Surveillance: Negative Rates with Mohamed El-Erian

what's the history of what happens next? The history, Tom is pretty clear that if you look at the last quarter of a century, there's been six years of performance like we just had in the US. In over three quarters of those years, the following year you had double digit rates of return. There was Newton law of motion. Things in motions stay in motion. That's what's happened, by the way, in the other years you lost money. So historians would all be millionaires of history simply repeated itself

perfect exactly. So, Michael, it's interesting, you know, we hear a lot of folks coming here and they look back at ten they had this huge run. But it's interesting if you take a look at it from the peak of eighteen and September, it's maybe it's still a double digit return, but there's no reason to maybe say, oh my god, I can't possibly follow up twenty percent year.

It's more like a ten or eleven or twelve percent year relative to Barry d Barry Ridholtz made it and thanks for listening exactly, and we have to give Barty Barry credit. How do you think about so nineteen? Do I need to think about certain sectors that I want to be in? Do I want to be more aggressive than I want to be defensive? How do you think

about it after even a double digit year? I think, Paul, when when you whenever including this period we just went through and are going into right now, I think you always have to look for the individual. If you're buying individual companies, you simply have to look at number one management. For example, we talked about Boeing earlier too. Uh, you have a new management that it probably is a major

plus for the company. Um. You look at companies like Microsoft, what they've done versus IBM and the cloud you go on it, so then you look at the valuation. So I think it's as simple as fundamentals. Basic blocking and tackling Um, there's still companies out there, they're trading at reasonable prices given their prospects. How do you factor in all these I guess exogenous issues that have really whip solved this market around almost on a daily basis. Let's

just take trade for example. Do you just try to just take the trade out of the discussion and focus again on the fundamentals of the companies or you can have to say, g I have to think about a stock that's gonna weather maybe a prolonged trade disagreements skirmish

with China. Yeah, the crazy trade stuff for the past year, Paul, actually provides opportunities if you identify a company really like and because someone says we're not gonna have a deal with the China, the Chinese uh, and the market goes down, you can you have an opportunity to buy it. I think at the end end of the process, would would you end up with with with the trade thing is we're gonna get something, the Chinese will get something, but

not very much and it doesn't really matter. Far more important actually for me over the decades and full of markets and market is the Federal Reserve. A year ago, the ugly December we had the worse since was caused in large part by the worry about the Fed hiking interest rates. Made no The market said, this is nuts. We may be going into a recession. We don't know, and the feed is talking about hiking rates. This is

crazy in the market. Tank. Now you have opposite day, which is massive amounts of liquidity, probably a record balance sheet for the Federal Reserve at the end of the year. Okay, we're doing We're channel in Wall Street week. Uh this day with Danna Telsea later and Elf and Michael Holland with us is well in honor of Marty's wife. Don't fight the Fed. How do you not fight the Fed? Forward? You don't fight him? Marty wonderful friend, do him for years?

A brilliant investors, really really good investor. Uh, there's gonna be a crash, the famous line, and uh, right before the crash of the market back anyhow, he he got it right. The Federal Reserve, if they were going to hike a year ago, you wanted to be out of the market. If they can, they don't have a they don't have a choice the Fed. Sometimes it's very the play card is pretty easy it's easy right now because for the time being, the Federal Reserve is really concerned

about the liquidity in the markets. They looks it looks like they've addressed it through the end of the year, but there was major concern back in going to rebuild the balance sheet and keep yield slow in the next year. They because they quick answer yes, yeah, I mean I think it's absolutely extraordinary. Michael. How we look at as we said earlier Graham, Dodd and Coddle, we've thrown it out the window. So what are we left with? What is the theory of owning companies like Amazon right now

or even an elevated Microsoft. What's the underlying theory that allows you to own them? Uh? You do human stuff, and that is you look at companies where the managements have figured it out. They perpetuate themselves Johnson and Johnson, Uh, Microsoft, You go on and on through through the great companies and you figure out where their price go ahead. No, no, don't please continue. No. So so that hasn't changed in

any way. I think at the end, at the end of the day, once once you find very high quality I think professional sports to the top athlete and get it at the right price, you realize that the only reason Holland's here he said, I'd only show up if the Bruins beat the capitalist You know that's the truth. Um,

this is important, folks. You got a couple of minutes to go here, and we have where this Paul Sweeney, who's done more to develop security analysis at Bloomberg than anyone, and a guy named Holland who began with Morgan Guarantee and then first Boston. Right, this is a few years ago. What are cf A is gonna do ten years from now or five years now? We're where Michael Holland, where is the security analysis five years from now? Well, I

think it's it's interesting, Tom. I think the cells, it's not necessarily the cell side, which is one of the historic landing points for the CFAs. Um, it's going to be at the bye side. I think there's taking more research in house on the by side. But then it's gonna be alternative research platforms, for example Bloomberg Intelligence here where we have three analysts covering two thousand stocks. It's just a different model kind of reacting to the changes

in the cell side. And I think there's gonna be other models out there. As well. Dana Telsey is a great example Tom for some of the independiques, the independent boties. But you have to be somebody like what do you read every day? Michael Holland. I mean, you know, we used to. I used to go up the elevator with Phil Kray Pioneer, and he had piles of stuff, you know, on the dolly. What do you reading? In his nineties, he was still reading stuff. I knew him. He was

one of my heroes in the business. I'm almost as old as he right now. I actually this is not a commercial. I don't belong to Bloomberg. I don't get paid by Bloomberg. I actually start with Bloomberg in the morning. And Paul Sweeney has helped to develop the model of the future, the business model of the future. The model that I grew up with in the business is dead. Uh. The model of the future is what you have at Bloomberg. People who have an objective reason to be right about

Then who who decides by hold self for you? If Paul Sweeney doesn't, oh, well, I have to do that myself. To do it's a surveillance bre exclusive investors by hold Cell. Michael Holland. Thank you so much for joining us here as well. We got through that without him talking, Abo. Can we hold him for another block? I'd like to speak about the upcoming presidential election? What should I disclaimer

here before we do the three? Michael Holland with us getting us into trouble, We're thrilled to bring you know uh an original healf on Wall Street Week. Dana Telsey joins us now with bear Stearings for years in a hugely successful retail research shop, Telsey Advisory. Dana, thank you so much for joining us. Let's just sum up here. How is this holiday season? Ben? I think the holiday

season has basically been okay. I think there's a have and to have, not value and convenience is winning And basically, if you are not having something innovative, you're not going to drive the traffic. I saw the other day the Steam luxury BRANDI off five days before Christmas or whatever. What do they do on the and forward into about January five? If they're sixty off, now, how much do they go off in the next ten days? I mean

off typically is the most it's gonna go. They'll move the merchandise or else it'll get sold to some of the off pricers. But the other key thing is what some of the retailers do that is a smart thing. They bring in new merchandise. You have to bring in fresh goods in order to attract the consumer. It can't be a deal a day every day in order to generate your profitable margins. So, Dana, what are people buying

this shopping season? I mean Tom just has got I think he bought twelve air pods or something to for his lisp. What are most people buying? That's what they're buying. Those AirPods are some of the most popular items out there. Some TVs are very popular also, and everything active. Check out those sneakers. And this is a boot season also where boots are doing very well too, like the Selene Folco over the knee boot and calf skin one thousand ninety.

Some saline must have and it's a musty, haven't I believe me? Someone was watching you, Dana with me earlier and she emailed in and said, deer on the way home, pick up those salines. How do these brands still do? What? I mean? Some brands are sinking. I'm you know, the Bank Group seeds to come. Uh, Dana and that. How

does someone like Selena of such a good year. I think some of the things they do, it's coming out with new designs, new styles on a regular basis, and basically being in the press and bring on social media that people want to be part of that club. Instagram media. Instagrams changed everything. How do the department stores adapt to the reality of Instagram. They need to offer service. You need to be able to have service to marry the

activity of buying with the activity of doing. It's interesting, Dana, what I've noticed, you know, just following the earnings of some of the big retailer, big box retailers, whether it's a wal Mart, Target is every quarter I look at their digital sales numbers and their eye popping, you know, kind of growth in e commerce from some of these big companies. To me, I'm just a lay person looking at the retail space, but it seems like they figured out how to compete against Amazon. I think that is

what's happening. I think when you think about some of these do aital numbers and you're marrying it with retail stores. Also, I think one of the themes of holiday season two thousand nine is going to be buy online pickup in store worked. That's ONNI channel tongue. Oh that's um, that's like, that's okay, I'm learning, Dana. You wrote a piece two days ago. I'll say that was absolutely exquisite on what I know everyone is talking about, which is the piles

and piles of cardboard boxes. Can Amazon, first of all, can Amazon be successful with one day shipping? I think they're going to be. I think Amazon continues to push the needle on speed, and speed basically means everything because I can allow you to gaine care. And I think we're going to continue to see retailers enhance their speed models. What do they do about the expense I believe you have in your lead paragraph shipping up eight to that

crushes retail margins. Do they pass that on to the customer? How does that work? I think some of it does come in the form of the of cost. I think some of it comes in the form of service, and I think some of it is just lower margins. It is expensive to offer all of these services. It doesn't come for free. Yeah, that's kind of where I wanted to go, Dana. I mean, if if I'm not a Walmart, if I'm not a Target, how do I compete against the digital aspect of it all? I can't invest, can I? Well,

I think there are some elements where you can. I think some of these companies overall, if you're not a Walmart, you're not a target. Take a look at the off pricers that treasure hunt experience. There's a reason why their traffic is up all the time. Take a look at country brands. You can only get them at those luxury stores. Or take a look at Lulu Lemon. Basically the identify of that brand, if it's unique and differentiated, the consumer

will come well, we're unique and differentiated. And then we're just two guys talking retail with Dana Telsey sort of fix that joining us saw the star of Bloomberg Business Week, Carol Masser. Women who can talk about stop. No, I'm out of questions. What do you think of all the more enlightened No, I am. We've been talking to Selene boot for two thousand dollars. Mrs Keane has noted that in my dream question, please for data, Telsey, Data Telsey,

the retailers. You know, it's funny. I was looking at some of the best performing and worst performing stocks of the S and P five hundred for the year last year, Target is near the top and at the bottles, So like, how do you reconcile the retailers who figured it out and those who haven't. I think one of the things that we've seen Target and Brian Cornell do a Target that's been pretty amazing and basically has worked the service aspect. Look at the look at the look of the stores

they've gotten cleaner. Look at the exclusive brands that's come in where basically he's changing up the brands on a regular basis. And look at the categories to it goes from electronics to cosmetics, to apparel to food. He really has taken that whole business model and turned it upside down and came out with something that's and exciting. Dana and Carol and also and Danny, you mentioned this earlier

on my other property, the whole makeup thing. I mean, Carol, you're living this in real time with various you know Tom King. Literally I just came down the escalator, Dana. I'm like here with my bags and he's like coming into the studio, coming to the studio. But I have to say the makeup category that like creams and lotions. Look at Sepphora, look at look at Alta. Alta is constantly I'm the most accurate. Who's the target, Dana Telsey, who is the targ of the makeup category. It's Alta

and Sepphora that are doing it. Alta out of the mall, Sepphora in the mall, and basically the reason why they have they have makeup applications there and it's a community. People basically get excited when they say that looks good on you or no, this is the color for you. It's it's interacting. That's what's driving the bus. Yeah, I

like Paul Color one oh six, Tasty Hazel. This is the Gucci Ruga Levra Matt lipstick forty two dollars after after thought, Dana, save us, because can you believe these two guys are talking lipstick? You know what? You never know? Right map Everyone wants to carry their skin with your heritage with Bergdorf? Do they make money in the basement? You go down there to the most dangerous basement in the world. What per square foot do they make in

the basement of Bergdorf? I makeup cosmetics is very high margin. There's a reason why there's always called the lipstick indicator. When recessions come, women will always buy lipstick. It's profitable and it adds a Dasha newness where there's a boom. Now, what's the newness now from miss mass or is she considers getting to the holidays? I mean, is it the

is it the facelift? The face mask? No, the face mask thing you're doing by looking at me and saying you wear one of my favorite everybody's walking around the house with face mask on? Is that like the next thing, Dana? Don't you know? The new look is all about natural and it takes a lot of work to look natural, but naturals wears that right now, telling Dana to tell us, thank you so much for being with us. Thrilled that

you're with us. We are thrilled to bringing a gentleman who put a book out a few years ago there was a must must read when markets collide, and when then his work for the industry, his work at Pimco and Alians, and of course his service to Cambridge which comes up in late two thousand and twenty. It is rare that you not only deliver when markets collide, but

a second book as well. The Only Game in Town, Dr Larry and joins us Samohama, And I know you're working on a new edition of the Only Game in Town? What will be new in the in the game in this town? I'm good morning, Tom, and thanks for having in. Happy holidays to you and and all our listeners. Um, what's gonna be new is that since I published a book in January two accounting and sixteen people have understood the issue. They have understood that there are costs and

risks of excessive reliance on central banks. And now we have a list of things that have become clear, but we have a list of other things that have become even more murky. And the conversation is starting to lose sight of the fact that we can get out of this mess, but we need to do it quickly. One of my conversations of the year was with great courage, David folk arts Landau of Deutsche Bank took a stand against negative interest rates with all the complexities of his

executive abilities at Deutsche Bank. And that do you agree with folk its land out that the experiment is done? So I think the experiment is done. I think the experiment was done. Um. A few years ago that's why I wrote the book. But getting out of the experiment is not in the hands of central banks. That's what people lose sight of. In order to normalize monetary policy, you need a policy handoff from excessive reliance on central banks to a comprehensive poke growth approach. And that means

the governments. It means politics, and we're simply not saying it, which is why No, I don't mean to interrupt Dr Lambe, but this is so important. Under the Hicksie and I s l l M framework, you're saying, move it over from the monetary game to the real economy game. Does that include fiscal policy? Are you suggesting it's strictly a policy opportunity. So for a very small handful of countries,

very small um, it means physical opportunity. For the rest, it means focusing on the drivers of productivity, on structure reforms, on infrastructure, on labor retraining, on labor retooling. There is so much to do, and if you look for the last twenty years, with the exception of Germany, nothing has been done. In the advanced world. We've relied on finance, first on private finance, and then on central banks and we've lost sight of what tribes productivity and growth. So

we need a pivot back. But I'm not too optimistic because that means a lot politicians, and it means that they have to get their act together. And Mohammed talking about getting the act together, I'm thinking about Germany and that's kind of you know, think about negative interest rates in the industrial world, certainly think about Germany. They have shown no signs. I guess from a political point to go to your point of thinking about fiscal steamless, what

has to change? What do you think realistically can happen to push it out. So if you are in Germany and everybody is lecturing you for fiscal stimulus, you really are baffled because, on the one hand, your service industry is doing fine. Second, yes, your manufacturing sector is not doing great, but that has little to do with demand. It has to do with trade, and it has to

do with the auto sector. So you keep on scrashing your head and saying, wait a minute, why is everybody asking me to sacrifice my physical side if they're not doing more? So I you know this notion we fell in love at one stage with them. Are your place with this notion that Germany was gonna implement. It's not gonna happen. They may do something small. So the answer to that is unfortunately more complicated, is that Germany has to be part of a regional effort to get fiscal

integration going. That's that's the answer. That is what the engineers would tell you, But the politicians will say, hey, no, not now. If you're just joining us worldwide in coast to coast Muhammad a'll aian with us of course writing for Bloomberg Opinion, uh and with alliance and of course moving to Queen's College at Cambridge? Are you going to be a tough grader at Queen's Scott What are you gonna do at Cambridge? I mean, are you going to

teach a course? But what you've missed, Tom is I've been teaching a course this semester at Wharton and it's been the most enjoyable thing. You want to learn something, go go talk to seventy secure year old and you will learn so much from them. It's been an incredible joy in various What are you telling them about the new actual assumption? I mean the reality here And this is NBA speak, folks, But the bottom line is the

actual assumption come screaming down. Bill Gross talks about financial repression. It's here for retirees. What do you tell them about what your new normal is? I mean, is it three actual real assumption? Is that where we're heading? So I take that as an example of you people sitting in the room are going to have to make decisions on

their radical uncertainty, on the unusual uncertainty. There's lots of things that were unthinkable that have become reality, and they are changing the way the system works, and that is the biggest challenge you're going to face in your business career. And then what I do is I give them tools. I don't give them the answer because I don't know what the answer is, but I give them tools to help them figure out how to get to an answer

in their particular circumstances. Interesting, Mohammed, if I were, you know, thinking about that. Tom talks about the actual assumptions. It's it's what I tell my kids. Max out on your four one K from day one. But Mohammed, so as we think about the world going forward, are you in the camp that is essentially you know, I can go to time assumption issue kind of lower growth for longer. I am lower growth for longer if and it's a big if. Okay, capital I capital if if if policymakers

don't step up to their policy responsibilities. Um, I worry. There's two really big unknown unknowns. Thomas was talking about this. I don't know what the answer is, and the marketplace has to deal with short term constructive outlook with the longer term uncertainty. I don't know how much damage we've created to the market based system with negative rates. I don't know whether we are going to deglobalize for a number of years or not. And I don't think anybody knows.

These are big unknowns and the key issues to build resilience. I'll go with resilience in Mohammed, if we could speak of your time at Harvard and you know the pluses and the minuses of actually managing real money, how should our listeners position shan there forty thou three hundred dollars or their forty two million, three hundred thousand dollars. How should they position that after this great ball market if they don't know the amplitudes of some of these sharks

to come, And that is the challenge. So sort of proposition that you're trying to implement is to keep a claim on the upside while having more protection against the downside. If you if you're a professional investor, and that's what we did at Harvard when I was there, you can do some tail hedging, you can do various things that are very low costs. In this environment because of volatility

has collapsed. If, however, your retail investor, it gets trickier. Um, a retail investor doesn't have as many options as a professional investor does. So you've got to focus on things that matter. Balance sheet matter, cash generations matter, being higher up in quality in credit terms matter. And you've just got to got to remember you want to maintain a claim on the upside, but increasingly protect against the downside.

And the time we've got left to Dr Hilaria. And I was cornered this weekend by a wonderful listener who a claim to me of his latest trip to Egypt, and he just said it was a complete success and the tourism that is so vital to your Egypt as well. Give us an update on what Egypt needs to do forward, Mr ELCC and the others. All the controversy, how does Egypt find a better decade. So economically they need to build on this success of the last few years to

produce more inclusive and higher growth. They having higher growth, it needs to be more inclusive. The success is reserves are no longer an issue there at record levels, Inflation has come down dramatically, and as you said, tourism has come back and has come back in size. So now you need to pivot it in order to make sure that the growth that is produced is more inclusive. And that's about second generation reforms. Um, it's not you know something we don't know about. It just requires a lot

of hard work at the micro level. How alone do you perceive Egypt to be? Given the challenges that Mr Radjuan in Turkey, he had a vision of foreign policy, of foreign projection, a Middle East projection of seven eight, nine years ago that was to be to take ownership in the future of the Eastern Mediterranean. That's evaporated, hasn't it? How alone is Egypt and it's it's destiny here and

how can the United States help? So Egypt has been focusing much more on its own issues, exactly a regional view that Turkey took and others have Um, you know, it has good allies in the region, has a very good relationship with the US, and I think what Egypt is trying to do is to get its house in order, and it has been doing so. Dr Larian, Thank you so much, Muhammadhlarian, folks, and when you await the new edition of the Only Game in Town, greatly appreciate it.

We're thrilled to continue with Michael Darta of MKM Partners. Michael, I've been in all cash that worked out. There was a photo out in the social space today. Have you with the Darta rocket ship with your three Bloomberg log ins and your various dogs assembled and and all that. Are you long the market now? And how do you position yourself in the next year? Hi Tom, thanks for having me on. Um. You know, I think the investor

should be diversified and maybe tactically cautious. Here if we just re rhind the clock exactly one year ago, we were in a situation where the S and P five dred had dropped almost twenty at the end of last year. And even though it was uncomfortable, uh, the view was you really want to be long risk here? Our opinion was recession probably unlikely, yet the market has almost priced in such a scenario. So today, you know, with these huge games that we've had this year, it's just the opposite.

You know, Valuations have have moved up a lot, the markets had a phenomenal year, and markets do not go straight up. Um, So you know, probably we're looking at some kind of a pullbacker dislocation in the not too distant future. A lot of optimism out there right now about a second half acceleration in two thousand money about this trade deal essentially being sign sealed and delivered, but you know that may not turn out to be the case. So from a shorter term slash tactical perspective, I think

a little bit of caution is probably justified here. So Michael, earlier in a programmed time when I were talking about whether we sense fear or greed in the marketplace, and my suggestion was I I kind of felt like it was cautiously optimistic, no real sense of greed in the marketplace that we've sensed in other parts of this bull market. As you talk to your clients as they enter fear or greed, what are you hearing most are feeling most? Well,

I'd say I'd replace agreed with optimism. Um. You know, I think most of the institutional money managers we interact with are pretty optimistic that we've soft landed. You know, that growth isn't going to be booming, but it'll be positive next year that the trade deal is done, and so they see further upside, but you know, maybe not

at the same pace that we enjoyed this year. So given where we are, Michael, uh, you know, in the economic cycle, in this bull market, given a price performance that we've seen in as you go into there sectors of the market you like more than the others. Yeah, thanks for that question. Absolutely. So if we just break it down in terms of the ten major sectors of the S and P five hundred and look at the

valuations relative to their own history, very interesting. So we had an underperformance by the healthcare sector this year for various reasons, obviously, some of which attributed to fears of um, you know, policy changes with the rise of Elizabeth Warren and concerns that Medicare for All and other changes might

hurt the sector's profitability. So healthcare underperformed this year. The valuations on a forward basis running about thirteen four percent um below you know where healthcare tends to trade historically. On the other end of the spectrum, consumer discretionary very strong this year, but the valuations almost cent above um its own history. So our view for next year would be, um, why not take a look at a sector that's not so tied to the economy that's all that also offers

attractive valuations. Healthcare would also fit uh into a bucket that you know that's shaping up better technically. J C. O'Hara, who's our technical strategist that you guys have on a lot, likes healthcare from a technical perspective. I like it from a fundamental perspective, and I like it from a business cycle risk perspective. If there is a downturn next year, then these high flying cyclical equity sectors are probably not going to be the place to be. Is that is

energy a value tub? It might be, Tom, It's interesting. I mean it screens quite well, not quite as well as healthcare on evaluation basis. I mean the valuations are below um, you know, their own history, But in an environment where the global economy doesn't turn, then you know you're gonna still have headwinds there I'd be more comfortable with energy perhaps than some of the other cyclical sectors, just simply because the valuations are are lower. But it's

a very relevant question. How much does this will go to our next section with Michael Darda, but how much of this, Michael, do you link into Fed policy. The zeitgeist right now is this is the power bull market? Is it? Yeah? I think so, because you know what tends to happen when growth is accelerating and you move into a decelerating pattern as you get an equity market correction. We had you know, two big ones last year, and if you're soft landing, you know, if it looks like goldilocks,

then valuations go back up. And that's exactly what's happened so so far. So far, it looks like the FED is pulled a rabbit out of the hat, if you will, with monetary policy, and they've done just enough to keep the economy going at a steady keel, and then you'd be justified in you know, in stock prices going back up to record highs. But just keep in mind that we had a four month yield curb in version this year. It's reversed now, but we had the yield curb inverted

tends to builds for or consecutive months. Historically, that's been a twelve month forward recession indicators. So the consensus seems to believe we're out of the woods on recession risk. But the last three times we had yield curve inversions, recessions hit between eight and sixteen months later. We're only six months out of the initial inversion at this moment in time, So maybe we're getting a bit over our skis here in terms of optimism on the business cycle. Hey, Michael,

this is obviously is presidential election year. Historically, how have markets reacted during an election period? You know, I don't put a ton of stock into that. Others have seen certain patterns, but I think it really comes down to, you know, the fundamentals, how much tightening did the FED doe in the past. You know, did you move into an inverted yield curve environment? You know how our credit

markets responding? And so as of now, you know, a lot of the indicators look like they're telling a soft landing story. Um, but I really think the first half of next is going to be critical in terms of how some of these shorter term leading indicators hold up like jobless claims and temporary help employment. Confidently, you know, if they hold up through the first half, then I think it's you know, looks it's looking much better for a soft land, but it's too soon at this point

to make that judgment. This has been great, Michael Darda, thank you so much, greatly appreciate it. With m Camp Partners this morning, very generous with his time. We're thrilled they have David Kotuk with this Cumberland Advisers. David, I just randomly picked off the map the twenty year piece of Sarah Soda. This is a small city in Florida, enjoying a four percent coupon. The yield at the moment is two point four percent. Priced at one eleven. I'm up eleven on this dog this year, so I got

eleven plus four. I got a fifteen percent total return on a Muni bond. You live, eating, breathe. Muni bonds. Are they priced to perfection? Hi? Tom, Merry Christmas and to you into Paul and May I add Rich Truman and Tanya Chin who are such a player to work and all four of you can come down to the old dog Sarah Sota on a fifteen percent total return on the Muni bond, and we would be happy to entertain you. It's remarkable. It's remarkable. I mean, it's been

a story is Michael Holland said earlier. Six of the last twenty five years have been like this. What do you do if you're clipping triple text free coupons and you're up fifteen percent in one year, Well, the first thing you do is uncorked the bottle of champagne. But when you finish it and come back to your sentence, you say, this cannot repeat itself. And in our portfolio strategies,

we have a barbel. A barbell means you have some of the kinds of bonds you've described, and you have shorter maturities, which is where you have the safety net. And as the bond market goes through this terrific increase, you move from the successful piece and add to the barbell defensive piece, because that's the only way you'll have money available to redeploy sometime in the future. Yeah, I apologize, my years are going here at the end of year.

I thought, he said, Barbill, we sometimes they go together together. Sometimes they do Tom. I'd tell you. When I read David co talks research, I always always always learned something new. Here's my nugget from today's UH Sweden's ricks bank. Did you know that this was the world's first central banquet opened its doors in six David was there? David was there? David.

That brings me to my point here. I mean, we don't have to talk about negative interest rates per se, because I'm not really sure how to figure that one out. But are you in the camp that says we are in a lower for longer rate environment. I'm not there. I think negative interest rates our peak, and the peak was at about seventeen trillion total worldwide debt specified in a negative interest rate by market based prices, and that was in the summer. That number is down to twelve.

Thank you for the compliment about the research on Sweden. Sweden is back up to zero and the rest of Europe is under discussion. Christine legarde Um has has phrased in a nuanced way, we're going to do a full review this year and the reason has to be negative interest rates have been so damaging. What the review is going to say when it will be completed, how they're going to move to it and how they do it when the staff of the e c B is part of the review process and they're the folks that created

the myth. David, to get to our to our next block, which I really want to focus on equity market and stock ownership. We we we have such a narrow market six eight, ten, twelve stocks. Everybody owns them, everybody loves them, or they're not in the market. Can you acquire shares of something like Apple today? And I'm just picking that, folks, as one of the representative stocks. And what do you do with these one story blue chips that have gone up,

up and up. It's remarkable. Um, we use E T s as you know, and in the E T F strategies. In the last few days, we've had three rounds of selling and we have raised cash. And as we sit here today in our US Exchange Traded funds portfolio today we are in case. So you only got to go

to get to where I am. Well, I the rest is in a mix, and that mix has overweight characteristics in healthcare and in defense, and for good reasons justified by the defense budget, by the complexities of the world geopolitical risk, and healthcare is the insulated sector eight percent of the US GDP. We own three TS to get

to the space, and that is domestic US. It has insular qualities against trade war effects, and the rest of the world wants to buy American healthcare results, whether it's in biotech, it's a cure, whatever it happens to be. So that's how we've repositioned here. David Kotak for US A couple of advices. Thanks for listening to the Bloomberg Savel podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,

or whichever podcast platform you prefer. I'm on Twitter at Tom Keane Before the podcast, you can always catch us worldwide. I'm Bloomberg Radio