Surveillance: OPEC Is Doomed, Gartman Says

Find Bloomberg Surveillance on iTunes, SoundCloud, Bloomberg dot com, and of course on the Bloomberg He was trying to get the Tiffany's next to the Trump Tower and it was a little hard to get there through the security for the President elect, so Dennis Gartment decided to darken the door. You guys will apparently let anybody on this show nowadays help, yes, help the liberals of America with the surprise of the election.

I would suggest a Virginia, North Carolina guy like you really wasn't all that surprised, assist the progressives Listening people need to get in an airplane and fly over the great fly over part of the United States and just go there and go there. It actually is quite civilized.

You'd be surprised. They are very nice well, it's well spoken area tite people living in Peoria who are reasonably well read, who are cognizant of what goes on in the rest of the country and are different than the coasts. But that's that's indeed what happened. So it was not all that surprising. Maybe you wrote about this this morning. Some of them want a thirty five percent tariff on bad elites like you sending jobs abroad and others, including leadership of the GOP and the How's go Maybe not?

Maybe not? Where are the checks and balances to Mr Trump's rhetoric excesses. I think Mr Ryan is a check in a balance to Mr Trump's rhetorical excesses. If there is a problem with Mr Trump, it is that this propensity on the part of of of he and others around him too to put into effect or talk at least about a thirty five percent tariff. What a what a silly notion that would be? How detrimental that would

be to the economy in general. Yes, two small groups of people to to the labor unions, it makes sense. But you have to remember you put a thirty five percent tariff on a television and suddenly you are spending thirty percent more to buy that television, and that's the problem.

Hopefully that shall not happen. Hopefully we do not take a chapter out of the middle of the nineteen thirties when tariffs, the smooth Holliday tariff, took a medium term and rather substantive recession and turn it into a depression. Hopefully there are wiser voices around. But on balance, I got to tell you there's a greater sense of of of optimism out in the great flyover part of the United States, and there had been a mere three weeks ago.

It's demonstrable. How do you judge Donald Trump's willingness to be checked and balanced? In this week since the presidential election, We've watched his Twitter feed with with great interest, But you know, you you wonder if he's that quick to respond to what the media is saying, for instance, how well he's going to be able to have a conversation about smart trade policy that does the great fear, isn't it? And and actually I put that in my newslet this morning.

Won't somebody around him please stop this man from tweeting? The problem is, it doesn't appear that anybody's gonna have the power to stop him. Please Milannia, stop this man from tweeting. I'll jokes aside, though, I mean here here, you know he has the potential to do some real damage. I mean you must have been watching what he was was saying about China, about Taiwan with us. I was not as dismayed about what he said about China as

as other people were and are. I'm far more dismayed about the the intention last week, or the decision last week to push Carrier to do what they did, to to push UTX to do what it had to do, and then to talk two or three days later about once again putting tariffs into effect. That that is bothersome. As long as we can avoid that, and I think we shall avoid that. As long as we can avoid that,

things will be fine. I I talk up Dennis how you're one of the few people that actually put your tick by tick TA track record out to the public. It's been a brutal year for people gaming uh the market. Now you enjoy Fortres's diamond three point one standard deviation moonshot on a monthly chart. The last time it did that was from the Quiet of two thousand five, which isn't even comparable. What does Dennis Gartman do if you buy and hold the banks and you've gotten this gift,

do you stay with him? I think you have to. I think there's something that is that is tectonic that really has occurred to things the banks are going to do so much better over the course of the next five, six, seven years, and to something I've been arguing about. To put it into simplistic terms, I I think that we're going to see the trumping for lack of a better term, of the Mahoning Valley, the place where Steele was born

in the United States, compared to Silicon Valley. I think it means that if the Trump administration means anything, it does in fact mean infrastructure rebuilding and simple things are going in down. Okay, but you come on, you invented this. Donald Trump took the lesson from you. If it drops on my foot, you own that fraend line. Yeah, what is taking so long for that to happen? He ain't president yet. Okay, it's that simple. He's not president yet and it will probably be with the whole concept of

shovel ready is an utter misnomer. The shovels are ready, but it takes a long time. Given the fact that all those products or projects have to be done at state and local levels. Federal government can try to do something. Federal government can set the standard. Federal government can fund a bit of it, but that the mass funding has to come from the state and from the local, from localities, and it takes a long time to get that that

kind of thing passed through those various legislatures. It will take time, but it is time to buy the things that if you drop them on the on your foot shell hurt. And I have to admit I think that's an interesting and simple but a correct mnemonic device. Dennis Goverment with us. We thank all the hate mail for coming in on guard. He is the pinata of the street. Here's here's the hate mail, David Girl from one de Cass down in Florida. Don Cass says, I'm short in

the banks. I don't agree with Dennis. Why how do you respond to a guy like Cass who, on a trading basis has been short this great bull market and now he loads the boat and shorts the banks. Yeah, but he's getting his golf games getting so much better. He sent me a scorecard. They had three birdies in a row. Well done, Douggie, well done, and we said good morning to Mr Cass. Seriously, folks, dot Cass very cautious to short on the banks after the huge service. David,

I'm eager to talk to you about oil. Since we last spoke, we had this OPEC production cut agreement. How optimistic are you that that's going to be uphilm It won't be upheld. I mean, if history shows anything, it shows you that all OPEC decisions, all OPEC cuts in the past have always been overridden. They cheat, it's just

a fact. Are they cheating right now? Well, the interesting thing is they began the cut from an already ramped up September October in early November production, So the cut is actually going only going to take you back to October levels of production. Two, they will cheat, that's just a matter of that. That's only a matter of time. The the new agreement doesn't go into effect till January one. I suspect it by March we will see a a

rather substantive amount of cheating. And it doesn't even take cheating, It takes us. We are going to continue to be larger and ever greater producers of crude oil fifty two dollars w T I with a four dollar contango to the one year gives you fifty six dollars for one year crude and they're going to sell We need more, jan can we get We need an additive jargon. What did you just say to the contango? The contango is the carrying charge, it's the cost. It's the tangible of

a tangible asset. And crude is indeed a tangible asset. And and for the one year, it's the one year forward. The crude oils trades right now at about two dollars and fifty cents premium to spot. That gives you a fairly comfortable hedge double arrangement. And I guarantee the banks are telling every E n P producer produce hedge, earned the carrying charge, and produce crude oil. What did the way that that meeting went down tell you about the

future of this organization? The future of OPEC. I think the future of OPEC is doomed for for no other reason. The smartest guy in the room at OPEC is the Deputy Crown Prince, and he's made it clear he understands thirty years from now, crude oil prices will be zero. There it will be worthless. Something else will have supplanted crude oil. He understands that, and he intends to sell his crude before that. Joseph Knight, in another world from

you of international relations, is adamant about American exceptionalism. Sure, I want you to state for US, and it permeates your newsletter the DEFEATUS of America. What do they get wrong? And particularly where do they get wrong? In capitalism? They get everything wrong. They get, for example, the one thing.

There are certain things in this world that you can count on, but you can count on the fact that every year drought in rain out, America's farmers are going to produce more and better crops every single year than they did the year before. Our technology drives that fact. We are now producing don't hold me to the number, but perhaps four to five times more soybeans on the same ancorage than we did a mere thirty years ago. We will produce more ten years from now than we

produce now. We have learned through technology how to drill for crude oil so much more efficiently, so much at a at a much greater pace, with a greater success ratio. They the defeatist miss what we do. We are the greatest minds in the country when in the world, when it comes to production. We enjoy the morning with Dennis Gartman of the Gartman Letter. No, we will not send out his letter. We protect the copyright of all of our guests and particularly the joy of Dennis Gartman's beliefs.

In the back of his newsletter, one of his foundation beliefs is gold, not in dollar terms, but in yen in euro terms. Uh, it's a really ugly chart. It's the classic pop bullmarket and then a trumpion rollover to eleven seventy two announce. Some gurus would tell me support is nine as possible. Are you long or short the Golden Beast? I am still long of gold in euro terms and in end terms. I have no urge to buy any in dollar terms because I'm a bull on

the US dollar. I'd rather own something in terms of a currency that I think is going to devalue in relationship relationship to the buck. But do I wish I owned any gold at all right now? I wish I sold a goodly portion of what I had, which is in my retirement fund. Two or three weeks ago. Wait, we get inflation from Mr Trump, from the Republicans in Washington, we get inflation, gold goes up, right, not necessarily there. There have been plenty of times when we've had inflationary

impulses and gold hasn't gone up. On the other hand, there have been periods of deflation in the past when gold has gone up. Gold, I think is misunderstood. I don't think it's an inflationary harbor any longer. I think

it's simply a currency relative to other currencies. And having started in the business in the early nineteen seventies at dear Old n C and being now Bank of America, when when when we traded one currency against another, I think of gold as simply being another currency, not not a harbor of of safety, not a a a place of value in an inflation to mentioned the Lira a few minutes ago, and you've written about that in your newsletter. The moves that we've seen there, what's driving it and

what do you see is the outlook for that? You mean the Turkish leer, Yes, exactly. Well, it's first of all, I don't I don't trust the Turkish government under air to one for as far as I can throw him. Uh and and he's fighting a rear guard action. The fact that you had the president of a of a country come out and say they need to lower rates and the Bank of the Central Bank has, in fact, right within minutes raised rates tell you he's got a problem.

Where's the where's the Turkish leer going probably demonstrably lower, if for no other reason that the dollar itself is demonstrably strong. Looking at euro dollar right now one of seven thirty seven, are you surprised is in light of what we saw in Italy that it is where it is? Oh? Yeah,

I am, I'm surprised. I thought when they it looked to me in the middle of the night after the votes had been counted, and when I get up every morning at one o'clock in the morning to write the letter, and we were trading one oh five one oh five, oh five had been given, it looked like one oh five, the big figure was going to be given. And then suddenly there was a defense at one oh five. Next thing you knew, everybody who's short, including myself, ran for cover,

and the next thing, it's trading one oh seven. But if you take a big look at the big picture over the course of the last year, is that rally from one oh five to one oh seven. I think we've got a one oh seven eighty bit if I'm not mistaken at one time yesterday. Is that is that

technically important? Now? The the lows are lower, the highs are lower, and it still looks to me like a bear market when you look ahead here to the the e c B meeting this week, what's what are your expectations terms of what we'll hear from from Mario dragging? I think we'll hear very little. I think that I think they'll kick the football into the next year. It's Christmas time. Their propensity to take any action whatsoever is

extremely limited. That will be rhetoric, there will be verbal action, but will there be any real action? I think to But but again it goes to the back half of your newsletter, which is essentially on the exogenous shocks. To worry about what's your outside shock? You're worried about what am I shot starting with European banking? But what's the one that keeps that garment up at night at one am?

When he writes in granite and chisels out his newsletter, the the one thing that keeps me up at night of the Chinese and whatever they're up to in the in in the South China Sea, that keeps me up at night. I'm always worried about what the North Koreans are capable of doing at any one time. They are more Trumpian than Mr Trump is, and he at least only tweets they actually take action at times. I I

stay awake worrying about that. Um I stay awake about I stay awake nowadays worrying about what Mr Trump is going to tweet out. That that bothers me a great in far more than it probably should. One final question, Bill Gross talks about a decade of financial repression. Can you say the financial impression for conservative people, retirees, savers,

can you say it's over? I think it's over. I think we're gonna see I think the honestly, I think the thirty five year bear market in the bond market, uh in in rates, the thirty five year bull market in bond prices has ended. I think it ended six months ago, and I think rates are going to be not dramatically higher, but certainly demonstrably higher. Can we get can we get the Fed funds, but right over the course of the the next three or four years back to

three percent. Can we get the ten year bond tenure note back to a five percent? Eel sure, I think we can do that without doing any damage to the economy. Independence bull, what's your forecast for the that will kick off at noon? And I think that both teams will the in the in the words, in the words of my high school phizzed teacher Bobby Knight, the team with the most points show win. There you go, a sound of forecasts anytime, the surveillance that all we're trying trying

a hard. Kate Moore joins as chief equity strategist at Black Rock. As I said to morning, Kate, let's start with with this referendum and and the fallout from it, so much as there is one here in US equity markets. How how we're market participants, our investors watching what was

going on in Italy. You know, I think we've been talking a lot about how markets have been shrugging off recent political changes and wondering, really if that's going to extend itself into two thousand seventeen years we get further into European elections, you know, there's a sense at one level that there's a bit of a narrative change, that we're going to have more stimulus, that the people are talking, that the government has to answer, And then there's a

sense on the other side that, you know, this doesn't actually change meaningfully the path of the economy, particularly I think when it comes to the market reaction to Italy. So I don't know, is it fair to say the markets have been schizophrenic? What one could? You know? You get, you get this no vote at Renzy is staying on here, but you said there's there's a lot of work to

be done here. How optimistic are you that in the next twelve eighteen months something is going to is going to happen or the politics going to overshadow everything that you think. I'm pretty focused on the politics, to be fair, I would love to tell you that I'm absolutely optimistic that we're going to see a significant acceleration in growth, that all of these changes end up being, you know, just sort of blips on a longer term positive trajectory.

But you know, the thing I keep coming back to is what this does to business confidence, what this does to investment sentiment, you know, and whether or not given all of this uncertainty, we actually get an increase in spend or let's say, if you're a consumer or household

and you think about borrowing money. You know, when there's so much political uncertainty in the future of Europe is in question, do you really look to you know, lever yourself up and um, you know, take advantage of this environment. I don't know. I was going to ask you to answerr rhetorical question. There I go. I would say, waiting on the sidelines and be a little bit more cautious

is prudent at this point. Continue with business as usual, but perhaps not accelerate any of your spend or investment. From here, I'm gonna ask you if this is all part of a continuum. We had the news out of friends yesterday another candidate for for president there from the socialist center left side of things. Uh. And it strikes me that the longer this continuum gets, the more events like this probably take upon to take less import than

they would have in the past. That's right. I wonder if we all have a little bit of a political news fatigue too, because um, it's been a NonStop array of big events and you know, analysis of every politicians speech, and we were already in that mode when it came to policymakers, particularly on the monetary side. Um and and now here we are trying to really discern what every politician is trying to try and do, and you know,

their policy priorities. The one thing I would also note, though, is, you know, all of these political changes have huge impacts on currencies and sustained impacts on currencies, and that ends up helping someone's relative purchasing power or uh, the earnings of exporters. I think that may actually help the economy in the near term, but it's really too soon to say how sustainable that is. So you can hear me, I'm a little bit of a skeptic. I'm a little

bit of skepter, you go. I mentioned those two big a monetary policy events, one this week one next is that taking on less importance is monetary policy taking on less importance, and light of all of the politics that we've seen, I was totally unaware that we had some monetary policy coming up. Of course that's not of course that's not true, But no, I think that actually, you know, if you were to ask me between now and kind

of your end. You know what am I most focused on, if any sort of events, it's is actually gonna be ECB on Thursday, UM less interested in the FED next week unless there was a meaningful shift and all of a sudden the decided to step away and not continue the path normalization. But I think you know what the ECB does in terms of talking about UM bond purchases in two thousand seventeen and onwards, whether or not they

would consider tapering or extending the program. I think that's going to have a huge impact and will really move markets. And there's a small meeting later this week. Small it'll be amazing why. I can't imagine what do you will say? It is always eagerly anticipated press conference. Good morning everyone, David Gerr and Tom King, Kate more with us Kate within within the rotation, You've said the word rotation four

or five times in the morning here as well. I think we needed to define that what is rotation and what does it mean for our listeners investment? So what I've been talking about rotation. You're right, Tom, totally fair to call me out on using that word a dozen times this morning, but only one cup of tea in what I would what I would say is this this this rotation within the equity market happened and started to

happen before the US election. It was away from some of the bond proxy stocks you know, broadly will say that's utilities, tell a calm and consumer staples, and towards some of the more value and cyclical plays, particularly towards financials, I would say, and energy. Uh, that accelerated after the election, and you can actually really see a meaningful departure from first half performance, second half performance, and then you know,

super charged in the last month. That's what I'm talking about in terms of the rotation and really away from you know, investor darlings into sectors people had much lower exposure to. So so help me. And maybe this goes with a Roper merger that was just announced. I believe Karen Moscow got that into a discussion. They're buying is it Dell Tech? Roper Technologies? Um getting it up here of Sarasota, Florida ten They manufactured, they distribute industrial equipment.

Those are the people Donald Trump wants to help. We mentioned tariffs before. How do you fold the president elects rhetoric maybe policy and actually you're estimate of his real policy into buying acquiring shares of industrials and then here's the hard part, and then holding them. How do you do that, Tom, That's a great question, I would say, because industrials are the one sector where I think there's

a huge amount of uncertainty. The market did price in an absolutely optimistic scenario, both in terms of infrastructure spend and on shoring. But it's really not so straightforward. And in fact, I would just take us back a few weeks to how companies in that that sector guided not just for fourth quarter, the forward quarter, but also for the next twelve months. It was very very mixed, Tom, and I think that's what we need to recognize. We

have to also look at the policy changes. But but but focus on the fundamentals, and um, you know, I'd say I'm a cautious, a little bit cautious. You know, given the recent run in the sector, market priced and pricedent very fast, too fast. Do you think I mean it's overshooting their bent? You know that you look at those for couple of days post the election, and and some of these potential policies got priced in very very

quickly and then backed off. I would say the big example there would be large capt pharma, and you know, kind of broad the healthcare where there was a great amount of optimism, of a bit of a relief rally, and then sort of a well, we don't know what this means for affordable care, and we're still concerned about pricing when it comes to private insurers, so you know, a bit bit of a back off. But then some

of the stuff can has continue to run. And those are the sectors as I mentioned before, they were already in favor and moving ahead of the election, help us understand the weight of the variable of trade policy. Here a lot of people saying, we heard what he had to say on the campaign trail, heard with Donald Trump had to say on the campaign trail. He's going to limit what he's said when he gets into opposit itself.

And then we see these tweets over the weekend as you're looking ahead to the to the health of the economy, how much is that weighing on on your outlook? I mean, trade policy is enormous people, people, we can't separate out what could happen to the US dollar um or what could happen to the global supply chain or what could happen to the average cost of goods purchased by the average consumer who has not actually experienced significant wage gains

or any wage gains UM. And I think stuff sounds good when it comes out, perhaps on a tweet, it looks like it's protecting the American people. But there's a far distance between some of that rhetoric and a positive impact UM in terms of over someone's overall spending. Kip more with us with black Rock. We've been talking up a storm here. On a break, Let's talk about technology

and hydrocarbons. There's always a point where something gets stupid within the SMP valuation, like it makes up twenty one or eight cent or whatever the sp index. I would suggest hydrocarbons right now aren't stupid, and I'm guessing sort of big ugly technologies not stupid. But is technology a value trap? What portion of the SMP is it? And is it a value trap? Look, without question, the importance of technology has increased, but I would say, you know, it's hard for me to say it's a value trap.

The multiples didn't get crazy. There was actually so much earnings growth and sales growth in that sector for a long time it's obviously slowed a little bit and estimates for two thousand seventeen or not as aggressive, But you know, it is a sector I think that incorporates some real high flying companies and some kind of older tech and where it may pay to be a little bit more specific and discerning. I would also say it's a sector

that was a huge consensus overweight for some time. At a consensus overweight going into this rotation, I want to use it for thirteen times now tom um in that that started in the beginning apart me the second half of of two thousand and sixteen. So it's a place where I think people can continue to reduce their positions in order to fund um some of their buying into energy or into cyclicals or something kind of a more value place. I was mentioning in terms of US bank stocks.

There was so much commentary after the election looking at technology and specific which was down on the heels of the election results that it was directly attributable to what happened on November eighth. Looking looking back at the election, now, is there anything that we've seen since that you can tie that to or is it just the uncertainty generally

in terms of rotation. It's not that you could argue if it was just about the election, then people should really like a lot of these technology companies with huge amounts of cash off shore and if that's coming back, and it would be great to own the shares, especially if some portion of that cash is used for buybacks

or special dividends. But I think this is really about people getting more constructive on the banks, which were the consensus underweight and which we had become more constructive on and sort of had been talking about throughout the fall, and that needing to fund um, you know, find some place to actually, you know, to get cash to decrease that underweight. And I don't even think we're at neutral yet. Frankly, yes,

I think so um, not meaningfully underweight, but modesty underweight. Look, I've had a number of conversations within Black Round, outside of Black Rock, where portfolio managers and investors have said, you know, if they were overweight, the bank's going in there at least neutral. They felt pretty good about it. But the speed at which these these stocks moved has made them cautious about doubling or trippling down. So I think that people are still phasing into the sector. Mike,

I'll give you a phase into the sector. JP Morgan is basically a moonshot. I mean, if you look at it on a monthly basis, and you look at too stands. I mean, David, it's it's where's that chart again? There it is. It means way out past three standard deviations on a monthly chart. It's a moon shot. I'm quite familiar with the shape of the J. Yeah. I thought the bank was about ready to fall apart if you left. I hardly think that's the case. It is, Uh, it is.

It is a very very solid institution. Uh probably didn't even notice I was gone. Um, But the point of the matter, Jamie, Diamond were black for three weeks after you left. I were black every day. Seriously, you're telling me the banks are availing to make it fails. I know. I think the banks have so many things going for them at this point. Outstanding balance sheets which we knew, better cash return to shareholders which we knew, which was sort of like skeptically, um, you know, taken in by

the market. We actually also we're seeing good green shoots. I hate using green shoots, but it's green shoots in terms of economic excuse me, we're rotting. We're pretty constructive on the U. S economy and actually see see good reason to believe we're going to get an acceleration in growth, not just because of this election, but just in terms of overall demand um in two thousand seventeen. In addition, if we have less regulatory pressure, I think that's a

that's a real help. And of course we've got this reflationary theme which is steepening the yield curve, and it's you know, going to help overall earnings. We think, especially over the next couple of quarters. There are a lot of things that have aligned at the same time to make the banks an interesting by. JP Morgan is out three standard deviations for the first time since May of two thousand six, and then it was from extremely quiet two thousand four, two thousand five. That's how rare the

Trump surge is for Mr Diamond. Fortress Fortress Trump, maybe that's what we'll call JP Morgan. Kate Moore, thank you so much. She is with Black Rock giving us wisdom on the equity. Fortress Trump till there was yesterday. I didn't lie this time to go across one block the New York Place to be. He said, you're a bad influence. Yes, I'm going to Gucci will continue. This is Bloomberg, who

you put your trust in matters. Investors have put their trust in independent registered investment advisors to the two and of four trillion dollars. Why they see their roles to serve, not sell. That's why Charles Schwab is committed to the success over seven thousand independent financial advisors who passionately dedicate themselves to helping people achieve their financial goals. Learn more and find your independent advisor dot com. Well, let's a real pleasure to have a legend on the line from

Rye in New York. That's Mario Gabelly, founder of Gabelly Funds, schooled by Dodd and Graham, joining us now by phone from Rye. As I say, Mary, good morning, Great to have you with us, Delighted to be here talking about stocks. There you go. Well, let me let me ask you, first of all, what these last few weeks have been like. We've been talking with guests about how they processed what

happened on November going into the morning afterward. Give us your sense of of what's happened here and how it's changed your outlook hasn't changed anything other than the re establishment of a basic fundamentals of allocation of capital towards capitalism as opposed to socialism. Any event, the eboth, Hillary and Donald were basically going to push for a couple of areas that were fairly obvious, one of which was

infrastructure spending. The other one was military spending. So you know, we were there and the you know, the change in administration basically allows new changes that who is going to run the regulatory agency like the Federal Communications Commission? What does that mean? And things like, uh, you know banks and consolidation in the banking industry. You bring up infrastructure, let's start there. There was so much enthusiasm among investors

after Donald Trump was elected. A lot of people betting on the fact that there is going to be an infrastructure spending package. When you look at a sector by sector basis, when you look at utilities, say, is it oversold at this point? Well, whoa, whoa, You're you're off the deep end. Let's talk about infrastructure. Cement, roads, bridges inland waterway inland waterway, the the locks on the Mississippi where our grain goes to export, like soybeans are big

export product that's got to be focused on. We've gotta eliminate the bottlenecks and just drive around Manhattan independent of all of that. What does infrastructure mean? It means airports and the equipment rental companies. You or I Ashtead in London, Herrick Rentals and has three or four others they benefit.

It's a forty five billion industry that was hidden. But you go back a year ago, one year ago, December fifteen, two thousand and fifteen, the US government past the five year bill for highway fixer up called fast Fix America Surface Transportations. Fact, like company in Chattanooga doubled before this happened. It's called Aztec. Companies like Gento, which makes us to

get tons. Mario, how do you respond to somebody who says, Okay, that's great, Mario, Red and barons from your listen to on surveillance and you are are United rentals talk about you can't make money in stocks, folks, fourteen point nine percent per year over the last decade. How do you respond, Mario to a person who says I didn't get in I'm too late. Well, that's the question mark. That's always good.

I think Buffett makes the case and I'll just echo his comments about the next ten years, America is great, American investing will be terrific. And to the cree that you own a company and your buy hole. Look, if you bought Warren Buffett's company somewhere around seventy when I started the firm, you probably compounded at any time over the last thirty years. People would say it's of a price. So I'm I'm think that a index fund will grow. Tom and the active management you better, I need you

get you wound up. This morning, Mario Gabelly on the people that say companies shouldn't do share buy backs, they should stop financial engineering, they should go out and find investment even if it doesn't work. That upsets you a

little bit, doesn't it? Not? Not really, I think it's not inappropriate to allocate capital to the way a CEO thinks to the degree that you were basically putting money in twenty years ago and open heart furnaces because you were in that business and you want to continue in that business, and now that was not smart. Just think of Cuba, Just think of China. They did the same thing. So when you look at the American capitalistic system. You know, you want to allow all of the errors and all

of the mistakes, allow that capital be formulated. And I put in, I have no problem if the company is selling value to buy, it is a thirty seconds that we're going to come back, Mario. Is Donald Trump good for Mario Gabelly? I think the notion of a lower corporate taxes, global competitors for American industry, somewhat less regulation, and the re establishment of the entrepreneurial innovation, creative innovation that made America great is not bad for any entrepreneur

like myself and anyone else that wants to succeed. To give you an idea of the pixie dust of Mario Gabelly, and trust me, folks, there's years that he would rather forget. Rarely, if ever, have I seen back to back years in the ninety four percentile that would be the Gabelly Equity trust A closed and fund g A B is Well, Mario, did banks have anything to do with your two thousand

twelve two thousand thirteen excellence. No. I think it was a combination of transactions and coming off the lackluster performance in the prior years. Talking about banks that we're looking at all of the banks in Virginia, South Carolina, North Carolina, Georgia, and Florida that will be part of the consolidation effort. So you know, anything on the two or three billion dollars, all of a sudden they've got a new tail in tom Well, how does it change, How does the bank

analysis dialogue change with the politics of Washington. Oh, I think it's fairly simple. The eliminate the the they raised the ceiling of fifty billion dollars before you have to file a large number of extra forms and the list is pretty simple. Anybody can just go out and get a Russell two thousand index of banks and identify those areas rather than be identifying them for you. But that's easy, you know, it just requires a little oval grease. On

the other side. In the infrastructure area, one of my favorites is case New Holland Farm Equipment Company, say construction equipment company that trucks in Europe, which is improving, and the stocks around eight dollars and seventy five cents and US and C n h I and it's controlled by the Annelli family, and I think it's quite quite attractive.

So there's a whole bunch, Tom, when you say about entry points, what do I want to own, how do I make money over the next three or four years, and how do I pay lower capital gains taxes during that period? While I'm holy it, that's what the individual investors think about, not the professional investors, the managing tax

free money. Though Tom mentioned your prowess for for media in particular, and our colleague David Weston sat down with Less Moonvest the president, chairman and CEO of CBS yesterday.

I know that you have been actively watching and engaged with the conversations about the future Vicom, the future of CBS are you are you looking forward to Do you want to see here a merger, a deal with both these companies and do you want to see Moonvesz running in Basically, Less is terrific, one of the great executives in America. We have blessed this this country with so many good CEOs. Basically, the decision is going to be made,

obviously by National Amusements. National Amusements obviously is trying to go through the fairness. Our clients own most of the majority of the minority in terms of voting stock in Boat CBS and Viacom. So hopefully if there's an issue in terms of fairness and extreme of fairness opinions or you know, uh, we will have an important say in it. And we're not opposed to emerging. We've gone through this

before Viacom was off from CBS. It was they bought CBS and a lot of going things going on within them. Within the dynamics. M is the basic idea of animal spirit. I guess we believe. I just did a chart of the monthly JP Morgan chart. It's a moonshot folks at three point one standard deviations. I mean, it is a Trump moonshot on the equity markets. Would you suggest M and A. I mean, I was with you, Mario one day and the next day Cadbury was taken out. Is

that game going to continue? Well, you know, it's funny that you mentioned Cadbury because one of the ones on Pretende A transaction list is one that you know, Irene Rosenfeldt went after cat Barrier and Mandale is certainly around forty. You know, kind of an interesting consolidation play on its own. Either they're gonna buy someone or someone will merge with them to create scale on the global basis, Tom, how was the the environment for the the atmosphere four mergers

and acquisitions right now? Well, it's not change. We go through the last sixty years and we go through a variety of cycles, and this one here, you know, may have some tail when, particularly if you allow capital to be flowed back to the United States and have a corporate tax that is not based on world taxation but territorial taxation, so that companies in the United States, particularly big farmer utilities, will merge. You know, you get a

whole bunch of companies that will consolidate. And the entertainment business is just another example, and content and connectivity, so you'll see a lot of potential deals. Even this morning where we're talking to I just tweeted that X Y companies being taken over the cash tender offer. Mario, let's do some job constructive job advice for our global Wall Street audience to the young turk who's level one, level two, level three cf A. They're doing securities analysis, either full

time or they're certainly aware of it. What is the new new for you in terms of analyzing the company's performance and potential. Well, we just look at how management allocates capital. Tom, that's but nothing has changed. I mean

basically as Graham Dodd Murray Greenwald that methodology. You know, if you want to be the CEO of a public company, if you want to do deals in big private equity, if you want to understand how to do merging acquisition work, you know, the notion of doing fundamental research and sticking to the problem is getting paid for it. Ever since Spitzer put his rules out, it has become extraordinarily hard for the cell side, which is a great training ground

to basically pay for analysts. And so where are the analyst going where they do in their work? And it's and that's the quandry. Tell me about General Electric if it's about the CEO and allocation of capital. Has mr mL done a good job? Well, clearly this deal with Maker use and merging their uh you know, energy business into that. And look at what they're doing in the additive area with Joyce who runs their engine business making acquisitions in Europe because he wants to get into the

three dimensional metal additive business. You know, they've got to move capital around. They've been shrinking the cap. The stock is a pretty good target for industrial activity on a global basis. Clearly they're trying to figure out what they're gonna do with their water business and obviously some other industries.

So the notion of capitalism is to allow you to make managements, to make mistakes, and you know, make acquisitions and also sell the investments without the same time reposition the company for the dynamics of growth and that stay frozen like Cuba did but fifty years I hear you're talking about the need for tax reform, for regulatory reform, and I wanted the degree to which you're working hard to make sure that that Donald Trump is hearing you out.

Are are you somebody who wants your opinions known, which we're talking about him here, But are you satisfied this as a president elect who's listening to guys like you? I hope, I hope he's not listening to me. There's a lot of part of people. There are a lot smarter people out there that can give him advice. I'm just basically an old fashioned stock picker that has done a fast you know, work hard for my clients, and that's all We're gonna focus on. No politics, no sex,

no religion. But we will listen to Tom Keene and Bloomberg. We're gonna leave it there after, you know, no, Mario, thank you so much, Baragabilly greatly. I appreciate it. Thanks for listening to the Bloomberg Surveillance podcast. Subscribe and listen to interviews on iTunes, SoundCloud, or whichever podcast platform you prefer. I'm out on Twitter at Tom Keene. David Gura is David Gura before the podcast. You can always catch us worldwide.

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