1 00:00:00,600 --> 00:00:07,240 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:09,960 --> 00:00:13,840 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 3 00:00:13,920 --> 00:00:17,000 Speaker 2: weekdays at ten am Eastern on Apple Cardplay and Android 4 00:00:17,000 --> 00:00:20,120 Speaker 2: Auto with the Bloomberg Business App. Listen on demand wherever 5 00:00:20,160 --> 00:00:24,480 Speaker 2: you get your podcasts, or watch us live on YouTube. 6 00:00:25,000 --> 00:00:27,320 Speaker 3: The other main mover of this week is what's going 7 00:00:27,360 --> 00:00:29,640 Speaker 3: to be happening with the Fed. We got Jackson Hall 8 00:00:29,760 --> 00:00:33,320 Speaker 3: in a couple weeks, FED Susan Collins coming out today 9 00:00:33,320 --> 00:00:37,000 Speaker 3: saying that rakecuts could be soon if inflation keeps falling. 10 00:00:37,040 --> 00:00:40,320 Speaker 3: She says, my outlook for continued gradual reduction back to 11 00:00:40,320 --> 00:00:43,120 Speaker 3: our two percent target amid a healthy labor market. That 12 00:00:43,120 --> 00:00:44,920 Speaker 3: doesn't says to me. That does not say to me 13 00:00:44,920 --> 00:00:47,520 Speaker 3: a fifty basis point cut in September or an emergency 14 00:00:47,600 --> 00:00:50,159 Speaker 3: rate cut. So let's go to Steve Matthews Bloomberg, a 15 00:00:50,159 --> 00:00:54,240 Speaker 3: Federal Preserve reporter. Steve, are we still thinking about a 16 00:00:54,280 --> 00:00:57,560 Speaker 3: fifty basis point cut or an inter meeting cut because 17 00:00:57,560 --> 00:01:00,160 Speaker 3: I have not seen the information from the FED to 18 00:01:00,200 --> 00:01:00,800 Speaker 3: back that up. 19 00:01:01,720 --> 00:01:05,000 Speaker 4: Yeah, you are exactly correct. I mean the markets are 20 00:01:05,120 --> 00:01:08,679 Speaker 4: pricing in the likelihood of a fifty basis point cut 21 00:01:08,720 --> 00:01:12,720 Speaker 4: in September. We have heard from you know, the Kansas 22 00:01:12,760 --> 00:01:18,720 Speaker 4: City FED president last night, the Chicago FED president, Boston 23 00:01:18,800 --> 00:01:23,440 Speaker 4: FED President Richmond. None of them are saying, you know, 24 00:01:23,920 --> 00:01:26,880 Speaker 4: anything that would indicate that we're going to get fifty 25 00:01:26,920 --> 00:01:27,600 Speaker 4: basis points. 26 00:01:27,640 --> 00:01:30,000 Speaker 5: And of course there is a lot of data. 27 00:01:30,880 --> 00:01:34,080 Speaker 4: We get CPI next week, we'll have another I mean, 28 00:01:34,120 --> 00:01:37,520 Speaker 4: the meeting is not until mid September. We'll get another 29 00:01:38,040 --> 00:01:41,840 Speaker 4: jobs report, We'll get another CPI report. I mean, we'll 30 00:01:41,880 --> 00:01:44,959 Speaker 4: get two CPI reports. So there's a lot of data 31 00:01:45,000 --> 00:01:48,320 Speaker 4: that could sway things. But from what we've been hearing 32 00:01:48,360 --> 00:01:51,640 Speaker 4: so far, there's no indication that the Fed is interested. 33 00:01:51,920 --> 00:01:55,480 Speaker 4: And in fact, what Powell said Chair Powell at the 34 00:01:55,560 --> 00:02:00,720 Speaker 4: last press conference, which was just last week, was that 35 00:02:01,080 --> 00:02:03,840 Speaker 4: they were not thinking about fifty basis points, and there's 36 00:02:03,880 --> 00:02:05,840 Speaker 4: no reason to believe that that's changed. 37 00:02:06,440 --> 00:02:09,080 Speaker 1: I found that fascinating the extent to which the calls 38 00:02:09,080 --> 00:02:12,000 Speaker 1: for fifty basis points developed their own momentum. But it's 39 00:02:12,080 --> 00:02:14,480 Speaker 1: interesting now to see this survey that really sort of 40 00:02:15,240 --> 00:02:17,080 Speaker 1: puts that to rest in a certain sort of way. 41 00:02:17,120 --> 00:02:19,200 Speaker 1: But I guess I wondered if you could talk a 42 00:02:19,200 --> 00:02:22,000 Speaker 1: little bit about the remarks from the Fed recently that 43 00:02:22,000 --> 00:02:24,359 Speaker 1: they're going to be putting increased weight on the full 44 00:02:24,400 --> 00:02:27,160 Speaker 1: employment mandate. What does that mean as a practical matter, 45 00:02:27,200 --> 00:02:29,320 Speaker 1: and what should investors be looking for between now and 46 00:02:29,360 --> 00:02:29,760 Speaker 1: the meeting. 47 00:02:30,840 --> 00:02:34,800 Speaker 4: Well, what that means is really for the last two years. 48 00:02:34,840 --> 00:02:39,040 Speaker 4: I mean, inflation peaked two years ago at if you 49 00:02:39,040 --> 00:02:41,720 Speaker 4: look at CPI, it was over nine percent. By the 50 00:02:41,720 --> 00:02:45,560 Speaker 4: Fed's measure, it was over seven percent. And at that 51 00:02:45,800 --> 00:02:49,600 Speaker 4: point they were focused strictly on what can they do 52 00:02:49,680 --> 00:02:52,920 Speaker 4: to bring inflation down? And you also had the unemployment 53 00:02:53,000 --> 00:02:56,400 Speaker 4: rate under four percent. Now you have the unemployment rate 54 00:02:56,440 --> 00:03:01,000 Speaker 4: which has risen to four point three percent and has 55 00:03:01,040 --> 00:03:05,959 Speaker 4: been rising, you know, somewhat unexpectedly more than the Fed 56 00:03:06,080 --> 00:03:10,440 Speaker 4: expected anyway, And therefore they're saying, we're going to be 57 00:03:10,480 --> 00:03:12,840 Speaker 4: paying attention to both sides or our mandate. We're not 58 00:03:12,960 --> 00:03:17,040 Speaker 4: just focused on inflation, even though inflation hasn't quite come 59 00:03:17,080 --> 00:03:21,480 Speaker 4: down to two percent. So it's not just the inflation 60 00:03:22,040 --> 00:03:24,720 Speaker 4: figures it will matter. It will be the employment figures 61 00:03:24,760 --> 00:03:28,600 Speaker 4: it will matter. And those that are predicting fifty basis points. 62 00:03:28,720 --> 00:03:32,079 Speaker 4: And they change a couple of big firms, JP Morgan's 63 00:03:32,080 --> 00:03:36,560 Speaker 4: City Corp City Group changed their calls to fifty basis 64 00:03:36,560 --> 00:03:40,360 Speaker 4: points after the last jobs report, and that was because 65 00:03:40,360 --> 00:03:43,040 Speaker 4: the job's report was very disappointing. 66 00:03:43,440 --> 00:03:45,000 Speaker 5: But they're kind of making the. 67 00:03:45,000 --> 00:03:48,480 Speaker 4: Assumption that that is not just an outlier, that that's 68 00:03:48,520 --> 00:03:49,320 Speaker 4: going to continue. 69 00:03:49,440 --> 00:03:51,200 Speaker 5: So we'll see if they're right. 70 00:03:52,160 --> 00:03:54,600 Speaker 3: So to that point, we only have about a minute left. 71 00:03:54,640 --> 00:03:57,760 Speaker 3: But if the Fed wants to walk back market expectations 72 00:03:57,800 --> 00:03:59,520 Speaker 3: while also acknowledging they're going to have to cut in 73 00:03:59,560 --> 00:04:01,600 Speaker 3: the econ of he's not as great, how do they 74 00:04:01,640 --> 00:04:01,960 Speaker 3: do that. 75 00:04:03,160 --> 00:04:07,200 Speaker 4: Well, you've seen pushback from a bunch of FED presidents. 76 00:04:07,960 --> 00:04:10,720 Speaker 4: In two weeks we will get presumably it's not been 77 00:04:10,720 --> 00:04:15,720 Speaker 4: formally announced, but every year Jerome Powell speaks at Jackson Hole, 78 00:04:15,840 --> 00:04:19,120 Speaker 4: so presumably he will be speaking and in two weeks 79 00:04:19,720 --> 00:04:24,200 Speaker 4: at the king City FED conference in Jackson Hole, and 80 00:04:24,760 --> 00:04:28,000 Speaker 4: that will be a key event where he can push 81 00:04:28,080 --> 00:04:32,479 Speaker 4: back against expectations if he chooses to, and if not, 82 00:04:32,880 --> 00:04:37,000 Speaker 4: you know, you have Vice Jared Jefferson. It's like sometimes 83 00:04:37,200 --> 00:04:41,280 Speaker 4: he will come out and give speeches or TV interviews, 84 00:04:41,640 --> 00:04:42,000 Speaker 4: and you. 85 00:04:42,000 --> 00:04:45,040 Speaker 5: Also have a Chris Waller, the governor is very. 86 00:04:44,920 --> 00:04:48,720 Speaker 4: Influential and you could hear him be speaking between now 87 00:04:48,760 --> 00:04:49,479 Speaker 4: and then as well. 88 00:04:50,000 --> 00:04:53,440 Speaker 3: All right, we appreciate that, Thank you very much. Joining 89 00:04:53,480 --> 00:04:56,520 Speaker 3: us with Steve Matthews, a Bloomberg a Federal Reserve reporter. 90 00:04:56,640 --> 00:04:57,960 Speaker 3: So I have to wonder, Jen, is it just going 91 00:04:58,040 --> 00:05:00,840 Speaker 3: to be like sit tight see you and Jack? Is 92 00:05:00,880 --> 00:05:02,320 Speaker 3: that what we're dealing with here? 93 00:05:02,480 --> 00:05:04,839 Speaker 1: You say sit tight, but I mean anyone who was 94 00:05:04,880 --> 00:05:07,480 Speaker 1: on their quote unquote vacation this week will come back 95 00:05:07,520 --> 00:05:09,400 Speaker 1: to find that there had been a nasty market surprise 96 00:05:09,520 --> 00:05:09,920 Speaker 1: come back. 97 00:05:10,279 --> 00:05:12,400 Speaker 3: They came back already and there were definitely us sitting 98 00:05:12,400 --> 00:05:14,040 Speaker 3: in there desk training there at that point. 99 00:05:14,279 --> 00:05:14,640 Speaker 6: It's true. 100 00:05:14,640 --> 00:05:16,880 Speaker 3: We do get CPI next week, so let's not totally 101 00:05:16,920 --> 00:05:19,680 Speaker 3: forget about that. Plus retail earnings, which should be quite fun. 102 00:05:21,080 --> 00:05:25,000 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 103 00:05:25,080 --> 00:05:28,600 Speaker 2: weekdays at ten am Eastern on applecar Play and Android 104 00:05:28,600 --> 00:05:31,400 Speaker 2: Auto with the Bloomberg Business Act. You can also listen 105 00:05:31,520 --> 00:05:34,600 Speaker 2: live on Amazon Alexa from our flagship New York station 106 00:05:34,960 --> 00:05:37,719 Speaker 2: Just Say Alexa playing Bloomberg eleven thirty. 107 00:05:39,240 --> 00:05:41,240 Speaker 3: All right, this was quite a week in the market. 108 00:05:41,240 --> 00:05:44,679 Speaker 3: Here's some superlatives for you. The SMP has now fallen 109 00:05:44,680 --> 00:05:46,720 Speaker 3: for four weeks in a row, the longest weeks since 110 00:05:46,720 --> 00:05:49,960 Speaker 3: September of twenty twenty three, the Nasdaq one hundred is 111 00:05:49,960 --> 00:05:53,000 Speaker 3: down five weeks, the work Streek since May of twenty 112 00:05:53,040 --> 00:05:54,960 Speaker 3: twenty two. I could do this for a while, So 113 00:05:55,040 --> 00:05:57,560 Speaker 3: let's just get to someone professional here, Adam Kuhne's chief 114 00:05:57,600 --> 00:06:01,679 Speaker 3: portfolio manager. I went through a capital manager joins us. Now, hey, Adam, 115 00:06:02,240 --> 00:06:05,279 Speaker 3: what has How do you categorize Maybe this is a 116 00:06:05,279 --> 00:06:07,520 Speaker 3: better question, how do you categorize the last week in 117 00:06:07,560 --> 00:06:10,440 Speaker 3: the market chaotic? 118 00:06:11,320 --> 00:06:14,520 Speaker 7: I mean, you know, I think the market has spent 119 00:06:14,600 --> 00:06:18,560 Speaker 7: the last year or so trying to look into a 120 00:06:18,600 --> 00:06:20,800 Speaker 7: crystal ball and determine what the FED is going to do, 121 00:06:21,080 --> 00:06:23,400 Speaker 7: and they keep getting it wrong. I think this is 122 00:06:23,400 --> 00:06:26,200 Speaker 7: probably another case where a little bit of a knee 123 00:06:26,279 --> 00:06:29,680 Speaker 7: jerk reaction to just a couple of data points, and 124 00:06:29,720 --> 00:06:31,080 Speaker 7: I think we're going to need to see a lot 125 00:06:31,120 --> 00:06:33,960 Speaker 7: more for the FED to really take any action to 126 00:06:34,440 --> 00:06:36,320 Speaker 7: decrease interest rates at this point. 127 00:06:37,160 --> 00:06:40,320 Speaker 1: So what's your call on how people should be thinking 128 00:06:40,320 --> 00:06:42,720 Speaker 1: about this? Is it something where people should just sit tight, 129 00:06:42,839 --> 00:06:45,119 Speaker 1: or is there some positioning recommendations you've got? 130 00:06:46,400 --> 00:06:49,960 Speaker 7: Well, I mean, the data is still real least showing 131 00:06:50,200 --> 00:06:53,640 Speaker 7: that things are slowing and things are deteriorating to a degree. 132 00:06:53,640 --> 00:06:56,280 Speaker 7: I think just the you know, magnitude of it is 133 00:06:56,320 --> 00:07:00,520 Speaker 7: still uncertain. And really it's the point about the determining 134 00:07:00,520 --> 00:07:02,880 Speaker 7: what the FED is going to do with the data 135 00:07:02,960 --> 00:07:04,680 Speaker 7: in the next couple of months. And so I think 136 00:07:04,880 --> 00:07:08,719 Speaker 7: when you look at how to position a portfolio right now, 137 00:07:09,200 --> 00:07:11,160 Speaker 7: it is still wise to start to. 138 00:07:11,440 --> 00:07:12,840 Speaker 8: You know, position more defensively. 139 00:07:12,840 --> 00:07:17,080 Speaker 7: You've got to look at maybe not necessarily decreasing your 140 00:07:17,080 --> 00:07:21,600 Speaker 7: equity allocation, but maybe increasing to things like quality. You know, 141 00:07:21,600 --> 00:07:24,520 Speaker 7: if you're looking at the factor exposures, you're increasing quality, 142 00:07:24,800 --> 00:07:28,239 Speaker 7: You're decreasing some of your high beta growth, maybe looking 143 00:07:28,240 --> 00:07:31,880 Speaker 7: at you know, more dividend paying type stocks, and maybe 144 00:07:31,920 --> 00:07:34,120 Speaker 7: even looking at some value. So I think you want 145 00:07:34,160 --> 00:07:36,600 Speaker 7: to start to just start to tilt towards what what 146 00:07:36,720 --> 00:07:40,840 Speaker 7: most would kind of consider lower vall you know, somewhat 147 00:07:40,920 --> 00:07:45,000 Speaker 7: defensive names within an equity strategy. But ultimately, I mean, 148 00:07:45,040 --> 00:07:48,600 Speaker 7: I think the best trade right now still are long 149 00:07:48,680 --> 00:07:51,360 Speaker 7: duration bonds. I mean, no matter what the FED does, 150 00:07:52,240 --> 00:07:54,560 Speaker 7: I think when you look at, you know, what trade 151 00:07:54,640 --> 00:07:59,280 Speaker 7: has an asymmetric restor reward profile, it's still that very 152 00:07:59,440 --> 00:08:03,679 Speaker 7: seemingly boring trade. Because if the FED sits tight. Most 153 00:08:03,840 --> 00:08:07,240 Speaker 7: likely they're going to really kind of push the economy 154 00:08:07,600 --> 00:08:11,040 Speaker 7: to further downside because they've held off too long. But 155 00:08:11,040 --> 00:08:12,840 Speaker 7: then if they do start to decrease rates, you'll start 156 00:08:12,840 --> 00:08:14,920 Speaker 7: to see interest rates come down and you'll benefit from 157 00:08:14,920 --> 00:08:16,920 Speaker 7: that too. So I think those are two different ways, 158 00:08:17,000 --> 00:08:18,800 Speaker 7: whether you're in the fixed income space or whether you're 159 00:08:18,840 --> 00:08:19,600 Speaker 7: in the equity space. 160 00:08:19,800 --> 00:08:21,880 Speaker 8: How we're playing it right now, is. 161 00:08:21,840 --> 00:08:23,800 Speaker 3: It also an opportunity to buy the dip? I mean, 162 00:08:23,840 --> 00:08:25,800 Speaker 3: I mentioned that the Nastaq one hundred has its worst 163 00:08:25,840 --> 00:08:28,840 Speaker 3: streak now since May of twenty twenty two, because it's 164 00:08:28,880 --> 00:08:32,440 Speaker 3: down about five straight weeks. A truist said, look, you 165 00:08:32,440 --> 00:08:34,720 Speaker 3: know there's a double dig percentage sell off. Let's go 166 00:08:34,800 --> 00:08:37,480 Speaker 3: buy some technology sector. Let's move it to overweight. Is 167 00:08:37,480 --> 00:08:38,720 Speaker 3: that all supposed to ategy here? 168 00:08:39,840 --> 00:08:42,280 Speaker 8: I do, And it's kind of in that same category. 169 00:08:42,720 --> 00:08:46,040 Speaker 7: Is I would buy the dip, especially in tech, but 170 00:08:46,240 --> 00:08:49,719 Speaker 7: particularly in the higher quality tech. And once again it 171 00:08:49,760 --> 00:08:51,680 Speaker 7: probably is more of a you know, somewhat of a 172 00:08:51,720 --> 00:08:56,800 Speaker 7: boring trade. But looking at your names like Alphabet, Meta, Microsoft, 173 00:08:57,679 --> 00:08:58,199 Speaker 7: that's where you. 174 00:08:58,160 --> 00:09:00,199 Speaker 8: Want to buy the dip. Where I wouldn't buy the dip. 175 00:09:00,120 --> 00:09:03,080 Speaker 7: Up our names like Tesla, I'd still be cautious on 176 00:09:03,120 --> 00:09:05,800 Speaker 7: the video here, even though there is still momentum. I'd 177 00:09:05,880 --> 00:09:08,080 Speaker 7: really look at the companies that have a strong business 178 00:09:08,080 --> 00:09:12,240 Speaker 7: model that can sustain some level of growth, some level 179 00:09:12,280 --> 00:09:15,120 Speaker 7: of free cash flow, even if we do see the 180 00:09:15,200 --> 00:09:18,600 Speaker 7: economy rollover. So I think would be particular in where 181 00:09:18,640 --> 00:09:21,160 Speaker 7: you're buying the dip and not just outright buying you know, 182 00:09:21,200 --> 00:09:22,880 Speaker 7: the market or just buying the Nasdaq. 183 00:09:23,200 --> 00:09:26,400 Speaker 8: You want to find, you know, pockets of value. 184 00:09:26,640 --> 00:09:29,839 Speaker 7: Within the SMP or you know, where you're looking to 185 00:09:30,080 --> 00:09:30,760 Speaker 7: buy stocks. 186 00:09:31,120 --> 00:09:32,760 Speaker 1: Can you talk a little bit more, just to dig 187 00:09:32,800 --> 00:09:34,560 Speaker 1: in a bit to your views on in Vidio, because 188 00:09:34,600 --> 00:09:36,920 Speaker 1: I remember the last quarter when I was on this 189 00:09:37,000 --> 00:09:39,760 Speaker 1: show and we spoke so much about Invidia and they 190 00:09:39,760 --> 00:09:42,640 Speaker 1: were just such a bell weather for the AI mania, 191 00:09:42,840 --> 00:09:46,120 Speaker 1: for the enthusiasm for tech. You know there's still to come. 192 00:09:46,440 --> 00:09:48,560 Speaker 1: What is your read on what we're going to see 193 00:09:48,559 --> 00:09:49,200 Speaker 1: from them? 194 00:09:51,160 --> 00:09:54,760 Speaker 7: Yeah, I mean I think, look, big tech is starting 195 00:09:54,800 --> 00:09:59,760 Speaker 7: to decelerate their spend on things like semiconductors and so 196 00:09:59,800 --> 00:10:04,480 Speaker 7: that it will be somewhat of a weight headwind per 197 00:10:04,520 --> 00:10:07,800 Speaker 7: se to the substantial growth at Navidia scene. So I 198 00:10:07,840 --> 00:10:09,480 Speaker 7: think this earnings will be a little bit of a 199 00:10:09,480 --> 00:10:10,679 Speaker 7: tell of what we're going to see in the next 200 00:10:10,760 --> 00:10:11,480 Speaker 7: few quarters. 201 00:10:12,000 --> 00:10:14,000 Speaker 8: This quarter will probably be just fined. I don't think 202 00:10:14,000 --> 00:10:15,160 Speaker 8: you're going to see the results of that. 203 00:10:15,240 --> 00:10:19,120 Speaker 7: It's really the go for the four guidance kind of 204 00:10:19,120 --> 00:10:23,400 Speaker 7: how the conversation goes with management on what they're seeing 205 00:10:23,559 --> 00:10:25,880 Speaker 7: coming up. And I think we're going to see some 206 00:10:26,120 --> 00:10:30,840 Speaker 7: level of deceleration. And unfortunately, because of the way Navidia's 207 00:10:30,880 --> 00:10:34,920 Speaker 7: price the high valuation, that sets it up for potentially 208 00:10:35,559 --> 00:10:38,640 Speaker 7: a bigger downside. We obviously saw it with Intel, and 209 00:10:38,640 --> 00:10:40,120 Speaker 7: I think that's a little bit of a different story. 210 00:10:40,160 --> 00:10:42,800 Speaker 7: That's just a mess altogether. But the fact that you 211 00:10:42,800 --> 00:10:45,760 Speaker 7: could see a name like Intel down twenty five percent 212 00:10:46,640 --> 00:10:49,640 Speaker 7: in one day on earnings, I don't think Navidia is 213 00:10:50,360 --> 00:10:53,960 Speaker 7: at least they're not immune from that. If the growth 214 00:10:54,040 --> 00:10:57,280 Speaker 7: story shows some level of slowing, I think you can 215 00:10:57,320 --> 00:10:59,880 Speaker 7: see investors move away from that type of name really quickly. 216 00:11:00,080 --> 00:11:02,320 Speaker 3: Yeah, those ticks aren't supposed to move like that, and 217 00:11:02,320 --> 00:11:05,880 Speaker 3: that was a really intense move. So we're definitely setting 218 00:11:05,880 --> 00:11:08,679 Speaker 3: ourselves up for a very big last week of August, 219 00:11:08,679 --> 00:11:10,720 Speaker 3: that's for sure. There's been some question over the last 220 00:11:10,720 --> 00:11:12,400 Speaker 3: couple of days as to if the sell off we 221 00:11:12,440 --> 00:11:16,880 Speaker 3: saw was technical in nature, spurred buy were overbought, the 222 00:11:16,960 --> 00:11:19,520 Speaker 3: carrier trades unwinding a little bit, We triggered some technical 223 00:11:19,600 --> 00:11:22,680 Speaker 3: levels versus an actual growth scare. 224 00:11:23,320 --> 00:11:24,520 Speaker 6: Where do you come down on that? 225 00:11:24,600 --> 00:11:26,520 Speaker 3: And I asked that because it also depends on how 226 00:11:26,559 --> 00:11:28,560 Speaker 3: you look at things like bonds, how you look at 227 00:11:28,600 --> 00:11:29,760 Speaker 3: things like corporate credit. 228 00:11:31,679 --> 00:11:33,680 Speaker 7: Yeah, so I think you want to look a little 229 00:11:33,720 --> 00:11:35,880 Speaker 7: bit deeper than just what the market did. And you 230 00:11:35,960 --> 00:11:39,320 Speaker 7: got to look at what volatility did and the volatility 231 00:11:39,360 --> 00:11:41,080 Speaker 7: of that volatility. So you know, when you look at 232 00:11:41,080 --> 00:11:44,240 Speaker 7: the Vicks spiking the way it did, or if you 233 00:11:44,280 --> 00:11:45,600 Speaker 7: look at you know, if you're a bond trader, if 234 00:11:45,600 --> 00:11:47,320 Speaker 7: you're looking at the move indection, you look at interest 235 00:11:47,360 --> 00:11:51,080 Speaker 7: rate volatility. Both had significant moves to the upside. And 236 00:11:51,080 --> 00:11:53,760 Speaker 7: that tells me this was more than just a technical trade. 237 00:11:53,880 --> 00:11:56,920 Speaker 7: This was this was really people starting to become fearful 238 00:11:57,480 --> 00:12:00,480 Speaker 7: of because this market has had so much much, so 239 00:12:00,600 --> 00:12:05,319 Speaker 7: much momentum to the upside, and because valuations are somewhat stretched, 240 00:12:05,760 --> 00:12:08,360 Speaker 7: you know, it's hard to know where the bottom is, 241 00:12:08,400 --> 00:12:12,440 Speaker 7: and so investors tend to during those periods of time, 242 00:12:12,480 --> 00:12:15,600 Speaker 7: they tend to be more reactive, and I think that's 243 00:12:15,600 --> 00:12:17,679 Speaker 7: what we saw last week, was it was more that 244 00:12:17,840 --> 00:12:21,880 Speaker 7: kind of emotional reaction to Okay, is this, it is this? 245 00:12:22,000 --> 00:12:23,960 Speaker 7: And I think everyone's still a little bit scarred from 246 00:12:24,080 --> 00:12:27,320 Speaker 7: you know, seven o eight and how destructive that was. 247 00:12:27,400 --> 00:12:29,880 Speaker 7: And by no means is this that type of scenario. 248 00:12:30,280 --> 00:12:31,920 Speaker 7: But I think you see investors that are quick to 249 00:12:31,960 --> 00:12:34,760 Speaker 7: want to get out of harm's way, you know, when 250 00:12:34,800 --> 00:12:38,400 Speaker 7: they start to see the data or the markets somewhat deteriorate, 251 00:12:38,559 --> 00:12:40,120 Speaker 7: they they're quicker to get out. 252 00:12:40,160 --> 00:12:41,080 Speaker 8: I think that's what we saw. 253 00:12:41,160 --> 00:12:43,680 Speaker 7: So there's probably a technical piece of it, but I 254 00:12:43,720 --> 00:12:49,960 Speaker 7: do think it was emotional somewhat fundamental, because people are 255 00:12:50,280 --> 00:12:54,800 Speaker 7: just scared of, you know, where it could go, and 256 00:12:54,960 --> 00:12:58,400 Speaker 7: especially if the FED. You know, if the FED is 257 00:12:58,440 --> 00:13:00,760 Speaker 7: going to be slow to react, I think that will 258 00:13:00,760 --> 00:13:04,000 Speaker 7: increase the fears even more because we have seen a 259 00:13:04,040 --> 00:13:07,720 Speaker 7: FED that's somewhat you know, they were slow to increase 260 00:13:07,760 --> 00:13:10,280 Speaker 7: interest rates on the bat, you know, at the front 261 00:13:10,360 --> 00:13:12,360 Speaker 7: end of the cycle, when we start it was queer 262 00:13:12,440 --> 00:13:15,880 Speaker 7: that inflation was picking up, and they used the transitory narratives, 263 00:13:15,880 --> 00:13:18,480 Speaker 7: they were slow to increase interest rates. There is a 264 00:13:18,520 --> 00:13:21,520 Speaker 7: fear that they're going to be slow to decrease interest rates, 265 00:13:21,520 --> 00:13:22,920 Speaker 7: and maybe they wait too long. 266 00:13:23,000 --> 00:13:24,160 Speaker 8: And so that's what we're. 267 00:13:24,000 --> 00:13:26,480 Speaker 7: Starting to see, that the market trying to just digest 268 00:13:26,640 --> 00:13:29,120 Speaker 7: all of that information coming to them at once, and 269 00:13:29,160 --> 00:13:31,280 Speaker 7: that's why you saw such a big reaction just on 270 00:13:31,320 --> 00:13:32,320 Speaker 7: a couple of data voids. 271 00:13:32,720 --> 00:13:35,000 Speaker 1: Can we shift the conversation a little bit over to 272 00:13:35,080 --> 00:13:37,920 Speaker 1: corporate credit and other areas of the credit markets, because 273 00:13:38,200 --> 00:13:40,720 Speaker 1: I've been looking at this over the whole year, and 274 00:13:40,760 --> 00:13:43,760 Speaker 1: we've just seen corporate spreads grind tighter and tighter and tighter, 275 00:13:44,200 --> 00:13:46,400 Speaker 1: but also at the same time, a lot of money 276 00:13:46,440 --> 00:13:50,360 Speaker 1: go into other safety plays like mortgage backed securities. So 277 00:13:50,480 --> 00:13:52,559 Speaker 1: can you talk a little bit about what the relative 278 00:13:52,600 --> 00:13:54,319 Speaker 1: value is there though, because I was looking at a 279 00:13:54,400 --> 00:13:57,319 Speaker 1: chart earlier this week and the returns for corporate credit 280 00:13:57,400 --> 00:14:00,480 Speaker 1: have just absolutely fallen off a cliff, whereas more have 281 00:14:00,520 --> 00:14:01,240 Speaker 1: really held up. 282 00:14:03,400 --> 00:14:06,400 Speaker 7: Yeah, So I mean part of that is that's the 283 00:14:06,520 --> 00:14:08,960 Speaker 7: risk portion of where you are in the kind of 284 00:14:08,960 --> 00:14:11,719 Speaker 7: bond spectrum, whether you're in a treasury or mortgage or 285 00:14:12,200 --> 00:14:14,319 Speaker 7: just flat out credit. And I think what we've seen 286 00:14:14,600 --> 00:14:17,680 Speaker 7: what you're seeing with like you said, credit returns falling 287 00:14:17,720 --> 00:14:21,160 Speaker 7: off a cliff really is that they're not immune to 288 00:14:21,280 --> 00:14:22,920 Speaker 7: the reactions of the market like you saw in the 289 00:14:22,920 --> 00:14:27,240 Speaker 7: equity markets, especially in high yield bonds. They become quite 290 00:14:27,280 --> 00:14:30,600 Speaker 7: correlated when things are moving to the downside and volatility 291 00:14:30,600 --> 00:14:33,200 Speaker 7: picks up. So it's no different here when you're looking 292 00:14:33,200 --> 00:14:35,760 Speaker 7: at a mortgage backed security. These are still very high 293 00:14:35,840 --> 00:14:39,200 Speaker 7: quality assets. They don't have the duration moves that like 294 00:14:39,240 --> 00:14:42,240 Speaker 7: a treasury would, but they tend to be very stable 295 00:14:42,360 --> 00:14:44,840 Speaker 7: during periods like this where there is heightened volatility. So 296 00:14:44,880 --> 00:14:47,600 Speaker 7: that's why we like these in a portfolio because you 297 00:14:47,640 --> 00:14:52,080 Speaker 7: pick up that additional yield coupon over a treasury, but 298 00:14:52,240 --> 00:14:54,960 Speaker 7: you have more stability like you would see out of 299 00:14:54,960 --> 00:14:55,480 Speaker 7: a treasury. 300 00:14:55,600 --> 00:14:57,720 Speaker 6: All right, Adam, golly it there, thanks a lot. Appreciate it. 301 00:14:57,760 --> 00:15:02,680 Speaker 3: Adam Kuhn's chief portfolio manager. When Thrope Capital Management. 302 00:15:02,800 --> 00:15:06,680 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 303 00:15:06,760 --> 00:15:09,840 Speaker 2: weekdays at ten am Eastern on Affo card playing Android 304 00:15:09,880 --> 00:15:12,960 Speaker 2: Auto with the Bloomberg Business app. Listen on demand wherever 305 00:15:13,040 --> 00:15:16,160 Speaker 2: you get your podcasts, or watch us live on YouTube. 306 00:15:17,560 --> 00:15:20,680 Speaker 3: Let's get to the tech news here. So Cisco potentially 307 00:15:20,760 --> 00:15:23,960 Speaker 3: laying off thousands of workers. This is reporting from Reuters. 308 00:15:24,000 --> 00:15:26,400 Speaker 3: It could look very similar to what we heard back 309 00:15:26,480 --> 00:15:28,240 Speaker 3: earlier in this year when they laid off about five 310 00:15:28,240 --> 00:15:31,280 Speaker 3: percent of its workforce. Dan, I've stand up leaf for 311 00:15:31,360 --> 00:15:34,360 Speaker 3: us managing director and senior equity analyst at Wedbush Securities. 312 00:15:34,360 --> 00:15:38,520 Speaker 3: He's in Tokyo. He's been a real trooper, staying up 313 00:15:38,600 --> 00:15:40,400 Speaker 3: quite late. Hey Dan, what do you make of this 314 00:15:40,440 --> 00:15:42,960 Speaker 3: headline from Reiters that Cisco could lay off thousands in 315 00:15:43,000 --> 00:15:44,320 Speaker 3: their second job cut this year. 316 00:15:45,680 --> 00:15:48,680 Speaker 9: Look, I mean they continue to have struggles Somewhere's what 317 00:15:48,720 --> 00:15:52,320 Speaker 9: we see with Intel, and I think you're really seeing 318 00:15:52,360 --> 00:15:54,880 Speaker 9: almost a have and a have nots in tech and 319 00:15:54,920 --> 00:15:58,720 Speaker 9: I think Cisco is struggling and this just speaks to 320 00:15:59,080 --> 00:16:01,720 Speaker 9: some of the I think issues they're gonna have a Look, 321 00:16:01,760 --> 00:16:05,120 Speaker 9: you cannot cut your way to growth, and that's going 322 00:16:05,200 --> 00:16:07,680 Speaker 9: to be the issue for Cisco going forward. 323 00:16:09,560 --> 00:16:11,400 Speaker 1: Well, you know, just looking a little bit more at 324 00:16:11,400 --> 00:16:13,040 Speaker 1: that point that you can't cut your way to growth. 325 00:16:13,080 --> 00:16:15,200 Speaker 1: I mean, this is not obviously the only company that's 326 00:16:15,240 --> 00:16:17,960 Speaker 1: doing job cuts. I mean, what's your Alex was just 327 00:16:18,040 --> 00:16:20,200 Speaker 1: talking about this at the start of the hour. What's 328 00:16:20,240 --> 00:16:22,720 Speaker 1: your take on how what the legs are, what the 329 00:16:22,760 --> 00:16:25,040 Speaker 1: momentum is for job cuts in the industry. Are these 330 00:16:25,080 --> 00:16:27,080 Speaker 1: all one offs? Or is this something that we're going 331 00:16:27,160 --> 00:16:27,880 Speaker 1: to be seeing more of. 332 00:16:29,080 --> 00:16:31,280 Speaker 9: Look, Cisco is in the right lane going to forty 333 00:16:31,280 --> 00:16:34,080 Speaker 9: five miles an hour, and so many of the rest 334 00:16:34,120 --> 00:16:37,920 Speaker 9: of tech and AI they're in Bugatti going one hundred 335 00:16:37,960 --> 00:16:39,920 Speaker 9: miles an hour in the left lane. And I think 336 00:16:39,960 --> 00:16:42,520 Speaker 9: what's going to happen here is you'll continue to see 337 00:16:42,520 --> 00:16:44,760 Speaker 9: a layouts being Look, if you looked up disaster and 338 00:16:44,760 --> 00:16:49,160 Speaker 9: the dictionary, see Intel, look at Cisco. It's having to 339 00:16:49,160 --> 00:16:52,160 Speaker 9: have nots. There's actually a lot of growth that's happening 340 00:16:52,280 --> 00:16:54,600 Speaker 9: in tech in terms of what we're seeing from hiring, 341 00:16:55,000 --> 00:16:57,640 Speaker 9: but it's really the strong they're getting stronger. But look, 342 00:16:57,640 --> 00:17:01,040 Speaker 9: that's why Cisco did Spunk acquisition. They're gonna have to 343 00:17:01,080 --> 00:17:02,160 Speaker 9: really do that through M and A. 344 00:17:02,640 --> 00:17:05,119 Speaker 3: Well to that point, then, is this just basically companies 345 00:17:05,160 --> 00:17:07,520 Speaker 3: are diverting a lot of their spending to AI stuff, 346 00:17:08,040 --> 00:17:10,280 Speaker 3: so their other stuff is not being spent on, which 347 00:17:10,359 --> 00:17:12,920 Speaker 3: hurts guys like Cisco. You can also make an argument 348 00:17:12,960 --> 00:17:15,960 Speaker 3: that it hurt five to nine, for example, the software company, 349 00:17:15,960 --> 00:17:17,040 Speaker 3: Like is that what we're seeing? 350 00:17:18,680 --> 00:17:21,600 Speaker 9: Look, I think to some extent, book. Cisco's had struggles 351 00:17:22,160 --> 00:17:24,960 Speaker 9: for decades. I mean, it's really been on the wrong 352 00:17:25,040 --> 00:17:26,920 Speaker 9: side of trends. They're trying to get into the right 353 00:17:26,960 --> 00:17:31,440 Speaker 9: side of the trend. Book AI is disrupting sales, it's 354 00:17:31,480 --> 00:17:35,360 Speaker 9: taking spending from other areas. And that's why the strength 355 00:17:35,400 --> 00:17:38,480 Speaker 9: we see in Microsoft and now bat Amazon of course 356 00:17:38,520 --> 00:17:42,240 Speaker 9: godfather of AI, Jensen Navinni and others, you also see 357 00:17:42,240 --> 00:17:45,520 Speaker 9: weakness in others and that's why intact, it's really you're 358 00:17:45,560 --> 00:17:48,560 Speaker 9: either on one side or the other, and right now, 359 00:17:48,800 --> 00:17:50,760 Speaker 9: unfortunately Cisco's on the outside looking in. 360 00:17:51,400 --> 00:17:53,800 Speaker 1: Can you talk a little bit about the equity sell off, 361 00:17:53,840 --> 00:17:55,840 Speaker 1: and you know, I've seen some comments that this is 362 00:17:55,880 --> 00:17:58,320 Speaker 1: remove some of the froth in big tech and maybe 363 00:17:58,359 --> 00:17:59,800 Speaker 1: it's a time to get back in. What do you 364 00:17:59,800 --> 00:18:00,400 Speaker 1: make that. 365 00:18:01,840 --> 00:18:04,080 Speaker 9: I think this is a golden fine opportune. I mean 366 00:18:04,119 --> 00:18:07,560 Speaker 9: that's always been our view in terms of these macro 367 00:18:08,160 --> 00:18:12,640 Speaker 9: fear white knockle events. The AI party is still nine 368 00:18:12,680 --> 00:18:15,359 Speaker 9: pm in a part that goes to four am, and 369 00:18:15,400 --> 00:18:18,160 Speaker 9: we're gonna have scares. I'm not gonna say it's gonna 370 00:18:18,160 --> 00:18:21,680 Speaker 9: be one hundred percent smooth, but everything we're seeing fundamentally 371 00:18:22,000 --> 00:18:24,560 Speaker 9: and what we're seeing from our chests continue to show 372 00:18:24,720 --> 00:18:27,359 Speaker 9: growth is gonna be there, and I think we're gonna 373 00:18:27,359 --> 00:18:30,720 Speaker 9: see this technical market it has sea legs, but look 374 00:18:30,760 --> 00:18:33,520 Speaker 9: the bears they've been rought. You know, bears have been 375 00:18:33,880 --> 00:18:36,879 Speaker 9: and obviously has it on this and they'll continue to 376 00:18:36,920 --> 00:18:41,119 Speaker 9: come out. In terms of fears like we saw this week. 377 00:18:41,720 --> 00:18:43,280 Speaker 3: Do you think what kind of risk event do you 378 00:18:43,320 --> 00:18:44,800 Speaker 3: think in video earnings at the end of the month 379 00:18:44,840 --> 00:18:46,840 Speaker 3: is going to because I think we have Jackson Hole 380 00:18:46,880 --> 00:18:48,400 Speaker 3: in the same week, so it's gonna be a lot. 381 00:18:48,480 --> 00:18:50,720 Speaker 3: Plus it's the last week in August right into Labor 382 00:18:50,800 --> 00:18:52,800 Speaker 3: Day weekend. What risk event are we set. 383 00:18:52,640 --> 00:18:53,120 Speaker 5: Up for here? 384 00:18:54,720 --> 00:18:57,359 Speaker 9: I think that's again at the popcorn moment in terms 385 00:18:57,440 --> 00:18:59,520 Speaker 9: in video. I mean, even if you have a TSMC 386 00:18:59,640 --> 00:19:03,200 Speaker 9: in some the breadcrumbs going on to this robust demand 387 00:19:03,880 --> 00:19:06,120 Speaker 9: in terms of what we see and I think right 388 00:19:06,160 --> 00:19:09,480 Speaker 9: now the street needs to see that to just give 389 00:19:09,520 --> 00:19:14,320 Speaker 9: further creates what we saw in Microsoft Polunteer Alphabet Service 390 00:19:14,359 --> 00:19:17,679 Speaker 9: now and others in terms of monization happen AI. But 391 00:19:17,760 --> 00:19:20,840 Speaker 9: that's me one of the most anticipated earnings calls for 392 00:19:21,080 --> 00:19:24,360 Speaker 9: hearing from Jensen and Nvidio probably in the last four 393 00:19:24,400 --> 00:19:26,120 Speaker 9: or five years, So. 394 00:19:26,119 --> 00:19:28,600 Speaker 1: Let's look past that earning call and we're looking at 395 00:19:29,680 --> 00:19:32,920 Speaker 1: late September. We've had perhaps of twenty five basis point 396 00:19:32,920 --> 00:19:36,080 Speaker 1: fed Reid cut, maybe even fifty. But what we're also 397 00:19:36,119 --> 00:19:38,720 Speaker 1: going to be seeing is probably more evidence that the 398 00:19:38,760 --> 00:19:41,439 Speaker 1: economy is slowing. So what does that do to the 399 00:19:41,520 --> 00:19:43,879 Speaker 1: demand story for all of this AI? 400 00:19:46,080 --> 00:19:48,920 Speaker 9: Look but right now, I mean balance treat is healthy 401 00:19:49,160 --> 00:19:50,840 Speaker 9: is they probably have ever been. I mean if you 402 00:19:50,840 --> 00:19:53,720 Speaker 9: go back to the last decade or more and you 403 00:19:53,840 --> 00:19:56,480 Speaker 9: look at a once in a forty year cycle in 404 00:19:56,600 --> 00:20:00,439 Speaker 9: terms of AI spend, and as this sort of colm 405 00:20:00,440 --> 00:20:05,000 Speaker 9: as a Goldilock scenario plays out, we get through September, 406 00:20:05,040 --> 00:20:08,240 Speaker 9: I think twenty twenty five numbers come up in terms 407 00:20:08,240 --> 00:20:12,160 Speaker 9: of tech, and you're gonna have more and more investors 408 00:20:12,320 --> 00:20:15,040 Speaker 9: needing to play these names going into the next year 409 00:20:15,560 --> 00:20:18,200 Speaker 9: because of where the growth is. And I think that 410 00:20:18,600 --> 00:20:22,440 Speaker 9: continues to be the issue. Growth is in tech and 411 00:20:22,560 --> 00:20:25,960 Speaker 9: that's why I'd rather pay up to play these names 412 00:20:26,040 --> 00:20:27,399 Speaker 9: that continue to outperform. 413 00:20:28,359 --> 00:20:30,000 Speaker 6: Let's go to TSMC. 414 00:20:30,160 --> 00:20:35,320 Speaker 3: You mentioned that so sales sord forty five percent in July, 415 00:20:35,840 --> 00:20:39,280 Speaker 3: accelerating his pace of growth from that June quarter, and 416 00:20:39,400 --> 00:20:44,040 Speaker 3: that's all about this on demands for AI. Just walk 417 00:20:44,119 --> 00:20:45,960 Speaker 3: me through when you see these kind of numbers, like 418 00:20:46,040 --> 00:20:46,920 Speaker 3: what goes through your head? 419 00:20:48,560 --> 00:20:50,600 Speaker 9: Look, it goes back to any of the bears that 420 00:20:50,640 --> 00:20:54,000 Speaker 9: have been sitting in those caves in hibernation mode the 421 00:20:54,080 --> 00:20:57,880 Speaker 9: last eighteen months when they say AI is hype, Look 422 00:20:57,920 --> 00:21:01,000 Speaker 9: at those numbers. It goes these sacktops and then I 423 00:21:01,040 --> 00:21:03,320 Speaker 9: think we'll see the same with Nvidia. We saw Microsoft 424 00:21:03,359 --> 00:21:08,000 Speaker 9: and others. That is eye popping growth. That speaks to 425 00:21:08,200 --> 00:21:11,919 Speaker 9: the demand story that's happening. You contrast that with Cisco 426 00:21:12,000 --> 00:21:15,320 Speaker 9: and others. That's where the growth is. That just gets 427 00:21:15,440 --> 00:21:19,960 Speaker 9: further in further credence to the AI revolution playing out. 428 00:21:21,240 --> 00:21:24,240 Speaker 1: So looking further ahead, Oh, she's like going like twenty 429 00:21:24,280 --> 00:21:24,800 Speaker 1: twenty five. 430 00:21:25,080 --> 00:21:26,240 Speaker 6: No, No, you went to the ray gut. 431 00:21:26,359 --> 00:21:28,200 Speaker 1: I went to the cut. No, there's one more event 432 00:21:28,240 --> 00:21:31,320 Speaker 1: into twenty four that I would like to discuss. Presidential election. 433 00:21:32,040 --> 00:21:34,600 Speaker 1: Is this something that the AI play even cares about 434 00:21:34,840 --> 00:21:36,640 Speaker 1: or is it just kind of let's just make sure 435 00:21:36,960 --> 00:21:39,720 Speaker 1: everything goes smoothly and then we can continue with business 436 00:21:39,720 --> 00:21:40,160 Speaker 1: as normal. 437 00:21:41,480 --> 00:21:44,520 Speaker 9: Well, I think it does because ultimately if a Trump 438 00:21:45,320 --> 00:21:48,680 Speaker 9: you know, presidency, if that ultimately happened, I mean that 439 00:21:48,840 --> 00:21:50,879 Speaker 9: you could argue that would be maybe negative for the 440 00:21:50,920 --> 00:21:53,560 Speaker 9: AI trade in terms the tariffs. What that could do 441 00:21:53,760 --> 00:21:58,520 Speaker 9: China US China could tech war. A Harris ticket getting 442 00:21:58,600 --> 00:22:01,280 Speaker 9: in would probably be more bullish for tech and especially 443 00:22:01,280 --> 00:22:03,560 Speaker 9: even on tech M and A. I think it would 444 00:22:03,560 --> 00:22:06,800 Speaker 9: be probably positive there. And depending what happens a FTC 445 00:22:07,480 --> 00:22:10,760 Speaker 9: and CON So you could argue that that's something that 446 00:22:10,920 --> 00:22:12,800 Speaker 9: the mark is trying to figure out in terms of 447 00:22:12,800 --> 00:22:15,840 Speaker 9: there's Trump trade tension reversing and now what that means 448 00:22:15,880 --> 00:22:18,479 Speaker 9: A Harris in terms of AI, the biggest issue comes 449 00:22:18,520 --> 00:22:21,440 Speaker 9: down to China. Harris ultimately would probably be a little 450 00:22:21,520 --> 00:22:24,880 Speaker 9: more bullish relative to that some of what we've seen 451 00:22:25,200 --> 00:22:26,280 Speaker 9: Trump would be negative. 452 00:22:27,119 --> 00:22:30,560 Speaker 3: Before I let you go down when you take a 453 00:22:30,560 --> 00:22:32,480 Speaker 3: look at the winners, right just hit me up with 454 00:22:32,560 --> 00:22:33,679 Speaker 3: some of the losers right now. 455 00:22:35,560 --> 00:22:40,520 Speaker 9: I mean losers are Intel, m H, Cisco. I think 456 00:22:40,560 --> 00:22:43,080 Speaker 9: a lot of the legacy tech You could argue, like 457 00:22:43,880 --> 00:22:47,200 Speaker 9: even some of the IT services are probably net losers here. 458 00:22:48,280 --> 00:22:51,080 Speaker 9: And in terms of the winners, I think that's clear. 459 00:22:51,200 --> 00:22:53,879 Speaker 9: But that's why it's a having to have nots and 460 00:22:54,160 --> 00:22:56,480 Speaker 9: I think it's becoming more and more evident. And also 461 00:22:56,640 --> 00:22:59,440 Speaker 9: just could you say Ai forty times in our conference calls. 462 00:22:59,440 --> 00:23:00,880 Speaker 9: I mean you're an AII. 463 00:23:00,720 --> 00:23:04,200 Speaker 3: Player, right right, And I feel like we learned that soon. 464 00:23:04,280 --> 00:23:05,840 Speaker 3: I feel like the first quarter when in video had 465 00:23:05,840 --> 00:23:07,760 Speaker 3: that breakout. Okay, if you said the word Ai, that 466 00:23:07,920 --> 00:23:10,040 Speaker 3: was cool, and after that we changed. 467 00:23:10,240 --> 00:23:12,800 Speaker 6: Dan. Another question, do you sleep when you're there? 468 00:23:12,920 --> 00:23:15,160 Speaker 3: Because I say that because I've seen you on TV 469 00:23:15,280 --> 00:23:17,119 Speaker 3: at like six am and then I've seen you on 470 00:23:17,200 --> 00:23:19,240 Speaker 3: the clothes with me at like four pm and you're 471 00:23:19,280 --> 00:23:20,920 Speaker 3: in Tokyo and there's a time change, Like do you 472 00:23:20,960 --> 00:23:22,400 Speaker 3: sleep when you're there or what happens? 473 00:23:23,000 --> 00:23:28,080 Speaker 9: I do sleep. It's been an unusual week, given you 474 00:23:28,119 --> 00:23:31,680 Speaker 9: know what's happened here in Tokyo and across the markets. 475 00:23:31,760 --> 00:23:34,520 Speaker 9: But yeah, I do sleep, and I'll be sleeping a 476 00:23:34,560 --> 00:23:35,160 Speaker 9: lot this week. 477 00:23:35,320 --> 00:23:36,400 Speaker 6: Okay, that you will? 478 00:23:36,680 --> 00:23:37,000 Speaker 5: All right? 479 00:23:37,160 --> 00:23:40,760 Speaker 3: Damn we appreciate it. Dan, i'ves joining us from Tokyo, 480 00:23:40,960 --> 00:23:42,240 Speaker 3: joined us from Webbush. 481 00:23:42,960 --> 00:23:48,359 Speaker 2: There you're listening to the Bloomberg Intelligence Podcast. Catch us 482 00:23:48,440 --> 00:23:51,680 Speaker 2: live weekdays at ten am Eastern on applecar Play and 483 00:23:51,800 --> 00:23:54,680 Speaker 2: Android Auto with a Bloomberg Business Act. You can also 484 00:23:54,800 --> 00:23:58,280 Speaker 2: listen live on Amazon Alexa from our flagship New York station. 485 00:23:58,680 --> 00:24:01,040 Speaker 2: Just say Alexa play he Bloomberg eleven. 486 00:24:02,720 --> 00:24:05,560 Speaker 3: I'm Alex Steele alongside Jen Ryan. Paul Sweeney is non 487 00:24:05,680 --> 00:24:08,399 Speaker 3: sunning himself on the beach on this Friday. This is 488 00:24:08,400 --> 00:24:11,040 Speaker 3: Bloomberg Intelligence Radio. We bring you all the news in business, 489 00:24:11,080 --> 00:24:13,960 Speaker 3: economic and finance through our lens of our Bloomberg Intelligence folks. 490 00:24:13,960 --> 00:24:16,240 Speaker 3: They cover two thousand companies and one hundred and thirty 491 00:24:16,240 --> 00:24:19,919 Speaker 3: industries worldwide. We also love checking with Bloomberg News. They 492 00:24:19,960 --> 00:24:23,560 Speaker 3: do amazing work, in particular the Big Take. They really 493 00:24:23,640 --> 00:24:25,920 Speaker 3: go deep into stories that we need to know that 494 00:24:25,960 --> 00:24:28,000 Speaker 3: are really important, whether you're in the markets or whether 495 00:24:28,040 --> 00:24:30,399 Speaker 3: you just live in the world as a person. And 496 00:24:30,520 --> 00:24:33,600 Speaker 3: one of them really deals with the election here in 497 00:24:33,680 --> 00:24:36,040 Speaker 3: the United States, but from an economic point of view. 498 00:24:36,160 --> 00:24:39,440 Speaker 3: Shaan don and Bloomberg News senior economics writer is joining 499 00:24:39,520 --> 00:24:41,920 Speaker 3: us and this Big Take is the swing state economic 500 00:24:42,119 --> 00:24:45,520 Speaker 3: realities shaping the US election. We can talk about the 501 00:24:45,640 --> 00:24:47,960 Speaker 3: drama that's unfolded over the last month all we want, 502 00:24:48,040 --> 00:24:50,080 Speaker 3: but the economics are going to win. Sean, what did 503 00:24:50,160 --> 00:24:53,600 Speaker 3: you guys find in this exploration for the Big Take? 504 00:24:54,600 --> 00:24:57,000 Speaker 10: Yeah, look, poll after poll shows the economy is the 505 00:24:57,080 --> 00:25:00,560 Speaker 10: top issue on voters' minds, even as we're talking all 506 00:25:00,600 --> 00:25:04,119 Speaker 10: the turmoil in the candidate ranks in recent weeks, So 507 00:25:04,200 --> 00:25:06,959 Speaker 10: we took a deep dive into the seven swing states 508 00:25:07,960 --> 00:25:09,800 Speaker 10: that are really going to decide a selection and look 509 00:25:09,800 --> 00:25:13,040 Speaker 10: at the economy there, and what you find is that 510 00:25:13,119 --> 00:25:15,960 Speaker 10: as a group, that battleground economy as we call it, 511 00:25:16,720 --> 00:25:20,800 Speaker 10: has been growing more slowly than the rest of the 512 00:25:21,000 --> 00:25:27,200 Speaker 10: United States since twenty nineteen. Effectively, in other words, as 513 00:25:27,240 --> 00:25:30,200 Speaker 10: a group, it's had a slower recovery from the pandemic 514 00:25:30,520 --> 00:25:32,879 Speaker 10: recession than the rest of the United States. Now there 515 00:25:32,920 --> 00:25:36,520 Speaker 10: are outliers within that. Arizona is a much happier story 516 00:25:36,600 --> 00:25:40,720 Speaker 10: on the economy than a place like Wisconsin. But really, 517 00:25:40,800 --> 00:25:43,960 Speaker 10: when we think about what we get from voters is 518 00:25:44,000 --> 00:25:46,560 Speaker 10: that they care about the economy. We look at the 519 00:25:47,000 --> 00:25:49,439 Speaker 10: states that are going to matter most in the election, 520 00:25:49,640 --> 00:25:51,240 Speaker 10: these swing states, and we look at what's happening in 521 00:25:51,240 --> 00:25:54,320 Speaker 10: the economy there, and the reality is it's a different 522 00:25:54,480 --> 00:25:56,560 Speaker 10: economic picture than what you've seen in the rest of 523 00:25:56,600 --> 00:25:59,840 Speaker 10: the United States. And that could be an obstacle for 524 00:26:00,840 --> 00:26:03,879 Speaker 10: Kamala Harris Vice President Harris as she kind of wears 525 00:26:04,040 --> 00:26:06,320 Speaker 10: the legacy of the Biden administration in the last few 526 00:26:06,400 --> 00:26:09,920 Speaker 10: years in the economy and takes that into November. 527 00:26:10,440 --> 00:26:14,720 Speaker 1: Are there any common threads that tie these swing states 528 00:26:14,760 --> 00:26:18,640 Speaker 1: together that would explain why it is that they're struggling 529 00:26:18,760 --> 00:26:21,240 Speaker 1: so much with growth versus the rest of the nation. 530 00:26:21,440 --> 00:26:24,280 Speaker 1: I mean, they'll all have their own unique stories, but 531 00:26:24,400 --> 00:26:25,840 Speaker 1: is there anything that they've got in common. 532 00:26:27,560 --> 00:26:29,000 Speaker 10: Look, I mean the thing that they have in common 533 00:26:29,080 --> 00:26:31,359 Speaker 10: this year is simply politics, right. I mean, these are 534 00:26:31,720 --> 00:26:34,800 Speaker 10: for different reasons. These are the seven swinging states that 535 00:26:34,960 --> 00:26:38,399 Speaker 10: both sides see as the real battleground. But if you 536 00:26:38,640 --> 00:26:42,760 Speaker 10: can split the states into the seven into two different groups, 537 00:26:42,800 --> 00:26:44,639 Speaker 10: you have what are called the Blue All States, the 538 00:26:44,760 --> 00:26:48,080 Speaker 10: old industrial states, and the common theme there is a 539 00:26:48,200 --> 00:26:52,040 Speaker 10: higher dependency on manufacturing. They have not seen the big 540 00:26:52,160 --> 00:26:56,000 Speaker 10: boost in manufacturing jobs that some other states have seen 541 00:26:56,080 --> 00:26:59,760 Speaker 10: in recent years, and they've seen much lower growth as 542 00:27:00,560 --> 00:27:04,440 Speaker 10: a group. In fact, that those Blue Wall states grew 543 00:27:04,480 --> 00:27:06,200 Speaker 10: at just a third of the rate of the rest 544 00:27:06,240 --> 00:27:09,719 Speaker 10: of the United States when you count for population changes 545 00:27:09,760 --> 00:27:11,680 Speaker 10: and inflation changes and look at what we call real 546 00:27:11,760 --> 00:27:15,359 Speaker 10: GDP per capita. On the other side, you have the 547 00:27:15,480 --> 00:27:19,879 Speaker 10: Sun Belt states like Arizona and Nevada and places like 548 00:27:20,000 --> 00:27:23,439 Speaker 10: North Carolina and Georgia, which have seen a much happier 549 00:27:23,560 --> 00:27:27,320 Speaker 10: story in terms of manufacturing employment. We've seen semiconductor plants 550 00:27:27,400 --> 00:27:31,920 Speaker 10: go into Arizona. We've seen new manufacturing jobs go into 551 00:27:31,960 --> 00:27:34,359 Speaker 10: Nevada and North Carolina and Georgia, which is a big 552 00:27:34,440 --> 00:27:39,000 Speaker 10: beneficiary of big electric vehicle investments. But you see another 553 00:27:39,359 --> 00:27:42,200 Speaker 10: thing dragging on the economies. There are certainly on voters' 554 00:27:42,240 --> 00:27:45,400 Speaker 10: mines there and that is housing prices in those places 555 00:27:46,040 --> 00:27:49,880 Speaker 10: are really going for crazy. We went to Washoe County, Nevada, 556 00:27:49,920 --> 00:27:52,520 Speaker 10: which is up where Reno is and Nevada is a 557 00:27:52,600 --> 00:27:57,640 Speaker 10: state where you would spend a medium household in Nevada 558 00:27:57,720 --> 00:28:00,440 Speaker 10: would spend nineteen percent of its inc come on a 559 00:28:00,520 --> 00:28:04,159 Speaker 10: median house in twenty nineteen. That's now up close to 560 00:28:04,280 --> 00:28:07,920 Speaker 10: thirty seven percent, wow of m And that's just a 561 00:28:08,080 --> 00:28:13,200 Speaker 10: huge change in people's realities. Rents are higher, it's just 562 00:28:13,480 --> 00:28:16,880 Speaker 10: a whole different level of problems. Those are very different 563 00:28:17,320 --> 00:28:19,600 Speaker 10: from what you see in the Blue Wall states. But 564 00:28:19,760 --> 00:28:21,719 Speaker 10: the you know, again, these are states that have been 565 00:28:21,720 --> 00:28:24,000 Speaker 10: brought together and that really are a group only because 566 00:28:24,160 --> 00:28:25,840 Speaker 10: they're the ones that matter in this election. 567 00:28:26,800 --> 00:28:29,480 Speaker 6: So Georgia in particular, it's focused there. For a second. 568 00:28:29,560 --> 00:28:31,560 Speaker 3: You write in the article that nominal GDP has grown 569 00:28:31,560 --> 00:28:34,000 Speaker 3: almost twenty five percent since twenty nineteen, but in real 570 00:28:34,040 --> 00:28:36,399 Speaker 3: per capita terms, the economy has grown by just two 571 00:28:36,440 --> 00:28:39,800 Speaker 3: and a half percent in that time. Now, some of 572 00:28:39,960 --> 00:28:42,680 Speaker 3: the things like the Chips Act, Infrastructure Act, even the 573 00:28:42,760 --> 00:28:46,160 Speaker 3: IRA a lot of like Georgia, for example, is getting 574 00:28:46,240 --> 00:28:49,440 Speaker 3: some of that money. Is that like a good thing 575 00:28:49,600 --> 00:28:51,479 Speaker 3: or bad thing short term because it's going to bring 576 00:28:51,560 --> 00:28:54,120 Speaker 3: more people to the state, But is that helpful for 577 00:28:54,240 --> 00:28:56,040 Speaker 3: those that actually still live there now? 578 00:28:57,880 --> 00:28:59,840 Speaker 10: Well, I think the way to think about what's happening 579 00:28:59,880 --> 00:29:02,480 Speaker 10: in Georgia is there's a bigger pie in terms of 580 00:29:02,520 --> 00:29:07,040 Speaker 10: the GDP in Georgia, but there's more people to share 581 00:29:07,160 --> 00:29:11,280 Speaker 10: that pie, which means that the slice that everyone's getting 582 00:29:11,920 --> 00:29:14,120 Speaker 10: is only a tiny bit bigger two and a half 583 00:29:14,200 --> 00:29:17,880 Speaker 10: percent bigger than it was in twenty nineteen. And you 584 00:29:18,000 --> 00:29:20,880 Speaker 10: see when you go to a place like Atlanta and 585 00:29:20,960 --> 00:29:23,880 Speaker 10: drive through cyburbs, you see, you know, the housing price 586 00:29:24,680 --> 00:29:27,520 Speaker 10: issues that I was talking about with Nevada, but you 587 00:29:27,720 --> 00:29:30,760 Speaker 10: also see any traffic, you see other issues. And I 588 00:29:30,840 --> 00:29:33,080 Speaker 10: went out to Jackson County, which is on the kind 589 00:29:33,120 --> 00:29:36,720 Speaker 10: of eastern fringe of Metro Atlanta. It's one of the 590 00:29:36,800 --> 00:29:40,320 Speaker 10: fastest growing counties, both in terms of population and in 591 00:29:40,440 --> 00:29:41,600 Speaker 10: terms of economic growth. 592 00:29:42,080 --> 00:29:42,640 Speaker 2: In the county. 593 00:29:43,040 --> 00:29:45,440 Speaker 10: It used to be a largely rural place. It's gotten 594 00:29:45,480 --> 00:29:50,320 Speaker 10: a big battery plant, Korean owned battery plant that's moved 595 00:29:50,360 --> 00:29:55,960 Speaker 10: in that's making batteries for Ford and Volkswagen. You but 596 00:29:56,160 --> 00:29:57,760 Speaker 10: you talk to you know, I sat down with a 597 00:29:57,800 --> 00:30:00,640 Speaker 10: guy called Jim Shaw. He's a former banker who runs 598 00:30:00,680 --> 00:30:03,360 Speaker 10: the local Chamber of Commerce and does economic development for 599 00:30:03,440 --> 00:30:04,720 Speaker 10: the county, and he says, you know, we're kind of 600 00:30:04,800 --> 00:30:09,280 Speaker 10: chasing our tails here because we're creating jobs in this county, 601 00:30:09,720 --> 00:30:13,160 Speaker 10: not for people who are here, but for people who 602 00:30:13,640 --> 00:30:17,960 Speaker 10: need to come here to fill those jobs. And there's 603 00:30:18,040 --> 00:30:22,640 Speaker 10: a lot of resentment locally about that growth. What's happening 604 00:30:22,680 --> 00:30:25,719 Speaker 10: with housing prices, what's happening with traffic. And you're starting 605 00:30:25,760 --> 00:30:30,000 Speaker 10: to see local communities put the pap the brakes, and 606 00:30:30,200 --> 00:30:33,720 Speaker 10: and and put new residential developments on hold, and and 607 00:30:33,960 --> 00:30:36,160 Speaker 10: and and take a pause really to kind of think 608 00:30:36,200 --> 00:30:39,440 Speaker 10: about the type of growth that they want. You know, 609 00:30:39,680 --> 00:30:43,479 Speaker 10: that's a that's in some ways that's a great position 610 00:30:43,600 --> 00:30:46,200 Speaker 10: to be in. You've got this incredible growth, but you're 611 00:30:46,200 --> 00:30:49,200 Speaker 10: starting to see a real kind of you know, some 612 00:30:49,360 --> 00:30:53,080 Speaker 10: real questions creep in about on the ground in these 613 00:30:53,160 --> 00:30:54,440 Speaker 10: places about that growth. 614 00:30:55,400 --> 00:30:57,320 Speaker 6: Hey, John, we really appreciate it. Thank you so much. 615 00:30:57,360 --> 00:31:00,920 Speaker 3: Shawn Don and Bloomberg News senior economics writer joining us 616 00:31:01,000 --> 00:31:02,680 Speaker 3: on The Big Take, and you can read more of 617 00:31:02,800 --> 00:31:05,360 Speaker 3: this story on the Bloomberg and at Bloomberg dot com 618 00:31:05,880 --> 00:31:07,360 Speaker 3: slash Big Take. 619 00:31:09,080 --> 00:31:12,920 Speaker 2: You're listening to the Bloomberg Intelligence Podcast. Catch us live 620 00:31:13,040 --> 00:31:16,560 Speaker 2: weekdays at ten am Eastern on applecar Play and Android 621 00:31:16,600 --> 00:31:19,320 Speaker 2: Auto with the Bloomberg Business App. You can also listen 622 00:31:19,480 --> 00:31:22,560 Speaker 2: live on Amazon Alexa from our flagship New York station, 623 00:31:22,960 --> 00:31:25,680 Speaker 2: Just Say Alexa Play Bloomberg eleven. 624 00:31:25,440 --> 00:31:29,720 Speaker 3: Thirty from Alex Stee alongside Jen Ryan. This is Bloomberg 625 00:31:29,760 --> 00:31:32,880 Speaker 3: Intelligence Radio. We bring you the top news and business, 626 00:31:33,000 --> 00:31:35,640 Speaker 3: economics and finance through our lens of our Bloomberg Intelligence Team. 627 00:31:35,680 --> 00:31:37,880 Speaker 3: They cover two thousand companies and one hundred and thirty 628 00:31:37,920 --> 00:31:41,280 Speaker 3: industries worldwide. Paul Sweeny is off setting himself. It's actually 629 00:31:41,280 --> 00:31:43,680 Speaker 3: a little lighter out. I don't think it's raining, and 630 00:31:43,840 --> 00:31:44,520 Speaker 3: he is at the beach. 631 00:31:44,680 --> 00:31:46,240 Speaker 1: I don't know, I can't really see some blue sky 632 00:31:46,320 --> 00:31:48,600 Speaker 1: from here, but I don't think I could anyway, Yeah, fair. 633 00:31:48,520 --> 00:31:49,800 Speaker 3: Enough, right, Well, Jen and I are here. We are 634 00:31:49,840 --> 00:31:52,880 Speaker 3: holding down the Ford. It was a week, obviously, a 635 00:31:52,920 --> 00:31:55,760 Speaker 3: week that was. Here's some stats for you. The S 636 00:31:55,880 --> 00:31:58,560 Speaker 3: and p's falling now for four stree week's longest streaks 637 00:31:58,560 --> 00:32:01,400 Speaker 3: and September twenty twenty three nas Tek one hundred down 638 00:32:01,480 --> 00:32:03,880 Speaker 3: five weeks worth streak since May of twenty twenty two. 639 00:32:03,960 --> 00:32:06,080 Speaker 3: A real divide happening within tech and the have and 640 00:32:06,160 --> 00:32:08,960 Speaker 3: have nots Ack of my Technology the best performing stock 641 00:32:09,000 --> 00:32:10,800 Speaker 3: on the S and P up by almost ten percent, 642 00:32:11,160 --> 00:32:14,000 Speaker 3: and Intel one of the worst, down by about four percent. 643 00:32:14,080 --> 00:32:17,120 Speaker 3: Obviously Cisco and the crosshairs there with those reports of 644 00:32:17,240 --> 00:32:20,480 Speaker 3: layoffs of thousands in a second job round, What do 645 00:32:20,520 --> 00:32:20,680 Speaker 3: you do? 646 00:32:21,080 --> 00:32:22,120 Speaker 6: How much risk do you take on? 647 00:32:22,520 --> 00:32:26,160 Speaker 3: Erica Mashmeyer is portfolio manager at Columbia thread Needle Investments. 648 00:32:26,400 --> 00:32:29,880 Speaker 3: She joins US now from Chicago, Illinois. Erica, how much 649 00:32:30,040 --> 00:32:31,760 Speaker 3: risk should one have on right now? 650 00:32:34,200 --> 00:32:37,440 Speaker 11: I think we are still in a place where you 651 00:32:37,760 --> 00:32:43,480 Speaker 11: benefit from having a relatively balanced portfolio, profitable companies with 652 00:32:43,600 --> 00:32:49,000 Speaker 11: good competitive positions growing. That said, historically, when the VIX 653 00:32:49,040 --> 00:32:51,200 Speaker 11: has been high, it has been a good time to 654 00:32:51,320 --> 00:32:54,800 Speaker 11: start to layer on risk, and I think you can 655 00:32:54,960 --> 00:32:57,120 Speaker 11: do that in a couple of different ways, right through 656 00:32:57,600 --> 00:33:02,480 Speaker 11: your growth company's software company is that have been more 657 00:33:02,520 --> 00:33:05,960 Speaker 11: ignored at the expense of AI hardware, and then also 658 00:33:06,160 --> 00:33:09,480 Speaker 11: with more cyclical construction housing related names. 659 00:33:10,080 --> 00:33:13,600 Speaker 1: But before this market craziness started this week, I mean, 660 00:33:13,960 --> 00:33:16,960 Speaker 1: the market was already looking really quite frothy. So it's 661 00:33:17,040 --> 00:33:20,040 Speaker 1: been a dip for sure, but it hasn't been enough 662 00:33:20,120 --> 00:33:22,120 Speaker 1: of a dip that some of that froth has been 663 00:33:22,200 --> 00:33:24,920 Speaker 1: removed and there's really some decent room for people to 664 00:33:24,960 --> 00:33:25,240 Speaker 1: get in. 665 00:33:27,080 --> 00:33:27,840 Speaker 5: Well. I think the. 666 00:33:28,000 --> 00:33:32,640 Speaker 11: Froth was really more on the megacaps, right, the part 667 00:33:32,680 --> 00:33:36,440 Speaker 11: of the market that admittedly is the biggest part of 668 00:33:36,520 --> 00:33:39,880 Speaker 11: the market, and it was larger than many countries. 669 00:33:39,800 --> 00:33:44,040 Speaker 12: But it was a pretty bifurcated market. There was an 670 00:33:44,120 --> 00:33:48,320 Speaker 12: easy trade, right The easy trade was by US large 671 00:33:48,400 --> 00:33:53,560 Speaker 12: cap tech and short everything else out there. We started 672 00:33:53,600 --> 00:33:58,320 Speaker 12: to see that dispersion pick up last quarter, which I 673 00:33:58,360 --> 00:34:03,160 Speaker 12: think is fair because we had earnings potentially decelerating for 674 00:34:03,280 --> 00:34:05,560 Speaker 12: that group. I think a lot of the outperformance was 675 00:34:05,680 --> 00:34:09,600 Speaker 12: fair because you know, the large cap stocks were growing faster. 676 00:34:10,120 --> 00:34:13,520 Speaker 11: But there are more more cracks in that, and I 677 00:34:13,640 --> 00:34:16,800 Speaker 11: think that there are plenty of areas that don't have 678 00:34:17,000 --> 00:34:17,560 Speaker 11: froth at all. 679 00:34:18,880 --> 00:34:21,760 Speaker 6: What do you buy then if there's the there's no froth. 680 00:34:21,880 --> 00:34:22,880 Speaker 6: We kind of been through it. 681 00:34:24,400 --> 00:34:27,920 Speaker 3: Maybe the rotation into say Smiths are still still up 682 00:34:27,960 --> 00:34:30,279 Speaker 3: for grabs. I mean the Russell has underperformed and then 683 00:34:30,400 --> 00:34:32,480 Speaker 3: Slash outperformed when we had to sell off over the 684 00:34:32,560 --> 00:34:33,439 Speaker 3: last couple of days. 685 00:34:33,440 --> 00:34:37,960 Speaker 11: But nonetheless, yeah, I mean I think, right, the valuation 686 00:34:39,000 --> 00:34:42,879 Speaker 11: advantage for for small caps has you know, small mid 687 00:34:43,120 --> 00:34:45,200 Speaker 11: has has been there for a while, right, the table's 688 00:34:45,200 --> 00:34:48,319 Speaker 11: been set for a while, uh for for for there 689 00:34:48,360 --> 00:34:49,279 Speaker 11: to be a rotation there. 690 00:34:49,880 --> 00:34:51,400 Speaker 12: It hasn't happened for good reasons. 691 00:34:51,640 --> 00:34:51,759 Speaker 5: Right. 692 00:34:51,800 --> 00:34:54,920 Speaker 11: You need, I think a macro to be study, and 693 00:34:55,000 --> 00:34:57,839 Speaker 11: you need the earnings growth. We have been living through 694 00:34:57,920 --> 00:35:01,120 Speaker 11: this choppier macro. I you know, from our team has 695 00:35:01,160 --> 00:35:04,720 Speaker 11: been paying attention to the economy from a rolling recession 696 00:35:04,880 --> 00:35:09,320 Speaker 11: recession perspective ever since we had COVID which led to 697 00:35:09,400 --> 00:35:12,600 Speaker 11: big booms and bus So you know, from here we 698 00:35:12,719 --> 00:35:16,240 Speaker 11: think that in small mids software there are some interesting, 699 00:35:16,880 --> 00:35:20,799 Speaker 11: interesting names. You know, that's a group that has been 700 00:35:21,280 --> 00:35:25,960 Speaker 11: more ignored at the expense of AI hardware areas. 701 00:35:26,880 --> 00:35:29,000 Speaker 12: They've you know, admittedly. 702 00:35:28,640 --> 00:35:33,960 Speaker 11: Had some weaker some some weaker sales cycles because the 703 00:35:34,719 --> 00:35:36,759 Speaker 11: CFOs of the world are looking to get rid of 704 00:35:36,840 --> 00:35:39,759 Speaker 11: software at this point and not add more. But I 705 00:35:39,840 --> 00:35:41,840 Speaker 11: think that we're going to hit the point where, you know, 706 00:35:41,880 --> 00:35:43,479 Speaker 11: there are a lot of these companies that are adding 707 00:35:43,560 --> 00:35:47,000 Speaker 11: real value and growing. You know, we own Zeta Global, 708 00:35:47,080 --> 00:35:50,400 Speaker 11: which is a small cap stock that is actually up 709 00:35:50,680 --> 00:35:52,600 Speaker 11: over one hundred and sixty percent year to date, but 710 00:35:52,840 --> 00:35:57,279 Speaker 11: is still relatively cheap versus other software names. I think 711 00:35:57,320 --> 00:36:01,760 Speaker 11: at the same time, you have pretty much anything short 712 00:36:01,840 --> 00:36:08,879 Speaker 11: cycle manufacturing, industrial construction that has a lot of opportunity 713 00:36:09,040 --> 00:36:13,160 Speaker 11: and potential for upside as we start to get rate cuts. 714 00:36:13,840 --> 00:36:17,560 Speaker 11: We own top Build, which is a company that is 715 00:36:17,640 --> 00:36:23,760 Speaker 11: an insulation insulation distributor and supplier, and they just reported 716 00:36:23,840 --> 00:36:30,080 Speaker 11: this week and still a relatively inexpensive stock. They missed slightly, 717 00:36:30,480 --> 00:36:35,239 Speaker 11: gave a slightly worse guidance range, but stock got hit. 718 00:36:35,360 --> 00:36:36,520 Speaker 6: But this is one they'll. 719 00:36:36,360 --> 00:36:40,640 Speaker 11: Continue to take share, executing very well, and as soon 720 00:36:40,719 --> 00:36:43,160 Speaker 11: as we get rate cuts, some of these projects that 721 00:36:43,239 --> 00:36:46,720 Speaker 11: have been delayed will will start to actually happen. 722 00:36:47,280 --> 00:36:49,359 Speaker 1: You know, I did want to ask you about rate 723 00:36:49,400 --> 00:36:51,560 Speaker 1: cuts because you're mentioning a number of sectors that have 724 00:36:51,719 --> 00:36:55,319 Speaker 1: been overlooked and could benefit from rate cuts. But how 725 00:36:55,400 --> 00:36:57,640 Speaker 1: big a rate cut do they need at this point? 726 00:36:58,120 --> 00:37:00,560 Speaker 1: Is twenty five basis points going to be the start 727 00:37:00,600 --> 00:37:03,400 Speaker 1: of a firing gun that gets things moving again? Or 728 00:37:03,480 --> 00:37:06,719 Speaker 1: do they need the fifty basis points that some big 729 00:37:06,840 --> 00:37:07,920 Speaker 1: players have been calling for. 730 00:37:09,960 --> 00:37:13,399 Speaker 11: I don't think that we need a fifty basis point cut, 731 00:37:13,520 --> 00:37:16,960 Speaker 11: and frankly, I think it's low probability, and I think 732 00:37:17,000 --> 00:37:19,480 Speaker 11: if that happened, it would be more likely to spook. 733 00:37:19,320 --> 00:37:20,840 Speaker 12: The market from a macro perspective. 734 00:37:20,960 --> 00:37:21,080 Speaker 2: Right. 735 00:37:21,120 --> 00:37:24,239 Speaker 11: The Fed only does that when you have something really 736 00:37:24,360 --> 00:37:25,880 Speaker 11: really wrong, and so I think that would be a 737 00:37:25,960 --> 00:37:29,799 Speaker 11: sign that the economy is broken, which I just don't 738 00:37:30,040 --> 00:37:32,600 Speaker 11: think that it is. We haven't gotten that sign right 739 00:37:32,640 --> 00:37:36,320 Speaker 11: where everything we see says that we are in a downturn, 740 00:37:36,400 --> 00:37:39,120 Speaker 11: we're in a period of slow growth, we're reacting to 741 00:37:40,360 --> 00:37:44,440 Speaker 11: rates that are higher. All very normal things and essentially 742 00:37:44,480 --> 00:37:47,279 Speaker 11: what the Fed intended to do with higher rates. There's 743 00:37:47,320 --> 00:37:49,440 Speaker 11: nothing that's saying that, Okay, this is a disaster, we 744 00:37:49,480 --> 00:37:51,480 Speaker 11: need to cut fifty basis points to get things moving. 745 00:37:51,800 --> 00:37:53,919 Speaker 11: I think if we get a twenty five basis point cut, 746 00:37:54,239 --> 00:37:57,200 Speaker 11: and the path is clear. I think it's the path 747 00:37:57,280 --> 00:37:59,359 Speaker 11: that matters more than the magnitude. 748 00:38:00,160 --> 00:38:01,920 Speaker 6: To the inside. Erica, I know it's been a very 749 00:38:02,080 --> 00:38:02,839 Speaker 6: long week. 750 00:38:03,200 --> 00:38:07,400 Speaker 3: Eric Mshmeyer, portfolio manager at Columbia Threadneedle Investments, giving us 751 00:38:07,440 --> 00:38:10,280 Speaker 3: her outlook on this very confusing market. 752 00:38:10,760 --> 00:38:15,279 Speaker 2: This is the Bloomberg Intelligence Podcast, available on apples, Spotify, 753 00:38:15,480 --> 00:38:18,640 Speaker 2: and anywhere else you'll get your podcasts. Listen live each 754 00:38:18,719 --> 00:38:21,879 Speaker 2: weekday ten am to noon Eastern on Bloomberg dot com, 755 00:38:22,200 --> 00:38:25,560 Speaker 2: the iHeartRadio app tune In, and the Bloomberg Business app. 756 00:38:25,719 --> 00:38:28,680 Speaker 2: You can also watch us live every weekday on YouTube 757 00:38:28,920 --> 00:38:30,760 Speaker 2: and always on the Bloomberg terminal.