1 00:00:00,120 --> 00:00:06,800 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,680 --> 00:00:15,480 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,720 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,760 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,440 --> 00:00:24,920 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,960 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,319 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,960 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:37,800 Speaker 2: Terminal and the Bloomberg Business app. Lori Calvesina of RBC, 10 00:00:37,920 --> 00:00:41,000 Speaker 2: writing globally, our analysts have a slightly bullish till in 11 00:00:41,040 --> 00:00:43,680 Speaker 2: their outlook for performance over the next six to twelve months. 12 00:00:43,920 --> 00:00:47,240 Speaker 2: Within the US, performance outlooks on financials and most bullish, 13 00:00:47,400 --> 00:00:50,880 Speaker 2: followed by materials and healthcare. Laurie's with us around the table, Lorie, 14 00:00:50,960 --> 00:00:52,440 Speaker 2: good morning to you, Thanks for having me. 15 00:00:52,520 --> 00:00:54,000 Speaker 3: Good to kick off the trading week with you. 16 00:00:54,080 --> 00:00:56,200 Speaker 2: One of the big sectors that comes at repeatedly around 17 00:00:56,240 --> 00:00:59,520 Speaker 2: this program, the financials. People seem to like the financials 18 00:00:59,560 --> 00:01:02,480 Speaker 2: earning seasiness started you like me. Like us, we look 19 00:01:02,520 --> 00:01:04,240 Speaker 2: at the banks as some kind of read on the 20 00:01:04,240 --> 00:01:05,040 Speaker 2: broader economy. 21 00:01:05,080 --> 00:01:06,200 Speaker 3: What's it telling you right now? 22 00:01:06,319 --> 00:01:08,560 Speaker 4: So I thought the results we got on Friday affirmed 23 00:01:08,560 --> 00:01:10,560 Speaker 4: the soft landing thesis. I mean, that's really all I 24 00:01:10,600 --> 00:01:12,320 Speaker 4: was paying attention to, to be honest, when we were 25 00:01:12,319 --> 00:01:14,800 Speaker 4: going through the transcript, and I think, you know, we 26 00:01:15,120 --> 00:01:16,760 Speaker 4: sort of heard, you know, on the one hand, the 27 00:01:16,760 --> 00:01:19,400 Speaker 4: consumer is still pretty strong. We had one bank tell us, 28 00:01:19,400 --> 00:01:21,679 Speaker 4: you know, we're eagerly looking for those signs of weakness 29 00:01:21,680 --> 00:01:23,920 Speaker 4: and we're just not finding them. And I think that, 30 00:01:23,959 --> 00:01:25,680 Speaker 4: you know, really reflects what a lot of us macro 31 00:01:25,720 --> 00:01:28,080 Speaker 4: forecasters have been telling our own clients lately, like we're 32 00:01:28,080 --> 00:01:30,240 Speaker 4: looking at it, we hear all the concerns, we are 33 00:01:30,280 --> 00:01:31,800 Speaker 4: just not seeing it in the data. We are just 34 00:01:31,800 --> 00:01:33,440 Speaker 4: not hearing it from the companies. 35 00:01:33,040 --> 00:01:35,039 Speaker 2: Which presents its own problem. You look at how you've 36 00:01:35,080 --> 00:01:37,880 Speaker 2: spread super thigh investment rides spread super tides. The banks 37 00:01:37,880 --> 00:01:40,000 Speaker 2: are saying nothing to see here, no problem. So as 38 00:01:40,000 --> 00:01:42,520 Speaker 2: an investor, if you've been set in cash, you look 39 00:01:42,520 --> 00:01:44,920 Speaker 2: at stocks at all time highs, credit spreads at very 40 00:01:45,000 --> 00:01:46,840 Speaker 2: very tight levels, and you're wondering, what on earth do 41 00:01:46,920 --> 00:01:47,120 Speaker 2: I do? 42 00:01:47,440 --> 00:01:48,080 Speaker 3: What do I do? 43 00:01:48,160 --> 00:01:50,160 Speaker 4: I think it's a question of your time horizons right 44 00:01:50,160 --> 00:01:52,240 Speaker 4: and if I think about my own targeting process, we're 45 00:01:52,240 --> 00:01:54,280 Speaker 4: a little bit over my fifty seven hundred number right 46 00:01:54,320 --> 00:01:57,120 Speaker 4: now for this year, and I feel pretty neutral in 47 00:01:57,160 --> 00:01:59,320 Speaker 4: the short term. I don't feel bearish by any stretch, 48 00:01:59,360 --> 00:02:02,560 Speaker 4: but valuation feel full. Sentiment feels pretty full to me. 49 00:02:02,640 --> 00:02:05,520 Speaker 4: Aaii hit. I think it was twenty four percent on 50 00:02:05,560 --> 00:02:07,760 Speaker 4: the four week average last week, twenty eight percent on 51 00:02:07,800 --> 00:02:10,440 Speaker 4: the one week number. That's a one standard deviation event, 52 00:02:10,800 --> 00:02:12,320 Speaker 4: so I don't necessarily feel like you need to be 53 00:02:12,400 --> 00:02:15,560 Speaker 4: chasing at this particular moment. That being said, when I 54 00:02:15,600 --> 00:02:17,680 Speaker 4: walk through the valuation math for next year, if I 55 00:02:17,760 --> 00:02:21,440 Speaker 4: keep a pretty steady multiple and I just bacon earning's growth, 56 00:02:21,440 --> 00:02:23,560 Speaker 4: assume a pretty good economy, I can get to sixty 57 00:02:23,600 --> 00:02:26,760 Speaker 4: two hundred easily. On my I have a below consensus 58 00:02:26,800 --> 00:02:28,800 Speaker 4: earnings number of two sixty nine. Now, if I use 59 00:02:28,840 --> 00:02:30,840 Speaker 4: consensus earnings, which is over too eighty, I can get 60 00:02:30,840 --> 00:02:33,320 Speaker 4: you to like sixty five hundred sixty six hundred. So 61 00:02:33,480 --> 00:02:35,240 Speaker 4: I think you buy dips is the way to think 62 00:02:35,280 --> 00:02:37,160 Speaker 4: about it. And I think if you don't really care 63 00:02:37,160 --> 00:02:39,240 Speaker 4: about the short term, sure you know, maybe you can 64 00:02:39,280 --> 00:02:40,400 Speaker 4: go ahead and hold your nose and buy. 65 00:02:40,639 --> 00:02:43,360 Speaker 5: There's a question about which dips do you buy because 66 00:02:43,360 --> 00:02:45,680 Speaker 5: there has been a very segmented market where you have 67 00:02:45,800 --> 00:02:48,560 Speaker 5: basically big tech rotating in and out of favor, and 68 00:02:48,600 --> 00:02:49,959 Speaker 5: then you have the rest of the four hundred and 69 00:02:50,000 --> 00:02:52,720 Speaker 5: ninety three that are playing catch up and fits and starts. 70 00:02:52,720 --> 00:02:54,600 Speaker 5: How much do you lean into the sort of rotation 71 00:02:54,760 --> 00:02:57,680 Speaker 5: this broadening out trade at a time where you do 72 00:02:57,800 --> 00:02:59,800 Speaker 5: see some earnings growth but it's patchy. 73 00:03:00,280 --> 00:03:02,480 Speaker 4: So look, I think if you're thinking about the rest 74 00:03:02,480 --> 00:03:04,600 Speaker 4: of the S and P five hundred x the MAG seven, 75 00:03:04,680 --> 00:03:07,280 Speaker 4: I feel much better about that right now than necessarily 76 00:03:07,280 --> 00:03:10,160 Speaker 4: small caps. But I do think the earnings need to 77 00:03:10,200 --> 00:03:11,959 Speaker 4: come through, and we're in just sort of this weird 78 00:03:12,000 --> 00:03:14,560 Speaker 4: earnings growth environment right now for the bits and pieces, 79 00:03:14,560 --> 00:03:17,720 Speaker 4: and I think that's why the leadership handoff has been such, 80 00:03:17,840 --> 00:03:20,960 Speaker 4: you know, fits and starts. So MAG seven earnings growth 81 00:03:21,000 --> 00:03:24,440 Speaker 4: is decelerating on forward estimates. However, those estimates have been 82 00:03:24,480 --> 00:03:27,960 Speaker 4: improving recently. If you look at the rest of the market, 83 00:03:27,960 --> 00:03:30,919 Speaker 4: those estimates have been stagnating. So you know, on the 84 00:03:30,960 --> 00:03:33,640 Speaker 4: one hand, we've got this decelerating earnings growth environment for 85 00:03:33,680 --> 00:03:35,560 Speaker 4: this previously hot part of the market, and that makes 86 00:03:35,560 --> 00:03:38,360 Speaker 4: everything very jittery, right, It makes us vulnerable to downside, 87 00:03:38,480 --> 00:03:41,320 Speaker 4: but it's fighting back very hard. I need the other 88 00:03:41,480 --> 00:03:44,480 Speaker 4: side of the market, the financials, the energy companies, We 89 00:03:44,520 --> 00:03:46,640 Speaker 4: need them to fight back harder this reporting season. 90 00:03:46,760 --> 00:03:49,120 Speaker 5: One thing that struck me about the earnings that we heard, 91 00:03:49,120 --> 00:03:51,360 Speaker 5: in particular from JP Morgan but also from Wells Fargo 92 00:03:51,480 --> 00:03:53,560 Speaker 5: is just the lack of clarity, the lack of visibility. 93 00:03:53,680 --> 00:03:55,760 Speaker 5: And I'm guessing we're going to hear that more from 94 00:03:55,760 --> 00:03:58,960 Speaker 5: other companies we have already. How difficult does that make 95 00:03:58,960 --> 00:03:59,360 Speaker 5: your job? 96 00:03:59,840 --> 00:04:01,840 Speaker 4: Makes it very difficult? And on the one you know, 97 00:04:01,880 --> 00:04:03,920 Speaker 4: I was talking to someone about corporate confidence over the 98 00:04:03,920 --> 00:04:05,320 Speaker 4: weekend and I said, on the one hand, you know, 99 00:04:05,400 --> 00:04:08,400 Speaker 4: there's this resilience, the faith and the ability to execute 100 00:04:08,400 --> 00:04:10,920 Speaker 4: and control what you can control. On the other hand, 101 00:04:11,040 --> 00:04:13,400 Speaker 4: you know, we are seeing companies talk time and time 102 00:04:13,440 --> 00:04:16,200 Speaker 4: again about uncertainty from things, you know, about the path 103 00:04:16,240 --> 00:04:18,520 Speaker 4: of interest rates. Well, we thought we settled that maybe not. 104 00:04:18,680 --> 00:04:21,719 Speaker 4: Let's see, we've got the election coming up, and you know, 105 00:04:21,720 --> 00:04:24,400 Speaker 4: I asked a company this recently at one of our conferences, 106 00:04:24,400 --> 00:04:26,560 Speaker 4: and I said, what are people waiting for? You know, 107 00:04:26,600 --> 00:04:29,000 Speaker 4: with this election? What outcome do they want what policy 108 00:04:29,000 --> 00:04:31,920 Speaker 4: issues are they focused on? And eventually the company said, well, 109 00:04:31,920 --> 00:04:33,520 Speaker 4: I think they just want the event to pass, so 110 00:04:33,560 --> 00:04:36,159 Speaker 4: you know, our customers know what they're dealing with. And 111 00:04:36,240 --> 00:04:38,599 Speaker 4: I think that for better or worse is where we are. 112 00:04:38,640 --> 00:04:40,280 Speaker 4: And we heard one of the banks actually allude to 113 00:04:40,320 --> 00:04:41,560 Speaker 4: that idea on Friday as well. 114 00:04:41,760 --> 00:04:42,600 Speaker 3: Can we stand on that thing? 115 00:04:42,640 --> 00:04:44,920 Speaker 2: Do you sense a real sense of paralysis that people 116 00:04:44,960 --> 00:04:47,040 Speaker 2: are really holding back, just waiting for this event to clear. 117 00:04:47,400 --> 00:04:49,880 Speaker 4: So if I think about the hedge funds, I don't 118 00:04:49,960 --> 00:04:52,240 Speaker 4: get the impression they have been doing a lot. They 119 00:04:52,240 --> 00:04:54,240 Speaker 4: may be starting to do more now that we're within 120 00:04:54,279 --> 00:04:56,440 Speaker 4: a thirty day window. You are seeing the vis move 121 00:04:56,520 --> 00:04:58,800 Speaker 4: up a little bit. That indicates to me that maybe 122 00:04:58,920 --> 00:05:01,239 Speaker 4: the fast money crowd is starting to do a bit more. 123 00:05:01,560 --> 00:05:03,400 Speaker 4: If I think about my long only clients, you know, 124 00:05:03,400 --> 00:05:05,080 Speaker 4: I have one person say to me recently said, I 125 00:05:05,120 --> 00:05:07,600 Speaker 4: don't know what's going to happen on the election. You know, 126 00:05:07,640 --> 00:05:09,120 Speaker 4: on election, I don't know what the outcome is going 127 00:05:09,160 --> 00:05:11,200 Speaker 4: to be. How can I possibly do anything right now? 128 00:05:11,480 --> 00:05:13,920 Speaker 4: And so I do. On that kind of longer term money, 129 00:05:14,000 --> 00:05:16,159 Speaker 4: I do see. I don't know if I call it paralysis, 130 00:05:16,160 --> 00:05:17,400 Speaker 4: but I see healthy, wait. 131 00:05:17,240 --> 00:05:19,840 Speaker 2: And see and whether we actually get an outcome. I say, 132 00:05:19,839 --> 00:05:21,720 Speaker 2: waiting for this event to clear. I've got no idea 133 00:05:21,760 --> 00:05:23,560 Speaker 2: how long it takes for this event clear. It could 134 00:05:23,560 --> 00:05:23,920 Speaker 2: be weeks. 135 00:05:24,000 --> 00:05:26,880 Speaker 4: Well, I think it's the election outcome itself where we're 136 00:05:26,880 --> 00:05:28,559 Speaker 4: going to go and fight it in the court system 137 00:05:28,640 --> 00:05:30,560 Speaker 4: the way we did back in two thousand. Now, what's 138 00:05:30,560 --> 00:05:32,600 Speaker 4: interesting about two thousand is we did not get our 139 00:05:32,640 --> 00:05:35,360 Speaker 4: typical sell off heading into the election. We also didn't 140 00:05:35,360 --> 00:05:38,240 Speaker 4: get our typical pop after the election. And I think 141 00:05:38,240 --> 00:05:40,919 Speaker 4: we actually resolved that pretty early on in December, and 142 00:05:40,920 --> 00:05:42,600 Speaker 4: the market still never got you know, that sort of 143 00:05:42,680 --> 00:05:45,200 Speaker 4: relief bounce. So that's something to watch in here as well. 144 00:05:45,480 --> 00:05:48,159 Speaker 4: But let's even take it a step further. The legislative 145 00:05:48,240 --> 00:05:50,839 Speaker 4: process is how laws are determined. I feel like I 146 00:05:50,920 --> 00:05:53,080 Speaker 4: keep having to remind people this who don't sit in 147 00:05:53,080 --> 00:05:56,080 Speaker 4: the US. It's not so much. You know, if A 148 00:05:56,200 --> 00:05:58,320 Speaker 4: Marie were here right this laundry list, this, you know 149 00:05:58,920 --> 00:06:01,839 Speaker 4: that they're all throwing out there, just negotiating points and ideas. 150 00:06:02,120 --> 00:06:03,960 Speaker 4: We have to actually see what Congress is going to 151 00:06:04,040 --> 00:06:06,360 Speaker 4: look like. We have to see which of this laundry 152 00:06:06,400 --> 00:06:08,359 Speaker 4: list they actually care most about. And you know, if 153 00:06:08,360 --> 00:06:10,080 Speaker 4: they're going to pick and choose a couple of things, 154 00:06:10,120 --> 00:06:11,760 Speaker 4: what are those things going to be? So we're going 155 00:06:11,800 --> 00:06:13,159 Speaker 4: to be waiting and seeing for a while. 156 00:06:13,360 --> 00:06:14,120 Speaker 3: The process that. 157 00:06:14,120 --> 00:06:18,560 Speaker 5: You're talking about applies almost binary outcomes or potentially very 158 00:06:18,560 --> 00:06:22,240 Speaker 5: different outcomes between one candidate and another, or between one 159 00:06:22,320 --> 00:06:26,000 Speaker 5: legislative outcome or another. How different are the ranges of 160 00:06:26,040 --> 00:06:27,919 Speaker 5: outcomes that people are trying to map out in the 161 00:06:27,920 --> 00:06:28,400 Speaker 5: c suite. 162 00:06:28,520 --> 00:06:31,320 Speaker 4: So you know, it's funny. I probably have a slightly 163 00:06:31,320 --> 00:06:33,520 Speaker 4: different view on this. I only look at policy. I 164 00:06:33,520 --> 00:06:36,479 Speaker 4: don't look at personality. And we've gone through and just 165 00:06:36,520 --> 00:06:39,120 Speaker 4: really tried to compare all the campaign documents, not what 166 00:06:39,160 --> 00:06:41,880 Speaker 4: they're saying in every single rally, but what's actually been 167 00:06:41,880 --> 00:06:44,120 Speaker 4: put on websites, what's been put on papers, what's been 168 00:06:44,120 --> 00:06:47,000 Speaker 4: said on dedicated economic speeches. And I do feel like 169 00:06:47,040 --> 00:06:49,840 Speaker 4: there are some clear differences on things like corporate tax policy, 170 00:06:49,960 --> 00:06:53,240 Speaker 4: things like energy policy, but tariffs, I feel like, you know, 171 00:06:53,240 --> 00:06:56,080 Speaker 4: as opposed to them being left and right, it's sort 172 00:06:56,120 --> 00:06:58,000 Speaker 4: of on one side of the spectrum, you know, with 173 00:06:58,080 --> 00:07:01,720 Speaker 4: different extremes. I do feel like I'm not seeing either 174 00:07:01,760 --> 00:07:04,200 Speaker 4: candidate necessarily talk a lot about in what I call 175 00:07:04,320 --> 00:07:07,279 Speaker 4: sort of industrial related stimulus, which was a big feature 176 00:07:07,279 --> 00:07:10,560 Speaker 4: of the last two campaigns, sort of reinvesting in infrastructure 177 00:07:10,600 --> 00:07:12,640 Speaker 4: and things like that. I'm seeing a lot of consumer 178 00:07:13,080 --> 00:07:16,040 Speaker 4: led initiatives, so I feel like, you know, we're kind 179 00:07:16,040 --> 00:07:17,760 Speaker 4: of ending up on the same page on a lot 180 00:07:17,800 --> 00:07:19,680 Speaker 4: of things, like they're both talking about things like homebuilding. 181 00:07:20,160 --> 00:07:22,640 Speaker 5: What strucks me is when we talk about what the 182 00:07:22,640 --> 00:07:25,080 Speaker 5: big fears are of people. They talk about geopolitics, they 183 00:07:25,080 --> 00:07:28,520 Speaker 5: talk about the unknown around the potential outcome of the election, 184 00:07:28,680 --> 00:07:31,080 Speaker 5: they talk about interest rates, and then you look at 185 00:07:31,080 --> 00:07:34,120 Speaker 5: things like the AAII Investor survey, and there's an incredible 186 00:07:34,120 --> 00:07:36,320 Speaker 5: amount of confidence. You take a look at what they're buying, 187 00:07:36,360 --> 00:07:38,040 Speaker 5: there's an incredible amount of confidence. 188 00:07:38,440 --> 00:07:40,040 Speaker 3: Where is this paralysis showing up? 189 00:07:40,040 --> 00:07:42,600 Speaker 5: If the consumer is still spending and companies are apporting 190 00:07:42,600 --> 00:07:44,600 Speaker 5: good earnings, where is it showing up? 191 00:07:44,680 --> 00:07:47,320 Speaker 4: I think part of it is maybe coming from overseas. 192 00:07:47,840 --> 00:07:49,880 Speaker 4: And one of the things I've noticed is that Russell 193 00:07:49,920 --> 00:07:53,360 Speaker 4: two thousand futures physicianing on the CFTC data has suddenly 194 00:07:53,640 --> 00:07:56,120 Speaker 4: just surged, right, And that's when people That tends to 195 00:07:56,160 --> 00:07:58,280 Speaker 4: happen when people want to make domestic bets on the 196 00:07:58,360 --> 00:08:01,280 Speaker 4: US it's moving up similar fashion to what we saw 197 00:08:01,320 --> 00:08:04,520 Speaker 4: in twenty sixteen on the Trump win, if you looked 198 00:08:04,520 --> 00:08:06,560 Speaker 4: at twenty seventeen on tax reform, if you looked at 199 00:08:06,560 --> 00:08:08,840 Speaker 4: twenty eighteen on the trade war. So those were mostly 200 00:08:08,880 --> 00:08:13,560 Speaker 4: domestic US trades. My colleague els Alinhos told me recently 201 00:08:13,560 --> 00:08:15,600 Speaker 4: that she's seen sort of a similar kind of sudden 202 00:08:15,680 --> 00:08:18,800 Speaker 4: upward move in dollar positioning. So I feel like maybe 203 00:08:18,800 --> 00:08:21,040 Speaker 4: we're starting to get some US sets that are being made. 204 00:08:21,240 --> 00:08:24,040 Speaker 2: Just a subtle shift towards the former president Donald Trump. 205 00:08:24,920 --> 00:08:26,880 Speaker 4: It's hard to say. I mean, we've looked at how 206 00:08:27,000 --> 00:08:29,000 Speaker 4: S and P five hundred is trading in regards to 207 00:08:29,000 --> 00:08:31,880 Speaker 4: Trump and the betting markets from twenty twenty three through 208 00:08:31,920 --> 00:08:34,320 Speaker 4: the middle of twenty twenty four. It was a very tight, 209 00:08:34,440 --> 00:08:37,480 Speaker 4: powerful correlation. It broke down the last couple months, and 210 00:08:37,480 --> 00:08:39,280 Speaker 4: I think we have to watch right now with the 211 00:08:39,360 --> 00:08:41,319 Speaker 4: betting markets starting to shift. You're not really seeing the 212 00:08:41,400 --> 00:08:43,959 Speaker 4: national polling averages shift yet. I think they probably will, 213 00:08:44,640 --> 00:08:46,840 Speaker 4: but we have to see if markets are recoupling with Trump. 214 00:08:46,920 --> 00:08:47,680 Speaker 4: It's not clear yet. 215 00:08:47,840 --> 00:08:49,800 Speaker 3: Things are still super tent. Laurie's going to see you. 216 00:08:49,800 --> 00:08:51,480 Speaker 3: Good to see you. I haven't seen it, of ABC 217 00:09:01,320 --> 00:09:02,320 Speaker 3: top of bank earnings. 218 00:09:02,400 --> 00:09:05,160 Speaker 2: Investors also keeping one eye on more fence weeekend data, 219 00:09:05,200 --> 00:09:08,400 Speaker 2: including retail sales, Nita Richardson of ADP calling it the 220 00:09:08,400 --> 00:09:11,400 Speaker 2: most important data point of the week, noting two things. 221 00:09:11,480 --> 00:09:14,520 Speaker 2: September's report tends to be softer, with consumers premping for 222 00:09:14,559 --> 00:09:17,959 Speaker 2: holiday spending, but a sharper than expected decline could signal 223 00:09:18,200 --> 00:09:20,160 Speaker 2: for the weakness Nati John just now for more Nata, 224 00:09:20,160 --> 00:09:20,720 Speaker 2: good morning. 225 00:09:20,520 --> 00:09:21,080 Speaker 3: It's good to see you. 226 00:09:21,120 --> 00:09:21,600 Speaker 1: Good morning. 227 00:09:21,679 --> 00:09:23,920 Speaker 2: Let's go run with that word weakness, and let's think 228 00:09:23,920 --> 00:09:27,240 Speaker 2: about job as claims. Last week on Thursday, they keept out, 229 00:09:27,320 --> 00:09:29,760 Speaker 2: they spiked higher. Can we start there? What's behind that? 230 00:09:29,880 --> 00:09:31,280 Speaker 2: Is that all just hurricane related? 231 00:09:32,160 --> 00:09:34,920 Speaker 1: That's what we don't know, and that's what this period 232 00:09:34,960 --> 00:09:37,400 Speaker 1: is going to be very messy and hard to interpret. 233 00:09:37,520 --> 00:09:40,400 Speaker 1: So the hurricanes usually have a very temporary effect on 234 00:09:40,800 --> 00:09:43,200 Speaker 1: the economy. As we've seen, there's going to be a 235 00:09:43,240 --> 00:09:46,200 Speaker 1: rebuilding effort, So we might see a little bit of 236 00:09:46,280 --> 00:09:48,960 Speaker 1: slip and growth in the last three quarters of the year, 237 00:09:49,040 --> 00:09:52,480 Speaker 1: followed by a rebound in twenty twenty five. But what's 238 00:09:52,480 --> 00:09:54,520 Speaker 1: going to be more immediate is the effect on the 239 00:09:54,640 --> 00:09:58,000 Speaker 1: labor market. It first is going to come with hours work. 240 00:09:58,800 --> 00:10:01,960 Speaker 1: Remember in September, most of the jobs that were created, 241 00:10:02,360 --> 00:10:05,600 Speaker 1: like a bulk of them, two thirds in the private sector, 242 00:10:05,840 --> 00:10:08,480 Speaker 1: were jobs that you have to be on site for, 243 00:10:08,960 --> 00:10:13,199 Speaker 1: so retail, healthcare. If you look at the damage across 244 00:10:13,240 --> 00:10:17,040 Speaker 1: the Southeast and the number of businesses that are still 245 00:10:17,080 --> 00:10:21,240 Speaker 1: without electricity, going to work is going to be a challenge. 246 00:10:21,320 --> 00:10:24,280 Speaker 1: And so that's what I expect to see that hours 247 00:10:24,320 --> 00:10:27,319 Speaker 1: worked really playing a role, and those hours are not 248 00:10:27,520 --> 00:10:30,240 Speaker 1: just hours alone. They're going to feed into our measures 249 00:10:30,240 --> 00:10:34,040 Speaker 1: of productivity, our measures of hourly earnings. And so I 250 00:10:34,120 --> 00:10:36,360 Speaker 1: think that the October jobs report is going to be 251 00:10:36,440 --> 00:10:37,319 Speaker 1: really really clouded. 252 00:10:37,360 --> 00:10:38,880 Speaker 2: It makes me wonder if them in the Federal Reserve 253 00:10:38,920 --> 00:10:40,960 Speaker 2: sitting down November seventh, and hopefully we've got an election 254 00:10:41,080 --> 00:10:43,280 Speaker 2: result in hand, and they're looking at these numbers, what 255 00:10:43,280 --> 00:10:45,360 Speaker 2: will they get a clean read on, If anything, it 256 00:10:45,400 --> 00:10:46,160 Speaker 2: is told, they. 257 00:10:46,160 --> 00:10:49,440 Speaker 1: Might get a clean read on retail sales, because that's 258 00:10:49,600 --> 00:10:52,239 Speaker 1: probably not going to be as affected in the September 259 00:10:52,320 --> 00:10:55,120 Speaker 1: data as the jobs market, and they're going to be 260 00:10:55,160 --> 00:10:58,040 Speaker 1: really focused on the health of the consumer in terms 261 00:10:58,080 --> 00:11:01,200 Speaker 1: of whether they might need to make an aggressive cut 262 00:11:01,240 --> 00:11:05,840 Speaker 1: or not. If the consumer stays relatively balanced, which they've 263 00:11:05,880 --> 00:11:09,080 Speaker 1: proven to be very resilient through the summer, then I 264 00:11:09,080 --> 00:11:11,840 Speaker 1: don't think they're going to need to do anything drastic. 265 00:11:12,120 --> 00:11:15,720 Speaker 1: When it comes to worries about the state of the economy. 266 00:11:15,240 --> 00:11:17,920 Speaker 5: Do you feel like there is some sort of weakness 267 00:11:18,040 --> 00:11:19,640 Speaker 5: or do you think in the data that you see 268 00:11:19,640 --> 00:11:22,120 Speaker 5: at ADP it's just simply companies that are reluctant to 269 00:11:22,120 --> 00:11:24,640 Speaker 5: make a big move sort of becomes this self fulfilling 270 00:11:24,720 --> 00:11:27,760 Speaker 5: cycle of not having confidence to hire, and so then 271 00:11:27,920 --> 00:11:29,880 Speaker 5: that doesn't get back into the economy, so it just 272 00:11:29,920 --> 00:11:32,360 Speaker 5: sort of chugs along at this very low rate. 273 00:11:32,520 --> 00:11:35,640 Speaker 1: We saw hesitancy over the summer. There did seem to 274 00:11:36,080 --> 00:11:39,560 Speaker 1: be this feeling that companies were holding back a little bit, 275 00:11:39,840 --> 00:11:43,200 Speaker 1: and not because of economic weakness, just that there's a 276 00:11:43,240 --> 00:11:46,320 Speaker 1: lot of uncertainty and that uncertainty can lead you to 277 00:11:46,440 --> 00:11:50,560 Speaker 1: delay decision making. Well, a part of that uncertainty was 278 00:11:50,640 --> 00:11:54,400 Speaker 1: kind of corrected when the Fed started their rate cutting cycle. 279 00:11:54,640 --> 00:11:55,959 Speaker 3: We knew now that we were on. 280 00:11:56,080 --> 00:11:58,280 Speaker 1: The path to lower interest rates, and it seemed to 281 00:11:58,920 --> 00:12:00,839 Speaker 1: fallow some of that has and see and we saw 282 00:12:00,880 --> 00:12:04,840 Speaker 1: a big jump in hiring in September now what happens 283 00:12:04,840 --> 00:12:07,640 Speaker 1: in October, I don't know, because the uncertainty has returned 284 00:12:07,640 --> 00:12:11,120 Speaker 1: in a different form with the hurricanes, and where most 285 00:12:11,120 --> 00:12:14,280 Speaker 1: of the jobs we're seeing is with service providers. We 286 00:12:14,360 --> 00:12:17,760 Speaker 1: don't know how global or national companies are going to 287 00:12:17,760 --> 00:12:21,120 Speaker 1: be looking at the hurricane damage in the Southeast and maybe, 288 00:12:21,520 --> 00:12:24,080 Speaker 1: you know, fine tuning their hiring plans even more. 289 00:12:24,280 --> 00:12:26,120 Speaker 5: Just to put together what you were saying, the idea 290 00:12:26,120 --> 00:12:28,200 Speaker 5: that retail sales is possibly going to be even more 291 00:12:28,240 --> 00:12:31,880 Speaker 5: important than some of the employment data, simply because that's 292 00:12:31,920 --> 00:12:34,640 Speaker 5: going to be so distorted for the Federal Reserve, is 293 00:12:34,679 --> 00:12:36,559 Speaker 5: there a feeling that retail sales. 294 00:12:36,240 --> 00:12:37,600 Speaker 3: Could drive business decisions? 295 00:12:37,640 --> 00:12:39,960 Speaker 5: Because essentially, if you don't make a decision to lean 296 00:12:40,000 --> 00:12:43,000 Speaker 5: into this kind of strength, that's on you, and that 297 00:12:43,080 --> 00:12:44,760 Speaker 5: companies eventually will have to realize that. 298 00:12:45,160 --> 00:12:48,280 Speaker 1: These next three months for retailers are hugely important. They 299 00:12:48,320 --> 00:12:51,079 Speaker 1: make about twenty to twenty five percent of their revenue 300 00:12:51,240 --> 00:12:54,280 Speaker 1: over the holiday season, and so that yes, in some sense, 301 00:12:54,320 --> 00:12:56,120 Speaker 1: they're going to have to skip over any kind of 302 00:12:56,160 --> 00:12:58,960 Speaker 1: hesdency and lean into what we're seeing so far, which 303 00:12:59,000 --> 00:13:01,680 Speaker 1: is consumers stress and you want to play into that, 304 00:13:01,880 --> 00:13:04,360 Speaker 1: especially if a big share of your revenues for the 305 00:13:04,440 --> 00:13:06,320 Speaker 1: year are going to be in the next three months. 306 00:13:06,400 --> 00:13:10,160 Speaker 1: So I do expect some hiring, but I also expect 307 00:13:10,160 --> 00:13:12,959 Speaker 1: some caution in certain regions, and so we'll see how 308 00:13:12,960 --> 00:13:14,959 Speaker 1: that plays out over the next three months. 309 00:13:15,120 --> 00:13:17,520 Speaker 2: You expect some hiring, it's the absence of firing the 310 00:13:17,559 --> 00:13:19,760 Speaker 2: stood aff result. And then we just see this big 311 00:13:19,800 --> 00:13:22,000 Speaker 2: contradiction on Thursday with jobless claimed spiking. 312 00:13:22,000 --> 00:13:24,240 Speaker 3: Where are we on layoffs? How do you view things? 313 00:13:24,240 --> 00:13:26,280 Speaker 2: Because the job opening states the weekend is a little 314 00:13:26,280 --> 00:13:28,400 Speaker 2: bit dated, you get a real time look at things 315 00:13:28,400 --> 00:13:31,320 Speaker 2: at ADP. Where are we with hiring, some firings, most 316 00:13:31,320 --> 00:13:32,480 Speaker 2: particularly well the. 317 00:13:32,520 --> 00:13:34,920 Speaker 1: Trend over all, and we have to always look at 318 00:13:34,920 --> 00:13:37,520 Speaker 1: the trend and not just a single data point, especially 319 00:13:37,520 --> 00:13:39,280 Speaker 1: when we know that that data point could have been 320 00:13:39,320 --> 00:13:42,480 Speaker 1: affected by weather events. But the trend overall is people 321 00:13:42,520 --> 00:13:46,920 Speaker 1: are staying on the jobs longer, and that's both voluntary 322 00:13:47,000 --> 00:13:50,440 Speaker 1: quits and involuntary layoffs. So there hasn't been a lot 323 00:13:50,480 --> 00:13:53,440 Speaker 1: of moves in terms of the overall headcount, and the 324 00:13:53,600 --> 00:13:58,000 Speaker 1: hiring we've seen has been expansive hiring, not replacement hiring. 325 00:13:58,040 --> 00:14:00,840 Speaker 1: So that's good news. Now, there are some that we've 326 00:14:00,880 --> 00:14:05,800 Speaker 1: seen some downturns in manufacturing and in information, but overall, 327 00:14:05,840 --> 00:14:08,400 Speaker 1: in terms of the service industry, it's been really, really strong. 328 00:14:08,480 --> 00:14:10,480 Speaker 2: The Federal Reserve has a buas to cut interest rates 329 00:14:10,640 --> 00:14:13,160 Speaker 2: at the moment. Roughail Bostik, who's going to be a 330 00:14:13,200 --> 00:14:14,959 Speaker 2: key policy maker in the month to come, particularly with 331 00:14:14,960 --> 00:14:18,280 Speaker 2: the hurricane damage across his region, suggested skipping a meeting. 332 00:14:18,840 --> 00:14:20,960 Speaker 2: How do you feel about skipping a meeting given all 333 00:14:21,000 --> 00:14:23,600 Speaker 2: the contradictions in the day to the murkiness, why should 334 00:14:23,600 --> 00:14:25,440 Speaker 2: the bus still be to reduce rates. 335 00:14:25,520 --> 00:14:28,200 Speaker 1: Well, about three months ago, I actually said this that 336 00:14:28,280 --> 00:14:30,720 Speaker 1: it's going to be likely that there would be stops 337 00:14:30,720 --> 00:14:33,840 Speaker 1: and starts in monetary policy, that they would not be 338 00:14:33,960 --> 00:14:37,040 Speaker 1: on a smooth glide path because of all the uncertainties 339 00:14:37,040 --> 00:14:41,080 Speaker 1: in the economy. Yes, the economy is strong, but every 340 00:14:41,120 --> 00:14:43,520 Speaker 1: month you get a new narrative about the future direction 341 00:14:43,720 --> 00:14:46,400 Speaker 1: and I think the Fed is very susceptible to that, 342 00:14:46,760 --> 00:14:50,120 Speaker 1: and these weather related events don't make it any easier. 343 00:14:50,160 --> 00:14:52,320 Speaker 1: So yes, I do think that that is a real 344 00:14:52,360 --> 00:14:55,440 Speaker 1: possibility that they may skip meetings in order to figure 345 00:14:55,440 --> 00:14:57,640 Speaker 1: out what's going on in the economy, and that is 346 00:14:57,680 --> 00:15:00,960 Speaker 1: related to their strategy, which is to be data dependent. 347 00:15:01,480 --> 00:15:04,440 Speaker 1: Maybe it's time for different everythink on that strategy to 348 00:15:04,480 --> 00:15:06,440 Speaker 1: be a little bit more long term. I feel like 349 00:15:06,480 --> 00:15:09,240 Speaker 1: we're kind of playing hopscotch with data. We just hoped 350 00:15:09,320 --> 00:15:11,360 Speaker 1: and leap from one data point to the next. I 351 00:15:11,360 --> 00:15:14,600 Speaker 1: don't think that's a really viable strategy that you want 352 00:15:14,640 --> 00:15:15,920 Speaker 1: to see with the FED long term. 353 00:15:15,960 --> 00:15:18,080 Speaker 5: The ECB is not playing hopscotch. They've got a pretty 354 00:15:18,080 --> 00:15:20,400 Speaker 5: clear message and they meet on Thursday. How much can 355 00:15:20,440 --> 00:15:23,280 Speaker 5: we conclude this period of time that the US has 356 00:15:23,360 --> 00:15:27,160 Speaker 5: truly diverged from Europe when it comes to economic trends. 357 00:15:27,960 --> 00:15:30,520 Speaker 1: Well, that divergence has been in play for all year, 358 00:15:30,640 --> 00:15:33,800 Speaker 1: right so the labor market is strong. To be candid, 359 00:15:33,840 --> 00:15:35,600 Speaker 1: I mean, there's some parts of Europe that are doing 360 00:15:35,720 --> 00:15:39,160 Speaker 1: much better than expecting, like the UK, for example, which 361 00:15:39,320 --> 00:15:42,560 Speaker 1: was thought to be going into recession a year ago 362 00:15:42,720 --> 00:15:45,920 Speaker 1: and they made it through that period. They're still going 363 00:15:45,920 --> 00:15:48,280 Speaker 1: to see the same kind of labor market tightness that 364 00:15:48,320 --> 00:15:50,320 Speaker 1: we see in the United States. Those are long term 365 00:15:50,320 --> 00:15:54,360 Speaker 1: demographic effects. But it comes to the US economic story, 366 00:15:54,640 --> 00:15:58,080 Speaker 1: it is unique and separate and apart from any other 367 00:15:58,160 --> 00:16:01,440 Speaker 1: place in the world. Right now, you see a healthy consumer, 368 00:16:01,560 --> 00:16:04,720 Speaker 1: you see strong business investment, you see a stock market 369 00:16:04,720 --> 00:16:07,640 Speaker 1: that keeps growing, and you see a very strong labor market. 370 00:16:07,720 --> 00:16:11,280 Speaker 1: So all those things added together put some distance with 371 00:16:11,360 --> 00:16:13,320 Speaker 1: the rest of the world, and it's really the US 372 00:16:13,360 --> 00:16:14,760 Speaker 1: that is driving the world. 373 00:16:14,640 --> 00:16:15,600 Speaker 3: Economy right now. 374 00:16:15,720 --> 00:16:18,360 Speaker 5: How much do when we're talking about China, the fact 375 00:16:18,360 --> 00:16:20,680 Speaker 5: that there's sort of this deflation and there's a sense 376 00:16:20,760 --> 00:16:23,280 Speaker 5: that growth is really falling off a cliff, how much 377 00:16:23,640 --> 00:16:26,080 Speaker 5: do you see that not at all affecting the US, 378 00:16:26,080 --> 00:16:29,080 Speaker 5: That these two economies have really grown apart, even though 379 00:16:29,360 --> 00:16:31,240 Speaker 5: we are seeing it trickle into Europe in a much 380 00:16:31,240 --> 00:16:31,960 Speaker 5: more meaningful way. 381 00:16:32,400 --> 00:16:35,280 Speaker 1: It's interesting the US economy because we think of it 382 00:16:35,320 --> 00:16:38,520 Speaker 1: as a global economy, but there's parts of the US 383 00:16:38,560 --> 00:16:42,920 Speaker 1: economy that is insulated from global effects, our energy for example. 384 00:16:43,520 --> 00:16:46,640 Speaker 1: And so yes, I do think that China, being the 385 00:16:46,680 --> 00:16:49,760 Speaker 1: second largest economy in the world, will eventually affect the 386 00:16:49,880 --> 00:16:53,840 Speaker 1: United States, but how much is undeterminate. I do think 387 00:16:53,880 --> 00:16:56,840 Speaker 1: that there's still some tailwinds in the US economy that 388 00:16:57,000 --> 00:17:00,160 Speaker 1: even allow us to grow past weakness other places. 389 00:17:00,280 --> 00:17:01,880 Speaker 3: Nina, you're one of the best. It's going to catch up. 390 00:17:01,880 --> 00:17:02,960 Speaker 3: It's going to see it. Thank you. 391 00:17:03,080 --> 00:17:15,800 Speaker 2: Nina Richardson of ADP Kate Moore of black Rock is 392 00:17:15,800 --> 00:17:18,840 Speaker 2: looking ahead to Wernex. Even with our balanced optimism about 393 00:17:18,840 --> 00:17:21,360 Speaker 2: three Q results, we are more focused on how management 394 00:17:21,400 --> 00:17:24,080 Speaker 2: guides are four Q and into twenty twenty five. We 395 00:17:24,119 --> 00:17:27,200 Speaker 2: want to hear management teams express confidence about their ability 396 00:17:27,480 --> 00:17:30,880 Speaker 2: to deliver revenue growth, to manage expenses, and to navigate 397 00:17:30,880 --> 00:17:34,440 Speaker 2: policy and political and certainty, three very different themes. Kate 398 00:17:34,520 --> 00:17:36,320 Speaker 2: Johns is now for more. Kate morning, It's good to 399 00:17:36,320 --> 00:17:36,600 Speaker 2: see you. 400 00:17:37,280 --> 00:17:39,640 Speaker 6: I'm a little sad. I didn't realize I was coming 401 00:17:39,680 --> 00:17:42,119 Speaker 6: here on the anniversary of the bullmarket. I would have 402 00:17:42,320 --> 00:17:43,320 Speaker 6: dressed differently. 403 00:17:43,440 --> 00:17:45,320 Speaker 2: How should we have dressed, like with red ties and 404 00:17:45,400 --> 00:17:46,480 Speaker 2: hearts and stuff like that. 405 00:17:46,560 --> 00:17:50,280 Speaker 6: Yeah, I mean it's quite a celebration in fact, and 406 00:17:50,680 --> 00:17:53,520 Speaker 6: I feel really good about the fact that equities continue 407 00:17:53,560 --> 00:17:56,160 Speaker 6: to make new all time highs and that the fundamentals 408 00:17:56,200 --> 00:17:58,280 Speaker 6: look really solid this far into the cycle. 409 00:17:58,400 --> 00:18:00,679 Speaker 2: Let's start with top line revenue growth. Where was it 410 00:18:00,720 --> 00:18:02,760 Speaker 2: coming from? How much confidence do you have that we'll 411 00:18:02,760 --> 00:18:04,080 Speaker 2: get more of that three twenty five. 412 00:18:04,440 --> 00:18:06,239 Speaker 6: Well, this was the big question right as we went 413 00:18:06,280 --> 00:18:09,920 Speaker 6: through second quarter reporting, where companies were putting up good 414 00:18:10,000 --> 00:18:12,840 Speaker 6: bottom line numbers, but the top line was really disappointing 415 00:18:12,880 --> 00:18:16,680 Speaker 6: on expectations this kind of quarter. We've seen a bunch 416 00:18:16,680 --> 00:18:19,960 Speaker 6: of solid activity, we've seen good incomes, We've been encouraged 417 00:18:19,960 --> 00:18:23,760 Speaker 6: by the fact that inflation has continued to slow, and 418 00:18:23,800 --> 00:18:26,880 Speaker 6: I think we're going to see solid but not blockbuster 419 00:18:27,040 --> 00:18:29,840 Speaker 6: revenue growth in the third quarter. The real chance is 420 00:18:29,880 --> 00:18:31,480 Speaker 6: going to be if we get into next year and 421 00:18:31,520 --> 00:18:33,719 Speaker 6: some of the uncertainty is removed, I think people will 422 00:18:33,760 --> 00:18:36,840 Speaker 6: feel more comfortable about increasing their activity. I mean by people, 423 00:18:36,840 --> 00:18:39,159 Speaker 6: I mean both business decision makers and individuals. 424 00:18:39,400 --> 00:18:41,920 Speaker 5: One of the reasons why maybe didn't realize it was 425 00:18:41,960 --> 00:18:45,480 Speaker 5: a second anniversary and John didn't sound overly enthusiastic about it. 426 00:18:45,480 --> 00:18:49,120 Speaker 5: Although happy anniversary, I do think it hasn't felt this way. 427 00:18:49,359 --> 00:18:51,560 Speaker 5: It has not felt like a whole market. It has 428 00:18:51,600 --> 00:18:54,919 Speaker 5: felt like a grind of lots of different narratives that 429 00:18:55,000 --> 00:18:57,760 Speaker 5: are coming together with whip saws in between, and a 430 00:18:57,800 --> 00:19:00,600 Speaker 5: couple of behemoths that have absolutely led the charge while 431 00:19:00,600 --> 00:19:04,040 Speaker 5: everything else had a saggy performance. Wouldn't let's start to 432 00:19:04,040 --> 00:19:05,040 Speaker 5: feel like a bullmarket? 433 00:19:05,119 --> 00:19:07,520 Speaker 6: Well, you're right. There's been a huge amount of discomfort 434 00:19:07,640 --> 00:19:09,679 Speaker 6: in the leadership and the strength of that leadership, the 435 00:19:09,720 --> 00:19:12,600 Speaker 6: persistence of the leadership. A message that we've talked about 436 00:19:12,640 --> 00:19:14,399 Speaker 6: many times, and I feel like I have been a 437 00:19:14,400 --> 00:19:16,800 Speaker 6: broken record, is to say the companies that have been 438 00:19:16,840 --> 00:19:19,720 Speaker 6: leading the market aren't the strongest fundamentally. These are the 439 00:19:19,720 --> 00:19:22,760 Speaker 6: companies putting up the cash flow, and I dispect that 440 00:19:22,800 --> 00:19:26,080 Speaker 6: will continue into twenty twenty five. How many times this year, 441 00:19:26,160 --> 00:19:29,680 Speaker 6: by the way, have the uncomfortable equity investors said it's 442 00:19:29,720 --> 00:19:32,199 Speaker 6: time for rotation. It's time for rotation. The market's supposed 443 00:19:32,200 --> 00:19:34,520 Speaker 6: to broaden out. Well, it's only going to broaden out 444 00:19:34,960 --> 00:19:39,200 Speaker 6: if these top companies actually don't have this same growth 445 00:19:39,240 --> 00:19:42,280 Speaker 6: trajectory that they've had over the last two years. And 446 00:19:42,320 --> 00:19:44,320 Speaker 6: I don't think that's the case. I mean, I think 447 00:19:44,359 --> 00:19:47,280 Speaker 6: parts of tech and the AI and AI adjacent themes 448 00:19:47,480 --> 00:19:48,720 Speaker 6: still have a lot of legs to go. 449 00:19:49,040 --> 00:19:53,240 Speaker 5: So given that, are you basically recommending that clients overweight 450 00:19:53,359 --> 00:19:56,760 Speaker 5: stocks even at the past of bonds at a time, Well, 451 00:19:56,880 --> 00:20:00,000 Speaker 5: the biggest uncertainty might not be in the stock market, 452 00:20:00,240 --> 00:20:02,880 Speaker 5: but at this point really is in the bond market. 453 00:20:02,960 --> 00:20:05,440 Speaker 5: That's closed today for a celebration of the second anniversary 454 00:20:05,440 --> 00:20:06,040 Speaker 5: of the bull market. 455 00:20:06,200 --> 00:20:10,359 Speaker 6: That's correct, the bond market got the celebration correct, I. 456 00:20:10,280 --> 00:20:11,000 Speaker 3: Would say this. 457 00:20:11,280 --> 00:20:12,960 Speaker 6: You know, we have been more neutral in terms of 458 00:20:13,000 --> 00:20:15,480 Speaker 6: our fixing come allocation. I still think you're going to 459 00:20:15,480 --> 00:20:18,000 Speaker 6: get the best use from the equity market, but again, 460 00:20:18,040 --> 00:20:19,840 Speaker 6: you have to pick your spots. The one thing that 461 00:20:19,920 --> 00:20:22,919 Speaker 6: has happened throughout this past year that people have not 462 00:20:22,960 --> 00:20:24,840 Speaker 6: always been comfortable with is that you have had to 463 00:20:24,840 --> 00:20:27,240 Speaker 6: be tactical and you had to have to be on 464 00:20:27,280 --> 00:20:29,560 Speaker 6: your feed I don't think the kind of the set 465 00:20:29,560 --> 00:20:31,240 Speaker 6: it and forget its strategy is going to be the 466 00:20:31,280 --> 00:20:33,399 Speaker 6: way to go forward in the equity market. And so 467 00:20:33,520 --> 00:20:35,080 Speaker 6: for this I would say I told you I love 468 00:20:35,160 --> 00:20:37,439 Speaker 6: the tech and the AI and ai jsent themes. I 469 00:20:37,440 --> 00:20:40,159 Speaker 6: think there's opportunity more in the banks as we move forward, 470 00:20:40,480 --> 00:20:43,320 Speaker 6: and I'm looking if we continue to have stable growth 471 00:20:43,320 --> 00:20:46,000 Speaker 6: indicators for opportunities in some of the cycle goals. But 472 00:20:46,040 --> 00:20:47,240 Speaker 6: there you have to be selective. 473 00:20:47,720 --> 00:20:52,080 Speaker 2: You identify three themes topline growth, yes, expense management, and 474 00:20:52,080 --> 00:20:54,879 Speaker 2: then navigating policy and political uncertainty. 475 00:20:54,960 --> 00:20:55,280 Speaker 6: That's right. 476 00:20:55,520 --> 00:20:57,520 Speaker 2: How they can to navigate the politics of the next month, 477 00:20:57,560 --> 00:20:58,800 Speaker 2: maybe the next four and. 478 00:20:58,760 --> 00:20:59,320 Speaker 3: A half years. 479 00:20:59,320 --> 00:21:00,639 Speaker 6: Well, I don't think they're to make a ton of 480 00:21:00,720 --> 00:21:02,199 Speaker 6: decisions in the near term. I mean This is the 481 00:21:02,200 --> 00:21:04,440 Speaker 6: pattern we always see the second half of the year 482 00:21:04,600 --> 00:21:07,439 Speaker 6: during a big election cycle. You don't tend to get 483 00:21:07,440 --> 00:21:10,320 Speaker 6: a lot of capital expenditure or new capex. It's mostly maintenance, 484 00:21:10,359 --> 00:21:13,560 Speaker 6: for example. And consumers have said in a lot of 485 00:21:13,640 --> 00:21:16,520 Speaker 6: polls and surveys more recently that they're kind of holding 486 00:21:16,600 --> 00:21:19,320 Speaker 6: off on making big decisions till they understand what their 487 00:21:19,359 --> 00:21:21,160 Speaker 6: tax rate is going to be, if there's any changes 488 00:21:21,160 --> 00:21:23,119 Speaker 6: in policy. So I think we're in a bit of 489 00:21:23,160 --> 00:21:26,640 Speaker 6: a holding pattern, John, for at least the next few months, 490 00:21:27,000 --> 00:21:29,600 Speaker 6: but next year, once we understand not just who is 491 00:21:29,640 --> 00:21:32,800 Speaker 6: going to be president, but the composition of Congress, I 492 00:21:32,800 --> 00:21:35,879 Speaker 6: think there's going to be a willingness to kind of 493 00:21:35,880 --> 00:21:38,359 Speaker 6: embrace whatever that policy is and move forward. 494 00:21:38,880 --> 00:21:41,320 Speaker 5: This, to me is one of the biggest question marks. 495 00:21:41,400 --> 00:21:44,359 Speaker 5: We hear about policy uncertainty. We hear about questions about 496 00:21:44,400 --> 00:21:48,000 Speaker 5: potential for growth in terms of earnings and margins. We 497 00:21:48,080 --> 00:21:51,960 Speaker 5: hear about a reticent investor who's holding on because of risks, 498 00:21:52,520 --> 00:21:55,199 Speaker 5: And then we see a fifth straight week of gains 499 00:21:55,280 --> 00:21:57,200 Speaker 5: in the S and P five hundred. The longest streak 500 00:21:57,320 --> 00:22:00,000 Speaker 5: is as John was mentioning, going back to may you 501 00:22:00,160 --> 00:22:03,440 Speaker 5: square what seems like a lack of confidence and surveys 502 00:22:03,760 --> 00:22:06,840 Speaker 5: and a demonstration of confidence when it comes to allocations, 503 00:22:06,920 --> 00:22:09,040 Speaker 5: inflows as well as just performance. 504 00:22:09,440 --> 00:22:12,600 Speaker 6: Sentiment has to be a big part of everyone's investment process. 505 00:22:12,640 --> 00:22:15,520 Speaker 6: And when you have all these sentiment indicators, the surveys, 506 00:22:15,960 --> 00:22:19,040 Speaker 6: you know, even some companies saying that they're concerned, they're concerned, 507 00:22:19,080 --> 00:22:21,439 Speaker 6: they're concerned, that's the moment you say there might actually 508 00:22:21,440 --> 00:22:24,400 Speaker 6: be opportunity, right, you know, when everyone is saying it's 509 00:22:24,400 --> 00:22:26,960 Speaker 6: an all clear, there's literally nothing for us to worry about. 510 00:22:27,680 --> 00:22:29,679 Speaker 6: We're going to pile all of our risk into the 511 00:22:29,800 --> 00:22:32,159 Speaker 6: riskiest parts of the stock market, then you kind of 512 00:22:32,160 --> 00:22:33,200 Speaker 6: have to back yourself off. 513 00:22:33,520 --> 00:22:34,080 Speaker 3: I think in this. 514 00:22:34,080 --> 00:22:36,760 Speaker 6: Case, the fact that people have been more reluctant bulls, 515 00:22:36,840 --> 00:22:38,800 Speaker 6: that there has been, you know, a fair amount of 516 00:22:38,880 --> 00:22:41,960 Speaker 6: argument around the leadership, that sets us up well. I 517 00:22:42,000 --> 00:22:45,879 Speaker 6: think for positioning, and we're not overly I think this 518 00:22:45,960 --> 00:22:47,800 Speaker 6: stock market is not overly owned at this point. There's 519 00:22:47,800 --> 00:22:50,320 Speaker 6: still a little bit of cash on the sidelines, and 520 00:22:50,600 --> 00:22:53,360 Speaker 6: if these tech companies in particular put up big numbers 521 00:22:53,560 --> 00:22:56,600 Speaker 6: in third quarter reporting, there's room to re up those positions. 522 00:22:56,680 --> 00:22:57,760 Speaker 6: I think going into your. 523 00:22:57,680 --> 00:22:59,680 Speaker 3: End, Okay, this was great. It's always going to see you. 524 00:22:59,760 --> 00:22:59,920 Speaker 6: Yeah. 525 00:23:00,200 --> 00:23:02,120 Speaker 3: Thanks for beer. MIRI's Kate Moore of Black Rock. 526 00:23:02,960 --> 00:23:06,520 Speaker 2: This is the Bloomberg Surveillance Podcast, bringing you the best 527 00:23:06,520 --> 00:23:09,840 Speaker 2: in markets, economics, and geopolitics. You can watch the show 528 00:23:09,880 --> 00:23:12,840 Speaker 2: live on Bloomberg TV weekday mornings from six am to 529 00:23:12,960 --> 00:23:16,720 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify, 530 00:23:16,880 --> 00:23:19,119 Speaker 2: or anywhere else you listen, and as always, on the 531 00:23:19,119 --> 00:23:21,560 Speaker 2: Bloomberg Terminal and the Bloomberg Business app.