Latest / Bloomberg Intelligence / Oil reports are very Normal : Stephen Schork

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Oil reports are very Normal : Stephen Schork · Bloomberg Intelligence

• 0:05
  Speaker 1: Welcome to the Bloomberg p m L Podcast. I'm pim
• 0:08
  Speaker 1: Fox along with my co host Lisa Bramowitz. Each day
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• 0:33
  Speaker 1: Crude oil inventories fell by more than four million barrels
• 0:36
  Speaker 1: this according to the e i A. This took the
• 0:39
  Speaker 1: market by surprise. We're seeing oil reverse earlier declines and
• 0:43
  Speaker 1: surge on the heels of this, I want to bring
• 0:45
  Speaker 1: in Stephen Shork, president of the Short Group, coming to
• 0:48
  Speaker 1: us from Pennsylvania. Steve, and I'd love to get your
• 0:51
  Speaker 1: reaction first to this in light of some of the
• 0:54
  Speaker 1: concerns that there have been about whether or not OPEC
• 0:57
  Speaker 1: will agree to sort of reduce seeing some of the
• 1:01
  Speaker 1: some of the production caps that they've had on. Does
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  Speaker 1: this come as a surprise to you the inventories fell. No, No,
• 1:08
  Speaker 1: it does not come as a surprise. And anyone who
• 1:10
  Speaker 1: seriously watches this market on a week week basis, uh
• 1:13
  Speaker 1: this should not come as a surprise to you. Uh,
• 1:16
  Speaker 1: the expectation cording of Bloomberg coming in today's report was
• 1:19
  Speaker 1: a build include all stocks of two point one million barrels. Uh.
• 1:23
  Speaker 1: That's just idiocy, Lisa, because some how you really feel
• 1:26
  Speaker 1: and not absolutely because I just it's just it sticks
• 1:30
  Speaker 1: in my craw that that people look at these weekly
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  Speaker 1: numbers as if it's actually possible to gauge the inflow
• 1:38
  Speaker 1: outflow of something like oil and so many different variables
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  Speaker 1: of it and so many different market airs, and if
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  Speaker 1: you really think that you can call this market uh
• 1:47
  Speaker 1: plus minds on any given week. Din didn't go with
• 1:50
  Speaker 1: God all right, because it is absolutely impossible. So Lisa,
• 1:55
  Speaker 1: what you have to do is you have to look
• 1:57
  Speaker 1: at the statistics. You have to look at the seasonality.
• 2:00
  Speaker 1: Are the markets are inventors moving in the correct direction. So,
• 2:04
  Speaker 1: for instance, last week, inventories reportedly rose by two point
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  Speaker 1: one million barrels. This week they reportedly fell by four
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  Speaker 1: point one million barrels. Okay, so that's about two million,
• 2:15
  Speaker 1: I met two million barrel draw over the last two weeks.
• 2:18
  Speaker 1: You know what, at this time of the year, anything
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  Speaker 1: in between a four point four million barrel draw to
• 2:23
  Speaker 1: a one point when one million barrel build is normal.
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  Speaker 1: So what we're getting out of this leasas this is
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  Speaker 1: a very normal report, same that goes with gasoline and
• 2:33
  Speaker 1: disilate inventories. So this should give no sort of bearing
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  Speaker 1: on what OPEC might or might not do in the
• 2:40
  Speaker 1: weeks ahead. So I will let everybody who does want
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  Speaker 1: to prognosticate on the barrel counts um go with God,
• 2:48
  Speaker 1: and I want to shift our pretention to the OPEC
• 2:50
  Speaker 1: meeting UM and just try to get a sense of
• 2:53
  Speaker 1: how this sort of factors into their views. Not necessarily
• 2:56
  Speaker 1: this reading, but just in general the backdrop for oil,
• 2:59
  Speaker 1: but is the i A also put out a report
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  Speaker 1: earlier today saying that I ran in Venezuela oil output
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  Speaker 1: could slump by nearly thirty percent. What are you expecting
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  Speaker 1: from the meeting, the OPEC meeting, uh? And you know,
• 3:12
  Speaker 1: do you think that it will materially lower oil prices?
• 3:16
  Speaker 1: I don't know about materially lowering oil prices, because what
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  Speaker 1: the issue that OPEC really has to contend with is
• 3:22
  Speaker 1: to your point, Venezuela, their their production has swollen, because
• 3:26
  Speaker 1: this is what socialism and inevitably gets you too. So
• 3:30
  Speaker 1: as that economy swirls down that socialist cess pool that
• 3:33
  Speaker 1: it is in right now. Yes, those barrels will continue
• 3:36
  Speaker 1: to be pulled off of the market, and that's the
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  Speaker 1: concern for the other members of OPEC because crudal demand
• 3:42
  Speaker 1: has never been stronger. Guest line demand here in the
• 3:45
  Speaker 1: United States. I know everyone hears wringing their hands that
• 3:48
  Speaker 1: guestlne prices are high, high, high. Well you know, just
• 3:51
  Speaker 1: the for inflation, guestling prices are not high. Hence why
• 3:54
  Speaker 1: guest line demanding that it has never been stronger right now,
• 3:57
  Speaker 1: and they've never been stronger right now because the economy
• 4:00
  Speaker 1: leads commodity prices and the economy is strong. Well, well,
• 4:06
  Speaker 1: actually I'm the oil guy. I've got a plug in
• 4:09
  Speaker 1: uh electric hybrid. Absolutely, this is the wave of the future.
• 4:14
  Speaker 1: And this is something that old packet and that's a
• 4:16
  Speaker 1: great lead in Lisa, thank you. This is anything next
• 4:18
  Speaker 1: Old Peck has to take into consideration because so the
• 4:21
  Speaker 1: first time ever this is substitute in the market. So
• 4:25
  Speaker 1: there are two variables that changes consumer behaviors, a price
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  Speaker 1: shocks and a substitute. We've never we've always had the
• 4:31
  Speaker 1: price shocks up and down. We never had the substitute.
• 4:34
  Speaker 1: I am getting fifty seven miles to the gallon in
• 4:37
  Speaker 1: an suv. So therefore, ten years ago I had to
• 4:41
  Speaker 1: fill up my guest doesn't su fifty seven times a year.
• 4:45
  Speaker 1: This time I have to fill up my suv maybe
• 4:48
  Speaker 1: eleven times a year. So that is a considerable drop
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  Speaker 1: in demand. Now I get it, it's just an anecdote,
• 4:54
  Speaker 1: but look around. I used to live in Grandage, Connecticut.
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  Speaker 1: What was the status car and Puttnam Avenue twenty years ago?
• 5:00
  Speaker 1: It was the hummer that car got three yards to
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  Speaker 1: the gallon. Today the status car tooling up Grinnage Avenue
• 5:06
  Speaker 1: is the Tesla. So absolutely there is a change, and
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  Speaker 1: this is something OPEC has to consider because they continue
• 5:13
  Speaker 1: to artificially drive prices higher. They're pushing people away from
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  Speaker 1: their market into the elon musk market, and this is
• 5:20
  Speaker 1: something that you have to keep prices low enough that
• 5:23
  Speaker 1: you don't cannibalize your current market share, but high enough
• 5:26
  Speaker 1: where you can make a decent return. And right now,
• 5:29
  Speaker 1: oil in that sixty five dollar range is an optimal level.
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  Speaker 1: So OPEC has to contend with keeping prices A lit
• 5:38
  Speaker 1: on prices right now seven just forty five seconds left
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  Speaker 1: I'd love your take on President Trump tweeting that oil
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  Speaker 1: prices are too high. OPEC is added again not good
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  Speaker 1: this morning. Does OPEC care? We absolutely look at President
• 5:51
  Speaker 1: just that's justing Trudeau for crying out loud. Yes, they
• 5:54
  Speaker 1: should care what President tweet is tweeting out every single minute,
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  Speaker 1: because what what's the what's the veil um A message here?
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  Speaker 1: Hey guys, I'm the United States. I have over six
• 6:05
  Speaker 1: million barrels sit in the Strategic Petroleum Reserve, two hundred
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  Speaker 1: million bars suite oil, which I don't really have a
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  Speaker 1: lot of use for. So get get get, get, get
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  Speaker 1: on board, or I'm gonna I'm gonna pull the plug
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  Speaker 1: on the sp R and flood the market. That's the
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  Speaker 1: message being set to Saudi, and the Saudis are hearing
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  Speaker 1: loud and clear. Stephen Short, thank you so much for
• 6:26
  Speaker 1: being with me today. A really interesting Stephen Schork, president
• 6:30
  Speaker 1: of the Short Group, coming to us from Pennsylvania. The
• 6:48
  Speaker 1: labor market is getting tight. If you talk to a
• 6:50
  Speaker 1: lot of chief executives, they say it is hard to
• 6:53
  Speaker 1: hire qualified workers. Our next guest is one of the
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  Speaker 1: fastest growing companies in day Moyne, Iowa, and we have
• 7:02
  Speaker 1: the chief executive officer here with us, Roger Hargins. Uh.
• 7:05
  Speaker 1: It is that the company is acum Old, and he
• 7:07
  Speaker 1: joins us here in our eleven three oh studios. Thank
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  Speaker 1: you so much for being here. Roger. You've hired a
• 7:13
  Speaker 1: tremendous number of people eighty four percent staff increase from
• 7:17
  Speaker 1: fourteen through two thousand and seventeen. Has it been difficult
• 7:22
  Speaker 1: to find qualified employees? Finding the right employees is always
• 7:26
  Speaker 1: a challenge, but we've We've been very fortunate because we
• 7:29
  Speaker 1: have a good brand in our marketplace, we have a
• 7:32
  Speaker 1: good culture, and we have good referrals from existing employees.
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  Speaker 1: But we decided to start our own program years ago,
• 7:39
  Speaker 1: twelve years ago with the De Moin Area Community College
• 7:42
  Speaker 1: with the acum Old Scholarship Program. We determined at that
• 7:46
  Speaker 1: time that what we were going to have to do
• 7:49
  Speaker 1: was grow our own so to speak, kids coming around
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  Speaker 1: of high school that wanted to go to college to
• 7:53
  Speaker 1: get a degree and to one I making or robotics
• 7:56
  Speaker 1: and automation. We started sponsoring that and funding the tuition
• 8:01
  Speaker 1: for that, and it's been a very successful program. So
• 8:04
  Speaker 1: can you give us a sense of what acum old
• 8:06
  Speaker 1: does and Uh? And it sort of goes against the
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  Speaker 1: grain that it's a manufacturing company in the US, it
• 8:11
  Speaker 1: has not been exported. What does it do. Yeah, we're
• 8:14
  Speaker 1: a high tech manufacturer of thermoplastic injection molding micro sized
• 8:19
  Speaker 1: components for the medical device, microelectronics, and micro optics industry primarily,
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  Speaker 1: and we design and build our own tooling to produce
• 8:28
  Speaker 1: customers specific components, usually critical components that make their assemblies work,
• 8:33
  Speaker 1: and we ship all over the world. We shipp the
• 8:35
  Speaker 1: twenty three countries. We've been a net exporter almost for
• 8:40
  Speaker 1: fifteen sixteen years. Okay, So, as a manufacturer in the US,
• 8:45
  Speaker 1: have you been tempted to move any of your operations
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  Speaker 1: overseas due to a cheaper workforce or more potential employees.
• 8:53
  Speaker 1: That's that's a great question. We get asked that a lot. Uh.
• 8:55
  Speaker 1: The answers. No. The thing that we have found is, uh,
• 8:59
  Speaker 1: the I he for our customers is very important. Their
• 9:02
  Speaker 1: critical component designs are very important. We made it intellectual
• 9:07
  Speaker 1: property and they made We made a decisions stay in
• 9:09
  Speaker 1: the US. Were very competitive, We're highly innovative, and we've
• 9:13
  Speaker 1: been able to attract the right kind of employee that
• 9:15
  Speaker 1: we want for the longer term. That helps solve the
• 9:18
  Speaker 1: problems for producing components for our customers. So when you
• 9:22
  Speaker 1: said that you're you're helping to finance the education of
• 9:25
  Speaker 1: specific individuals who you think will be good employees. What
• 9:28
  Speaker 1: is sort of the most important thing skill UH for
• 9:33
  Speaker 1: your prospective employees to to learn in a college type setting.
• 9:38
  Speaker 1: They need to really start grasping what the technical challenges
• 9:42
  Speaker 1: on micro sized parts are from designing, of tooling and automation.
• 9:46
  Speaker 1: They need to understand where a culture of problem solving,
• 9:50
  Speaker 1: and they need to really understand that they can work
• 9:52
  Speaker 1: well in teams. We take a team approach internally as
• 9:56
  Speaker 1: we solve problems for our customers. UM. One thing that
• 9:59
  Speaker 1: I'm wondering, you said that you're an exporter, a pretty
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  Speaker 1: big exporter. Are you concerned or have you been affected
• 10:05
  Speaker 1: at all by some of the tariff discussions or uh
• 10:09
  Speaker 1: tensor trade discussions We have not. Are you concerned about that? UM?
• 10:14
  Speaker 1: We're always concerned about any trade barriers that are out there.
• 10:17
  Speaker 1: We have not seen that have and I don't believe
• 10:19
  Speaker 1: we'll have any really any big effect on our type
• 10:23
  Speaker 1: components that we produce. Given the fact that people are
• 10:27
  Speaker 1: talking about the tight labor market. UM. Have you found
• 10:30
  Speaker 1: that you've had to increase salaries more than you had
• 10:34
  Speaker 1: previously in order to attract talent. Yes, you know, it's
• 10:37
  Speaker 1: like the market conditions. We want to continually attract the
• 10:42
  Speaker 1: best and brightest. So absolutely pay has to go up somewhat.
• 10:46
  Speaker 1: How much has it gone up in the past few years? Uh?
• 10:49
  Speaker 1: And certain skilled trades that's gone up more than others.
• 10:52
  Speaker 1: Certain things whether you're robotics, automation person or a tool
• 10:56
  Speaker 1: eye person, it's it's gone up faster than maybe somebody
• 10:59
  Speaker 1: with out those skills that's doing regular production. So can
• 11:03
  Speaker 1: you just explain what if you go into one of
• 11:08
  Speaker 1: the plants, what will you see? What you'll see at
• 11:12
  Speaker 1: acum Old is uh. First off, we have a team
• 11:15
  Speaker 1: working together to design tools, to build products, to build
• 11:20
  Speaker 1: the tools and automation, and then run the products and
• 11:23
  Speaker 1: validate them in our plant. What you'll be able to
• 11:26
  Speaker 1: see as a teamwork of people, we have lots of
• 11:28
  Speaker 1: areas that are proprietary, that are off limits that only
• 11:32
  Speaker 1: our employees and certain employees can be in those particular
• 11:35
  Speaker 1: areas to produce these critical components for our customers. So
• 11:39
  Speaker 1: their components, Uh, I mean just trying to even wrap
• 11:42
  Speaker 1: my head around some of these nearly microscopic parts that
• 11:47
  Speaker 1: determine whether or not your phone, whether or not the
• 11:51
  Speaker 1: you know, surgical arm that goes in and does the
• 11:54
  Speaker 1: laparoscopic surgery, whatever it is. Uh, these crucial parts that
• 11:59
  Speaker 1: the design of them is make it or break it?
• 12:02
  Speaker 1: Is that right? I mean? Am I understanding that's right?
• 12:04
  Speaker 1: The customer typically will design what they want. We work
• 12:07
  Speaker 1: with them and help them make sure the design is
• 12:09
  Speaker 1: ready for manufacturing. So there's always a compromise making sure
• 12:13
  Speaker 1: that it works well in a production environment for us
• 12:15
  Speaker 1: to produce at a at a rate that makes sense
• 12:18
  Speaker 1: for them. So we then produced the parts and ship
• 12:22
  Speaker 1: them to our customers all over the world for assembly
• 12:24
  Speaker 1: until it can be meta device. It can be, uh,
• 12:27
  Speaker 1: life sciences, it can be and like in blood glucose
• 12:30
  Speaker 1: monitoring or different things that that's a big area eye surgery.
• 12:33
  Speaker 1: We're big into surgical components for the eyes. Okay. So
• 12:37
  Speaker 1: we've been talking a lot by about smaller private businesses
• 12:41
  Speaker 1: and how business confidence has been surging. Do you feel
• 12:46
  Speaker 1: that as well? Yes, very much. So. We see the
• 12:49
  Speaker 1: competitiveness today, uh, and we've been competitive over the years,
• 12:53
  Speaker 1: but today it's even more so because through innovation and automation,
• 12:58
  Speaker 1: we've been able to remain very competitive the world stage.
• 13:01
  Speaker 1: Is the reason we're shipping to other countries on a
• 13:03
  Speaker 1: regular basis. Are there competitors in the US or there's
• 13:06
  Speaker 1: a few smaller ones, yes, mom and pop type chops. Okay, so, uh,
• 13:11
  Speaker 1: you know, some people talk about how there seems to
• 13:14
  Speaker 1: be a bifurcation in the economy where wealthier individuals are
• 13:18
  Speaker 1: making more money and then there's a whole host of
• 13:20
  Speaker 1: people left out. Do you see that or do you
• 13:23
  Speaker 1: not see that? And we don't. We don't really see that.
• 13:25
  Speaker 1: We will see anybody that truly wants to work and
• 13:27
  Speaker 1: learn can get a job. Iowa has, as you know,
• 13:30
  Speaker 1: one of the lowest unemployment rates at two point nine percent.
• 13:33
  Speaker 1: I think is where we're at today. So we're working
• 13:35
  Speaker 1: number one to keep every employee, to grow their skill
• 13:38
  Speaker 1: set and attract new ones. Do you think that, Uh,
• 13:41
  Speaker 1: kids require a four year education in college in certain
• 13:45
  Speaker 1: areas if that's what they want to go into. Yes,
• 13:47
  Speaker 1: we don't require. What we're looking for is people that
• 13:50
  Speaker 1: have those skill sets of really wanting to work in manufacturer,
• 13:53
  Speaker 1: whether it's production or if they want to go into
• 13:56
  Speaker 1: tool and I robotics and automation. Those two year degree
• 14:00
  Speaker 1: is is a very good, very good start for us.
• 14:03
  Speaker 1: And you certainly also are financing the accum Old Scholarship
• 14:07
  Speaker 1: program um which is really interesting, basically paying college tuition
• 14:12
  Speaker 1: uh and a part time paid job to scholars who
• 14:16
  Speaker 1: then graduate and begin a full time position at the company.
• 14:20
  Speaker 1: Roger Hargins, thank you so much for being here. Really interesting.
• 14:23
  Speaker 1: Roger Hargins is chief executive officer of acum Old, which
• 14:26
  Speaker 1: is based in Des Moines, Iowa. It is actually one
• 14:28
  Speaker 1: of the largest and fastest growing companies in Des Moines.
• 14:33
  Speaker 1: Uh so really interesting. Well, the NASDAC in particular keeps
• 14:50
  Speaker 1: climbing to new highs every day, which leaves investors with
• 14:54
  Speaker 1: a big question does it have more room to run
• 14:58
  Speaker 1: or is this sort of the peak of the cycle.
• 15:01
  Speaker 1: Joining me now is Jim Key. He is president in
• 15:04
  Speaker 1: chief economist for South Texas Money Management, which oversees about
• 15:09
  Speaker 1: three point three billion dollars and is based in San Antonio, Texas.
• 15:13
  Speaker 1: But he joins me here in our eleven three oh studios. Jim,
• 15:16
  Speaker 1: thank you so much for being here. Let's just start
• 15:19
  Speaker 1: with those tech stocks, because that's been a big question
• 15:21
  Speaker 1: mark for a lot of people. Is this time to
• 15:24
  Speaker 1: take some profits, sell the facebooks, the apples, etcetera that
• 15:28
  Speaker 1: are at record highs and invest in something else. Well,
• 15:31
  Speaker 1: I think you should always control your sector exposure, and
• 15:34
  Speaker 1: that's something we do at South Texas Money Management. But
• 15:37
  Speaker 1: within that, business investment spending is one of the things
• 15:41
  Speaker 1: driving technology. And when you have the interaction at tax
• 15:44
  Speaker 1: cuts and deregulation which we've had this year, a lot
• 15:48
  Speaker 1: of the business investment spending takes the way of information technology.
• 15:52
  Speaker 1: So um, I think it probably has room to run,
• 15:54
  Speaker 1: but I would watch, I would watch my exposure to
• 15:57
  Speaker 1: tech in general, tanny sector in general. Okay, So I
• 15:59
  Speaker 1: was looking it's some of your ideas for what you liked,
• 16:03
  Speaker 1: and I found them interesting. There was some contrarian place
• 16:06
  Speaker 1: here Ford. I want to start there because Ford has
• 16:09
  Speaker 1: been a real underperformer and there are a lot of
• 16:12
  Speaker 1: question marks about that company. Why are you bullish on them?
• 16:14
  Speaker 1: It is it's what we call an ugly baby, and
• 16:17
  Speaker 1: you know and we own value stocks and gross it
• 16:20
  Speaker 1: is that's a genie y at our CEO original but uh,
• 16:24
  Speaker 1: the value growth differential, as you probably know, it's kind
• 16:27
  Speaker 1: of at an all time high. It's it's hit there
• 16:29
  Speaker 1: a few times before, and usually that gap closes with
• 16:31
  Speaker 1: growth underperforming. So it's a good time to look at
• 16:34
  Speaker 1: value and forward. You know, they've they're behind their peers
• 16:38
  Speaker 1: and operating. They've they've been behind in the electric vehicle
• 16:41
  Speaker 1: UH initiatives, and they've had a change a churning. They've
• 16:47
  Speaker 1: they've got a new CEO, they've got a team Edison
• 16:49
  Speaker 1: for the electric initiative. They're obsessed with costs UH and
• 16:53
  Speaker 1: they're contracting assets and focusing on our O I s.
• 16:55
  Speaker 1: That's just what a value stock should do. Nothing's priced in,
• 16:58
  Speaker 1: and the dividend yields pretty high, about five percent, So
• 17:01
  Speaker 1: it's a it's a good ugly baby value stock for US.
• 17:04
  Speaker 1: Ugly baby. I hope that I I mean, I guess
• 17:07
  Speaker 1: that you kind of want to be an ugly baby
• 17:09
  Speaker 1: at this market, but I don't know that I would
• 17:10
  Speaker 1: really want that Delta shares down more than one percent.
• 17:13
  Speaker 1: You like this, you like this company we do. This
• 17:16
  Speaker 1: is a business investment. You know, at any firm this
• 17:18
  Speaker 1: one included, I'm sure you know when business slows, it's
• 17:21
  Speaker 1: you know, pull in travel and don't use the color copier.
• 17:24
  Speaker 1: But I think we're seeing the opposite. Business optimism is high. Uh,
• 17:28
  Speaker 1: Delta has more exposure to business class travel than a
• 17:31
  Speaker 1: lot of its piers. It's a best in class operator.
• 17:34
  Speaker 1: It's it's CEO Ed Bastions, you know, definitely played a
• 17:37
  Speaker 1: win guy. So yeah, we like Delta a lot. So
• 17:39
  Speaker 1: one thing that I'm struck by is how do you
• 17:41
  Speaker 1: bet on an airline company when their profits hinge so
• 17:47
  Speaker 1: directly on the price of oil, which we have learned
• 17:50
  Speaker 1: time and again is incredibly fickle in subject to all
• 17:53
  Speaker 1: sorts of forces. You it's very difficult to predict. It
• 17:55
  Speaker 1: is airlines. You know, Delta itself has its own refinery business,
• 17:59
  Speaker 1: so sensibly that leads it a little less exp it shares. Absolutely,
• 18:03
  Speaker 1: they plunge in tandem with all the other airlines whenever
• 18:05
  Speaker 1: oil prices go up. So here's the difference, I think,
• 18:08
  Speaker 1: and I agree with you. In general, it's a tough business.
• 18:11
  Speaker 1: But airlines are earning return on investment above the costs
• 18:15
  Speaker 1: of capital. Some of them, like Delta, have been ratcheting
• 18:18
  Speaker 1: up every year, so they're about double what they were
• 18:20
  Speaker 1: through there in their longer term pass they used to
• 18:22
  Speaker 1: be cost of capital businesses and they and they haven't
• 18:25
  Speaker 1: been in the last five or six years, and that's
• 18:28
  Speaker 1: with high and low oil prices. All right, So let's
• 18:31
  Speaker 1: move on to some of your other stock picks. Raytheon
• 18:35
  Speaker 1: this one's interesting to me, uh, for a lot of reasons.
• 18:39
  Speaker 1: Why do you like this one? Well, you know, I'm
• 18:43
  Speaker 1: glad to see the North Korea talks, but I don't
• 18:45
  Speaker 1: think we're heading into a peace dividend era anytime soon.
• 18:49
  Speaker 1: So airspace defense, you know, hold on a second, Were
• 18:52
  Speaker 1: you hoping for some kind of military conflict so that
• 18:55
  Speaker 1: your shares rise? No, it's more of a military spending
• 18:59
  Speaker 1: and this was something prior to the election. Whether you
• 19:01
  Speaker 1: like both Clinton and Trump both we're likely to spend
• 19:05
  Speaker 1: more on on defense than than the previous administration. So
• 19:09
  Speaker 1: I think missiles and missile defense is still a pretty
• 19:12
  Speaker 1: good business going forward in this world. And that's what
• 19:14
  Speaker 1: Rayeon desk, and it's less expensive than some of them. Right. Okay,
• 19:20
  Speaker 1: So just on a general basis, do you sort of
• 19:23
  Speaker 1: buy into our play into any of these trades when
• 19:26
  Speaker 1: people start to worry about trade tensions and then they
• 19:29
  Speaker 1: sell certain shares, do you do that at all? Well? We, uh,
• 19:33
  Speaker 1: we don't. We haven't yet. Trade tensions, though, I think
• 19:36
  Speaker 1: are starting to affect x US growth. I think a
• 19:40
  Speaker 1: lot of cross business plans and spending are kind of sideline.
• 19:45
  Speaker 1: A lot of people are kind of taking a weight
• 19:46
  Speaker 1: and see attitude. So and I think that's showing up
• 19:49
  Speaker 1: in some of the global the global growth pause that
• 19:51
  Speaker 1: we've seen. So it is important. Um, but yeah, we
• 19:57
  Speaker 1: you know trade effect. We have exposure to most asset
• 20:03
  Speaker 1: classes all the time. So in this case, it's hurts
• 20:06
  Speaker 1: some of the global multinationals with Laddie International sales, but
• 20:09
  Speaker 1: it's helped some of the small gaps and we have
• 20:11
  Speaker 1: exposure to both. Just real quick, are you holding more cash?
• 20:15
  Speaker 1: We are not. We always try to stay fully invested
• 20:18
  Speaker 1: to our target. Uh. Markets aren't cheap right now, but
• 20:23
  Speaker 1: they're not outside of a normal range of valuation. Evaluation
• 20:27
  Speaker 1: tells you very little about what returns to expect over
• 20:30
  Speaker 1: the next twelve months. It tells you a lot about
• 20:31
  Speaker 1: what to expect over maybe the next ten years or so.
• 20:34
  Speaker 1: Jim Key, thank you so much for being here. Really fun.
• 20:36
  Speaker 1: Thank you. Jim Key, President, chief economist at South Texas
• 20:39
  Speaker 1: Money Management, based in Santonio, San Antonio, Texas. But here
• 20:44
  Speaker 1: in our eleven three studios with us really interesting to
• 20:48
  Speaker 1: hear the bull case for Ford and for Delta. Thank
• 20:51
  Speaker 1: you so much. Thanks for listening to the Bloomberg P
• 20:56
  Speaker 1: and L podcast. You can subscribe and listen to interviews
• 20:59
  Speaker 1: that app, podcasts, SoundCloud or whatever podcast platform you prefer.
• 21:03
  Speaker 1: I'm Pim Fox. I'm on Twitter at pim Fox. I'm
• 21:07
  Speaker 1: on Twitter at Lisa abramowits one before the podcast. You
• 21:11
  Speaker 1: can always catch us worldwide on Bloomberg Radio