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Speaker 1: Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene

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Speaker 1: Jay Ley. We bring you insight from the best in economics, finance, investment,

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Speaker 1: and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud,

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Speaker 1: Bloomberg dot Com, and of course, on the Bloomberg. Do

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Speaker 1: you want to us? Here? In New York is John Quinlan,

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Speaker 1: head of c i O Market Strategy for Meryl and

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Speaker 1: Bank of America Private Bank. Good morning, chit cho, Good morning.

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Speaker 1: Let's just start with those trade talks, shall we. We

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Speaker 1: have got increasingly comfortable that everything is going to be okay?

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Speaker 1: Is that come from misplaced says everything's going to be okay?

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Speaker 1: I'm looking John, I same thing. The administration is the

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Speaker 1: only one telling me everything is going to be Uncertainly,

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Speaker 1: the markets not pricing at the downside, is it now?

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Speaker 1: I think the markets have been a little complacent about

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Speaker 1: the deadlines being missed and the fact that they're you know,

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Speaker 1: we're traveling over to Beijing. Beijing is coming to Washington,

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Speaker 1: so we're getting we're gonna get to that point where

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Speaker 1: is there a deal or not? What's the enforcement issues,

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Speaker 1: what actually is happening, what's in the deal, um that

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Speaker 1: could actually move the market. So we're getting close to

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Speaker 1: crunch time. We're not there just yet, but I think

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Speaker 1: the weaker numbers out of China the p M I

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Speaker 1: you know, maybe that's gonna give some urgency or just

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Speaker 1: momentum for the Chinese to get the deal done in

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Speaker 1: some shape or form. Let's talk about that. I think

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Speaker 1: a lot of people are comfortable with it for two reasons.

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Speaker 1: One is diminished escalation risk. That's an important part of

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Speaker 1: all of this that seems to have diminished over the

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Speaker 1: last few months. The other is the stimulus of the

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Speaker 1: Chinese are pumping through. It seems to be having a

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Speaker 1: limited effect on the Chinese economy at this point. Yeah,

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Speaker 1: the stimulus. Every dollar invested now in the infrastructure is

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Speaker 1: giving less back, and that's just because of the size

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Speaker 1: of the Chinese economy and how it's shifting more towards consumption.

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Speaker 1: So the Chinese need to rebalance growth, but it's very

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Speaker 1: hard to do in the midst of a major trade

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Speaker 1: war with not just the United States, but also Europe

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Speaker 1: as well. Europe kind of dropped down on board as well.

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Speaker 1: I think it was an analyst this morning that said,

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Speaker 1: we need to draw a distinction between avoiding a hard

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Speaker 1: landing versus reviving global growth. It's the global growth aspect

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Speaker 1: of this that fascinates me. We've had industrial output from

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Speaker 1: South Korea down Japan last week, plunging Europe just a

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Speaker 1: little bit better today. How encouraging is it that euros

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Speaker 1: own GDP just shows a little bit of life. It's

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Speaker 1: very encouraging because remember, after the United States, the European Union,

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Speaker 1: with or without the UK, is the second largest economy

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Speaker 1: in the world seventeen eighteen trillion dollars. They've been more

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Speaker 1: of a deflationary drag and we're the last, say three

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Speaker 1: quarters four quarters. So any signs of life, any pulse,

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Speaker 1: particularly coming out of the Mediterranean, you know, Italy in Spain,

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Speaker 1: that's nice news to have. Would be nice. Would be

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Speaker 1: even nicer if Germany got on board and stopped running surplusses,

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Speaker 1: start to look to spend on infrastructure. So there's their

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Speaker 1: signs of home in Europe. Joe, there's a coup in

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Speaker 1: Venezuela right now, Folks is reported by Associated Press and

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Speaker 1: many other services will get to that in a bit.

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Speaker 1: Bill Dudley of the New York Fed just drops a bombshell.

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Speaker 1: I'm Bloomberg Opinion just moments ago. Thank you Michael McKee

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Speaker 1: for showing that to me, and the basic idea from

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Speaker 1: the former president of the New York Fed as we

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Speaker 1: should drop the target rate to John's good questions on

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Speaker 1: the economic cacophony out there right now? What is it

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Speaker 1: fed to do? Do they have an underlying theory into

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Speaker 1: tomorrow's meeting? I don't really maybe a theory tom but

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Speaker 1: in practical, practical terms to a moving target, I mean,

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Speaker 1: they adjust their inflation. They missed their inflation targets for

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Speaker 1: over a decade. Why not adjust? Why not? Or why not?

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Speaker 1: Like rethink this one and I but you know, I

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Speaker 1: think I think the FED fears a minute they readjust

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Speaker 1: or reset, then inflation spikes and here we go again.

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Speaker 1: Joe hate to do this, but they shout out to

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Speaker 1: one of our listeners, John Farrell yesterday, who was way

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Speaker 1: out front on the inflation just isn't there. I mean, services,

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Speaker 1: flat goods is rolling over again, and it's Bill Dudley

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Speaker 1: rights for Bloomberg Opinion. They're boxed into a course seems

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Speaker 1: to be spread out on between various rates of inflation.

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Speaker 1: There's certainly a big difference between where PC is and

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Speaker 1: were c p I is right now. If you're looking

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Speaker 1: at some of the consumers goods companies in the United States,

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Speaker 1: they've managed to put up prices and imagine for many

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Speaker 1: of our listeners their experience with inflation is very different

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Speaker 1: to the Fence view on inflation as well. Joke it is,

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Speaker 1: but it hasn't. It's not that crushing inflation that's taking

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Speaker 1: away disposable income set aside gasoline. But so it's I

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Speaker 1: think through productivity games, the consumer having a waging wage

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Speaker 1: game that it's passing. It's like we can we can

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Speaker 1: absorb the kind of those price increases. So we've got

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Speaker 1: to think about how you push all of this free.

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Speaker 1: Financial markets equities yesterday closing at an all time high.

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Speaker 1: It's easy when you were a record high to say,

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Speaker 1: you know what, I'm cautious now and cautiously optimistic. I

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Speaker 1: think things are still okay, but I don't like it

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Speaker 1: when we're up at these levels. What do you say

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Speaker 1: to clients right now? We're telling clients, particularly ones that

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Speaker 1: remember Christmas Eve, the Masacre massacre, and the v Shape recovery,

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Speaker 1: that you know, we've reset, we're kind of all time highs. Now,

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Speaker 1: how do we go? How do we go higher? Here?

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Speaker 1: We need more global growth to get that traction. We

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Speaker 1: need traction out of China. We need get to trade

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Speaker 1: disputes behind us. We need more clarity from the Fed

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Speaker 1: on how they're what they're inflation outlooks looks as well.

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Speaker 1: Europe is a positive surprise, but you know Europe, they're

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Speaker 1: they're good one quarter, the next quarter there down. So

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Speaker 1: we need kind of like the global growth story to

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Speaker 1: gain traction, and that's got to come from the United States,

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Speaker 1: Europe and China. What is the market telling us? What

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Speaker 1: is the stock market on a log basis, is on

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Speaker 1: a new slope? John, Are we calling it a melt up? No? Yeah,

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Speaker 1: I mean is Man City or Liverpool and melt up?

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Speaker 1: Um standy Liverpool from meltdown, But it is a meltdown.

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Speaker 1: Are we had a melt up? Well in the Philadelphia

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Speaker 1: Phillies melt up? I mean, but I would think the

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Speaker 1: markets are telling you that there's no place really else

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Speaker 1: to put your money to work exactly and here, and

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Speaker 1: we've seen this movie over and over again. Don't fight it.

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Speaker 1: We're telling clients, don't fight that kind of then how

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Speaker 1: do you intelligently deploy capital today with the moonshot in

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Speaker 1: a selected eight stocks or whatever it is. Well, you

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Speaker 1: don't want to overpay. I mean, so you're looking at

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Speaker 1: value in healthcare maybe, and and even in the kind

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Speaker 1: of biotechnology you want to look at, say some financials

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Speaker 1: good dividend payers. The key here is not to get

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Speaker 1: caught in overpay. What do you do with a busted

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Speaker 1: blue chip? Michael Rooman at three M will join Bloomberg today.

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Speaker 1: He's got a I mean, I don't want you to

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Speaker 1: talk an individual stock at three M, But how do

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Speaker 1: you approach a busted blue chip very cautiously, carefully but

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Speaker 1: looking thinking long term. Do they have the global presence

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Speaker 1: in the leadership to turn it around, work through the

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Speaker 1: structural problems, because if they do, then that they're there's

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Speaker 1: value there to buy it today. I don't know. I

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Speaker 1: don't know. Some of these blue chips at the round

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Speaker 1: for over a hundred years are gonna outlast this cycle,

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Speaker 1: this market, everything else. Joe Quelin, thank you so much

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Speaker 1: for being with us today with the cacophony of a

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Speaker 1: coup in Venezuela, and greatly greatly appreciate your time with

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Speaker 1: Bloomberg Surveillance. Today he is with Bank of America. Mary

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Speaker 1: Lynch is their head of market Strategy. Now for an

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Speaker 1: important interview on Venezuela. Marian Emmenez Morales is it Oxford.

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Speaker 1: She's also been an advisor and Mr Guido and joins

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Speaker 1: us from Berlin. Marian, what is your relationship with Mr Guido? Well,

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Speaker 1: first of all, I'm an academic, so I'm a political

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Speaker 1: scientist studying the situation of opposition and electoral autocracies. UH.

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Speaker 1: For a while this represent me as a Venezuela UH,

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Speaker 1: and I have tried, through UH several briefings to help

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Speaker 1: UM understand the situation in Venezuela. So my relationship with

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Speaker 1: him is that he's the president of my country. Alice Conan,

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Speaker 1: who worked with Senator Rubio Florida, told Bloomberg Surveillance moments

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Speaker 1: ago that Mr Rubio is alone in Washington. What does

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Speaker 1: Mr Guido need right now from the United States, from

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Speaker 1: the US military and from President Trump? I think UM

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Speaker 1: there are several several points UM, so very important right

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Speaker 1: now is to not polarize the situation. So Venezuela needs

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Speaker 1: the US to help maintain UM real information about what's

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Speaker 1: going on and spread the real news basically to not

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Speaker 1: feed to fake news UH in the US. So we

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Speaker 1: know that Twitter and other social media have been shut

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Speaker 1: down in in as well as the Right now, it's

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Speaker 1: very important to inform the population about what's going on,

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Speaker 1: and because they're so even as rounds inside the US,

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Speaker 1: we need also both based there to inform Venezuelas in

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Speaker 1: the country. But I also think that the US needs

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Speaker 1: to put pressure on the United Nations, for example, UM two,

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Speaker 1: closely follow what's happening. This is important, Marian, Marian, whether

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Speaker 1: the news slow that we're seeing this morning. My colleague

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Speaker 1: John Farrell makes a very good point. The Associated Press

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Speaker 1: is calling this a coup. You're going lighter on it.

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Speaker 1: Is this a coup going on now or not? UM, Well,

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Speaker 1: you know the government is saying that this is a coup.

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Speaker 1: What UH President one point way though, has said is

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Speaker 1: that military officers are now obeying by the Constitution and

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Speaker 1: by the UM by the rules of the transition to

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Speaker 1: democracy in Venezuela. And I think that right now it's

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Speaker 1: very important to follow what the president is saying. Obviously

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Speaker 1: we will hear to two type of news on the situation.

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Speaker 1: In Venezuela. And this is why I'm saying that the

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Speaker 1: role of the US is crucial in this. We need

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Speaker 1: to really focus on the real news. And talking about

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Speaker 1: a cool is I think not helpful because we don't

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Speaker 1: have a legitimate uh Madua is not the legitimate president

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Speaker 1: and um, right now, the military forces have to listen

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Speaker 1: to what the population wants, which is people are really changed. Yeah, Marian.

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Speaker 1: For someone who might have just tuned in, it might

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Speaker 1: be somewhat confusing as the way you referred to the

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Speaker 1: president the president of Veniceue. It depends on who you ask.

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Speaker 1: Of course you'll appreciate that. And I understand that when

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Speaker 1: you refer to the president you are referring to one Quardo.

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Speaker 1: For the purpose of this conversation, let's just talk about

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Speaker 1: one Guardo as the opposition leader and Nicola Madre at

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Speaker 1: the head of the government. As things stand, one Guardo

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Speaker 1: is calling from military uprising. Now I'm trying to understand

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Speaker 1: what is happening on the ground as to how much

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Speaker 1: military control, military influence one Guido currently has. Do you

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Speaker 1: have any clarity on that? Well, these things are obviously

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Speaker 1: quite time and complicated. At this moment of time, Guangwado

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Speaker 1: cannot reveal his strategy obviously because the government is trying

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Speaker 1: to counter all of what has been done within the

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Speaker 1: opposition camp. So I think that we will have to

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Speaker 1: wait for a few hours to see how many people

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Speaker 1: will join this call. And military officers, well, well said,

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Speaker 1: do you have any measurement or any knowledge to John's

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Speaker 1: good question of the size of military support for Mr Guido. Well,

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Speaker 1: we've seen that many over now are in Columbia and

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Speaker 1: we've all we've also seen that there are some important

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Speaker 1: forces already gathered at the air base in La Carlotta.

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Speaker 1: But it's way too early, uh to say anymore. We

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Speaker 1: will have to wait a couple more hours to see

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Speaker 1: how many more will join. There is now high pressure

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Speaker 1: from a Lulo and algo on the military who is

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Speaker 1: still in the barracks um to sort of not break away.

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Speaker 1: But we know that there's mass of discontent within the

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Speaker 1: middle ranks. Now it's really important to closely follow the

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Speaker 1: high ranks and whether we'll see any um flipping within

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Speaker 1: the next few hours, just in terms of the support

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Speaker 1: and the friendship provided from the likes of Russia's Vladimir

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Speaker 1: Putin and China's using pink to the current leader of Venezuela,

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Speaker 1: President Nikola Madora. How important is that it's very important

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Speaker 1: that Russia and China understand that uh niny percent of

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Speaker 1: Venezuelans warrant a regime change. So we could say that

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Speaker 1: for him from a door, is really important to maintain

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Speaker 1: these two allies because they have been h isolated internationally

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Speaker 1: because more than uh fifty five country support one Wail

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Speaker 1: or So what now China and Russia need to understand

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Speaker 1: is that there will be eventually really in change in Venezuela,

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Speaker 1: and that if they're interested in maintaining their economic investments

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Speaker 1: and looking forth in the future, they will have to

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Speaker 1: at least if they do not want to publicly endorse

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Speaker 1: one Wail, they should at least back down and uh

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Speaker 1: take away to the support from Maduro Maran before we

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Speaker 1: let you go. I just like some insight from us

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Speaker 1: to how the current leader of the country, Nicolamaduro maintains

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Speaker 1: military support through promotions to the general level, through payments

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Speaker 1: to these individuals within the military. Just how does he

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Speaker 1: do that and how much has that influence diminished over

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Speaker 1: the last year or so. Well, that's this is a

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Speaker 1: crucial question. So little because he's not a very charismatic

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Speaker 1: and are not very popular and also not a military

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Speaker 1: officers himself. He had to give up parts of the

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Speaker 1: economy and parts of the political control of the country

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Speaker 1: over to the military. So it's not just that the

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Speaker 1: military or the high ranks of the military received um benefits,

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Speaker 1: but it's also that they want the elisted economy. So

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Speaker 1: we know that the military is involved not the trafficking,

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Speaker 1: but also it was mining, etcetera. So they are literally

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Speaker 1: running parts of the ellisted economy, which gives them a

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Speaker 1: lot of um. Let me ask one final question. It's

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Speaker 1: beyond a delicate question. And we see this folks with

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Speaker 1: the headlines out Mr sab the public prosecutors saying quote

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Speaker 1: actions will face consequence of the law. It what danger

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Speaker 1: or risk is Mr Guido on this Tuesday morning. Well,

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Speaker 1: there is, of course danger is that he will be

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Speaker 1: uh he can be jailed at any time. We know

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Speaker 1: that his community was taken away a few weeks ago.

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Speaker 1: Uh So obviously right now the official version of the

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Speaker 1: regime Malula and all his supports is to intimidate the

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Speaker 1: population to not leave and hit the street, and also

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Speaker 1: to intimidate and put pressure on one way though, and

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Speaker 1: people closer to him to basically back down and go back.

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Speaker 1: You've been very generous with your trying marrying him and

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Speaker 1: it's Morrel's thank you so much at the University of

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Speaker 1: Oxford speaking to us from Berlin today, Karen, thanks so much.

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Speaker 1: Earlier this morning, the two conversations with the lecture from

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Speaker 1: the University of Oxford lecturer Imanez out of Berlin on

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Speaker 1: her Venezuela, her supportive Mr Guido, I thought there were

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Speaker 1: very informative. This is definitive and has made evermore so.

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Speaker 1: Is Mike Allen at Axios leads today with why President

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Speaker 1: Trump is focused on Venezuela joining us now Alex conan

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Speaker 1: communications director, and a lot of leadership for Senator Marco

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Speaker 1: Rubio to remind you, Marco Rubio with three tweets out

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Speaker 1: immediately on these efforts by Mr Guido, the AP calling

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Speaker 1: it a coup, others saying no, Alex, we need to

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Speaker 1: catch up on the story. Mike Allen goes back to

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Speaker 1: a pivotal moment, that's a quote. A pivotal moment was

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Speaker 1: Senator Rubio, Vice President Pence, and the President with Lillian

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Speaker 1: Tintor in the Oval Office discuss why Marco Rubio cares

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Speaker 1: so much about Lillian Tintor of Caracas. Hey, Tom, thanks

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Speaker 1: for having me. It's great to talk to you. Yeah.

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Speaker 1: So in February, I think it was Marco's first meeting

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Speaker 1: with President Trump in the Oval Office. He brought uh,

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Speaker 1: the wife of a well known Venezuelan dissident who has

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Speaker 1: been under house arrest. He brought her into the Oval

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Speaker 1: Office to make the personal pitch to the President about

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Speaker 1: why venezu will mattered and and and Trump got it.

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Speaker 1: I mean, he was on board from that very first meeting.

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Speaker 1: And I was marketing Rubio's communications director in the presidential campaign.

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Speaker 1: I don't work from now, but I keep in touch,

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Speaker 1: and I know that this is an important issue for him,

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Speaker 1: and he's been working very closely with the Trumpet administration

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Speaker 1: to ratchet up pressure. And I think it's led directly

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Speaker 1: to the events that we've seen this morning. Where is

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Speaker 1: that pressure right now? I don't want to get into

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Speaker 1: the delicacies of your conversations with Senator Rubio in the

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Speaker 1: last twenty four hours, but described the pressure now moving

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Speaker 1: forward into this week for the Trump administration for the

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Speaker 1: president and for his Pentagon, well, I think the I

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Speaker 1: think markat Rubio's tweets this morning, as your point out,

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Speaker 1: he's been very active on Twitter, and the big part

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Speaker 1: about it is trying to separate Maduro from the military,

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Speaker 1: and and according to the videos we've seen out of

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Speaker 1: Venezuela this morning, it certainly peers at least some part

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Speaker 1: of the military are breaking with the Maduro regime. I

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Speaker 1: think what Marco is trying to do is encourage the

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Speaker 1: rest of the military to to to join the opposition

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Speaker 1: so we can be rid of Maduro once and for all,

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Speaker 1: and so that we, frankly, can begin to put this

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Speaker 1: country back together, to rebuild the democracy there, to bring stability,

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Speaker 1: and then to bring basic essentials like food and medicine,

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Speaker 1: which the regime has been keeping out of the country.

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Speaker 1: From where you sit in your advice to the Senator

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Speaker 1: from Florida, does the Pentagon have an interest in Venezuela.

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Speaker 1: Is there a plan for the Pentagon in Venezuela or

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Speaker 1: is it almost just humanitarian assistance. I can't speak to

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Speaker 1: that directly, but clearly I think having a failed regime,

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Speaker 1: failed state in the southern in South America in the

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Speaker 1: western hemisphere is potentially the stabilizing for the entire region.

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Speaker 1: And clearly, what we've seen just at the Mexican border

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Speaker 1: so far this year emanating out of Central America is

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Speaker 1: it's clear that that problems in South America and Central

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Speaker 1: America don't stay in South America and Central America. And

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Speaker 1: I think that's the case that the President, or that

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Speaker 1: Marco Rubiel has been making to the President, that what

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Speaker 1: happens in our hemisphere impacts Americans directly. We have a

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Speaker 1: vest at stake in the outcome, and that's why it's

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Speaker 1: important that we continue to put pressure on the Maduau

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Speaker 1: regime as they have in recent in recent months. The

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Speaker 1: granularity of this is simple, Rubio penns Trump Uh clearly,

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Speaker 1: what else do you need to see from Republican leadership

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Speaker 1: and particularly Senate leadership. I think the late Richard Luger,

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Speaker 1: who joined us just months ago to three months ago

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Speaker 1: dying here in the last few days. Where is the

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Speaker 1: Luger of the modern Republican Party. Well, frankly, in this

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Speaker 1: in the in the Senate, we see a lot of

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Speaker 1: strong foreign policy leaders are clearly mark of Rubio taking

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Speaker 1: his leadership on the Western hemisphere and human rights around

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Speaker 1: around the world. But then also leaders like under Tom Cotton,

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Speaker 1: who is very active, Joni Arrens, who I actually also

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Speaker 1: worked for. Okay, so what what do they need to

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Speaker 1: do right now, right now with the headlines flying by

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Speaker 1: on the Bloomberg terminal coop not coup, whatever, what does that?

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Speaker 1: What does that leadership need to do to insist the people?

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Speaker 1: Incumbent on I think it's incumbent on every political leader

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Speaker 1: in in the US and Washington Republican and Democrat to

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Speaker 1: make it clear that any attempt by the Madura regime

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Speaker 1: to cause physical violence to maintain their power will not

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Speaker 1: be accepted by the US and that all options are

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Speaker 1: on the table. And the President Trump has made clear

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Speaker 1: that that all options are on the table, and that

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Speaker 1: the military, for the sake of the people as well

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Speaker 1: for the sake of their own futures, now is the

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Speaker 1: time for them to break from Madera. Thank you so much.

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Speaker 1: Formally with UH, Senator Ruby on a course of supportant

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Speaker 1: days A Senator tweets out on UH the events of Venezuela.

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Speaker 1: Right now we have a voted confidence that will get

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Speaker 1: wisdom from brook Sutherland on generous Electric as well. What's

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Speaker 1: the X axis for Lawrence Callp? How fast does he

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Speaker 1: have to move to continue to resurrect? What M L.

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Speaker 1: Rot Well, I think you just have to look at

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Speaker 1: John Flannery's tenure and he got about fourteen months, and

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Speaker 1: so I think it's you can apply that timeline to

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Speaker 1: Larry Colp as well and say, you know, at that

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Speaker 1: point investors are going to want to see the turnaround

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Speaker 1: taking route now. To his credit, he has moved much

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Speaker 1: more swiftly on the divestiture front in terms of bringing

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Speaker 1: down ges debtload and as far as cutting costs and

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Speaker 1: trying to put those operations. What do they say about power?

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Speaker 1: Karen says? The powered timeline is a lot longer. That's

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Speaker 1: not that good, is it. It's not that good, But

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Speaker 1: it's just the reality of it. This is a business

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Speaker 1: where their structural change happening and people are shifting more

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Speaker 1: and more too cheaper renewable energy products and g all

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Speaker 1: so sort of shot itself in the foot with the

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Speaker 1: way it priced these contracts with the Alston acquisition, So

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Speaker 1: it has a lot to do just to sort of

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Speaker 1: get back to even where it was, let alone think

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Speaker 1: about really growing that business book doesn't know that go

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Speaker 1: in and do a common size bad will analysis of

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Speaker 1: g E. Just like, are they going to do a

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Speaker 1: craft with a big right down in power. Well, they

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Speaker 1: already did that. They took a twenty two billion dollar

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Speaker 1: right down on the Once you get started, you never

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Speaker 1: know what you're going to find. Um No, but I

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Speaker 1: think you know, obviously the stock is up a lot

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Speaker 1: today on that first quarter cash flow number, But I

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Speaker 1: do want to point out that that's relative to, you know,

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Speaker 1: some expectations that to me at least seemed out of

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Speaker 1: whack from the beginning. When you talk about the cash

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Speaker 1: flow headwinds for the year, you're talking about restructuring, you're

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Speaker 1: talking about unwinding the working capital benefits from g capital. Uh,

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Speaker 1: none of those struck me as being particularly first quarter weighted. Now,

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Speaker 1: the first three months of the year always seasonally the

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Speaker 1: weakest for g E from a cash a perspective, But

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Speaker 1: you're not going to necessarily get that restructuring build up,

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Speaker 1: So I don't think it's you know, that's I guess

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Speaker 1: I would take a little bit more of a cautious

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Speaker 1: tone to this first quarter beat. Okay, I'll go with

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Speaker 1: that total intangible assets common size versus in the old

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Speaker 1: days it was fourteen or six. So I would suggest

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Speaker 1: Paul Power put a thousand basis points on yeah, exactly

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Speaker 1: and intangibles. You to Brooks point. When I looked at

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Speaker 1: the g E numbers today, I said, Wow, that's that's

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Speaker 1: a big beat on the cash story. That's great. But

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Speaker 1: the question is how sustainable is it? And you know,

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Speaker 1: you know, I think that's really an issue for investors.

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Speaker 1: I mean, he's done a good job here in as

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Speaker 1: Brooks said, he it's probably gonna have a very short

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Speaker 1: leash from investors, so I think maybe you bought himself

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Speaker 1: some time here, right. But I do think it's a

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Speaker 1: bit of a timing issue why you're seeing that cash

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Speaker 1: flow number come in as it did in the first quarter.

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Speaker 1: In g has said that they had some orders come in,

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Speaker 1: some progress payments come in that were earlier than what

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Speaker 1: they expected. So that does raise the question about what

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Speaker 1: you're looking at for the balance of the year, and

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Speaker 1: they're maintaining their guidance for a two billion dollars much

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Speaker 1: as a two billion dollar cash burn. And thank you

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Speaker 1: so much with Bloomberg News on Generous Electric this morning.

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Speaker 1: Always loud and boisterous on all sorts of things with

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Speaker 1: the market's Michael Purvis, we who joins us at this morning. Michael,

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Speaker 1: just as simple as I can state, at how do

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Speaker 1: you find the courage to be in equities right now

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Speaker 1: after the melt up from December? Yeah, I mean the

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Speaker 1: best the melt up has been one of the most

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Speaker 1: vicious melt ups on record, all right, and you know,

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Speaker 1: you know, back in December twenty s you can certainly

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Speaker 1: make a very obvious valuation argument, you know, equities really

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Speaker 1: were miss price, you know, and you go back through

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Speaker 1: the Q four volatility. Earnings didn't really miss at all.

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Speaker 1: In Q three economic data at least in this country

430
00:24:58,440 --> 00:25:01,560
Speaker 1: came in just fine. So you could certainly, you know,

431
00:25:01,640 --> 00:25:03,639
Speaker 1: make a good argument that you know, another one or

432
00:25:03,680 --> 00:25:07,240
Speaker 1: two pe um points could be added on even without

433
00:25:07,240 --> 00:25:10,199
Speaker 1: an earnings pickup. That's that's been achieved with this with

434
00:25:10,240 --> 00:25:12,760
Speaker 1: this vicious rally. Now we're looking at, really, you know,

435
00:25:13,160 --> 00:25:15,679
Speaker 1: how how how much stronger can earnings growth get? And

436
00:25:15,680 --> 00:25:18,880
Speaker 1: the current season seems to reveal yet again earning procession

437
00:25:19,000 --> 00:25:21,359
Speaker 1: is not at bay. Earnings are you know, in that

438
00:25:21,440 --> 00:25:25,600
Speaker 1: sort of middle upper middle single digit growth, which is

439
00:25:25,640 --> 00:25:32,280
Speaker 1: which is solid spectacular, right, solid, right, and and solid

440
00:25:32,359 --> 00:25:34,440
Speaker 1: is you know, kind of really defined this sort of

441
00:25:34,600 --> 00:25:37,160
Speaker 1: you know, this sort of new normal condition that we've

442
00:25:37,160 --> 00:25:38,919
Speaker 1: been living with for the last few years. In a way,

443
00:25:39,000 --> 00:25:41,159
Speaker 1: the solid never spectacular. We had a little bit of

444
00:25:41,160 --> 00:25:44,800
Speaker 1: spectacular last year, and it was arguably what helped get

445
00:25:44,840 --> 00:25:46,800
Speaker 1: us into some of the trouble and queue for right

446
00:25:46,960 --> 00:25:49,800
Speaker 1: you know. Um, at times, as you may remember, I've

447
00:25:49,800 --> 00:25:53,879
Speaker 1: been arguing that you know, solid sort of almost mediocre,

448
00:25:53,960 --> 00:25:57,639
Speaker 1: but solid GDP and earnings growth is better for equities

449
00:25:58,000 --> 00:26:02,280
Speaker 1: than than than than a really robust GDP acceleration and

450
00:26:02,280 --> 00:26:08,199
Speaker 1: earnings acceleration because like solid earnings. Um, it seems like,

451
00:26:08,240 --> 00:26:10,160
Speaker 1: you know, one of the things I hear from investors

452
00:26:10,160 --> 00:26:13,240
Speaker 1: is kind of what's the next catalyst? Doesn't have to

453
00:26:13,280 --> 00:26:15,320
Speaker 1: be the FED? Is the FED the only thing that

454
00:26:15,359 --> 00:26:18,600
Speaker 1: can take this thing another leg higher? You mean? And

455
00:26:18,680 --> 00:26:23,040
Speaker 1: so look, the FED pivot is solid and so so

456
00:26:23,359 --> 00:26:28,439
Speaker 1: to actually to move from a fed uh pivot to

457
00:26:28,880 --> 00:26:31,440
Speaker 1: to sort of pause to actually a cut, I think

458
00:26:31,520 --> 00:26:33,439
Speaker 1: is where you're going. Well, they actually agree with the

459
00:26:33,480 --> 00:26:36,600
Speaker 1: money markets or come down to the money markets. Um,

460
00:26:36,640 --> 00:26:39,640
Speaker 1: I'm not so sure that's really rewarded, right, you know, Um,

461
00:26:39,680 --> 00:26:42,600
Speaker 1: at this point. Uh. You know, if anything, I probably

462
00:26:42,640 --> 00:26:44,760
Speaker 1: think people say, hey, wait, what is really wrong with

463
00:26:44,800 --> 00:26:46,520
Speaker 1: this market? What is the FED seeing in this that

464
00:26:46,600 --> 00:26:49,919
Speaker 1: I'm not doing that they actually have to cut um,

465
00:26:50,160 --> 00:26:52,680
Speaker 1: And I'm not necessarily sure the FED would even cut.

466
00:26:52,760 --> 00:26:55,000
Speaker 1: I'm actually pretty much on the view that the FED

467
00:26:55,119 --> 00:26:59,680
Speaker 1: is is to do nothing. Is is the most easiest path, uh,

468
00:27:00,160 --> 00:27:03,040
Speaker 1: the most probable path for the next four quarters for

469
00:27:03,040 --> 00:27:06,040
Speaker 1: the FED. It's really just beyond pause here. I think

470
00:27:06,040 --> 00:27:08,680
Speaker 1: it's also important to recognize that, you know, you step back, well,

471
00:27:08,920 --> 00:27:11,960
Speaker 1: you know, the the ECB pivot has been seems to

472
00:27:11,960 --> 00:27:16,120
Speaker 1: be deferred at some point into the distant, hazy future. Um.

473
00:27:16,440 --> 00:27:18,720
Speaker 1: The b o J is business as usual over there.

474
00:27:18,840 --> 00:27:23,119
Speaker 1: So with the FED pivot in, um, you know, where's

475
00:27:23,119 --> 00:27:28,000
Speaker 1: the next big central bank stimulus going to come from? Here? Right? Um?

476
00:27:28,280 --> 00:27:31,399
Speaker 1: It's it. Arguably the Fed's thinking is gonna be it

477
00:27:31,440 --> 00:27:33,880
Speaker 1: needs to come when things get really bad. And when

478
00:27:33,920 --> 00:27:37,879
Speaker 1: you look at the economic data here and even overseas, UM,

479
00:27:38,200 --> 00:27:40,720
Speaker 1: it's hard to see really bad, all right, So where

480
00:27:40,720 --> 00:27:44,000
Speaker 1: do you see value here? So you know, one of

481
00:27:44,040 --> 00:27:48,359
Speaker 1: the fascinating things that unfolded over the last three months

482
00:27:48,560 --> 00:27:51,160
Speaker 1: is that because of the Q four volatility, and because

483
00:27:51,200 --> 00:27:53,800
Speaker 1: of the FED pivot, you had massive distortion. So if

484
00:27:53,800 --> 00:27:56,080
Speaker 1: you look at like the tech sector x l k

485
00:27:56,200 --> 00:27:59,240
Speaker 1: E t F relative to the XLF of the UM

486
00:28:00,760 --> 00:28:03,320
Speaker 1: the financials et F, whether on a price basis or

487
00:28:03,480 --> 00:28:06,680
Speaker 1: on a relative value, but you know, relative pe basis

488
00:28:06,720 --> 00:28:10,399
Speaker 1: that have been stretched to multidecade extremes. Right, So you know,

489
00:28:10,480 --> 00:28:15,560
Speaker 1: I'm not crazy about the financials um earning stream. Right,

490
00:28:15,600 --> 00:28:17,720
Speaker 1: it's pretty boring. You know, big banks are gonna be

491
00:28:17,760 --> 00:28:20,560
Speaker 1: pretty boring. But can I buy them when B A

492
00:28:20,640 --> 00:28:22,720
Speaker 1: C S trading at ten times with a two percent

493
00:28:22,760 --> 00:28:27,200
Speaker 1: dividend with a solid franchise um. Absolutely so. So I've

494
00:28:27,200 --> 00:28:30,200
Speaker 1: been you know, constructive on financials and in the same

495
00:28:30,320 --> 00:28:32,960
Speaker 1: vein utilities. You look at the relative value of utilities

496
00:28:33,040 --> 00:28:36,439
Speaker 1: that got massively bit into this bond rally um and

497
00:28:36,600 --> 00:28:41,120
Speaker 1: with the volatility, right, the relative value of utilities to

498
00:28:41,160 --> 00:28:45,720
Speaker 1: the market was stretched to all multidecade uh extremes. Every

499
00:28:45,720 --> 00:28:48,480
Speaker 1: time it's gotten to those extreme levels, utilities have put

500
00:28:48,480 --> 00:28:52,120
Speaker 1: in a nice ten to fift um sell off and

501
00:28:52,120 --> 00:28:55,240
Speaker 1: and also uh, you know, relative performance. So right now

502
00:28:55,280 --> 00:28:58,720
Speaker 1: I'm basically long banage for utilities. Very good, Michael Purvis,

503
00:28:58,800 --> 00:29:01,160
Speaker 1: Thank so even this morning, just a quick look there

504
00:29:01,640 --> 00:29:11,320
Speaker 1: at the equity markets. Thanks for listening to the Bloomberg

505
00:29:11,320 --> 00:29:17,280
Speaker 1: Surveillance podcast. Subscribe and listen to interviews on Apple Podcasts, SoundCloud,

506
00:29:17,640 --> 00:29:21,880
Speaker 1: or whichever podcast platform you prefer. I'm on Twitter at

507
00:29:21,920 --> 00:29:26,120
Speaker 1: Tom Keane before the podcast. You can always catch us worldwide.

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00:29:26,640 --> 00:29:27,720
Speaker 1: I'm Bloomberg Radio.