Will have to move . Joining us now is the National Security market strategist, art hogan. There it doesnt have legs, it is sustainable, what are we doing . We got business rotations out of growth and into value like we saw in june. It was not durable. We saw it in august. In this latest move, it is probably one we will see presiding over markets probably for the next three to four quarters. I say that because of Economic Sentiment has underperformed for the entirety of this year. If you are to backup the lens further and say how long is the s p outperforming the russell 2000, you would have to go back five to 10 years to see. So you have a lot of reversion to make up and at does not happen over the course of several days area i think the important thing to think about is, what the drivers are. The drivers are an assumption economic will increase activity in 2021 and Market Pricing will start getting that right early. I think that is where we see that, the beginning. Guy that is going to be bomb some assuming. We were joking before we came on air, chatting, talking about the fact that it has not gotten cold yet in new york at the numbers are beginning to climb. Hospitalization is starting to rise and the numbers in texas look scary. At some point, do you think the market reverts back to the here and now . The here and now looks bad, art. Art i would say looks better in terms of this wave of covid case discovery and looks to get worse before it gets better. If we look at the seven day average, it is as high as we have ever seen in the entire cycle including the springtime. Springtime. We are clearly talking about covid caseloads. In march and april, i would say we are Getting Better at it in terms of hospital settings, therapeutics, knowing what to do. While hospitalizations are going up, death rates are not. Which is good news. It will likely be more targeted in the things we shut down. I dont know if we will have a mass shutdown. I think there will be Economic Impact on this increased caseload but i dont think there will be what we saw in the spring. I think we ride from this wave, get to the other side, look towards one or two of the feedbacks in production in the first half of next year, and play into that better Economic Activity to follow the week. Alix we break can you break on what you mean by value . If you were to play the rotational little bit, keeping in mind yields are stuck around 1 , really yields negative, what kind of value stocks makes sense . Art we talk about this all of the time, and it is easy to take value in the trade where growth has outperformed value for the better part of this decade. To suggest we would have some sort of rotation into value from growth, when growth will continue to have explosive earnings and revenue growth, and our use of technology will increasing next year, so increase next year. When you step back and say what do we think about in this rotation, i would like to think of it economically sensitive. Energy, financials, industrials fall into that category that will likely do better as we pick up Economic Activity in the year ahead. Versus saying, what is cheap here . Often times, value is cheap for a reason. Rather than classify this as growth versus economically sensitive cyclicals, that has been the heart of the rotation. What needs better Economic Activity to succeed . I think that rotation will continue for a bit. Guy you sound pretty positive. Do you think the highs are at the end of the year . Art i dont. I think this market has been a forward pricing mechanism and we are not pricing and what we think will happen in the Fourth Quarter. Which will likely be bad. Bumps in the road will likely follow the path of the virus. I think a Market Pricing is better than what we have right now. We saw the election largely gridlock and not seeing major changes in tax policy. I believe there will be a lot of Economic Energy that gets released in 2021 in the form of consumers and pent up demand for goods and services they have not been able to satiate over the last year, and cash on the Balance Sheets sheets of corporate america, which tends to manifest in shareholder friendly activity like capex, new hires, mergers and acquisitions, dividends, buybacks. Alix Goldman Sachs out with s p, theres a 700 and its a big call for the next couple years. It makes sense doesnt make sense to sell volatility despite the fact that we will see shortterm, volatile headlines, or do you buy it here . Art i think its getting awfully cheap and the one day moving on monday for the vix was eyepopping. I think volatility is getting cheaper. I think there will be plenty of bumps in the road as we work our way through the First QuarterFourth Quarter and as we ascertain what the first 100 days of the new administration will look like. Thats wrapped up in an environment where we have a worsening path of the environment and dont know when that peaks out. It will likely be a wild. Also be a wild before we have a broadly available vaccine. I think bought will be a wild before we have a broadly available vaccine. I would not walk away from this rotational trait. Guy how much do you think you should have in your bow folios . Art we prefer you to have portfolio . Art we prefer you to have fun one end of a barbell, exposure to healthcare names on the other side economical cyclicals. To balance every two months, selling winners and buying losers. If you had the folio coming in mmday, you would outperfo the s p outperformed the s p 500. There is both sides on the barbell for growth and cyclicals. Guy we will wrap it up there. We have one more. Alix no no, you go. Guy i was going to thank him, but i think you should ask him another question. Alix i will do that then. [laughter] we are usually good at this, guy and i. What does this mean for the dollar, by the way . Art thats a great question. A lot of this is predicated on what we get for fiscal policy over the course of the next 12 months. My guess is we will see a weakening dollar. I do not think we will see the kind of fiscal policy we want. In september, you will see this 400 billion to 600 billion level and all of that assumes we have better fiscal policy and we go for the dollar into 2021. Guy i will wrap this thing up now. It was great to speak with you. We appreciate your time. Art hogan, of National Security, thank you very much. We will look at the state of the foreign u. S. Policy under a Biden Administration next and , theto a retired admiral allies nato supreme allied commander. He joins us next. I just think it is an embarrassment, quite frankly. Can ily thing that how say this tactfully . I think it will not help the president s legacy. There will be a smooth transition to a second Trump Administration. We are ready. The world is watching whats taking place, and we will count all the votes. When the process is complete, there will be an elector selected. The constitution lays the process out clearly. Guy still trying to read the mike pompeo and he said that. How ironic he was trying to be, hard to read. Nevertheless, you heard from president elect joe biden, talking about legacies and how important they are. Lets get a sense of how much progress is being made here and how and where we are. Kevin cirilli is monitoring everything in here to tell us what we need to know. Give us the lay the land in washington. Kevin moments ago, headlines crossing the bloomberg terminal that november 17, a pennsylvania judge will hear the motion to dismiss President Trumps lawsuit in that state on the election front. This following developments this morning that the president won the state of alexa. Alaska. I talk to sources that told me in the Republican Party that they are incredibly confused as to why there has not been a cohesive litigation that has been filed in an organized manner. As a result of that, they view the president s calculations and lack of concession as political posturing. We should take a look at the upcoming dates which are the backdrops to all of this noise coming out of washington dc. Washington, d. C. December 11, lawmakers have to get to some type of a budget deal to keep the government open. Then, january 5, the Georgia Special runoff election. Senate Majority Leader Mitch Mcconnell is trying to keep his majority in the senate. That is really why im hearing leader mcconnell and secretary pompeo have taken a much more measured tone with regards to the President Trump trying to keep the base of their party. January 20, that is when the president ial inauguration is for president elect joe biden. Frankly, when you are outside of washington trying to figure out when more fiscal stimulus will come, there might be a skinny version ahead of that as cases of covid continue to rise, but another massive fiscal stimulus deal could happen, post inauguration with the new administration. Alix thanks so much. Kevin cirilli. Joining us for more is admiral james stavridis. Admiral, it did they get nervous . When you have a National Security team that cannot get their briefings from the General Service administration, what is the problem there . What do you think about that . Admiral stavridis im very concerned about it. If you step outside the boundaries of the United States and you look globally, think how this is being received. We have decapitated our department of defense. We fired the secretary of defense, the under secretary of , thats thepolicy coo to put it in business terms. We fired the head of intelligence in the pentagon and chief of staff of the secretary of defense. Thats in the last 24 hours. So youve got a very Inexperienced Group of people stepping into these roles for the next 70 days until president elect bidens team comes in. It impacts us tactically. These people arent familiar with what is happening globally tower deployed troops. It affects us operationally, they are illequipped to step in and make decisions about the battle group going to the arabian gulf or south china sea. Strategically, for example, they are being handed the nuclear codes, which they have never touched, worked with, practiced. So we are pretty concerned right now. Guy looking through the other end of the telescope, admiral, which threats do we need to take seriously in terms of where they are likely to come from . Is it iran, russia . Who do you think will take advantage of the situation . Admiral stavridis heres the good news. The good news is that our professional, uniformed military are on the job. They are not paying attention to what is in the rearview mirror. They will continue to be a formidable deterrent, globally, as they operate today, which is veterans day in the United States. Having said that, i think the uranians may be tempted to do iranians may be tempted to do something. I think kim jongun could miscalculate and decide this is a perfect time to test intercontinental ballistic missile. You can see china putting more pressure on taiwan, cracking down on hong kong. There are many out there, and the top of the list would include russia, which we would and they would do something in the world of cyber. There is plenty of threat out there. The pentagon is in disarray on the civilian side, good news on veterans day. Military is on the job. We will get through this. It is a turbulent time. Alix admiral, we would like to thank you for your service on this veterans day. Point, hong kong opposition quit on masks, the new china powers and hong kong. For example, admiral stavridis i think he can. The larger point here is, unlike four years ago, where we had any inexperienced president come into office, inexperienced to say the least, here you have arguably the most experienced american stepping into the office. He has spent eight years as Vice President , and before that, decades as chairman of the Senate Foreign relations committee. Hes well prepared. The team he is bringing in around him serve as cabinet level or some sort of cabinet level. Its a very experienced team, and i think president elect biden is doing exactly the right thing, picking up the phone and calling our allies. Who have felt abused over the years with the Trump Administration and their policies. If we are going to influence chinas behavior or russia, or pyongyang, it will not be u. S. Versus one of them, it will be all of us, our allies, both on the atlantic side, pacific side, working together. President elect biden is positioned wellpositioned to reach out to world leaders. Guy guy admiral, one of the defining aspects of the Trump Administration was its activity for germany. Germany in particular and is lack of defense spending. Do you think that has disappeared under a Biden Administration . Admiral stavridis certainly the ,eflexive concerns about allies generally speaking, disappears. This is an incoming administration, i know all of them extremely well, they were all in office with the supreme allied commander when i was supreme allied commander and they are reaching out to allies. Having said that, i think a Biden Administration, just like the trump or obama administration, will put pressure appropriately on our european nato allies to hit the 2 defense spending. Here is the good news, the allies are on track to do that by the middle of this decade. I think you will see a Biden Administration continue to push them. The tone, the amick ability, to link arms together and deal with big problems, that will change. Alix i know this is more of a trade question, but trade and financial aspect has also sort of melded with the National Security aspect to some extent under President Trump. The tariffs the eu and u. S. Are opposing on each other, did they get rolled back or wrapped into this National Security conversation under a Biden Administration or no . Admiral stavridis i think they will not immediately, suddenly tariffs beingse imposed from both sides, frankly, as you correctly point out. I think because this administration has credibility in conversation and can bring more to the table, i think you will see a lessening of this, particularly on the european side of things. Over on the china side, you will see a Biden Administration that creates a real strategy, doesnt attempt to use tariffs as a has a, blunt instrument, nuanced basket of sticks and carrots, so i think there will be possibilities on that side as well. Possibilities to find ourselves in a better place. What weve got to avoid is what happened 100 years ago when the world came out of its last pandemic. What happened . Trade barriers all around the , tariffs in the United States. How did that work out . We cracked the Global Economy with the Great Depression and staggered into the second world war. We can avoid that. I think a Biden Administration is wellpositioned to do that. Lets start having the conversation. Both with allies and with our opponents. Assume war is a mercantile process, so maybe rolling these things into the same bucket actually, in some ways, is an effective strategy. Talking up spending money, lets talk about where you think a Biden Administration should spend money. You mentioned cyber earlier on. When do you think the efforts should be where you thing that for should be for the dod to have . It looks like budgets would be flat. Would you place the emphasis more on cyber, looking at where what is happening in asia and stick with a more conventional approach . Where do you think it lies . Admiral stavridis i think you have it about right. Defense budgets i predict will remain flats, maybe slightly down. Haveyou will want to do is a portion within that top line as we call it in the department of invents department of defense. I think the winners will be Cyber Security special forces, unmanned vehicles, and not only drones in the air but also oceangoing drones, landbased drones, the unblinking eye in the sky, and maritime. The big challenge as the century unfolds, and certainly this decade, will be with china. We will not find fight a land war in asia. Creatinging to be deterrence in the south china sea, whether a Maritime Forces with our Maritime Forces and Everything Else i mentioned. It is unlikely to see nature land conflict of ticular Nuclear Forces conflict. Nuclear forces might not need the upgrades like the Trump Administration. Thats what i would predict from the pentagon under president biden. Thank you very much indeed. I would like to add my thanks as well to the thanks that alex gave earlier on for your service and for anybody that is wearing a uniform or has worn a uniform. Thank you. This is bloomberg. Alix coming up, a biden presidency is bad news for u. S. Equities. Thats according to mark mobius of mobius capital partners. We talk to him next. S p hanging onto gains, and the nasdaq outperforming, up 1. 5 , holding onto those gains. The virus count mounts the rotation the last we the rotation we saw over the last couple days is reversing a little bit. This is bloom