1 00:00:02,400 --> 00:00:08,600 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 00:00:15,520 --> 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 --> 00:00:24,880 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 --> 00:00:37,360 Speaker 2: Terminal and the Bloomberg Business App. Naila Richardson of ADP 10 00:00:37,560 --> 00:00:40,320 Speaker 2: joins us now for more. Following the lowest ADP we've seen, 11 00:00:40,360 --> 00:00:42,560 Speaker 2: I believe since March twenty twenty three, Neil, good to 12 00:00:42,560 --> 00:00:44,760 Speaker 2: see you great to see is almost behind it. How 13 00:00:44,840 --> 00:00:46,240 Speaker 2: much weakness are we actually seeing? 14 00:00:46,800 --> 00:00:50,760 Speaker 3: First off, I think it's important to underline the prominent 15 00:00:50,920 --> 00:00:53,920 Speaker 3: trend in the ADP data, which is a slowdown in 16 00:00:54,000 --> 00:00:58,080 Speaker 3: hiring momentum that's been from January through this year. That 17 00:00:58,200 --> 00:01:02,320 Speaker 3: has been consistently valid every single month. What we did 18 00:01:02,360 --> 00:01:05,480 Speaker 3: this month, though, was a statistical regularity. 19 00:01:05,560 --> 00:01:06,560 Speaker 1: We do it every year. 20 00:01:07,240 --> 00:01:11,080 Speaker 3: We announce it in February with the January release, which 21 00:01:11,120 --> 00:01:15,240 Speaker 3: is to do an annual benchmarking. Normally this does not 22 00:01:15,319 --> 00:01:19,039 Speaker 3: make news this month, it did. But what it does 23 00:01:19,160 --> 00:01:23,399 Speaker 3: is it reattaches the ADP numbers to the source of 24 00:01:23,480 --> 00:01:26,399 Speaker 3: truth that we have in the United States, which is 25 00:01:26,440 --> 00:01:31,039 Speaker 3: this benchmark that comes from state Unemployment Insurance data, this 26 00:01:31,200 --> 00:01:33,399 Speaker 3: kind of data that we see weekly with the jobless 27 00:01:33,400 --> 00:01:36,800 Speaker 3: claims numbers. And the importance of that is, if you 28 00:01:36,920 --> 00:01:39,600 Speaker 3: really want the perfect data set, you would have the 29 00:01:39,680 --> 00:01:43,880 Speaker 3: comprehensiveness of the state UI data covering ninety five percent 30 00:01:43,959 --> 00:01:48,200 Speaker 3: of US employees and the granularity of ADP data. We 31 00:01:48,280 --> 00:01:50,760 Speaker 3: don't have that, So we make this trade off of 32 00:01:50,840 --> 00:01:54,480 Speaker 3: ADP estimating that state data that comes out with a 33 00:01:54,520 --> 00:01:57,559 Speaker 3: six month lag, we reattached to it every single year. 34 00:01:57,640 --> 00:01:59,560 Speaker 4: So was it as bad as it looked yesterday? I mean, 35 00:01:59,640 --> 00:02:01,559 Speaker 4: that's really what people want to know. This all sounds 36 00:02:01,640 --> 00:02:03,800 Speaker 4: very complicated, and it sounds like, you know, there are 37 00:02:03,800 --> 00:02:05,960 Speaker 4: a lot of things at play, But the granular data. 38 00:02:06,080 --> 00:02:08,000 Speaker 1: Does it display the same kind. 39 00:02:07,840 --> 00:02:11,399 Speaker 4: Of negativity if the bond market took notice of it yesterday? 40 00:02:11,520 --> 00:02:12,320 Speaker 1: Yeah, it does. 41 00:02:12,680 --> 00:02:16,600 Speaker 3: This is our best estimate of what hiring was in September. 42 00:02:16,840 --> 00:02:20,000 Speaker 3: Negative thirty two thousand. That is our best estimate. It 43 00:02:20,080 --> 00:02:23,440 Speaker 3: is our most robust estimate. It's rigorous, it's tied to 44 00:02:23,480 --> 00:02:27,760 Speaker 3: the QCW. So no, you don't need to dismiss the number. Now, 45 00:02:27,800 --> 00:02:31,200 Speaker 3: if you look at the series, we don't fully rebnchmark 46 00:02:31,240 --> 00:02:34,360 Speaker 3: the year until February with the January release, but that 47 00:02:34,440 --> 00:02:38,120 Speaker 3: September number is the number. So what it tells you 48 00:02:38,560 --> 00:02:41,399 Speaker 3: Even if you look at the pre benchmarked series, which 49 00:02:41,440 --> 00:02:44,200 Speaker 3: I did, of course you see the same trend. And 50 00:02:44,240 --> 00:02:46,320 Speaker 3: this is what I want to underscore to your audience, 51 00:02:46,360 --> 00:02:50,000 Speaker 3: because the takeaway is qualitative and the takeaway is firm 52 00:02:50,280 --> 00:02:54,000 Speaker 3: validated that hiring momentum has slowed since the beginning of 53 00:02:54,040 --> 00:02:56,560 Speaker 3: the year to a point where it is a week 54 00:02:56,840 --> 00:02:59,680 Speaker 3: labor market in terms of hiring. It is not a 55 00:02:59,720 --> 00:03:04,400 Speaker 3: week labor market in terms of layoffs. Very important to 56 00:03:04,480 --> 00:03:08,000 Speaker 3: hold these two ideas together. The stock of the labor 57 00:03:08,040 --> 00:03:11,919 Speaker 3: market is strong, the flow into the labor market is weak. 58 00:03:12,080 --> 00:03:14,200 Speaker 3: The flow out of the labor market is weak. 59 00:03:14,280 --> 00:03:16,919 Speaker 4: So is the market breaking or is it just an 60 00:03:16,960 --> 00:03:20,320 Speaker 4: ongoing stagnation of the low fire, low higher that still 61 00:03:20,320 --> 00:03:22,000 Speaker 4: has not broken in one way or another. 62 00:03:22,040 --> 00:03:23,600 Speaker 1: We have a stagnant labor market. 63 00:03:24,360 --> 00:03:28,440 Speaker 3: And all of that consumer spending that fueled Q two 64 00:03:28,680 --> 00:03:31,280 Speaker 3: a three point eight percent growth rate we just saw 65 00:03:31,840 --> 00:03:33,920 Speaker 3: was built on the backs of the labor market, because 66 00:03:33,919 --> 00:03:37,080 Speaker 3: the labor market is supporting the consumer. So in that way, 67 00:03:37,160 --> 00:03:41,880 Speaker 3: it's strength. But that strength is not strong enough in 68 00:03:41,960 --> 00:03:44,840 Speaker 3: terms of consumer spending to create new jobs. 69 00:03:44,880 --> 00:03:46,760 Speaker 1: That's a different level of. 70 00:03:46,760 --> 00:03:50,160 Speaker 3: Economic productivity that we still need to see in the economy. 71 00:03:50,360 --> 00:03:54,640 Speaker 3: That's missing the dynamism that leads to consistent job creation. 72 00:03:55,040 --> 00:03:57,880 Speaker 1: We don't have it in the September number. This time 73 00:03:57,920 --> 00:03:58,480 Speaker 1: tomorrow we. 74 00:03:58,560 --> 00:04:01,360 Speaker 5: Would be debating and looking at the data. When it 75 00:04:01,360 --> 00:04:03,240 Speaker 5: comes to the BLS report, we're not going to get it. 76 00:04:03,520 --> 00:04:06,200 Speaker 5: What do you make of the shutdown? How much of 77 00:04:06,240 --> 00:04:07,880 Speaker 5: an impact is it's going to have on the economy. 78 00:04:07,920 --> 00:04:11,400 Speaker 3: You know, it depends on how long the government stays 79 00:04:11,440 --> 00:04:15,760 Speaker 3: shut But what I will say is that the shutdown 80 00:04:15,840 --> 00:04:19,240 Speaker 3: doesn't just affect federal workers. It does affect federal workers, 81 00:04:19,240 --> 00:04:21,840 Speaker 3: but not just. If you think about all those private 82 00:04:21,920 --> 00:04:25,640 Speaker 3: contract workers, the ones that operate the cafeterias, the ones 83 00:04:25,680 --> 00:04:29,960 Speaker 3: in the national parks, the ones that drive government officials 84 00:04:30,000 --> 00:04:33,200 Speaker 3: here and there, they are also without work as the 85 00:04:33,240 --> 00:04:37,120 Speaker 3: government shuts down. So it's these reciprocal effects that I'll 86 00:04:37,160 --> 00:04:40,160 Speaker 3: be watching in the private sector data to see if 87 00:04:40,240 --> 00:04:44,000 Speaker 3: this leads to even more weakness and hiring because of 88 00:04:44,040 --> 00:04:45,800 Speaker 3: all those private contractors in. 89 00:04:45,760 --> 00:04:48,200 Speaker 5: The past, did you see it bleed into the private sector. 90 00:04:48,640 --> 00:04:51,960 Speaker 3: Yeah, but it was always temporary. We know that the 91 00:04:52,000 --> 00:04:56,120 Speaker 3: longest shut down that we've seen recently, it was thirty 92 00:04:56,120 --> 00:04:59,960 Speaker 3: five days. That's a long time to be without a paycheck. 93 00:05:00,040 --> 00:05:01,760 Speaker 3: I don't care who you are, it's a long time 94 00:05:01,760 --> 00:05:04,080 Speaker 3: to be without a paycheck. And so that is going 95 00:05:04,120 --> 00:05:06,240 Speaker 3: to have an effect in the labor market. It's going 96 00:05:06,279 --> 00:05:09,240 Speaker 3: to have effect in consumer spending. But if we can 97 00:05:09,279 --> 00:05:12,599 Speaker 3: get a reopening that's much shorter than that, we won't 98 00:05:12,640 --> 00:05:16,000 Speaker 3: see such a strong pushback in the labor market when 99 00:05:16,040 --> 00:05:18,640 Speaker 3: it comes to hired. I also will note that this 100 00:05:18,960 --> 00:05:21,960 Speaker 3: just adds to the malaise of uncertainty that we've seen 101 00:05:22,000 --> 00:05:25,000 Speaker 3: all year long. It's not just the data, it's not 102 00:05:25,160 --> 00:05:28,640 Speaker 3: just the conditions. It's the fact that companies are going 103 00:05:28,680 --> 00:05:32,240 Speaker 3: to operate through fog. If you're a private contractor, do 104 00:05:32,320 --> 00:05:35,000 Speaker 3: you hire right now? And how much do you hire? 105 00:05:35,040 --> 00:05:37,800 Speaker 3: That's the question before them. As the government is. 106 00:05:37,760 --> 00:05:40,120 Speaker 4: Shut the entire morning, we've been talking to people who 107 00:05:40,160 --> 00:05:43,000 Speaker 4: say that the US economy can keep running at this 108 00:05:43,160 --> 00:05:45,560 Speaker 4: very slow pace and we can still see the incredible 109 00:05:45,600 --> 00:05:49,400 Speaker 4: dynamism that's reflected in equity market pricing. Do you see 110 00:05:49,440 --> 00:05:51,520 Speaker 4: the same relationship or do you think that there is 111 00:05:51,920 --> 00:05:54,760 Speaker 4: a greater warning flag in the labor market and the 112 00:05:54,839 --> 00:05:57,520 Speaker 4: dynamic that you're seeing there for the other side of 113 00:05:57,560 --> 00:05:58,040 Speaker 4: the equation. 114 00:05:58,520 --> 00:06:01,360 Speaker 3: You know, I feel like we are at this traffic 115 00:06:01,440 --> 00:06:03,839 Speaker 3: light right now that is out You know what happens 116 00:06:03,839 --> 00:06:06,400 Speaker 3: to traffic when the light is out right, You fall 117 00:06:06,480 --> 00:06:08,680 Speaker 3: back on this, You take your turn. 118 00:06:08,720 --> 00:06:09,479 Speaker 1: I'll take my turn. 119 00:06:09,640 --> 00:06:11,560 Speaker 3: Sometimes we get that confused and we go at the 120 00:06:11,560 --> 00:06:14,440 Speaker 3: same time, and once we're past the light, we're fine. 121 00:06:14,960 --> 00:06:16,880 Speaker 3: That's where we are in the economy. We don't have 122 00:06:16,960 --> 00:06:20,200 Speaker 3: the data we're used to seeing. There's some uncertainty about 123 00:06:20,240 --> 00:06:23,680 Speaker 3: who goes next. We won't get the flow. There's bottlenecks. 124 00:06:24,000 --> 00:06:27,240 Speaker 3: That's what comes up economic activity. But if you can 125 00:06:27,279 --> 00:06:30,599 Speaker 3: get pass that into some clarity, we have all the 126 00:06:30,920 --> 00:06:34,720 Speaker 3: ingredients in this economy to push forward with strong GDP 127 00:06:34,839 --> 00:06:37,400 Speaker 3: growth as we saw in the second quarter. So some 128 00:06:37,440 --> 00:06:40,200 Speaker 3: of this is just getting the lights literally back on 129 00:06:40,760 --> 00:06:42,960 Speaker 3: and the data is still flowing. So we can keep 130 00:06:43,000 --> 00:06:44,080 Speaker 3: that dynamism flowing. 131 00:06:44,160 --> 00:06:44,760 Speaker 6: That's the data. 132 00:06:44,800 --> 00:06:47,520 Speaker 4: But when it comes to hiring plans, if there is 133 00:06:47,640 --> 00:06:50,520 Speaker 4: a greater degree of mergers and acquisitions and certainty at 134 00:06:50,600 --> 00:06:53,120 Speaker 4: least from the economic trajectory, maybe not in the tariffs, 135 00:06:53,240 --> 00:06:55,080 Speaker 4: do you expect the hiring to reaccelerate. Do you think 136 00:06:55,080 --> 00:06:57,080 Speaker 4: this is going to break to the upside rather than 137 00:06:57,120 --> 00:06:58,320 Speaker 4: further to the downside. 138 00:06:58,400 --> 00:07:01,440 Speaker 3: I think there's a potential, but right now it is 139 00:07:01,520 --> 00:07:05,200 Speaker 3: not clear where that trigger of dynamism comes from. 140 00:07:06,040 --> 00:07:08,080 Speaker 1: For employers to hire, what do they need. 141 00:07:08,279 --> 00:07:11,840 Speaker 3: They need clarity, they need strong consumer demand, and they 142 00:07:11,880 --> 00:07:15,120 Speaker 3: need the ability to invest long term. So they have 143 00:07:15,200 --> 00:07:17,960 Speaker 3: some of those elements in place. I think we're still 144 00:07:18,000 --> 00:07:22,200 Speaker 3: missing the clarity, and that's a really important component of 145 00:07:22,280 --> 00:07:25,640 Speaker 3: whether or not you can add to your headcount, which 146 00:07:25,680 --> 00:07:28,840 Speaker 3: is a long term people investment. Now, one thing I'm 147 00:07:28,880 --> 00:07:33,480 Speaker 3: hearing employers say is now, if we can't hire our workforce, 148 00:07:33,600 --> 00:07:36,400 Speaker 3: let's make sure those workers we have are more engaged. 149 00:07:36,640 --> 00:07:39,840 Speaker 3: And when I talk to big companies especially, there has 150 00:07:39,880 --> 00:07:43,480 Speaker 3: been more attention on how to upscale their workers, train 151 00:07:43,520 --> 00:07:46,960 Speaker 3: their workers, engage their workers, have more connection to get 152 00:07:47,000 --> 00:07:49,200 Speaker 3: the most out of the people they have right now, 153 00:07:49,440 --> 00:07:51,760 Speaker 3: even if they can't add to the headcount in a 154 00:07:51,840 --> 00:07:52,720 Speaker 3: significant way. 155 00:07:52,880 --> 00:07:55,360 Speaker 2: Keep your payper happy. That's what it's all about. A 156 00:07:55,400 --> 00:07:56,480 Speaker 2: place are getting back to that. 157 00:07:56,480 --> 00:07:56,880 Speaker 1: That's good. 158 00:07:57,200 --> 00:07:59,200 Speaker 6: Yeah, did you hear it? Keep your people happy. 159 00:07:59,240 --> 00:08:01,960 Speaker 4: I will get more out of them and milk them 160 00:08:02,000 --> 00:08:02,760 Speaker 4: for all you can. 161 00:08:02,800 --> 00:08:04,200 Speaker 1: And you can keep them happy. 162 00:08:04,360 --> 00:08:05,400 Speaker 6: Whichever way you do it. 163 00:08:05,480 --> 00:08:06,880 Speaker 1: Happy people are more productive. 164 00:08:06,960 --> 00:08:07,760 Speaker 7: Are you there? 165 00:08:08,000 --> 00:08:08,200 Speaker 8: Yeah? 166 00:08:08,840 --> 00:08:12,320 Speaker 2: Stay with us. More Bloomberg Surveillance coming up after this. 167 00:08:21,360 --> 00:08:24,080 Speaker 2: With stocks rising after closing at record highs, John Stolfis 168 00:08:24,120 --> 00:08:26,920 Speaker 2: of Oppenheimer calling for a street high seventy one hundred 169 00:08:26,920 --> 00:08:28,600 Speaker 2: on the S and P by year Rent, writing this 170 00:08:28,960 --> 00:08:32,720 Speaker 2: economic resilience, along with revenue, earnings growth and innovation across 171 00:08:32,760 --> 00:08:35,160 Speaker 2: the sectors, remains key in our view to the market's 172 00:08:35,160 --> 00:08:38,880 Speaker 2: ability to continue climbing the proverbial wall of worry. John 173 00:08:38,920 --> 00:08:41,000 Speaker 2: joins us now for more. John and Mornig, good morning. 174 00:08:41,040 --> 00:08:43,200 Speaker 2: It's that government shut down just another brick in that 175 00:08:43,240 --> 00:08:43,880 Speaker 2: wall of worry. 176 00:08:44,040 --> 00:08:46,680 Speaker 9: I think it's another brick in the wall, to quote 177 00:08:46,760 --> 00:08:52,320 Speaker 9: Pink Floyd. But that said, we've seen the markets really 178 00:08:52,640 --> 00:08:57,520 Speaker 9: overcome at traverse hurdles all along this year, and it 179 00:08:57,600 --> 00:09:01,319 Speaker 9: is indeed it's the innovation, it's the rezillions, and it's 180 00:09:01,320 --> 00:09:04,200 Speaker 9: a different structure in terms of the market itself. We 181 00:09:04,360 --> 00:09:06,520 Speaker 9: believe in terms of participants. 182 00:09:06,520 --> 00:09:07,600 Speaker 7: You know, the market is. 183 00:09:07,520 --> 00:09:11,520 Speaker 9: Not just the guy with the monocle from the Monopoly game. 184 00:09:11,600 --> 00:09:14,520 Speaker 9: You know, it's all kinds of people. And in the 185 00:09:14,640 --> 00:09:19,559 Speaker 9: US it's multi generational people investing for longer term goals. 186 00:09:19,600 --> 00:09:23,360 Speaker 9: So the disturbances that are caused by the potential for 187 00:09:23,480 --> 00:09:29,760 Speaker 9: a short term or intermediate or longer term shutdown of 188 00:09:29,880 --> 00:09:33,280 Speaker 9: less concern to them right away as opposed to getting 189 00:09:33,320 --> 00:09:36,840 Speaker 9: money positioned for goals that maybe three, five, seven years. 190 00:09:37,160 --> 00:09:38,520 Speaker 2: Can I build on that, John, Do you think some 191 00:09:38,600 --> 00:09:41,560 Speaker 2: tension between different generations and how they have this market 192 00:09:41,559 --> 00:09:43,880 Speaker 2: should be valued, Some tension between the boomers and what 193 00:09:43,920 --> 00:09:46,480 Speaker 2: they think the appropriate multiple is for this stock market 194 00:09:46,559 --> 00:09:47,840 Speaker 2: with a different sectimics. 195 00:09:48,120 --> 00:09:50,160 Speaker 9: Most certainly, I think you know, when you look at 196 00:09:50,440 --> 00:09:54,480 Speaker 9: people who've been the Boomer generation, stocks are cheap at 197 00:09:54,720 --> 00:09:59,920 Speaker 9: the sixteen forward multiple. As you go forward in generationally, 198 00:10:01,000 --> 00:10:04,400 Speaker 9: people are willing to pay higher multiples for growth. And 199 00:10:04,480 --> 00:10:06,640 Speaker 9: I believe the reason why a lot of it comes 200 00:10:06,640 --> 00:10:10,200 Speaker 9: from Ed Yardini, who's for years said that the what 201 00:10:10,320 --> 00:10:13,439 Speaker 9: is it the Wilshire five thousand. There aren't enough stocks 202 00:10:13,480 --> 00:10:16,959 Speaker 9: to really qualify that are publicly traded anymore. For that 203 00:10:17,200 --> 00:10:19,520 Speaker 9: indicaes anymore because it's what is it about thirty five 204 00:10:19,600 --> 00:10:22,120 Speaker 9: hundred stocks at thirty four hundred that you actually have 205 00:10:22,160 --> 00:10:26,200 Speaker 9: to choose from? And the thought is here is it's 206 00:10:26,240 --> 00:10:29,839 Speaker 9: supply and demand. It's the basic thing of economics, the 207 00:10:30,360 --> 00:10:35,679 Speaker 9: demand for your technology, your hyper growers, the ones who 208 00:10:35,720 --> 00:10:38,320 Speaker 9: are well established, deeply embedded in the lives of both 209 00:10:38,400 --> 00:10:42,240 Speaker 9: business and the consumer, where we're all on the upgrade. 210 00:10:41,800 --> 00:10:43,160 Speaker 7: Cycle whether we like it or not. 211 00:10:43,200 --> 00:10:46,120 Speaker 9: As I always like to say, this is what's driving 212 00:10:46,200 --> 00:10:50,560 Speaker 9: this market in many ways, and it differentiates not just generationally, 213 00:10:50,880 --> 00:10:54,640 Speaker 9: but the difference between traders who are looking at at 214 00:10:55,000 --> 00:10:58,720 Speaker 9: risk to capital a capital put at risk on a 215 00:10:58,800 --> 00:11:01,680 Speaker 9: day to day, minute to minute basis, and intermediate to 216 00:11:01,720 --> 00:11:05,120 Speaker 9: longer term investors. When I started in this business forty 217 00:11:05,160 --> 00:11:07,080 Speaker 9: two years ago, hard to believe. It's not that I 218 00:11:07,080 --> 00:11:09,080 Speaker 9: didn't think I'd lived this long. I didn't know how 219 00:11:09,160 --> 00:11:14,640 Speaker 9: longyr would happened, but it was the retail investor would 220 00:11:14,640 --> 00:11:17,480 Speaker 9: always come into the market, usually about once the market 221 00:11:17,520 --> 00:11:19,640 Speaker 9: was up twenty percent and everybody knew it, and the 222 00:11:19,640 --> 00:11:22,319 Speaker 9: cab driver was asking you for a hot tip if 223 00:11:22,320 --> 00:11:24,480 Speaker 9: you saw you had a copy of the Wall Street 224 00:11:24,520 --> 00:11:28,679 Speaker 9: Journal under your arm. Today people are very well informed 225 00:11:28,800 --> 00:11:30,160 Speaker 9: by the financial media. 226 00:11:30,240 --> 00:11:31,640 Speaker 7: They have all the arguments. 227 00:11:31,679 --> 00:11:35,480 Speaker 9: You get to see the players actually express themselves and 228 00:11:35,559 --> 00:11:38,280 Speaker 9: you see what is it the body language that people 229 00:11:38,320 --> 00:11:41,800 Speaker 9: are using, you know, and it makes it it's actually 230 00:11:41,840 --> 00:11:45,120 Speaker 9: it's remarkably more intimate than it was ever before, and 231 00:11:45,160 --> 00:11:48,000 Speaker 9: people are better informed and better able to work. We'd 232 00:11:48,040 --> 00:11:52,280 Speaker 9: like to think with financial advisors who are working as fiduciaries. 233 00:11:51,760 --> 00:11:54,080 Speaker 4: They also are better sold in the story of the 234 00:11:54,080 --> 00:11:56,280 Speaker 4: hopes and dreams of just how much AI can do. 235 00:11:56,360 --> 00:11:57,720 Speaker 4: And there is a lot of truth to it. And 236 00:11:57,800 --> 00:12:00,920 Speaker 4: history doesn't repeat, but it does rhyme. Back inthe dot 237 00:12:00,960 --> 00:12:05,040 Speaker 4: com bubble boom and bust, there was aol you've got mail. 238 00:12:05,120 --> 00:12:06,920 Speaker 1: We don't do that anymore. I mean some people still do, 239 00:12:07,000 --> 00:12:08,079 Speaker 1: and you know, go bless you. 240 00:12:08,200 --> 00:12:11,160 Speaker 4: But I'm just wondering going forward, how do you identify 241 00:12:11,400 --> 00:12:13,480 Speaker 4: all of the money that's going to be wasted at 242 00:12:13,480 --> 00:12:15,960 Speaker 4: a time where there's a lot of projections and not 243 00:12:16,160 --> 00:12:18,520 Speaker 4: a lot of data, and what ultimately will happen or 244 00:12:18,559 --> 00:12:19,600 Speaker 4: how it's going to be applied. 245 00:12:19,760 --> 00:12:20,800 Speaker 7: Well, I think, for. 246 00:12:20,800 --> 00:12:23,120 Speaker 9: One, is if we just go back to if we 247 00:12:23,200 --> 00:12:25,360 Speaker 9: just go back to as recently as the tech bubble, 248 00:12:25,440 --> 00:12:28,600 Speaker 9: things were practically primitive versus where we are today. 249 00:12:28,960 --> 00:12:31,040 Speaker 7: I can remember working at another well. 250 00:12:30,800 --> 00:12:36,960 Speaker 9: Known firm headquarters on Broadway in nineteen ninety seven, and 251 00:12:37,280 --> 00:12:39,880 Speaker 9: suddenly you would find the internet would go out, you know, 252 00:12:39,960 --> 00:12:42,040 Speaker 9: and when you would go home to connect to the corp, 253 00:12:42,160 --> 00:12:43,640 Speaker 9: you'd have, you know. 254 00:12:43,640 --> 00:12:46,600 Speaker 7: Sometimes a little device would be and all that stuff. 255 00:12:46,640 --> 00:12:50,719 Speaker 9: Today's we still have problems with technology, but it's very 256 00:12:50,720 --> 00:12:54,040 Speaker 9: well established and the ideas you know, well, I can 257 00:12:54,080 --> 00:12:56,360 Speaker 9: remember putting dimes in a payphone. 258 00:12:56,480 --> 00:12:58,800 Speaker 7: People don't even know what a payphone used to look like. 259 00:12:58,920 --> 00:13:02,000 Speaker 9: I can see sometimes I see an old architecture in 260 00:13:02,040 --> 00:13:04,280 Speaker 9: our building which another firm had before us. 261 00:13:04,440 --> 00:13:07,120 Speaker 7: There's actually a group of things and no phone anymore. 262 00:13:07,160 --> 00:13:08,280 Speaker 7: But what are these things for. 263 00:13:08,400 --> 00:13:11,280 Speaker 9: They're for the press as they exit exited, to write 264 00:13:11,280 --> 00:13:14,080 Speaker 9: things down. But where we are today, I think a 265 00:13:14,160 --> 00:13:17,560 Speaker 9: lot of the stuff will likely prove disappointing, but the 266 00:13:17,600 --> 00:13:21,040 Speaker 9: core will be it's already being invested in and utilized 267 00:13:21,280 --> 00:13:22,920 Speaker 9: to create greater efficiencies. 268 00:13:23,080 --> 00:13:25,559 Speaker 4: I guess you talk about the babies being. 269 00:13:25,360 --> 00:13:26,640 Speaker 1: Thrown out with the bathwater. 270 00:13:27,200 --> 00:13:29,160 Speaker 4: I don't see any babies, and I don't see any 271 00:13:29,160 --> 00:13:30,400 Speaker 4: bathwater being thrown out either. 272 00:13:30,559 --> 00:13:31,640 Speaker 1: Nothing's being thrown out. 273 00:13:31,720 --> 00:13:33,360 Speaker 4: So how do you identify what that means? 274 00:13:33,440 --> 00:13:35,480 Speaker 7: Well, I'd say actually, on a day to day basis. 275 00:13:35,520 --> 00:13:38,280 Speaker 7: You know, I'm not solely a strategist. 276 00:13:38,360 --> 00:13:43,280 Speaker 9: I also manage money for the firm, both ETF portfolio 277 00:13:43,679 --> 00:13:48,960 Speaker 9: with passive indices and then individual stock portfolio. And we've 278 00:13:49,000 --> 00:13:52,480 Speaker 9: seen a considerable broadening of the rally that has suddenly 279 00:13:52,520 --> 00:13:58,959 Speaker 9: rewarded sectors like industrials. We've seen better attention played to utilities, 280 00:13:59,000 --> 00:14:01,199 Speaker 9: both on as it looks like the FED is going 281 00:14:01,240 --> 00:14:06,600 Speaker 9: to be cutting rates going forward, not necessarily enthusiastically, but 282 00:14:06,640 --> 00:14:09,400 Speaker 9: on a down payment kind of basis, to show. 283 00:14:09,200 --> 00:14:11,280 Speaker 7: That the rate hike cycle is over. 284 00:14:12,080 --> 00:14:15,920 Speaker 9: What you have effectively is you've got utilities are no 285 00:14:16,000 --> 00:14:18,320 Speaker 9: longer considered as much of a risk as a bomb 286 00:14:18,400 --> 00:14:22,000 Speaker 9: proxy because it looks like interest rates are coming down. 287 00:14:23,280 --> 00:14:25,640 Speaker 9: Healthcare has caught a bid as a result of one 288 00:14:25,760 --> 00:14:29,920 Speaker 9: company's efforts to reduce prices in the last couple of days. 289 00:14:29,920 --> 00:14:32,680 Speaker 9: I'd mentioned the name of the company because I manage money. 290 00:14:32,720 --> 00:14:33,640 Speaker 9: The firm doesn't let me. 291 00:14:34,440 --> 00:14:36,280 Speaker 7: I want to be pitching stocks that I might or 292 00:14:36,320 --> 00:14:37,200 Speaker 7: might not own. 293 00:14:37,160 --> 00:14:39,120 Speaker 5: Saying on the FED, how difficult is the end of 294 00:14:39,160 --> 00:14:42,680 Speaker 5: October's meeting going to be? If this government shutdown is prolonged. 295 00:14:42,720 --> 00:14:45,000 Speaker 5: We know we're not likely going to get tomorrow's perils report, 296 00:14:45,000 --> 00:14:47,400 Speaker 5: but then what about CPI on October fifteenth as well? 297 00:14:47,480 --> 00:14:49,840 Speaker 5: They might not have all the most relevant up to 298 00:14:49,920 --> 00:14:50,920 Speaker 5: date data. 299 00:14:51,160 --> 00:14:54,120 Speaker 9: I think, you know, I think it's close enough to 300 00:14:54,160 --> 00:14:58,160 Speaker 9: the September meeting that I think we kind of got 301 00:14:58,160 --> 00:15:02,120 Speaker 9: a fairly good idea that the the dot plots showed 302 00:15:02,200 --> 00:15:05,480 Speaker 9: that there would likely be a cut in October, and 303 00:15:05,520 --> 00:15:07,640 Speaker 9: I think we're close enough in terms of the data. 304 00:15:07,680 --> 00:15:10,240 Speaker 9: I think the question would be to December, what's going 305 00:15:10,280 --> 00:15:12,840 Speaker 9: to happen there? And hopefully by then this will be 306 00:15:12,840 --> 00:15:14,720 Speaker 9: behind us, this whole question of the shot. 307 00:15:14,960 --> 00:15:16,640 Speaker 2: Jo'll never mind the Bathwart said, this has been a 308 00:15:16,640 --> 00:15:19,680 Speaker 2: pool party now for six months, and it's getting wilder. 309 00:15:19,920 --> 00:15:23,400 Speaker 2: I think spring Break don't want to go there. Look 310 00:15:23,440 --> 00:15:26,360 Speaker 2: at the valuations we're seeing in private markets, five hundred 311 00:15:26,400 --> 00:15:29,040 Speaker 2: billion dollars on the startup now, John, I'm just trying 312 00:15:29,080 --> 00:15:30,800 Speaker 2: to work out, you know, never mind the risk a version. 313 00:15:30,800 --> 00:15:32,760 Speaker 2: I don't see any I saw a bunch of dead 314 00:15:32,760 --> 00:15:35,240 Speaker 2: issuents in September, and people start to get pretty excited 315 00:15:35,240 --> 00:15:37,800 Speaker 2: about the future. Still on top of that, when do 316 00:15:37,880 --> 00:15:39,240 Speaker 2: you start to get concerned? 317 00:15:39,400 --> 00:15:42,600 Speaker 9: Well, you know, I play in the public markets as 318 00:15:42,600 --> 00:15:45,120 Speaker 9: opposed to the private markets, so one to inform the other. 319 00:15:45,680 --> 00:15:50,160 Speaker 9: That's well, I think to some extent with the selectivity 320 00:15:50,200 --> 00:15:52,560 Speaker 9: there and what is chosen to move into the private 321 00:15:53,040 --> 00:15:57,200 Speaker 9: equity market is not necessarily everything that play, I think 322 00:15:57,200 --> 00:16:00,320 Speaker 9: that's something to look at as we go forward, and that, 323 00:16:00,920 --> 00:16:03,160 Speaker 9: as you mentioned, the money that's being thrown at this 324 00:16:03,200 --> 00:16:08,200 Speaker 9: one particular deal is like the valuation is rather worrisome, 325 00:16:08,600 --> 00:16:12,200 Speaker 9: except if you consider how much is already developed. This 326 00:16:12,320 --> 00:16:15,640 Speaker 9: is much, you know, This isn't the primitive stage of 327 00:16:15,680 --> 00:16:20,000 Speaker 9: people saying someday we will have a million eyeballs on 328 00:16:20,080 --> 00:16:23,520 Speaker 9: our website. This is companies that know you need billions 329 00:16:23,560 --> 00:16:27,680 Speaker 9: of eyeballs and you need to be well capitalized. And 330 00:16:27,720 --> 00:16:31,200 Speaker 9: there is it's not just well capitalized, but the likelihood 331 00:16:31,200 --> 00:16:34,240 Speaker 9: of cash flow generation pretty quickly from here to there. 332 00:16:34,480 --> 00:16:38,040 Speaker 7: Because this week I was at a due diligence. 333 00:16:37,600 --> 00:16:41,960 Speaker 9: Meeting in an ETF firm management firm that has ETFs 334 00:16:42,080 --> 00:16:45,160 Speaker 9: right and they're technology people just talking about all the 335 00:16:45,520 --> 00:16:48,880 Speaker 9: investment that's being made here, but by smart people who 336 00:16:48,920 --> 00:16:52,720 Speaker 9: are educated and deeply involved in tech for maybe forty 337 00:16:52,800 --> 00:16:53,600 Speaker 9: or fifty years. 338 00:16:54,600 --> 00:16:58,080 Speaker 2: Stay with us, Multilinpex Savannas coming up off to this, 339 00:17:07,200 --> 00:17:10,280 Speaker 2: stocks reaching record highs despite the chaos on Capitol Hill. 340 00:17:10,520 --> 00:17:13,280 Speaker 2: Sarah Hunt of Alpine Saxon words, writing, the government shutdown 341 00:17:13,359 --> 00:17:16,000 Speaker 2: may or may not impact a raft of data for investors. 342 00:17:16,280 --> 00:17:18,600 Speaker 2: This may be the trickiest part, at least in the 343 00:17:18,640 --> 00:17:21,080 Speaker 2: net term. Sarah joins us now for more. Sarah, good 344 00:17:21,080 --> 00:17:23,520 Speaker 2: morning morning. Do you think this will hold back risk 345 00:17:23,520 --> 00:17:25,520 Speaker 2: appetite this month? No sound of that just yet. Do 346 00:17:25,560 --> 00:17:26,200 Speaker 2: you think it will? 347 00:17:26,760 --> 00:17:29,399 Speaker 10: It depends a lot on how long everything takes and 348 00:17:29,480 --> 00:17:31,560 Speaker 10: what kind of data comes out in the interim and 349 00:17:31,600 --> 00:17:34,640 Speaker 10: sort of and the kickoff of Q three earning season, right, 350 00:17:34,680 --> 00:17:37,000 Speaker 10: so all these things are going to be important. Earning 351 00:17:37,000 --> 00:17:38,719 Speaker 10: season is going to take on even more importance if 352 00:17:38,760 --> 00:17:40,520 Speaker 10: we have a lack of government data because people want 353 00:17:40,520 --> 00:17:42,520 Speaker 10: to see what companies say. But I think this morning 354 00:17:42,560 --> 00:17:45,920 Speaker 10: the news on chat TBT was one of those open ai. 355 00:17:45,960 --> 00:17:47,960 Speaker 10: It was one of those things that certainly helps the 356 00:17:48,119 --> 00:17:49,320 Speaker 10: situation and doesn't hurt it. 357 00:17:49,320 --> 00:17:51,120 Speaker 2: It just built on that a little bit more, Why 358 00:17:51,160 --> 00:17:53,399 Speaker 2: does it how the situation sitting here this morning and 359 00:17:53,520 --> 00:17:56,600 Speaker 2: understanding that you've got this private company staying private worth 360 00:17:57,040 --> 00:17:59,960 Speaker 2: five hundred billion dollars, what is the help? 361 00:18:00,160 --> 00:18:02,919 Speaker 10: Because the question has been all along this AI has 362 00:18:02,960 --> 00:18:05,000 Speaker 10: been fueling this rally. Right, you take that out and 363 00:18:05,040 --> 00:18:07,120 Speaker 10: all of a sudden, the statistics do not look nearly 364 00:18:07,160 --> 00:18:10,040 Speaker 10: as good. And if you see cracks in that story 365 00:18:10,119 --> 00:18:12,160 Speaker 10: with the other problems that are going on, I think 366 00:18:12,200 --> 00:18:13,720 Speaker 10: you have issues the fact that you saw a. 367 00:18:13,760 --> 00:18:14,960 Speaker 6: Data point that's positive. 368 00:18:15,119 --> 00:18:17,000 Speaker 10: Take it as you want, whether or not that's too bubbly, 369 00:18:17,080 --> 00:18:19,640 Speaker 10: or whether or not it's anything else. The bottom line 370 00:18:19,680 --> 00:18:21,680 Speaker 10: is people are willing to put up some serious money 371 00:18:21,680 --> 00:18:23,000 Speaker 10: to be a part of that story. 372 00:18:23,040 --> 00:18:24,000 Speaker 6: And that's still the case. 373 00:18:24,320 --> 00:18:26,480 Speaker 10: That is going to help the equity markets just because 374 00:18:26,480 --> 00:18:29,080 Speaker 10: it underlies that foundation and it gives it more confidence. 375 00:18:29,200 --> 00:18:30,240 Speaker 1: So don't fight AI. 376 00:18:30,880 --> 00:18:33,600 Speaker 4: Is there increasingly a feeling in your mind, don't fight 377 00:18:33,640 --> 00:18:36,000 Speaker 4: the FED in terms of supporting the rest of the 378 00:18:36,080 --> 00:18:39,280 Speaker 4: non AI universe that hasn't fared as well well. 379 00:18:39,320 --> 00:18:40,920 Speaker 10: I think the FED had a very tough has a 380 00:18:41,000 --> 00:18:42,760 Speaker 10: very tough job going into the next couple of months. 381 00:18:42,800 --> 00:18:44,320 Speaker 10: A lack of data doesn't help it at all. And 382 00:18:44,560 --> 00:18:46,560 Speaker 10: to your point, the ADP numbers, people are going to 383 00:18:46,560 --> 00:18:47,920 Speaker 10: look at that, They're going to look at any non 384 00:18:47,960 --> 00:18:50,280 Speaker 10: government data that comes out, because until we get government 385 00:18:50,320 --> 00:18:54,040 Speaker 10: data out, you don't have enough information. But directionally speaking, 386 00:18:54,320 --> 00:18:56,240 Speaker 10: I think that that one of the reasons you saw 387 00:18:56,280 --> 00:18:58,199 Speaker 10: that happen yesterday is that people thought, well, this is 388 00:18:58,280 --> 00:19:00,760 Speaker 10: another excuse to cut rais whether or not that actually 389 00:19:00,800 --> 00:19:02,879 Speaker 10: solves any problems or does what it's supposed to do 390 00:19:03,000 --> 00:19:05,800 Speaker 10: is another question. But the idea that it's coming is 391 00:19:05,840 --> 00:19:07,440 Speaker 10: still positive for equity markets. 392 00:19:07,480 --> 00:19:10,080 Speaker 4: I just wonder how long you can turbocharge growth before 393 00:19:10,119 --> 00:19:11,639 Speaker 4: inflation becomes a problem. 394 00:19:11,880 --> 00:19:13,119 Speaker 1: A lot of people have said it's not. 395 00:19:13,480 --> 00:19:15,880 Speaker 4: And at the same time, you start thinking, if we're 396 00:19:15,880 --> 00:19:19,199 Speaker 4: already above that two percent target and you add juice 397 00:19:19,400 --> 00:19:22,680 Speaker 4: to it, already is a strong economy, albeit concentrated in AI. 398 00:19:23,040 --> 00:19:25,120 Speaker 1: Doesn't that become a real concern later this year? 399 00:19:25,480 --> 00:19:27,399 Speaker 10: Well, I still don't think that we've seen the true 400 00:19:27,720 --> 00:19:30,560 Speaker 10: dynamics of the tariff pricing in pricing right, So whether 401 00:19:30,640 --> 00:19:32,520 Speaker 10: or not that's going to come in as the price 402 00:19:32,600 --> 00:19:35,240 Speaker 10: level raised or it's inflation, I don't think that that's 403 00:19:35,280 --> 00:19:37,920 Speaker 10: really come through. You've seen big waves of inventory every 404 00:19:37,920 --> 00:19:40,440 Speaker 10: time there's been a pullback in timing on those tariffs. 405 00:19:40,640 --> 00:19:42,720 Speaker 10: So the companies have been absorbing a lot. There's a 406 00:19:42,760 --> 00:19:45,240 Speaker 10: point at which that flips, that script flips, and I 407 00:19:45,240 --> 00:19:47,840 Speaker 10: don't know where we are with that yet, But as 408 00:19:47,880 --> 00:19:49,439 Speaker 10: that sort of comes in, I don't see. 409 00:19:49,320 --> 00:19:50,359 Speaker 6: How it can be beneficial. 410 00:19:50,760 --> 00:19:51,760 Speaker 1: So what are you worried about now? 411 00:19:51,800 --> 00:19:53,399 Speaker 5: Because you don't sound like you're that worried about a 412 00:19:53,400 --> 00:19:55,840 Speaker 5: bubble when it comes to AI, you don't sound that 413 00:19:55,840 --> 00:19:57,240 Speaker 5: worried about a government shutdown. 414 00:19:58,200 --> 00:20:00,480 Speaker 10: I worry about a lot of things. I wouldn't go 415 00:20:00,680 --> 00:20:02,600 Speaker 10: so far as to say I'm not worried about a bubble. 416 00:20:02,640 --> 00:20:04,520 Speaker 10: But the problem with that is that bubbles can go 417 00:20:04,560 --> 00:20:06,920 Speaker 10: on a lot longer than we can think about whether 418 00:20:06,960 --> 00:20:09,400 Speaker 10: or not they should. And if there is enough real 419 00:20:09,480 --> 00:20:12,440 Speaker 10: money chasing that right now, as opposed to the whole 420 00:20:12,520 --> 00:20:14,800 Speaker 10: argument about debt and debt or financing that came back 421 00:20:14,800 --> 00:20:15,840 Speaker 10: around with that big. 422 00:20:15,680 --> 00:20:18,800 Speaker 6: Deal right So, as long as there is, as long as. 423 00:20:18,680 --> 00:20:21,320 Speaker 10: People are putting up money to help solve that problem, 424 00:20:21,400 --> 00:20:23,199 Speaker 10: I think it's less of an issue. I think it 425 00:20:23,280 --> 00:20:25,879 Speaker 10: becomes one when people start to worry about whether or 426 00:20:25,880 --> 00:20:28,680 Speaker 10: not there's any actual productivity that's going to come out 427 00:20:28,680 --> 00:20:30,199 Speaker 10: of this efficiency that's going to come out of this, 428 00:20:30,240 --> 00:20:31,919 Speaker 10: and I think that that's still one of those questions that. 429 00:20:31,880 --> 00:20:32,560 Speaker 6: We're struggling with. 430 00:20:32,600 --> 00:20:34,200 Speaker 5: It's a good point the end of the nineties when 431 00:20:34,240 --> 00:20:36,760 Speaker 5: Greenspan talked about rational xuberances. We had a bull market 432 00:20:36,840 --> 00:20:37,840 Speaker 5: run for four years. 433 00:20:38,040 --> 00:20:39,199 Speaker 1: But how do you time it? 434 00:20:40,640 --> 00:20:42,560 Speaker 10: That is a great question, and that is the problem 435 00:20:42,600 --> 00:20:45,200 Speaker 10: because you only see that in retrospect when people finally 436 00:20:45,240 --> 00:20:46,760 Speaker 10: start to look back and go, you know what, we 437 00:20:46,760 --> 00:20:49,080 Speaker 10: were wrong at X point, at why point, at Z point. 438 00:20:49,160 --> 00:20:51,400 Speaker 10: Right now, we're still looking at that and saying there's 439 00:20:51,400 --> 00:20:53,760 Speaker 10: still a lot of promise. We collectively as investors. I'm 440 00:20:53,760 --> 00:20:56,920 Speaker 10: not speaking about us just generally personally, but the investment 441 00:20:56,920 --> 00:20:58,600 Speaker 10: community is willing to look at that and say that 442 00:20:58,600 --> 00:21:00,919 Speaker 10: there's a whole wave coming and even though you know 443 00:21:00,960 --> 00:21:02,920 Speaker 10: they will be inefficiencies in that way, if people aren't 444 00:21:02,920 --> 00:21:05,240 Speaker 10: sure where they're going to be yet, so at some 445 00:21:05,440 --> 00:21:08,080 Speaker 10: point it starts to be cluegy where you don't get 446 00:21:08,200 --> 00:21:10,520 Speaker 10: some people coming out and saying this is helping our margins, 447 00:21:10,520 --> 00:21:12,360 Speaker 10: this is doing that for us. We need to see 448 00:21:12,359 --> 00:21:14,480 Speaker 10: that come through and that's still a promise right now, 449 00:21:14,480 --> 00:21:15,560 Speaker 10: and market loves a good story. 450 00:21:15,600 --> 00:21:17,359 Speaker 2: There seems to be some great division over the balance 451 00:21:17,400 --> 00:21:19,040 Speaker 2: of risk. I think the Fed's got one view and 452 00:21:19,080 --> 00:21:21,600 Speaker 2: the market's got another. The Federal Reserve believes the biggest 453 00:21:21,680 --> 00:21:24,280 Speaker 2: risk right now is downside risk to employment, and a 454 00:21:24,320 --> 00:21:26,000 Speaker 2: lot of people in markets are coming around to the 455 00:21:26,000 --> 00:21:28,280 Speaker 2: idea that the biggest risk might be upside risk to inflation, 456 00:21:28,600 --> 00:21:30,359 Speaker 2: and they're chasing that because the Fed's going to respond 457 00:21:30,400 --> 00:21:32,600 Speaker 2: to one and not the other. This is what Tawson's 458 00:21:32,640 --> 00:21:35,920 Speaker 2: lack of Apollo said just yesterday. Upside risk to inflation 459 00:21:35,960 --> 00:21:38,640 Speaker 2: are growing, particularly if the FED continues to cut interest rates, 460 00:21:38,680 --> 00:21:41,800 Speaker 2: and he believes his whole profession continue to underestimate this 461 00:21:41,880 --> 00:21:45,160 Speaker 2: economy and the resilience of it. Are you coming round 462 00:21:45,200 --> 00:21:46,359 Speaker 2: to that side of things as well. 463 00:21:47,200 --> 00:21:47,400 Speaker 8: Well. 464 00:21:47,400 --> 00:21:50,560 Speaker 10: It's interesting because the resilience of the economy also bakes 465 00:21:50,600 --> 00:21:52,840 Speaker 10: in a number of things, you know. So Kelsey Vera 466 00:21:52,960 --> 00:21:54,840 Speaker 10: was just talking about the difference between big corporations and 467 00:21:54,840 --> 00:21:58,080 Speaker 10: small corporations, So it bakes in a lot of positive 468 00:21:58,080 --> 00:22:01,560 Speaker 10: movements across the entire strata. I don't know that the 469 00:22:01,680 --> 00:22:04,520 Speaker 10: entire strata is performing that well but from markets perspective, 470 00:22:04,560 --> 00:22:07,280 Speaker 10: it doesn't really matter. Lower and consumers aren't doing that well, 471 00:22:07,400 --> 00:22:09,960 Speaker 10: stock market doesn't mind. They don't spend the most money anyway. 472 00:22:10,320 --> 00:22:12,600 Speaker 10: If you can continue to see cash flow in those 473 00:22:12,640 --> 00:22:14,800 Speaker 10: big companies, it's less of an issue than if Main 474 00:22:14,840 --> 00:22:16,639 Speaker 10: Street is struggling on the smaller side. 475 00:22:16,720 --> 00:22:17,920 Speaker 6: So it really does depend. 476 00:22:18,000 --> 00:22:20,119 Speaker 10: But I do think that inflation is an issue, and 477 00:22:20,160 --> 00:22:21,520 Speaker 10: I do think that it could be a. 478 00:22:21,440 --> 00:22:22,639 Speaker 6: Bigger issue going forward. 479 00:22:22,680 --> 00:22:24,240 Speaker 10: But if we're not going to get some of that data, 480 00:22:24,440 --> 00:22:27,200 Speaker 10: it makes it easier to ignore. On the other hand, 481 00:22:27,280 --> 00:22:29,359 Speaker 10: I think that it is definitely something that continues to 482 00:22:29,400 --> 00:22:31,280 Speaker 10: flow through, and that's going to be tricky because what 483 00:22:31,320 --> 00:22:33,679 Speaker 10: happens with that is you fix margins by getting rid 484 00:22:33,720 --> 00:22:36,320 Speaker 10: of people, and then the labor question becomes even more problematic, 485 00:22:36,520 --> 00:22:38,200 Speaker 10: and then the FED is in a very difficult place, 486 00:22:38,200 --> 00:22:39,560 Speaker 10: which I sort of think they are anyway. 487 00:22:39,680 --> 00:22:41,560 Speaker 4: I'm looking at where to buy gold bars right now, 488 00:22:41,600 --> 00:22:44,840 Speaker 4: and I'm one s There's crossco. There are places though 489 00:22:44,840 --> 00:22:46,639 Speaker 4: they limit how much you can buy. You have to 490 00:22:46,680 --> 00:22:49,119 Speaker 4: be a member, and then it's only one bar per person. 491 00:22:49,160 --> 00:22:50,840 Speaker 4: I'm looking at this, how much is that sort of 492 00:22:50,840 --> 00:22:52,800 Speaker 4: the solution increasingly for people I know that you say 493 00:22:52,840 --> 00:22:57,119 Speaker 4: that personally is one thing, but increasingly how mainstream is 494 00:22:57,160 --> 00:22:59,600 Speaker 4: that type of investing really becoming? 495 00:23:00,119 --> 00:23:02,680 Speaker 10: Well, I think that gold and to some degree bitcoin, 496 00:23:02,720 --> 00:23:05,200 Speaker 10: and I wouldn't call gold a bitcoin, you know, digital 497 00:23:05,200 --> 00:23:07,879 Speaker 10: gold or anything else, but they are ways to express 498 00:23:07,920 --> 00:23:10,280 Speaker 10: an opinion that the system itself is going to have 499 00:23:10,320 --> 00:23:14,000 Speaker 10: some problems and that government all currencies are going to 500 00:23:14,040 --> 00:23:16,239 Speaker 10: have to value against something. Right, So gold is one 501 00:23:16,240 --> 00:23:18,359 Speaker 10: of those things that people look at and say, I 502 00:23:18,359 --> 00:23:20,439 Speaker 10: can buy gold. It's going to It doesn't matter if 503 00:23:20,840 --> 00:23:23,200 Speaker 10: it's a year US thing or if it's a japan 504 00:23:23,359 --> 00:23:23,800 Speaker 10: US thing. 505 00:23:24,119 --> 00:23:26,000 Speaker 6: I know that if currencies. 506 00:23:25,560 --> 00:23:28,440 Speaker 10: Are going to be devalued, i've got something that should 507 00:23:28,520 --> 00:23:30,720 Speaker 10: rise in value. And whether or not that's a truism 508 00:23:30,840 --> 00:23:32,840 Speaker 10: or people argue it, or it's just you know, people 509 00:23:32,880 --> 00:23:35,240 Speaker 10: are chasing it. Central banks are going back to buying 510 00:23:35,240 --> 00:23:37,680 Speaker 10: gold to some degree. They certainly seem to have been 511 00:23:37,760 --> 00:23:41,080 Speaker 10: on the non oecd side. So I think that there 512 00:23:41,200 --> 00:23:43,920 Speaker 10: is room for that to move because it hasn't moved 513 00:23:43,960 --> 00:23:47,200 Speaker 10: in so very long, and we just topped inflation adjusted 514 00:23:47,280 --> 00:23:50,199 Speaker 10: gold prices in the seventies and eighties, and that is 515 00:23:50,240 --> 00:23:54,040 Speaker 10: one of those technical markers that people look for. 516 00:23:54,160 --> 00:23:56,000 Speaker 4: Well, is that something where you're starting to credibly look 517 00:23:56,000 --> 00:23:58,600 Speaker 4: at that as a real slice of the sort of 518 00:23:58,920 --> 00:24:01,399 Speaker 4: more risk averse side of portfolio in a way that 519 00:24:01,600 --> 00:24:02,640 Speaker 4: you hadn't before. 520 00:24:03,160 --> 00:24:04,960 Speaker 10: Well, I think the tricky thing is that after it's 521 00:24:04,960 --> 00:24:07,400 Speaker 10: had such a big run, it almost seems difficult to say, 522 00:24:07,480 --> 00:24:09,040 Speaker 10: now this is the time to go ahead and say 523 00:24:09,040 --> 00:24:10,679 Speaker 10: that this should be a part of your portfolio. 524 00:24:10,880 --> 00:24:12,960 Speaker 6: If it was before, you're feeling pretty good about it. 525 00:24:13,000 --> 00:24:15,080 Speaker 10: If it isn't, now you're looking at that going can 526 00:24:15,080 --> 00:24:17,439 Speaker 10: I jump in here and buy something that's elevated so much? 527 00:24:17,480 --> 00:24:19,520 Speaker 10: And I think this goes back to all risk assets 528 00:24:19,520 --> 00:24:21,720 Speaker 10: are going in one direction and whether or not that 529 00:24:21,800 --> 00:24:25,360 Speaker 10: can continue. And it's difficult to jump in and say, yes, 530 00:24:25,440 --> 00:24:27,240 Speaker 10: I want to put a chunk of something in the 531 00:24:27,960 --> 00:24:30,240 Speaker 10: asset that's run that much. But you could certainly layer 532 00:24:30,280 --> 00:24:31,800 Speaker 10: in a little bit and see what happens so that 533 00:24:31,800 --> 00:24:33,160 Speaker 10: it gives you a chance to layer in a little 534 00:24:33,160 --> 00:24:36,560 Speaker 10: bit more, just because it's an opposite to larger financial systems. 535 00:24:36,920 --> 00:24:40,399 Speaker 2: Stay with us more Bloomberg surveillance coming up after this, 536 00:24:49,720 --> 00:24:52,080 Speaker 2: Sticking with Marcus Spinky shadotoutsche Bank is one of the 537 00:24:52,080 --> 00:24:54,080 Speaker 2: most polish on the street with a year rend target 538 00:24:54,080 --> 00:24:54,639 Speaker 2: of seven k. 539 00:24:54,960 --> 00:24:55,399 Speaker 7: He writes. 540 00:24:55,400 --> 00:24:58,840 Speaker 2: In our reading, however, equity positioning is only moderately overweight, 541 00:24:59,119 --> 00:25:01,480 Speaker 2: and we see gross not rate as the primary driver. 542 00:25:01,640 --> 00:25:03,680 Speaker 2: To focus on banking joints us now for more banking. 543 00:25:03,680 --> 00:25:06,000 Speaker 8: Good morning, good morning. Let's get into this. 544 00:25:06,600 --> 00:25:08,920 Speaker 2: A lot of people would look at this market and say, well, 545 00:25:08,960 --> 00:25:11,120 Speaker 2: everyone must be very, very long and overweight. 546 00:25:11,480 --> 00:25:12,320 Speaker 8: What do you read? 547 00:25:12,640 --> 00:25:13,439 Speaker 6: What are you looking at? 548 00:25:13,440 --> 00:25:14,560 Speaker 2: That's howsually something different. 549 00:25:15,200 --> 00:25:19,760 Speaker 11: So overall equity market positioning in our reading. 550 00:25:19,760 --> 00:25:21,119 Speaker 8: Is clearly overweight. 551 00:25:21,680 --> 00:25:24,280 Speaker 11: So if you think about it on a Z score basis, 552 00:25:24,480 --> 00:25:26,800 Speaker 11: normally we are in a range between minus one and 553 00:25:26,840 --> 00:25:30,080 Speaker 11: plus one, or read in round numbers, would be that 554 00:25:30,200 --> 00:25:34,560 Speaker 11: the market's position basically at plus a half foero point. 555 00:25:34,280 --> 00:25:38,320 Speaker 8: Five, So clearly overweight, but not extreme. 556 00:25:39,160 --> 00:25:41,600 Speaker 11: But the related point that I would make is that 557 00:25:41,600 --> 00:25:45,800 Speaker 11: that overweight is coming in our reading entirely from the 558 00:25:45,840 --> 00:25:50,160 Speaker 11: positioning of systematic strategies. So if you think back to April, 559 00:25:50,200 --> 00:25:53,400 Speaker 11: then well there's April the second, which is lead into 560 00:25:53,760 --> 00:25:57,919 Speaker 11: April the ninth, and you have had basically on April 561 00:25:57,960 --> 00:26:01,360 Speaker 11: the second, you know what I would describe really as 562 00:26:01,400 --> 00:26:04,040 Speaker 11: a volved shock so you have the victim the fifties, 563 00:26:04,560 --> 00:26:07,159 Speaker 11: and then you have the relent on policies on April 564 00:26:07,200 --> 00:26:11,119 Speaker 11: the ninth, and vol starts to basically come down. You 565 00:26:11,200 --> 00:26:14,600 Speaker 11: get a strong recovery, and so the trend and volve 566 00:26:14,680 --> 00:26:19,560 Speaker 11: basically coming down is pushing up by rules the positioning 567 00:26:19,600 --> 00:26:23,960 Speaker 11: of systematic strategies. I would say the much larger part 568 00:26:23,960 --> 00:26:27,240 Speaker 11: of the investor base the discretionary investors as opposed to 569 00:26:27,280 --> 00:26:30,760 Speaker 11: systematic investors, and discretionary investors you want to think about 570 00:26:30,840 --> 00:26:37,120 Speaker 11: as basically fundamentals based investors. Their positioning is basically at 571 00:26:37,240 --> 00:26:41,879 Speaker 11: neutral by early July, and in our reading continues basically 572 00:26:41,920 --> 00:26:43,240 Speaker 11: to hug neutral. 573 00:26:43,720 --> 00:26:45,359 Speaker 8: So I would argue. 574 00:26:45,040 --> 00:26:49,080 Speaker 11: That actually positioning today despite the run up in the market, 575 00:26:49,440 --> 00:26:52,959 Speaker 11: is a source of upside because if you look at 576 00:26:53,000 --> 00:26:56,959 Speaker 11: the positioning of discretionary investors and what drives it historically, 577 00:26:57,560 --> 00:26:59,280 Speaker 11: it's exactly what you would think it. 578 00:26:59,240 --> 00:27:01,360 Speaker 8: Is, which is earnings growth. 579 00:27:01,840 --> 00:27:04,680 Speaker 11: And so if you look at the relationship between discretionary 580 00:27:04,720 --> 00:27:09,400 Speaker 11: investor positioning historically and S and P five hundred earnings growth, 581 00:27:09,560 --> 00:27:13,800 Speaker 11: it's a pretty compelling relationship. There are, of course, disconnects 582 00:27:13,800 --> 00:27:17,000 Speaker 11: from time to time when other things are in focus. 583 00:27:17,119 --> 00:27:20,560 Speaker 11: And if you look at their neutral positioning today, it's 584 00:27:20,600 --> 00:27:24,800 Speaker 11: positioned for growth in the very low single digits one 585 00:27:24,920 --> 00:27:29,960 Speaker 11: two three percent. It moves around we and their positioning. 586 00:27:30,040 --> 00:27:32,399 Speaker 11: Like I said, you know, it's been this way since July. 587 00:27:33,760 --> 00:27:36,680 Speaker 11: That's when we were getting second quarter earnings which came 588 00:27:36,720 --> 00:27:39,680 Speaker 11: in at ten percent year and year growth nine and 589 00:27:39,720 --> 00:27:43,400 Speaker 11: a half percent. And if you think about what we're 590 00:27:43,440 --> 00:27:46,040 Speaker 11: going to start getting in a couple of weeks, our. 591 00:27:45,880 --> 00:27:49,240 Speaker 8: Take or preview would be that we're likely. 592 00:27:49,080 --> 00:27:52,040 Speaker 11: To get, you know, actually somewhat of a pickup in 593 00:27:52,160 --> 00:27:56,639 Speaker 11: growth in earnings growth closer to sort of eleven percent, 594 00:27:57,320 --> 00:28:00,560 Speaker 11: and so the pressure is on. I would argue for 595 00:28:00,720 --> 00:28:05,240 Speaker 11: discretionary investors to buy in basically to this recovery, where 596 00:28:05,600 --> 00:28:09,320 Speaker 11: they haven't. They've only been focused on the risks, is 597 00:28:09,359 --> 00:28:10,440 Speaker 11: what we would argue. 598 00:28:10,560 --> 00:28:12,760 Speaker 4: So this is the reason why you upgraded your target 599 00:28:12,960 --> 00:28:16,000 Speaker 4: for the S and P four year end two seven thousand, 600 00:28:16,080 --> 00:28:19,040 Speaker 4: that was earlier in September. I'm just wondering how much 601 00:28:19,040 --> 00:28:21,800 Speaker 4: you see that continuing through twenty twenty six to lead 602 00:28:21,840 --> 00:28:23,760 Speaker 4: to some of the real ball cases that we've heard 603 00:28:23,800 --> 00:28:26,639 Speaker 4: of seventy seven, seventy eight hundred on the S and p. 604 00:28:26,760 --> 00:28:27,359 Speaker 1: Five hundred. 605 00:28:27,440 --> 00:28:30,199 Speaker 11: Yeah, so you know, our target for this year end 606 00:28:30,320 --> 00:28:32,760 Speaker 11: is seven thousand, and the way I would put it is, 607 00:28:33,240 --> 00:28:37,640 Speaker 11: actually it's a reinstating of our target. At the beginning 608 00:28:37,680 --> 00:28:41,080 Speaker 11: of the year, we cut our numbers, our earnings numbers, 609 00:28:41,080 --> 00:28:43,600 Speaker 11: and our market view. We remain sort of constructive that 610 00:28:43,680 --> 00:28:46,160 Speaker 11: we would get a relent on policies and we would 611 00:28:46,200 --> 00:28:49,600 Speaker 11: go a lot higher. But at the end of the day, 612 00:28:49,760 --> 00:28:52,640 Speaker 11: I mean, I think the simple fact is, and as 613 00:28:52,760 --> 00:28:55,040 Speaker 11: some of the guests earlier were saying, basically, you know, 614 00:28:55,240 --> 00:28:56,080 Speaker 11: you just don't. 615 00:28:55,840 --> 00:28:57,520 Speaker 8: See a lot of stuff with the data. 616 00:28:57,600 --> 00:28:59,320 Speaker 11: I mean if you think about I mean, the reason 617 00:28:59,400 --> 00:29:01,880 Speaker 11: for cutting the tariffs, and they look to be having, 618 00:29:02,240 --> 00:29:04,880 Speaker 11: you know, a much more modest impact than. 619 00:29:04,760 --> 00:29:06,040 Speaker 8: We basically thought. 620 00:29:07,840 --> 00:29:10,320 Speaker 11: If I look at earnings, you know, so you started 621 00:29:10,360 --> 00:29:12,920 Speaker 11: with macro growth. I mean, we got the second quarter 622 00:29:12,960 --> 00:29:15,040 Speaker 11: of recovery. We could say the three point eight percent 623 00:29:15,160 --> 00:29:17,920 Speaker 11: is partly a recovery from you know, slow down in 624 00:29:18,000 --> 00:29:20,920 Speaker 11: Q one, but we're in Q three now and the 625 00:29:20,960 --> 00:29:25,360 Speaker 11: Atlanta FED at last read was pretty close to four percent. 626 00:29:25,640 --> 00:29:30,160 Speaker 8: So on macro growth, you know, not much is showing up. 627 00:29:30,160 --> 00:29:33,440 Speaker 11: And I would actually argue that a lot of negativity 628 00:29:33,800 --> 00:29:36,520 Speaker 11: and sort of the macro consensus that we would get, 629 00:29:37,160 --> 00:29:41,880 Speaker 11: you know, pretty significant slowing. That's that's a that's. 630 00:29:41,680 --> 00:29:43,000 Speaker 8: A positive catalyst. 631 00:29:43,080 --> 00:29:45,960 Speaker 11: And it's a mini version really of what happened in 632 00:29:46,000 --> 00:29:50,880 Speaker 11: twenty twenty three, when the macro consensus, you know, persistently 633 00:29:50,920 --> 00:29:53,800 Speaker 11: looked basically for a recession that didn't come. And so 634 00:29:53,840 --> 00:29:57,320 Speaker 11: what you've got is basically fifteen months of positive macro 635 00:29:57,480 --> 00:30:00,840 Speaker 11: data surprises, and markets are not necessarily go down when 636 00:30:00,920 --> 00:30:05,080 Speaker 11: you're getting continuously positive surprises. We're having a mini version 637 00:30:05,120 --> 00:30:07,240 Speaker 11: of the same thing. If you look at the City 638 00:30:07,280 --> 00:30:11,680 Speaker 11: Group data surprise index kind of went vertical late last week, 639 00:30:12,080 --> 00:30:17,480 Speaker 11: and so, I mean, you know, discretionary investor positioning is 640 00:30:17,680 --> 00:30:20,440 Speaker 11: exactly actually in line with the macro consensus of a 641 00:30:20,440 --> 00:30:23,040 Speaker 11: slowdown in growth and a slowdown in earnings growth. 642 00:30:23,720 --> 00:30:25,479 Speaker 8: But we're not getting those things. 643 00:30:26,800 --> 00:30:30,360 Speaker 2: This is the Bloomberg Sevendics podcast, bringing you the best 644 00:30:30,400 --> 00:30:33,720 Speaker 2: in markets, economics, angient politics. You can watch the show 645 00:30:33,760 --> 00:30:36,720 Speaker 2: live on Bloomberg TV weekday mornings from six am to 646 00:30:36,840 --> 00:30:40,600 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify 647 00:30:40,760 --> 00:30:42,960 Speaker 2: or anywhere else you listen, and as always on the 648 00:30:43,000 --> 00:30:45,720 Speaker 2: Bloomberg Terminal and the Bloomberg Business Out