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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg

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Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern

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Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: Joining us now from Torno. David Rosenberg writing his important note.

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Speaker 3: Into the weekend.

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Speaker 4: David, there just seems to be a vacillation. You're almost

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Speaker 4: a two part discussion of sustained higher inflation. Look at

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Speaker 4: grocery prices or the idea of a disinflationary tendency if

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Speaker 4: real estate levels out, do we maintain in Rosenberg disinflationary tendency?

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Speaker 5: Well, just arithmetically, Tom, if real estate flattens out, And

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Speaker 5: actually I think the risk is at real estate price

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Speaker 5: are going to be going down as opposed to up.

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Speaker 5: When you look at the latest stunt sold inventory numbers

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Speaker 5: in the new and existing market, you know, when you

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Speaker 5: look at the CPI, you know a third of the

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Speaker 5: index is related to residential real estate. Forty percent of

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Speaker 5: the core is related to residential real estate. So it

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Speaker 5: is actually very important, and I think it's going to

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Speaker 5: act as a very powerful antidote to the inflation we're

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Speaker 5: going to get on the goods prices side from all

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Speaker 5: the tariffs.

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Speaker 6: Dick, and I'm very curious as you look ahead to

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Speaker 6: the next week, and this is an extremely pivotal week

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Speaker 6: in terms of economic data, in terms of earnings. We've

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Speaker 6: got the FED meeting as well. Of course, Friday of

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Speaker 6: next week the deadline of that extension of the ninety

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Speaker 6: day pause that President Trump put in place on those

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Speaker 6: reciprocal tears. What are you watching for as that week unfolds?

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Speaker 6: What's going to give you the best sense here of

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Speaker 6: the relative health of the US economy?

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Speaker 5: And light of all I just mentioned, the most important

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Speaker 5: thing next week is going to be the employment report,

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Speaker 5: because that is going to tell all the tail as

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Speaker 5: to you know, whether the FED is going to start

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Speaker 5: to rekindle the rate cuts at the September meeting. That's

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Speaker 5: really what we're waiting for. If we see cracks emerge

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Speaker 5: in the labor market, and we see a loosening up

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Speaker 5: in a labor market, the FED is going to feel

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Speaker 5: quite a bit more relaxed that the goods inflation that

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Speaker 5: we are seeing on the terrifile. If it doesn't feed

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Speaker 5: into wages. That's going to be a comforting sign. So

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Speaker 5: I'd say that the employment number in its entirety, you know,

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Speaker 5: the headline, the revisions, what the unemployment rate does, the

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Speaker 5: participation rate, but also keep a fermoil on the wage number,

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Speaker 5: because what's really important here, and everybody's waxing on about

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Speaker 5: how great the US economy is doing, I think it's

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Speaker 5: rather mixed, is that real work based income and inflation

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Speaker 5: adjusted terms is actually contracting. And that is going to

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Speaker 5: be where you know, the from the tariffs is going

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Speaker 5: to hit the wall on the labor market. So nothing,

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Speaker 5: we know. The Fed's not going to do anything. I

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Speaker 5: think they'll be they'll keep their cards close to their

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Speaker 5: vest in terms of any guidance. The key is really

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Speaker 5: going to be the labor market. That's what we're waiting

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Speaker 5: for in terms of what it's going to mean for

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Speaker 5: interest rates over the next few months.

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Speaker 4: Well, then, David, on that real way analysis, the inflation

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Speaker 4: adjusted way analysis, Let's go to eggs.

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Speaker 2: Lisa Mateo is going to Costco in the next.

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Speaker 4: Twelve eighteen hours to buy forty two dozen eggs just

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Speaker 4: to get through the week. David, I'm looking at grocery

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Speaker 4: prices it ain't happen.

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Speaker 2: They're not Grocery prices are not coming down.

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Speaker 5: Well, that's actually a global phenomenon. I mean, the fact

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Speaker 5: that agricultural prices are going up so much is global

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Speaker 5: in nature and is actually more related to climate change

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Speaker 5: issues and the dramatic shifts and weather patterns than it

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Speaker 5: has to really do with the tariffs. It's not just

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Speaker 5: it's not just food, Tom. You know you've got furniture appliances.

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Speaker 5: I think you'll start to start seeing it in the

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Speaker 5: auto sector. Like goods prices in general, the next few

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Speaker 5: months are going to be rising. The question is the

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Speaker 5: persistence and as I said earlier, the extent to which

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Speaker 5: the service sector and we mentioned real estate. The question

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Speaker 5: will be the extent to which the service sector is

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Speaker 5: going to act as a offset towards seeing in the

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Speaker 5: goods part. But it's not just eggs. You're seeing more

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Speaker 5: broadly based pressure coming on goods. You mentioned food. That's

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Speaker 5: weather patterns for the most part, and disruptions from climate change.

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Speaker 5: But the tariffs haven't had an impact yet. A big

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Speaker 5: impact on the good side that's coming in the next

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Speaker 5: few months. I'm not convinced it's going to be sustainable,

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Speaker 5: but more on top of that, And it came down

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Speaker 5: to the earlier question. Sixty percent of the CPI is

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Speaker 5: in services, okay, and service sector is disinflating. The question

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Speaker 5: is you're going to win that tug of war?

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Speaker 4: I mean, Dave, you had that brilliant question earlier. Why

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Speaker 4: did you get the last question, mister Rosenberg?

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Speaker 6: David, I've been watching the closed circuit television from the

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Speaker 6: Eckles Building looking at FED Chair Jerome Powell with his

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Speaker 6: hard hat on and the President with his hard hat on.

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Speaker 6: And I was reminded Tom, actually at the time we

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Speaker 6: were in London touring the yet unfinished Bloomberg European Headquarters

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Speaker 6: and you and I don hard hats. I'm going to

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Speaker 6: dig up that photo for our YouTube viewers because it

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Speaker 6: looks very similar what we're seeing here on. But David,

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Speaker 6: to that point, as you watched those theatrics unfold yesterday,

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Speaker 6: does it signal to you the end of this, you know,

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Speaker 6: very confrontational ballet we've seen from the President and the

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Speaker 6: FED Chair. Do you think that this story the effort

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Speaker 6: on his part to put the FED Chair in a

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Speaker 6: difficult position, to say the least, talk about firing him

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Speaker 6: getting him out of that position has ended as a

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Speaker 6: result of that grand tour that we saw of the

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Speaker 6: Eckles Building yesterday afternoon.

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Speaker 5: Well, I mean President Trump did say that he's no

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Speaker 5: longer in a hurry to fire Trump, but clearly he's

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Speaker 5: still exerting all the pressure publicly possible to get the

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Speaker 5: Fed to cut interest rates. I would say prematurely. I

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Speaker 5: think the Fed will cut rates, but at the right time,

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Speaker 5: the President seems to be in a very big hurry.

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Speaker 5: And you know what's troubling me is less the President

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Speaker 5: and more that you're seeing all corners of the White

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Speaker 5: House coming out and radically pressuring j. Powell to cut rates.

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Speaker 5: We've got to keep in mind that J. Powell has

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Speaker 5: the most powerful vote, but it's just one vote. I mean,

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Speaker 5: it's the committee, it's the FMC that sets interest rates.

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Speaker 5: I was more troubled actually by an interview that Kevin

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Speaker 5: worsh gave yesterday where he said that he would cut

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Speaker 5: rates immediately, starting at the at the next MC meeting,

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Speaker 5: you know, next week. And I'm just you know, I

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Speaker 5: cannot believe that you would cut rates. The market's not

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Speaker 5: priced for it, and right now it's it seems unnecessary.

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Speaker 5: So I'm still concerned about who the next chairman is

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Speaker 5: going to be, and how politically influenced that chairman is

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Speaker 5: going to be, and how that is going to create

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Speaker 5: instability on the FOMC. Like what if there's a mutiny

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Speaker 5: on the FED because the need is an institution, right,

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Speaker 5: it's not one person, and they're going to defend their

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Speaker 5: independence vigorously.

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Speaker 4: Well said David, and I really want to emphasize, folks,

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Speaker 4: when he gave you your civics lesson there, it's not

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Speaker 4: just the chairman.

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Speaker 2: Ala Green Spans standing on the podium of years ago.

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Speaker 4: David Rosenberg, great brief on a Friday, Thank you so much.

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Speaker 4: Up in Toronto with the first Place Toronto Blue Jays

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Speaker 4: David Rosenberg.

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Speaker 1: This morning, you're listening to the Bloomberg Surveillance Podcast. Catch

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Speaker 1: us live weekday afternoons from seven to ten am. E's

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Speaker 1: durn Listen on Applecarplay and Android Otto with the Bloomberg

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Speaker 1: Business app, or watch us live on YouTube.

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Speaker 4: We now turn to the media and it's really an

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Speaker 4: auspicious day to have Brian Weezer with us. Madison and

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Speaker 4: Wall We welcome all over you in your commute across

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Speaker 4: the nation. I noticed, Brian the Paramount comes in and

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Speaker 4: I'm talking here without notes folks, that they began calling

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Speaker 4: WBZTV in Boston.

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Speaker 2: They took out six engineers, six photographers.

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Speaker 4: Brian, is that twenty twenty six for the media business,

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Speaker 4: where all the deck chairs move on the Titanic and

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Speaker 4: they just start cutting jobs.

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Speaker 7: I think that's accurate. You know.

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Speaker 8: I think that the ongoing cost cuts are the apath forward,

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Speaker 8: but not maybe the best one. I think that there

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Speaker 8: are opportunities for growth, but the reality.

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Speaker 7: Is that they keep doing what they're doing. There is

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Speaker 7: no growth. We'll stop.

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Speaker 6: I'm curious about the leadership structure of this new company.

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Speaker 6: So you have one David Ellison, the son, of course

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Speaker 6: of a very famous and a rich tech entrepreneur. He's

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Speaker 6: forty two years old, David Ellison is and I look

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Speaker 6: at her. Who's going to remain with this company? George Cheeks,

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Speaker 6: I gather he's going to stick around. And then you've

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Speaker 6: got Jeff Shell, who is it NBC Universe that left

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Speaker 6: under a cloud of difficulty? How do you see them

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Speaker 6: reorienting this company? So just again picking up on that

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Speaker 6: notion of difficulty, how do they make this company work

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Speaker 6: after this deal goes through.

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Speaker 9: You know, they seem to be really focused on the

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Speaker 9: studio for you know, maybe Ellison's reasons and just credit.

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Speaker 10: I think Skydance has actually done pretty well as studios go.

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Speaker 7: The problem is, studio.

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Speaker 10: Business isn't the greatest business right now, and I don't

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Speaker 10: know that that trajectory changes by much, but that does

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Speaker 10: seem to be.

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Speaker 7: The primary area and focus.

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Speaker 11: Certainly they do some successful businesses, you know, I think

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Speaker 11: is a positive as positive trajectory in the US and

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Speaker 11: many countries.

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Speaker 7: But the reality is that most.

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Speaker 11: Of the legacy cable networks are just on a declining path.

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Speaker 8: The broadcast network is durable, but it's facing certain challenges.

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Speaker 11: The cost of content rights, sports in particular, it's just

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Speaker 11: going up and up and up and up, and investment

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Speaker 11: and news are important, but they're also being there political

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Speaker 11: perspective to.

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Speaker 4: Little surveillance history or Brian Reeser, I'm going to say

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Speaker 4: ten years ago, way out front saying no, there won't

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Speaker 4: be a death of TV. There's just going to be

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Speaker 4: this slow attrition. So I saw a chart yesterday of

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Speaker 4: basically Netflix flat with a dominant eight percent share, but

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Speaker 4: YouTube with an upward slope.

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Speaker 3: Do you just extrapolate that out?

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Speaker 4: I mean, with all your wisdom, Brian, is YouTube just

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Speaker 4: a linear or log linear extrapolation of growth into the future.

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Speaker 10: I think that reflects that people are getting used to

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Speaker 10: the idea that you can consume YouTube on your television set.

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Speaker 7: Netflix is doing really well. The fact that they might

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Speaker 7: be flat.

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Speaker 3: I think they're.

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Speaker 10: Ignored that there's an underlying growth trend for consumption, subscriptions

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Speaker 10: and everything else.

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Speaker 7: So Netflix is in a great position.

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Speaker 10: YouTube is just different, and it happens to be consumed

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Speaker 10: on television set with increasing volumes.

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Speaker 7: That's maybe way to think about it.

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Speaker 6: Rian, How should we look at what happened here regulatorily

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Speaker 6: over the last few months leading up to this deal.

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Speaker 6: So of course we're all fixated on Stephen Colbert losing

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Speaker 6: his position in a matter of months here, the chair

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Speaker 6: of the FCC was on Fox yesterday. I wouldn't answer the

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Speaker 6: question directly if that was a result of conversations that

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Speaker 6: he had with with David Ellison and others, but suffice

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Speaker 6: to say that the political climate here is shaping a

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Speaker 6: lot of the regulatory appetite for making deals like this one.

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Speaker 6: Going forward, we see the vice that a lot of

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Speaker 6: companies are under media companies are under. How do you

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Speaker 6: look at that environment and what does it portend for

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Speaker 6: you about further consolidation and what's going to happen to

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Speaker 6: these legacy networks going forward?

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Speaker 9: Yeah, well, I mean the political angle is going to

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Speaker 9: be front and center for any company. It's not just

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Speaker 9: the Paramount. We look at the inner public Omnicom transaction.

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Speaker 10: The consent decree they had to sign is a remarkable,

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Speaker 10: be ridiculous, but the point is that that's going to

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Speaker 10: be the normal way of things for the foreseeable future.

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Speaker 7: So it is when it is when it comes to

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Speaker 7: media now.

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Speaker 10: I did think it was kind of interesting and amusing

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Speaker 10: that they noted a one point five billion dollar investment

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Speaker 10: that Skuydance is making into the into the new entity.

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Speaker 10: I don't know if you saw the news about Paramount

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Speaker 10: comming to agree with the south Park books with a

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Speaker 10: one point five billion dollar commitment. EI are not related,

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Speaker 10: but kind of funny in context of the south Park

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Speaker 10: episode that if.

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Speaker 6: Yeah, I watched the clips, Tom, did you see the

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Speaker 6: south Park? We want to air them, we want to

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Speaker 6: air them here. We don't rea air them here on

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Speaker 6: Bloomberg surveillance.

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Speaker 7: But that's unusual. Those brave that they got that out.

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Speaker 6: Yes, no, I completely agree it was brave.

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Speaker 3: I'm not that pale. You're not get one more question.

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Speaker 3: It's a family network. Come on, girl, Sweeney would never

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Speaker 3: bring that up. No, you wouldn't.

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Speaker 6: I'll ask you lastly, just about this ombudsman. That's part

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Speaker 6: of this deal that the paramount's not going to have

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Speaker 6: when they're kind of monitoring what what what what this

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Speaker 6: company is doing when it comes to diversity efforts and

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Speaker 6: what kind of politics are being evinced on on the air.

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Speaker 6: Is this a template that we're going to see going forward?

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Speaker 6: Are we going to see the government play or insisting

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Speaker 6: upon a greater role for that kind of check on

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Speaker 6: what programming is Brian?

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Speaker 9: Yeah, absolutely, and that's obviously for the worst.

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Speaker 7: I think that again, look to the inner public.

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Speaker 12: Omnicom to consent to cruise maybe didn't get as much attention,

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Speaker 12: but again, the fact that agencies cannot provide their clients

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Speaker 12: with recommendations for brand safety, including things like whether or

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Speaker 12: not there's inappropriate content politically speaking on a site. There's

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Speaker 12: all sorts of restrictions that limit freedom of speech and

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Speaker 12: companies that are coming through in these rooments now, so

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Speaker 12: I think that is the path forward.

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Speaker 4: Unfortunately, Brian, thank you so much, greatly, greatly appreciate it.

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Speaker 4: If David Rosenberg, Brian Weezer get us started here on

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Speaker 4: a Friday is a wonderful mister Weezer Madison.

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Speaker 3: Wall on Media.

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Speaker 2: He has nailed the durability of a television.

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Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

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Speaker 1: starting at seven am Eastern on Apple Coarplay and Android

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Speaker 1: Auto with the Bloomberg Business app. You can also listen

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Speaker 1: live on Amazon Aloe from our flagship New York station,

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Speaker 1: Just say Alexa play Bloomberg eleven thirty.

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Speaker 4: Alicia Levine basically says, you don't go up, you.

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Speaker 3: Don't win if you don't play.

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Speaker 4: She's been in the market, would be in why we're

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Speaker 4: thrilled she could join this morning. How has the character

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Speaker 4: of the gloom Crew changed in the last six weeks.

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Speaker 4: It's you know, you're too young to know this, but

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Speaker 4: you go back to like some of the things eighty

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Speaker 4: seven and ninety eight.

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Speaker 3: This is an odd time for the gloom crew.

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Speaker 13: It's a tough time for the Gloom crew. Look, their

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Speaker 13: recovery to the old high is historic. Fifty five days

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Speaker 13: from the low on April eighth to recover the old

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Speaker 13: high in the SMP the second best time within you know,

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Speaker 13: ninety eight, and we remember what happened then, and I

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Speaker 13: think there are some parallels to the late nineties to

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Speaker 13: what's happening here in the sense that we feel like

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Speaker 13: we have a technological revolution on our hands, and it's investible.

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Speaker 13: It's investible.

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Speaker 3: I brought this up eight times this week, David. I

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Speaker 3: hope I haven't bored you with it.

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Speaker 4: It feels so much now like late ninety four, early

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Speaker 4: nineteen ninety five.

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Speaker 2: I've never said that in thirty years.

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Speaker 6: How are you looking at the earning season that's underway here?

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Speaker 6: We saw estimates that were markedly lower. The bar was

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Speaker 6: much lower, I think, than we've seen in the past.

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Speaker 6: We've had what one hundred and sixty plus companies report

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Speaker 6: so far, I think eighty percent or more of them

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Speaker 6: have beat those estimates. How are you framing it? How

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Speaker 6: are you thinking about what these companies are reporting? What

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Speaker 6: is not telling you about valuations in the future of

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Speaker 6: this market?

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Speaker 13: So if you look over all on the aggregate, as

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Speaker 13: you know, earnings dropped precipitously, you know, February, March, April,

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Speaker 13: May stabilizing in June. For twenty twenty five and twenty

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Speaker 13: twenty six, we brought our earnings estimates down as well,

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Speaker 13: and then in early May we brought our earnings estimates

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Speaker 13: back up because it seemed very clear that the policy

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Speaker 13: that was going to come out of tariffs was just

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Speaker 13: not going to be as onerous as what we had

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Speaker 13: heard in any early eight. With that, we brought our

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Speaker 13: S and B targets up as well. Overall, the aggregate

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Speaker 13: earnings are starting to hook upwards again. For twenty twenty

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Speaker 13: five and twenty twenty six. We know the second quarter

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Speaker 13: is there to beat, right, a four percent year over

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Speaker 13: year growth will come in higher than that. The first

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Speaker 13: quarter was a six percent beat. We probably beat by

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Speaker 13: two or three percent in the second quarter here, and

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Speaker 13: then the question really remains, you know, what happens with

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Speaker 13: the tariffs?

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Speaker 14: Who's eating the tariffs now?

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Speaker 13: The Wall Street Journal has an article this morning that

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Speaker 13: corporates are eating the terriffs, but we don't see it

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Speaker 13: really yet in earnings estimates. I think that's the big question.

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Speaker 13: If there is some dispersion over who is paying the tariffs. Okay,

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Speaker 13: a little bit consumer, a little bit corporate, a little

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Speaker 13: bit exporter eats it. Then you have your earnings estimates

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Speaker 13: staying higher. And then the multiple moved the market in

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Speaker 13: the last three or four months. We went from eighteen

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Speaker 13: times forward to twenty two times forward. Now earnings have

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Speaker 13: to do the lifting, and.

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Speaker 14: If earnings to come.

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Speaker 13: Up, the denominator has to come up.

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Speaker 3: Denominators the bottom bottom, bottom of the down back. Oh,

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Speaker 3: very good. You noticed Chicago to learn that, David.

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Speaker 6: Continue uh, let me pick up on that. We saw

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Speaker 6: this note from Michael Harte at a Bank of America

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Speaker 6: this morning. But there's still so much concentration in this market.

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Speaker 6: What's your sense of when that's going to broaden out,

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Speaker 6: what's going to be the catalytic factor that's going to

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Speaker 6: get us sort of a broader move here in the

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Speaker 6: SP five hundred.

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Speaker 13: So let's just say that the top ten stocks in

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Speaker 13: the SMP, you know, are about thirty percent of the SMP,

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Speaker 13: which actually is on the low side as a percentage

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Speaker 13: if you look at other global markets. So in Germany

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Speaker 13: the top ten is over fifty percent. France the same.

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Speaker 13: So if you look at other global markets, the concentration

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Speaker 13: in the US is not unusual. What I will say

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Speaker 13: is this is cyclicals or outperforming defensives here because you're

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Speaker 13: the industrials are working. The financials are really working, because

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Speaker 13: with a deregulatory agenda, you have other parts of the

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Speaker 13: market working, and the mag seven is sort of breaking apart.

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Speaker 14: Right, We're gonna have wind up with a new acronym here.

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Speaker 13: So, but you need tech to work, and it must

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Speaker 13: work because the behemoths of cash flow and margin growth

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Speaker 13: are driving the rest of the SMP margin.

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Speaker 3: Right.

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Speaker 13: The margins of the Magnificent seven are double the margins

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Speaker 13: of the rest of the S and P. So that

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Speaker 13: has to work, and the cap X spend must produce earnings.

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Speaker 13: Must It cannot just go into a black hole on

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Speaker 13: a Friday.

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Speaker 4: We're going to digress here with Alicia Levina being why

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Speaker 4: we can do that. Our math skills are prodigious. I'm

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Speaker 4: gonna do a little bit of technical stuff here for

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Speaker 4: Global Wall Street.

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Speaker 3: Cat me go get a coffee. Noh no, no.

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Speaker 4: Take notes on the Intel it went seven to seventy.

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Speaker 4: There were some challenging years recently in the pandemic Intel

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Speaker 4: was near seventy my cell signal. This is log exponential

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Speaker 4: moving averages. Just as a general statement, I didn't sell

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Speaker 4: at the peak, but I got out at fifty three

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Speaker 4: or fifty four when sixty seven down to fifty three

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Speaker 4: and I was able to get out.

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Speaker 2: That's technical analysis.

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Speaker 4: How do you know when to get out of a

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Speaker 4: treasured blue chip stock?

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Speaker 13: So, as you know, I can't discuss individual stocks. This

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Speaker 13: will be as this will be a generic discussion.

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Speaker 3: But who tells what we're talking about?

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Speaker 13: Well, I mean, you know, in the end, you're looking

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Speaker 13: for signs of weakness, slightly slower growth quarter over quarter,

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Speaker 13: you're looking.

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Speaker 11: More CEO tone.

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Speaker 13: You're looking You're looking at the top line slowing and

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Speaker 13: margins compressing.

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Speaker 14: And that's enough.

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Speaker 13: And that's why you know, even if if a fast,

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Speaker 13: if a growth stock misses its growth target, it gets

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Speaker 13: destroyed because the story, you know, the wall streem moves

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Speaker 13: it forward and you see the slower growth and it

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Speaker 13: can't sustain the multiple.

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Speaker 3: Good morning, Tom Galvin, iconic of Donaldson, Lufkin Jenrette.

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Speaker 2: Glvin's the one that taught me to go up the

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Speaker 2: income statement.

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Speaker 4: Alicia, what you just said the first and second derivative

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Speaker 4: study of revenue and ready for this, folks, David take

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Speaker 4: notes partial derivatives of unit dynamics and price dynamics at

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Speaker 4: the revenue line.

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Speaker 14: You're freaking me out hard of the matter.

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Speaker 3: No, seriously, is at the heart of the matter. Yes,

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Speaker 3: is a revenue dynamic.

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Speaker 13: It's actually much simpler than that. I'll say it for

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Speaker 13: those who didn't understand what you just said, which is

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Speaker 13: that the growth socks have to continue to exhibit the

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Speaker 13: growth growthiness and it's very hard to meet elevated expectations.

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Speaker 13: I mean, we're all married, right, very hard to meet

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Speaker 13: at elevated expectations, and that's that's what you're looking for.

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Speaker 13: So even a one to two percent miss on the

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Speaker 13: revenue line creates an outsize downside move because it's the signal. Right,

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Speaker 13: it seems to be irrational, but it's not because you're

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Speaker 13: probably at a higher multiple and you have to start

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Speaker 13: thinking about earnings.

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Speaker 14: So and three years forward, that's the issue.

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Speaker 13: Having said that, we're all in right, our team, our

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Speaker 13: team is all in on AI. We think this is real.

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Speaker 13: We think it's the beginning of the revolution. All of

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Speaker 13: the corporate sector will have to incorporate these tools. We

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Speaker 13: see the financials already doing it, and you're going to

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Speaker 13: see it in healthcare as well. Any company that is

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Speaker 13: data driven will be doing this, and that means for

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Speaker 13: the foreseeable future it's there.

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Speaker 14: One day it won't be there.

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Speaker 13: But for now it's there.

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Speaker 6: Even Tom Keen doing AI as we.

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Speaker 4: Learn, I'm doing I'm gemin no idea what I'm doing.

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Speaker 4: I'm learning and I'm using it one more, I'm using

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Speaker 4: search less.

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Speaker 3: That's it.

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Speaker 4: That's the head Alicia being bottled that. Thank you so

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Speaker 4: much as being where they're on the importance of looking

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Speaker 4: up the income statement to revenue dynamics.

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Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

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Speaker 1: starting at seven am Eastern on Apple Corplay and Android

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Speaker 1: Auto with the Bloomberg Business app. You can also watch

442
00:22:00,119 --> 00:22:03,000
Speaker 1: us live every weekday on YouTube and always on the

443
00:22:03,040 --> 00:22:04,120
Speaker 1: Bloomberg terminal.

444
00:22:04,440 --> 00:22:08,680
Speaker 4: Martin Norton joins us right now an actual allocations using empowered.

445
00:22:09,320 --> 00:22:10,040
Speaker 3: They're Canadian.

446
00:22:10,040 --> 00:22:14,080
Speaker 4: They're ginormous, full disclosure and power handles my puny four

447
00:22:14,119 --> 00:22:17,399
Speaker 4: owin k. You know, I didn't start until it was

448
00:22:17,480 --> 00:22:20,000
Speaker 4: like eighty, you know, sixty something.

449
00:22:20,160 --> 00:22:23,880
Speaker 6: Yeah, Well I'm catting it's growing mightily. That grows.

450
00:22:24,200 --> 00:22:27,440
Speaker 2: It was a triple average all cash from Roger's signature fund.

451
00:22:28,160 --> 00:22:31,320
Speaker 2: Marta joins us on the strategy for Marta.

452
00:22:31,400 --> 00:22:34,960
Speaker 4: What do you tell the people who have a fund

453
00:22:35,240 --> 00:22:39,400
Speaker 4: that is now forty percent or dare I say fifty

454
00:22:39,480 --> 00:22:42,040
Speaker 4: percent in their top ten stocks?

455
00:22:43,560 --> 00:22:47,160
Speaker 15: I mean it's the concentration problem has been a problem

456
00:22:47,640 --> 00:22:49,879
Speaker 15: in the US at least for the past several years,

457
00:22:49,920 --> 00:22:53,320
Speaker 15: where there is this concern about how much people have

458
00:22:53,400 --> 00:22:55,720
Speaker 15: in those top few names. And we know that a

459
00:22:55,760 --> 00:23:00,159
Speaker 15: lot of investors, retirement investors included, have this preference for

460
00:23:00,240 --> 00:23:02,639
Speaker 15: US equities, so there has been this kind of doubling

461
00:23:02,680 --> 00:23:04,960
Speaker 15: down on that exposure. I think there's a few things

462
00:23:04,960 --> 00:23:07,800
Speaker 15: that have shifted here. One is that the mag seven

463
00:23:07,920 --> 00:23:10,440
Speaker 15: aren't quite as overvalued as they were at the start

464
00:23:10,480 --> 00:23:12,080
Speaker 15: of the year. They had the one two punch, they

465
00:23:12,119 --> 00:23:14,040
Speaker 15: had the deep seek sell off, then they had the

466
00:23:14,080 --> 00:23:15,960
Speaker 15: sell off related to tariffs. So we have seen this

467
00:23:16,000 --> 00:23:18,440
Speaker 15: tremendous move higher in the markets, as you all have

468
00:23:18,520 --> 00:23:21,720
Speaker 15: been covering. We've seen technology in particular up forty five percent.

469
00:23:22,119 --> 00:23:25,240
Speaker 15: We see valuations and technology look expensive, but the mag

470
00:23:25,359 --> 00:23:28,080
Speaker 15: seven look a bit cheaper. They have idiosyncratic issues that

471
00:23:28,119 --> 00:23:30,600
Speaker 15: are also going on. So I almost think that the

472
00:23:30,960 --> 00:23:34,080
Speaker 15: concentration risk is less extreme than it was because it's

473
00:23:34,119 --> 00:23:36,080
Speaker 15: not combined without valuation concern.

474
00:23:36,960 --> 00:23:40,000
Speaker 4: The thud you heard up in Winnipeg or wherever was

475
00:23:40,119 --> 00:23:41,920
Speaker 4: compliance falling off the chair.

476
00:23:42,200 --> 00:23:43,240
Speaker 3: Why did you continue?

477
00:23:43,400 --> 00:23:46,120
Speaker 2: Why did you continue the conversation? David Martin?

478
00:23:46,200 --> 00:23:48,399
Speaker 6: What have you seen so far in this earning season?

479
00:23:48,440 --> 00:23:50,480
Speaker 6: We were talking just a moment ago about the busyness

480
00:23:50,520 --> 00:23:53,159
Speaker 6: of the upcoming week when it comes to earnings.

481
00:23:53,520 --> 00:23:54,359
Speaker 7: What are you looking for?

482
00:23:54,400 --> 00:23:55,200
Speaker 3: What are you hoping to.

483
00:23:55,240 --> 00:23:57,760
Speaker 6: Learn as we have I think many dozens of companies

484
00:23:57,800 --> 00:23:58,720
Speaker 6: reporting in the week ahead.

485
00:23:59,720 --> 00:24:01,840
Speaker 15: Well, first, I mean, just to level set on the

486
00:24:01,880 --> 00:24:04,280
Speaker 15: earnings conversation, and I know you've had several guys who've

487
00:24:04,280 --> 00:24:06,760
Speaker 15: weighed on this. We have kind of this low bar

488
00:24:07,000 --> 00:24:09,280
Speaker 15: in terms of what to expect with this earning season,

489
00:24:09,320 --> 00:24:13,800
Speaker 15: and companies are clearing it with ease simply because expectations

490
00:24:13,800 --> 00:24:16,800
Speaker 15: are low. But there's also some trends out there, the

491
00:24:16,840 --> 00:24:20,199
Speaker 15: AI trend being a strong proponent as we go forward.

492
00:24:20,440 --> 00:24:22,639
Speaker 15: I think what we want to see, particularly as it

493
00:24:22,720 --> 00:24:27,200
Speaker 15: pertains to these technology companies the Max seven that continue

494
00:24:27,200 --> 00:24:30,159
Speaker 15: to report, is how this AI theme is continuing to

495
00:24:30,200 --> 00:24:33,320
Speaker 15: play out, of course the capital investments that they're making,

496
00:24:33,359 --> 00:24:36,000
Speaker 15: but also are they realizing it, And we've had some

497
00:24:36,119 --> 00:24:38,520
Speaker 15: green shoots in that regard. We're seeing some of the

498
00:24:38,520 --> 00:24:41,920
Speaker 15: cost savings that some of these companies have reported. We're

499
00:24:41,960 --> 00:24:45,679
Speaker 15: also seeing some broadening out of the AI trend, and

500
00:24:45,760 --> 00:24:48,040
Speaker 15: I think that's something to keep an eye on. I'm

501
00:24:48,040 --> 00:24:50,280
Speaker 15: not sure, though, and I think this is important. I'm

502
00:24:50,280 --> 00:24:53,119
Speaker 15: not sure that the earning season this go around is

503
00:24:53,119 --> 00:24:56,119
Speaker 15: going to reveal its entire hand as it attains to

504
00:24:56,200 --> 00:24:57,960
Speaker 15: tariffs and as it pertains to AI.

505
00:24:58,200 --> 00:24:58,560
Speaker 3: Martin.

506
00:24:59,280 --> 00:25:01,439
Speaker 4: I got to get this, Martin. I think it's too important.

507
00:25:01,480 --> 00:25:03,359
Speaker 4: Girl wants to ask a smart question. I'm going to

508
00:25:03,400 --> 00:25:06,720
Speaker 4: be dumb. If you're going to be in equities in

509
00:25:06,800 --> 00:25:10,800
Speaker 4: this great bullmarket, which has basically been NonStop since nine,

510
00:25:10,880 --> 00:25:14,160
Speaker 4: a few hiccups like COVID along the way, you needed to.

511
00:25:14,119 --> 00:25:15,960
Speaker 2: Withstand three draw downs.

512
00:25:16,680 --> 00:25:19,680
Speaker 4: Negative thirty eight percent of the Dow Marta, the Dow

513
00:25:19,840 --> 00:25:22,960
Speaker 4: Jones Industrial Average is the index Michael Barr and I

514
00:25:23,040 --> 00:25:28,640
Speaker 4: follow negative thirty eight percent down, yep OH seven negative

515
00:25:28,680 --> 00:25:33,440
Speaker 4: fifty three percent down, and recently COVID negative thirty eight percent.

516
00:25:33,560 --> 00:25:36,760
Speaker 4: Now serious question, with your morning Star and power work.

517
00:25:37,080 --> 00:25:41,119
Speaker 4: What percentage of people in equities and empower are ready

518
00:25:41,440 --> 00:25:45,320
Speaker 4: for a thirty five percent draw down that's normal?

519
00:25:46,480 --> 00:25:48,720
Speaker 15: Yeah, I think it's it's the magnitude of the draw

520
00:25:48,760 --> 00:25:50,960
Speaker 15: dow you know that scale, that thirty five percent idea,

521
00:25:51,040 --> 00:25:54,520
Speaker 15: and also the duration. I think investors got conditioned on

522
00:25:54,600 --> 00:25:58,160
Speaker 15: this idea, especially with COVID, is that the snapback can

523
00:25:58,160 --> 00:26:01,439
Speaker 15: be and will be always in meet. I'm not sure

524
00:26:01,600 --> 00:26:05,639
Speaker 15: necessarily that that's the case always. Of course, with the GFC,

525
00:26:05,720 --> 00:26:08,760
Speaker 15: we had a much longer duration. People had to weather

526
00:26:08,840 --> 00:26:11,479
Speaker 15: that for much longer. I think that's the concern. If

527
00:26:11,520 --> 00:26:14,679
Speaker 15: you get a massive pullback, I think the inclination of

528
00:26:14,680 --> 00:26:16,399
Speaker 15: most investors is going to be like, oh, it's a

529
00:26:16,400 --> 00:26:18,720
Speaker 15: great hashtag by the dip moment. I think if you

530
00:26:18,840 --> 00:26:22,000
Speaker 15: have that extended, that's when you start to shake loose

531
00:26:22,080 --> 00:26:23,920
Speaker 15: kind of the weak need of the group. And that's

532
00:26:23,960 --> 00:26:24,480
Speaker 15: the concern.

533
00:26:24,720 --> 00:26:26,520
Speaker 3: We haven't had this stated in the ages.

534
00:26:26,680 --> 00:26:27,720
Speaker 6: No, that's very true.

535
00:26:27,840 --> 00:26:31,000
Speaker 4: Like the Carter malaise, get one more in here. Carter

536
00:26:31,200 --> 00:26:32,360
Speaker 4: was a broker from Georgia.

537
00:26:32,400 --> 00:26:34,720
Speaker 6: Thank you very much, pena former, etcetera, etcetera.

538
00:26:34,880 --> 00:26:35,200
Speaker 3: Marta.

539
00:26:35,320 --> 00:26:37,600
Speaker 6: I wanted to ask you just on a sector by

540
00:26:37,680 --> 00:26:39,959
Speaker 6: sector basis where you see opportunity. Now he's looking through

541
00:26:39,960 --> 00:26:41,879
Speaker 6: your notes healthcare as something that you flagged, but it,

542
00:26:42,000 --> 00:26:46,040
Speaker 6: like many of these sectors, does have the potential here

543
00:26:46,040 --> 00:26:47,920
Speaker 6: for there will be some sort of regulatory weight on it.

544
00:26:48,880 --> 00:26:51,840
Speaker 15: I mean, it's a really tricky question on the sector

545
00:26:51,880 --> 00:26:54,639
Speaker 15: basis because if you look across the board at the

546
00:26:54,680 --> 00:26:57,480
Speaker 15: sectors in the US, all of them, it feels like

547
00:26:57,560 --> 00:26:59,760
Speaker 15: almost all of them, of course, calling out healthcare are

548
00:27:00,119 --> 00:27:03,280
Speaker 15: extreme valuations. And so when we're talking about extreme valuations,

549
00:27:03,280 --> 00:27:05,919
Speaker 15: we're taking the price to forward earnings, we're breaking it

550
00:27:05,920 --> 00:27:08,920
Speaker 15: into deaciles for that sector's history, they're in those ninth

551
00:27:09,040 --> 00:27:12,800
Speaker 15: tenth deaciles, and that's when that tends to suggest foward

552
00:27:12,840 --> 00:27:15,679
Speaker 15: three year returns not quite a strong. Healthcare is one

553
00:27:15,720 --> 00:27:18,879
Speaker 15: of those few areas that's especially cheap. But of course

554
00:27:18,960 --> 00:27:21,440
Speaker 15: you don't have cheap for no reason. There's always some

555
00:27:21,480 --> 00:27:25,959
Speaker 15: measure of hair. And we have concerns around the regulatory questions.

556
00:27:25,960 --> 00:27:28,959
Speaker 15: We have concerns around tariffs. We're talking about massive tariffs

557
00:27:29,000 --> 00:27:32,360
Speaker 15: on pharmaceuticals and so a lot of shifts that those

558
00:27:32,400 --> 00:27:33,639
Speaker 15: companies are going to have to deal with. But I

559
00:27:33,680 --> 00:27:37,480
Speaker 15: think the value of these valuations is that there's something

560
00:27:37,520 --> 00:27:40,240
Speaker 15: already in the price. There's concern in the price, and

561
00:27:40,280 --> 00:27:43,359
Speaker 15: there's not much concern any of these other sectors in

562
00:27:43,400 --> 00:27:43,840
Speaker 15: the price.

563
00:27:44,160 --> 00:27:46,480
Speaker 2: Martin Norton, thank you so much, Chief Investments.

564
00:27:46,119 --> 00:27:47,040
Speaker 3: Createitis to poll.

565
00:27:47,560 --> 00:27:51,439
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

566
00:27:51,480 --> 00:27:54,520
Speaker 1: starting at seven am Eastern on Apple Corplay and Android

567
00:27:54,520 --> 00:27:57,560
Speaker 1: Auto with the Bloomberg Business app. You can also listen

568
00:27:57,640 --> 00:28:00,920
Speaker 1: live on Amazon Alexa from our flagship New York station.

569
00:28:01,440 --> 00:28:04,080
Speaker 1: Just say Alexa Play Bloomberg eleven thirty.

570
00:28:04,440 --> 00:28:06,840
Speaker 3: Oh the newspapers, are we not your free today?

571
00:28:07,240 --> 00:28:09,920
Speaker 14: We are, yes, but we're cafine infused.

572
00:28:11,840 --> 00:28:13,399
Speaker 6: It's just green tea, isn't it?

573
00:28:13,480 --> 00:28:14,879
Speaker 14: Green tea and espresso shots.

574
00:28:15,000 --> 00:28:17,840
Speaker 6: I see together? Good dar, all right, the newspaper won't

575
00:28:17,840 --> 00:28:20,320
Speaker 6: waste any more time, you got it.

576
00:28:20,920 --> 00:28:22,920
Speaker 14: This first article stood out to me. It's in the

577
00:28:22,960 --> 00:28:26,160
Speaker 14: New York Times. It's about the division among New York

578
00:28:26,240 --> 00:28:28,960
Speaker 14: families and the mayoral race. Because you have the young

579
00:28:29,040 --> 00:28:33,480
Speaker 14: voters who supported Zormondami trying to persuade their parents now

580
00:28:33,520 --> 00:28:36,800
Speaker 14: to do the same thing. And now the parents are

581
00:28:36,840 --> 00:28:39,000
Speaker 14: starting to listen, so they're telling the New York Times,

582
00:28:39,120 --> 00:28:40,960
Speaker 14: the moms and dad that even though they may not

583
00:28:41,040 --> 00:28:44,520
Speaker 14: have supported Mumdammi initially because his lack of experience or

584
00:28:44,520 --> 00:28:48,480
Speaker 14: his policies, they say that their move because how enthusiastic

585
00:28:48,520 --> 00:28:51,960
Speaker 14: their kids are about this. They say the future belongs

586
00:28:52,000 --> 00:28:54,960
Speaker 14: to them. So they also say they hear stories of

587
00:28:54,960 --> 00:28:57,840
Speaker 14: their kids getting shamed by other people for supporting and

588
00:28:58,160 --> 00:28:59,880
Speaker 14: they want to back their kids up and say, you

589
00:28:59,880 --> 00:29:01,680
Speaker 14: know what, I'm going to stand behind my child and

590
00:29:02,040 --> 00:29:03,680
Speaker 14: I'm going to go with them on this one. But

591
00:29:03,760 --> 00:29:06,000
Speaker 14: it's weird because you're seeing this shift because usually it's

592
00:29:06,000 --> 00:29:09,680
Speaker 14: the kids who inherit from the parents these views, but

593
00:29:09,760 --> 00:29:12,880
Speaker 14: experts are saying the reason it's starting to change is

594
00:29:12,920 --> 00:29:15,840
Speaker 14: because the parents want this better relationship with the kids,

595
00:29:15,840 --> 00:29:18,640
Speaker 14: a better relationship than they had with their parents.

596
00:29:18,880 --> 00:29:22,040
Speaker 6: Fascinating piece Genia Belafante's column in The Times, and this

597
00:29:22,080 --> 00:29:24,200
Speaker 6: stood out to me. She says, in statistical terms, the

598
00:29:24,240 --> 00:29:26,680
Speaker 6: young don't dominate in this city, the City of New York.

599
00:29:26,680 --> 00:29:29,400
Speaker 6: They're roughly half a million more New Yorkers over fifty

600
00:29:29,400 --> 00:29:31,560
Speaker 6: than those between the ages of twenty and thirty nine.

601
00:29:31,960 --> 00:29:35,719
Speaker 6: The city's population, she writes, like its infrastructure is simply

602
00:29:35,720 --> 00:29:37,520
Speaker 6: getting older and older.

603
00:29:37,560 --> 00:29:38,800
Speaker 14: So this is just something.

604
00:29:38,560 --> 00:29:40,600
Speaker 6: Really interesting to watch a lot of the folks with

605
00:29:40,640 --> 00:29:44,840
Speaker 6: whom she spoke, not outright endorsing Mamdani in this race,

606
00:29:44,920 --> 00:29:47,280
Speaker 6: but looking at their kids, seeing their enthusiasm for it,

607
00:29:47,320 --> 00:29:50,280
Speaker 6: thinking about generational change, and it sounds like maybe tossing

608
00:29:50,280 --> 00:29:51,480
Speaker 6: a little money towards this campaign.

609
00:29:51,520 --> 00:29:53,680
Speaker 14: It is some of them have been donating. You're correct

610
00:29:53,720 --> 00:29:57,000
Speaker 14: about that. Okay, So if speaking of giving money, okay,

611
00:29:57,000 --> 00:29:59,240
Speaker 14: if you're feeling a little generous, did you know you

612
00:29:59,320 --> 00:30:02,880
Speaker 14: can venmo the US government to help pay down the debt.

613
00:30:02,880 --> 00:30:05,200
Speaker 6: You don't veno time to you don't.

614
00:30:06,960 --> 00:30:11,040
Speaker 4: He's Brian wining a growled at me and Davos once.

615
00:30:10,880 --> 00:30:14,840
Speaker 14: Time you got a zeld, I do the zel thing too.

616
00:30:14,960 --> 00:30:17,600
Speaker 14: But you can use venmo, you know, like what you

617
00:30:17,720 --> 00:30:19,560
Speaker 14: use to pay back your friends when you're splitting the

618
00:30:19,640 --> 00:30:22,000
Speaker 14: check at dinner. You can use that to help pay

619
00:30:22,040 --> 00:30:25,640
Speaker 14: down the debt. Business insider says it's it's started there

620
00:30:25,640 --> 00:30:27,440
Speaker 14: earlier this year, but it's just starting to gain some

621
00:30:27,480 --> 00:30:29,320
Speaker 14: traction because they've done it for years.

622
00:30:29,400 --> 00:30:29,520
Speaker 7: Right.

623
00:30:29,520 --> 00:30:31,400
Speaker 14: You can put your credit card, you can do you know,

624
00:30:31,480 --> 00:30:33,880
Speaker 14: your bank account, your debit card. But this is just

625
00:30:34,000 --> 00:30:36,480
Speaker 14: a new way for them to bring in someone.

626
00:30:36,680 --> 00:30:38,960
Speaker 6: There's only getting more to pay down, right, it's only

627
00:30:38,960 --> 00:30:39,800
Speaker 6: getting bigger.

628
00:30:41,640 --> 00:30:47,440
Speaker 14: The four digits of the number. Okay, next, okay, and

629
00:30:47,480 --> 00:30:50,880
Speaker 14: finally this one. There is an app that lets women

630
00:30:51,160 --> 00:30:55,600
Speaker 14: anonymously post reviews about the guys they're dating. And it's

631
00:30:55,640 --> 00:30:58,560
Speaker 14: soaring to the top of Apple's app store. It's called

632
00:30:58,680 --> 00:31:01,320
Speaker 14: Tea and you think about it meaning like the gossip,

633
00:31:01,400 --> 00:31:02,840
Speaker 14: like you spill the tea about somebody.

634
00:31:02,880 --> 00:31:05,840
Speaker 6: So that's it's.

635
00:31:05,760 --> 00:31:10,440
Speaker 14: Termed Tom Beyond It. But it launched in twenty twenty three,

636
00:31:10,480 --> 00:31:13,240
Speaker 14: and it was launched by a man, if you believe

637
00:31:13,240 --> 00:31:14,800
Speaker 14: it or not. His name is Sean Cook, and he

638
00:31:14,920 --> 00:31:18,160
Speaker 14: started it because his mom was calfished and he wants

639
00:31:18,280 --> 00:31:20,840
Speaker 14: women to have more transparency and talk about, you know,

640
00:31:21,000 --> 00:31:23,680
Speaker 14: if anyone has been a criminal and kind of how

641
00:31:23,720 --> 00:31:25,480
Speaker 14: this works. Okay, let me just put it out there.

642
00:31:25,520 --> 00:31:28,800
Speaker 14: So basically, you post about a man. You can put

643
00:31:28,800 --> 00:31:32,800
Speaker 14: his name, his age, his location, and you can include

644
00:31:32,880 --> 00:31:37,120
Speaker 14: captions photos, and then there's red flags and green flags, no,

645
00:31:37,120 --> 00:31:40,960
Speaker 14: no flags and green flags, and you could add comments.

646
00:31:42,240 --> 00:31:46,160
Speaker 14: It's because that's a good one, and you can add comments.

647
00:31:46,200 --> 00:31:49,320
Speaker 14: So it's kind of like this forum it's free until

648
00:31:49,360 --> 00:31:51,000
Speaker 14: you want to do like more than five searches. Then

649
00:31:51,040 --> 00:31:53,120
Speaker 14: you gotta pay fifteen bucks a month. But it's really

650
00:31:53,160 --> 00:31:55,360
Speaker 14: starting to gain traction. But the controversy is because you

651
00:31:55,360 --> 00:31:58,560
Speaker 14: know what guys are saying, Hey, that's my privacy, Like

652
00:31:58,560 --> 00:32:00,800
Speaker 14: what if there are some false acts usations out there?

653
00:32:00,840 --> 00:32:02,720
Speaker 14: And then I'm getting a bad rap for you know,

654
00:32:02,800 --> 00:32:05,840
Speaker 14: you posting about me on this forum. So it is

655
00:32:05,880 --> 00:32:08,560
Speaker 14: the new thing in dating. I'm just glad I'm saying yeah.

656
00:32:08,600 --> 00:32:11,160
Speaker 14: I mean, I'm not saying tea and catfish.

657
00:32:12,720 --> 00:32:13,160
Speaker 3: Potato.

658
00:32:14,960 --> 00:32:16,160
Speaker 7: I'm glad I'm not single.

659
00:32:17,040 --> 00:32:19,480
Speaker 3: God at LEASTAO the newspapers here. Thank you.

660
00:32:19,720 --> 00:32:24,520
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,

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Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,

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Speaker 1: seven to ten am Eastern on Bloomberg dot com, the

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Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You

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Speaker 1: can also watch us live every weekday on YouTube and

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Speaker 1: always on the Bloomberg terminal