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 00:00:27,960 --> 00:00:31,400 Speaker 2: Joining us now, someone never will have an encore career. 7 00:00:31,680 --> 00:00:34,800 Speaker 2: Claudia sim is the anchor to our job's day. We're 8 00:00:34,840 --> 00:00:38,280 Speaker 2: honored she could be with us in the revisions coming 9 00:00:38,479 --> 00:00:44,839 Speaker 2: up here. Claudia, how aging is our population? So? 10 00:00:45,159 --> 00:00:47,720 Speaker 3: I mean it's an ongoing process. 11 00:00:47,760 --> 00:00:51,000 Speaker 4: I mean baby boomers who have moved into prime retirement. 12 00:00:51,200 --> 00:00:55,639 Speaker 4: And you know, the demographics on the aging side move 13 00:00:55,760 --> 00:00:58,360 Speaker 4: very slowly. The demographics that have been moving very quickly 14 00:00:58,400 --> 00:01:01,520 Speaker 4: have been on the immigration side. That's really what's been pulling, 15 00:01:02,160 --> 00:01:05,120 Speaker 4: say the payroll numbers around. But aging is happening, and 16 00:01:05,160 --> 00:01:08,080 Speaker 4: that that is a that's a reality that's marching along 17 00:01:08,160 --> 00:01:09,840 Speaker 4: right with these every month of data. 18 00:01:09,600 --> 00:01:13,080 Speaker 5: Weekend, you know, Claudia, every time we talk about the 19 00:01:13,160 --> 00:01:16,520 Speaker 5: labor market, what we now also have to incorporate into 20 00:01:16,560 --> 00:01:20,040 Speaker 5: that discussion is AI quite simply as AI and net 21 00:01:20,120 --> 00:01:23,440 Speaker 5: creator of jobs or net destroyer of jobs. 22 00:01:23,440 --> 00:01:25,600 Speaker 6: What's what's your view at this early early stage. 23 00:01:26,920 --> 00:01:29,600 Speaker 4: So we're at a very early stage and with AI, 24 00:01:29,840 --> 00:01:32,960 Speaker 4: what this how this transforms our labor market and it 25 00:01:33,000 --> 00:01:35,920 Speaker 4: will transform our labor market is going to depend on 26 00:01:36,000 --> 00:01:39,920 Speaker 4: the leadership that we have in our businesses, our civic institutions, 27 00:01:39,920 --> 00:01:42,960 Speaker 4: and our government. Right like AI is not in control, 28 00:01:43,120 --> 00:01:45,640 Speaker 4: we are in control. It's a technology. It's a technology 29 00:01:45,680 --> 00:01:48,160 Speaker 4: that has a lot of potential. It could go in 30 00:01:48,160 --> 00:01:50,960 Speaker 4: a lot of different directions. It's not just about automating 31 00:01:51,000 --> 00:01:53,680 Speaker 4: out workers. It can also be about empowering workers and 32 00:01:53,760 --> 00:01:57,800 Speaker 4: making them you know, more valuable, higher paid, new opportunities. 33 00:01:58,120 --> 00:02:00,960 Speaker 4: But it's but we don't know to where it's going. 34 00:02:01,000 --> 00:02:03,160 Speaker 4: And so there's going to be decision makers who really, 35 00:02:03,240 --> 00:02:05,480 Speaker 4: you know, shape the future of AI and the workforce. 36 00:02:05,760 --> 00:02:09,480 Speaker 2: Claud your research not really emphasizes the revisions. So last 37 00:02:09,480 --> 00:02:13,000 Speaker 2: time I got a one thirty pop, what happens to 38 00:02:13,040 --> 00:02:15,520 Speaker 2: the markets if we go back to back plus one 39 00:02:15,560 --> 00:02:20,480 Speaker 2: hundred numbers? I mean, no one's expecting that, are they? No? 40 00:02:20,919 --> 00:02:23,680 Speaker 4: Yeah, And I think what we were looking for as 41 00:02:23,680 --> 00:02:28,040 Speaker 4: we came into this year with signs of stabilization in 42 00:02:28,120 --> 00:02:30,799 Speaker 4: the labor market, right, things had been slipping since midyear 43 00:02:31,120 --> 00:02:34,280 Speaker 4: and we saw job creation really like hit a wall 44 00:02:34,560 --> 00:02:36,280 Speaker 4: in the middle of last year, and so we're just 45 00:02:36,360 --> 00:02:37,760 Speaker 4: looking stabilization. 46 00:02:38,200 --> 00:02:40,680 Speaker 3: Right January was like more than stabilization. 47 00:02:40,720 --> 00:02:43,760 Speaker 4: One hundred and thirty thousand payrolls unemployment rate taking down 48 00:02:43,760 --> 00:02:45,919 Speaker 4: at tent that's not that's like getting better. I mean, 49 00:02:45,960 --> 00:02:48,520 Speaker 4: we'll take that right like, that would be awesome. But 50 00:02:48,680 --> 00:02:51,960 Speaker 4: even if we had some downard revisions to January, and 51 00:02:52,000 --> 00:02:54,760 Speaker 4: we have a February payrolls number that is positive and 52 00:02:54,840 --> 00:02:56,880 Speaker 4: kind of has some lyft to it, it could be 53 00:02:57,000 --> 00:02:59,960 Speaker 4: fifty thousand, forty thousand something in there, and then I'm 54 00:03:00,080 --> 00:03:02,519 Speaker 4: let me rate stay stable. Like that's going to check 55 00:03:02,560 --> 00:03:05,840 Speaker 4: the box on stabilization, even if we get some downward 56 00:03:05,919 --> 00:03:07,200 Speaker 4: revisions in prior months. 57 00:03:08,200 --> 00:03:12,000 Speaker 5: So real quickly, wages, how do you think wage environment 58 00:03:12,040 --> 00:03:12,600 Speaker 5: is right now? 59 00:03:14,280 --> 00:03:18,280 Speaker 4: So we have seen you know, wages, wage growth slow, 60 00:03:18,320 --> 00:03:20,639 Speaker 4: and we've seen a moderation. It's been very gradual, which 61 00:03:20,680 --> 00:03:23,680 Speaker 4: is consistent with some softening of demand for workers. But 62 00:03:23,760 --> 00:03:26,720 Speaker 4: the wage numbers, including last month, have still been you know, 63 00:03:26,840 --> 00:03:29,520 Speaker 4: pretty they've been pretty solid. And even when we think 64 00:03:29,560 --> 00:03:32,440 Speaker 4: about what's happening right now with gas prices and the 65 00:03:32,600 --> 00:03:36,480 Speaker 4: energy shop coming to American consumers. Those wage growth numbers 66 00:03:36,600 --> 00:03:39,360 Speaker 4: and the jobs are so important because this is the 67 00:03:39,480 --> 00:03:43,040 Speaker 4: key buffer that Americans have for these higher costs, is 68 00:03:43,040 --> 00:03:46,160 Speaker 4: to have a paycheck that's getting bigger and being able 69 00:03:46,200 --> 00:03:47,560 Speaker 4: to find work if they want work. 70 00:03:47,680 --> 00:03:49,520 Speaker 3: So that's a really critical backdrop. 71 00:03:50,360 --> 00:03:52,640 Speaker 2: Some with us new central advisors that we're going to 72 00:03:52,680 --> 00:03:56,840 Speaker 2: continue with doctor some here after we see the jobs report. 73 00:03:56,920 --> 00:03:59,640 Speaker 2: Jennifer Lee of BEMO Capital Markets a NAT your level 74 00:04:00,240 --> 00:04:04,480 Speaker 2: ubs will join us as well into the jobs report. 75 00:04:04,600 --> 00:04:13,200 Speaker 2: Futures negative thirty six. Good morning, Wow. 76 00:04:14,520 --> 00:04:18,440 Speaker 7: I'm Alexis Christophers, and these numbers just crossing the bloomberg now. 77 00:04:18,480 --> 00:04:21,880 Speaker 7: The Labor Department says the US economy lost ninety two 78 00:04:22,040 --> 00:04:26,320 Speaker 7: thousand jobs in February. That is worse than expected. We 79 00:04:26,320 --> 00:04:29,359 Speaker 7: were looking at an additional fifty five thousand jobs. And 80 00:04:29,400 --> 00:04:31,760 Speaker 7: of course this is compared to January when we added 81 00:04:31,800 --> 00:04:35,200 Speaker 7: one hundred and thirty thousand jobs. The unemployment rate ticking 82 00:04:35,279 --> 00:04:37,680 Speaker 7: up to four point four percent. The estimate there was 83 00:04:37,720 --> 00:04:40,159 Speaker 7: four point three percent in the prior month was four 84 00:04:40,200 --> 00:04:43,799 Speaker 7: point three percent. Checking wages month over month up slightly 85 00:04:43,839 --> 00:04:46,240 Speaker 7: to four tenths of a percent. Estimates were for three 86 00:04:46,279 --> 00:04:49,559 Speaker 7: tenths and earnings year over year also a bit hotter 87 00:04:49,600 --> 00:04:52,919 Speaker 7: three point eight percent versus the three point seven percent expected. 88 00:04:52,920 --> 00:04:55,800 Speaker 7: But again the headline here the economy lost many more 89 00:04:55,839 --> 00:04:58,800 Speaker 7: jobs and expected ninety two thousand in the month of February. 90 00:04:59,320 --> 00:05:01,839 Speaker 7: Estimates were for fifty five thousand. We also just got 91 00:05:01,880 --> 00:05:04,760 Speaker 7: retail sales numbers out for the month of January and 92 00:05:04,800 --> 00:05:07,320 Speaker 7: they were down two tenths of a percent versus the 93 00:05:07,480 --> 00:05:11,120 Speaker 7: estimate of three tenths of a percent. As for market reaction, 94 00:05:11,680 --> 00:05:13,840 Speaker 7: it is swift. The Dow futures now down more than 95 00:05:13,839 --> 00:05:16,720 Speaker 7: four hundred points s and p futures off sixty four. 96 00:05:17,000 --> 00:05:20,040 Speaker 2: Guys, alexis, thank you so much. Tenure Yield comes in 97 00:05:20,240 --> 00:05:24,120 Speaker 2: with a vengeance. Four point one seven is now handle 98 00:05:24,240 --> 00:05:27,919 Speaker 2: four point one zero. That's price up, yielded down in 99 00:05:28,000 --> 00:05:33,200 Speaker 2: futures negative forty to negative sixty. Here, retail sales pretty 100 00:05:33,279 --> 00:05:36,560 Speaker 2: much on track or the constructive revision. But Paul, I'm 101 00:05:36,560 --> 00:05:38,280 Speaker 2: just going to before we go back to doctor, some 102 00:05:39,000 --> 00:05:42,720 Speaker 2: change in non farm payrolls negative ninety two two months 103 00:05:42,839 --> 00:05:46,320 Speaker 2: revision negative sixty nine. I might ball on it, Paul, 104 00:05:46,360 --> 00:05:51,240 Speaker 2: but I think that's a negative one sixty one yep. 105 00:05:51,400 --> 00:05:54,880 Speaker 5: Combine, Yeah, that is a sharp reversal in the short 106 00:05:54,960 --> 00:05:58,159 Speaker 5: term labor market. Here again minus ninety two thousand. The 107 00:05:58,200 --> 00:06:00,960 Speaker 5: consensus was for positive fifty five five thousand, and that 108 00:06:01,000 --> 00:06:04,920 Speaker 5: two month payroll revision negative sixty. 109 00:06:04,760 --> 00:06:07,719 Speaker 6: Nine thousand toms. So that is the big numbers across 110 00:06:07,760 --> 00:06:08,119 Speaker 6: the tape. 111 00:06:08,240 --> 00:06:12,280 Speaker 2: Claudia sm this as we continue with all of good 112 00:06:12,320 --> 00:06:15,480 Speaker 2: work here. These are the kind of numbers, Claudia where 113 00:06:15,520 --> 00:06:19,839 Speaker 2: amateurs like me go, okay, that means diminished GDP? Is 114 00:06:19,839 --> 00:06:22,800 Speaker 2: that correct that all of the sun's back to a 115 00:06:22,880 --> 00:06:26,720 Speaker 2: lesser real GDP where we're on the sum recession. 116 00:06:26,240 --> 00:06:31,720 Speaker 4: Watch, So not necessarily you know this, so clearly these 117 00:06:31,800 --> 00:06:34,400 Speaker 4: numbers from February are not in like you know, checking 118 00:06:34,440 --> 00:06:37,160 Speaker 4: the box on signs of stabilization in the labor market. 119 00:06:37,240 --> 00:06:38,240 Speaker 3: Right, we're losing jobs. 120 00:06:38,360 --> 00:06:40,760 Speaker 4: Un'mplating rate ticked up. This is not a good sign. 121 00:06:41,200 --> 00:06:45,000 Speaker 4: This actually sits pretty consistently, especially get the last three 122 00:06:45,040 --> 00:06:47,719 Speaker 4: months with what we saw all of last year. The 123 00:06:47,800 --> 00:06:52,360 Speaker 4: US economy last year created almost no jobs on net right, 124 00:06:52,600 --> 00:06:57,240 Speaker 4: and at the same time, consumer spending increased, business investment 125 00:06:57,279 --> 00:06:58,480 Speaker 4: in creed GDP. 126 00:06:58,279 --> 00:06:59,279 Speaker 3: Rose for the year on. 127 00:07:00,920 --> 00:07:03,520 Speaker 4: Right, it may we can talk about concentration. We can 128 00:07:03,560 --> 00:07:06,719 Speaker 4: talk about what sectors it's in, but we have already 129 00:07:06,760 --> 00:07:10,360 Speaker 4: been for a year in a jobless expansion. 130 00:07:10,880 --> 00:07:13,760 Speaker 3: So unfortunately, what the February. 131 00:07:13,160 --> 00:07:16,840 Speaker 4: Data, with this latest labor market data suggests is that's 132 00:07:16,840 --> 00:07:19,040 Speaker 4: still where we're at right And we have been looking 133 00:07:19,080 --> 00:07:21,280 Speaker 4: for signs that hiring was picking up, and you know 134 00:07:21,320 --> 00:07:24,040 Speaker 4: that January gave some the Januor Employment report gave some 135 00:07:24,080 --> 00:07:26,880 Speaker 4: signs of that. January still is a really strong number, 136 00:07:26,880 --> 00:07:29,680 Speaker 4: even with down revisions. It's all you know, it's close 137 00:07:29,720 --> 00:07:32,400 Speaker 4: to one hundred and thirty thousand still, But I mean, clearly, 138 00:07:32,600 --> 00:07:35,400 Speaker 4: to lose ninety thousand jobs on net in February is 139 00:07:35,400 --> 00:07:36,720 Speaker 4: a real problem, Claudia. 140 00:07:37,160 --> 00:07:40,560 Speaker 3: It's a it's a we're not creating jobs. It's that question. 141 00:07:40,800 --> 00:07:41,680 Speaker 3: Is it a problem? 142 00:07:41,760 --> 00:07:43,760 Speaker 4: That's a whole separate And this has been a really 143 00:07:43,800 --> 00:07:46,560 Speaker 4: difficult conversation to have, but we've been in this for 144 00:07:46,600 --> 00:07:47,720 Speaker 4: well over a year now. 145 00:07:48,640 --> 00:07:52,000 Speaker 6: So Claudia, what's just it? What do we know about 146 00:07:52,640 --> 00:07:53,960 Speaker 6: the supply of labor? 147 00:07:54,000 --> 00:07:57,560 Speaker 5: We know that this administration is effectively closed down the border, 148 00:07:58,200 --> 00:08:00,920 Speaker 5: reducing supply of labor to some indust trees, you know, 149 00:08:00,960 --> 00:08:05,600 Speaker 5: whether it be housing, construction, agricultural, hospitality. What do we 150 00:08:05,680 --> 00:08:07,640 Speaker 5: know with a year's worth of data here as to 151 00:08:07,680 --> 00:08:09,200 Speaker 5: the supply of labor. 152 00:08:11,040 --> 00:08:14,960 Speaker 4: Well, the estimates with immigration come in, it takes some time. 153 00:08:15,120 --> 00:08:18,400 Speaker 4: We have you know, updated estimates from the Census Bureau, 154 00:08:18,400 --> 00:08:21,320 Speaker 4: we have updated estimates from Congressional Budget Office. They're pulling 155 00:08:21,320 --> 00:08:23,360 Speaker 4: in a lot of different pieces of data. These are 156 00:08:23,400 --> 00:08:26,520 Speaker 4: still in flux, but it is very clear directionally, and 157 00:08:26,560 --> 00:08:29,160 Speaker 4: it's also very clear in terms of magnitudes. These are 158 00:08:29,320 --> 00:08:33,160 Speaker 4: large down shifts and immigration and immigrants have been kind 159 00:08:33,200 --> 00:08:37,040 Speaker 4: of on the margin additional workers in recent years. So 160 00:08:37,320 --> 00:08:40,040 Speaker 4: it does like directionally this makes sense, and I think 161 00:08:40,040 --> 00:08:43,120 Speaker 4: that is important to keep in context these shifts in 162 00:08:43,240 --> 00:08:44,679 Speaker 4: job creation, going from you. 163 00:08:44,600 --> 00:08:47,080 Speaker 3: Know, hundreds of thousands of jobs created on net. 164 00:08:46,960 --> 00:08:50,040 Speaker 4: Not that long ago, to not creating any and if 165 00:08:50,080 --> 00:08:53,040 Speaker 4: maybe even destroying jobs on net in the US economy, 166 00:08:53,520 --> 00:08:55,320 Speaker 4: Like that is a dramatic shift. 167 00:08:55,920 --> 00:08:59,079 Speaker 3: And the unemployment rate has drifted up I word, four 168 00:08:59,160 --> 00:08:59,960 Speaker 3: point four percent. 169 00:09:00,120 --> 00:09:03,000 Speaker 4: So like we have to keep the like the magnitudes 170 00:09:03,040 --> 00:09:06,080 Speaker 4: and the drama on the payroll side. It's not just 171 00:09:06,120 --> 00:09:08,280 Speaker 4: about we can demand it is this supply and that's 172 00:09:08,320 --> 00:09:10,840 Speaker 4: a policy choice, but keep an eye on like the 173 00:09:10,880 --> 00:09:13,720 Speaker 4: unemployer rate has drifted up, and that is there is 174 00:09:13,720 --> 00:09:15,880 Speaker 4: still a problem. This is not just about supply. We 175 00:09:15,960 --> 00:09:17,840 Speaker 4: don't have enough demand for workers. 176 00:09:17,920 --> 00:09:20,319 Speaker 2: I mean, Claudia, do your point in a flat economy. 177 00:09:20,400 --> 00:09:22,520 Speaker 2: I just did a three month moving average, folks in 178 00:09:22,559 --> 00:09:24,840 Speaker 2: the back of my HP twelve c oh. Yeah. And 179 00:09:24,880 --> 00:09:29,520 Speaker 2: the bottom line here is we've generated five six hundred 180 00:09:29,520 --> 00:09:33,600 Speaker 2: and sixty jobs over the last ninety days per month. 181 00:09:34,240 --> 00:09:36,280 Speaker 2: I mean that is I've never seen that. That's like 182 00:09:36,640 --> 00:09:40,040 Speaker 2: a flat economy. I have, Claudia quickly here. I mean, 183 00:09:40,040 --> 00:09:44,160 Speaker 2: there's a lot of negative statistics. Claudia, what does a 184 00:09:44,200 --> 00:09:47,640 Speaker 2: FED do with this information if labor matters? 185 00:09:49,480 --> 00:09:52,400 Speaker 4: So they're watching They're watching all of this very carefully. 186 00:09:52,520 --> 00:09:55,280 Speaker 4: I think the unemployment really does some a lot of 187 00:09:55,320 --> 00:09:57,880 Speaker 4: this up. The fact that you know, you're the unemployer 188 00:09:57,920 --> 00:10:00,079 Speaker 4: rate did tick up. We're still at low levels. It 189 00:10:00,200 --> 00:10:03,439 Speaker 4: has been drifting up gradually. They're going to keep I mean, 190 00:10:03,520 --> 00:10:08,760 Speaker 4: this returns some attention to the downside risks to employment, right, 191 00:10:08,800 --> 00:10:11,080 Speaker 4: this is all about the employment risks. The inflation risk 192 00:10:11,400 --> 00:10:13,920 Speaker 4: Today brought some of those employment risks back into focus. 193 00:10:13,960 --> 00:10:15,079 Speaker 3: But this is still. 194 00:10:15,040 --> 00:10:19,480 Speaker 4: Largely a labor market that looks like it's working relatively well, 195 00:10:19,920 --> 00:10:23,600 Speaker 4: not a recessionary dynamic, but a very unusual dynamic. 196 00:10:24,280 --> 00:10:27,400 Speaker 2: Okay, it's unusual, but I mean there's a lot of 197 00:10:27,440 --> 00:10:30,240 Speaker 2: people flat on their back in this country. Claudia saying, 198 00:10:30,559 --> 00:10:35,240 Speaker 2: cut interest rates. If Waller in company, goals be in company, 199 00:10:35,559 --> 00:10:39,680 Speaker 2: Hast in company, if they cut interest rates, does that 200 00:10:39,840 --> 00:10:42,600 Speaker 2: help the labor economy or is it now removed? 201 00:10:46,240 --> 00:10:50,240 Speaker 4: Cutting interest rates is a way to stimulate demand, whether 202 00:10:50,320 --> 00:10:54,120 Speaker 4: that's you know, consumer is going out making bigger purchases 203 00:10:54,120 --> 00:10:56,400 Speaker 4: they have to take out, you know, on their credit cards, 204 00:10:56,520 --> 00:11:01,560 Speaker 4: buying a home, businesses making investment equipment. Where like, it's 205 00:11:01,720 --> 00:11:04,600 Speaker 4: a channel that can help. It is not all powerful. 206 00:11:04,840 --> 00:11:07,480 Speaker 4: It's a very blunt tool, but you know that's the 207 00:11:07,520 --> 00:11:10,079 Speaker 4: tool that FEDS got and it is very clear from 208 00:11:10,080 --> 00:11:12,360 Speaker 4: this power fed they will defend the labor market if 209 00:11:12,360 --> 00:11:12,840 Speaker 4: they need to. 210 00:11:13,360 --> 00:11:16,040 Speaker 2: Doctor Sum, thank you so much for supporting us in 211 00:11:16,080 --> 00:11:19,559 Speaker 2: your note and all your work with this, Claudia Sum, 212 00:11:19,920 --> 00:11:27,440 Speaker 2: with this this morning with New Century Advisors. Stay with us. 213 00:11:27,640 --> 00:11:30,920 Speaker 2: More from Bloomberg Surveillance coming up after this. 214 00:11:38,120 --> 00:11:41,720 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 215 00:11:41,800 --> 00:11:44,920 Speaker 1: weekday afternoons from seven to ten am. Eastern Listen on 216 00:11:45,040 --> 00:11:48,680 Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or 217 00:11:48,840 --> 00:11:50,320 Speaker 1: watch us live on YouTube. 218 00:11:50,640 --> 00:11:54,520 Speaker 2: A wonderful brief here from Eric Vanastron joining us in studio, 219 00:11:54,640 --> 00:11:59,000 Speaker 2: chief investment officer at Lazard. What have you change in 220 00:11:59,040 --> 00:12:02,560 Speaker 2: your call in the last seven days? I mean, you know, 221 00:12:02,640 --> 00:12:05,640 Speaker 2: I'm sitting here, it's like the time Keen Employment Act 222 00:12:05,760 --> 00:12:08,600 Speaker 2: is like the news Solul's crazy. But what are you 223 00:12:08,840 --> 00:12:11,720 Speaker 2: writing differently now than eight days ago? 224 00:12:11,920 --> 00:12:13,679 Speaker 8: Well, let me first say I'm a big supporter of 225 00:12:13,720 --> 00:12:14,960 Speaker 8: the Tom Keen Employment Act. 226 00:12:15,000 --> 00:12:18,000 Speaker 2: So but that's we're working for you. Alexis doesn't agree 227 00:12:18,000 --> 00:12:18,640 Speaker 2: with you, That's. 228 00:12:19,920 --> 00:12:22,720 Speaker 8: I think the sharpest investors are the ones who are 229 00:12:22,760 --> 00:12:25,400 Speaker 8: willing to change their minds when the facts on the 230 00:12:25,400 --> 00:12:28,120 Speaker 8: ground change. And what we've seen over the last seven 231 00:12:28,200 --> 00:12:31,360 Speaker 8: days is a pretty dramatic rethinking of the global supply picture. 232 00:12:31,440 --> 00:12:33,440 Speaker 2: For energy in particular. 233 00:12:33,280 --> 00:12:35,640 Speaker 8: We've seen a staggering surge in the price of oil 234 00:12:35,679 --> 00:12:37,240 Speaker 8: as the traffic in the Strait of War moves has 235 00:12:37,240 --> 00:12:40,240 Speaker 8: slowed down as dramatically as it has. But I still 236 00:12:40,280 --> 00:12:43,160 Speaker 8: think markets are thinking of it like a short term disruption. 237 00:12:43,200 --> 00:12:45,080 Speaker 8: I think there's still a little bit of recency bias 238 00:12:45,120 --> 00:12:49,280 Speaker 8: from the twenty twenty five Iran episode, which is fundamentally 239 00:12:49,440 --> 00:12:51,520 Speaker 8: very different from this one. And I still don't think 240 00:12:51,520 --> 00:12:55,079 Speaker 8: markets have fully appreciated the cost to global growth, to 241 00:12:55,200 --> 00:12:58,400 Speaker 8: global supply chains, and to domestic inflation here in the 242 00:12:58,480 --> 00:13:01,559 Speaker 8: United States from a persistent and disruption of the Straits. 243 00:13:02,240 --> 00:13:06,560 Speaker 5: So the underlying economic data in the US is still 244 00:13:06,640 --> 00:13:09,560 Speaker 5: generally very healthy. Yeah, when you look at GDP growth, 245 00:13:09,600 --> 00:13:14,320 Speaker 5: we'll get the jobs data today, inflation. But this situation 246 00:13:14,400 --> 00:13:16,920 Speaker 5: in Iran, you know, I guess the market is kind 247 00:13:16,920 --> 00:13:17,680 Speaker 5: of telling us. 248 00:13:17,920 --> 00:13:20,280 Speaker 6: We're prepared to look through it to the other side. 249 00:13:20,640 --> 00:13:23,319 Speaker 5: Is that a fair assumption here or what point does 250 00:13:23,360 --> 00:13:24,480 Speaker 5: it become problematic? 251 00:13:24,559 --> 00:13:25,880 Speaker 6: Is it three four or five, six weeks? 252 00:13:25,920 --> 00:13:26,480 Speaker 5: That kind of thing. 253 00:13:26,679 --> 00:13:28,720 Speaker 8: Well, I think you're absolutely right in terms of what 254 00:13:28,760 --> 00:13:31,880 Speaker 8: the market is discounting. The market is trying to look 255 00:13:31,920 --> 00:13:34,160 Speaker 8: through it. Even though you know, these oil price moves 256 00:13:34,200 --> 00:13:37,000 Speaker 8: look big. The stock market moves this week feel painful 257 00:13:37,400 --> 00:13:39,839 Speaker 8: in the grand scheme of things. US equities are just 258 00:13:39,880 --> 00:13:41,760 Speaker 8: at the bottom of the range they've been since October. 259 00:13:42,200 --> 00:13:45,080 Speaker 8: Oil still off its heights from since the since the 260 00:13:45,160 --> 00:13:50,280 Speaker 8: Ukrainian invasion. But I think that that relative sanguinity that 261 00:13:50,320 --> 00:13:52,880 Speaker 8: relative calm is out of line with the level of 262 00:13:52,880 --> 00:13:55,560 Speaker 8: fundamental risks in the backdrop here. And that's why I 263 00:13:55,600 --> 00:13:58,360 Speaker 8: think paying close attention to traffic in the Gulf is 264 00:13:58,400 --> 00:13:59,320 Speaker 8: going to be very important. 265 00:13:59,440 --> 00:14:02,120 Speaker 2: Eric turnin this here we're going to continue. Jane Folio 266 00:14:02,160 --> 00:14:05,880 Speaker 2: over at Rabobank just tweaks hero she goes weaker Euro 267 00:14:06,160 --> 00:14:09,559 Speaker 2: from a one seventeen down to one sixteen is a 268 00:14:09,880 --> 00:14:13,160 Speaker 2: view right now, Euro with a really difficult week one 269 00:14:13,360 --> 00:14:18,360 Speaker 2: fifteen sixty two with dxy pushing up against one hundred. 270 00:14:18,400 --> 00:14:22,960 Speaker 2: I mean that's consensus gets a view here. Oops, it's wrong, 271 00:14:23,040 --> 00:14:25,840 Speaker 2: Like the massive week dollar call doesn't look so good 272 00:14:25,880 --> 00:14:29,080 Speaker 2: right now? Right What does consensus and economics into this 273 00:14:29,200 --> 00:14:32,840 Speaker 2: job's report into retail sales? What's a consensus call in 274 00:14:32,920 --> 00:14:35,600 Speaker 2: economics where the Van Nostri and Radar is up. 275 00:14:35,920 --> 00:14:38,240 Speaker 8: Well, I think you got to separate the structural, the 276 00:14:38,240 --> 00:14:40,960 Speaker 8: structural and the cyclical here. And I think the big 277 00:14:41,320 --> 00:14:44,880 Speaker 8: the structural context coming into the Iranian episode and coming 278 00:14:44,880 --> 00:14:49,360 Speaker 8: into the jobs report today is that the US economy 279 00:14:49,360 --> 00:14:51,520 Speaker 8: has been I like to call it more concentrated, that 280 00:14:51,600 --> 00:14:54,600 Speaker 8: it's been really in living memory. The way consumers spend 281 00:14:54,640 --> 00:14:56,840 Speaker 8: it's really driven by the top of the income distribution, 282 00:14:57,280 --> 00:15:01,160 Speaker 8: the way businesses invest, it's all concentrat in AI data centers, 283 00:15:01,160 --> 00:15:04,840 Speaker 8: we have a very concentrated set of demand factors on 284 00:15:04,880 --> 00:15:07,840 Speaker 8: both the consumption side and the investment side of the US, 285 00:15:08,200 --> 00:15:10,840 Speaker 8: and that's contributed to strong overall growth. But it's also 286 00:15:10,920 --> 00:15:14,640 Speaker 8: more fragile than this level of economic growth normally is. 287 00:15:14,720 --> 00:15:17,720 Speaker 8: And that's why X factors like this energy shock, the 288 00:15:17,840 --> 00:15:20,120 Speaker 8: risk of a slowing labor market, and that's why we'll 289 00:15:20,160 --> 00:15:24,040 Speaker 8: be watching today's report very closely. All threaten to disrupt 290 00:15:24,160 --> 00:15:26,680 Speaker 8: that generally strong growth we've seen here today. 291 00:15:27,000 --> 00:15:30,960 Speaker 5: This shape economy, this case shaped consumer, it's been with 292 00:15:31,040 --> 00:15:32,240 Speaker 5: us for a long time. 293 00:15:33,160 --> 00:15:34,200 Speaker 6: Is it problematic? 294 00:15:34,240 --> 00:15:36,000 Speaker 5: I know it's problematic for the people on the lower 295 00:15:36,080 --> 00:15:38,800 Speaker 5: end of the K, But for sure, overall economy, the 296 00:15:38,880 --> 00:15:41,240 Speaker 5: numbers that we get on our ecoscreen, they seem pretty 297 00:15:41,240 --> 00:15:41,840 Speaker 5: thrown good. 298 00:15:42,400 --> 00:15:42,680 Speaker 6: Is that? 299 00:15:43,000 --> 00:15:46,400 Speaker 5: But structurally can this economy continue with such a disparity? 300 00:15:46,760 --> 00:15:46,960 Speaker 2: Yeah? 301 00:15:47,000 --> 00:15:49,040 Speaker 8: So the reason I think it's problematic for a lot 302 00:15:49,080 --> 00:15:52,600 Speaker 8: of reason is not least because of the large portrait 303 00:15:52,640 --> 00:15:55,040 Speaker 8: of Americans who aren't seeing the income growth that one 304 00:15:55,040 --> 00:15:59,080 Speaker 8: would expect from this level of aggregate economic strength. But 305 00:15:59,160 --> 00:16:02,720 Speaker 8: It's also worry because the most persistent growth, the growth 306 00:16:02,760 --> 00:16:06,760 Speaker 8: we can have the most confidence in his MACROI as macroeconomists, 307 00:16:07,120 --> 00:16:10,080 Speaker 8: is the broadest growth, and when it gets concentrated like this, 308 00:16:10,880 --> 00:16:14,560 Speaker 8: it's more prone to disruption from geopolitical shock, which we've 309 00:16:14,600 --> 00:16:18,120 Speaker 8: had it aful lot of lately, and from supply constraints. 310 00:16:18,280 --> 00:16:20,720 Speaker 8: And I think this particular geopolitical shock is going to 311 00:16:20,760 --> 00:16:22,080 Speaker 8: increase those supply constraints. 312 00:16:22,080 --> 00:16:25,680 Speaker 2: And before the jobs report fifteen sixteen minutes away from 313 00:16:25,720 --> 00:16:28,760 Speaker 2: all that data, Claudiusom will be with us. Let me 314 00:16:28,800 --> 00:16:31,280 Speaker 2: look at the list here. I don't have naughty love. 315 00:16:31,280 --> 00:16:34,000 Speaker 2: It will be with this ubs and the Equity Marcus 316 00:16:34,040 --> 00:16:38,480 Speaker 2: Jennifer Lee from Demo Capital, Marcus, just wonderful. Benjamin Ladler, 317 00:16:38,520 --> 00:16:40,840 Speaker 2: who has the Mother of All calls, a guy named 318 00:16:40,880 --> 00:16:43,080 Speaker 2: Kevin Has's going to stop by, I believe, talking to 319 00:16:43,160 --> 00:16:45,880 Speaker 2: John Ferrell as well. Austin gools me late late in 320 00:16:45,920 --> 00:16:49,160 Speaker 2: the show today. Right now, Eric Faestron with us. Okay, 321 00:16:49,160 --> 00:16:51,400 Speaker 2: I'm gonna get you in trouble. There's a guy, Adam 322 00:16:51,480 --> 00:16:54,920 Speaker 2: Posen at the Peterson Institute who do to co write 323 00:16:54,960 --> 00:16:58,280 Speaker 2: with a guy named or Zegg, and they have basically 324 00:16:58,320 --> 00:17:02,360 Speaker 2: suggested inflation will be more are persistent. Do you agree 325 00:17:02,400 --> 00:17:06,000 Speaker 2: with Lizard's Peter or Zag that we are going to 326 00:17:06,040 --> 00:17:09,919 Speaker 2: see a persistent wage inflation, We are going to see 327 00:17:09,960 --> 00:17:14,160 Speaker 2: a persistent overall inflation which is not in the markets 328 00:17:14,200 --> 00:17:14,800 Speaker 2: at this time. 329 00:17:15,280 --> 00:17:17,119 Speaker 8: I'm happy to give you a list of topics on 330 00:17:17,160 --> 00:17:19,400 Speaker 8: which I disagree with my boss, but on this one, 331 00:17:19,440 --> 00:17:21,480 Speaker 8: Peter and I are in the same place. I think 332 00:17:21,520 --> 00:17:25,040 Speaker 8: the markets are generally far too calm about the inflation picture. 333 00:17:25,040 --> 00:17:25,639 Speaker 2: They've been kind of. 334 00:17:25,640 --> 00:17:27,679 Speaker 8: Well to sleep a bit by the fact that the 335 00:17:27,680 --> 00:17:32,200 Speaker 8: headline CPI has calmed down, and you know, Peter made 336 00:17:32,240 --> 00:17:35,040 Speaker 8: that call before the episode this week. I think the 337 00:17:35,080 --> 00:17:37,800 Speaker 8: oil disruption we're seeing is obviously going to juice the 338 00:17:37,840 --> 00:17:38,800 Speaker 8: inflation numbers. 339 00:17:38,520 --> 00:17:39,200 Speaker 6: In a meaningful way. 340 00:17:39,200 --> 00:17:42,440 Speaker 8: But here's the key point, Tom. It's not just the 341 00:17:42,480 --> 00:17:46,000 Speaker 8: impact of the oil shock that we've already seen. It's 342 00:17:46,040 --> 00:17:48,560 Speaker 8: the fact that the broader supply picture bleeds through to 343 00:17:48,640 --> 00:17:52,120 Speaker 8: a much broader global constellation of goods and services and inflation, 344 00:17:52,560 --> 00:17:55,440 Speaker 8: and to my mind, really increases the risk of upside price. 345 00:17:55,280 --> 00:17:58,160 Speaker 2: Ground and Peter the brilliant supply and analysis here two 346 00:17:58,200 --> 00:18:01,280 Speaker 2: three years ago on COVID as well, So with the 347 00:18:01,440 --> 00:18:04,919 Speaker 2: jobs report last month was oops. Well that was positive. 348 00:18:05,359 --> 00:18:07,680 Speaker 2: Are we going to get another oops report here where 349 00:18:07,720 --> 00:18:10,480 Speaker 2: you got a three month moving average which is oops 350 00:18:10,840 --> 00:18:12,000 Speaker 2: better than the gloom Crew? 351 00:18:12,280 --> 00:18:14,159 Speaker 8: Well, I think I heard Chris Waller. Just tell your 352 00:18:14,200 --> 00:18:17,199 Speaker 8: colleagues he expects January to be revised down meaningfully. I 353 00:18:17,200 --> 00:18:22,040 Speaker 8: do think January looks like a pretty significant upside outlier 354 00:18:22,200 --> 00:18:25,040 Speaker 8: in the pace of job growth we've seen recently. I 355 00:18:25,040 --> 00:18:27,280 Speaker 8: think it's very important here tom to balance the supply 356 00:18:27,400 --> 00:18:30,199 Speaker 8: constraints that have been pulling job growth down to and 357 00:18:30,320 --> 00:18:32,919 Speaker 8: not confuse them with slowing demand, which I think is 358 00:18:32,920 --> 00:18:35,040 Speaker 8: one of the one of the bigger forward looking worries 359 00:18:35,080 --> 00:18:35,800 Speaker 8: we have right now. 360 00:18:36,240 --> 00:18:38,960 Speaker 5: Supreme Court recently struck down the IEPA tariffs, but we 361 00:18:39,000 --> 00:18:42,560 Speaker 5: still have a lot of terriffs out there. But the 362 00:18:42,600 --> 00:18:45,679 Speaker 5: market again seems to have looked through generally after that 363 00:18:45,760 --> 00:18:48,719 Speaker 5: April time frame last you look through these tariffs. What 364 00:18:48,800 --> 00:18:50,800 Speaker 5: is the economic impact of these tariffs. 365 00:18:50,440 --> 00:18:50,800 Speaker 1: Do you think? 366 00:18:50,960 --> 00:18:53,480 Speaker 8: I think the markets have looked through the tariffs because 367 00:18:53,480 --> 00:18:56,520 Speaker 8: the inflation data has given them permission to. Because the 368 00:18:56,560 --> 00:19:00,920 Speaker 8: inflation data so far has been much softer than most economists, 369 00:19:01,040 --> 00:19:03,639 Speaker 8: including me, by the way, would have expected given the 370 00:19:03,680 --> 00:19:06,560 Speaker 8: magnitude of terroiffs we've seen now, that's much more likely 371 00:19:06,600 --> 00:19:08,919 Speaker 8: to be a delay in the tariff impact than a 372 00:19:09,000 --> 00:19:11,480 Speaker 8: miss on the tariff impact. And that's part of the 373 00:19:11,520 --> 00:19:15,560 Speaker 8: reason we expect me you know, we expect an elevated 374 00:19:15,680 --> 00:19:17,960 Speaker 8: risk of hotter inflation over the course of this year. 375 00:19:18,280 --> 00:19:21,480 Speaker 2: You were the Assistant Secretary of the Treasury for Economic 376 00:19:21,560 --> 00:19:26,280 Speaker 2: Policy under President Biden. What did you learn there? I mean, 377 00:19:26,320 --> 00:19:28,239 Speaker 2: a fancy guy like you, with all your work at 378 00:19:28,240 --> 00:19:31,360 Speaker 2: Blackrocket now at Lazard, you wandered by Yelle to get 379 00:19:31,400 --> 00:19:35,120 Speaker 2: pizza in a lot of great, wonderful work out of Pennsylvania. 380 00:19:35,240 --> 00:19:39,040 Speaker 2: What was the biggest lesson learned in your public service 381 00:19:39,080 --> 00:19:39,680 Speaker 2: at Treasury? 382 00:19:39,880 --> 00:19:42,680 Speaker 8: I mean I came away from that job deeply, deeply 383 00:19:42,760 --> 00:19:49,040 Speaker 8: inspired by the manner and the courage with which public servants, 384 00:19:49,119 --> 00:19:51,720 Speaker 8: not just in the Biden administration, but including the career 385 00:19:51,760 --> 00:19:55,240 Speaker 8: officials that worked closely with us throughout, were able to 386 00:19:55,359 --> 00:20:01,000 Speaker 8: balance economic rigor and understanding the intellectual arguments with understanding 387 00:20:01,040 --> 00:20:03,240 Speaker 8: the way they affected human beings. 388 00:20:03,320 --> 00:20:05,159 Speaker 2: So if we pop three months, this is like an 389 00:20:05,240 --> 00:20:08,680 Speaker 2: Orzeg question. If we pop three months moving average sub 390 00:20:08,720 --> 00:20:12,040 Speaker 2: one hundred thousand, non farm payrolls. You're telling me that's 391 00:20:12,080 --> 00:20:13,440 Speaker 2: politically acceptable. 392 00:20:13,760 --> 00:20:16,520 Speaker 8: Absolutely not. I think the slowdown in job growth we've 393 00:20:16,520 --> 00:20:20,040 Speaker 8: seen over the past couple of years is evidence that 394 00:20:20,840 --> 00:20:23,520 Speaker 8: the you know, it's evidence that some of the shifts 395 00:20:23,520 --> 00:20:25,440 Speaker 8: we've seen in the way the labor market's been able 396 00:20:25,440 --> 00:20:28,800 Speaker 8: to grow, some of the tighter constraintsprised on supply by 397 00:20:28,800 --> 00:20:32,280 Speaker 8: immigration policy in particular, are resulting in lower growth in 398 00:20:32,320 --> 00:20:34,359 Speaker 8: the United States would otherwise be able to deliver. 399 00:20:34,480 --> 00:20:37,160 Speaker 2: This is like gossip with Taylor Swift. What's the thing 400 00:20:37,920 --> 00:20:39,879 Speaker 2: I've gotten that one? What is the most? What is 401 00:20:39,920 --> 00:20:42,080 Speaker 2: the thing you and Orzag are most not in the 402 00:20:42,160 --> 00:20:43,760 Speaker 2: same page on? What do you argue about? 403 00:20:43,960 --> 00:20:47,560 Speaker 8: Now you are going to I think that the conversational alzar. 404 00:20:47,640 --> 00:20:50,760 Speaker 8: We always described the conversational lazar as being about contextual alpha, 405 00:20:50,840 --> 00:20:53,760 Speaker 8: which is, we do our quantitative, rigorous work, but we 406 00:20:53,840 --> 00:20:56,119 Speaker 8: put it against a backdrop of what's going on in 407 00:20:56,160 --> 00:20:59,920 Speaker 8: the geopolitical environment overall. And I think that mix of quality, 408 00:21:00,000 --> 00:21:02,280 Speaker 8: aative and quantitative is really at the center of how 409 00:21:02,320 --> 00:21:05,000 Speaker 8: we develop use, but also creates a lot of debate 410 00:21:05,359 --> 00:21:07,159 Speaker 8: and creates some you know, I think a lot of 411 00:21:07,200 --> 00:21:12,160 Speaker 8: open questions about whether the whether the Supreme Court's ruling 412 00:21:12,160 --> 00:21:15,280 Speaker 8: on tariffs creates more or less uncertainty. I think right now, 413 00:21:15,280 --> 00:21:16,679 Speaker 8: I think it's a good thing they did that, But 414 00:21:16,720 --> 00:21:17,200 Speaker 8: I think. 415 00:21:17,280 --> 00:21:20,359 Speaker 2: We'll sum it up on the back of a three postcards. 416 00:21:20,440 --> 00:21:24,240 Speaker 2: Do we get solid GDP out of your contextual reality? 417 00:21:24,600 --> 00:21:26,800 Speaker 8: I still think this year is more likely than not 418 00:21:26,880 --> 00:21:30,199 Speaker 8: to deliver above potential growth overall, But there's a lot 419 00:21:30,200 --> 00:21:31,920 Speaker 8: of risks. Tom and your listeners need to pay close 420 00:21:31,960 --> 00:21:32,679 Speaker 8: to tell us. 421 00:21:32,720 --> 00:21:34,840 Speaker 2: What did you say like ambiguity? 422 00:21:35,000 --> 00:21:41,240 Speaker 7: Grammatically grammatically ambiguitous, ambiguous, ambiguous, Yes, thank you, there's nothing. 423 00:21:42,160 --> 00:21:45,440 Speaker 8: Eric, Eric, We try to be grammatically precise. 424 00:21:45,760 --> 00:21:48,040 Speaker 2: Eric, thank you so much. On this job is that 425 00:21:48,160 --> 00:21:53,720 Speaker 2: he is with Lizard Asset Management. Stay with us. More 426 00:21:53,840 --> 00:21:56,720 Speaker 2: from Bloomberg Surveillance coming up after this. 427 00:22:04,000 --> 00:22:07,560 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 428 00:22:07,640 --> 00:22:11,160 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on Apple, 429 00:22:11,200 --> 00:22:14,520 Speaker 1: Karplay and Android Otto with the Bloomberg Business app, or 430 00:22:14,680 --> 00:22:16,280 Speaker 1: watch us live on YouTube. 431 00:22:16,440 --> 00:22:19,200 Speaker 2: We start strong with Kevin Gordon with Charles Schwab working 432 00:22:19,240 --> 00:22:22,239 Speaker 2: would live in a starders what's the place like if 433 00:22:22,320 --> 00:22:25,240 Speaker 2: Kathy Jones retires? I mean it's not good. 434 00:22:25,359 --> 00:22:26,400 Speaker 9: I mean, I know we're sad. 435 00:22:26,480 --> 00:22:28,080 Speaker 6: I mean, you know we're so sidly earned it. 436 00:22:28,119 --> 00:22:31,080 Speaker 9: But I'm yes, personally and professionally, we're all set just 437 00:22:31,119 --> 00:22:31,720 Speaker 9: but we we're happy. 438 00:22:31,760 --> 00:22:34,280 Speaker 2: For Kathy. That's a really cuge commitment now by her 439 00:22:34,359 --> 00:22:37,480 Speaker 2: to Schwab. Our commitment to you is you people are 440 00:22:37,520 --> 00:22:41,280 Speaker 2: the kings of patients. Just as from you from sixty 441 00:22:41,359 --> 00:22:45,840 Speaker 2: thousand feet there's a war, do you change your asset allocation. 442 00:22:46,119 --> 00:22:47,640 Speaker 9: In response to it in a knee jerk way? 443 00:22:47,720 --> 00:22:47,760 Speaker 10: No. 444 00:22:48,000 --> 00:22:50,679 Speaker 9: I mean our message around any sort of geopolitical conflict 445 00:22:50,760 --> 00:22:52,960 Speaker 9: has always has always been that not to say that 446 00:22:53,000 --> 00:22:54,879 Speaker 9: it doesn't matter or that it won't you won't start 447 00:22:54,880 --> 00:22:56,680 Speaker 9: to see any impact from it. And I do think 448 00:22:56,720 --> 00:22:58,920 Speaker 9: that you know to the points that you are all 449 00:22:58,960 --> 00:23:01,679 Speaker 9: just making around some of these these moves and prices, 450 00:23:02,400 --> 00:23:04,879 Speaker 9: and this is an environment where rate of change and 451 00:23:05,000 --> 00:23:07,919 Speaker 9: level both matter. Typically there's sort of some distinction between 452 00:23:07,920 --> 00:23:10,760 Speaker 9: the two. But I think from a consumer perspective, but 453 00:23:10,840 --> 00:23:13,560 Speaker 9: also eventually maybe from a business confidence perspective, there is 454 00:23:13,640 --> 00:23:15,800 Speaker 9: potential for this to sort of shake things out a 455 00:23:15,800 --> 00:23:17,280 Speaker 9: little bit more. But I mean this is a day 456 00:23:17,280 --> 00:23:20,480 Speaker 9: by day yeah, development, developing situation, I mean we're sort 457 00:23:20,480 --> 00:23:24,320 Speaker 9: of one cease fire announcement away from everything, sort of 458 00:23:24,359 --> 00:23:26,119 Speaker 9: just reversing sharply and aggressively. 459 00:23:26,200 --> 00:23:27,040 Speaker 2: Yeah, exactly right. 460 00:23:27,119 --> 00:23:29,320 Speaker 5: So what is the message to the SCHWAP clients, Because 461 00:23:29,359 --> 00:23:31,359 Speaker 5: I'm sure the phone calls are coming in fast and furious. 462 00:23:31,680 --> 00:23:34,919 Speaker 5: You guys, go speak to your big room full of 463 00:23:35,080 --> 00:23:37,439 Speaker 5: SCHWAP clients, and before you even get into your prepared remarks, 464 00:23:37,440 --> 00:23:38,159 Speaker 5: they like, what do we do? 465 00:23:38,320 --> 00:23:40,080 Speaker 9: Yeah, I mean the message around I mean, it always 466 00:23:40,080 --> 00:23:42,639 Speaker 9: sounds like some sort of boring message around diversification, but 467 00:23:42,960 --> 00:23:45,119 Speaker 9: that really is the best way to sort of hedge. 468 00:23:45,119 --> 00:23:47,920 Speaker 9: This s lowercase age hedge. If you think about even 469 00:23:47,960 --> 00:23:50,760 Speaker 9: coming into this year, before this started, you were still 470 00:23:50,760 --> 00:23:54,560 Speaker 9: seeing that international outperformance relative to the US, but now 471 00:23:54,680 --> 00:23:56,520 Speaker 9: it's kind of reversing a little bit. Where of course, 472 00:23:56,560 --> 00:23:59,119 Speaker 9: because of the exposure that some other countries mainly in 473 00:23:59,119 --> 00:24:01,840 Speaker 9: the European region but also Asia that they have to 474 00:24:01,880 --> 00:24:04,640 Speaker 9: the Middle least because of energy and oil, the US 475 00:24:04,680 --> 00:24:06,359 Speaker 9: has clearly gotten a bid. You could see that clearly 476 00:24:06,400 --> 00:24:09,080 Speaker 9: within the dollars. So I think that you know, that's 477 00:24:09,119 --> 00:24:11,240 Speaker 9: sort of been the important messages. You don't want to 478 00:24:11,280 --> 00:24:13,520 Speaker 9: go all in or all out on one particular asset 479 00:24:13,520 --> 00:24:15,840 Speaker 9: class at the expense of the other, and we're sort 480 00:24:15,840 --> 00:24:17,640 Speaker 9: of living that in real time, especially over the past 481 00:24:17,720 --> 00:24:18,200 Speaker 9: five days. 482 00:24:18,359 --> 00:24:20,359 Speaker 5: We're going to get some jobs data today that is 483 00:24:20,600 --> 00:24:22,640 Speaker 5: an important data point for our federal Reserve. 484 00:24:23,200 --> 00:24:24,160 Speaker 6: How do you think the FED is. 485 00:24:24,080 --> 00:24:25,920 Speaker 5: Going to be taking in some of this economic data 486 00:24:26,240 --> 00:24:27,240 Speaker 5: that's going to be coming. 487 00:24:27,080 --> 00:24:29,119 Speaker 9: So, you know, I think that they're increasingly in a 488 00:24:29,760 --> 00:24:31,520 Speaker 9: tough spot in the sense that I think it's getting 489 00:24:31,560 --> 00:24:34,280 Speaker 9: just harder to argue for cuts in this environment. And 490 00:24:34,280 --> 00:24:36,680 Speaker 9: you know, I was listening actually to Claudia Sum. I 491 00:24:36,680 --> 00:24:39,040 Speaker 9: know you're going to have around, but most recently just 492 00:24:39,080 --> 00:24:41,880 Speaker 9: a few minutes ago, talking about sort of this kind 493 00:24:41,920 --> 00:24:44,399 Speaker 9: of tricky nature of where inflation is averaging closer to 494 00:24:44,400 --> 00:24:46,120 Speaker 9: three percent, but the fact that you know, we'll see 495 00:24:46,160 --> 00:24:49,119 Speaker 9: what happens at eight thirty. There is some stabilization happening 496 00:24:49,160 --> 00:24:50,760 Speaker 9: in the labor market, and if you take out the 497 00:24:50,760 --> 00:24:53,840 Speaker 9: federal payroll data, the private workforce in payrolls has been 498 00:24:53,880 --> 00:24:56,640 Speaker 9: rebounding and a pretty meaningfully over the past several months. 499 00:24:56,720 --> 00:24:59,280 Speaker 9: I think that it's a good thing from an economic standpoint, 500 00:24:59,680 --> 00:25:01,280 Speaker 9: but I I think that that is sort of keeping 501 00:25:01,320 --> 00:25:04,320 Speaker 9: the FED in a really tough position, especially if it's 502 00:25:04,359 --> 00:25:07,600 Speaker 9: worsh coming in in June and still you know, tilting dubbish. 503 00:25:07,640 --> 00:25:09,000 Speaker 9: I just think that's going to be tough at least 504 00:25:09,040 --> 00:25:10,080 Speaker 9: in the first first half of. 505 00:25:10,040 --> 00:25:13,159 Speaker 2: The year across the nation worldwide. On YouTube, subscribe to 506 00:25:13,160 --> 00:25:16,480 Speaker 2: Bloomberg cod podcasts our number one way to get in 507 00:25:16,560 --> 00:25:19,720 Speaker 2: touch with us here on a daily basis. Kevin Gordon 508 00:25:19,760 --> 00:25:22,560 Speaker 2: of Charles Schwab with this this morning, Oil eighty nine 509 00:25:22,600 --> 00:25:25,439 Speaker 2: dollars really right out to new highs here off of 510 00:25:25,760 --> 00:25:28,479 Speaker 2: the war, and we're seeing it in futures negative forty 511 00:25:28,920 --> 00:25:31,600 Speaker 2: three as well. Barry to your note, you're starting to 512 00:25:31,680 --> 00:25:34,200 Speaker 2: rationalize and I'm just seeing this in the last forty 513 00:25:34,200 --> 00:25:38,560 Speaker 2: eight hours. MAG seven may be showing signs of life. 514 00:25:38,640 --> 00:25:41,359 Speaker 2: Is that the right way to look at the Belingered 515 00:25:41,560 --> 00:25:43,000 Speaker 2: tech area. Yeah, I think. 516 00:25:43,040 --> 00:25:45,800 Speaker 9: I mean, you go through these cycles now, you know, 517 00:25:45,840 --> 00:25:48,119 Speaker 9: every other year it feels where you get sort of 518 00:25:48,119 --> 00:25:49,960 Speaker 9: this big sentiment wash out for a group like the 519 00:25:50,000 --> 00:25:51,679 Speaker 9: max S. Even I would expand it to, you know, 520 00:25:51,720 --> 00:25:54,720 Speaker 9: beyond just those seven names and probably include you know, 521 00:25:54,720 --> 00:25:58,240 Speaker 9: all three sectors really communication services, discretionary and then tech 522 00:25:58,560 --> 00:26:00,240 Speaker 9: and you know, as I mentioned, we're sort of one 523 00:26:00,280 --> 00:26:02,840 Speaker 9: headline away from you know, a lot of this momentum 524 00:26:02,840 --> 00:26:05,600 Speaker 9: reversing where oil prices come lower for some reason because 525 00:26:05,640 --> 00:26:08,880 Speaker 9: of a ceasefire announcement. Maybe not saying that that's our projection, 526 00:26:09,280 --> 00:26:12,280 Speaker 9: but those kinds of swings in this environment where sentiment 527 00:26:12,320 --> 00:26:15,320 Speaker 9: has now gotten so stretched in one direction for an 528 00:26:15,320 --> 00:26:18,119 Speaker 9: area like software in the broader tech sector, and then 529 00:26:18,160 --> 00:26:20,720 Speaker 9: vice versa for some of these deeper cyclicals like energy. 530 00:26:21,400 --> 00:26:23,040 Speaker 9: You know, sometimes you sort of have to pay attention 531 00:26:23,119 --> 00:26:25,439 Speaker 9: to what could snap in terms of that anti momentum. 532 00:26:25,640 --> 00:26:29,360 Speaker 2: Well, Richard Bernstein iconic at Merrilynch just absolutely wonderful, great 533 00:26:29,359 --> 00:26:33,600 Speaker 2: books on growth and value. Leading indicators continue to show strength, 534 00:26:33,800 --> 00:26:40,080 Speaker 2: probabilities and timing of FED rate cuts increasingly seem too optimistic. 535 00:26:40,560 --> 00:26:43,040 Speaker 2: That's the underlying percolation here. Yep. 536 00:26:43,119 --> 00:26:45,119 Speaker 6: Absolutely, Kevin. 537 00:26:45,640 --> 00:26:48,320 Speaker 5: Earnings were pretty much through the earning cycle, pretty darn 538 00:26:48,359 --> 00:26:51,920 Speaker 5: good earnings. The outlook maybe a little conservative buy a 539 00:26:51,920 --> 00:26:55,399 Speaker 5: lot of companies understandably. So here, how is the earnings 540 00:26:55,440 --> 00:26:57,280 Speaker 5: environment out there for you guys as it relates to 541 00:26:57,520 --> 00:26:58,800 Speaker 5: can it support this valuation? 542 00:26:59,200 --> 00:26:59,400 Speaker 7: Yeah? 543 00:26:59,440 --> 00:26:59,800 Speaker 2: I think so. 544 00:27:00,080 --> 00:27:01,919 Speaker 9: I think you know a lot of the valuation access 545 00:27:01,920 --> 00:27:03,720 Speaker 9: that has come in and that froth that has come 546 00:27:03,760 --> 00:27:06,359 Speaker 9: in has been concentrated in some of these higher flyers 547 00:27:06,400 --> 00:27:09,439 Speaker 9: that tend to be, you know, overvalued relative to the 548 00:27:09,440 --> 00:27:11,320 Speaker 9: rest of the market, or have tended to be overvalued 549 00:27:11,560 --> 00:27:13,160 Speaker 9: relative to the rest of the market. You know, from 550 00:27:13,160 --> 00:27:15,320 Speaker 9: an earning's perspective, I think this is a really central 551 00:27:15,680 --> 00:27:18,639 Speaker 9: piece of talking about this conflict or any sort of 552 00:27:18,680 --> 00:27:22,240 Speaker 9: geopolitical instability we've seen this year. The sort of framework 553 00:27:22,280 --> 00:27:24,240 Speaker 9: that I've used to you know, help kind of guide 554 00:27:24,240 --> 00:27:26,480 Speaker 9: through this environment over the past year, you can really 555 00:27:26,520 --> 00:27:29,520 Speaker 9: date it back to Liberation Day, has been the distinction 556 00:27:29,600 --> 00:27:31,280 Speaker 9: between what is a front page risk and what is 557 00:27:31,280 --> 00:27:33,199 Speaker 9: bottom line risk for the market. And you know, we 558 00:27:33,240 --> 00:27:35,000 Speaker 9: often get the question. I was just speaking at client 559 00:27:35,040 --> 00:27:38,280 Speaker 9: events in southern California and also Vermont over the past week, 560 00:27:38,720 --> 00:27:42,040 Speaker 9: and there's this sort of discomfort that people have around 561 00:27:42,040 --> 00:27:44,119 Speaker 9: how is the market just completely looking through this? I mean, 562 00:27:44,160 --> 00:27:46,320 Speaker 9: the S and P five hundred largely unchanged over the 563 00:27:46,359 --> 00:27:49,160 Speaker 9: past several months, and to me, from an earning standpoint, 564 00:27:49,240 --> 00:27:52,399 Speaker 9: until this materially starts to hit bottom line estimates for 565 00:27:52,400 --> 00:27:54,159 Speaker 9: the S and P five hundred, you're not going to 566 00:27:54,160 --> 00:27:56,080 Speaker 9: see as viscerable response from the S and p. So 567 00:27:56,280 --> 00:27:58,119 Speaker 9: it's an uncomfortable way of thinking about it because of 568 00:27:58,119 --> 00:28:00,840 Speaker 9: the humanity angle to all of this. But if you're 569 00:28:00,880 --> 00:28:03,119 Speaker 9: looking at it dispassionately like the market does, it's an 570 00:28:03,119 --> 00:28:03,920 Speaker 9: important distinction. 571 00:28:04,119 --> 00:28:07,240 Speaker 2: If you go from southern California to Vermont, do you 572 00:28:07,359 --> 00:28:09,080 Speaker 2: demand Liz's golf stream? 573 00:28:09,640 --> 00:28:12,320 Speaker 3: No, golf stream, No, we are a commercial howl. 574 00:28:12,440 --> 00:28:14,560 Speaker 2: God's name do you get from southern California? 575 00:28:14,560 --> 00:28:17,040 Speaker 9: I had to stop over here, so I stopped in 576 00:28:17,080 --> 00:28:18,439 Speaker 9: New York first, and then I and then I went 577 00:28:18,480 --> 00:28:19,280 Speaker 9: over to snow. 578 00:28:19,240 --> 00:28:20,320 Speaker 6: Vermont during ski season. 579 00:28:20,320 --> 00:28:21,600 Speaker 3: I see what excuse me? 580 00:28:21,720 --> 00:28:24,879 Speaker 2: Now that we're here, Kevin, can we pause? Pray? Tell? 581 00:28:24,920 --> 00:28:26,879 Speaker 2: How are snow conditions in Colorado? 582 00:28:27,080 --> 00:28:30,720 Speaker 5: Well, I'm heading out to Colorado Sunday. They're not great, 583 00:28:31,119 --> 00:28:34,000 Speaker 5: but it's still the Rocky Mountains and we'll take it. 584 00:28:33,920 --> 00:28:38,000 Speaker 6: Well better in California. And I know dumped on Yep, Yeah, 585 00:28:38,040 --> 00:28:38,360 Speaker 6: it was. 586 00:28:38,440 --> 00:28:41,640 Speaker 5: So my cohort. They said, hey, let's go to Japan, 587 00:28:41,800 --> 00:28:43,320 Speaker 5: that's where the snow is. And I'm like, I'm not 588 00:28:43,360 --> 00:28:44,160 Speaker 5: going to Japan. 589 00:28:44,600 --> 00:28:47,280 Speaker 2: What's a lift ticket? I looked at a lift ticket 590 00:28:47,400 --> 00:28:50,520 Speaker 2: at Bristol Mountain in Western New York. Big drop, ye 591 00:28:50,800 --> 00:28:54,680 Speaker 2: tiny Mountain one hundred bucks a day, Primetime, three twenty five, 592 00:28:55,280 --> 00:28:58,960 Speaker 2: three twenty five. Imagine taking a family skiing like my 593 00:28:59,080 --> 00:29:05,000 Speaker 2: dad back Canniflash about it, Kevin, what's screening well for 594 00:29:05,080 --> 00:29:09,000 Speaker 2: you guys these days? Whether it's an industry or a factor, 595 00:29:09,000 --> 00:29:10,400 Speaker 2: How are you What do you guys talk to your 596 00:29:10,400 --> 00:29:11,280 Speaker 2: clients about these days? 597 00:29:11,360 --> 00:29:13,720 Speaker 9: Well, I mean the factors in some of the sectors 598 00:29:13,720 --> 00:29:17,120 Speaker 9: skew in terms of what looks what looks good moving forward, 599 00:29:17,120 --> 00:29:19,520 Speaker 9: are actually somewhat aligned in terms of a lot of 600 00:29:19,520 --> 00:29:21,880 Speaker 9: the earning stability coming back for you know, I called 601 00:29:21,920 --> 00:29:25,120 Speaker 9: the rest of the market, so everything except those those 602 00:29:25,200 --> 00:29:28,160 Speaker 9: hyperscalers and the sectors that they occupy. So you know, 603 00:29:28,160 --> 00:29:31,120 Speaker 9: with whether it's industrials, which has actually shown pretty solid 604 00:29:31,160 --> 00:29:35,040 Speaker 9: broad based strength recently, or even parts of communication services 605 00:29:35,320 --> 00:29:37,560 Speaker 9: that's a very very concentrated sector. I mean, Meta and 606 00:29:37,600 --> 00:29:40,959 Speaker 9: alphabet makeup about eighty percent of that of that, so 607 00:29:41,480 --> 00:29:43,600 Speaker 9: it's a pretty you know that we always sort of 608 00:29:43,640 --> 00:29:46,520 Speaker 9: make that distinction, but everything from an earning stability and 609 00:29:46,520 --> 00:29:49,520 Speaker 9: profit margin stability standpoint, that's those are the factors that 610 00:29:49,560 --> 00:29:54,120 Speaker 9: we've continued to emphasize, and again, similar to diversification, sounds 611 00:29:54,120 --> 00:29:55,720 Speaker 9: boring when you think about it and when you talk 612 00:29:55,720 --> 00:29:57,840 Speaker 9: about it. But in this environment where you've got so 613 00:29:57,920 --> 00:30:00,880 Speaker 9: much potential for whiplash, it really matters in terms of 614 00:30:00,920 --> 00:30:02,280 Speaker 9: keeping stability in a portfolio. 615 00:30:02,280 --> 00:30:04,520 Speaker 2: Do you guys have an S and P target? 616 00:30:04,720 --> 00:30:05,120 Speaker 6: We don't. 617 00:30:05,200 --> 00:30:08,560 Speaker 2: We don't do that. You don't do that. No, lucky you? Lucky? 618 00:30:08,640 --> 00:30:11,160 Speaker 9: Yes, and lucky our clients, because I don't know with 619 00:30:11,280 --> 00:30:13,840 Speaker 9: you know, forty million clients, I'm not sure how that's helpful. 620 00:30:13,720 --> 00:30:16,440 Speaker 2: The magic of schwell, what are you hearing from retail 621 00:30:16,520 --> 00:30:18,200 Speaker 2: schwab across this country? 622 00:30:18,320 --> 00:30:20,440 Speaker 9: So in all the events I've done in the past 623 00:30:20,520 --> 00:30:22,640 Speaker 9: couple of weeks, there is still this, and I think 624 00:30:22,640 --> 00:30:24,640 Speaker 9: it is actually in somewhat keeping with what we've seen 625 00:30:24,640 --> 00:30:27,680 Speaker 9: in the inflation data year to date, some more evidence 626 00:30:27,720 --> 00:30:29,880 Speaker 9: of this tariff pass through, but there is still more 627 00:30:29,880 --> 00:30:32,480 Speaker 9: of this consternation and discomfort around what our price is 628 00:30:32,480 --> 00:30:34,600 Speaker 9: going to look like this year because the general public 629 00:30:34,600 --> 00:30:35,640 Speaker 9: has just recovered. 630 00:30:35,760 --> 00:30:38,880 Speaker 2: So my brain's going, nominal GDP will hold up, whether 631 00:30:38,920 --> 00:30:42,960 Speaker 2: it's lousy, real GDP two percent, whatever, you throw on 632 00:30:43,080 --> 00:30:46,520 Speaker 2: a three percent or plus inflation rate, and that's enough 633 00:30:46,560 --> 00:30:50,480 Speaker 2: to have corporations keep going, oh yeah, I mean revenue, yes, 634 00:30:50,600 --> 00:30:51,200 Speaker 2: tif Ernie. 635 00:30:51,440 --> 00:30:53,840 Speaker 9: But admittedly though with the split between large and then 636 00:30:53,840 --> 00:30:56,360 Speaker 9: small and medium sized companies, I think that that you know, 637 00:30:56,720 --> 00:30:58,560 Speaker 9: I know it's an overused term at this point, but 638 00:30:58,640 --> 00:31:00,680 Speaker 9: the nature of that k you know, how you sort 639 00:31:00,680 --> 00:31:03,480 Speaker 9: of describe the economy, it's still very much there. I 640 00:31:03,520 --> 00:31:06,200 Speaker 9: do think that because of what happened with labor last 641 00:31:06,280 --> 00:31:09,120 Speaker 9: year and how much companies pulled back on hiring, especially 642 00:31:09,120 --> 00:31:12,000 Speaker 9: at the smaller end, maybe there was net negative hiring 643 00:31:12,080 --> 00:31:15,600 Speaker 9: for for small businesses in America that did help us, 644 00:31:15,640 --> 00:31:17,560 Speaker 9: you know, sort of cushion some of their profit margins, 645 00:31:17,560 --> 00:31:19,280 Speaker 9: and now I think that is benefiting some of their 646 00:31:19,320 --> 00:31:20,240 Speaker 9: forward earnings estimates. 647 00:31:20,360 --> 00:31:22,640 Speaker 2: Paul, Walmart the last twelve months, you taught me to 648 00:31:22,640 --> 00:31:26,560 Speaker 2: look at this and thes up thirty one percent. Right 649 00:31:26,600 --> 00:31:31,080 Speaker 2: now the pe is forty eight Walmart. 650 00:31:30,720 --> 00:31:32,480 Speaker 6: For a retailer, it's well, it's more. 651 00:31:32,600 --> 00:31:35,440 Speaker 2: I would have flunked CFA if they'd asked me. 652 00:31:35,400 --> 00:31:37,000 Speaker 6: That question, I know, absolutely. 653 00:31:37,040 --> 00:31:39,960 Speaker 5: So, you know, Kevin, we have seen, I guess since 654 00:31:40,040 --> 00:31:42,440 Speaker 5: late last year, a rotation in this market away from 655 00:31:42,440 --> 00:31:45,160 Speaker 5: some of the growthy sectors of the market and maybe 656 00:31:45,240 --> 00:31:48,760 Speaker 5: some more value maybe small in mid capin is that 657 00:31:48,840 --> 00:31:50,480 Speaker 5: a short term trade or is that something that you 658 00:31:50,480 --> 00:31:52,160 Speaker 5: guys think has maybe some some legs. 659 00:31:51,960 --> 00:31:52,280 Speaker 6: Here in it. 660 00:31:52,360 --> 00:31:54,640 Speaker 9: No think we think it has legs, I mean admittedly, 661 00:31:54,680 --> 00:31:57,280 Speaker 9: and we always make the clear sort of distinction that 662 00:31:57,320 --> 00:31:59,160 Speaker 9: it's never going to happen in a straight line. Of course, 663 00:31:59,360 --> 00:32:01,520 Speaker 9: you're kind of learning that over the past couple of 664 00:32:01,640 --> 00:32:04,200 Speaker 9: days at times small caps are getting hit harder than 665 00:32:04,280 --> 00:32:06,680 Speaker 9: large caps as an example, But I think of it 666 00:32:06,960 --> 00:32:09,760 Speaker 9: kind of in a broader context, not just small versus 667 00:32:09,840 --> 00:32:12,920 Speaker 9: large in the US, but x US versus the US. 668 00:32:13,000 --> 00:32:15,160 Speaker 9: Of course, there's been more pressure in the past week 669 00:32:15,400 --> 00:32:17,720 Speaker 9: in areas like Europe, as I mentioned, with their energy 670 00:32:17,760 --> 00:32:20,880 Speaker 9: exposure to the Middle East. However, I do think that 671 00:32:20,880 --> 00:32:22,320 Speaker 9: if you look at some of the PMI deat and 672 00:32:22,400 --> 00:32:24,720 Speaker 9: look some of the economic data around the world, even 673 00:32:24,800 --> 00:32:27,120 Speaker 9: for you know, the Global Composite PMI that just came 674 00:32:27,120 --> 00:32:31,080 Speaker 9: out recently for February, the strength in Asia and Asia Pacific, 675 00:32:31,080 --> 00:32:32,800 Speaker 9: in Europe has been you know, it's been better than 676 00:32:32,800 --> 00:32:34,640 Speaker 9: the US. They've been stronger and they've seen you know, 677 00:32:34,840 --> 00:32:38,560 Speaker 9: stronger accelerating growths of rates of growth. So I think 678 00:32:38,600 --> 00:32:39,959 Speaker 9: that you have to sort of pay attention to that 679 00:32:39,960 --> 00:32:43,200 Speaker 9: that it's not necessarily just a weaker dollar story. I 680 00:32:43,240 --> 00:32:45,680 Speaker 9: think that was kind of a twenty twenty five story. 681 00:32:46,080 --> 00:32:48,920 Speaker 9: Now I think it's translating into sort of more tangible 682 00:32:48,960 --> 00:32:51,120 Speaker 9: growth prospects for the rest of the world. Not saying 683 00:32:51,160 --> 00:32:53,280 Speaker 9: that it's this boom, but you know, the market's going 684 00:32:53,320 --> 00:32:55,440 Speaker 9: to trade off of those rates of change and differentials. 685 00:32:55,600 --> 00:32:58,400 Speaker 2: What does earning season look like, I mean, or upon 686 00:32:58,520 --> 00:33:01,720 Speaker 2: the end of the calendar quarter here March thirty one, 687 00:33:01,880 --> 00:33:05,040 Speaker 2: I guess April twentieth, April fifteenth, we start to go 688 00:33:05,200 --> 00:33:06,280 Speaker 2: through the ballet again. 689 00:33:06,400 --> 00:33:09,200 Speaker 9: Yeah, well, look, well, I think that the focus is 690 00:33:09,200 --> 00:33:11,960 Speaker 9: still going to because because of how much you know, 691 00:33:12,040 --> 00:33:15,000 Speaker 9: we're in this sort of AI centric economy and market. 692 00:33:15,200 --> 00:33:17,640 Speaker 9: I'm still I think the focus is really going to 693 00:33:17,640 --> 00:33:19,720 Speaker 9: be again on those hyperscalers and how much they're going 694 00:33:19,760 --> 00:33:21,640 Speaker 9: to up their CAPBECS budgets. Because that was really the 695 00:33:21,680 --> 00:33:25,000 Speaker 9: decisive turning point for this rotation last October, when we 696 00:33:25,000 --> 00:33:26,640 Speaker 9: were in that earning season and you started to see 697 00:33:26,640 --> 00:33:29,360 Speaker 9: those announcements roll through where they started to add up 698 00:33:29,400 --> 00:33:31,240 Speaker 9: to you know, a third of S and P five 699 00:33:31,320 --> 00:33:32,120 Speaker 9: hundred caps. 700 00:33:32,480 --> 00:33:33,880 Speaker 6: That's when the rotation really. 701 00:33:33,720 --> 00:33:35,720 Speaker 9: Started to kick into to hire gear, So I think 702 00:33:35,720 --> 00:33:37,760 Speaker 9: that is still going to be a focal point for earnings. 703 00:33:37,960 --> 00:33:42,000 Speaker 5: You know, what we've seen in cellofs before is Schwab 704 00:33:42,080 --> 00:33:45,440 Speaker 5: customer stepping and buying a market, retail buying, buying the 705 00:33:45,480 --> 00:33:48,959 Speaker 5: market being reached, buying the dips. I mean, when you 706 00:33:48,960 --> 00:33:51,320 Speaker 5: go out to southern California and a Vermont, do you 707 00:33:51,360 --> 00:33:54,640 Speaker 5: get that sense that your clients want to buy dips, 708 00:33:54,680 --> 00:33:56,280 Speaker 5: want to continue to be bullish. 709 00:33:56,440 --> 00:33:58,320 Speaker 9: I do still get that sense, and I think a 710 00:33:58,320 --> 00:33:59,600 Speaker 9: lot of it. And I know we talked about this 711 00:33:59,680 --> 00:34:02,080 Speaker 9: last time that I was here with Wizan, and we 712 00:34:02,120 --> 00:34:04,840 Speaker 9: all had a conversation about this. You know, I think 713 00:34:04,880 --> 00:34:07,080 Speaker 9: that's still the fact that in the post pandemic era, 714 00:34:07,680 --> 00:34:09,200 Speaker 9: we really haven't had what I think of as a 715 00:34:09,200 --> 00:34:11,279 Speaker 9: real bear market. And I think it's more important in 716 00:34:11,360 --> 00:34:14,240 Speaker 9: terms of duration, not necessarily death. And I think actually 717 00:34:14,239 --> 00:34:16,800 Speaker 9: the nature of that, the fact that the bear markets 718 00:34:16,800 --> 00:34:19,720 Speaker 9: we've had have been so shortened, you know, relatively short lived, 719 00:34:20,160 --> 00:34:22,440 Speaker 9: that has sort of conditioned the average retail trader, and 720 00:34:22,520 --> 00:34:25,080 Speaker 9: especially the newer trader these days, or newer investor, to 721 00:34:25,239 --> 00:34:28,000 Speaker 9: sort of step right in when you're down twenty or 722 00:34:28,040 --> 00:34:30,920 Speaker 9: twenty five percent. So to me, the next time we 723 00:34:30,960 --> 00:34:32,640 Speaker 9: do get a bear market, and if it is more 724 00:34:32,680 --> 00:34:35,160 Speaker 9: protracted it, if it lasts longer and it's associated with 725 00:34:35,200 --> 00:34:37,480 Speaker 9: some economic pain, that to me will be the real 726 00:34:37,520 --> 00:34:40,160 Speaker 9: test for that that Cohorative Traders. 727 00:34:40,000 --> 00:34:42,400 Speaker 2: Thank you for coming in. Thank you, it's always good 728 00:34:42,400 --> 00:34:48,279 Speaker 2: to see you. Stay with us. More from Bloomberg Surveillance 729 00:34:48,360 --> 00:34:49,680 Speaker 2: coming up after this. 730 00:34:56,960 --> 00:35:00,960 Speaker 1: You're listening to the Bloomberg Surveillance Podcast US Live weekday 731 00:35:01,000 --> 00:35:04,120 Speaker 1: afternoons from seven to ten am Eastern. Listen on Apple, 732 00:35:04,160 --> 00:35:07,480 Speaker 1: Karplay and Android Otto with the Bloomberg Business app, or 733 00:35:07,640 --> 00:35:09,160 Speaker 1: watch US Live on YouTube. 734 00:35:09,360 --> 00:35:14,000 Speaker 2: Brian Gardner joins US chief Washington War policy Strategists. It's 735 00:35:14,000 --> 00:35:16,960 Speaker 2: Steifel with all his work at Keith, Briett and Woods 736 00:35:16,960 --> 00:35:20,600 Speaker 2: over the years. Wonderful to have you here. I heard 737 00:35:20,960 --> 00:35:22,000 Speaker 2: a group. 738 00:35:23,360 --> 00:35:25,160 Speaker 6: I think we're gonna go mister Gardner first. 739 00:35:25,400 --> 00:35:28,359 Speaker 5: Okay, excuse because let's get the policy stuff right out 740 00:35:28,360 --> 00:35:28,680 Speaker 5: of the way. 741 00:35:29,080 --> 00:35:31,719 Speaker 2: I'm sorry Brian Gardner with this. I'm confused here because 742 00:35:31,719 --> 00:35:35,160 Speaker 2: we're it's jobs Day. I'm going on here, Brian Gardner 743 00:35:35,200 --> 00:35:38,759 Speaker 2: with us right now. It's Steph O. Brian. I look 744 00:35:39,160 --> 00:35:43,480 Speaker 2: at where we are and there's this confusion over conflict 745 00:35:43,800 --> 00:35:47,759 Speaker 2: in war, it's Stefel. Is this a conflict or is 746 00:35:47,800 --> 00:35:48,400 Speaker 2: this a war? 747 00:35:50,239 --> 00:35:52,040 Speaker 10: I'm not going to speak for the firm time because 748 00:35:52,040 --> 00:35:53,960 Speaker 10: I probably get myself in a little bit of trouble, 749 00:35:54,040 --> 00:35:57,359 Speaker 10: But I mean, I'll use the president's words himself. He's 750 00:35:57,360 --> 00:35:59,480 Speaker 10: referred to it as a war. I mean, obviously there 751 00:35:59,480 --> 00:36:01,560 Speaker 10: are folks up on Capitol Hill that want to avoid 752 00:36:01,600 --> 00:36:06,080 Speaker 10: that term. But the President on several occasions said, you know, 753 00:36:06,080 --> 00:36:08,960 Speaker 10: I got to get back to the war. So when 754 00:36:09,040 --> 00:36:13,239 Speaker 10: bombs start dropping and people are being killed, it's a war. 755 00:36:14,040 --> 00:36:19,240 Speaker 5: Hey, Brian, politically speaking, is this war a net positive 756 00:36:19,320 --> 00:36:22,600 Speaker 5: or net negative for the president here? Because this is 757 00:36:22,640 --> 00:36:24,319 Speaker 5: a president at least in his first term, said he 758 00:36:24,320 --> 00:36:27,200 Speaker 5: doesn't want anything to do with any of these entanglements. 759 00:36:27,800 --> 00:36:30,080 Speaker 10: Yeah, so we're Paul, We're in the fog of war. 760 00:36:30,160 --> 00:36:32,960 Speaker 10: So it's it's tough to see forward and how this 761 00:36:33,120 --> 00:36:35,960 Speaker 10: is all going to play out longer term. But I 762 00:36:36,000 --> 00:36:38,440 Speaker 10: think there is risk longer term. Short term, there's not 763 00:36:38,520 --> 00:36:42,040 Speaker 10: a lot of risk right now, you know, a write 764 00:36:42,080 --> 00:36:46,759 Speaker 10: down political partisan divides on support for the war. But 765 00:36:47,000 --> 00:36:49,800 Speaker 10: longer term he has he does have to be careful 766 00:36:50,160 --> 00:36:54,640 Speaker 10: that part of his coalition more than just the America 767 00:36:54,760 --> 00:36:59,080 Speaker 10: first diehards start to peel away if there were to 768 00:36:59,120 --> 00:37:01,400 Speaker 10: be boots on the ground. Now we're not close to that. 769 00:37:01,640 --> 00:37:04,400 Speaker 10: The administration is really pushed back on that idea. But 770 00:37:04,600 --> 00:37:06,800 Speaker 10: if somehow things were to change and there are boots 771 00:37:06,840 --> 00:37:10,239 Speaker 10: on the ground, I think the political dynamic changes, and 772 00:37:10,400 --> 00:37:13,640 Speaker 10: he just runs the risk generally of being seen as 773 00:37:13,680 --> 00:37:18,480 Speaker 10: being too focused on foreign policy when Americans clearly want 774 00:37:18,760 --> 00:37:22,040 Speaker 10: a focus on economic and domestic policy. That goes back 775 00:37:22,080 --> 00:37:24,640 Speaker 10: to twenty twenty four and it is still the case today. 776 00:37:25,000 --> 00:37:26,720 Speaker 5: And Brian, what we saw in some of the governor 777 00:37:26,760 --> 00:37:29,600 Speaker 5: elections last year in Virginia, New Jersey and some other 778 00:37:29,640 --> 00:37:34,640 Speaker 5: places was affordability was issue number one. And we're hearing 779 00:37:34,680 --> 00:37:38,920 Speaker 5: reports that gasoling prices are really starting to surge across America, 780 00:37:39,480 --> 00:37:42,120 Speaker 5: twenty five cents a gallon higher just in the last 781 00:37:42,840 --> 00:37:46,640 Speaker 5: week or so. That can't be politically good for this 782 00:37:46,680 --> 00:37:49,920 Speaker 5: administration or the party in general, exactly. 783 00:37:50,000 --> 00:37:53,279 Speaker 10: Look, if this is sorry to use the word, if 784 00:37:53,320 --> 00:37:58,879 Speaker 10: this is transitory and markets correct and oil drops back 785 00:37:58,880 --> 00:38:02,520 Speaker 10: to its previous level, gas gives back its gains, that's 786 00:38:02,560 --> 00:38:03,040 Speaker 10: one thing. 787 00:38:03,560 --> 00:38:06,080 Speaker 6: But if this is longer lasting, that's a problem. 788 00:38:06,280 --> 00:38:09,600 Speaker 10: And just going back since you mentioned those elections in November, 789 00:38:09,880 --> 00:38:11,719 Speaker 10: I mean, keep him on the context of that, not 790 00:38:11,800 --> 00:38:14,520 Speaker 10: just the shutdown, which everybody pays attention to, but the 791 00:38:14,520 --> 00:38:17,839 Speaker 10: president had been in Asia before then, and I think 792 00:38:17,920 --> 00:38:21,640 Speaker 10: again it kind of reiterated this perception that maybe he's 793 00:38:21,719 --> 00:38:25,040 Speaker 10: more focused on foreign policy than domestic policy. 794 00:38:25,080 --> 00:38:26,359 Speaker 6: I think that's a real risk for him. 795 00:38:26,520 --> 00:38:28,839 Speaker 2: Wonderful half hour for you folks into the job. Stay 796 00:38:28,880 --> 00:38:31,680 Speaker 2: in twenty five minutes. Claudius sam will join us to 797 00:38:31,719 --> 00:38:33,799 Speaker 2: give you that great coverage we try to do for 798 00:38:33,840 --> 00:38:36,760 Speaker 2: you with the release of the data. Eric van Astron 799 00:38:36,800 --> 00:38:41,080 Speaker 2: with his shortly chief investment officer at Lizard Asset Management 800 00:38:41,160 --> 00:38:45,360 Speaker 2: right now, Brian Gardner, Chief Washington Policy Strategies, it's default 801 00:38:45,400 --> 00:38:49,080 Speaker 2: fold in the elections of Tuesday, I guess the elections 802 00:38:49,080 --> 00:38:51,640 Speaker 2: for the mid year. It started this Tuesday with all 803 00:38:51,640 --> 00:38:55,600 Speaker 2: that we saw, particularly in Texas and the Carolina as well. 804 00:38:55,920 --> 00:39:00,480 Speaker 2: Brian Gardner, is the election season rush now? With all 805 00:39:00,520 --> 00:39:04,000 Speaker 2: of our uproar in March, are we doing a May 806 00:39:04,120 --> 00:39:07,000 Speaker 2: or June fever of a midterm? 807 00:39:07,200 --> 00:39:07,399 Speaker 6: Yeah? 808 00:39:07,719 --> 00:39:12,400 Speaker 10: It just feels time that every cycle starts earlier and earlier. 809 00:39:12,440 --> 00:39:14,919 Speaker 10: I mean, I'm already getting questions about twenty twenty eight 810 00:39:15,040 --> 00:39:16,080 Speaker 10: much less than midterm. 811 00:39:16,160 --> 00:39:18,000 Speaker 2: So yeah, we're we're already. 812 00:39:18,239 --> 00:39:22,160 Speaker 10: Yeah, we're already into the cycle, especially the midterm cycle, 813 00:39:22,480 --> 00:39:25,239 Speaker 10: and that's going to flow through to Congress and legislation 814 00:39:25,440 --> 00:39:29,880 Speaker 10: and what cannot get done. The legislative window is narrowing. 815 00:39:29,880 --> 00:39:32,520 Speaker 10: It's closing much faster than we have seen in the past. 816 00:39:32,560 --> 00:39:34,960 Speaker 10: So we are deep into election. 817 00:39:34,680 --> 00:39:38,800 Speaker 2: Season inside the beltwagh who has the most money? I'm told, 818 00:39:38,880 --> 00:39:42,480 Speaker 2: I'm lectured that money matters. Gura does this? Tell me 819 00:39:42,560 --> 00:39:45,080 Speaker 2: this Bloomberg this weekend with David Girl, look for that 820 00:39:45,160 --> 00:39:49,680 Speaker 2: here tomorrow. I mean, help me here, Brian, who's got 821 00:39:49,760 --> 00:39:54,480 Speaker 2: money up to the eyeballs? It matters until it doesn't. 822 00:39:54,520 --> 00:39:57,520 Speaker 10: Tom I mean, we can go back and look at 823 00:39:57,600 --> 00:40:01,080 Speaker 10: a couple of campaigns that have already occurred. The notable 824 00:40:01,239 --> 00:40:05,480 Speaker 10: state election state legislative election in Texas a couple of 825 00:40:05,480 --> 00:40:08,400 Speaker 10: weeks ago, where a Democrat won the seat, took it 826 00:40:08,440 --> 00:40:10,880 Speaker 10: from Republicans that had held it for quite a long time. 827 00:40:11,080 --> 00:40:15,040 Speaker 10: The Democratic candidate was outspent ten to one. So I mean, 828 00:40:16,000 --> 00:40:19,440 Speaker 10: you have to match the message in the moment. Money matters. 829 00:40:19,680 --> 00:40:23,040 Speaker 10: Directly to your question, both parties have more than enough money. 830 00:40:23,280 --> 00:40:25,000 Speaker 6: I think Republican. 831 00:40:25,320 --> 00:40:28,000 Speaker 3: Parties, the party apparatus. 832 00:40:27,520 --> 00:40:30,319 Speaker 10: Is in really good shape compared to Democrats, who know 833 00:40:30,360 --> 00:40:34,080 Speaker 10: the DNC I think is not in a good cash situation. 834 00:40:34,480 --> 00:40:38,160 Speaker 10: But at the candidate level, I think Democratic candidates are 835 00:40:38,200 --> 00:40:41,800 Speaker 10: in very good shape, especially in those key swing districts. 836 00:40:41,840 --> 00:40:44,520 Speaker 10: They're flush with money. They're going to have enough. But 837 00:40:45,120 --> 00:40:47,200 Speaker 10: I think we yeah, money matters, but I think we 838 00:40:47,239 --> 00:40:49,239 Speaker 10: overplay it. It's more about the message and the. 839 00:40:49,239 --> 00:40:52,520 Speaker 5: Moment, Brian, most folks feel like the House is certainly 840 00:40:53,239 --> 00:40:55,560 Speaker 5: in play. How about the Senate in terms of the 841 00:40:55,560 --> 00:40:56,760 Speaker 5: Democrats taking control. 842 00:40:57,840 --> 00:41:02,320 Speaker 10: So Democrats would need a four seat pickup in the Senate, 843 00:41:02,719 --> 00:41:07,399 Speaker 10: and numerically they have the upper hand because Republicans are 844 00:41:07,440 --> 00:41:11,120 Speaker 10: defending more seats than our Democrats. So you say, okay, 845 00:41:11,160 --> 00:41:13,920 Speaker 10: they have more pickup opportunities, but when you look at 846 00:41:13,960 --> 00:41:18,080 Speaker 10: where those seats are, where the contested seats are, Republicans 847 00:41:18,160 --> 00:41:20,680 Speaker 10: are in a much stronger position in the Senate than 848 00:41:20,719 --> 00:41:23,400 Speaker 10: they are in the House. As we sit here today, Paul, 849 00:41:23,440 --> 00:41:27,640 Speaker 10: I would say Republicans have a pretty good chance, certainly 850 00:41:27,680 --> 00:41:29,840 Speaker 10: over fifty to fifty. I'm putting it probably in the 851 00:41:30,080 --> 00:41:34,000 Speaker 10: sixty sixty five, maybe seventy percent chance of retaining the Senate. 852 00:41:34,640 --> 00:41:38,960 Speaker 10: Let's see how the situation with Iran unfolds. Let's come 853 00:41:39,000 --> 00:41:41,680 Speaker 10: back in three, four or five months. It could be 854 00:41:41,719 --> 00:41:45,200 Speaker 10: in a different environment, but based on what we know today, 855 00:41:46,360 --> 00:41:49,400 Speaker 10: even with a tough political environment for Republicans, I think 856 00:41:49,400 --> 00:41:51,600 Speaker 10: they're in a good position to keep the Senate. 857 00:41:51,719 --> 00:41:54,719 Speaker 2: Brian Gardner, thank you so much, Chief Washington policy strategist. 858 00:41:54,760 --> 00:41:56,399 Speaker 2: Steve greatly appreciate that. 859 00:41:56,760 --> 00:42:01,799 Speaker 1: This is the Bloomberg Surveillance Podcast on Apple, Spotify, and 860 00:42:01,960 --> 00:42:06,000 Speaker 1: anywhere else you get your podcasts. Listen live each weekday, 861 00:42:06,120 --> 00:42:09,600 Speaker 1: seven to ten am Eastern on Bloomberg dot Com, the 862 00:42:09,680 --> 00:42:13,719 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You 863 00:42:13,760 --> 00:42:17,120 Speaker 1: can also watch us live every weekday on YouTube and 864 00:42:17,320 --> 00:42:19,040 Speaker 1: always on the Bloomberg terminal.