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Speaker 1: This is Bloomberg Business Week. I'm Carol Masser and I'm Jason Kelly. We're here every day bringing you the latest news from the world's of business and finance, plus technology, politics, economics, all harnessing the power of Bloomberg Business Week reporters and editors, not to mention our journalists and analysts, and more than a hundred and twenty countries. You can download Bloomberg Business Week on iTunes, SoundCloud, or Bloomberg dot Com. You can also listen to our radio show weekdays at two pm Eastern only on Bloomberg Radio. The first God, alright, understand exactly what we heard from the FED today. We have sort of a schworkers board of swords, Carrol create testimony from j Pow as well as the FED minutes. Obviously, the comments from j Pow a little bit more up to date because those FED minutes they go back to that meeting a few weeks back. Tendai kept Feezi is chief economists for Lending Tree. He joins us on the phone from North Carolina. Tinda, great, two have you with us? Nice to hear your voice. Yeah, glad to be here. I'm actually in New York though. Oh well, there you go. Well, you're right around the corner. Um So tell us what you heard, especially from j Pale today, because his comments tended to have it seemed to have the most impact on the markets out there. Well, it seems like it's Christmas in July, right, basically almost promised a rate cut at the end of this month. Um. I think he was probably more dovish than I expected. Uh So it looks like it's a lock on the rate cut. Well, that's interesting too. And I do wonder how much of you know, the FED trying to kind of manage markets and you know, how much disappointment if you kind of had gone in the other direction. Do you think that dovish tone is warranted considering the economic data points that are out there. Um, I do not. I think for me, one of the most surprising things he said was when he was asked if Friday's job number had affected his thinking, and he said not at all, or something to that. I thought, yeah, exactly right. Um So, you know it's surprising to me that you know, they say the data dependent and uh, I think you would many people would judge that the payroll report is one of the more important pieces of data Um. While certainly you don't ever want to react to one single data point, to suggest that it had no influence to me was very surprising. And so as you think about some of the other data that they are looking at as they think about getting together later this month, what else are you looking forward to give you an indication and what are j Pale and his team looking at most closely? UM? I think you know, between now and the FED meeting, we're going to get data on almost every part of the economy. UM. I think the weaker parts of the economy have been a business confidence you look at the ISM surveys UM, and also APEX business spending UH. So I think that's where the weakness and the economy is coming from. Inflation allows them the room UH to make a cut. So I think if you were biased towards the cut, you could certainly talk to yourself into a cut. Where I kind of differ is that I don't think that the weakness that we're seeing in the economy has anything to do with monetary policy, So I don't think it can be fixed by monetary policy. So I think we're going to get a rate cut and it's not going to do anything for the economy. It will probably help you know some of the financial parts of the economy, but in terms of real growth, I don't think the impact will be meaningful at all. What would have an impact. I think the challenges the economy are facing are related to, uh some structural issues, trade negotiations, just this level of uncertainty around you know where you can source your your your supply chain. Right. Um, if you look at measures of business confidence, you see that they have been trending downwards pretty much since trade tensions kind of started getting more and more intense. We gotta truce the other weekend, but that certainly doesn't look like we're moving towards resolution, right It seems that, okay, maybe things are not going to get worse. And if you're trying to figure out long term planning as to where am I sourcing my materials, how am I signing contracts, how am I going to employ people, and how am I going to estimate the growth for my company, it's hard to do with all this uncertainty around what things are out only going to cost, whether they have tarroriffs on them or not. Uh So, I think the only thing that's gonna take care of the weakness in the economy is removing some of these challenges which are um, you know, it seems more policy based, uh you know, not monetary policy, but uh, other broader economic policy. And you're go ahead, well, go ahead. I was going to say, because one of the things that struck struck me in your notes, and you said, we risk heading down the path of Europe and Japan, who, in failing to make the needed structural changes, have driven their monetary policy to the point of being inapt and you see the United States on the same path, same trajectory. Um. Yeah, so I think actually, like this kind of increased that risk. Right. Um. You know, you don't wake up one morning and just suddenly find that, oh, we're cutting rates and the economy is not reacting. Uh you kind of get there, uh you know, a little by little, you know, I kind of I like the song you guys are playing the first cut as the deepest, but you know, I guess it's another one would be you know, death by a thousand cuts. Right. Uh. You look at Japan, it's been almost twenty years since their monetary policy really created any kind of reaction in the economy. Uh. In the EU, they've had negative rates. Uh, you know, probably for you know, getting onto the better part of a decade. Now. Uh. If low rates generated economic growth, both those countries would be growing faster than the United States. So it says that rates matter, but there's other things that can matter more
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than rates. And if you use rates for the wrong things, uh, they become less and less effective. And I think this particular cut would be an instance of using rates for the wrong things. And so today, is it safe to say that if they don't cut, the markets will react quite negatively? I think so, because the cut is all about the financial markets, right um. So you know, I always say, you know, the FED has two stated mandates, full employment and price stability, but have the shadow mandate of uh, you know, financial conditions, you might call it. Um. And people talk about the power put they used to be the Greenspan put these all kinds of other puts. Uh. So I think that that's this is the gallery that they that they're playing to, right um. And you know, it kind of makes me think there's a there's a show called Intervention where people who are suffering from substance abuse need their family members to kind of shake them out of it and Uh, you know the markets are addicted to rate. All right, Gonna leave it on that note. Tindae kept feezy. He's chief economist at lending Tree on the phone. Ah, well done, Paul Brennan. Uh, this story, as we've been talking about among our most right on the Bloomberg today about how the shackles on Wall Street are quietly disappearing, maybe Wall Street saying I'm free. Michelle Davis is with us to explain exactly though what we mean. She's financial porter up Bloomberg New She's in our Bloomberg Interactive Broker studio in New York. So Wall Street kind of free, what's going on? So this one is a kind of you know, interesting one to explain because it's something that was secretly happening that's secretly not happening anymore. Um. But you know, it all comes down to a lot of what happens between banks and their regulators is secret and and and that makes sense because we wouldn't want to cause a run on the bank or something like that. Um. But it turns out that actually, you know, before the current administration took over, uh, you know, regulators in their interactions with banks or discouraging them from expanding or kind of more explicit punishments than what we're what we saw with Wells Fargo. Uh, you know a couple of years ago, and now, Uh, these punishments or restrictions have been rolled back just as silently as they were you know, put forward, all without any change in actual laws on the books. It is interesting to think about how much the banks didn't do for for a long period of time, and you had a number of you know, chiefs changeover. I guess I should say some leave, you know, new blood come in. Some banks still waiting for a new boss. But among those who everyone is watching and I feel like he's the star of this story throughout, Jamie Diamond. Uh, he wants to do another deal, at least according to your reporter and tell us about that he's eyeing his next big one or he wants to do one more big one before he's done. That. To me was shocking to see or here that happened, because you know, they yeah, they hadn't been doing anything and it turns out they actually weren't allowed to do, you know, do this big branch expansion that they wanted to do, and uh engage in m and A uh, or even expand in Africa like they wanted to do a few years ago. And now the fact that Diamond you know, is apparently telling people that he doesn't really think anyone would stand in his way of doing things, that's to me the epitome of you know, the banks are free, right, Yeah, absolutely so, And and who's in the best position to do to do a deal at this point to really get into it. Well, so you know, obviously the big banks like JPMorgan Bank of America, they are you know, they can't do any banking murders because they but by law, if you are you know, have more than ton percent of US deposits, you can't do that. But you know, some of the regional banks people have talked about but a little I guess more nuance when it comes to the stories that this there were a bunch of banks that wanted to you know, expand it to new markets or even offer new products that that couldn't while they were in the you know, informal you know, unwritten penalty. Yeah, and so that's why it's you know, if you put all the you know, puzzle pieces together, you you step back and you say, oh, yeah, that's true. No one. Everyone was shutting branches, no one was going into new markets. And now suddenly we have four of the biggest US banks going into you know, opening up branches in new markets. Bank America opening five hundred JP Morgan, you know a similar amount. So, so what happened to DoD Frank? I mean, it's still there. So so are these different rules beyond Dodd Frank that regulators, whether it's the FED or the O c C or whatever, that they're able to maneuver. So, you know, a lot of what Dodd Frank was, uh, you know, require banks to shore up their capital positions, you know, it imposed stress tests, vocal rule, that sort of thing. But the laws that govern you know, the bank expansionary activity, those are things that have been on the books for a while, um and so and those haven't changed. Um. But what we're seeing is it's because supervisors, you know, do have a lot of discussion in their interactions with with banks. Um. What I've heard is, you know, what I've been told by dozens of people is that, you know, just the mere change in tone at the regulator has paved the way for a lot of these things to happen. Well, and I was just gonna say. One of the things that sort of embedded in what you said, Carol was this idea of you know, the Fed, the O, c C, whoever, and part of understanding this, and you do such a great job with this, Michelle is understanding like this is a complex regulatory framework for these guys too. You know, different parts of the banks are regulated by different pieces and so if you can, I'll just say it like game it correctly. You can sort of figure out away, especially when they're you know, kind of stepping back. A little bit of what's funny too is that the banks would say,
you know what they you know, they haven't loosened up. It's still like a mine field. We have still have to deal with hundreds of thousands of pages of you know, regulations. This is not a loosening. It's a return to normalcy, you know. And the regulators say like nothing's changed, like the laws are the same, but right, and there's some where arguing you put this in your story that you know, banks are in stronger positions so they're able to kind of do more things right right, Yeah, So it's not necessarily a policy ship, but it sounds like the attitude ship. Changing or stuff to tone to tone, change in tonue. It's a great story and as Carol mentioned, one of the most read not surprisingly. Uh and there's some great color throughout and really some as as Michelle said, capturing a lot of the nuances of what happens on Wall Street. These are savvy dealmakers. Well, and you do wonder where these banks are ultimately going to end up right as they pursue kind of some other maybe non traditional banking business lines. Yeah, I think he's been walking on some sunshine today. Pretty much anyone who is anyone in the media world is gathered in sun Valley, Idaho right now. That's where the Allen and coastun Valley Media Conference is underweights, also where Paul Sweeney is his host of Bloomberg Surveillance and Bloomberg Markets on Bloomberg Radio, and he joins us now from sun Valley. Um, Paul, I'm a little jealous, but I'm glad to know that you. I can see, actually we have a monitor so I can see the mountains in the back drop. It's really gorgeous. Do me a favor, though, give us an idea for our listeners about the backdrop literally and figuratively. You know what this event is all about. Yeah, this is the UH big Allen and Company UH Investor Conference where a lot of the big media companies, technology companies, and telecommunications companies gather in Sun Valley, Idaho in July, which is a fantastic location, and they do this every year and it's one of the biggest conferences of the year because it really brings together all of the big executives of these tech companies, media companies, and they come together every year and they've been doing it for many, many years, and really the focus is for these executives to learn to figure out what's the next new thing, the next technology, the next wave in communications um And oftentimes this is the conference that launches a lot of merger and acquisition activity because when you get two executives sitting down and you know, having lunch, and you know, they start talking about CEO things, and one things leads to another, and oftentimes you'll see six or nine months later a deal announced and you'll find out that it was hatched here at the Allen and Company conference. Hey don't look, but behind you, I think there's a gray wolf. I do like the idea. I like the idea of Paul that they sit down and they talk about CEO things. Well, like one of the CEO things that's clearly top of mind is technology and it's effect on the media world. Uh. We were able to catch up with John Malone, you and the team out there earlier today. Here's what he had to say. They've changed the world and they're the disruptors. Now, we were disruptors and at our youth. Okay, now they're the disruptors. We have to figure out how to position ourselves to adapt to the changing world that they're changing. Uh. You're not going to fight them, so you better you better accept them as a as a fact and then adjust your your positioning. Well, that is almost a subdued John Malone talking about disruption and the reaction. I mean, does that capture sort of the mood of the more traditional media companies at this point? I think it really does. I mean you come here and you look at the CEOs that have gathered here. It's it's a mix of the traditional media companies, newspapers, television companies, cable TV companies, and the big entertainment companies along with the technology companies, uh that are coming out of Silicon Valley and some of the emerging technologies, and they all gathered together and they're i think exchanging a lot of notes and seeing how perhaps they can work together where there might be some threats and opportunities. But as John Malone said, um, I think the traditional media companies have said, we need to get bigger, we need to get more technology driven to compete against not just each other, um, but against some of these big technology companies like a Google, like a Facebook, like an Amazon. Uh. And we're starting to see media companies really adjust their strategies. So, for example, the greatest example will probably be the Walt Disney Company buying Century Fox. They recognized the Disney Company that they needed to get more scale, more programming so they could go direct to the consumer and try to compete against the Netflix of the world. Yeah. And of course John Malone, chairman of Liberty Media, I mean, you know the go to guy when it comes to the cable industry for for many many decades. You know. It's interesting I was reading something up Paul, I think it was in Variety, and they just talked about in Sun Valley this year it's the content arms race, and that the streaming wars are taking center stage, and I do you know, wonder you know how things have changed in terms of the landscape when you know, we talked so much about Netflix and Hulu and Amazon and you know all of those players, uh and everybody kind of watching what they're doing. Yeah, exactly right. Um, just to put a number on it, there's on air this year almost five hundred scripted television shows and you you rewind to maybe seven or ten years ago, that numbers about two d and fifty. So there's a lot more demand for content. There's contents a lot more valuable than it's ever been because they're more distributors. There are Netflix of the World and who Lose and just streaming over the internet. So what the media companies and the content creators here are talking about is how do we maximize
the value of our content. Historically, i e. Over the last five or six years, they would license that content for cash to the Netflix of the world. Now they're bringing that content back in house and saying, gee, we need to create our own streaming service with our own content. So they're bringing the content back um from Netflix and Hulu and others, and they're creating their own streaming services, So A T and T Comcast just seems like every company you talk to, NBCUniversal, they're all talking about and and in fact launching their own streaming content services with their own content, uh, in an effort to try to uh, you know, attract eyeballs and consumers. You know. One thing that's cool about Sun Valley is I feel like Paul, it's it's notable for who is there. It's also sometimes notable for who who isn't. And I'm not sure if this is correct, but I had read something to that CBS and Viacom they're not there. I just wonder they're you know, folks that aren't there that are kind of you know, it's noticeable. Yeah, it's interesting. We we did not see the executives from viacom UM or CBS here, but Sherry Redstone, uh, who is a controlling shareholder of both companies, she is here, and I'm sure that obviously the talk around her investment in both Viacom and CBS is when are you finally gonna put these two companies together and and create and recombine them. Um. So there's definitely that's probably the number one speculated media deal in this on the Street right now. So she is here and I'm sure the Allen and Company bankers are talking to her about, you know, possibly getting some kind of deal done. And so when you look at the sort of the streaming war, is just going back to that for a second, Paul, who's winning. Well, clearly Netflix is the dominant winner so far. They were first to market, they have that great brand in the marketplace. Uh, they have over a hundred fifty million subscribers globally. But there are other companies. Hulu is out there and uh, Disney is a majority holder of Hulu. Uh, so they're out there and they have you know, over million U S subscribers, and they are growing. And I think what the markets really waiting to see is what Disney Plus will look like. That's going to be the streaming service from Disney that will launch later this year. And boy, you think about the great content they have with Marvel and Star Wars and now the twenty one century Fox content, So you think, boy, they have got some of the best content in the world. Uh, they clearly should be a winner. Um. And I think most investors that that owned Disney stock feel pretty good that they will be able to compete against Netflix and the other players. Paul, any conversations on the sideline that, you know maybe has get people talking because I just think about, you know, all the deals that have ultimately come out of Sun Valley. Uh, you know Comcast and Gast, you know huddling. I think back in two thousand nine, you know that led to Comcast buying NBCU, Amazon, Jeff Bezos buying the Washington Post. You know, deal talk I think initiated there. Just got about thirty seconds anything that anybody's talking about. I think the big thing is, will any of the technology companies that are here, you know, Jeff Bezos is here. You mentioned, well, the big technology companies, will they really jump in the deep end of the media and content pool and make a big acquisition. That's what everybody's waiting for. Uh So maybe something will get sparked here, all right, Paul Sweeney, he's the co host of Bloomberg Surveillance and Bloomberg Markets Doing. You know, he deserves combat pay for this. He's joining us on the phone from the Allen and Co. Conference out in Sun Valley, Idaho. I would never say boomtop him. Oh, I would never say that either. He looks so happy. He does. He really, he is totally in his element. That was such a great conversation. How much by how much does an actual stock certificate of Lehman Brothers, bear Stearns or Countrywide Financial? How much does a question? Because you know what, Jason, they're around. They are around, even though you can't buy them on the open market kit by the actual shares, but the certificates, apparently you can pick them up, although you gotta have some cash. You do have to have some cash. This story in the finance section of the magazine this week, also online and on the Bloomberg Joining us with more Pat Rigney or Markets and Finance editor Bloomberg Business Week, along with Joel Weber, Bloomberg Business Week Editor uh both in our Bloomberg Interactor Broker's Studio Jason, Now We're lucky. We caught up with Mike Regan, who wrote this story. I love this story path lead of the week for the records. So I should have bought more. If not something you're here every day, say what, well, because Lehman, as we know, doesn't exist anymore. But Pat, we're talking about actual stock certificates from when Lehman did exist, right, these are the uh suitable for framing pieces of paper that look a lot like money. There's a relatively robust collector's market for these things. And um, people who read Business Week will learn a new vocabulary word, which is scripted puffily uh. And people who collect these things are script puffs practicing practicing away. Anyway, if you are a scapopolis and I've mispronounced that, please we will here tell it the Twitter. Well, it's interesting. And what's fun about this story is the worst the situation financial system system or company was, or the more defunct a company was, the more I guess, the more valuable that these share certificates are. That's right. And and then some of the ones that we show here on page we've got the Trump casinos. The art on that is amazing. It really is head sort of above the sort of levitating above the boardwalk in Atlantic City, and the head of Donald Trump. The head of Donald Trump. I mean, we have the taj Mahal Trump uh Trump Property Washington Mutual and then and run and and then and run. So you
know all these things. I think people who are into the markets are kind of fascinated with failures. Often they've had a close brush with it themselves, and these things can be like markers of a moment in their lives. I think, you know, I think all of us who are in financial markets or cover it, you know, we always remember where we were when we heard something like that happened. It's kind of the same impulse having this piece of paper is like, you know, remember that this, remember that this happened. Um history me mento mori of the financial market. And these things went for like a dollar apiece, and we're afterthoughts when these companies were going. It's after the fact that they become and some of them were actually meant to be destroyed. I mean, I think legally they were supposed to like be bend literally and you know, but some people either tuck them away on purpose or like they got stuck in a five. Are you one of those people? Would you have sucked their way? Absolutely? Absolutely right? So who who's collecting these? Who's and who's the guy with the website where you can get these? Well, so there's there's a guy named Bob Kristin who does a lot of the collecting, and he's at scrap papile dot com uh and and scp dot. He managed to get both the dot com and the dot net. Uh and uh, you know, so so he's he's uh, you know, and the website's fund because often there are like little capsule stories of what exactly happened to this. And again, I think that speaks to, you know, the fact that there there are people who have, you know, a historical interest in these things. Well, Jil, one of the things that Mike Reagan pointed out to us is, you know, you sort of go into this thinking like this is a bunch of like old cojers who are like hanging these up on the wall. But when this story went out, Mike was telling us that, you know, he had all these millennials like tweeting him there like walls of either shame or infamy of all these stocks and bond certificated. Yeah, I believe it. I mean, I think there's just this thing with collectibles right and there, and when you think about finance, it's not like there's a lot of collectible things, right. So the fact that you can like mark a moment, however bad it might look in hindsight, with a physical thing, I think there's definitely some humor to it. In this ethereal world but it is not the only thing that's actually in the finance section this week. So as long as we've got more talk about what else. Well, I mean, the theme that we're covering like crazy and I think we'll continue to cover is uh this low rate world UM and the ways that it's kind of you know, shaping markets and surprising ways. We have this really interesting story out of Tokyo about the Postal Savings Bank attached to the Japanese post Office UM and how you know they have become you know, an important player on global bond markets because there's they can't get any yield buying Japanese bonds, so they have to go out in you know, into foreign markets, including into things like collateralized woman obligations. The other big player there is a bank that is a cooperative for farmers and fishermen in Japan. And you think about this though, it's you know, the postal services were reporting here, the Japanese Postal Service for a hundred years. They've basically been this amazing state institution where without a doubt, you could just lock your money up and you're going to get a return. But they don't have that luxury anymore because where where they turned to has zero percent. And this is turning out to be a generational story. I mean, one of the things that we've been talking about is five years ago I wrote a story about how two percent explains the world, and it was about that that, uh, you know, to the two percent ten year yield on a treasury was such a remarkable thing and it was reshaping everything, and I checked. I checked bond yields every day for about a year after that to make sure that I didn't like put a tombstone on that moment. And we're a bond yield right now, they're about two percent. Yeazing. You're remarkable, right this environment and that its sustained itself for so long. But that also means something else we have in this section that things bond funds are getting a little edgier because of it, That's right. I mean you see that all over the place that like even the most plain vanilla bond funds are in lots of different nickel. For every time I heard someone say bond funds are getting edgier, exactly, you have a lot of business exactly, all right. Pat right Near is Markets and Finance editor for Bloomberg BusinessWeek, Joel Weber is the editor of Bloomberg Business Week. Thank you both so much a journal. Yeah, but you let me drive, no no, no no home ann Please, I'll do the right drivel. I want to drive. Just drive by good questions, trying. This is the drive to the globe. Give me thanks well drying us down on Bloomberg Radio. It is time for the drive to the close on this Wednesday, back with us as John Train, our chief investment officer at People's United Wealth Management, roughly nine billion in assets under a manager based in Bridgeport, Connecticut, in our Bloomberg Interactor broker studio and New York. Nice to be back with us, Nice to be back, Thank you. Very different environment absolutely mind. I guess it was Brock in December, late December when like the market, the equity markets certainly was coming undone. We're about five thousand points higher than when I was here last time. It's amazing, amazing. So what happened? What happened in the interviewing time? You know, the news on the economy really didn't change that dramatically. It was investors perceptions number one of the FED. I think I think you know Powell has gotten his communication. Uh strategy down. He's doing a much better job. And the economic numbers have come in, They've come in good, but not so strong to scare people. And then inflation. Inflation is the amazing, uh mystery out here
that you know, we've got the PC the last last twelve months one point five percent. That's incredible, incredible interest. How do you explain it at this point in the cycle. His expansion on record, right, it's not only the PC, it's wage inflation. I mean, think about that. I think I look at where the unemployment rate is and we're only looking at a little over three percent. And we were, we were communicating very clearly to clients. When you got to three and a half percent, that's when we get into the changer zone. That's when the Fed starts to get nervous. We hit three point four percent, we came right back down again. So the wage inflation side is very confusing to us. You know, individuals are evidently not pushing for wages. They're very happy they have a job, um, and that's flowing through. We really think on the on the employment side and and the inflation side, the PC and so you know, you mentioned Chaire Powell. He'd spent several hours upun Capital Hill today, several hours more coming tomorrow. He talked about his communication style. There was some interesting back and forth that he had with some some lawmakers. What were the highlights for you? You know, one of the things that really stood out to us was he was being questioned by politicians, and they're in charge of fiscal policy, you know, getting infrastructure spending going, all sorts of things that that really you know, if if the FIT has a has a ballpeen hammer, the fiscal policy as a sledge hammer, and that should really be where the heavy lifting is going. And a lot of the politicians were basically saying, hey, Fed, what are you doing? What are you going to do? He pushed back a little bit, which I was very glad to see, and even Draggy and the ECB has done the same thing, pushed back on the polic to get a movie we've seen before with Janet Yellen, with Ben Bernanke, where you know, the FED is kind of like, we've done what we can do, folks, it's up to you policymakers. It really goes back to the Greenspan put that the FED is always going to be there to bail you out and if there was a disappointment, you know, we now have the power put and it we reinforce that message that the Fed will always be there. It would be great if there was a little more give and take. John, is this a market that continues to trend higher? Grind higher? Equity Market Day Wilson had an interesting chart and has been looking at where you've seen these kinds of gains in the first half and what it means for the second half. And you tend to see under performance, but I am just curious how you see it. We see it moving higher. We're we're actually from an asset allocation standpoint, we're actually slightly overweight equities, underweight bonds. We think equities or where you want to be. If you take a look at the charts. Once the FED cuts rates at this point, you're generally going to get at least another six months of good returns. What concerns us is that this is a purely valuation driven market. This is
a rising pe market. We I would love to see earnings rebound, but we're not. We don't have great expectations this year. Hopefully we'll start to see them next year, but you know, lower rates are allowing you know, the pe multiple to expand we would rather see being earnings driven. I was looking at some notes you sent over and one of the areas that you like from a sector perspective is cloud computing. We talked a little bit about this yesterday with the closing of the red Hat acquisition by IBM. Obviously a big bet by IBM that that's where the future is going. Hard to argue given the success of Microsoft and Amazon, especially in Google for that matter, what do you like they're in cloud? You know, the largest holding that we have in our model portfolios right now is Microsoft, and I will tell you that we own that when when there was a lot of skepticism around Microsoft cloud strategy. We're very pleased with how that's gone through. Our largest cloud ramped up from coming I feel like safe to say behind right to wrapping up a cloud. They were way behind. It was really, i'd say, just a phenomenal management move on their part, and it was, you know, a little tough for us. We had a few years of no performance from Microsoft and has really been a great holding for us. But Microsoft is, without a doubt our number one holding that area right now. And how much does something like that. Conviction on cloud computing, computing, excuse me, sort of rely on continued heavy enterprise spending, continued investment from big corporate customers. If you look at at corporate capital spending, you know that the disappointment is we're not seeing a lot of plant and equipment, not seeing new buildings go up. But where companies are spending, they're spending on technology, which is sort of the easier spend to make. You know, you're you're not committing to a huge new facility, and you're you're you're investing in productivity, you're investing in your employees very often when you're investing in technology. So we see that as as a great investment. We'd love to see a broadening of that capital spending, but just seeing the technology spending is very encouraging. What this is in your model portfolio in terms of the equity allocation is is there a consumer play? There are there are consumers? Uh, you know, we like we like Disney right now, and we we've got more of an exposure, i'd say, more of an exposure to the consumer cyclicals, not as much of the consumer staples. And in our portfolio, what what has worked out very well for us is that we're airing on the side of growth in the portfolio rather than some of the value names. We haven't felt that the economy is going to be that strong to really get a lot of the cyclicals moving, So we're we're airing on the side of companies that that have are showing good revenue growth, that they have a little more ability to generate organic growth. That's the key. We don't think the economy is going to be so strong that you want to go out and load up on some deep cyclical stocks right now. Interesting to to think about Disney. We were just catching up with one of our colleagues is out in Sun Valley. I'm looking over here because that our shot of Silicon Sun Valley fused me. Um. You know, Disney a huge bet that seems to be paying off on streaming. You know a lot of eyes on that. We were originally like Disney because you know, whether you get your whether your kids get the Disney channel through the cable or over the air, or whatever it is, you you want the content. So Disney for us was always a great content play. And then they shifted and said, okay, we do need to own the pipeline and they're making a great, a great move in that direction. What's the risk of this environment right now? The risk of this environment when we sit down with clients, We've got a lot of fully invested bears. We've got a lot of very nervous people. But when you take a look at their portfolios, they are fully invested. So it's a it's a real dichotomy right now. I would I would think that when we saw that market pullback in May that I would have had all my phone would have been off the hook, not at all, not at all. People were calm. So I'd actually like to see a little bit more nervous. Thus on the part of clients. The fact that I'm not seeing it, that makes me nervous. Their lack of nervous, This makes you nervous. Correct, Correct, That's that's why you're a good manager, all right. John Trayner, chief investment officer of People's United Wealth Management. They receive about nine billion dollars. He's based up in Bridgeport. Here with us in New York City today. Thanks for listening to Bloomberg Business Week. You can subscribe to the podcast on iTunes, SoundCloud, or Bloomberg Dot com. You can also listen to our radio show every weekday at two pm Eastern only on Bloomberg Radio