1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:22,000 Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business app. 4 00:00:22,360 --> 00:00:25,680 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:25,760 --> 00:00:27,040 Speaker 1: us live on YouTube. 6 00:00:27,320 --> 00:00:30,720 Speaker 2: Christopher Verona is with us, working with Jason Trenet at strtigas. 7 00:00:30,760 --> 00:00:34,680 Speaker 2: He is definitive on trend based technical analysis. As many 8 00:00:34,720 --> 00:00:37,520 Speaker 2: of you know. I'm comfortable with that versus the catching 9 00:00:37,520 --> 00:00:40,680 Speaker 2: a knife in the dark approach. Chris, I got eight 10 00:00:40,680 --> 00:00:42,280 Speaker 2: ways to go here, but I got a first go 11 00:00:42,440 --> 00:00:46,280 Speaker 2: to price up, yield down. Is it a critical pro 12 00:00:46,479 --> 00:00:49,280 Speaker 2: level that the tenure yield is through four percent? 13 00:00:49,520 --> 00:00:50,279 Speaker 3: I don't think it is. 14 00:00:50,320 --> 00:00:52,040 Speaker 4: I mean, let's just look back at the last three years. 15 00:00:52,080 --> 00:00:55,040 Speaker 4: We've effectively been between three seventy five and four fifty 16 00:00:55,200 --> 00:00:58,400 Speaker 4: tenure yields for three years. We've had this very unsatisfying 17 00:00:58,400 --> 00:01:00,560 Speaker 4: call on yields. At the only correct call it's no call. 18 00:01:00,720 --> 00:01:02,720 Speaker 4: And I'm kind of still in that camp here. You know, 19 00:01:02,840 --> 00:01:05,039 Speaker 4: under three seventy five my antenna would start to go 20 00:01:05,120 --> 00:01:07,520 Speaker 4: up more than you know, maybe something's really starting to change. 21 00:01:07,520 --> 00:01:09,640 Speaker 3: But you know, Frankly, Tom, it's more curve shape right 22 00:01:09,680 --> 00:01:11,360 Speaker 3: now than it is anything. And you have this little 23 00:01:11,360 --> 00:01:12,120 Speaker 3: subtle flattener. 24 00:01:12,480 --> 00:01:13,200 Speaker 2: It's Friday. 25 00:01:13,400 --> 00:01:14,440 Speaker 3: Yeah, okay, we're. 26 00:01:14,280 --> 00:01:18,080 Speaker 2: Going into the weekend sweets finding California. You're supposed to say. 27 00:01:18,000 --> 00:01:20,040 Speaker 3: OMG, it's like a huge deal. 28 00:01:21,360 --> 00:01:24,000 Speaker 5: So we've seen Chris, you know, boy of rotation in 29 00:01:24,040 --> 00:01:27,479 Speaker 5: the equity markets here. You know, the growth has definitely 30 00:01:27,480 --> 00:01:28,960 Speaker 5: taken it on the chin a little bit here at 31 00:01:29,000 --> 00:01:31,720 Speaker 5: some of the software socks and things like that. Some 32 00:01:31,800 --> 00:01:35,000 Speaker 5: of the industrials and small midcaps have been working here. 33 00:01:35,360 --> 00:01:37,600 Speaker 5: Is that a short term trade or is that something bigger? 34 00:01:37,640 --> 00:01:38,000 Speaker 3: Do you think? 35 00:01:38,080 --> 00:01:39,880 Speaker 4: I think this is a big right, of course, we 36 00:01:39,959 --> 00:01:42,320 Speaker 4: know that we don't know right, but our hunch is 37 00:01:42,440 --> 00:01:44,319 Speaker 4: that this is a big deal. And it didn't begin 38 00:01:44,600 --> 00:01:46,360 Speaker 4: four weeks ago or eight weeks ago. I mean this 39 00:01:46,440 --> 00:01:48,840 Speaker 4: began back in September October when you look at when 40 00:01:49,480 --> 00:01:52,480 Speaker 4: like equal weights started to really outperform the cues. I 41 00:01:52,480 --> 00:01:56,240 Speaker 4: think this is early early days in what is a 42 00:01:56,320 --> 00:01:58,800 Speaker 4: trend that will define not just the remainder of the year, 43 00:01:58,880 --> 00:02:01,560 Speaker 4: but kind of the years to come. Here, I think 44 00:02:01,600 --> 00:02:03,520 Speaker 4: this is the transition in our call has been the 45 00:02:03,560 --> 00:02:06,120 Speaker 4: transition from kind of the speculative corners of the market 46 00:02:06,160 --> 00:02:08,400 Speaker 4: to the real economy or the old economy. I think 47 00:02:08,440 --> 00:02:11,280 Speaker 4: that's well underway. It's ongoing, and I would expect it 48 00:02:11,320 --> 00:02:12,400 Speaker 4: to continue moving forward. 49 00:02:13,040 --> 00:02:14,600 Speaker 3: You were pretty much thlu to the earnings. Most of 50 00:02:14,600 --> 00:02:17,040 Speaker 3: the SEPO five hundred companies have reported earning. Show what 51 00:02:17,080 --> 00:02:20,440 Speaker 3: have you seen? Is it enough to support this market? 52 00:02:20,440 --> 00:02:21,200 Speaker 2: Here? Do you think? Well? 53 00:02:21,200 --> 00:02:23,360 Speaker 4: I think earnings are grown in something like twelve thirteen 54 00:02:23,400 --> 00:02:26,919 Speaker 4: percent year over year. Here when you look at yesterday's 55 00:02:26,960 --> 00:02:30,480 Speaker 4: response to Nvidia, I think even more evidence in this regard. 56 00:02:30,560 --> 00:02:33,000 Speaker 4: I mean stock clothes on the lows right down five 57 00:02:33,080 --> 00:02:37,640 Speaker 4: or six percent, advantures overwhelmed decliners. Yesterday, more stocks up 58 00:02:37,639 --> 00:02:41,200 Speaker 4: than down despite NASDAK down nearly two percent. Fourth day 59 00:02:41,240 --> 00:02:43,359 Speaker 4: this year, where you've had the nasdck down at least 60 00:02:43,440 --> 00:02:46,760 Speaker 4: one percent, yet more stocks up than down. That only 61 00:02:46,800 --> 00:02:50,399 Speaker 4: happened three times all of last year. So you kind 62 00:02:50,400 --> 00:02:54,200 Speaker 4: of see this average stock over the index continuing to proliferate. 63 00:02:54,520 --> 00:02:57,640 Speaker 2: Chris's people, folks sent me the strtiguous deck on all this, 64 00:02:57,760 --> 00:02:59,760 Speaker 2: and like we could literally talk to him for three 65 00:03:00,720 --> 00:03:03,520 Speaker 2: ending the jump movie see in Chinese. You want now, 66 00:03:03,840 --> 00:03:06,800 Speaker 2: let's stay on software stacks, because that's what everybody's focused on. 67 00:03:07,200 --> 00:03:12,560 Speaker 2: You talk about a high volume reversal, is it catharsis. 68 00:03:11,919 --> 00:03:14,600 Speaker 3: Where you load the boat. I don't think you load 69 00:03:14,600 --> 00:03:14,880 Speaker 3: the boat. 70 00:03:14,919 --> 00:03:16,800 Speaker 4: I think you cover your shorts if you're on the 71 00:03:16,840 --> 00:03:19,000 Speaker 4: short side of the story here. And you know when 72 00:03:19,040 --> 00:03:21,240 Speaker 4: you look at what tends to show up in the 73 00:03:21,240 --> 00:03:23,680 Speaker 4: ballpark of a bottom, one of the features is this 74 00:03:23,840 --> 00:03:26,560 Speaker 4: indiscriminate selling and the acceptance of narrative. 75 00:03:26,680 --> 00:03:28,480 Speaker 3: Right, So you have the indiscriminate selling. 76 00:03:28,560 --> 00:03:30,520 Speaker 4: The last couple of weeks in software, I think eighty 77 00:03:30,520 --> 00:03:33,080 Speaker 4: percent of them made a new low, only five percent 78 00:03:33,080 --> 00:03:35,000 Speaker 4: above the two or day moving average. And then suddenly 79 00:03:35,040 --> 00:03:37,960 Speaker 4: there's agreed upon narrative of why they're all down that 80 00:03:38,120 --> 00:03:39,400 Speaker 4: generally is found. 81 00:03:39,160 --> 00:03:41,240 Speaker 3: Late in the decline, not early in the decline. 82 00:03:41,280 --> 00:03:44,720 Speaker 4: So I would be covering shorts if on the short 83 00:03:44,760 --> 00:03:47,400 Speaker 4: side of the boat here, I might position tactically for 84 00:03:47,440 --> 00:03:48,400 Speaker 4: some type of amounts. 85 00:03:48,760 --> 00:03:49,960 Speaker 3: But has the trend changed? 86 00:03:51,080 --> 00:03:53,720 Speaker 2: No, Good morning across the nation, Chris Verono. This we're 87 00:03:53,720 --> 00:03:56,120 Speaker 2: going to continue with a good conversation. I got to 88 00:03:56,200 --> 00:03:59,040 Speaker 2: drop in some of the data points. Paul Brench Crude 89 00:03:59,120 --> 00:04:02,680 Speaker 2: seventy two, twenty five up Way over a stick seventy 90 00:04:02,720 --> 00:04:04,840 Speaker 2: two point twenty five on global oil. 91 00:04:05,440 --> 00:04:07,440 Speaker 3: Torchton SLocker a good friend over to pollow out with 92 00:04:07,440 --> 00:04:07,920 Speaker 3: a note. 93 00:04:07,760 --> 00:04:11,280 Speaker 5: This morning, the average daily US equity market turnover now 94 00:04:11,320 --> 00:04:16,320 Speaker 5: exceeds one trillion dollars, driven by higher retail participation, more 95 00:04:16,360 --> 00:04:19,600 Speaker 5: high frequency trading, and recent tech market volatility. What does 96 00:04:19,640 --> 00:04:22,560 Speaker 5: that tell you when you're seeing, you know, just trading 97 00:04:22,640 --> 00:04:25,480 Speaker 5: volumes pick up. I mean, people are in this market 98 00:04:25,640 --> 00:04:26,839 Speaker 5: on both sides of the trade. 99 00:04:26,920 --> 00:04:28,520 Speaker 3: Well Torson does great work, He's a close friend. 100 00:04:29,400 --> 00:04:32,560 Speaker 4: I think the point is well took here that there 101 00:04:32,680 --> 00:04:36,160 Speaker 4: is a lot going on under the surface for an 102 00:04:36,240 --> 00:04:38,880 Speaker 4: index that really has gone nowhere for six months. I 103 00:04:38,880 --> 00:04:40,920 Speaker 4: mean SMP is in one of the narrowest six months 104 00:04:40,960 --> 00:04:43,200 Speaker 4: rains that we've seen in a long time, call up 105 00:04:43,200 --> 00:04:46,039 Speaker 4: between sixty seven hundred and seven thousand. It doesn't tell 106 00:04:46,080 --> 00:04:48,599 Speaker 4: half the story of what's played out under the surface here. 107 00:04:48,920 --> 00:04:51,480 Speaker 4: I think the question here, as we move forward with 108 00:04:51,560 --> 00:04:53,920 Speaker 4: ten yure yields back to the lower end of the range, 109 00:04:54,000 --> 00:04:57,960 Speaker 4: can lower bond yields recatalyze the more cyclical corners of 110 00:04:57,960 --> 00:05:00,720 Speaker 4: the market, and if they can't, and what is the 111 00:05:00,839 --> 00:05:03,200 Speaker 4: message to the markets attempting to send us. Right, you 112 00:05:03,279 --> 00:05:06,080 Speaker 4: started the year with all these anticipations and all this 113 00:05:06,240 --> 00:05:10,560 Speaker 4: hope of some big cyclical recovery. If the cyclicals can't go, 114 00:05:10,600 --> 00:05:12,360 Speaker 4: and when do we start to get more worried about that? 115 00:05:12,440 --> 00:05:15,040 Speaker 2: What does Dan Clifton say about that? It's fatigus. You've 116 00:05:15,040 --> 00:05:18,640 Speaker 2: got public policy down cold. Is this a nervous market 117 00:05:18,680 --> 00:05:21,640 Speaker 2: looking forward to a nervous public policy? 118 00:05:21,960 --> 00:05:22,159 Speaker 3: Yeah? 119 00:05:22,200 --> 00:05:24,240 Speaker 4: I think if Dan was sitting here and we were 120 00:05:24,240 --> 00:05:27,039 Speaker 4: with each other yesterday, we were talking about this idea 121 00:05:27,800 --> 00:05:31,680 Speaker 4: we are every day hard to believe, you know, we 122 00:05:31,720 --> 00:05:36,000 Speaker 4: were talking about this idea of that public policy. Fiscal 123 00:05:36,040 --> 00:05:39,160 Speaker 4: policy is really in the gunnet mode here over the 124 00:05:39,200 --> 00:05:41,680 Speaker 4: next number of months. So if the market's going to 125 00:05:41,760 --> 00:05:44,400 Speaker 4: respect that, I think it's time we start seeing the 126 00:05:44,440 --> 00:05:46,840 Speaker 4: discretionary names turn back up. I think it's time that 127 00:05:46,880 --> 00:05:50,120 Speaker 4: we see, you know, a lot of those pro cyclical 128 00:05:50,160 --> 00:05:53,000 Speaker 4: stocks really reclaim the baton of leadership. 129 00:05:53,040 --> 00:05:54,919 Speaker 2: Moving forward, Right, We're going to go to London the 130 00:05:55,120 --> 00:05:57,680 Speaker 2: end of this hour for Global Wall Street a brief 131 00:05:57,960 --> 00:06:00,680 Speaker 2: on this MFS uproar London. 132 00:06:00,520 --> 00:06:03,000 Speaker 3: Paul Us versus rest of the world. 133 00:06:03,000 --> 00:06:05,080 Speaker 5: We saw in twenty twenty five while the US equity 134 00:06:05,120 --> 00:06:08,880 Speaker 5: indises did very well. Many of the stock markets around 135 00:06:08,880 --> 00:06:10,920 Speaker 5: the world did even better, and that's continuing in this year. 136 00:06:10,920 --> 00:06:13,440 Speaker 3: How do you think about the US allocation versus rest 137 00:06:13,480 --> 00:06:14,040 Speaker 3: of the world here? 138 00:06:14,080 --> 00:06:16,159 Speaker 4: So I think that trend that began really in late 139 00:06:16,240 --> 00:06:20,080 Speaker 4: twenty twenty four continues here and it continues. 140 00:06:19,640 --> 00:06:20,440 Speaker 3: In a very big way. 141 00:06:20,960 --> 00:06:22,800 Speaker 4: If you look at US market cap as a share 142 00:06:22,800 --> 00:06:25,120 Speaker 4: of global market cap, that peaked in the fourth quarter 143 00:06:25,160 --> 00:06:27,360 Speaker 4: of twenty four, So we're almost eighteen months into this, 144 00:06:27,880 --> 00:06:32,080 Speaker 4: into this transition. Put aside the dollar considerations for a moment, 145 00:06:32,279 --> 00:06:35,120 Speaker 4: and just look in the month of February. You have 146 00:06:35,200 --> 00:06:37,760 Speaker 4: new highs in almost every global market. Where do you 147 00:06:37,760 --> 00:06:41,320 Speaker 4: not have a new high? Triple QS, SMP Right, the 148 00:06:41,400 --> 00:06:43,799 Speaker 4: price action is telling you the character of the global 149 00:06:43,880 --> 00:06:45,720 Speaker 4: leadership has changed the character of. 150 00:06:45,640 --> 00:06:50,360 Speaker 2: Your work is a logarithmic y axis, very careful moving averages. 151 00:06:50,600 --> 00:06:54,360 Speaker 2: I use what are called climate exponential. Chris uses something different. 152 00:06:54,520 --> 00:06:56,760 Speaker 2: We all got our own way. And what I see 153 00:06:56,800 --> 00:07:00,000 Speaker 2: in your charts and you feature HSBC out of London. Yeah, 154 00:07:00,160 --> 00:07:04,320 Speaker 2: on this it's remarkable, given the frantic nature, how things 155 00:07:04,320 --> 00:07:07,440 Speaker 2: are still on trend. Yeah, if we've broken trend, if 156 00:07:07,440 --> 00:07:10,040 Speaker 2: somebody listening with a four to oh one k they're 157 00:07:10,040 --> 00:07:12,760 Speaker 2: going home this weekend. They're words that the Islanders beat 158 00:07:12,800 --> 00:07:15,920 Speaker 2: the Montreal Canadians in the last minute. Should they be 159 00:07:16,080 --> 00:07:18,080 Speaker 2: worried about trend in their retirement. 160 00:07:18,880 --> 00:07:21,520 Speaker 4: No trends have been broken here, or no trends of 161 00:07:21,520 --> 00:07:24,119 Speaker 4: any significance kind of at the index level have been broken, 162 00:07:24,160 --> 00:07:25,080 Speaker 4: particularly globally. 163 00:07:25,160 --> 00:07:26,680 Speaker 3: I mean, is that in the media. 164 00:07:26,800 --> 00:07:29,800 Speaker 2: I think you're right, and the frenzy here is ridiculous, 165 00:07:29,840 --> 00:07:30,640 Speaker 2: it's juvenile. 166 00:07:31,040 --> 00:07:32,280 Speaker 3: I think it's remarkable. 167 00:07:33,560 --> 00:07:35,160 Speaker 4: You know, when you look at all these things, there's 168 00:07:35,160 --> 00:07:38,040 Speaker 4: almost this desire for some of these idiosyncratic episodes to 169 00:07:38,120 --> 00:07:39,000 Speaker 4: become systemic. 170 00:07:39,160 --> 00:07:40,920 Speaker 3: Like you can kind of sense it in the tone, 171 00:07:40,960 --> 00:07:42,240 Speaker 3: particularly of the. 172 00:07:41,880 --> 00:07:45,320 Speaker 4: Financial media here. Of course both of you are outstanding. 173 00:07:46,680 --> 00:07:49,240 Speaker 4: It just gets the sense that there's this desire to 174 00:07:49,280 --> 00:07:52,160 Speaker 4: almost repeat what we saw in seven o A big 175 00:07:52,160 --> 00:07:55,440 Speaker 4: differences here. I think number one, the bank stocks globally 176 00:07:55,760 --> 00:07:58,480 Speaker 4: in you know, really by six we're starting to send 177 00:07:58,480 --> 00:08:01,040 Speaker 4: a very ominous message that's just not I mean, look 178 00:08:01,080 --> 00:08:03,120 Speaker 4: at these European banks, look at the Japanese banks, they're 179 00:08:03,120 --> 00:08:05,840 Speaker 4: still very much in trend, and I think public credit 180 00:08:06,040 --> 00:08:08,600 Speaker 4: spreads are modestly wider here, but they're not exploding. 181 00:08:09,080 --> 00:08:11,040 Speaker 3: I get the concern around private capital. 182 00:08:11,040 --> 00:08:14,480 Speaker 4: I think there's more of that story than perhaps this 183 00:08:14,640 --> 00:08:18,760 Speaker 4: kind of this kind of story that we're being told. 184 00:08:18,840 --> 00:08:22,560 Speaker 4: I mean, think about the financial deregulation aspect of this. 185 00:08:22,600 --> 00:08:24,800 Speaker 4: If we're going to deregulate money center banks, why would 186 00:08:24,840 --> 00:08:26,680 Speaker 4: I want to own an Apollo or a KKR or 187 00:08:26,680 --> 00:08:28,480 Speaker 4: an OWL when I can to own a Goldman or 188 00:08:28,480 --> 00:08:30,720 Speaker 4: a Market Stanley or a Bank of America. 189 00:08:30,840 --> 00:08:32,920 Speaker 3: I think that's part of the story here as well. 190 00:08:33,280 --> 00:08:35,800 Speaker 5: So you mentioned the spreads. I mean, they're widening, but 191 00:08:35,800 --> 00:08:38,520 Speaker 5: they're not blowing out. And that's what we've heard from 192 00:08:39,120 --> 00:08:41,800 Speaker 5: bond folks that are saying, if the tech companies want 193 00:08:41,800 --> 00:08:44,320 Speaker 5: to issue more paper, we'll take it. So is a 194 00:08:44,360 --> 00:08:47,040 Speaker 5: bond market do they have a better handle on risk 195 00:08:47,080 --> 00:08:48,760 Speaker 5: out there that maybe the equity markets do here? 196 00:08:48,960 --> 00:08:51,440 Speaker 4: I think the demand, particularly in the high yield quarter 197 00:08:51,480 --> 00:08:56,240 Speaker 4: of the debt market, remains pretty remarkable. This stuff gets 198 00:08:56,600 --> 00:09:00,800 Speaker 4: just absorbed almost immediately as it comes to market. Widespreads again, 199 00:09:00,840 --> 00:09:03,760 Speaker 4: while modestly wider, are not really blowing out here. I 200 00:09:03,800 --> 00:09:05,800 Speaker 4: think the more difficult question is when you look at 201 00:09:05,800 --> 00:09:10,160 Speaker 4: the kind of arc of the leadership over the last 202 00:09:10,240 --> 00:09:13,720 Speaker 4: number of months with staples better with healthcare, with utilities? 203 00:09:15,160 --> 00:09:16,559 Speaker 3: Is this the market messaging? 204 00:09:16,800 --> 00:09:20,400 Speaker 4: Something more sinister from a defensive perspective is coming. 205 00:09:20,800 --> 00:09:22,000 Speaker 3: I'm not quite there yet. 206 00:09:22,520 --> 00:09:25,120 Speaker 4: I think healthcare the narrative will become, Hey, this is 207 00:09:25,200 --> 00:09:28,120 Speaker 4: the beneficiary of AI. Look at all this drug discovery. 208 00:09:28,160 --> 00:09:31,199 Speaker 4: That's where I think the puck is probably going on healthcare. Staples, 209 00:09:31,200 --> 00:09:33,839 Speaker 4: for as good as they've been recently, actually have not 210 00:09:33,920 --> 00:09:36,160 Speaker 4: turned in our work. They're still in a relative down trend. 211 00:09:36,320 --> 00:09:38,760 Speaker 4: And in the spirit of trend following Tom, Staples are 212 00:09:38,800 --> 00:09:41,720 Speaker 4: still a relative laggard over the longer term in this market. 213 00:09:41,920 --> 00:09:45,720 Speaker 2: What's we're going to go here? But from the technical 214 00:09:45,760 --> 00:09:48,560 Speaker 2: analysis that Chris and I do, Folks, is trend based 215 00:09:49,200 --> 00:09:51,520 Speaker 2: versus catching the knife, and people love to try to 216 00:09:51,559 --> 00:09:55,520 Speaker 2: catch the knife in the dark. How do you use 217 00:09:55,960 --> 00:10:01,080 Speaker 2: moving averages? I see such a misuse nuts folks on 218 00:10:01,120 --> 00:10:04,000 Speaker 2: the death Cross and the life Cross. 219 00:10:04,280 --> 00:10:05,079 Speaker 3: If it were going up? 220 00:10:05,120 --> 00:10:07,480 Speaker 2: Is it? What's it on? Don't know? Birth Cross? I 221 00:10:07,520 --> 00:10:10,240 Speaker 2: don't know. How do you use moving averages? 222 00:10:10,440 --> 00:10:10,680 Speaker 3: Tom? 223 00:10:10,760 --> 00:10:13,680 Speaker 4: You remember how your mom probably said nothing good happens 224 00:10:14,080 --> 00:10:15,880 Speaker 4: after midnight? 225 00:10:16,000 --> 00:10:18,680 Speaker 3: Well, in our world, nothing good happens below downward sloping 226 00:10:18,800 --> 00:10:19,480 Speaker 3: moving averages. 227 00:10:19,559 --> 00:10:21,800 Speaker 4: Right, So if it's the two undre day moving average 228 00:10:21,960 --> 00:10:25,240 Speaker 4: downward sloping, we just don't play. And it's tempting to 229 00:10:25,280 --> 00:10:27,480 Speaker 4: want to catch niner, it's tempting to want to call loas. 230 00:10:27,559 --> 00:10:29,360 Speaker 4: That's just not where the money's made in this business. 231 00:10:29,360 --> 00:10:32,000 Speaker 4: The money is made in up trends. The money is 232 00:10:32,040 --> 00:10:35,680 Speaker 4: made both from a volatility adjusting perspective. Okay, owning things 233 00:10:35,679 --> 00:10:37,080 Speaker 4: with upward sloping movie brilliant. 234 00:10:37,160 --> 00:10:40,000 Speaker 2: So let's get let's get the verone keen approach here, 235 00:10:40,280 --> 00:10:43,200 Speaker 2: and have you talk about the software stocks. The only 236 00:10:43,240 --> 00:10:45,520 Speaker 2: way you can really make money, folks, on a risk 237 00:10:45,559 --> 00:10:49,800 Speaker 2: adjusted basis is an up market an up sector in 238 00:10:49,880 --> 00:10:54,760 Speaker 2: an upstock. If the software stocks is Microsoft broken that maximum. 239 00:10:55,160 --> 00:10:56,840 Speaker 4: So if you look at a very long term basis, 240 00:10:57,280 --> 00:11:00,000 Speaker 4: Microsoft right now is hovering right near it's upward slope 241 00:11:00,120 --> 00:11:02,120 Speaker 4: in two hundred week moving average. So this is kind 242 00:11:02,120 --> 00:11:06,440 Speaker 4: of where the decline stopped both in twenty twenty two, 243 00:11:06,800 --> 00:11:09,720 Speaker 4: which where it stopped in twenty eighteen. So you're in 244 00:11:09,760 --> 00:11:12,679 Speaker 4: the zone where Microsoft is going to stabilize. It kind 245 00:11:12,679 --> 00:11:14,959 Speaker 4: of has to happen here that is very different than 246 00:11:14,960 --> 00:11:18,600 Speaker 4: many of its peers Workday Service now are in long 247 00:11:18,679 --> 00:11:21,440 Speaker 4: term down trends, dose salesforce. 248 00:11:20,920 --> 00:11:22,880 Speaker 2: To the cash of Microsoft. 249 00:11:22,920 --> 00:11:25,520 Speaker 4: In the spirit of the same group, I would be 250 00:11:25,679 --> 00:11:28,840 Speaker 4: very skeptical of bounces in that other quality of ste 251 00:11:28,880 --> 00:11:29,760 Speaker 4: I'll get one more in there. 252 00:11:29,760 --> 00:11:31,920 Speaker 2: But the key thing mister Varone said there, folks is 253 00:11:31,920 --> 00:11:33,720 Speaker 2: is unit based weeks. 254 00:11:34,000 --> 00:11:36,040 Speaker 3: Pros use weeks. 255 00:11:36,080 --> 00:11:40,240 Speaker 2: Good morning, Louis Jamonta Las Sweety's one more with Christopher Varone. 256 00:11:40,240 --> 00:11:42,280 Speaker 5: I'm going to just the Nasdaq with the tech heavy 257 00:11:42,360 --> 00:11:44,760 Speaker 5: NASAC and I type in the RSI function in the 258 00:11:44,800 --> 00:11:47,280 Speaker 5: Bloomberg terminal. You know it says, you know that that 259 00:11:47,480 --> 00:11:50,880 Speaker 5: RSI function says we're over sold. If the indexes at thirty, 260 00:11:51,000 --> 00:11:53,560 Speaker 5: we're overbought. If it's at seventy, we're at forty seven. 261 00:11:53,640 --> 00:11:55,480 Speaker 5: Right smash in the middle of the NASDAK. I don't 262 00:11:55,480 --> 00:11:56,120 Speaker 5: know what to do here. 263 00:11:56,160 --> 00:11:58,040 Speaker 3: I don't I think tech traders don't know what to 264 00:11:58,080 --> 00:11:58,360 Speaker 3: do here. 265 00:11:58,440 --> 00:12:00,480 Speaker 4: You know, it's funny, We've joked about this four time. 266 00:12:00,520 --> 00:12:03,079 Speaker 4: I think overbought, oversold are the most misused terms in 267 00:12:03,120 --> 00:12:07,120 Speaker 4: this business. Oversold, parish, overbought, bullish, right, things that get 268 00:12:07,160 --> 00:12:09,880 Speaker 4: overbought against they overbought are your best trends, things that 269 00:12:09,920 --> 00:12:13,520 Speaker 4: get oversold, No thanks, Yeah, particularly when you're oversold in 270 00:12:13,520 --> 00:12:14,080 Speaker 4: weak trends. 271 00:12:14,120 --> 00:12:16,320 Speaker 3: And you look at the NASDAK right now, it's. 272 00:12:16,160 --> 00:12:19,040 Speaker 4: Probably the weakest of the major trends, and it's in 273 00:12:19,160 --> 00:12:21,800 Speaker 4: kind of no man's land from a momentum standpoint. I 274 00:12:21,840 --> 00:12:24,520 Speaker 4: believe as of last night, only about forty percent of 275 00:12:24,559 --> 00:12:26,920 Speaker 4: the tech sector was above the TUTOR day moving average. 276 00:12:26,960 --> 00:12:28,320 Speaker 3: I mean, that's a very. 277 00:12:28,120 --> 00:12:32,559 Speaker 4: Difficult place to expect that you're going to make consistent returns. 278 00:12:33,040 --> 00:12:35,640 Speaker 4: I want to fish where the fish are most abundant. 279 00:12:35,679 --> 00:12:37,760 Speaker 4: That's not with forty percent of issues above TUNA day. 280 00:12:37,760 --> 00:12:40,560 Speaker 2: Don't be a stranger bringing Jason trendet is what Christopher 281 00:12:40,640 --> 00:12:46,200 Speaker 2: Varone is with stratigis stay with us. More from Bloomberg 282 00:12:46,360 --> 00:12:48,400 Speaker 2: Surveillance coming up after this. 283 00:12:55,640 --> 00:12:59,200 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 284 00:12:59,280 --> 00:13:02,480 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 285 00:13:02,520 --> 00:13:06,200 Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or 286 00:13:06,360 --> 00:13:07,840 Speaker 1: watch us live on YouTube. 287 00:13:07,880 --> 00:13:11,240 Speaker 2: Speaking to her in the coming weeks here, particularly on IRAN. 288 00:13:11,920 --> 00:13:14,800 Speaker 2: So this is the way it works, folks. We have teams. 289 00:13:14,840 --> 00:13:16,720 Speaker 2: Paul and I don't really have a job. We sort 290 00:13:16,720 --> 00:13:19,680 Speaker 2: of saunter in and you know, hang out, get a coffee, 291 00:13:19,679 --> 00:13:23,960 Speaker 2: make jokes. We have people that work definitive on this 292 00:13:24,120 --> 00:13:28,520 Speaker 2: crisis in London are Scott Carpenter, Donald Griffin and the 293 00:13:28,600 --> 00:13:32,720 Speaker 2: leadership of Constantine Carculis. Constantine joins us off the desk 294 00:13:33,040 --> 00:13:35,920 Speaker 2: at Queen Victoria Street this morning. He's in charge of 295 00:13:35,920 --> 00:13:41,160 Speaker 2: Distressed Debt and cockroaches at Bloomberg Nation. I Constantine, first 296 00:13:41,160 --> 00:13:45,599 Speaker 2: of all, congratulations on the impact of your reporting worldwide. 297 00:13:46,000 --> 00:13:51,040 Speaker 2: If we look at Market Financial Solutions Limited, is there contagion? 298 00:13:52,640 --> 00:13:55,280 Speaker 6: I mean, that's a big question. So far, we haven't 299 00:13:55,280 --> 00:13:57,400 Speaker 6: seen any signs alow in the equity market. Some of 300 00:13:57,440 --> 00:14:01,480 Speaker 6: these lenders definitely took a hit. I think Jeffreys was 301 00:14:01,520 --> 00:14:04,720 Speaker 6: down as much as ten percent yesterday because they're exposed 302 00:14:04,760 --> 00:14:07,440 Speaker 6: to a round one hundred million to this entity. Apollo 303 00:14:08,280 --> 00:14:13,920 Speaker 6: also down five percent. It had lent around four hundred 304 00:14:14,360 --> 00:14:20,600 Speaker 6: to this entity. Ya it secured credit vehicle Atlas. So yeah, 305 00:14:20,600 --> 00:14:22,800 Speaker 6: there's already signs of Jeter's in the equity market, but 306 00:14:23,280 --> 00:14:25,720 Speaker 6: not seeing this spreading to credit yet. 307 00:14:25,880 --> 00:14:29,280 Speaker 2: I've done my amateur work on their chief executive officers 308 00:14:29,320 --> 00:14:32,880 Speaker 2: sum reports. He slipped a dubai Paresh Raja. I hope 309 00:14:32,880 --> 00:14:37,400 Speaker 2: I'm pronouncing that correctly. Who is Paresh Raja? 310 00:14:37,880 --> 00:14:40,160 Speaker 7: Very good question. We don't know all that much about him. 311 00:14:40,200 --> 00:14:42,880 Speaker 6: We have, I mean Bloomberg our colleagues, My colleagues have 312 00:14:43,320 --> 00:14:47,200 Speaker 6: done an investigation on him back in two thousand and 313 00:14:47,440 --> 00:14:50,760 Speaker 6: twenty four and showed that a group of firms that 314 00:14:50,840 --> 00:14:56,320 Speaker 6: had tied tied to him, including MFS and another entity, Zirkon, 315 00:14:56,520 --> 00:15:01,800 Speaker 6: lent money, lent money in relation to property deals to 316 00:15:01,920 --> 00:15:07,640 Speaker 6: a former land minister in Bangladesh. So yeah, the story 317 00:15:07,720 --> 00:15:10,640 Speaker 6: kind of starts back there. But yeah, we don't know 318 00:15:10,960 --> 00:15:13,880 Speaker 6: other than the fact that he is the sole owner 319 00:15:14,040 --> 00:15:19,080 Speaker 6: and officer in the sprawling empire of MFS and then 320 00:15:19,080 --> 00:15:22,040 Speaker 6: this investigation back in twenty twenty four. Yeah, we don't 321 00:15:22,080 --> 00:15:24,400 Speaker 6: know all that much about him, but that's something we're chasing. 322 00:15:25,480 --> 00:15:28,280 Speaker 3: Talk to us about market financial solutions. 323 00:15:28,280 --> 00:15:30,440 Speaker 5: So are these people and what part of the credit 324 00:15:30,440 --> 00:15:31,280 Speaker 5: market do they play in? 325 00:15:31,880 --> 00:15:37,160 Speaker 6: So they're a niche market mortgage lender, I suppose, So 326 00:15:37,200 --> 00:15:42,240 Speaker 6: they kind of step in where traditional banks won't and 327 00:15:42,280 --> 00:15:46,160 Speaker 6: they provide short term sort of bridging loans or other 328 00:15:46,200 --> 00:15:51,640 Speaker 6: complex structures to help facilitate like maybe there's an entity 329 00:15:51,680 --> 00:15:53,520 Speaker 6: that wants to sell a property and buy another, doesn't 330 00:15:53,520 --> 00:15:56,760 Speaker 6: have the doesn't have the cash to do that immediately. 331 00:15:56,800 --> 00:16:02,560 Speaker 6: That's what's called the bridging loan. So they to finance this, 332 00:16:03,240 --> 00:16:07,040 Speaker 6: they borrowed vast amounts of money from traditional lenders on 333 00:16:07,120 --> 00:16:11,840 Speaker 6: Wall Street, and then they're tasked with collecting, collecting payments, and. 334 00:16:13,480 --> 00:16:15,560 Speaker 7: Servicing these these loans in a sense. 335 00:16:16,280 --> 00:16:20,400 Speaker 6: So so that that's the business model. But what turns 336 00:16:20,400 --> 00:16:23,200 Speaker 6: out the allegations are that a lot of this money 337 00:16:23,200 --> 00:16:26,520 Speaker 6: that was supposed to be going back into the certain 338 00:16:26,560 --> 00:16:32,000 Speaker 6: bank accounts went to other bank accounts. The court documents 339 00:16:32,040 --> 00:16:37,400 Speaker 6: so far show that there's around two hundred million that 340 00:16:37,560 --> 00:16:42,200 Speaker 6: kind of got channeled in the wrong place. And on 341 00:16:42,280 --> 00:16:44,320 Speaker 6: top of that, and this is what makes it much 342 00:16:44,360 --> 00:16:48,440 Speaker 6: more interesting is that it appears and the allegations are 343 00:16:48,480 --> 00:16:50,720 Speaker 6: that there's been some double pledging of collateral. 344 00:16:51,600 --> 00:16:54,840 Speaker 2: So, yeah, Constantika Koros so with us. We're going to 345 00:16:54,880 --> 00:16:57,600 Speaker 2: continue with him with his public service, to his grease 346 00:16:58,200 --> 00:17:00,640 Speaker 2: working with us at Bloomberg News. And I says earlier 347 00:17:00,720 --> 00:17:03,640 Speaker 2: it was a joke, folks, He's not distressed debt and 348 00:17:03,800 --> 00:17:07,720 Speaker 2: cockroach reporter. It was kidding, is well, consciously, how do 349 00:17:07,760 --> 00:17:12,720 Speaker 2: you respond to James Diamond upset about the cockroaches mathematically 350 00:17:12,800 --> 00:17:15,800 Speaker 2: or as a former Greek finance horse, how do you 351 00:17:15,840 --> 00:17:16,640 Speaker 2: respond to that. 352 00:17:18,920 --> 00:17:21,480 Speaker 6: I don't know if I'm in a position to respond 353 00:17:21,520 --> 00:17:24,840 Speaker 6: to the Jamie Diamond, but you know, he does make 354 00:17:24,880 --> 00:17:28,800 Speaker 6: a good point that look, I think, you know, the 355 00:17:28,840 --> 00:17:32,680 Speaker 6: examples are adding up, right, First Brands, trickle Ore, now 356 00:17:32,760 --> 00:17:35,359 Speaker 6: this right, So I feel that we're in the point 357 00:17:35,359 --> 00:17:39,240 Speaker 6: in the cycle where, yeah, fraud is surfacing to the top, 358 00:17:39,600 --> 00:17:43,280 Speaker 6: and people kind of push into corners of finance to 359 00:17:43,520 --> 00:17:49,720 Speaker 6: get that extra return, and it's probably, in hindsight, looks 360 00:17:49,760 --> 00:17:50,840 Speaker 6: like a bad idea for something. 361 00:17:50,880 --> 00:17:52,520 Speaker 2: And Paul You turned to me and said, what about 362 00:17:52,560 --> 00:17:56,840 Speaker 2: Jeffery's you know, first Brands, tricolor and now this next. 363 00:17:56,760 --> 00:17:58,159 Speaker 3: Thing exactly constantine. 364 00:17:58,160 --> 00:17:59,800 Speaker 5: I guess that kind of goes to the question of 365 00:18:00,440 --> 00:18:02,399 Speaker 5: do we put this in this Oh it's just a 366 00:18:02,440 --> 00:18:06,520 Speaker 5: one off, idiosyncratic thing, or is there something more broader 367 00:18:06,560 --> 00:18:08,520 Speaker 5: here that people are concerned about? 368 00:18:09,600 --> 00:18:10,320 Speaker 7: I think definitely. 369 00:18:10,400 --> 00:18:13,359 Speaker 6: I think you know, it's only how many how many 370 00:18:13,400 --> 00:18:15,840 Speaker 6: examples you need for it not to be considered a trend. 371 00:18:15,920 --> 00:18:20,439 Speaker 6: That's my view, So of course they'll tell you that 372 00:18:20,560 --> 00:18:27,600 Speaker 6: each instance is idiosyncratic and comes with its own yeah, yeah, parameters. 373 00:18:27,640 --> 00:18:31,120 Speaker 6: But at the end of the day, these are yeah, 374 00:18:31,160 --> 00:18:32,440 Speaker 6: the evidence is just there. 375 00:18:32,440 --> 00:18:37,560 Speaker 2: That is the tilt here towards what I'm going to 376 00:18:37,680 --> 00:18:42,920 Speaker 2: call executive fiction delusion, fraud, or is the tilt here 377 00:18:43,119 --> 00:18:49,720 Speaker 2: to normative leverage market forces where oops, something goes wrong 378 00:18:49,840 --> 00:18:51,760 Speaker 2: because of leverage. 379 00:18:52,440 --> 00:18:54,760 Speaker 7: It's where those two things intersect. 380 00:18:54,960 --> 00:18:59,280 Speaker 6: It's when leverages, when you use leverage and then you 381 00:18:59,359 --> 00:19:02,000 Speaker 6: end up in in the situation and then and then 382 00:19:02,000 --> 00:19:03,520 Speaker 6: it's just the losses are just compounding. 383 00:19:03,640 --> 00:19:06,040 Speaker 2: We got to go, yeah, cause we got to go here, 384 00:19:06,080 --> 00:19:07,479 Speaker 2: and you got to get back to work. I mean, 385 00:19:07,520 --> 00:19:12,159 Speaker 2: you haven't done You've completely slacked off here this morning. 386 00:19:12,400 --> 00:19:15,359 Speaker 2: What I want to know is, what's your biggest mystery? 387 00:19:15,880 --> 00:19:17,560 Speaker 2: Is you published a Monday morning? 388 00:19:18,480 --> 00:19:18,840 Speaker 7: Okay? 389 00:19:18,880 --> 00:19:22,480 Speaker 6: So questions that I want to find out where is 390 00:19:22,760 --> 00:19:28,240 Speaker 6: Rajah and more about who he is, because the allegations 391 00:19:28,280 --> 00:19:32,000 Speaker 6: in court were that he's he's skipped down. The other 392 00:19:32,040 --> 00:19:34,600 Speaker 6: one is kind of how exactly this went down, what 393 00:19:35,480 --> 00:19:40,320 Speaker 6: precipitated the blow up exactly right? And then obviously who 394 00:19:40,359 --> 00:19:42,760 Speaker 6: else is involved? Because I have a sense that there 395 00:19:42,760 --> 00:19:47,119 Speaker 6: are some other names that we haven't unearthed yet. 396 00:19:47,359 --> 00:19:50,520 Speaker 2: Constantine on behalf of all of Teams Surveillance. Thank you 397 00:19:50,560 --> 00:19:53,400 Speaker 2: to your team for your reporting on this story. It's 398 00:19:53,400 --> 00:19:57,480 Speaker 2: gone worldwide this morning. I really can't say enough about 399 00:19:57,480 --> 00:20:00,639 Speaker 2: the work that we've seen off the Derivatives desk Bloomberg 400 00:20:01,160 --> 00:20:07,280 Speaker 2: at Queen Victoria Street. Constantine kurkulis with his stay with us. 401 00:20:07,520 --> 00:20:10,720 Speaker 2: More from Bloomberg Surveillance coming up after this. 402 00:20:18,000 --> 00:20:21,560 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live 403 00:20:21,640 --> 00:20:24,800 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 404 00:20:24,880 --> 00:20:28,320 Speaker 1: Apple Karplay and Android Otto with the Bloomberg Business app, 405 00:20:28,440 --> 00:20:30,200 Speaker 1: or watch us live on YouTube. 406 00:20:30,480 --> 00:20:34,119 Speaker 2: This is incredibly well timed. KPMG UK has done a 407 00:20:34,160 --> 00:20:37,600 Speaker 2: survey of Europe, and of course yell selfon joins us 408 00:20:37,640 --> 00:20:40,760 Speaker 2: now Yale in America. All we're talking about is a 409 00:20:40,840 --> 00:20:44,119 Speaker 2: lengthy Wall Street Journal article that says Paul Sweeney and 410 00:20:44,160 --> 00:20:47,680 Speaker 2: Tom Keener moving to Europe. So I want to personalize 411 00:20:47,720 --> 00:20:52,600 Speaker 2: the KPMG sixty thousand foot view Yale. What is the 412 00:20:52,720 --> 00:20:57,600 Speaker 2: Europe we're moving to, whether we move to Portugal or Finland. 413 00:20:58,000 --> 00:21:04,000 Speaker 2: We moved to Wales, we moved to Eastern Europe. Albania. Sure, Albania. 414 00:21:04,119 --> 00:21:06,679 Speaker 2: What's the europe yell that we're moving to. 415 00:21:07,880 --> 00:21:11,480 Speaker 8: Well, first of all, welcome, we'll be happy to have. 416 00:21:11,400 --> 00:21:12,720 Speaker 3: You, Thank you. 417 00:21:14,040 --> 00:21:17,600 Speaker 8: And I think Europe is very diverse. 418 00:21:17,800 --> 00:21:18,040 Speaker 9: Yeah. 419 00:21:18,200 --> 00:21:21,280 Speaker 8: I mean you could say the US is reverliatively diverse 420 00:21:21,320 --> 00:21:23,800 Speaker 8: if you look at different states, But when it comes 421 00:21:23,800 --> 00:21:27,120 Speaker 8: to Europe, as you say, there's a lot of different 422 00:21:27,280 --> 00:21:33,480 Speaker 8: parts there, and I think generally there's quite a few opportunities. 423 00:21:33,680 --> 00:21:35,600 Speaker 8: It really depends on what you're after. 424 00:21:36,440 --> 00:21:36,680 Speaker 3: Yeah. 425 00:21:36,680 --> 00:21:39,879 Speaker 5: We saw about this time last year when President Trump 426 00:21:40,720 --> 00:21:44,880 Speaker 5: initiated some of his tariffs, that we saw Europe step 427 00:21:44,960 --> 00:21:47,399 Speaker 5: up here and we saw a number of countries saying, okay, 428 00:21:48,000 --> 00:21:49,840 Speaker 5: we get the message. We're going to start investing in 429 00:21:49,880 --> 00:21:53,760 Speaker 5: our military, in our infrastructure, Germany in particular, making some 430 00:21:54,080 --> 00:21:59,160 Speaker 5: big commitments. Is that something Europe can really do over 431 00:21:59,200 --> 00:22:01,400 Speaker 5: the intermediate long term. 432 00:22:01,720 --> 00:22:04,200 Speaker 8: Well, I mean, I think there's a few things here. 433 00:22:04,359 --> 00:22:08,080 Speaker 8: One is, what would you really want Europe to invest in. 434 00:22:08,320 --> 00:22:11,960 Speaker 8: I'd say defense is probably necessary, but if we can 435 00:22:12,040 --> 00:22:17,040 Speaker 8: be as forward looking as possible and try and invest 436 00:22:17,080 --> 00:22:19,760 Speaker 8: in the things that will actually help our defense as 437 00:22:19,800 --> 00:22:23,720 Speaker 8: well as potentially more be of due usage and help 438 00:22:23,800 --> 00:22:27,439 Speaker 8: us with our productivity another thing that's even better, So 439 00:22:28,800 --> 00:22:33,720 Speaker 8: trying to figure that out is important. Also, Europe really 440 00:22:33,760 --> 00:22:36,480 Speaker 8: want to try and produce as much as possible of 441 00:22:36,520 --> 00:22:42,000 Speaker 8: it in Europe, and we probably as a whole don't 442 00:22:42,040 --> 00:22:44,760 Speaker 8: have the capabilities at the moment. So there's a big 443 00:22:44,880 --> 00:22:48,160 Speaker 8: theme of wreaking up mobilities. Well, I mean, but first 444 00:22:48,160 --> 00:22:49,760 Speaker 8: of all, you need to understand what it is that 445 00:22:49,800 --> 00:22:50,840 Speaker 8: you want to produce. 446 00:22:52,960 --> 00:22:56,600 Speaker 2: In your KPMG study, you have nominal GDP just as 447 00:22:56,600 --> 00:23:00,200 Speaker 2: a quick sum, it's maybe four percent four point two 448 00:23:00,280 --> 00:23:03,840 Speaker 2: percent or maybe dare I say nominal GDP The animal 449 00:23:03,880 --> 00:23:07,480 Speaker 2: spirit of the economy is sub three percent over here. 450 00:23:07,520 --> 00:23:12,320 Speaker 2: That's a depression. Can Europe accept that tepid growth? Or 451 00:23:12,400 --> 00:23:18,320 Speaker 2: is there finally a behavioral motivation to be more Anglo American? 452 00:23:20,280 --> 00:23:22,880 Speaker 8: Very good question. So I think there's two things here. 453 00:23:23,040 --> 00:23:27,840 Speaker 8: One is we've had much wiger productivity in Europe than 454 00:23:27,880 --> 00:23:30,800 Speaker 8: in the US. Some of it, i'd say, you can 455 00:23:30,960 --> 00:23:35,159 Speaker 8: potentially change. There's definitely things that Europe can do better 456 00:23:35,240 --> 00:23:38,959 Speaker 8: and is striving to do a bit better. But europely slow. 457 00:23:39,119 --> 00:23:41,159 Speaker 8: I mean, if you look at the European Union, we 458 00:23:41,200 --> 00:23:43,640 Speaker 8: have twenty seven countries. It's not that easy to bring 459 00:23:43,680 --> 00:23:44,920 Speaker 8: them all Yeah stuck. 460 00:23:45,080 --> 00:23:47,320 Speaker 2: Yeah, Yeah, it's not slow. It's the land of the 461 00:23:47,359 --> 00:23:50,679 Speaker 2: three hour lunch. I've lived it in Frankfurt. Yeah. Is 462 00:23:50,760 --> 00:23:53,280 Speaker 2: AI going to speed things up for you? Is AI 463 00:23:53,400 --> 00:23:57,320 Speaker 2: in Helsinki or AI in Paul Sweety's Albania? Is it 464 00:23:57,359 --> 00:23:58,520 Speaker 2: going to get it done? 465 00:23:59,119 --> 00:23:59,399 Speaker 3: Okay? 466 00:23:59,520 --> 00:24:01,919 Speaker 8: This is a but also you need to think about 467 00:24:02,040 --> 00:24:04,720 Speaker 8: what you're trying to achieve. There's also about things about 468 00:24:04,800 --> 00:24:09,879 Speaker 8: quality of life equalities. There's other goals that Europeans have 469 00:24:10,080 --> 00:24:15,199 Speaker 8: that the America doesn't necessarily put at the forefront. And 470 00:24:15,240 --> 00:24:17,800 Speaker 8: I'm not sure that is going to change as much. 471 00:24:17,880 --> 00:24:22,080 Speaker 8: I think different priorities in Europe and that's partially why 472 00:24:23,000 --> 00:24:28,120 Speaker 8: they priority prioritize other things, and growth is not always 473 00:24:28,400 --> 00:24:33,480 Speaker 8: the first priority. AI will help. I think AI will help, 474 00:24:33,520 --> 00:24:36,480 Speaker 8: but also it's not going to work the same way 475 00:24:36,520 --> 00:24:40,439 Speaker 8: as in the US because you don't have the initial technology. 476 00:24:41,119 --> 00:24:44,200 Speaker 5: Yeah, what's the thinking now again, a year after President 477 00:24:44,240 --> 00:24:47,119 Speaker 5: Trump again his tariff campaign, what's the thinking in Europe 478 00:24:47,119 --> 00:24:50,159 Speaker 5: about the ability to partner with the US, to trade 479 00:24:50,160 --> 00:24:50,879 Speaker 5: with the US? 480 00:24:51,560 --> 00:24:52,959 Speaker 3: Where are we with that thinking? 481 00:24:53,880 --> 00:24:54,040 Speaker 5: Well? 482 00:24:54,200 --> 00:24:59,639 Speaker 8: US is still an incredibly important market for Europe and 483 00:25:00,160 --> 00:25:05,520 Speaker 8: a partner across different you know, initiatives, but there's definitely 484 00:25:05,520 --> 00:25:11,040 Speaker 8: a recognition that you can rely less on US to 485 00:25:11,280 --> 00:25:14,360 Speaker 8: help in times of when you look at defense, for example, 486 00:25:14,800 --> 00:25:17,879 Speaker 8: but also you can you can rely less on the 487 00:25:18,000 --> 00:25:21,639 Speaker 8: US as a market, given that policies change all the time. 488 00:25:22,680 --> 00:25:27,280 Speaker 2: Yil you're at UCL and LC, you get prodigious European chips. 489 00:25:27,320 --> 00:25:29,040 Speaker 2: We've got to run to our next guest. I got 490 00:25:29,119 --> 00:25:31,880 Speaker 2: six people telling me I got to get to them yourself. 491 00:25:31,960 --> 00:25:37,000 Speaker 2: And as simply as I can, are Americans welcome in Europe? 492 00:25:37,600 --> 00:25:37,840 Speaker 8: Yes? 493 00:25:38,840 --> 00:25:43,040 Speaker 3: There, that's good enough. You're over there all the time. 494 00:25:43,280 --> 00:25:45,439 Speaker 3: I'm loving, love you. But you know, I mean, just 495 00:25:45,440 --> 00:25:46,280 Speaker 3: to finish this up. 496 00:25:46,320 --> 00:25:49,560 Speaker 2: Yeah, I go to Paris and I'm in a Disneyland 497 00:25:49,640 --> 00:25:52,760 Speaker 2: tourist center of three Arron d Small. There's a whole 498 00:25:52,840 --> 00:25:57,200 Speaker 2: other Paris out there. I never see describe that tension 499 00:25:57,560 --> 00:26:01,439 Speaker 2: between the real Paris and the tur Paris of tom Keene. 500 00:26:04,040 --> 00:26:09,119 Speaker 8: Europe has many challenges and they need to try and 501 00:26:09,160 --> 00:26:11,840 Speaker 8: overcome them. One way of trying to overcome them is 502 00:26:11,880 --> 00:26:16,600 Speaker 8: by increasing growth and potentially but also giving more people 503 00:26:16,680 --> 00:26:20,120 Speaker 8: the opportunity to benefit from thy growth. I think this 504 00:26:20,160 --> 00:26:22,680 Speaker 8: is a similar issue to what we have in the US. 505 00:26:22,760 --> 00:26:26,280 Speaker 8: It's not different at all. You have different worlds in 506 00:26:26,320 --> 00:26:27,280 Speaker 8: the US as well. 507 00:26:27,640 --> 00:26:30,080 Speaker 2: Don't be a stranger. This has been fabulous yourself, and 508 00:26:30,160 --> 00:26:33,280 Speaker 2: thank you so much. With the European report out of 509 00:26:33,320 --> 00:26:38,600 Speaker 2: KPMG in the United Kingdom, thank you so much. Stay 510 00:26:38,640 --> 00:26:42,480 Speaker 2: with us. More from Bloomberg Surveillance coming up after this. 511 00:26:49,760 --> 00:26:53,320 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 512 00:26:53,400 --> 00:26:56,560 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 513 00:26:56,640 --> 00:27:00,320 Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or 514 00:27:00,440 --> 00:27:02,080 Speaker 1: watch US live on YouTube. 515 00:27:02,440 --> 00:27:05,920 Speaker 2: That's right. Schapper joins us from Lazard asset manager. Really 516 00:27:05,920 --> 00:27:08,480 Speaker 2: to do a brief here on EM but I got 517 00:27:08,520 --> 00:27:10,399 Speaker 2: to go. You know you're at NYU, you're an LC 518 00:27:10,680 --> 00:27:13,840 Speaker 2: and in all of a study the history of the 519 00:27:13,880 --> 00:27:17,600 Speaker 2: shadows that are out there. We agreeeded this morning and folks, 520 00:27:17,760 --> 00:27:19,879 Speaker 2: our lead reporter on this will be on with in 521 00:27:19,920 --> 00:27:23,760 Speaker 2: twenty minutes. MFS in London, mister Diamond would say, it's 522 00:27:23,760 --> 00:27:27,720 Speaker 2: another cockroach. Are you in the broader team at Lazard? 523 00:27:28,280 --> 00:27:33,680 Speaker 2: Are you worry about the shadows of manufactured leverage, manufactured 524 00:27:33,720 --> 00:27:34,479 Speaker 2: private credit? 525 00:27:34,960 --> 00:27:37,800 Speaker 9: So I think the most important thing and Peter at 526 00:27:37,880 --> 00:27:40,760 Speaker 9: Lazard or our CEO, talks about the context of contextual 527 00:27:40,800 --> 00:27:45,239 Speaker 9: alpha and understanding the impact of events like that are 528 00:27:45,320 --> 00:27:47,400 Speaker 9: unfolding right now, and how does that pick the impact 529 00:27:47,400 --> 00:27:51,840 Speaker 9: the broader context. As an emerging market investor, we understand 530 00:27:51,840 --> 00:27:53,840 Speaker 9: the cost of capital is born here in the US 531 00:27:53,840 --> 00:27:58,280 Speaker 9: and understanding that context around the geopolitics where inflation expectations are. 532 00:27:58,480 --> 00:28:00,639 Speaker 9: When I see that kind of context playing out in 533 00:28:00,640 --> 00:28:03,840 Speaker 9: emerging markets, we're really constructive the asset class. We see 534 00:28:03,840 --> 00:28:07,640 Speaker 9: positive real rates, we see that liquidity measure better. Quite frankly, 535 00:28:07,880 --> 00:28:10,600 Speaker 9: the banking systems across most of the emerging markets are 536 00:28:10,680 --> 00:28:13,240 Speaker 9: very traditional in nature. We don't have a lot in 537 00:28:13,280 --> 00:28:18,920 Speaker 9: terms of private credit and non banking financial companies that we've. 538 00:28:18,480 --> 00:28:21,800 Speaker 5: Really seen emerging markets perform so well over the last 539 00:28:21,880 --> 00:28:24,800 Speaker 5: year plus. How much of that has been the weakness 540 00:28:24,800 --> 00:28:29,800 Speaker 5: of the US dollar versus maybe improving earnings, just better 541 00:28:29,840 --> 00:28:32,240 Speaker 5: business prospects politics in general. 542 00:28:32,280 --> 00:28:34,280 Speaker 9: So, Paul, I think what's really exciting is that emerging 543 00:28:34,280 --> 00:28:38,560 Speaker 9: markets just finished ten years of famine and we're in 544 00:28:38,800 --> 00:28:41,240 Speaker 9: an eighteen month period where em is kind of getting 545 00:28:41,240 --> 00:28:43,440 Speaker 9: a little bit of it's mojo back. But what's really 546 00:28:43,440 --> 00:28:46,800 Speaker 9: important is that this is not just purely on weaker dollar, 547 00:28:46,920 --> 00:28:49,520 Speaker 9: which obviously plays an important role in terms of global 548 00:28:49,560 --> 00:28:53,240 Speaker 9: stimulus because long term liabilities are denominant dollars. But importantly, 549 00:28:53,280 --> 00:28:57,040 Speaker 9: there's foundational change. Emerging markets is no longer the monolithic 550 00:28:57,160 --> 00:29:00,000 Speaker 9: story of the past. We have AI opportunities that are 551 00:29:00,040 --> 00:29:02,400 Speaker 9: are taking place. I mean, as we know many leading 552 00:29:02,640 --> 00:29:05,920 Speaker 9: semiconductor companies Korea for examples of fifty percent here today. 553 00:29:06,000 --> 00:29:06,800 Speaker 3: They're a key. 554 00:29:06,640 --> 00:29:08,640 Speaker 9: Component of that. And at the same time, the debate 555 00:29:08,720 --> 00:29:12,160 Speaker 9: around AI and disruption is impacting some of the service areas. 556 00:29:12,480 --> 00:29:14,480 Speaker 2: Should we do a victory laugh on this shore I 557 00:29:14,480 --> 00:29:17,120 Speaker 2: wrote Heat was way out front on this. Yeah, I mean, 558 00:29:17,240 --> 00:29:18,960 Speaker 2: you know you were in here months and months and 559 00:29:19,040 --> 00:29:23,800 Speaker 2: quarters ago saying this is different. Why is Korea tripled? 560 00:29:24,360 --> 00:29:27,960 Speaker 3: Yeah, good question. It's it's it's a couple of things. 561 00:29:28,000 --> 00:29:31,920 Speaker 9: First of all, the local populace are equity owners of 562 00:29:31,960 --> 00:29:36,080 Speaker 9: their companies, right, so they essentially are are our greater participation. 563 00:29:36,120 --> 00:29:37,880 Speaker 9: We're seeing their their flowes picking up. 564 00:29:37,960 --> 00:29:39,440 Speaker 3: We're seeing corporate governance reform. 565 00:29:39,520 --> 00:29:43,000 Speaker 9: They just announced this week plans to improve treasury shares 566 00:29:43,040 --> 00:29:45,719 Speaker 9: in terms of cancelations. And then the most important aspect 567 00:29:45,920 --> 00:29:47,480 Speaker 9: is the focus on R. 568 00:29:47,440 --> 00:29:48,320 Speaker 3: And D and investment. 569 00:29:48,680 --> 00:29:52,400 Speaker 9: In Korea, we've seen this development particularly around memory, which 570 00:29:52,760 --> 00:29:55,480 Speaker 9: has really helped the leading memory companies that are key 571 00:29:55,520 --> 00:29:58,600 Speaker 9: components of high bandwidth memory that goes into our AI 572 00:29:58,680 --> 00:30:01,080 Speaker 9: servers today. The other aspect which I think people are 573 00:30:01,080 --> 00:30:03,600 Speaker 9: getting excited about is this aspect. 574 00:30:03,280 --> 00:30:05,960 Speaker 3: Of of of uh. 575 00:30:05,160 --> 00:30:07,680 Speaker 9: Robotics and humanoids. And you guys had an interesting piece 576 00:30:07,760 --> 00:30:12,080 Speaker 9: yesterday looking at uh uh the Atlas uh robot by 577 00:30:12,120 --> 00:30:13,800 Speaker 9: by the Hundai Group and how does that compare with 578 00:30:13,840 --> 00:30:16,280 Speaker 9: what Tesla's doing. The context is that you had a 579 00:30:16,360 --> 00:30:18,840 Speaker 9: very low valuation starting point and at the same time, 580 00:30:18,880 --> 00:30:22,640 Speaker 9: foundationally there's there's there's there's uh uh investment happening. 581 00:30:22,640 --> 00:30:25,080 Speaker 2: To see that row heat is pounding the table? Do 582 00:30:25,160 --> 00:30:25,560 Speaker 2: you hear that? 583 00:30:28,000 --> 00:30:29,200 Speaker 3: Now we's been saying the same thing. 584 00:30:29,680 --> 00:30:32,760 Speaker 5: Got time to really pay attention to emerging markets here China. 585 00:30:33,240 --> 00:30:35,920 Speaker 5: What is your world doing with China these days? For 586 00:30:35,960 --> 00:30:39,200 Speaker 5: a while it was almost uninvestable. Now it seems to. 587 00:30:39,160 --> 00:30:41,040 Speaker 3: Be back, coming back. How do you guys think about it? 588 00:30:41,120 --> 00:30:41,280 Speaker 1: Yeah? 589 00:30:41,280 --> 00:30:43,480 Speaker 9: So, I think that the exciting thing about China is 590 00:30:43,520 --> 00:30:46,200 Speaker 9: that there's no one China. It's no longer just purely 591 00:30:46,200 --> 00:30:50,160 Speaker 9: based upon fixed out that investment and property development that 592 00:30:50,240 --> 00:30:53,600 Speaker 9: area is still quite challenged. But what's exciting is what 593 00:30:53,680 --> 00:30:56,440 Speaker 9: China's doing in terms of energy security, what China has 594 00:30:56,440 --> 00:31:00,520 Speaker 9: done in terms of uh AI renewables uh as we 595 00:31:00,600 --> 00:31:03,200 Speaker 9: talked about, over fifty percent of vehicle sales in China 596 00:31:03,200 --> 00:31:06,840 Speaker 9: today are ev They're also exporting, so that context in 597 00:31:06,920 --> 00:31:10,560 Speaker 9: terms of them moving terms of working forth the dustrialization. 598 00:31:10,800 --> 00:31:12,640 Speaker 9: And at the same time we've seen a lot of development, 599 00:31:12,680 --> 00:31:17,280 Speaker 9: particularly around the AI, the natural language processing that's occurry 600 00:31:17,280 --> 00:31:18,960 Speaker 9: that China is also playing. 601 00:31:20,200 --> 00:31:21,280 Speaker 3: In that global race. 602 00:31:21,520 --> 00:31:24,400 Speaker 2: Right He choper with us. He's EM equity portfolio manager 603 00:31:24,400 --> 00:31:27,400 Speaker 2: at Lazard asset manager. Can we massively rip up the 604 00:31:27,440 --> 00:31:29,720 Speaker 2: script and yelet of rip okay? I'm going to editorialize 605 00:31:29,720 --> 00:31:32,240 Speaker 2: and say that under the leadership of Peter Orzag, who's 606 00:31:32,280 --> 00:31:35,640 Speaker 2: been way kind to me over the years, mister Orzag 607 00:31:35,680 --> 00:31:39,760 Speaker 2: has reinvigorated the academics of Lazard, the brain power coming 608 00:31:39,800 --> 00:31:43,560 Speaker 2: out of your shop is just jaw dropping. Is AI 609 00:31:43,840 --> 00:31:49,720 Speaker 2: transferable to the EM economies? I get it that that 610 00:31:49,840 --> 00:31:54,400 Speaker 2: AI works in Silicon Valley, it works at Northwestern in Chicago, 611 00:31:55,040 --> 00:31:55,920 Speaker 2: Does it work at Duke? 612 00:31:56,120 --> 00:31:57,440 Speaker 3: I think it works at day time? 613 00:31:57,560 --> 00:31:59,760 Speaker 2: It works at Duke, Does it work in. 614 00:31:59,720 --> 00:32:04,200 Speaker 9: Malay It works because it is a tool right now. 615 00:32:04,200 --> 00:32:07,400 Speaker 9: It's leading to productivity gains. It's about understanding the data. 616 00:32:07,920 --> 00:32:10,880 Speaker 9: But what's also a fact is that AI will be 617 00:32:10,960 --> 00:32:14,760 Speaker 9: highly disruptive as well. We're seeing some of those debate. 618 00:32:14,760 --> 00:32:16,400 Speaker 9: For example, I just came back from India. There's a 619 00:32:16,400 --> 00:32:19,600 Speaker 9: big debate, particularly in the IT services industry where a 620 00:32:19,600 --> 00:32:23,040 Speaker 9: lot of these companies were benefiting from lower cost labor 621 00:32:23,120 --> 00:32:28,000 Speaker 9: and IT expertise and now potentially that code is going 622 00:32:28,000 --> 00:32:30,400 Speaker 9: to be written by AI and that can be disruptive. 623 00:32:30,400 --> 00:32:33,000 Speaker 2: Okay, the heart of India issach an Adela, coming out 624 00:32:33,040 --> 00:32:38,120 Speaker 2: of Bangalore and down south is a Tamil Nadu. Tamil Nadu. 625 00:32:38,360 --> 00:32:41,000 Speaker 2: How are they adapting to AI in the heart of 626 00:32:41,160 --> 00:32:42,680 Speaker 2: Indian technology? 627 00:32:42,640 --> 00:32:43,880 Speaker 3: Yes, it's a wake up call. 628 00:32:43,920 --> 00:32:44,160 Speaker 8: I think. 629 00:32:44,160 --> 00:32:45,520 Speaker 9: The first thing I'd say here is that if you 630 00:32:45,560 --> 00:32:48,360 Speaker 9: look at Indian corporates, historically they haven't invested as much 631 00:32:48,360 --> 00:32:49,960 Speaker 9: in terms of R and D spen. So R and 632 00:32:50,040 --> 00:32:53,600 Speaker 9: D spend in India has been relatively low. What you're 633 00:32:53,600 --> 00:32:56,520 Speaker 9: finding with the tariff discussions that there's been a whole 634 00:32:56,560 --> 00:32:58,760 Speaker 9: focus on how do we improve our R and d 635 00:32:58,840 --> 00:33:01,240 Speaker 9: spen how do we improve our manufat action capability, So 636 00:33:01,280 --> 00:33:03,840 Speaker 9: there is definitely a sense of urgency. I do think 637 00:33:03,880 --> 00:33:05,960 Speaker 9: these models will business models will change. But at the 638 00:33:05,960 --> 00:33:08,760 Speaker 9: same time as companies adopt AI, you need the Indian 639 00:33:08,840 --> 00:33:11,680 Speaker 9: IT service companies to help push that through that integration. 640 00:33:11,960 --> 00:33:12,560 Speaker 2: Get one more in. 641 00:33:13,000 --> 00:33:15,280 Speaker 5: Num world of emerging markets equities, where do you guys 642 00:33:15,280 --> 00:33:17,440 Speaker 5: see the maybe the best value give now you have 643 00:33:17,560 --> 00:33:18,760 Speaker 5: had some movement here. 644 00:33:19,160 --> 00:33:21,440 Speaker 9: I think the best value in emerging markets it is Brazil. 645 00:33:21,760 --> 00:33:25,480 Speaker 3: Brazil. I think, yes, you have the. 646 00:33:25,760 --> 00:33:29,240 Speaker 9: Benefit a weaker dollar, you have strong commodity complex, inflation 647 00:33:29,320 --> 00:33:32,080 Speaker 9: under control, and most importantly, real rates are amongst the 648 00:33:32,120 --> 00:33:34,800 Speaker 9: highest in the world based interest rates at fifteen percent. 649 00:33:35,160 --> 00:33:37,360 Speaker 9: I think that starts to come down as inflation comes down, 650 00:33:37,400 --> 00:33:39,200 Speaker 9: and that's going to start to drive a current cycle 651 00:33:39,400 --> 00:33:41,080 Speaker 9: and that's going to be I think a big surprise 652 00:33:41,120 --> 00:33:43,040 Speaker 9: to investors that they see growth improving there. 653 00:33:42,880 --> 00:33:45,600 Speaker 2: I get to research. Note that just came out. Roycheschepper, 654 00:33:45,720 --> 00:33:49,960 Speaker 2: thank you so much for coming in with Stay with us. 655 00:33:50,200 --> 00:33:53,440 Speaker 2: More from Bloomberg Surveillance coming up after this. 656 00:34:00,640 --> 00:34:04,240 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live 657 00:34:04,320 --> 00:34:07,480 Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on 658 00:34:07,560 --> 00:34:11,239 Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or 659 00:34:11,360 --> 00:34:12,880 Speaker 1: watch US live on YouTube. 660 00:34:13,000 --> 00:34:16,960 Speaker 2: Jennifer Welch joins US now chief geo Economics analyst Bloomberg 661 00:34:17,040 --> 00:34:22,719 Speaker 2: Economics on Iran and suddenly on Cuba. Jennifer Welch, thank 662 00:34:22,719 --> 00:34:25,560 Speaker 2: you so much for joining us. It's ninety four miles 663 00:34:25,560 --> 00:34:29,680 Speaker 2: from Key West to the shores of Cuba. How close 664 00:34:29,840 --> 00:34:32,960 Speaker 2: are we to Cuba as we go into the weekend. 665 00:34:33,840 --> 00:34:37,120 Speaker 10: I think at the moment the situation is somewhat uncertain, 666 00:34:37,239 --> 00:34:40,880 Speaker 10: but somewhat stable too. When we look at the recent 667 00:34:41,000 --> 00:34:45,840 Speaker 10: incident of a boarded tag speedboat approaching Cuban authorities having 668 00:34:46,080 --> 00:34:50,239 Speaker 10: a crisis, a shooting incident, and the immediate response from 669 00:34:50,320 --> 00:34:53,480 Speaker 10: Washington doesn't seem to indicate that the United States is 670 00:34:53,480 --> 00:34:56,000 Speaker 10: looking to get directly involved at this moment. They're looking 671 00:34:56,040 --> 00:34:58,600 Speaker 10: to gather more information, but it's somewhat of a d 672 00:34:58,719 --> 00:34:59,640 Speaker 10: esclatory step. 673 00:35:00,160 --> 00:35:01,200 Speaker 3: I think the broader. 674 00:35:00,920 --> 00:35:06,000 Speaker 10: Trajectory, though, of the relationship, is increasingly negative for Cuba. 675 00:35:06,080 --> 00:35:08,920 Speaker 10: The economic pressure campaign that the US is put in 676 00:35:08,960 --> 00:35:11,959 Speaker 10: place doesn't look like it's going to let up anytime soon. 677 00:35:12,680 --> 00:35:14,600 Speaker 10: Or has the U S shifted its position in what 678 00:35:14,680 --> 00:35:16,160 Speaker 10: it ultimately wants to achieve. 679 00:35:15,840 --> 00:35:19,240 Speaker 2: There, Ben Jennifer, I remember my parents hiding the newspapers 680 00:35:19,280 --> 00:35:22,680 Speaker 2: of the Cuban missile crisis because they thought that the 681 00:35:22,719 --> 00:35:26,359 Speaker 2: offspring would be afraid of it. Go to twenty twenty one, 682 00:35:26,440 --> 00:35:31,080 Speaker 2: Miguel dis Canal takes over not a castro, who is 683 00:35:31,120 --> 00:35:35,640 Speaker 2: the leadership of Cuba that Secretary Rubio must confront. 684 00:35:37,080 --> 00:35:40,160 Speaker 10: It looks like Secretary Rubio and his team are engaging 685 00:35:40,280 --> 00:35:44,000 Speaker 10: with a number of different elites, including the former leaders, 686 00:35:44,120 --> 00:35:48,600 Speaker 10: personal bodyguards, and crew. I think though negotiations are still 687 00:35:48,640 --> 00:35:51,480 Speaker 10: at a pretty decent stage at this point, and this 688 00:35:51,640 --> 00:35:54,200 Speaker 10: is likely to be an extenduated situation. I mean, if 689 00:35:54,239 --> 00:35:56,920 Speaker 10: we think back to even Venezuela, that was a month's 690 00:35:56,960 --> 00:36:00,560 Speaker 10: long pressure campaign and at much higher level of intensity 691 00:36:00,600 --> 00:36:03,880 Speaker 10: than what we're currently seeing right now. You mentioned earlier 692 00:36:03,960 --> 00:36:05,920 Speaker 10: that there is also a situation in Iran in the 693 00:36:05,920 --> 00:36:08,919 Speaker 10: Middle East. US attention at the moment is a little 694 00:36:08,960 --> 00:36:11,600 Speaker 10: bit more divided and spread across the world, and I 695 00:36:11,640 --> 00:36:13,720 Speaker 10: think that's part of the reason that we're not seeing 696 00:36:13,760 --> 00:36:15,880 Speaker 10: a huge escalation on Cuba right now. 697 00:36:16,600 --> 00:36:19,399 Speaker 5: You mentioned Iran, we're putting. The US is putting some 698 00:36:19,520 --> 00:36:24,600 Speaker 5: serious military hardware in that part of the world. We 699 00:36:24,880 --> 00:36:27,319 Speaker 5: typically don't do that unless we're going to use it. 700 00:36:27,520 --> 00:36:30,920 Speaker 5: Historically speaking, what's the latest thinking coming out of Washington 701 00:36:30,920 --> 00:36:32,560 Speaker 5: as it relates to Iran? 702 00:36:34,080 --> 00:36:36,360 Speaker 10: The military build up, as you mentioned, it's one of 703 00:36:36,360 --> 00:36:39,359 Speaker 10: the largest in decades since the Iraq War, really in 704 00:36:39,400 --> 00:36:42,520 Speaker 10: many ways, and I think it serves two purposes. The 705 00:36:42,560 --> 00:36:46,040 Speaker 10: first one is signaling power to Tehran that the United 706 00:36:46,040 --> 00:36:48,640 Speaker 10: States is serious about wanting a deal and sort of 707 00:36:48,640 --> 00:36:52,360 Speaker 10: applying this ongoing pressure. The second is to give the 708 00:36:52,400 --> 00:36:56,480 Speaker 10: President options if he does decide to order strikes. Now, 709 00:36:56,560 --> 00:36:58,840 Speaker 10: the risk that we face is the talks yesterday in 710 00:36:58,840 --> 00:37:02,200 Speaker 10: Geneva didn't produce an immediate agreement. They are meant to 711 00:37:02,239 --> 00:37:05,920 Speaker 10: continue next week, but US negotiators reportedly left that meeting 712 00:37:06,000 --> 00:37:09,640 Speaker 10: quite disappointed. And we've seen in the past, including last year, 713 00:37:09,800 --> 00:37:12,640 Speaker 10: that President Trump ordered strikes on Iran even when talks 714 00:37:12,640 --> 00:37:15,279 Speaker 10: were meant to continue. So we're by no means out 715 00:37:15,280 --> 00:37:16,800 Speaker 10: of the woods yet on this situation. 716 00:37:18,239 --> 00:37:21,680 Speaker 5: What is really the strategy of the US right now 717 00:37:21,719 --> 00:37:25,200 Speaker 5: through Has that been articulated well by this White House? 718 00:37:26,320 --> 00:37:26,480 Speaker 2: Well? 719 00:37:26,520 --> 00:37:28,279 Speaker 10: As we heard from the President earlier this week in 720 00:37:28,320 --> 00:37:30,160 Speaker 10: the City of the Union, I think if you had 721 00:37:30,160 --> 00:37:32,440 Speaker 10: to boil it down, his strategy is to try to 722 00:37:32,440 --> 00:37:35,959 Speaker 10: get Iran to agree to a nuclear deal again. After 723 00:37:36,040 --> 00:37:39,719 Speaker 10: pulling out of the nuclear deal that the Obama administration structured, 724 00:37:40,360 --> 00:37:43,000 Speaker 10: the President is now aiming to negotiate a new deal 725 00:37:43,040 --> 00:37:46,440 Speaker 10: with Iran. The challenge is that from Tehran's perspective, they 726 00:37:46,480 --> 00:37:48,319 Speaker 10: already agreed to a deal and the US is the 727 00:37:48,320 --> 00:37:50,440 Speaker 10: one that renegged on it, and now the US is 728 00:37:50,480 --> 00:37:53,400 Speaker 10: asking for far more at a time in which Tehran 729 00:37:53,480 --> 00:37:55,880 Speaker 10: feels it has far fewer options and its back is 730 00:37:55,920 --> 00:37:58,320 Speaker 10: already up against the wall. So this is a really 731 00:37:58,360 --> 00:38:00,640 Speaker 10: tense Situationifer, we got. 732 00:38:00,480 --> 00:38:02,960 Speaker 2: To go to breaking news, but really appreciate the twenty 733 00:38:03,000 --> 00:38:05,080 Speaker 2: four to seven you've been doing. She is chief ge 734 00:38:05,280 --> 00:38:10,160 Speaker 2: Economics analyst for Bloomberg Economics, Jennifer Welch here, and I 735 00:38:10,280 --> 00:38:12,719 Speaker 2: think we'll be more than speaking to her in the 736 00:38:12,719 --> 00:38:15,280 Speaker 2: coming weeks here, particularly on Iran. 737 00:38:16,000 --> 00:38:20,839 Speaker 1: This is the Bloomberg Surveillance Podcast, available on Apple, Spotify, 738 00:38:20,960 --> 00:38:25,240 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 739 00:38:25,360 --> 00:38:28,840 Speaker 1: seven to ten am Eastern on Bloomberg dot Com, The 740 00:38:28,920 --> 00:38:32,960 Speaker 1: iHeartRadio app tune In, and the Bloomberg Business App. You 741 00:38:32,960 --> 00:38:36,360 Speaker 1: can also watch us live every weekday on YouTube and 742 00:38:36,560 --> 00:38:38,280 Speaker 1: always on the Bloomberg terminal