Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg
Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern
Speaker 1: on Apple car Play or Android Auto with the Bloomberg
Speaker 1: Business App. Listen on demand wherever you get your podcasts,
Speaker 1: or watch us live on YouTube.
Speaker 2: Think back on twenty twenty five the returns we've had
Speaker 2: inequities and fixed income and commodities, and think about twenty
Speaker 2: twenty six worst opportunities and where you really want to
Speaker 2: start is in technology. We do that with Dan Ives.
Speaker 2: He's a senior tech analyst and head of technology research
Speaker 2: at what Bush Security Stand.
Speaker 3: Thanks for being in our studio here heres always all.
Speaker 2: Right, set us. Let's set us up for twenty twenty
Speaker 2: six in tech, I mean the consumer electronics shows in
Speaker 2: a couple of weeks in Vegas. I'm sure you're going
Speaker 2: to be their huge presence there. Use my name. If
Speaker 2: you go to Bolajia, they'll take care of you. I know.
Speaker 3: So just you know, you say Sweeney, it'll always gets
Speaker 3: the best.
Speaker 2: Open stores opens. What are you thinking about twenty twenty
Speaker 2: six year for AI?
Speaker 3: Look, I mean obviously it starts off at Cees where
Speaker 3: I think that Jensen's speech on that Monday is going
Speaker 3: to set the tone tone set right in terms of
Speaker 3: autonomous robotics, physical AI. But look, I think the reality
Speaker 3: is is that despite a lot of the haters and
Speaker 3: the bears and hibernation mood, it is going to be
Speaker 3: I think just a booming year for AI and tech stocks,
Speaker 3: especially in the first half of the year. I think
Speaker 3: investors are underestimating, specifically on software, like we talked about
Speaker 3: not just Palenteer, but Manga, dB Snowflake, go Out, the
Speaker 3: infrastructure plays nebiis and some of those others. It's about
Speaker 3: the derivative please the second, third, fourth derivatives, CrowdStrike, cybersecurity, power, Alto,
Speaker 3: and I think what we're going to see play out
Speaker 3: Microsoft Oracle. Look, I think we said here a year
Speaker 3: from now, Oracle is the name that I think investors
Speaker 3: are just throwing in the garbage. That's the one I
Speaker 3: think investors are getting, yeah, because it's the view, like
Speaker 3: taking on debt, open ai is not going to be
Speaker 3: good for their bill. Look, if you look at any
Speaker 3: open AI related tech stock, from AMD to you know,
Speaker 3: to Microsoft to Oracle, those stocks have sold off significantly.
Speaker 3: And I think the reality is this is an AI
Speaker 3: revolution where you're in. We talked about the AI party.
Speaker 3: It's ten thirty ten forty five pm. Party goes to
Speaker 3: four am, start a nine pm and Open AI is
Speaker 3: going to play a huge role in that in the
Speaker 3: infrastructure build out. So to me, Paul, it's like I think,
Speaker 3: like tech stocks, they're up twenty five percent.
Speaker 4: Really twenty six, But I mean is that the big
Speaker 4: names like in Vidia, because I think to myself, lots
Speaker 4: of competition out there for them. First of all, supply
Speaker 4: chain challenges continue, but you've also got Google and Amazon,
Speaker 4: big competitors who are playing catch up with Nvidia. Can
Speaker 4: it really hold on to that momentum in twenty twenty six.
Speaker 3: Well, there's only one godfather of AI. He's wearing a
Speaker 3: black leather jacket. His name's Jensen, And I think, look,
Speaker 3: they are five years ahead of any other competitor. That's
Speaker 3: why look for them, like even their third best chip
Speaker 3: restricted each two hundreds right in China despite whatever the
Speaker 3: polotic baba JD tencent, they want those chips because it
Speaker 3: comes down to like they are so many years ahead
Speaker 3: of competition. I think book AMD, that's going to be
Speaker 3: a major play that we see playing out and then
Speaker 3: I think you start to look at like what Google's doing,
Speaker 3: what Microsoft is doing. So in this chip world, it's
Speaker 3: in the AI arms rates. But here's the deal. For
Speaker 3: the first time in thirty years, US is ahead of
Speaker 3: China when it comes to tech.
Speaker 2: How about that?
Speaker 3: That that is I think that's really like the most
Speaker 3: important thing here is that's it's.
Speaker 4: Getting lost in the sauce. I feel what you just said.
Speaker 3: What is because for so many times, like I'd be
Speaker 3: in Taiwan eighteen hours seeing like factory fabs, then land
Speaker 3: the newer garaport, there's some fisfied dung and donuts and
Speaker 3: you're like, wow, we are like Sobahat now switched.
Speaker 2: So is Opening Eye going to go public in twenty
Speaker 2: twenty six and is that going to be a seminal event.
Speaker 3: For I think early twenty seven? Okay, they go, they
Speaker 3: could file maybe by the way twenty six, But but
Speaker 3: I think that's the thing like SpaceX, you think about Anthropic,
Speaker 3: you think about open Ai. Look, the reality is is
Speaker 3: that you know, people talk about bubble some of the
Speaker 3: best companies that haven't even gone public yet. And I
Speaker 3: think there's a supply demand for big growth names. And
Speaker 3: that's why to me, I think investors that are seeing
Speaker 3: it's a bubble text done, they're doing it from the
Speaker 3: twenty fifth four of New York City office building Metro
Speaker 3: North right. I mean the reality is like for someone
Speaker 3: like me that sees it globally, sees the demand that
Speaker 3: supply is twelve to one for video chips today in Asia.
Speaker 4: But here's the question is there enough energy out there
Speaker 4: to meet that supply? Because that's one of the big
Speaker 4: the biggest challenge going forward.
Speaker 3: That's Look, if you think the thing to me that
Speaker 3: like if you're just like what could spoil the AI party?
Speaker 3: It's not about demand fourth and dust revolution. It's not
Speaker 3: about like the use cases. It's energy and regulation. And
Speaker 3: look energy, that's why like you know, you look what's
Speaker 3: happening a nuclear You saw the TAE deal with you
Speaker 3: know obviously trum media. You saw what Google's doing in
Speaker 3: terms of them buying their own energy company. I mean,
Speaker 3: energy is the biggest restriction in the US. But I
Speaker 3: continue to believe like nuclear is going to be the
Speaker 3: play there.
Speaker 2: See Yes, it's two and fifty three undred thousand people
Speaker 2: to send on Vegas Ford and it's been going there
Speaker 2: for forty years, I've been going to this thing. This
Speaker 2: one feels like we might get like a seminal announcement
Speaker 2: coming out of this, whether it's a product, service, an investment,
Speaker 2: a deal. It just feels like maybe this CEES might
Speaker 2: be something where something really material pops out of there.
Speaker 3: Yes, I agree, because like look, for so many years,
Speaker 3: CEES is like, oh, a great refrigerator that talks to you,
Speaker 3: a cool drone that now it's really become like central
Speaker 3: to the when you think about the AI revolution, I
Speaker 3: think when you do about chips, when you look what's
Speaker 3: coming out of AMD, I think Nvidia is really gonna
Speaker 3: double down on robotics. I think quantum is another one.
Speaker 3: If you go back a year ago, that's where Jensen
Speaker 3: was sort of quantums, Like ten fifteen years away, Qualm
Speaker 3: stocks sold up. I actually think there's gonna be a
Speaker 3: lot more bullish when it comes to quantum. And look,
Speaker 3: I know half the companies that I know that are
Speaker 3: going there. They're not officially there. Why they go in there.
Speaker 3: They're not going there to you know, to go to
Speaker 3: the Cosmo or go to the wind for dinner. They're
Speaker 3: going because they're looking. They're looking for acquisitions.
Speaker 2: I kind of feel like during CS if I talked
Speaker 2: to a CEO, I think my first question is could
Speaker 2: be why you're not in Vegas? Like, I don't care
Speaker 2: what business you're in. I'm in the pain.
Speaker 4: You're touched by the technology.
Speaker 3: Yeah, exactly. But to Paul's point, it's this isn't just
Speaker 3: about like consumer gadgets one hundred inch televisions that somehow
Speaker 3: talk to you. Now it's really become central to like
Speaker 3: where the technology. Think about the Chinese presence there in
Speaker 3: terms of X paying bid everyone else. You think about
Speaker 3: autonomous robotics, and that's why, like I think the one
Speaker 3: thing like to stress to anyone listening is like this
Speaker 3: is AI.
Speaker 2: It's not just.
Speaker 3: About like chat, GPT, but what mile do you use?
Speaker 3: We are now this is the year Apple goes deep
Speaker 3: thousands of deep end and pool when it comes to
Speaker 3: a on the consumer side, we're now going to hit
Speaker 3: the next level of the AI revolution. But this is
Speaker 3: a nineteen ninety six moment, noine, nineteen ninety nine, two
Speaker 3: thousand bubble moments.
Speaker 4: Yes, thankfully. Do we expect a big China presence at
Speaker 4: this thing given the relationship right now between the US
Speaker 4: and China.
Speaker 3: If you're a China tech company, you have to come here.
Speaker 3: And I think, like when I think about like the
Speaker 3: Presidence last year, that was already significant. This year it
Speaker 3: is it's booming because for them, okay, like they're not
Speaker 3: going to be able to sell into the US at
Speaker 3: least currently, but this for them, it's a flex to
Speaker 3: muscles on the global stage in terms of them selling
Speaker 3: South America, Europe, Australia. I mean that is that world
Speaker 3: descends upon the stay. We're right, because when you this
Speaker 3: is the world event. But to Paul's point, like if
Speaker 3: you're not there, it's almost like being at a wedding
Speaker 3: at a table by the kitchen with random people instead
Speaker 3: of being at like kind of like Paul, he's always
Speaker 3: like front and center, like he's at the cool table.
Speaker 2: Matt Campbell named seven teenth Penn State head football coach.
Speaker 2: What do you think?
Speaker 3: Look, I think Campbell like he is the right guy
Speaker 3: for Penn State. I mean it's not just that it's
Speaker 3: the staff he's going to bring in. He's he knows
Speaker 3: how to recruit. I think he's the magic formula. I
Speaker 3: think now we'll get Dan town Win from the USC
Speaker 3: as a defensive coordinator. This is going to build the
Speaker 3: stage to what I've like people will say next year,
Speaker 3: I got to rebuild in here. I disagree. I think
Speaker 3: this gets us back into the playoffs next year, and
Speaker 3: it goes back to the dream for a Natty in
Speaker 3: twenty seven or twenty eight.
Speaker 2: There we go Penn State, a new cycle there as
Speaker 2: coach Franklin moves on to Virginia Tech. We got the
Speaker 2: Matt Campbelltoner come up there at Penn State and Dan
Speaker 2: I very is an alument and very involved this school.
Speaker 2: Dan I thanks so much for joining us. Is Senior Tech,
Speaker 2: anols is web Bush Security giving us the latest thoughts there.
Speaker 2: Stay with us. More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am. E'stern listen on Apple,
Speaker 1: Karplay and Android Otto with the Bloomberg Business app, or
Speaker 1: watch us live on YouTube.
Speaker 4: Let's talk a little geopolitics, because goodness knows, there is
Speaker 4: a bunch of stuff happening all the time. And our
Speaker 4: next guest says, geopolitics is no longer background noise. It
Speaker 4: is now a core pricing mechanism in global markets. So
Speaker 4: let's dig in with Patrick Murphy, his executive director of
Speaker 4: Geopolitical Advisors at Hillco Global. Patrick, thanks so much for
Speaker 4: being with us, just an overview here on I mean,
Speaker 4: right now on the hot seat, we've got Trump talking
Speaker 4: to net and Yahoo, Trump talking to Putin and to Zelenski.
Speaker 4: How are those big talks playing out in the stock market.
Speaker 5: Oh well, at first, Alex bol thanks for having me on.
Speaker 5: It's playing big time because you know, when we look
Speaker 5: at geopolitics, it's now not just background noise as you mentioned,
Speaker 5: it's really we're pricing mechanism out there. So these geopolitical things,
Speaker 5: I mean especially at least when you look at our
Speaker 5: shipping costs from last year of three hundred percent, why
Speaker 5: because we're the attacks against the shipping lanes there, especially
Speaker 5: in the Red Sea, So in those certain routes, shipping
Speaker 5: costs going up three hundred percent. So you know when
Speaker 5: you say four hundred forty percent of the world's container
Speaker 5: traffic comes from that region, that's a big deal. So
Speaker 5: that's why you solved. The United States and UK joined
Speaker 5: forces and what we call it Operation rough Rider to
Speaker 5: attack the Sudi huthis there to put them back on
Speaker 5: our heels. But it's still a volatile region. So that's
Speaker 5: why this at the end of twenty twenty five, we
Speaker 5: need to make sure that we are moving the ball forward,
Speaker 5: hopefully some peace so we can just continue this. You know,
Speaker 5: economy that's moving in the right direction.
Speaker 2: Patrick, you're a young guy, but many you've done a
Speaker 2: lot in your life. I mean, this dude a rack
Speaker 2: a served US Army. Okay, so thank you for your
Speaker 2: servicer in a rack in Bosnia, thirty second Undersecretary of
Speaker 2: the Army. Not even sure what that means, but it
Speaker 2: sounds really cool. Served in the US House of Representatives.
Speaker 2: I mean, the dudes had like three lives and he's
Speaker 2: still young men very cool.
Speaker 5: Well, I drink a lot of coffee, My friend drink
Speaker 5: a lot of coffee.
Speaker 2: Pat When you when you talk to corporations out there, executives,
Speaker 2: they did they understand that you know this, they really
Speaker 2: are impacted by geopolitics because I think we as consumers
Speaker 2: and investors, we learned that the hard way during kind
Speaker 2: of the pandemic, if you will, we Cas said, boy,
Speaker 2: that's global supply chains pretty fragile.
Speaker 5: Yeah, No, doubt about it. And I think what you're
Speaker 5: seeing Paul is markets are rewarding resilience.
Speaker 2: You look, look at the numbers.
Speaker 5: I'm a numbers guy, right, So seventy percent of global
Speaker 5: manufacturing their manufacturer basically like they're saying, hey, we want
Speaker 5: to make sure that we are increasing on shore or
Speaker 5: near shore. Why because they want to make sure that
Speaker 5: you know, they're moving from just in time basically inventory
Speaker 5: models to make sure they're being replaced by hybrid systems.
Speaker 5: So sixty percent basically a saty stock, right because we
Speaker 5: saw the work COVID when they were hurting, they weren't
Speaker 5: able to react and produce for their customers. So that's
Speaker 5: what Hillco does. And we're phenomenal and basically excelling for
Speaker 5: our clients where we say, hey, let's make sure that
Speaker 5: we're doing pricing and repositioning when you look at these
Speaker 5: jew political dislocations, particularly though where the public policy collides
Speaker 5: with private capital. So you know we are best in
Speaker 5: the world at this. I'm excited to be part of
Speaker 5: this team. I love being part of the army team, Paul.
Speaker 5: As you mentioned, I was a soldier in Iraq, professor
Speaker 5: at West Point, and I was at the undersectar is
Speaker 5: basically the COO of the army, and I was the
Speaker 5: acting start to the Army. But now I'm with the
Speaker 5: great team at Hellco Global and you know, as a
Speaker 5: part time professor at West Point. I'm sorry at Whartonell,
Speaker 5: but it's just an exciting time to be a geopolitics
Speaker 5: and make sure we're helping our clients be ahead of
Speaker 5: the curve.
Speaker 4: I like how we just slips in there that he's
Speaker 4: now our professor at Wharton. Sure, you have like four
Speaker 4: careers going on here, Patrick, I'm just curious what you're
Speaker 4: hearing from your clients and as they look at investments
Speaker 4: through this geopolitical lens, and what are some of their
Speaker 4: biggest concerns heading into the new year.
Speaker 5: I think they want to make sure that there's certainty
Speaker 5: out there, right, and I think we all come together
Speaker 5: as the markets first to make sure that we're speaking
Speaker 5: in one voice. You know, we used to say politics
Speaker 5: should end at our water's edge. We know that might
Speaker 5: be trite and not necessarily the case in this And
Speaker 5: I served in Congress when I came back from Iraq,
Speaker 5: and you know I saw in the Pentagon, but there
Speaker 5: aren't a lot of folks out there that just want
Speaker 5: certainty so it can make the right decisions. But Alexis,
Speaker 5: what you're seeing is that there's a massive public private partnership.
Speaker 5: What does that mean? That means like industrial policy is
Speaker 5: being reshaped out there, from chips to ships. What does
Speaker 5: that mean? That means that you're seeing things like the
Speaker 5: Chips Act, right, Yeah, was tens of billions of dollars
Speaker 5: of government investment, but that triggered three hundred billion an investment,
Speaker 5: and with semiconductor industry that's a positive thing. But it's
Speaker 5: not just in semi conductors, not just with chimps. It's
Speaker 5: also in defense. You saw in this administration they just
Speaker 5: passed a bill that is going to provide two hundred
Speaker 5: billion dollars to the Department of Defense now called the
Speaker 5: Department of War, to what's called their Office of Strategic
Speaker 5: Capital to develop these public fire partnerships. So you're seeing
Speaker 5: the government put in there that's again two hundred billion
Speaker 5: is over the next four years.
Speaker 3: But then you're seeing JP Morgan Jay.
Speaker 5: Say, hey, we're going to make sure we put one
Speaker 5: point five try dollars an investment what they're calling a
Speaker 5: resiliency and Security Initiative where they're making sure that they're
Speaker 5: added the curve too, because why because in defense last
Speaker 5: year two point four to four trillion dollars in defense spending,
Speaker 5: right where there's this recount calibration with you know, basically
Speaker 5: world powers to make sure that you know, to do
Speaker 5: what's necessary to keep their family safe, and they have
Speaker 5: security goals. NATO specifically, he's all about. They're supposially now
Speaker 5: hitting three point five percent of their GDP and defense spending,
Speaker 5: some countries like Germany blowing past four percent. So you're
Speaker 5: seeing this real recaliber caliberation going on and it's exciting
Speaker 5: to be part of it. And that's what our clients want.
Speaker 5: They want the data that's going to affect their bottom line.
Speaker 5: It's gonna affect their customers to make sure they're head
Speaker 5: to curve and sleep with the wheel.
Speaker 2: Patrick, we've seen some movement towards near shoring, friends shoring,
Speaker 2: on shoring, all that type of stuff of various parts
Speaker 2: of the economy. Does that signal that globalization is dead?
Speaker 5: I wouldn't say it's dead. I think we had an
Speaker 5: air of globalization and now we have an era of
Speaker 5: basically strategic I would say fragmentation where you're having a
Speaker 5: clear alignment with countries that are aligned with their values
Speaker 5: toward each other. And I think you're going to see that,
Speaker 5: you know, moving forward, and that's why you know they're
Speaker 5: protecting you basically the supplying channels out there. I've already
Speaker 5: mentioned that shipping container routes, especially dealing with you know,
Speaker 5: the red seat as who has canal, But I think
Speaker 5: you're also seeing it on making sure that they're really
Speaker 5: evaluating the market specifically really valuing Paul, the basically resiliency
Speaker 5: that we haven't seen before because they understand that things
Speaker 5: could change on a dime. And I think that's where
Speaker 5: at HOPKA we really excel on that, you know, the
Speaker 5: pricing and repositioningid these geopolitical dislocations that we're seeing out
Speaker 5: there and so and it's not partisan, Paul, I mean
Speaker 5: because he saw on their President Biden about sixteen million
Speaker 5: new jobs and it's four years, but one point five
Speaker 5: million jobs in manufacturing, and they're seeing President Trump now
Speaker 5: doubled down on American manufacturing and you know, I think
Speaker 5: it's going to be here to stay, you know, moving forward. Yep.
Speaker 2: All right, Patrick, thank you so much for joining us
Speaker 2: really appreciate it. Patrick Murphy, He's the executive director Geopolitical Advisors.
Speaker 2: The firm is Hillco Global. Stay with us. More from
Speaker 2: Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us Live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Apple Karplay and Android Auto with the Bloomberg Business app,
Speaker 1: or watch US Live on YouTube.
Speaker 2: Alonso Munos Droids is here, Chief Investment Officer, Hamilton Capital Partners. Alonso,
Speaker 2: you sit down with your clients here and you say, boy,
Speaker 2: we had a good twenty twenty five. Stocks, Euro up
Speaker 2: fifteen to twenty percent, high single digit returns on your
Speaker 2: fixed income investments. Commodities have been ripping, like we just
Speaker 2: mentioned gold and silver. What's the conversation for twenty twenty
Speaker 2: six with your clients?
Speaker 6: Good morning, Paul, going to be here. Can't the markets
Speaker 6: close everything? We're done? No, Look, I think we have
Speaker 6: to be sanguine about the fact that there may be
Speaker 6: some volatility next year. We have some big catalysts that
Speaker 6: we're looking forward to, like FED policy, FED rate cuts
Speaker 6: maybe in January, maybe not a lot of the expectations
Speaker 6: or that the Fed's now going to pull back. We're
Speaker 6: looking at the Supreme Court and what they do with tariffs.
Speaker 6: I think that's a big deal, and so I think
Speaker 6: we're going to be, you know, really open to next year.
Speaker 6: We're keeping a little bit of cash on hand, but
Speaker 6: we're going to stay on the AI trade. I think
Speaker 6: that's what we're going to do going into next year.
Speaker 4: So you're staying on the AI trains, as you said
Speaker 4: in your note. But if you're also holding onto some
Speaker 4: dry powder, where are you looking for those other opportunities?
Speaker 4: Where might they be?
Speaker 2: Alexis.
Speaker 6: I think what we've been doing and our thought logic
Speaker 6: going in next year is to buy the back end
Speaker 6: of the yield curve of the US treagery curve, just
Speaker 6: to lock in some of those rates or clients. We
Speaker 6: expect that rates will start to come down maybe next year.
Speaker 6: We saw that the unemployment rate moved up to four
Speaker 6: point six, so there's a balance on Hey, everything's great.
Speaker 6: GDP was really strong, there's a lot of money flowing
Speaker 6: into this market with there are a lot of folks
Speaker 6: struggling out there too. The unemployment rate is rising. The
Speaker 6: FED is backed into a quarter, Jerome Palace on his
Speaker 6: way out. So we're thinking about about a lot of
Speaker 6: things for us right now. It's lock in some of
Speaker 6: these rates, put in a simple hedge, and go into
Speaker 6: next year, although you know, with some risk, with a
Speaker 6: lot of optimism as well.
Speaker 2: I see you know some of your core holdings at
Speaker 2: your firm, Google, Tesla, Meta, We're gonna have the biggest
Speaker 2: supporter arguably on the seal side of those types of names.
Speaker 2: Dan Ives coming in a little bit later here this morning.
Speaker 2: Here those stocks have been such good performers over the years.
Speaker 2: What gives you a conviction to stay with them as
Speaker 2: opposed to maybe, you know, maybe rotate into some other
Speaker 2: areas well.
Speaker 6: We're always looking forward. I mean, we don't like to
Speaker 6: look backwards. But if you haven't owned the Big the
Speaker 6: Megacap seven or the Max seven we used to call him,
Speaker 6: than you've missed out on tremendous returns. And I think
Speaker 6: for the everyday investor, for you know, folks are accumulating wealth,
Speaker 6: you have to be in these names, these leaders that
Speaker 6: have led in the past but are leading into the
Speaker 6: future as well. We saw the acquisition announcement this morning
Speaker 6: from Meta. Yep, Big deal, and I think going forward,
Speaker 6: we have an administration that has been friendly to these companies,
Speaker 6: and you see these the principles of these firms CosIng
Speaker 6: up to the president. We like to allocate capital where
Speaker 6: the capital is flowing, and we think that trade continues now.
Speaker 4: Of course, when Facebook turned over to Meta, it kind
Speaker 4: of screwed up the whole Fang acronym, and then more
Speaker 4: companies were added right as well as we have the
Speaker 4: MAC set it. I want to talk a minute about
Speaker 4: the bond market because there's a lot of talk about
Speaker 4: the steepening of the yield curve. Does that if you
Speaker 4: are buying into that that's going to happen next year,
Speaker 4: does that imply that inflation might be a problem, and
Speaker 4: then doesn't that sort of throw a juggernaut into all
Speaker 4: of it?
Speaker 6: Well? I think to your point, the FED has primed
Speaker 6: us to watch every single data point basically every day,
Speaker 6: and so we're glued to our screens. I think as
Speaker 6: we go on in next year, what we're seeing is
Speaker 6: inflation not coming down specifically to that two percent target.
Speaker 6: The economy is doing really well and the FED is
Speaker 6: cutting rates, but the back end of the yield curve
Speaker 6: has been pushing higher, So we start to look at
Speaker 6: the risk, which are you the deficit, government spending, the shutdown,
Speaker 6: the terrif us. I mean, there's a lot out there
Speaker 6: that can drive that back into the yield curve higher.
Speaker 6: For us, however, locking in some of those rates potentially
Speaker 6: putting in a very simple simple hedge. We know that
Speaker 6: the ten to twenty year traditionally does well when markets
Speaker 6: push lower, when the momentum ships are the downside. So
Speaker 6: for us, we kind of have a Barbelle approach. We're
Speaker 6: locking in some good yields. You know, there's a lot
Speaker 6: of cash in money markets, seven plus trillion dollars in
Speaker 6: money markets, So where does that money go as rates
Speaker 6: go down into the low threes?
Speaker 2: Hot tuoes alternatives? What are your clients? How much exposure
Speaker 2: do they want two alternatives? And then what's that discussion
Speaker 2: like with your clients?
Speaker 6: Well, you know, I think it's difficult because these big
Speaker 6: asset managers, the alternative asset managers, have made a huge
Speaker 6: push to bring this to four to one k's to
Speaker 6: the everyday investor, and they come with risk, you know,
Speaker 6: lack of liquidity, client sophistication on understanding these products. But
Speaker 6: We've had a lot of conversations. We've actually been in
Speaker 6: private credit for some time, and we think that trade
Speaker 6: continues and if anything, it's coming to four to one k's,
Speaker 6: it's coming to the everyday investor in the form of vtfs.
Speaker 6: We've seen tremendous amounts of vtfs launched with these products,
Speaker 6: and I think we'll have to wait and see how
Speaker 6: this plays out at the retail investor level.
Speaker 4: You talk about hedging, A lot of folks see the
Speaker 4: precious metals as a hedge, and lately they've been acting
Speaker 4: more like meme stocks. So what do you do with
Speaker 4: precious metals because some thought, you know, yesterday's biggest drop
Speaker 4: in silver in five years was more than just a
Speaker 4: bit of a correction. It was like, you know what,
Speaker 4: we're going to reset and maybe we're not going higher here.
Speaker 2: That's right, Well, I left.
Speaker 6: I think the goldbugs are finally right everyone that told
Speaker 6: us to buy gold. Now. When we talked to investors
Speaker 6: about commodities, commodities have always had a place in a portfolio,
Speaker 6: typically five to ten percent, as you guys have talked about,
Speaker 6: but we also warned folks that when we chase these
Speaker 6: trends just like twenty twenty one, whether it's meme stocks
Speaker 6: or technology stocks, or in this case gold and silver,
Speaker 6: you know, it can lead about outcomes for investors that
Speaker 6: aren't willing to hold these positions for long term. So
Speaker 6: it is fun to see. It is sort of fun
Speaker 6: in conversation. And I think there's a supply demand global
Speaker 6: supply demand dynamic at play here for gold and for silver,
Speaker 6: and for some of these rare earth corals copper that
Speaker 6: are inputs to data centers, to chips, to all these
Speaker 6: things that we're talking about that are exciting about. Yeah,
Speaker 6: I trade.
Speaker 2: So we've had I would say, really good earnings environment
Speaker 2: supporting stocks and bonds. Do you think earnings are going
Speaker 2: to continue to be strong enough to support these markets here?
Speaker 6: So we think that earnings are going to be good,
Speaker 6: I think the bar continues to be pushed so high
Speaker 6: that when companies don't absolutely smoke earnings, you see really
Speaker 6: big price reaction. And I know, you guys, maybe we'll
Speaker 6: remember this. Prior to COVID, if we had an up down,
Speaker 6: you know, one and a half percent in the market
Speaker 6: at the broad index, we would all freak out.
Speaker 2: Now it's just.
Speaker 6: A normal, normal Monday, normal Tuesday. So we're looking at
Speaker 6: that volatility. I think, you know, going into next year,
Speaker 6: we're just open to the fact that, you know, earnings
Speaker 6: will be good, but we could see some broader volatility,
Speaker 6: specifically within these names that have been that have been
Speaker 6: hot for the last time.
Speaker 4: And it really has been good. Is just not good enough,
Speaker 4: especially when you're talking about some specific names. It's been
Speaker 4: like that for a while. Now, what about IPO market,
Speaker 4: M and A. Lots of folks we're talking to seeing
Speaker 4: bullish in those two areas.
Speaker 6: Very much so. I mean banks, a lot of bank
Speaker 6: mergers this year. I mean, we've seen some really big,
Speaker 6: sort of flashy eye and M and A's announces share
Speaker 6: and we think that continues. The market was basically frozen
Speaker 6: for two years, you know, when the FED was in
Speaker 6: their rate hiking cycles. So this is sort of a reopening,
Speaker 6: a breath of fresh air to see some of these
Speaker 6: deals take place and hopefully a lot of money money
Speaker 6: to be made.
Speaker 2: You're based on in Atlanta, Atlanta, Georgia. I'm just gonna
Speaker 2: guess watch this, Okay, I guess without even asking.
Speaker 1: Peachtree.
Speaker 6: We're on Peachtree.
Speaker 2: There you go, what are your clients asking you these days,
Speaker 2: what's the biggest concern for them these days?
Speaker 6: You know, I think that a lot of clients are
Speaker 6: wondering when rates are going to come down. You know,
Speaker 6: a lot of folks still have mortgages, they have credit cards,
Speaker 6: they have auto loans. And what we're seeing, and part
Speaker 6: of that dynamic is the economy is great in the
Speaker 6: Fed's cutting rates, but that back into the yield curve
Speaker 6: is sort of anchored in the in the low force
Speaker 6: mid forced. So we're talking a lot about estate planning.
Speaker 6: We're talking a lot about how to allocate fresh capital
Speaker 6: with markets at all time highs. We're talking a lot
Speaker 6: about gold and how to melt gold and sell gold,
Speaker 6: and you know, but it's they're exciting conversations. You know,
Speaker 6: a lot of people have done really well in the
Speaker 6: market and so looking to rebalance in the new year,
Speaker 6: maybe get some exposure out of tech to financials and
Speaker 6: healthcare sectors that haven't done you know, specifically, as well
Speaker 6: as technology and consumer discretion.
Speaker 2: Alanza, thank you so much for joining us. Really appreciate
Speaker 2: it a lot. Some MNOs. He's a chief investment officer
Speaker 2: Hamilton Hamilton Capital Partners. Stay with us. More from Bloomberg
Speaker 2: Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or
Speaker 1: watch us Live on YouTube.
Speaker 2: It's an election year that has a lot of ramifications
Speaker 2: for a lot of parts of this economy, in this
Speaker 2: markets and what does it mean for Republicans, Democrats and investors.
Speaker 2: Coming out over gothamcconda joints us here lecture of Management
Speaker 2: Practice at the Yale School of Management. He's also now
Speaker 2: a Bloomberg opinion contributor here. So you know, we got
Speaker 2: the midterm elections here, typically got the party that's not
Speaker 2: in the White House tends to do better in these
Speaker 2: midterm elections. I'm hearing reporting that that may occur this
Speaker 2: time as well. How do you guys see it?
Speaker 7: No, I think that's right, and that's the general tendency.
Speaker 7: And you got a layer onto that. Two other things.
Speaker 7: One is that Donald Trump is historically unpopular. He's you know,
Speaker 7: he's essentially never broken fifty percent other than a week
Speaker 7: here and there, but he's really unpopular now depending on
Speaker 7: the poll you're looking at somewhere between thirty six and
Speaker 7: forty one. Those are all bad numbers. Okay, So when
Speaker 7: you have a particularly unpopular presence, going to do worse.
Speaker 7: And the second is Donald Trump's sort of secret sauce
Speaker 7: in politics, and it is extraordinary, Let's be clear, is
Speaker 7: his ability to get people who do not normally vote
Speaker 7: to show up and vote for him.
Speaker 2: Right.
Speaker 7: We just see this at a scale that's remarkable. You
Speaker 7: saw in Michigan, you actually saw where the Democratics under
Speaker 7: one because thirty thousand Trump voters voted for Trump and
Speaker 7: left the rest of the ballot blank. Right, So that
Speaker 7: doesn't work in midterms when he is not on the ballot,
Speaker 7: and so that puts the Republicans in an even worse situation.
Speaker 7: Right now, what I'd say is there, and I think
Speaker 7: there are Republicans and congress people, and I've heard this
Speaker 7: from some who are really concerned.
Speaker 2: They are right at the edge where.
Speaker 7: The gerrymanders set up to protect their districts are going
Speaker 7: to start to look weak. If Trump drops another three
Speaker 7: four five points, you know you're gonna start to see
Speaker 7: incumbents who thought they were essentially asleep at the switch.
Speaker 7: We're never you know, would have to die before they
Speaker 7: lost reelection, right, right, are going to be in trouble,
Speaker 7: and then you're gonna you'll see a big shift in
Speaker 7: political dynamics.
Speaker 4: So are we already seeing those folks distance themselves or
Speaker 4: try to distance themselves from the president? I mean, they're
Speaker 4: sort of in a no win situation, right.
Speaker 7: They are the extent of personal control that he exercises
Speaker 7: over the party and the kind of ruthless way he
Speaker 7: goes after people who go who break from him, as
Speaker 7: Marjorie Dylor Green has experienced. There just isn't a precedent
Speaker 7: in American history for that. This is just a new phenomenon.
Speaker 7: But at some point they're going to start worrying about
Speaker 7: ringing reelection and they're going to start saying, well, maybe
Speaker 7: the primary isn't the only thing I have to worry about.
Speaker 7: I don't think you're seeing distancing yet, and I'm actually
Speaker 7: pretty skeptical you will. We've seen so much turnover in
Speaker 7: the Republican Party that a lot of these people are
Speaker 7: either genuinely true believer or purely cynical, right, Like they're
Speaker 7: kind of one or the other. What you are, I
Speaker 7: think likely to see is more retirements. And you know,
Speaker 7: there are all these rumors that you're going to see
Speaker 7: people retiring during the term, enough that Mike Johnson might
Speaker 7: actually lose the speakership. I don't think that will happen
Speaker 7: because the level of essentially fear that they will put
Speaker 7: into anyone who to do that is going to be extraordinary.
Speaker 7: But the fact that people are even talking about it
Speaker 7: is not something on your career.
Speaker 4: See mass retirements is what you're saying in Congress.
Speaker 2: That being said to the extent that the Republican Party is,
Speaker 2: you know, weakening around the edges as Trump's administration ages
Speaker 2: here again, I have to ask the question, where are
Speaker 2: the Democrats Who's leading the charge here? It can't be
Speaker 2: Chuck Schumer. No.
Speaker 7: I think the extent of the generational shift that's hitting
Speaker 7: the Democratic Party is profound, and this is going to
Speaker 7: have long lasting effects in American politics. This is not
Speaker 7: just going to be this election cycle seeing a new
Speaker 7: sort of generation of Democrats who basically, I think the
Speaker 7: way they would put it is they want to play
Speaker 7: the game the way the Republicans do, right, and which
Speaker 7: means that they are not as interesting compromise. They are
Speaker 7: not as interested in blanking. Whether or not you agree
Speaker 7: with that assessment, that's how they think about it. And
Speaker 7: that shift is going to be is going to be
Speaker 7: pretty When you have two parties who are willing to
Speaker 7: go to the edge, that is very different than having
Speaker 7: one party that's willing to go to the edge. And
Speaker 7: so that is going to happen. But Paul, as you know,
Speaker 7: you asked me this question every time I bought it,
Speaker 7: I tell you the same answer. It's still early, okay.
Speaker 7: The way the leadership of the party is going to
Speaker 7: evolve is the primary is and we're not going to
Speaker 7: start the primaries till after the midterm elections. You're starting
Speaker 7: to see people jockey. You're starting to see people have success.
Speaker 7: I mean, Gavin Newsome, I would not have predicted that
Speaker 7: parodying Donald Trump's voice on Twitter would be a successful
Speaker 7: political tactic, but it turns out it.
Speaker 2: Really works for him.
Speaker 7: And you're seeing a bunch of other people who are similarly,
Speaker 7: you know, making making waves, making noise that you're starting
Speaker 7: to say, Okay, the demochocratic problem in the primaries as
Speaker 7: opposed to now right where all anybody cares about is
Speaker 7: the midterm. But when the primaries roll around. Is it's
Speaker 7: not going to be a lack of people. It's going
Speaker 7: to be too many that there are just so many
Speaker 7: plausible candidates. So I'm not you know, I'm not saying
Speaker 7: any of these people would be a great president. But
Speaker 7: if Kevin Yousome or Josh Shapiro or Wes Moore or
Speaker 7: core like, there's a lot of people in the Democratic
Speaker 7: Party who you look at and go, that's a plausible
Speaker 7: present and that you know, there's sort of an embarrassment
Speaker 7: of riches problem that they might have to deal with there.
Speaker 4: Well, something that's going to be happening before the midterms,
Speaker 4: of course, is the deadline for another government shutdown, and
Speaker 4: the crux of the first government shutdown is still the problem,
Speaker 4: which is no agreement on healthcare. Do you think they're
Speaker 4: going to take it to the mat and then we're
Speaker 4: going to avoid or could we be entering yet another
Speaker 4: historic shutdown at the end of January.
Speaker 7: I mean, I think there's a chance that will that
Speaker 7: will avoid another shutdown, just because one of the bigger,
Speaker 7: big underlying driving factors for the last shutdown was the
Speaker 7: Fsteam files, and you know, mad as that seems it's
Speaker 7: quite clear that the House was held out of session
Speaker 7: to stop that, to delay that vote on the files.
Speaker 7: Since that vote has taken place, that factor is out,
Speaker 7: and I think everybody's kind of looking at the last
Speaker 7: one and being that that didn't work right Like the
Speaker 7: Democrats who did it, it did not they you know that,
Speaker 7: even if they got what they wanted out of it,
Speaker 7: it doesn't feel that way because there's so much internal
Speaker 7: pressure against it. The Republicans, this is just a nightmare.
Speaker 7: But the other big driving dynamic in this, I don't
Speaker 7: know how they're going to get out of it. Is
Speaker 7: really simple. If premium skyrocket the way that it looks
Speaker 7: they are doing and the looks like they're going to,
Speaker 7: that is a political disaster for the Republican party, which
Speaker 7: owns the issue. In that way, they're asking Democrats, but
Speaker 7: to fix it, almost all the votes will be Democrats.
Speaker 7: The policy incentives which are to fix the problem, and
Speaker 7: the political incentives, which are for Democrats to say, hey, guys, congratulations,
Speaker 7: like you own this, those run in completely opposite directions.
Speaker 7: And the closer we get to the midterms, the more
Speaker 7: the political incentives are going to want the policy wants.
Speaker 2: Post midterms to what extent, is President Trump effectively a
Speaker 2: lame duck.
Speaker 7: I mean he was, he was a lame duck from
Speaker 7: the moment he got regotsorn in, right, But what has
Speaker 7: stopped that from happening is again this incredible personalist control
Speaker 7: over the party. That is again like Franklin Roosevelt in
Speaker 7: his wildest dreams did not have anything like this. And
Speaker 7: so if the midterms are a blood bath for the Republicans,
Speaker 7: and much of that just depends on the economy, right Like,
Speaker 7: if AI keeps the economy to float through November, then
Speaker 7: they bill be they're in a loose seats but if MA,
Speaker 7: they may not lose sixty seats, they may lose twenty.
Speaker 7: But if the midterms are a blood bath for the Republicans,
Speaker 7: then I think you're going to see some pretty high
Speaker 7: level of panics setting in because, especially if the economy
Speaker 7: turns between now and twenty eight, which I'm not making
Speaker 7: any predictions, just that we've had a long run without
Speaker 7: that so that it wouldn't shock anybody, You're going to
Speaker 7: see some Republicans who are pretty panicked and who are
Speaker 7: not going to feel all that comfortable, say writing the
Speaker 7: inner of jd Vance in the same way.
Speaker 4: In thirty seconds or less. Do we get a deal
Speaker 4: Ukraine and Russia.
Speaker 7: No, No, we're not like I like the deal. The
Speaker 7: deal would have to be the Russians essentially withdrawal from Ukraine,
Speaker 7: because the Ukrainians are pretty clear they're going to keep
Speaker 7: fighting and as long as they're going to keep fighting
Speaker 7: and as long as Putin wants to conquer Ukraine, which
Speaker 7: is essentially still where you're saying, there's not going to
Speaker 7: be a deal. The sort of Trump administration's decision to
Speaker 7: side with Russia in this war and put pressure on
Speaker 7: Ukraine is you know, like just one as a matter
Speaker 7: of national interest, in national honor, horrifying, right, But even
Speaker 7: setting that aside, what it's demonstrated is that the Ukrainians
Speaker 7: can keep fighting without us, and fight well, and they
Speaker 7: know it all right.
Speaker 2: Gotham, thank you so much for joining us. Skathamccon the
Speaker 2: lecture of Management Practice at the l School of Management.
Speaker 2: Also a Bloomberg Opinion contributor.
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify
Speaker 1: and anywhere else you get your podcasts. Liz Live each weekday,
Speaker 1: seven to ten am Eastern on Bloomberg dot com the
Speaker 1: iHeartRadio app tune In, and the Bloomberg Business app. You
Speaker 1: can also watch us live every weekday on YouTube and
Speaker 1: always on the Bloomberg terminal