About this episode
John Stoltzfus, Oppenheimer Chief Investment Strategist, says the consumer and the jobs market will play an important role in 2024 . Elliot Ackerman, US Marine Corps Veteran & Former White House Fellow, overviews the latest in the Middle East and Indo-Pacific as global geopolitical tensions continue to rise . Sarah Hunt, Alpine Saxon Woods Chief Market Strategist, says six rate cuts could indicate a weaker economic scenario. Thierry Wizman, Macquarie Global Interest Rates and Currencies Strategist, advises holding a long position on oil . Doug Kass, Seabreeze Partners President, details the catalysts that could drag down stocks in his '10 surprises of 2024.' Get the Bloomberg Surveillance newsletter, delivered every weekday. Sign up now: https://www.bloomberg.com/account/newsletters/surveillance Full Transcript: This is the Bloomberg Surveillance Podcast. I'm Tom Keane, along with Jonathan Farrow and Lisa Abramowitz. Join us each day for insight from the best and economics, geopolitics, finance and investment. Subscribe to Bloomberg Surveillance on demand on Apple, Spotify and anywhere you get your podcasts, and always on Bloomberg dot Com, the Bloomberg Terminal, and the Bloomberg Business App. John Stolfus joints chief investment Strategist at op co Op and I'm our asset management and we speak to him about the bullmarket he nailed last year and continues to nail this year. John, I'm going to take it back to the analog of the middle seventies, a horrific recession, the leap in nineteen seventy five, and then a follow on in nineteen seventy seven. It's twenty twenty four, a follow on bullmarket. I think in many ways it is, Tom. I think the question here really is, or rather the difference is, it's a substantially different background in terms of a digitalized global society for business as a consumer and what was back then, which was essentially an analog world. And I think things get digested much quicker. I think that the data is a better quality. And because we've been in crisis in an out of crisis since two thousand and eight, all the players as well as you know, the traders as well as the investors are more experienced with dealing with volatility. John, I think what's so important here is only Stolphus is talking about last year was a prelude. I just think that's so important. Fifty two hundred price target year rent this year, John, let's build on that. You and I have talked about this a few times in the last few months, and I've appreciate it. Can we just address it right now? How dependent that call is on interest rate cuts from the feder Reserve? Not much really. You know, we're not of the camp it's looking for six cuts this year in twenty twenty four. We're looking for perhaps one or two. And we're not looking for the first half for cuts. We think it'll happen in the second half of the year, and lightly later rather than earlier. In the second half. To us, the Fed has been remarkably sensitive in practicing its mandate. You know, where as able to comy and full employment is described by unemployment between three and four percent, and we think it wants to keep it that way, and so that's what we're looking at A little bit different. We like the Fed. Ironically, very few people do we think the Fed has done. It shows the Ben Bernank legacy carried on through Jerome Powell in the sense of communication and clarity. So it might not necessarily the rally my not be dependent on j. Powell. But how much is it dependent on the Central Bank of Tim Cook? I would have to say, perhaps I'll keep it away from a company specific here, but I would say certainly a business, the consumer and the jobs market will play an important role this year. Keyword to watch for is resilience when we look at economic data, what we're looking at is for things to show resilience, and naturally is a challenging environment when you're making transitions and you have the levels of trouble around the world. The geopolitical risks seems to keep ramping up by the day. But consider where business plays out in this where the opportunities are both this cyclical point where we are on the calendar, as well as the secular trends that are driving potential growth for all eleven sectors. Okay, So in other words, his text still lead me. I guess if that's the question at a time, or that accounted for fifteen percent of the twenty four percent game of the SMP last year at least, I think tech certainly remains a major participant in this, But I think what we need to watch well, of course communications services, which is about fifty percent tech related, you also have when you look at the other sectors, just think about industrials and all the technology in that. And it's a good customer of technology, whether it's it's sensors of robotics or what have you, and the cloud, big data and all that aon. So when we look at this, it's you know, whether it's it's a utility company, whether it's a materials company, whether it's a pharmaceutical or a biotech. Technology is where it's at. So we can but think. The other reason is last year Tech was was fabulous it's performance because it had been so brutalized in twenty twenty two when the Bears sold all of Tech, the long duration they sold because they were worried about red dancings, but they sold the good stuff that was highly profitable positive cash low, create products, and deeply embedded in the lives of business and the consumer. John the cliche is the boat has left the duck. I would guess a very large percent of the surveillance audience feels like they missed twenty twenty three. How do you get back in the game if the boat's left the duck. Yeah, Tom, I would say for the people who missed this, I would say it's a question of layering in. That's not back up the truck. At these levels, consider opportunities that show up when you get some weakness in names that may have gotten away from you. Look for babies that get grown out with the bathwater in downdrafts to add to positions that you're building, and in essence, what you want to avoid is just blindly buying deps. You want to be selective, even within what appears to be a nicely broadening rally. After as Lisa pointed out earlier, I mean we're still back to the future in terms of the prices of stocks. In many cases outside of the magnificent seventy eight there you know they've got it would look like they've got plenty of headroom available to move higher in so many ways. We had a decade in a year. As Lisha and I discussed a little bit earlier on the program, John want to put to catch up with you, sir, Happy new year. John stelfiestet of Oppenheim arrasted management. Right now, we need perspective, and we get it from someone gifted. He's served the nation in the Marine Corps, also a White House fellow, and critically he is a king of speculative fiction with James Travitis, Elliott Ackerman's must read two thou thirty four, boy is out of mustard right now, given the Philippines, given the South China Sea, and we eagerly anticipate two thousand and fifty four that you'll see in March. Elliott Eckerman joins us this morning. Elliott, if this is not speculative fiction, it is reality in the Red Sea. What is lost in the press coverage? I think the one thing that is often lost is we have a tendency to focus kind of specifically on military events while losing perspective that all military events happen in a political overlay. You know, ultimately these are political questions. What's going on in Taiwan? What's going on in Ukraine, what's going on in Israel. And the longer these wars play out, the more and more central the politics of the war it self become. And what the outcome is going to be the heart of your fiction with the Admiral st Vetus is things happen suddenly and then in sequence, do we have the ships in place against these terrorists whatever you want to call them. Do we have the process in place where unexpected bad things can happen in sequence? I think when it comes to the Middle East and the challenges that we're seeing there, yes we do. And that is a situation where we the United States vis the Iranians. We are not facing a peer level adversary necessarily in Iran. And I agree with Terry's comments that the underappreciated conflict here is Taiwan. And when it comes to Taiwan, you know, the United States does not have the forces in place, at least peer level forces in place that could meet Chinese aggression across the Taiwan Straits, and that's one of the huge challenges that we face it. But the Chinese would be fighting that conflict in their backyard and we would be fighting it from across the Pacific Ocean. I want you to elaborate a little bit on the point that you just made that all of these international conflicts have real domestic political implications. What are some of the ramifications that we've seen over the past year, how the conflicts have developed, and how public opinion has shaped the inaction that we're currently seeing in Congress to continue providing aid. I think when we go around the go around the world, if we look at Ukraine right now, I would argue that that's probably a war that's not going to be decided on the battlefield as those conditions stagnate. Is a war that's going to be decided at the ballot box. And I think in Ukraine, in Israel, as we see this war is now extending in two months, I think domestic political considerizations in Israel are going to determine the outcome of their war with Hamas. And I think when we look at the United States, you know, the elephant in the room is we have an election. It's going to occur this fall, and how that election unfolds will be determinatives of those conflicts. And lastly, when we look at Taiwan, I mean, in two weeks the Taiwanese people are having a presidential election, and the outcome of that election will certainly affect China's perceptions on what they should do in Taiwan. How different is the foreign policy of Donald Trump versus President Biden. I think the foreign policy of Donald Trump is much more unpredictable, and I think the foreign policy of Joe Biden, as we've seen it, as much more. It has it much more incremental. So I don't think anyone can necessarily say what Donald Trump's policies would be on any three of these conflicts Taiwan, Ukraine, or Israel, Whereas I think we've seen sort of a more consistent approach that Joe Biden has applied. I mean, I look, Elliott where we are, and it's about public service. There's a lot of people watching this across this nation that have loved ones. That's the loved ones on long tours of duty. I know that the Ford is coming back from the Mediterranean. Are we fit now in our defense budget for multiple wars you mentioned Taiwan. Let's say our war Ukraine, our war Iran, maybe our war China. Do we have a budget near capable of meeting those three threats? I think we're I think we have to take a very very hard look not only at the budget and the financial resources that we're applying, but you know, also the intellectual resources. And that's actually where I have the most concerns. You know, is a what a war against China look like a repeat of the Second World War, in which the coin of the realm and naval battle or aircraft carriers eighty years after the aircraft carrier became the corner of the realm. And I don't know that that is necessarily the case. You know, we've seen in places like Ukraine that the Ukrainians have been very effective in sinking Russian ships of the line with shore based missiles. And so I know, I'm a marine veter in my own service right now is in the midst of doing some real strategic a real strategic reset about what it would look like to fight a revisited island hopping campaign in the South China Sea, and they're restructuring the entire Marine Corps to do that. So I think there's a budgetary question, but there's also an intellectual question of you know, what will the wars of the future look like, and that work needs to be done now, and it's going to force some American military institutions to transform in ways that are going to be very uncomfortable with the war of the future. Elliott, what's a more effective strategy one that's predictable or one that's unpredictable. Well, I think in terms of your battle plans, you always want to be unpredictable. The word I would use is one that is adaptive. Because it's very difficult to predict what the war the future is going to be. It's most essential not to get the prediction right, but to get the prosture right so that your forces can adapt to whatever the next conflict looks like. And to use an analogy from the Second World War, at the outset of the Second World War, in terms of naval warfare, again, the coin of the realm was the battleship, and it had been the corner of the realm and was the central platform for centuries. But as we all know, you know, Pearl Harvard, the entire US battleship fleet was sunk, and we had this new platform, which is the aircraft carrier, and that platform was able to adapt and become the central force around which naval battles were fought, and I think whatever the next war is, we're going to see a similar process of adaptation need to occur. It's going to have to occur very fast, and the side that gets their right will probably be the side that wins oty. Just to finish that, what do you suspect it is. I think it's going to probably be a network of platforms. I think it's going to be unmanned, unmanned ships, unmanned aerial vehicles, our ability to fight both a high tech war and also a hybrid low tech war where many of those high tech systems are taken offline and our forces ability to kind of toggle between the two. So it's gonna be very, very complex, but more of the network centric version of warfare as opposed to a platform center version of warfare built around you know, very big ships and aircraft and things of that. Interesting. Interesting Elliott, thank you, I appreciate your time this morning. Always do Happy New Year, Sir Akman, US Marine Corps veteran whether surround the table. Sarah Hunt, chief market strategist at Alpine Saxon Words, Sarah, good morning and happy New Year. Let's revisit that quote from Berkley's This Morning. We believe the continued period of week results coupled with multiple expands is not sustainable. You on the same page. I think you almost have to be. I mean, you know, the theme for twenty twenty three was all about the FED and what was going to happen, and as soon as the cycle peak, you could be okay. So if we pulled forward a lot of multiple expansion on the back of the idea that rates are going to come down, they're probably not going to come down to that great Financial crisis level. If they come down a couple hundred basis points. Is the multiple expansion already too much? And I think that that's going to be the big tension in a lot of them. And you know, for Apple, which we were talking about, you've got to look at all that consistency and all that cash onlo and that's what people are paying for that and the exclusivity of its Apple, and people will keep replacing those products. It's that assessment true. If the whole market of just a select group of stocks that dominate the market, I think it's more select group. I mean, you have to I think valuations and we keep saying and it's one of like, this is Europe's year, this is valuation's year. It's going to matter this year, right, I don't know when it's going to matter, but at some point it will. I think having money have a cost makes valuations matter in a way that we had fifteen years where you know, people talked about it, but it didn't really matter. And maybe that starts to happen now and maybe people really start looking at those metrics. But I think you've got a lot of money on the table, and you've got a lot of places that you know, I got a lot of money that needs to be invested. Frame out total return. You could go to the Bloomberg folks. The terminal tr is the function, and you can model in and your return quickly one year back, two years back, three years, et cetera. And the answer is we're now addicted to oh, I made fifteen percent. I failed Blooney, it's a single digit return. At the most, you're going to make eleven percent. But the answer is do we need to get use again to equity return of eight or nine percent? I think that you do. And I think that you also have to look at history. I mean, yes, you had a huge move last year, and a handful of names, and yes, some of the other stocks started to catch up at the end of the year. I'm just looking at a chart of L three Harris before I come on here, and I was like, Wow, that back end of the performance was really really quick. I don't know where you end up with multiples here, but I don't think that you can have the kind of growth that we've had given the kind of economic backdrop that we're looking at. You. If the Fed's really going to cut six times like the market is pricing in, then we probably have a much weaker economic scenario than earnings are pricing in. So I don't know. There's a tension here. In twenty twenty four has got a lot of questions that need to be answer. You're the person I've been wanting to ask this question too. One of the big surprises last year was that the great underperformance came from oil. Tom and John were talking about why that was so surprising considering some of the conflicts that really were escalating in the Middle East. At this point, we are seeing oil perkop just a touch with relative in relation to what's going on in the Red Sea. Could this increase if it continues, change the disinflation narrative absolutely, I mean just the changing the trade routes alone could change some of that because you're going to things get more expensive. But you've had a huge supply response to oil demand and you've got you were talking about earlier, the US is a huge producer now right commodities are priced on the margin. If I've got excess supply, I can't get prices to really move that high, which is why the Saudias had to keep taking oil off the market. But if you start to see a crimping of some of those roots and you can't move things the way you thought you could before, then you're going to see then you could see some problems. And that's been a huge help for the inflation picture. And if that changes and you start to see data that is a little bit more inflationary, that narrative on how much the Fed's going to cut has to change, and then that's going to be a question. Then where to equity multiples go given that scenario. I know that you're bullish on energy stocks through the beginning of last year, then you've got a little more tapid as you saw as some of the moves at this point, how much are you leaning in to some of those names because of just how offsides people would be if the disinflation narrative fades an oil prices surge. Well, we think of energy as an area where you need to have some position, but you trade around that position, and you get heavier when you think that you've got an opportunity, and you get lighter when you think that the market is not going your way. When the supply came up a lot, that's where you sort of lighten up on your energy positions. I don't think you want to be out of it entirely. You've got a lot of very good dividen yields in those and you've got a lot of stocks that act better in a bad market than some of the other things do. So I think that's something you want to trade around. And we still think that energy has a longer tail. You've got a Barbell portfolio, You've got short term stuff for your day trading. We know you're famous for that, Sarah, and then you got the buy and hold. I want you to talk to the audience that their heads are spinning off of COVID. They're stating, Okay, COVID's over. Can I maintain some form of three year or four year or five year ownership of whatever equity uncomfortable? Can you still do that act? I think you absolutely can, and I think that this is the time to really be thinking about that thematic trade of what's going to happen in the next few years. Right, so we look at something like Tetratech that does all sorts of engineering construction but basically on a lot of water and some of the infrastructure stuff. I think that you can definitely look at companies that have a longer term theme that are playing into some of the things that are going on, but the volatility within that you have to be able to say, okay, this is where I will allow some volatility to occur, because some of those stocks that we like a lot still have had some challenges in a year where someone makes an acquisition or somebody does something. But I think you can look at the matic investing now because you really got a longer term view and you've got a market. It's fairly expensive, so you better really like where you're positioned. Let's finish on the banks, the regional banks specifically, not a big players, the regionals Kori closely followed Regional Bank ETF you know them well, up almost fourteen percent in November of sixteen percent in December. Is that just a leftige trade on what's happening in the bond market in treasuries as yields fall aggressively or is there something to get your hands around for twenty four I think that's a lot to do with what's going on with interest rates, and I think it's also a lot to do with people looking for okay, where has completely still been on the floor and maybe we can pick something up here, because the valuations on that group were very, very not challenging relative to the rest of the market. I think you still have issues with the yield curve. I think it's still difficult to make some money in some of those and I think we still have some commercial real estate issues that we haven't flown through yet. So it's a little bit challenging to say that that's a definite thing about the environment as more as like it was being picked up off the floor. Speaking of the yeld curve, Lisa two year versus ten year still negative thirty six basis points. They're not going to really make up some of the difference through lending long and borrowing short. To also Sarah's point one hundred and seventeen billion dollars of commercial mortgage debt coming to just this year alone, that's really going to raise some questions on that front. With some of these reached out. I had the same article. I believe it is in the fteam. My brain's frozen on that right now. But the answer John is I saw a bar chart. I'm going to say ten cities in America, there's basically New York in some of all the others, and maybe every other city combined is the same as New York. I mean, it's amazing. Now this is a local issue for us. E Sarah, It's going to see you. Happy New year, Sarah. About pont Snackson Woods. Let's quickly get the ry isman of acquiry here on global FX and all the other things that get us back to a great bull market in the United States. Wonderful to have your after Wiseman to get us started for the year. Let me go to the larger view, which is everything hinges on China. Do you agree not for twenty twenty four? No, Although I do think that China is a very important part of the macro story. Globally. We have this central banks in the US to worry about, we have the central banks in Europe to worry about, and we have supply shocks, especially in the natural resource markets and the oil markets to worry about too. So China is important, but it's not all or nothing as it comes to China. I will say this though, I think the market is somewhat wrong in focusing too much on the property sector in China an agurate demand in China. I think what the market has lost sight of to some extent is President's willingness to go after the tech sector in China and more generally, you know, against the whole concept of private property in China. I think this is what is souring sentiment for China, and I think to the extent that that is find some relief in twenty twenty four, it could be a bigger deal for China on the upside than you know, some resolutions to the problems on the balance sheet of the property sector. There's been a multi decade failure of international stocks and some correlated over to an ever stronger dollar. Is a dollar finally broken where there's an unspoken opportunity in international equities. Well, if you're asking, is the dollar is a lot dollars a reserve currency as the standard for international trade, international finance is over No, I know, I don't think so. If what you're asking for, is there going to be a structural break with regard to the status of the dollar, international capital markets, and international trade, I think the answer is no. Remember that we had a period before we had globalization, before nineteen ninety five for that matter, when China and Russia and the other emerging markets were not that fully integrated into the global economy or the Washington Consensus for that matter, and yet we still talked about the dollar is the reserve currency of the world. Why, because you know, a good part of the of the world still depends on the dollar for its trade and for its commerce and for its it's financing. So no, I don't think that's going to happen anytime soon. At least, one of the trades that we do at the beginning of every year is to come up with potential tail risks, which inevitably will probably be wrong. But there is a question here. Tail risk the dollar being somehow profoundly debased, seems to be off the table. From what you just said, what about a sort of the tail risk of some sort of significant supply shock. You sort of alluded to that initially in the commodity space, so that I think is a bigger tail risk, and I think it behooves every investor out there to at least have some oil in one's portfolio, be long oil, because when you think about US recessions in the postwar period, you'll find it an amazingly large number of them had been preceded by a rapid rise in oil prices. You'll see that, and it behooves investors to have some oil in the portfolio because we just don't know to the extent that we do have a supply shock. Oil prices will go up, and you'll offset the losses you would otherwise experience from seeing stocks go seeing bonds go down. In that context, this raises a question to me of how off size the market would be should there be some sort of oil supply shock. Given the fact that people have kind of gotten accustomed to the idea that the US is a producing record amounts, and then even in the phase of conflict, oil prices went down, how wrongly positioned are people for this kind of this kind of event. I don't know how wrongly positioned they are. There is a case to be made, however, for the logic of oil prices having come down in the last few months, and the logic is very straightforward. The elasticity of supply in oil is actually quite high, potentially higher than the market surmised before six months ago. What we have seen with the increase in oil prices that preceded this decline is a huge increase in oil production in the US, and that is the basis for why oil prices are down. But if we were to get a shock, a shock out of the Middle East, for example, a shock out of Russia, it's not conceivable that production can go up quickly enough to offset that in a very short period of and that's the risk that we face right now from these shocks. Over the long term, there'll be an adjustment in US supply that's positive and beneficial, but not in the short term. Is the US donar a commodity currency now? No, I don't think so. Certainly the market doesn't see it that way, right. It's interesting there are some emerging markets that we don't necessarily associate that much from the perspective of their current account balance and their trade with oil, because they're not huge net exporters Brazil, for example, but they are large producers. And yet the market tends to associate the Brazilian real with oil more than it does associate the US dollar with oil. Do you expect that to change anytime soon? No? I don't think so. And that's because no one's going to really associate the US with a very large net export balance in oil. It really has to get to a point where US trade is dominated by oil, and that is not the case. Yet it's still dominated by services. Knowledge very true, TK The number is just absolutely staggering when it comes to production, thirteen million barrows a day in this country. Yeah, well, it's interesting here is we don't have an oil policy. I mean, we take great pride that Washington has never come up with the plan. We've got this plan, that plan, whatever plan. I guess it's a technological success. Not sure. We needn't want no plan. Well to that point, do we need one? It's Washington is the White House of renovant with regards to this conversation, only to respect that oil is such a geopolitical issue, and of course geopolitics and politics generally have to manage you through diplomacy or through some management of market forces that are relevant to geopolitics. That's ok. There's a case be made for the energy market to be managed from that perspective. But if it wasn't for the importance of oil from a geopolitical perspective, I don't think so. Terry. It's good to see you. Happy new year. Thank you, sir, Terry Wiseman of Macquarie. We're beginning strong this year, and part of that is with Doug Cass, who is many of you know out on social media. Seabree's Partners is a great pinata and Doug, before we get to your always interesting, thought provoking ten ideas, if I'm cautious on the market, or if I'm short on the market and the market runs away from me the other direction, what do you do? What do you do? In December? Given this bull market leg up? How did you respond? We were short in two time frames. One was timely mated after July after the majorly I run, but we didn't lose money in the majorly run, and we were net short in November and December. We didn't lose money either. And now how do you do that? I think a lot of people want to know, Doug, how do you not lose money? It's tough, you know, to begin with, Why did I get it wrong in the last two months? I think I underestimated the animal spirits and the price momentum that had been accumulated. I underestimated the power of the herd as the pressure on the upside intensified, and so did Fomo. I understand. I estimated the contribution from market structure, which had basically intensified the upside to equities, and same applies to interest rates. The momentum and the yields to the downside accelerated. And you know, we live in a market which is has a structure. It's far different than I started when I was a housing analyst kit or Peabody. Buyers live higher and sellers of lower, so you have to adapt. Warm Buffett said the first two lessons on investing don't lose money, and the second lesson is don't forget the first lesson. So we trade opportunistically around short positions and risk averse. Because my short book is pretty diversified, and when I'm wrong, I take a lot of small office that's the answer. But as we entered the new year, I am not short. So how do you think about here this twenty twenty four? Again, I think the you know, late October through the year end twenty three caught a lot of people by surprise, the vigor of that rally here. So what do we do here on January second? Well, I always find it amusing that there is now a universal view almost after the quantum rise, especially the NASDAC, the markets are headed higher. However, I think it's important Paul, to observe how wrong the confident consensus has been in each of the last two years. If you remember, in the end of twenty twenty one, the herd was optimistic. In twenty twenty two was a disaster. We had such a bad experience in twenty twenty two that the consensus ended that year wildly confident, and that especially but this time barish, especially on tech stocks, and that couldn't be for their off sides. Today, the consensus found the momentum is very bullish and an area bear can be found. In fact, many of the bears that I watch when I'm on the desk stars the NBC have now become bulls. So I see a vast of a ray of unexpected political, geopolitical, economic, and market surprises that could be untapped for next year. And my biggest concern is the equity risk premium. And despite the enormity of the drop in yields, the equity risk premium is still paper thin, and historically this is a reasonable predictor of weak markets. Paul Apple, Yeah, exactly, Doug surprises for twenty twenty four. What should Maybe we're not thinking about it. I mean we should, sure. I think one of the things we're not thinking about is in part due to fear that the Democrats will continue to hold on to the presidency. Foreign powers step up military confrontations and my surprise, my second surprise, is that the West continues to lose patients with how the war is going with Ukraine, as a US backs off and support and negotiations of a territorial split began and Ukraine is forced to give up east side of the country. North Korea, with support from Russia, undertakes skirmishes in the DMZ and makes threats to invade South Korea. Iran completes its nuclear build up, which provides a direct attack from Israel. Though China doesn't invade Taiwan, it continues with aggressive war game tactics in the Kia Sea. So my feeling is that the global economy, Tom and pol are more susceptible to supply shocks than has generally believed. And with Russia and Saudi conspiring on production cuts, I wouldn't be surprised as a surprise that the price of oil exceeds one hundred and ten dollars a barrel, and the price of a gallon gasoline US approaches six dollars, and shares of Exxon oxy chevron each rise by a third in the year. Doug, I want to get to send it's so important within all of this, you really go after the Blackstones, the Apollos of the world. You say, private equity quote to get torn to shreds. Discuss that that's important for global wall Street. Sure, Surprise number seven is Wall Street's most vicious vultures. Private equity are about to get torn to shreds. And remember we still Tom have elevated interest rates, and we have a slowing global economy. We have the loan rate reset cliff beginning at the last half of this year, and I think it's going to contribute to a leader in private credit failing. Blackstone shares could drop by a third after the BREI, which is the private real estate fund run by the company, and the public fund bx MT come under new redemption pressures. And finally, I wouldn't be surprising. I was involved as a director of a business development company in New York Stock Exchange and I personally saw vividly the phony marks in our books. So my surprise is that shares a private equity stocks like KKR, Apollo and Blackstone plunge as the SEC opens and investigation into the failure of the private equity industry to realistically marked to market their portfolios in the timely manner. Wow, interesting because that's been an issue for a long time, particularly now that these companies are public. How about private credit, Doug, This is a new business for you, Tom and me. Over the last decade or something. It's just exploded in terms of size. We were all comfortable with, or we think we understand private equity, but private credit has become a huge business and it just doesn't feel like it gets the regulatory scrutiny that they get the regulatory scrutiny at all. Paul it's hurting the banking industry. It's one of the reasons why I'm so negative on banks, besides the credit cycle, the emerging credit cycle. So this is something to watch, you know, whenever there is such quantum increase in balance sheets as are currently in private equity, we have to be on the alert. Well, speaking of alert, Doug, I got time for one question. I read my Padres in Red Sox the athletic coverage this week. I'm sorry Juan Soto for the dreaded New York Yankees. He's basically Weighe bogs with power that changes the Yankees lineup, doesn't. It's a massive move for the Yankees. Our team has lacked left hand sluggers in recent years, and we never had the necessary lineup support for Aaron Judge. Remember, he bats left handed right and he's fully capable of taking advantage of the short porch in right fielded Yankee Stadium. I think we're one Jordan Montgomery type away through the World Series. But the problem is Montgomery, Montras, Manea Lugo, they're all going, they're all signing. But this is a powerful lineup from may U Sodo, Judge, Zo, Stanton Torres, twenty seconds. Dougcast, could you do something about the food at Yankee Stadium? People that live in glasshouses in Fenway Park? Doug, Thank you so much. Doug Cass the series partners. Subscribe to the Bloomberg Surveillance podcast on Apple, Spotify, and anywhere else you get your podcasts. Listen live every weekday starting at seven am Eastern on Bloomberg dot Com, the iHeartRadio app tune In, and the Bloomberg Business app. You can watch us live on Bloomberg Television and always. I'm the Bloomberg Terminal. Thanks for listening. I'm Tom Keane and this is Bloomberg. See omnystudio.com/listener for privacy information.