. Admiral Steady is there's a question about the alliance and how strong it is and coming up with a strategy with respect to China. Uh,

there is. As we get the arrivals at the G seven, we have Angele and Merkel German chancellor arriving in Germany has an incredible trade partnership with China, even as it does take a harder stance. How much of a consensus is there on the right approach for the allies versus China in terms of reconfiguring trade. I think that's the through line for G seven tornato um and and in

fact the Atlantic Charter is all part of this. And one central element to this, Lisa, that you'll be well aware of are the Chinese claims of territorial ownership in the South China Sea. We are pushing back on that by driving our ships through those international waters. That's a set piece that opens four. In the today's world. The Brits are headed there, the French are doing it, the Germans have pledged to send a ship there to stand

with us. A lot of it derives from concern about human rights, but also your point about trade and access to Chinese markets. Um. I think there's gonna be a continuous conversation about China and Western China relations that run from geopolitics to ge economics, to mercantile to market access.

How good of a job has the Western world done at vaccine diplomacy, at shoring up support from regions near the South China Sea in their outrage to try to help us all get out of the pandemic versus China, which has been more aggressive or at least aggressive on

a pr stands about their efforts on that front. Yeah, this is a reflection of the clever, capable Chinese strategy one Belt, One Road or sometimes called the Belt and Road Initiative b r I. It's a clever strategy that seeks to engage China geoeconomically in a mercantile fashion, and vaccines have become part of that. That's why the president's announcement of five million doses, no strings attached, fightser gold

standard coming from the United States. Uh, that's a big deal and it kind of wraps together, if you will, the three c's of the G seven, COVID, China, and cyber. We've now hit all three of those. Must venis Anglo Medicare is about ready to descend upon her last G seven meeting at sixty six years old. She is esteemed and venerated. She is a quantum chemist from Eaton, eastern Germany. What has been her chemistry? Her impact on the Western world,

your tour of duty at NATO and after that. I met with the Chancellor many, many times, and honestly, there is no leader that I would put above her in terms of her integrity, her willingness to make hard decisions. Germany and nation of eighty million, took in a million refugees from Syria. The United States took in less than twenty thousand. She made the hard political choices. She's a four term chancellor. She's like f DR elected four times

to office. I cannot say enough good about Angelo Meracle. I hope she does not go gently into that good night back to a physics lab somewhere, and I don't think she will. She's got my vote to be the Secretary General of the United Nations. Well there you go. Servin is working on the resume for miracle U. Matt Miller is in Berlin, and of course she celebrates a political domestic victory Matt in the recent days. In recent days, but you know those polls come and those polls go.

I think, Um, the Admiral's point is an interesting one. Miracle would make a great secretary general. When I attended the G twenty meeting in Hamburg, she got a standing ovation from all of the other leaders when she entered the the the the opera hall. There. At the end of the meeting, she essentially was leading the G twenty. And it'll be interesting to see what she can do

here at the G seven. To me, Admiral, the interesting um, the most interesting thing about Miracle is all of the all of the good deeds she's done you just listed, and yet she is so insistent on building this Nords dream to pipeline to Russia, essentially funding you know, billions, hundreds of billions of dollars to Vladimir Putin um to finance things like the annexation of Crimea. Why. I think it would be hard to find any leader who backs

a thousand. In other words, uh, I think all of us can look at any of our leaders and say, hey, you got this one wrong, you got that one wrong. To to the pipeline question, Miracle, I would say to her Chancellor, you've got that one wrong. And it reflects her sometimes our greatest strength can be our greatest weakness. Um and in many ways she wants to build consensus. She wants to pull Russia to the west. There's a strategic sense to that, but it won't work with Vladimir Putin.

Therefore I would score her less perfect on that. For particular point, Venus, if you've framed out Russia after Putin, I guess none of us are doing that. Miracle is thinking forward always, as you say, the Chancellor and others, what does Russia look like pulled to the west after Putin? Let's hope it happens. And if you look at the history of Russia in terms of leaders, you roll the

cosmic dice. Sometimes you get Peter the Great, the next time you get Ivan the Terrible, you get a Joseph Stalin, then you get a Gorba job those dice landed on Vladimir Putin. He will be the Tsar of all the Russians still the day he dies. He's alive in four as an octogenarian. But what comes afterward. Let's hope the dice land on a different kind of leader. It's possible if you look at Russian history, the strategic opening to pull Russia away from China is a powerful moment for

the West. It won't come into Vladimir Putin passes on to the Great Commune in the Sky. James Travides, thank you so much for joining us this morning. Folks. We're gonna get all the answers to the bond market mysteries to Badra. Japa has them all. She's standing by ceciatasion or our ahead of us rate strategy. And there is this question of what has been behind the incredible rally in ten your treasuries. I was saying, a lot of people are attributing it to a short squeeze. Is that it? Well,

I think it's one of many factors. Right, You're definitely seeing a little bit of positioning being very skewed towards shorts, and typically when you see, uh, you know, when position gets a little bit skewed, you tennessee a short covering rally. But it's also you're seeing very very strong demand coming from you know, real money accounts, overseas accounts. In auctions this week, if you look at the auction metrics, both indirects as well as directs, you know the participation has

been very very strong. So the primary dealers are not taking down these auctions. It's real money investors and end investors that are taking down this auction. So it's a combination of positioning as well as strong demand from end investors for treasuries, which I think is kind of counterintuitive. Like you pointed out, at this stage in the recovery,

you shouldn't be expecting a gradual rising yields. So in some respects, the sort of rally that we've seen in the last week, at least to me, is somewhat countered you do. So that really raises the question how much does this rally have legs or is this a one off, a sort of positional shakeout that's poised to reverse. I think I'm more in the camp that you know, once we get this position shakeout, we should see, uh, you know, yields start to head ever so gradually towards you know,

a higher trajectory. And in some respects where we are right now is very similar to what we saw earlier on this year, you know, in tenny yields where eighty or ninety basis points. When we began the year, we thought the world would come to an end when tenny yields got to the Fed's definitely gonna, you know, talk down the market. They're not gonna let yields rise to one. Guess what the FED just stepped aside and said, you

know what, it's okay for yields to rise. We're exactly at that same juncture heading into the June meeting where tenny years at one forty five, the FED is gradually thinking about carrying back acid purchases. They're gonna look at tens at one forty five, equities at all time highs and say, you know what, we have a little bit more room to sound a little bit more hawkish on the market, and it yields right, So right, so what you know, there's a lot more room for yields to rise.

So that's kind of where I you know, I think the big risk heading into next week is that there's a there's a decent out of complacency in the bond market that the Fed's going to keep things status Well, we'll talk a little bit more about the complacency, and I guess the potential here is sabadra for volatility. Should we finally start to get a little bit clearer communication about the FED, Because while they may be standing pat

right now. I mean, they've also made it clear that at some point things are going up, and we're going to get that communication, some sort of roadmap hopefully soon. And I'm wondering as we start to drift lower here whether that just sets us up for a more volatile spike higher at some point soon. Yeah, I know, definitely, I think that there's I think the summer itself is going to be somewhat more volity. It's not just fed communication that good spur bolatility from here on, it's also

the data. If there's anything we've learned in the last couple of months, it's that you can't just turn on a switch and have the economy come back online. There's just a lot of bottlenecks that each behind out. Uh. You know, there's there's data that we're going to get that that you know, we don't know. The trajectory for employment is it turns out to be a lot slower

than what we're anticipating. It's not going to be a million dollar jobs per month, So you know, at least till till we get through the third second quarder and third quarder, I think we're going to see a little of all, Clilady, the data and the FED is long overdue. I would say, in my opinion, to start thinking about tapering acid purchases and communicating those intentions. And I think that those intentions are going to start getting communicated as

early as next week on a strategy basis. So Brita, with where we are, what does CFOs do? Do you look? I mean, is the great unspoken here? There's going to be a wall of bond issuance coming out in the next six months. I mean I've lost track of you know, what the corporations are actually gonna do. Are they going to pile on more debt? Yeah? I mean I think if interestrates a that's what you should be doing, right boring as Yeah, and you know, there's there's definitely a

case to be made, and it's already happened. I mean a good portion of this year we've seen tremendous amounts of corporate bond issuance. What's really interesting is the amount of demand has been from ended masters for all this issuance that's coming to the market. I mean, whether it be investment grade or high yield, spreads are extraordinarily tight,

so you know, and this demand continues. That's where I wanted to go, this idea that high yield bonds are now yielding one basis point away from the lowest ever sub four percent. We're looking at three point eight nine percent on high old bonds, and the record sales pace has been absolutely employ your sox off. I mean, basically,

that's the c f A term. Tom. There is a question about the moral hazard here, the idea of the complacency of a low rate regime here on out tied with companies selling bonds to raise money to buy bitcoin, like the micro Strategy bond, to raise money to pay dividends, to pay money to the private equity ownership. At what point does this become a problem or are we in a never ending a cycle of ever lower yields. So I was listening to Romaine earlier on and he was saying,

at some point there's going to be a correction. So I'm kind of in that same camp that, you know, things do get a little bit out of hand and then you're going to see some sort of a correction, and for that to happen, it's going to come from a change in the policy stands right now, you know, the FEDS, you know, keeping its asset purchases. At some point when they start tapering asset purchases, these real yields that you're seeing a negative of nine two basis points

negative one are going to have to move higher. And guess what when when really you start moving higher in a steady systematic way because it fed's trying to remove accommodation. This is going to have an impact on on risky assets.

So we're not there yet. It's really hard to time this, but definitely that's that's a risk in the horizon's brout to thank you so much, harp so to drop of there from society general on US rates and the derivative heritage of such in there, on the dynamics of these rates and the major dynamics in shock and awe here. One of the great hallmarks of securities research is how you read the research. And one of the you know,

I literally I do lectures on this, folks. You get a four page report and as a way to read it in twenty two seconds and get what's out of it. And then there's the fifteen page report and you do that, and then there's Paul him are you This goes way back the reports some kidder pebody behere you go. Damn, I've got to read this whole thing. It was Joe Almato's fault. It was his fault. Was like that, and he went through a story career in securities research. And

I would suggest the integrity of it. It wasn't about by hold cell. It was about inform you about where the company fit in within sector in terms of growth evaluation. And there wasn't a Motto heritage there, heritage there all the way up to Lehman Brothers and and Tom. I first bumped into Joe Motto when I was a young analyst. I interviewed when he was a director of research at Lehman Brothers for media research analyst position and boy, the team he said, he probably it was. It was fun.

We had a we had a good discussion. He had a great team there. Joe, thanks so much for joining us here at Joe A Motto. He's a new Burger Berman President and chief investment officer. Um, Joe, thanks so much for joining us here. I mean, you've had such a storied career, have seen at all? What are you telling your clients here as they think about I got a global reopening of this economy like we've never seen before. What do I do? Well, good morning, and thanks for

having me, and thanks certainly for those kind words. Um uh, Well, we are certainly uh constructive on the outlook, and we're you know, we're talking with clients about the strength of the global growth recovery that is clearly in in in full swing and how to position oneself for that, uh, certainly talking through the inflation risks and the rate outlook.

All that are quite relevant to how one looks at, you know, an acid allocation across the board, whether it be in equities or fixed income or what have you. But but bottom line is, we're you know, we're constructive on risk assets. We see the outlook uh is a positive one. We're probably going to achieve record earnings. I know, lots of folks have been talking about achieving record uh levels in equity valuations right now. But you're also going

to see equity earnings UM at record levels. So Joe, you know, coming out of the financial crisis, Um, you know, the great bullmarket coming out of financial crisis was driven in large part by these big tech growth stocks that work so well uh for most investors. Yet we see a nice rotation into more cyclical kind of sectors of this economy. I'm thinking, uh, energy, financials. Where do you guys see the performance coming from over the next twelve

to twenty four months. Well, right now, we're we're definitely positive toward the value sector, the cyclical sector. We think there's more legs to the economic recovery here that you can position oneself for to take advantage of it. In that In that time frame that you're that you're talking about, it's we're going to see economic growth levels GDP levels that we haven't seen in a in a long time, and I think you want to be positioned for that.

And during periods of accelerating economic activity, you want to be positioned in cyclicals and and and value stocks. And that's what you've seen has been working. As you think beyond that time frame, one debate we certainly have internally is what level of sustainable sort of trend line growth you're going to see out to three years from now. And we do think the growth is going to slow down, and during that period of slow down, you typically will

rotate back into your secular growers. I don't think it's time for that yet, but it is something that you know we're thinking about as we as we position position portfolios for for long term um uh investment. Joe about it.

You guys are very sophisticated investors. I think in Charles Cantor and his leadership in the equity market, so many many others at Newburger Berman, I want you to talk to what our listeners are living, which is active passive the giant ormous successive passive Joe, j enormous c f A word incasion. An familiar with that, but but passive is taken over state the case for active Charles Cantor like management insecurities research where there's no money in it

for the street anymore. Six cents used to be big living. It's gone. Tell me how we move forward doing active research. We still certainly believe that there are real benefits that will enhance ultimately returns by doing good, bottom up fundamental research, and they're they're still in our view even in markets like large cap us which often as I describe as ground zero for the active passive debate. Even in that market, their pockets of inefficiency that you could take advantage of.

The challenge active managers have had is when that handful of whether you want to call it fang or just do super large cap stocks do well. It's very hard for an active manager to out perform because very few active managers are going to be way overweight five stocks that represent thirty of the index. But but as you see in small cap land, in non US world, emerging markets, world, active managers actually have had a more sustained level of of performance relative to indices, and and so you know,

we we don't just look at large cap US. That's been tough. It's been better recently because as the fang stocks have slowed down a bit, it's given opportunity for active manager to show to show their wares. And the other point I would make is in engaging companies and acting like active owners and real shareholders, because as you know, Tom, we invest for you know, the long term. We're not

We're not a high frequency trader. If you will not, uh, you know that Engaging companies, being response sable owners, whether it be capital allocation decisions, the board makeup, compensation of the alignment of the senior executives, are all important things that I think active manager has been an enormous amount of the table. What about diverse diversification or is Peter Lynch would say diversification. I mean if in this mill, you in this oddity of I don't know where the

risk free rate is. Maybe you know, but I don't. Do you approach this less diversified or more diversified than what we were trained as well? If I would, I would think about in components. If you're thinking just intra equities, I think it pays to be diversified. If you look at the powerful swings that are nearly impossible to predict in the short term. Write the rotation between growth and values small and large US non US. Those were enormous

alpha generators if you timed it right. But timing it is nearly impossible in the short term, So so diversifying across those levels. For those investors who came into the new year with very little value exposure, they really suffered because value is dramatically outperformed growth, just like the reverse occurred back in two thousand twenty. As you move across asset classes equity fixed income, you do start to question the benefits of that sixty forty traditional type diversification because

your bonds in the past gave you good ballast. If you will versus your equity risk and now it feels like you get less of that. Yeah, the new Amazon. Hey, Joe, you know I'm going to ask you to put your director research had on from years ago. How do research analysts do their jobs these days in the world of a pandemic? I used to be on the road the time visitor my companies. Yeah, but mine was going to the theme park world to play golf exactly. So, Joe, how do you how are the analyst at Burman kind

of doing their jobs and adapting here? Well, certainly the inability to to go kick tires, visit manufacturing facilities, meet companies in their offices. What have you have have been dramatically affected by, you know, the last fifteen months or so, the availability of company managements to talk, whether it be through video conference or a phone call or what have you certainly gone up because they're just more available, But you don't necessarily get the same interaction in that in

that form. One of the things that I think is enhanced fundamental analytical rigor is data science. So we've invested a lot in evaluating alternative data sets using the processing power that is available today to look at ways that in the past, whether it be my early days as an analysts or others, you just didn't have access to really really interesting, insightful data. And now that I think gives gives a lot of our team a big edge. Charles Cantor still has a slide rule on his desk.

Joel Motto, Thank you so much. Joe Moddo, one of the legends of the business thrillies with us today, Chief Investment Officer Equities, New Burger Bourman. 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