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

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

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

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

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Speaker 1: us live on YouTube.

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Speaker 2: Right now, what we're going to do is get to

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Speaker 2: the economic data at Greg Boudele with us here to

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Speaker 2: wrap around it on the mathiness and derivative moment. This weekend,

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Speaker 2: all financial publications will tell the American public give up

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Speaker 2: the upside hedge, taking a higher income when you hedge,

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Speaker 2: and you'll be happy. You're the pro at this. Should

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Speaker 2: we be doing that? Should we be giving up upside

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Speaker 2: potential in bringing in a premium income to goose our

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Speaker 2: dividend to goose so sure, buyback.

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Speaker 3: That's certainly how we feel about things.

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Speaker 2: In the short run.

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Speaker 3: We titled I Not Yesterday tariff fatigue. The market is

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Speaker 3: starting to look a little bit tired. Some of the

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Speaker 3: imbalances in position in which we think drove the extent

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Speaker 3: of this rally have started to become worked through a

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Speaker 3: little bit, and we think we are in an environment

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Speaker 3: where it would be easier for the market to tread water.

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Speaker 3: When we look at the options complex, there are places

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Speaker 3: where we think it is better to extract premium and

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Speaker 3: others where we think it is better to own that optionality.

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Speaker 4: So if we think the markets are going to kind

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Speaker 4: of tread water a little bit, am I writing options

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Speaker 4: these days? Is that what people are doing?

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Speaker 5: So?

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Speaker 3: I think like one of the kind of oldest option

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Speaker 3: strategies out there is the covered core boom owning the

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Speaker 3: equity selling some upside against that. What you're basically doing

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Speaker 3: is giving up some of the right tail of the

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Speaker 3: distribution the short term in exchange for some income.

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Speaker 4: See I paid attention in Futures and Options class Cam Harvey. Yeah,

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Speaker 4: I paid attention. There are people what do they feel

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Speaker 4: like in terms of the risk, Like, if I want

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Speaker 4: the I some protection here, is it expensive relative to

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Speaker 4: historic levels or where are we?

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Speaker 3: So it kind of depends what you're looking at. If

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Speaker 3: we're talking broad US indices, then it's way off the highs.

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Speaker 3: Things got very expensive post Liberation Day, but we are

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Speaker 3: not back to those pre Liberation day levels. You know,

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Speaker 3: the equity market is we've been touching distance of all

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Speaker 3: time highs, but equity optionality is still a little bit

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Speaker 3: more elevated from where it was, particularly on the downside.

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Speaker 3: So yeah, if you're just going and buying US index hedges,

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Speaker 3: you have to be careful because it's not cheap.

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Speaker 2: If you're buying individual stock edges, do you partition it

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Speaker 2: between fancy stocks where you could get crushed, taking in

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Speaker 2: premium where they take off like Microsoft this month of

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Speaker 2: May or and then there's four to eighty three other

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Speaker 2: stocks that you really can grab a premium. Is that

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Speaker 2: how it works? Yeah?

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Speaker 3: I think you have to think about what are the

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Speaker 3: risks that you are worried about. What are you trying

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Speaker 3: to hedge. Is it more eosyncratic stock specific or are

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Speaker 3: we looking for more macro hedges. We've been talking more

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Speaker 3: about looking at macro hedges, but going a little bit

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Speaker 3: out the term structure, out to say the September expiry

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Speaker 3: where we think some of the macro weakness could start

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Speaker 3: to manifest a little bit more. I think the smaller midcaps,

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Speaker 3: so the Russell IWM is a part of the market

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Speaker 3: which I think looks attractive to use to hedge.

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Speaker 2: Greg boutle ready for those compliance of BMP Perry, but

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Speaker 2: they don't even speak English in New York, it's in French.

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Speaker 2: They're even more ergus O mon dieux, Greg Bottle on

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Speaker 2: naked short selling.

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Speaker 3: Go so, I think that if you want to be

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Speaker 3: naked short the market, then you have to be willing

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Speaker 3: to accept the risk that comes with it. For us,

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Speaker 3: we think there is better risk world profile and putting

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Speaker 3: on hedges on the downside owning optionality than there is

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Speaker 3: naked short selling.

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Speaker 2: That was like road compliance. Yeah, that was really that

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Speaker 2: was a plus, say Greg Bodles answered that question before.

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Speaker 2: Naked short selling, folks, is not to be tried. Don't

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Speaker 2: do this at home. It's really really hazardous. You'll be

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Speaker 2: right four or five six times and boom and it

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Speaker 2: doesn't work out right. Be careful out there. Let's talk

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Speaker 2: to Paul Sweety about option you know, how to not

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Speaker 2: lose money in the or the de Jerrians one of

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Speaker 2: the two. I'm just going to make it as clear

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Speaker 2: as I can. I got economic data with some revisions here.

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Speaker 2: I got a sweet PCI year over year of two

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Speaker 2: point one percent, signaling some disinflation. I got a revision

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Speaker 2: showing personal income is better, and it doesn't care because

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Speaker 2: the president just tweeted yep, I mean, basically, there's no

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Speaker 2: dynamic with an SMP futurest Greg battle they're negative twenty,

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Speaker 2: they come up a little. In defense, they come up

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Speaker 2: negative twenty out of negative twenty five up the negative twenty.

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Speaker 2: Do we misjudge the American economy? Is that the issue

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Speaker 2: for people cautious on the equity market potentially?

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Speaker 3: I think the question about the data is when is

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Speaker 3: it going to start to matter? At the moment, what

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Speaker 3: we see is backward looking data that maybe is starting

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Speaker 3: to capture the first impacts of the tariffs. But what

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Speaker 3: matters as much more as when we move through June July,

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Speaker 3: does the data stay very resilient case that's going to

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Speaker 3: create question marks for the bears. I think the consensus

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Speaker 3: is that the data will start to soften as we

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Speaker 3: moved through the summer. So I think at the moment

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Speaker 3: it's very hard to get a positive risk signal or

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Speaker 3: more clear from data.

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Speaker 2: This is really important to continuing claims breaking out. Yesterday

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Speaker 2: Veronica Clark mentioned it's the end of May. We don't

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Speaker 2: have a clue except we said that at the end

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Speaker 2: of December.

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Speaker 4: Lie exactly exactly as well.

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Speaker 2: Here we go.

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Speaker 4: So given that uncertainty, Greg do you find your clients.

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Speaker 4: Are they coming to you and say, I want to

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Speaker 4: have more protection around my portfolio than typically or are

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Speaker 4: they just saying I can't worry about this stuff.

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Speaker 3: I think people are more defensively positioned. We look at

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Speaker 3: this through quantitative lens where we aggregate a lot of

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Speaker 3: the flows in the equity market, and we've produced this

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Speaker 3: composite equity positioning indicator and it scales from zero to

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Speaker 3: one hundred, so it's pretty easy to read we are

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Speaker 3: euphoric levels at the end of last year almost ninety

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Speaker 3: seven hour of one hundred. Things got very washed out

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Speaker 3: post liberation, and now we've made our way back into

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Speaker 3: this more neutral territory. That indicator sits in the mid forties,

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Speaker 3: so points to a market where people are more defensively positioned.

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Speaker 3: But we're not as barishes as we were from a

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Speaker 3: positioning landscape a month ago.

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Speaker 4: Ninety seven reading I kind of remember those days. It

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Speaker 4: was like we have in an administration that's going to

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Speaker 4: be pro growth, you know, less regulatory and boy times

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Speaker 4: have changed.

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Speaker 3: Six months ago, but it feels like a lot longer

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Speaker 3: than it does it does.

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Speaker 4: What's kind of the smart trade you've somebody's come up

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Speaker 4: to you with recently when your clients are called gym

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Speaker 4: say hey, we like to do this, and you're like, really.

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Speaker 3: I think the things that people have been doing have

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Speaker 3: been more nuanced. As we were discussing earlier, it is

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Speaker 3: looking at ways to fun trade. So if you're looking

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Speaker 3: at the optionality complex and like, I do you think

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Speaker 3: maybe there's value in owning some of that September optionality

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Speaker 3: where the data starts to matter a little bit more

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Speaker 3: through the summer. It's looking at smart ways to try

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Speaker 3: and finance that. So you know, one of the things

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Speaker 3: that we were talking about in our tariffy yesterday was

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Speaker 3: how to fund those hedges. So we think looking at

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Speaker 3: things like cover calls and things like the energy space

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Speaker 3: is probably probably an interesting way.

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Speaker 4: So what's a covered call in the energy space?

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Speaker 2: Like that?

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Speaker 3: So a cover call is simply if you are long

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Speaker 3: the stock and you are selling optionality against that such

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Speaker 3: that you are not nakedly short that option. And in

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Speaker 3: terms of the energy space, that could be one of

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Speaker 3: the energy ETFs such as Yahoo or some of the

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Speaker 3: some of the large energy stocks. It's a very benign strategy,

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Speaker 3: but a way to eke out a little bit of

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Speaker 3: yield that we think you can spend on hedges.

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Speaker 2: We got a great set of people. Robert from uh

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Speaker 2: I think it's it's up and it's colder than Union College.

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Speaker 2: He was upset at our Union College discussion of D

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Speaker 2: one hockey with Pat Haskell Blackrock. Robert comes in and

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Speaker 2: says Hamilton College is destined D one hockey. He notes

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Speaker 2: Paul the complete return of the trade deficit. It is

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Speaker 2: a spring back from a negative one six zero, stunning

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Speaker 2: back to negative nine zero. That's not I wonder if

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Speaker 2: the President will bring that up at the press conference today.

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Speaker 2: Our policies are working. We're getting rid of the trade deficence.

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Speaker 4: Awesome, that would be the promise than with Italy with

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Speaker 4: the purchase.

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Speaker 2: Wait a couple of weeks. If you're gonna have a

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Speaker 2: trade deficit, you're gonna be on the Spanish steps and

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Speaker 2: you looked out that's that. You look down that street,

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Speaker 2: a gauntlet of stores. It's it's it's Lisa, what's it

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Speaker 2: called its avenue tradio deficit? You o something like that? Greg,

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Speaker 2: thank you for coming in, Thank you for the explanation

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Speaker 2: there and getting through the compliance moment un naked naked

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Speaker 2: you know you nailed it, Greg Botle, don't be a stranger.

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Speaker 2: Thank you. With b MP Perry by just wonderful through

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Speaker 2: some of the sous on VMP Perry BA has had

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Speaker 2: a really really excellent, uh excellent moment there, I should

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Speaker 2: say as well, again when we set this up and

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Speaker 2: Eric did a great job with the interns, we wanted

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Speaker 2: a broader view. Even Devid can give that to us

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Speaker 2: right now. She has been wonderful, particularly with a transatlantic view.

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Speaker 2: All of that important into the President's press conference today.

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Speaker 2: Ifan Devid joins us from Manetta. If and what are

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Speaker 2: you writing into the month of June.

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Speaker 6: Excellent question.

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Speaker 7: I think we're going to see a continuation of this

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Speaker 7: type of volatility. We're obviously going to see getting close

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Speaker 7: to drop dead dates and some of these tariffree negotiations.

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Speaker 7: We'll see how the negotiations actually play out. We're going

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Speaker 7: to see more and more clarity in terms of the

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Speaker 7: actual impact of tariffs on prices. We've only seen really

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Speaker 7: sporadic clarity up to now, and we're probably going to

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Speaker 7: see more resolution in terms of the legality of these tariffs.

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Speaker 7: We're going to this day now that's been placed on

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Speaker 7: the Court of Trade decision. There should be an appeal

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Speaker 7: and we should see the outcome of that. So lots

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Speaker 7: going on. It's not going to be is silly in

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Speaker 7: the quiet summer.

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Speaker 2: Are Europeans returning to American investment, leaving American investment? Are

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Speaker 2: they waiting for Paul's arrival in Rome? Which is it?

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Speaker 7: I'd say at this point there is not a net

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Speaker 7: increase in US investment. There has been an overweight to

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Speaker 7: the US for the most part. It has played out

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Speaker 7: very well. The strong dollar has worked very well for them.

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Speaker 7: Right now it seems that the US investment story is

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Speaker 7: losing a little bit of its charm, its cachet. The

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Speaker 7: weaker dollar is the course affecting that. And then we're

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Speaker 7: hearing just about this anti perhaps foreign student movement, the

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Speaker 7: lack of travel into the US, perhaps the sense that

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Speaker 7: there might be a revenge that was a headline today.

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Speaker 7: So all that all adds to the uncertainty. And I

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Speaker 7: would say, now there is often taking and timing back.

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Speaker 2: I mean, Paul, think about it ending to give in

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Speaker 2: school where kids are like I got to get up

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Speaker 2: and go to thermodynamics, and I got to put up

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Speaker 2: with all this protest and angst and passports and all that.

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Speaker 2: Why don't I just go to Trinity College Dublin. I mean,

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Speaker 2: you know, Boom, you're there.

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Speaker 4: I'd be right there. They would love me there. Even

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Speaker 4: where do we go here? I mean, Tom's been long

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Speaker 4: bitcoin and just laughing all the way to the bank.

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Speaker 4: But how about for the rest of us? How much

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Speaker 4: risk are your clients feel like they need to take

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Speaker 4: these days? Or it's just too much noise out there?

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Speaker 6: It's an excellent question.

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Speaker 7: There definitely is not sort of satisfaction with sitting in

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Speaker 7: cash right now. We know that cash is not a drag,

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Speaker 7: but there's still that that four between four and five percent,

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Speaker 7: it's still not great. After inflation, there's a real sense

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Speaker 7: that inflation is going to be with us for a

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Speaker 7: very long time and that we will have to invest

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Speaker 7: in growth assets. So where are clients comfortable taking risk.

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Speaker 7: They're still quite comfortable in the equity markets, and that's

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Speaker 7: a good thing because that will have to be their

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Speaker 7: engine of growth for some time. They're increasingly more comfortable

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Speaker 7: in the private segments, private equity, private credit. They're not

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Speaker 7: as comfortable in real estate as before. Perhaps there is

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Speaker 7: a little bit of muscle memory or even trauma around

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Speaker 7: previous downturns and something like infrastructure or income generating.

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Speaker 6: That's really something for the institutions.

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Speaker 7: It's not something I see a ton of interest among

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Speaker 7: private wealth clients in Interesting would on Frenday College seven

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Speaker 7: Trendy College, telln is an excellent place to visit.

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Speaker 2: Ephan Devin, stay with us, please Interesting Friday Morning across

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Speaker 2: a nation. Good morning from the early morning Left Coast

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Speaker 2: out there and Android Auto Apple car play Major. Good

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Speaker 2: morning to Sirius XM Channel one twenty one, huge distribution

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Speaker 2: for US ninety nine one FM in Washington, ninety two

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Speaker 2: nine FM in Boston, and Bloomberg eleventh three to zero

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Speaker 2: in New York. We say good morning on YouTube building

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Speaker 2: every month. Paul and I just dumbfounded by the success

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Speaker 2: of Bloomberg podcast. Thank you so much for your attention there,

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Speaker 2: particularly your global attention. The evening of the Pacific at RIM,

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Speaker 2: futures are negative twenty five off the President's tweet. They

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Speaker 2: come up a little bit off buoyant personal income spending

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Speaker 2: quite essent inflation at the margin. Futures go negative twenty

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Speaker 2: five up the negative twenty.

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Speaker 4: If and you mentioned private equity, private credit I'm surprised

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Speaker 4: that at the level of exposure that a lot of

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Speaker 4: family offices and their clients have to alternative investments. What

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Speaker 4: do you think is a reasonable allocation because there's so

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Speaker 4: many opportunities now, hedge funds, private equity, now private credit

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Speaker 4: has become such a big market opportunity. What's your expertise, I'd.

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Speaker 7: Say, depending of course on the size of that family office.

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Speaker 7: But we're seeing anything from fifteen to thirty percent in

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Speaker 7: alternative assets. Certainly would lower be lower at the dipping

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Speaker 7: the toe in the water stage, and you have five

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Speaker 7: percent ten percent, I'd say less than five percent, it's

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Speaker 7: not really worth the extra work and due diligence involved

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Speaker 7: and this sacrifice sub liquidity. It's important to really understand

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Speaker 7: the segment all about relationships. You're in there for the

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Speaker 7: long haul, and I have to be a meaningful allocation.

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Speaker 7: But between five and fifteen absolutely normal, and if you

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Speaker 7: really have high conviction going higher.

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Speaker 4: And that again, if we saw a movement of capital

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Speaker 4: investment capital out of the US earlier this year, when

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Speaker 4: the uncertainty was maybe at its peak around tariffs and

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Speaker 4: economic impacts, was that just a short term trade or

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Speaker 4: as you talk to your clients, do they feel less

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Speaker 4: likely or less confident investing in the US markets?

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Speaker 7: Yeah, definitely, there is I'd say a wariness around having

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Speaker 7: too much in the US right now, and our clients

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Speaker 7: have always had global exposure, and that global piece was

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Speaker 7: a little difficult to defend recently, especially in the last

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Speaker 7: over fifteen years under performance that is definitely by definition

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Speaker 7: difficult to defend and with a strong dollar two. Now

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Speaker 7: that some of those movements have reversed, our clients are

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Speaker 7: taking are quite confident now in their non US holdings,

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Speaker 7: and I would say that the non US story it

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Speaker 7: tends to get crowded out a lot by some of

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Speaker 7: the flooding of the zone that occurs in the US,

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Speaker 7: and that the Trump administration the US developments are on

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Speaker 7: everyone's lips no matter where you are, particularly in Europe.

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Speaker 7: But behind US and Europe there is by stealth. I

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Speaker 7: would call it a steady growth of investment in the sector,

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Speaker 7: in the industrial complex, really coming back from rock bottom

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Speaker 7: in terms of confidence.

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Speaker 6: And just innovation and a lot more focus of that.

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Speaker 7: I think we have to start looking beyond some of

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Speaker 7: the noise in the US.

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Speaker 2: Ivan Devid, thank you so much for the brief from

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Speaker 2: Minetta this morning. Here in a Friday where we set

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Speaker 2: up conversations to get you into the month of June

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Speaker 2: features negative twenty five lift to negative nineteen, the Vics

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Speaker 2: nineteen zero point five to one dead tape two hours ago.

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Speaker 2: The President with a tweet makes it more sprightly here

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Speaker 2: with angst about China, Paul, you gotta believe China responds

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Speaker 2: in some way towards the Asia Monday opening of seven PMSH.

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Speaker 4: Yeah, you know, I'm not really sure what the president's

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Speaker 4: referencing in his tweet here as it relates to discussions

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Speaker 4: with China, but obviously he doesn't like what he sees

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Speaker 4: and maybe hears from China. But it just kind of

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Speaker 4: brings back into the discussion and a little bit of

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Speaker 4: heightened trade uncertainty, which seems to be the background.

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Speaker 2: I'm going to go by to the Peterson Institute and

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Speaker 2: the iconic work of William Klein here the idea of

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Speaker 2: bilateral or unilateral discussions. It's a multilateral world joining us

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Speaker 2: right now on the short term bond market where he

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Speaker 2: is world acclaimed. Ira Jersey just off testimony to I

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Speaker 2: believe the House of Representatives joins us this morning, driving

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Speaker 2: all a fixed income at Bloomberg Intelligence. I rate just

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Speaker 2: simple into June. Is you and your team right, do

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Speaker 2: you have like a theme or are you as confused

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Speaker 2: as everyone else? Yeah?

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Speaker 8: Well I think the theme is confusion. Uh, And you

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Speaker 8: know certainly that we're going to continue to probably have

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Speaker 8: these headlines right like we're trying to and the market

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Speaker 8: is trying to find where the endgame is likely to

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Speaker 8: be in terms of all of these policy actions that

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Speaker 8: the president's doing. And of course, when you have court

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Speaker 8: decisions that seem to you know, are going to might

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Speaker 8: force the president to backtrack, and some of these tariffs

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Speaker 8: unwined because there's an overreach of executive orders, that again

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Speaker 8: puts another layer of confusion into things. So I think

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Speaker 8: what that means is that you're not necessarily going to

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Speaker 8: see a whole lot of directional moves in the rates

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Speaker 8: market in particular, right, So the treasury market will probably

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Speaker 8: just be kind of range bound, but you're going to

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Speaker 8: see a lot of volatility within that range, and that

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Speaker 8: that's certainly what you've seen the last two months.

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Speaker 4: We got some inflation data today core pc E n

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Speaker 4: X a month to month zero point one percent on

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Speaker 4: an annualized basis two point five percent. That's right in

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Speaker 4: line with expectations. It doesn't seem like some of these

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Speaker 4: tariffs are impacting inflation yet. I guess, how's your market

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Speaker 4: kind of digesting this?

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Speaker 8: Yeah, So certainly that the yet is what matters in

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Speaker 8: that sentence there, Paul, because if you look at the

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Speaker 8: durable goods, like if within the PC data you can

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Speaker 8: break out durable goods and non durable goods, which are

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Speaker 8: things like consumables and the like, and then services. What

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Speaker 8: you saw is it was actually a decline in prices

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Speaker 8: for both of those goods sectors, but a three point

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Speaker 8: three percent increase in prices month on month for for

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Speaker 8: the services sector. So you still have services driving inflation

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Speaker 8: at the moment. And the continued fear is that with

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Speaker 8: a significantly lower amount of imports coming in that eventually

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Speaker 8: that's going to go through prices. So as inventories are

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Speaker 8: drawn down, you're going to see, you know, new prices

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Speaker 8: for what the imported goods were. So look at the

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Speaker 8: trade number. You know, I haven't heard you in the

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Speaker 8: last couple of minutes anyway talk about the trade data.

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Speaker 8: But twenty percent draw down a twenty percent decline in

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Speaker 8: imports is pretty significant, right, and you know that this

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Speaker 8: is only for one month, and the first month where

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Speaker 8: tariffs were imposed. It might be even worse as we

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Speaker 8: get the May data, right, and so when we end

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Speaker 8: up getting higher prices than in the future. For that

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Speaker 8: the rates market, though, you know, you look at inflation

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Speaker 8: break evens right now, they haven't moved very much, right

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Speaker 8: tenure inflation break evens two point three three percent. Even

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Speaker 8: though you might have an uptakeing inflation briefly, the market

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Speaker 8: certainly doesn't think it's going to be very sticky.

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Speaker 2: Well, thanks to Bob a professor up at Hamilton College

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Speaker 2: for that mentioned in the trade deficit really came back

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Speaker 2: as mister Jersey mentions the interest rates as well. Ira Jersey,

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Speaker 2: did you buy we're talking UNI bonds earlier? Did you

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Speaker 2: take a position in the two hundred million dollars of

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Speaker 2: Georgia's Fayette County Development Authority bonds to build the new

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Speaker 2: headquarters for the US Soccer Federation.

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Speaker 8: So I did not, but I am very excited to

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Speaker 8: have a home for US Soccer that's in a single location.

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Speaker 8: I think Atlanta was an interesting place because we do

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Speaker 8: have a lot of players going over to Europe, so

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Speaker 8: easier to have something in the East Coast than in

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Speaker 8: the Central or West Coast time zones for a lot

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Speaker 8: of those players when they come back to play for

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Speaker 8: their national teams.

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Speaker 2: IRA one final question sliding into June July fifth. It's

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Speaker 2: called the sold out Stadium. I mean it's every content there,

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Speaker 2: I mean, lamars sold out. Are you going to go

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Speaker 2: to Back to Beginning? I mean, this is like a

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Speaker 2: huge deal for the United Kingdom. This is like a

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Speaker 2: massive fund raise. Are you going to be there?

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Speaker 8: Ira, So I I I plan on it. Yeah, I'm

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Speaker 8: going to take it. We're in the middle of our

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Speaker 8: semi pro Socra season that we're in right now, but

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Speaker 8: I'm going to take that that long weekend off to

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Speaker 8: the jet set over there and uh and go watch

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Speaker 8: some Black Sabbath and uh and a few other for Pinterra.

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Speaker 2: Sure, Okay, there you go, Lisa, there's your road trip.

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Speaker 2: You know.

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Speaker 4: So I just never got into metal.

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Speaker 2: It's up North. It's up North. Okay, it's the Land

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Speaker 2: of Metal. Okay, Yeah, it's it's a huge deal. It's

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Speaker 2: called Back to the Beginning Villa Park, Ira, Jersey, be

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Speaker 2: there and this is in support of huge causes for Birmingham,

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Speaker 2: including the Birmingham Children's Hospital and the Acorn Children's Hospice,

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Speaker 2: as well serious stuff by Black Sabbath and all the

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Speaker 2: metal heads up there. Futures going negative twenty five to

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Speaker 2: negative seventeen. It's well the next.

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Speaker 4: Nineteen point high a Jersey metalhead, I never would have

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Speaker 4: picked that.

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Speaker 2: We you know, that's what happens when you read Fobosi.

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Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live

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00:21:35,560 --> 00:21:38,760
Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on

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00:21:38,800 --> 00:21:42,480
Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or

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Speaker 1: watch us live on YouTube.

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Speaker 2: Seema shop chief Global strategiest of principles. She has been

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Speaker 2: wonderful about a persistent view on the market. Seema. Do

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Speaker 2: you have to rewrite your view this weekend or is

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Speaker 2: it even possible?

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Speaker 9: Hi?

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Speaker 6: Tom No, I think look yesterday's news, it didn't change

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Speaker 6: anything for us, the tariff story. This is absolutely not

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Speaker 6: the end of the road. I don't think President Trump

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Speaker 6: would permit it to be the end of the road.

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Speaker 6: So I think it's been really important for inverses, for

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Speaker 6: everyone to really try and look away from some of

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Speaker 6: that noise, some of it is meaningful, some of that

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Speaker 6: is going to be sustained. Per Certainly, the news from

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Speaker 6: this week is not something that is changing our views.

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Speaker 2: You just metten out with a note she's up at

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Speaker 2: three am this morning. You see that she's so productive

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Speaker 2: all night. Right, Seema shot SMB five hundred, up six

439
00:22:28,480 --> 00:22:31,840
Speaker 2: point two percent. If we close out the month and

440
00:22:31,920 --> 00:22:36,280
Speaker 2: this huge advance, what do people do who didn't participate,

441
00:22:36,680 --> 00:22:39,400
Speaker 2: What do you do with cash? With an equity outlook

442
00:22:39,480 --> 00:22:40,000
Speaker 2: right now?

443
00:22:41,720 --> 00:22:44,919
Speaker 6: Yes, we have still a slightly positive view for the

444
00:22:44,920 --> 00:22:46,760
Speaker 6: rest of the year. The reason is is that we're

445
00:22:46,760 --> 00:22:49,840
Speaker 6: not anticipating recession. And so even if you just have

446
00:22:51,119 --> 00:22:53,840
Speaker 6: slightly modest positive growth, so expecting one and a half

447
00:22:53,840 --> 00:22:56,600
Speaker 6: percent growth for this year, that is still a scenario

448
00:22:56,600 --> 00:22:58,520
Speaker 6: where you can get positive earnings growth. And if you've

449
00:22:58,520 --> 00:23:01,800
Speaker 6: got postive earnings growth, you should see the equity market

450
00:23:01,840 --> 00:23:04,439
Speaker 6: still get positive returns. The thing is it's not going

451
00:23:04,480 --> 00:23:07,040
Speaker 6: to be They're not going to be significant positive gains,

452
00:23:07,119 --> 00:23:09,960
Speaker 6: nothing like what we've seen in previous years. And it's

453
00:23:10,000 --> 00:23:12,440
Speaker 6: important for investors remember there will be a ton of noise.

454
00:23:12,520 --> 00:23:16,720
Speaker 6: We're expecting volatility to stay fairly high over the coming months,

455
00:23:17,280 --> 00:23:19,159
Speaker 6: and so it's going to be important that if you

456
00:23:19,160 --> 00:23:21,440
Speaker 6: aren't invested, to get invested, but also once you're invested,

457
00:23:21,800 --> 00:23:25,080
Speaker 6: stop looking at every single headline because that could be very,

458
00:23:25,200 --> 00:23:25,960
Speaker 6: very disruptive.

459
00:23:26,280 --> 00:23:28,480
Speaker 4: So siman, just looking back on year to date, I

460
00:23:28,520 --> 00:23:30,919
Speaker 4: mean it's been a glass half full, glass half empty.

461
00:23:30,920 --> 00:23:33,240
Speaker 4: I mean we had that twenty percent sell off in

462
00:23:33,280 --> 00:23:36,440
Speaker 4: the marketplace, but then we've retraced most of that coming

463
00:23:37,200 --> 00:23:41,440
Speaker 4: back higher. What are the markers that you're looking at

464
00:23:41,440 --> 00:23:43,439
Speaker 4: the to really give you a sense of how this

465
00:23:43,520 --> 00:23:45,080
Speaker 4: market might perform for the rest of the year. What

466
00:23:45,080 --> 00:23:46,159
Speaker 4: should we be focusing on.

467
00:23:47,359 --> 00:23:49,280
Speaker 6: Yeah, this is a really important question. So when we're

468
00:23:49,320 --> 00:23:51,439
Speaker 6: talking about the horizons, we're seeing that there is a

469
00:23:51,440 --> 00:23:54,000
Speaker 6: bit of a difference coming through. So over a three

470
00:23:54,040 --> 00:23:56,680
Speaker 6: month horizon, there is a lot of concerns. We do

471
00:23:56,720 --> 00:23:58,640
Speaker 6: think there are a number of potholes that are coming

472
00:23:58,680 --> 00:24:01,119
Speaker 6: that you could start to see a couple of market

473
00:24:01,119 --> 00:24:03,760
Speaker 6: pullbacks come through. If you're looking at a twelve month horizon,

474
00:24:03,800 --> 00:24:05,880
Speaker 6: it's a slightly more positive outlook where we do see

475
00:24:05,880 --> 00:24:09,600
Speaker 6: those positive returns coming through. So within the next three months,

476
00:24:09,600 --> 00:24:11,119
Speaker 6: the things that we can be looking at for is

477
00:24:11,119 --> 00:24:14,080
Speaker 6: of course can be the economic data. At the moment,

478
00:24:14,160 --> 00:24:16,280
Speaker 6: the market has been I think inspired by the fact

479
00:24:16,320 --> 00:24:18,879
Speaker 6: that the hard data has remained really strong. It will

480
00:24:18,960 --> 00:24:21,560
Speaker 6: likely slow down in Q three, So that's potential pothole.

481
00:24:21,840 --> 00:24:23,520
Speaker 6: And the other thing is of course going to be inflation.

482
00:24:23,880 --> 00:24:27,680
Speaker 6: We're anticipate painting a spike in inflation again in Q three,

483
00:24:28,200 --> 00:24:30,800
Speaker 6: and I think at that point there'll be some discussions

484
00:24:30,840 --> 00:24:32,600
Speaker 6: around the FED is going to do, and that's where

485
00:24:32,600 --> 00:24:36,359
Speaker 6: you start to see a few potential disturbances to the market.

486
00:24:36,640 --> 00:24:38,399
Speaker 2: The heart of the matter, and Seema we're hearing is

487
00:24:38,480 --> 00:24:40,080
Speaker 2: from a lot of people, is if we get this

488
00:24:40,160 --> 00:24:43,520
Speaker 2: redo and inflation PC today folks on a Friday, a

489
00:24:43,520 --> 00:24:45,639
Speaker 2: lot of economic data for you at eight thirty and

490
00:24:45,760 --> 00:24:49,280
Speaker 2: at ten o'clock as well. But Seema, if we get it,

491
00:24:49,359 --> 00:24:52,320
Speaker 2: then we get a nominal GDP pop. Do you just

492
00:24:52,680 --> 00:24:57,320
Speaker 2: pull that indu sustained earning surprises to the upside?

493
00:24:59,280 --> 00:25:00,679
Speaker 6: I mean, I think so. I mean, I think to

494
00:25:00,680 --> 00:25:03,760
Speaker 6: some extent there was so much negativity about a month ago,

495
00:25:03,880 --> 00:25:07,000
Speaker 6: so there's still some upgrades to go in terms of

496
00:25:07,040 --> 00:25:08,600
Speaker 6: where I think a lot of people are pricing in

497
00:25:08,680 --> 00:25:12,840
Speaker 6: for earnings and you know, inflation, it can be positive,

498
00:25:12,880 --> 00:25:15,080
Speaker 6: of course you talk about the normal growth side, but

499
00:25:15,160 --> 00:25:18,000
Speaker 6: it can have it's certainly its negative impact in terms

500
00:25:18,040 --> 00:25:20,440
Speaker 6: of margins. So when we're thinking about earnings, when we're

501
00:25:20,440 --> 00:25:23,000
Speaker 6: thinking about forward guidance, that's really the key thing that

502
00:25:23,040 --> 00:25:25,440
Speaker 6: we're looking at is how much pricing power do these

503
00:25:25,440 --> 00:25:28,720
Speaker 6: companies have. Are they able to pass on those price

504
00:25:28,760 --> 00:25:31,560
Speaker 6: increases or are they having to absorb themselves? And that,

505
00:25:31,640 --> 00:25:33,720
Speaker 6: to me, I think is one of the key things

506
00:25:33,720 --> 00:25:35,199
Speaker 6: that we're going to be looking out for over the

507
00:25:35,200 --> 00:25:36,360
Speaker 6: coming months and quarters.

508
00:25:37,920 --> 00:25:40,320
Speaker 4: Sima, we just kind of got through earning share we had.

509
00:25:40,320 --> 00:25:42,080
Speaker 4: We've kind of finished up the earning season on a

510
00:25:42,119 --> 00:25:45,280
Speaker 4: pretty high note with Nvidia giving some some good numbers

511
00:25:45,280 --> 00:25:48,320
Speaker 4: out But still I think there are concerns out there

512
00:25:48,320 --> 00:25:51,480
Speaker 4: in the marketplace that earnings estimates out there is still

513
00:25:51,520 --> 00:25:54,159
Speaker 4: maybe too high. How do you think about the earning

514
00:25:54,200 --> 00:25:54,920
Speaker 4: story out there?

515
00:25:56,760 --> 00:25:59,280
Speaker 6: Well, I think it's also worth keeping in mind that

516
00:25:59,720 --> 00:26:02,880
Speaker 6: on a general annual basis, you do see this continuous

517
00:26:02,920 --> 00:26:06,000
Speaker 6: down grade to earning forecast as the year progresses. This

518
00:26:06,040 --> 00:26:07,840
Speaker 6: is going to be no different for this year. The

519
00:26:07,960 --> 00:26:11,960
Speaker 6: question is, are even from that perspective, are earning still

520
00:26:12,000 --> 00:26:13,919
Speaker 6: a little bit too optimistic? Given if you kind of

521
00:26:14,359 --> 00:26:16,520
Speaker 6: think through the agrads that are likely in a normal

522
00:26:16,600 --> 00:26:20,560
Speaker 6: seasonal fashion, I think there is still some negativity to come,

523
00:26:21,720 --> 00:26:22,960
Speaker 6: but I don't want to exaggerate that.

524
00:26:23,000 --> 00:26:23,119
Speaker 2: Then.

525
00:26:23,119 --> 00:26:24,399
Speaker 6: I think it's going to be really important that you

526
00:26:24,400 --> 00:26:26,120
Speaker 6: think about in terms of which are the pockets, which

527
00:26:26,119 --> 00:26:28,119
Speaker 6: are the sectors which are going to be most exposed,

528
00:26:28,600 --> 00:26:30,639
Speaker 6: because there will be our areas of opportunity. I mean,

529
00:26:30,640 --> 00:26:33,360
Speaker 6: the ones that we like from sectoral perspective are going

530
00:26:33,400 --> 00:26:36,960
Speaker 6: to be the financials. We're going to like utilities, and

531
00:26:37,000 --> 00:26:39,000
Speaker 6: we like energy. So there's still a lot of good

532
00:26:39,000 --> 00:26:41,960
Speaker 6: news from a deregulation perspective. It's just that maybe in

533
00:26:41,960 --> 00:26:45,480
Speaker 6: the near term there could be some disappointment which can

534
00:26:45,520 --> 00:26:47,520
Speaker 6: then ideally be reversed as you get through to the

535
00:26:47,560 --> 00:26:48,440
Speaker 6: second half of the year.

536
00:26:48,640 --> 00:26:51,199
Speaker 2: Journalist this morning, Sea Michelle. We do continue with her

537
00:26:51,240 --> 00:26:53,800
Speaker 2: with principal asset manager, who welcome all of you to

538
00:26:53,880 --> 00:26:57,520
Speaker 2: cross the nation and your commute. I was run again

539
00:26:57,840 --> 00:26:59,919
Speaker 2: had a driver, you staid the Bentley was in the garage?

540
00:27:00,040 --> 00:27:05,000
Speaker 2: Ye serious? Xam is normous? Is It's like like, cy

541
00:27:05,080 --> 00:27:07,080
Speaker 2: help me out in the control rooms? I wake up.

542
00:27:07,280 --> 00:27:10,480
Speaker 2: I know you're up with the Nick slate. Serious Exam

543
00:27:10,600 --> 00:27:12,800
Speaker 2: is a big deal. It's a big deal. It's like

544
00:27:13,000 --> 00:27:17,760
Speaker 2: very general, enormous Channel one Good Mornings, I Serious Exam

545
00:27:17,800 --> 00:27:20,000
Speaker 2: for June. That's going to be my focus here in

546
00:27:20,040 --> 00:27:24,120
Speaker 2: our wonderful distribution. You mentioned we're on Bloomberg Originals. Yeah. Absolutely,

547
00:27:24,240 --> 00:27:26,040
Speaker 2: this is TV like Roku.

548
00:27:26,359 --> 00:27:29,040
Speaker 4: If you got like a Samsung Smart, the Smart TV's

549
00:27:29,080 --> 00:27:30,960
Speaker 4: time where you don't even need cable or anything like that.

550
00:27:31,119 --> 00:27:34,000
Speaker 2: They just got the soft and watches in the United Kingdom.

551
00:27:34,040 --> 00:27:35,840
Speaker 4: You just search Bloomberg original look at that.

552
00:27:36,080 --> 00:27:39,600
Speaker 2: It's amazing on YouTube. Good morning. Subscribe to Bloomberg Podcasts,

553
00:27:39,680 --> 00:27:41,760
Speaker 2: curring each and every day. Really excited. Can we do

554
00:27:41,800 --> 00:27:44,639
Speaker 2: a shout out Tracy and Joe. Sure, they're killing it

555
00:27:44,640 --> 00:27:48,080
Speaker 2: on outline. They're really helping out Bloomberg Podcasts. Thank you

556
00:27:48,119 --> 00:27:50,880
Speaker 2: to odd Lots for all your support. There. Seema show

557
00:27:51,000 --> 00:27:53,919
Speaker 2: with us with futures at negative three.

558
00:27:53,359 --> 00:27:55,040
Speaker 4: In the fixed income market here, I look at it

559
00:27:55,080 --> 00:27:57,400
Speaker 4: to your treasury, I'm getting close to four percent here.

560
00:27:57,440 --> 00:27:59,800
Speaker 4: That's a that's not a bad way to make a

561
00:27:59,800 --> 00:28:02,359
Speaker 4: lit there. Do I take credit risk on top of that?

562
00:28:02,440 --> 00:28:03,520
Speaker 4: How do you guys think about that?

563
00:28:04,800 --> 00:28:05,000
Speaker 8: Yeah?

564
00:28:05,000 --> 00:28:06,920
Speaker 6: I think you can take a bit of credit risk. Erny.

565
00:28:06,960 --> 00:28:09,640
Speaker 6: As long as we're not anticipating recession, then defaults they're

566
00:28:09,680 --> 00:28:11,800
Speaker 6: going to rise likely, but they're not going to spike.

567
00:28:12,720 --> 00:28:14,480
Speaker 6: We would be focused a bit more on the high

568
00:28:14,560 --> 00:28:16,760
Speaker 6: quality part of the market because we are expecting an

569
00:28:16,760 --> 00:28:20,240
Speaker 6: economic slowdown. And if you're looking across the treasury curve,

570
00:28:20,320 --> 00:28:21,760
Speaker 6: like where do you want to be focused, it's probably

571
00:28:21,760 --> 00:28:23,720
Speaker 6: in the short duration side.

572
00:28:24,240 --> 00:28:24,439
Speaker 5: You know.

573
00:28:24,640 --> 00:28:27,960
Speaker 6: Thelongside is where you're continuing to see and I don't

574
00:28:27,960 --> 00:28:31,520
Speaker 6: think it's going to disappear. Some of those fiscal concerns

575
00:28:31,560 --> 00:28:33,320
Speaker 6: continuing to come through, and we think that's going to

576
00:28:33,359 --> 00:28:35,760
Speaker 6: be a persistent narrative. So for us, it's that short

577
00:28:35,800 --> 00:28:39,080
Speaker 6: duration and the high quality segments that we're most interested

578
00:28:39,120 --> 00:28:41,720
Speaker 6: in from a credit and from a treasury curve perspective.

579
00:28:42,400 --> 00:28:45,960
Speaker 2: Seman, what does big tech look like from London? I mean,

580
00:28:46,000 --> 00:28:48,240
Speaker 2: I think it's just like this American thing. We're all

581
00:28:48,280 --> 00:28:50,880
Speaker 2: mental about Apple and Paul and I drive by the

582
00:28:50,920 --> 00:28:54,760
Speaker 2: Apple store at Central Park, South Central Park, and yeah,

583
00:28:54,840 --> 00:28:57,880
Speaker 2: Central Park and Fifth Avenue every day. But Sima, what

584
00:28:57,920 --> 00:29:01,120
Speaker 2: does mag seven look like from London? You've got a

585
00:29:01,200 --> 00:29:02,320
Speaker 2: nice distance to it.

586
00:29:04,080 --> 00:29:06,560
Speaker 6: I think we're just as obsessed with it as the

587
00:29:06,680 --> 00:29:09,360
Speaker 6: US is when you're you know, when we're talking to

588
00:29:09,400 --> 00:29:11,360
Speaker 6: investors in the UK, it's the same kind of questions.

589
00:29:11,400 --> 00:29:13,640
Speaker 6: They're obsessed with the big tech trade. They want to

590
00:29:13,680 --> 00:29:15,760
Speaker 6: know which is going to persist or is it something

591
00:29:15,800 --> 00:29:19,320
Speaker 6: which has maybe run its course. But if you're looking

592
00:29:19,360 --> 00:29:21,000
Speaker 6: at it again O for a longer term perspective, you

593
00:29:21,040 --> 00:29:23,640
Speaker 6: don't see that investors are losing much interest. They're just

594
00:29:23,680 --> 00:29:26,560
Speaker 6: looking for what is a buying opportunity? When can we

595
00:29:26,600 --> 00:29:28,680
Speaker 6: really buy the dip if there is going to be another.

596
00:29:28,440 --> 00:29:30,800
Speaker 2: Dip so sima.

597
00:29:30,880 --> 00:29:32,840
Speaker 4: Earlier in this year, when we had the you know,

598
00:29:32,840 --> 00:29:36,400
Speaker 4: maybe the peak volatility in the US markets around the terrace,

599
00:29:36,640 --> 00:29:39,600
Speaker 4: we still have a pronounced shift of capital out of

600
00:29:39,600 --> 00:29:42,800
Speaker 4: the US to other parts of the world, most notably

601
00:29:42,840 --> 00:29:46,360
Speaker 4: European equity markets. Is that still the trade here? Do

602
00:29:46,400 --> 00:29:50,040
Speaker 4: people feel like Europe is a good place to move

603
00:29:50,200 --> 00:29:51,560
Speaker 4: money visa the the US?

604
00:29:53,360 --> 00:29:55,640
Speaker 6: Well, I think that trade has lost a bit of

605
00:29:55,680 --> 00:29:57,560
Speaker 6: it shine in the last couple of weeks. What we're

606
00:29:57,560 --> 00:30:01,280
Speaker 6: seeing is that investors really questioning. They know that there

607
00:30:01,320 --> 00:30:03,240
Speaker 6: is maybe a potential upside, but they almost at the

608
00:30:03,320 --> 00:30:06,000
Speaker 6: point where they're saying, show us some money when is

609
00:30:06,040 --> 00:30:08,240
Speaker 6: Europe really going to start to outperform on is it

610
00:30:08,320 --> 00:30:10,920
Speaker 6: really going to start talking about deregulation? And only at

611
00:30:10,920 --> 00:30:13,200
Speaker 6: that point can they start to think about the increase

612
00:30:13,240 --> 00:30:16,360
Speaker 6: in potential growth rate for Europe. So it is a discussion.

613
00:30:16,760 --> 00:30:18,600
Speaker 6: It's certing more a different discussion than it was in

614
00:30:18,680 --> 00:30:20,680
Speaker 6: prior years. But I think in the last couple of

615
00:30:20,680 --> 00:30:22,520
Speaker 6: weeks you are studying to get to that point where

616
00:30:22,560 --> 00:30:24,880
Speaker 6: investors are becoming a little bit more skeptic and they

617
00:30:24,920 --> 00:30:27,920
Speaker 6: want to see that Europe is realistically going to come

618
00:30:27,960 --> 00:30:30,000
Speaker 6: through on some of the plans that people have been

619
00:30:30,000 --> 00:30:30,520
Speaker 6: talking about.

620
00:30:30,720 --> 00:30:34,800
Speaker 2: To me, the great divide of may Sey Mischa has

621
00:30:34,840 --> 00:30:38,840
Speaker 2: been the mood of retail in America versus institutional Wall Street.

622
00:30:39,200 --> 00:30:41,720
Speaker 2: Do you see the same thing in the city.

623
00:30:42,400 --> 00:30:44,080
Speaker 6: Yeah, I think so. In a way, it's been interesting

624
00:30:44,080 --> 00:30:46,600
Speaker 6: because the retail money is the money that's been really smart.

625
00:30:46,640 --> 00:30:50,080
Speaker 6: They stayed invested through the last couple of months. They

626
00:30:50,080 --> 00:30:53,880
Speaker 6: didn't come out of their trades when things got a

627
00:30:53,920 --> 00:30:56,960
Speaker 6: little bit rocky. So I think there is a divide

628
00:30:57,000 --> 00:31:01,200
Speaker 6: in the behavior. And certainly if you know for institutions

629
00:31:01,200 --> 00:31:03,280
Speaker 6: that they're trying to get back into the market if

630
00:31:03,280 --> 00:31:05,920
Speaker 6: they did exit it was retail to State Investige.

631
00:31:05,880 --> 00:31:08,200
Speaker 2: Seema Nixer Pacers.

632
00:31:09,440 --> 00:31:11,440
Speaker 6: I'm going to say, Nick, look at.

633
00:31:11,320 --> 00:31:15,880
Speaker 2: That right on top of it. Thank you, Semashawe really appreciated.

634
00:31:16,160 --> 00:31:20,040
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

635
00:31:20,080 --> 00:31:23,080
Speaker 1: starting at seven am Eastern on Apple Corplay and Android

636
00:31:23,120 --> 00:31:26,160
Speaker 1: Auto with the Bloomberg Business App. You can also listen

637
00:31:26,240 --> 00:31:29,520
Speaker 1: live on Amazon Alexa from our flagship New York station.

638
00:31:30,040 --> 00:31:32,680
Speaker 1: Just say Alexa play Bloomberg eleven thirty.

639
00:31:32,800 --> 00:31:34,880
Speaker 2: We really wanted the tax of brain folks. You went

640
00:31:34,920 --> 00:31:37,920
Speaker 2: through the rolodex and said, okay, who can spouse connected

641
00:31:38,000 --> 00:31:41,440
Speaker 2: the Pat Askell joins us right now. Municipal bonds. We

642
00:31:41,520 --> 00:31:45,000
Speaker 2: really Paul's been on fire about this, taking advantage of

643
00:31:45,120 --> 00:31:49,280
Speaker 2: tax free bonds right now. Our airport bought you your

644
00:31:49,440 --> 00:31:53,040
Speaker 2: union college. It's connected the years ago before a lot

645
00:31:53,040 --> 00:31:57,800
Speaker 2: of years, a few years ago before. Help me here

646
00:31:59,120 --> 00:32:02,720
Speaker 2: with airport. It's is there an opportunity with all the

647
00:32:02,760 --> 00:32:08,520
Speaker 2: gloom about airports aviation, our municipal bonds of LaGuardia or

648
00:32:08,600 --> 00:32:12,600
Speaker 2: o hair A vailue. Now, yes, we like the airport sector.

649
00:32:13,520 --> 00:32:17,160
Speaker 10: You know, the financials, the planes are full, the off

650
00:32:17,360 --> 00:32:19,800
Speaker 10: the off putty contracts like the there's a lot of

651
00:32:19,800 --> 00:32:21,800
Speaker 10: opportunity there. I mean, you look at LaGuardia, it's a

652
00:32:21,800 --> 00:32:24,520
Speaker 10: beautiful project. Now that it's done, JFK is going through

653
00:32:24,520 --> 00:32:27,800
Speaker 10: the construction. You know, other airports in the country are

654
00:32:27,800 --> 00:32:30,600
Speaker 10: going to continue to uh to be the opportunities for us.

655
00:32:30,680 --> 00:32:33,160
Speaker 2: Can a little guy buy those bonds? Can I go

656
00:32:33,200 --> 00:32:36,200
Speaker 2: out and say, hey, the uber pick up at LaGuardia

657
00:32:36,320 --> 00:32:38,959
Speaker 2: was actually pretty good. I want to buy ten thousand

658
00:32:39,040 --> 00:32:42,000
Speaker 2: dollars at Laguardian. Yeah you can do that. Yeah, sure

659
00:32:42,000 --> 00:32:42,200
Speaker 2: you can.

660
00:32:42,200 --> 00:32:43,840
Speaker 10: You can definitely do It's easier to do it during

661
00:32:43,880 --> 00:32:45,920
Speaker 10: the new issue process because the bonds tend to get

662
00:32:45,920 --> 00:32:48,280
Speaker 10: put away, but sure, mom, pop can still buy me

663
00:32:48,280 --> 00:32:51,400
Speaker 10: any bonds. It's it's easier, you know, to to buy

664
00:32:51,520 --> 00:32:54,600
Speaker 10: manage products on those kind of denominations. But certainly you

665
00:32:54,600 --> 00:32:55,040
Speaker 10: can do it.

666
00:32:55,640 --> 00:32:58,120
Speaker 4: Pat the minisial bombs just going at the the on

667
00:32:58,160 --> 00:33:01,600
Speaker 4: the Bloomberg I end go function, Bloomberg index browser underperforming

668
00:33:01,840 --> 00:33:04,320
Speaker 4: the US agg pretty substantially this year.

669
00:33:04,240 --> 00:33:08,120
Speaker 10: Underperforming this year, outperforming in the last month, so you know,

670
00:33:08,160 --> 00:33:10,719
Speaker 10: pretty good relative value coming into April when we had

671
00:33:10,840 --> 00:33:13,520
Speaker 10: VAUL kick up in the beginning of April based on

672
00:33:13,600 --> 00:33:17,600
Speaker 10: due to the post Liberation Day market moves, communis underperformed

673
00:33:17,640 --> 00:33:20,160
Speaker 10: since then have done very well. And I think there's

674
00:33:20,200 --> 00:33:22,440
Speaker 10: really three things. The relative value that you pointed out

675
00:33:22,480 --> 00:33:25,480
Speaker 10: to other fixing a masset classes the technicals. We're going

676
00:33:25,480 --> 00:33:27,560
Speaker 10: into a positive technical as we go into the summer,

677
00:33:27,560 --> 00:33:31,040
Speaker 10: as supply as supply wanes, and some of the policy

678
00:33:31,040 --> 00:33:33,320
Speaker 10: concerns we had out there as we have the tax

679
00:33:33,360 --> 00:33:35,720
Speaker 10: bill was first come out of committee in Congress. Looks

680
00:33:35,760 --> 00:33:37,480
Speaker 10: like unions are relatively unscathed.

681
00:33:37,680 --> 00:33:39,560
Speaker 4: That's the key point, because that was a I guess

682
00:33:39,560 --> 00:33:41,400
Speaker 4: it's always a point. I guess what I've learned from

683
00:33:41,400 --> 00:33:44,480
Speaker 4: new municipal guys is every administration comes in, you always

684
00:33:44,480 --> 00:33:47,560
Speaker 4: have the risk that the tax deductibility of municipal bonds

685
00:33:48,080 --> 00:33:52,960
Speaker 4: may be reduced or eliminated. And that's true in this administration, but.

686
00:33:53,080 --> 00:33:55,720
Speaker 10: True in the Obama administration. True and Trump one point oh,

687
00:33:55,840 --> 00:33:57,920
Speaker 10: true and Trump two point oh. That at least it

688
00:33:57,960 --> 00:33:59,760
Speaker 10: gets discussed, and I think at the end of the

689
00:33:59,800 --> 00:34:01,760
Speaker 10: day we get back to the same thing at all times.

690
00:34:01,760 --> 00:34:03,840
Speaker 10: There's very few things that pull well on both sides

691
00:34:03,840 --> 00:34:06,120
Speaker 10: of the aisle in our country. One of them's infrastructure.

692
00:34:06,320 --> 00:34:07,760
Speaker 10: This is the market that we build most of our

693
00:34:07,760 --> 00:34:11,160
Speaker 10: infrastructure in our country, and the exemption to keep the

694
00:34:11,320 --> 00:34:13,880
Speaker 10: borrowing costs or state local governments stays in place to

695
00:34:13,920 --> 00:34:15,080
Speaker 10: keep that borrowing cost lower.

696
00:34:15,400 --> 00:34:18,600
Speaker 2: Why would anyone call, by full faith in credit taxable

697
00:34:18,800 --> 00:34:21,600
Speaker 2: over a certain income level. I just don't get it.

698
00:34:21,680 --> 00:34:25,160
Speaker 2: I mean, the yield pickup inural state, I mean a

699
00:34:25,239 --> 00:34:28,920
Speaker 2: black crop is there's no debate. No, the yield pickup

700
00:34:29,000 --> 00:34:29,640
Speaker 2: is stunning.

701
00:34:30,200 --> 00:34:34,640
Speaker 10: The when you think about investment grade municipals on a

702
00:34:34,680 --> 00:34:37,879
Speaker 10: tax equivalent yield basis behind six percent and a high

703
00:34:37,920 --> 00:34:40,359
Speaker 10: yield municipal basis behind nine percent.

704
00:34:41,160 --> 00:34:43,040
Speaker 2: It's they offer incredible value.

705
00:34:43,200 --> 00:34:44,799
Speaker 10: I mean, this is the first time we think about

706
00:34:44,840 --> 00:34:46,920
Speaker 10: it since pre financial crisis. Will we be able to

707
00:34:46,920 --> 00:34:49,560
Speaker 10: get this level of yields embedded in portfolios with the

708
00:34:49,560 --> 00:34:51,960
Speaker 10: exception of a few times of crisis you go back

709
00:34:51,960 --> 00:34:52,640
Speaker 10: to seven?

710
00:34:52,920 --> 00:34:56,879
Speaker 4: Yeah, what's the credit outlook out there for municipalities? Because

711
00:34:56,880 --> 00:35:00,000
Speaker 4: I know during the coming out of the during the pandemic,

712
00:35:00,080 --> 00:35:01,400
Speaker 4: I thought, oh my goodness, we're going to have the

713
00:35:01,400 --> 00:35:03,719
Speaker 4: first left and right. But there's so much liquidity pumped

714
00:35:03,719 --> 00:35:06,120
Speaker 4: in by the government that that did not happen.

715
00:35:06,719 --> 00:35:09,360
Speaker 10: The rough numbers are you know, state and local governments

716
00:35:09,360 --> 00:35:11,160
Speaker 10: came out of the pandemic short about one hundred and

717
00:35:11,200 --> 00:35:14,879
Speaker 10: forty billion through a variety of federal programs to airports, universities,

718
00:35:15,120 --> 00:35:18,319
Speaker 10: and local governments. The feds gave the muni sector about

719
00:35:18,320 --> 00:35:21,640
Speaker 10: three hundred billion, so that we really came out of

720
00:35:21,760 --> 00:35:25,080
Speaker 10: the pandemic in very good stead and that continues to

721
00:35:25,080 --> 00:35:26,880
Speaker 10: be the case. I mean, you know some of the

722
00:35:26,880 --> 00:35:28,960
Speaker 10: noise you have around universities right now, on some of

723
00:35:28,960 --> 00:35:32,640
Speaker 10: these flagship universities, even if they were downgraded, they're triple

724
00:35:32,680 --> 00:35:34,880
Speaker 10: A to double A, right, you know they're going to

725
00:35:34,920 --> 00:35:36,799
Speaker 10: have instead of seven times coverage, they're gonna have four

726
00:35:36,800 --> 00:35:39,120
Speaker 10: point seven times coverage, right. And I think we'd all

727
00:35:39,120 --> 00:35:41,360
Speaker 10: agree on most of the universities that are in the press,

728
00:35:41,840 --> 00:35:43,800
Speaker 10: the demand from a student perspective pretty and elastic.

729
00:35:43,960 --> 00:35:47,160
Speaker 2: I'm looking at the black Rock, New York State municipal

730
00:35:47,200 --> 00:35:50,439
Speaker 2: buying front. It's had a really rocky one year two

731
00:35:50,480 --> 00:35:53,680
Speaker 2: year in twenty twenty, it was like world class performing

732
00:35:53,800 --> 00:35:57,840
Speaker 2: ninety fifth percentile? Is that how your world roles where

733
00:35:58,120 --> 00:36:00,799
Speaker 2: there's a challenge in a churn and you know you

734
00:36:00,920 --> 00:36:03,600
Speaker 2: make your coupon and reinvest it or whatever, and then

735
00:36:03,640 --> 00:36:06,560
Speaker 2: there's one big year where you really get the total return.

736
00:36:07,280 --> 00:36:10,480
Speaker 10: Now, I actually think most people buy our products for income.

737
00:36:10,560 --> 00:36:12,440
Speaker 2: I would take it the other way. They take the coupon.

738
00:36:12,560 --> 00:36:14,759
Speaker 10: Yeah, where they want, they want the coupon. I mean,

739
00:36:15,000 --> 00:36:16,920
Speaker 10: you know, in general terms, I always say, when the

740
00:36:16,960 --> 00:36:20,040
Speaker 10: fixed in fixed income is larger, it's more attractive, it

741
00:36:20,120 --> 00:36:20,840
Speaker 10: makes better.

742
00:36:20,600 --> 00:36:21,719
Speaker 2: Ballast in the portfolio.

743
00:36:22,280 --> 00:36:23,880
Speaker 10: So we we don't try to hit home runs in

744
00:36:23,960 --> 00:36:25,640
Speaker 10: terms of total return in any one given year.

745
00:36:26,160 --> 00:36:28,600
Speaker 4: What's total what's the new issue market look like, what's

746
00:36:28,600 --> 00:36:29,440
Speaker 4: the calendar look like?

747
00:36:29,640 --> 00:36:31,759
Speaker 10: It's it's busy that you were going to have another

748
00:36:31,880 --> 00:36:33,800
Speaker 10: Last year was a record year. Last year is a

749
00:36:33,800 --> 00:36:35,799
Speaker 10: record year. This year it could be like, Yeah, last

750
00:36:35,840 --> 00:36:37,680
Speaker 10: year was north of five hundred billion. It looks like

751
00:36:37,880 --> 00:36:39,560
Speaker 10: we're going to come in around five and a quarter

752
00:36:39,640 --> 00:36:41,480
Speaker 10: to five thirty this year. That's what it's looking like

753
00:36:41,600 --> 00:36:44,560
Speaker 10: right now. And it's it's it's being absorbed in a

754
00:36:44,560 --> 00:36:47,200
Speaker 10: better orderly fashioned again, with the exception of the two

755
00:36:47,239 --> 00:36:49,640
Speaker 10: weeks you know, kind of following Liberation Day, where markets

756
00:36:49,680 --> 00:36:52,400
Speaker 10: all over the globe war we're in fuegos so, but

757
00:36:52,640 --> 00:36:54,439
Speaker 10: it's been relatively well received.

758
00:36:54,200 --> 00:36:57,319
Speaker 2: So to get back to airlines. Say Atlanta Hartsfield, they're

759
00:36:57,320 --> 00:37:01,359
Speaker 2: doing a big building project, it's empty million. Do they

760
00:37:01,400 --> 00:37:04,960
Speaker 2: make four phone calls to Blackrock Fidelity in the rest or?

761
00:37:05,040 --> 00:37:08,319
Speaker 2: Is it distributed like the old days? It's it's distributed,

762
00:37:08,640 --> 00:37:08,840
Speaker 2: you know.

763
00:37:08,960 --> 00:37:12,480
Speaker 10: Look, it's the retail or period is not as dominant

764
00:37:12,480 --> 00:37:14,319
Speaker 10: as it was in the in the old days that

765
00:37:14,360 --> 00:37:16,640
Speaker 10: we're going to go back kind of seventies and eighties. However,

766
00:37:16,920 --> 00:37:19,239
Speaker 10: there still is a retail or period, and it's you know,

767
00:37:19,960 --> 00:37:22,440
Speaker 10: an issue like Hartfield, for example, that'd be out there

768
00:37:22,440 --> 00:37:24,000
Speaker 10: and you know they would be doing a rango for

769
00:37:24,000 --> 00:37:26,080
Speaker 10: two or three weeks and they'd have one hundred investors

770
00:37:26,080 --> 00:37:26,479
Speaker 10: in the book.

771
00:37:26,760 --> 00:37:29,200
Speaker 2: You're committed to one of the great schools in America.

772
00:37:29,280 --> 00:37:33,000
Speaker 2: Full disclosure, My uncle was a professor there years ago.

773
00:37:33,160 --> 00:37:36,880
Speaker 2: Union College Connected in New York. It's rated top forty

774
00:37:37,000 --> 00:37:39,919
Speaker 2: schools in the nation for value as well.

775
00:37:40,840 --> 00:37:41,000
Speaker 1: There.

776
00:37:41,239 --> 00:37:44,839
Speaker 2: Yeah, it's the new engineering. It's such our ci. It's

777
00:37:44,880 --> 00:37:47,480
Speaker 2: a one after thoughts. Friends got into RPI and you

778
00:37:47,480 --> 00:37:50,680
Speaker 2: know it's great. How'd the admission season go? You guys

779
00:37:50,800 --> 00:37:54,279
Speaker 2: prospering in all this education turmoil, you.

780
00:37:54,200 --> 00:37:57,680
Speaker 10: Know, it looks small, smaller Upstate universities are. You know,

781
00:37:57,880 --> 00:38:02,280
Speaker 10: in New England, universities are are an intense competition for students.

782
00:38:02,520 --> 00:38:05,319
Speaker 10: Union is doing well, but it's just like all its counterparts,

783
00:38:05,560 --> 00:38:07,319
Speaker 10: you know, the you know, you bring up R P I,

784
00:38:07,560 --> 00:38:09,000
Speaker 10: R I T a lot of the schools that we

785
00:38:09,080 --> 00:38:12,520
Speaker 10: know about their excellent institutions. But because there's that demographic

786
00:38:12,560 --> 00:38:14,520
Speaker 10: waste they're going through right now where there's a few

787
00:38:14,600 --> 00:38:16,920
Speaker 10: less students out there, there's a lot of competition that

788
00:38:16,960 --> 00:38:19,640
Speaker 10: they and they don't have, you know, the really really

789
00:38:19,680 --> 00:38:21,400
Speaker 10: significant endowments to some of the college.

790
00:38:21,520 --> 00:38:25,839
Speaker 2: So your selling point is it's warm. Schenectady is warmer

791
00:38:25,880 --> 00:38:27,000
Speaker 2: than Rochester is.

792
00:38:27,040 --> 00:38:31,040
Speaker 10: At the selling point, we're warmer than Rochester. We're getting

793
00:38:31,040 --> 00:38:34,520
Speaker 10: a new hockey rank. We're excited about school rink, not

794
00:38:34,600 --> 00:38:37,239
Speaker 10: the Hasspital rank, but the might be involved a little bit.

795
00:38:37,280 --> 00:38:39,759
Speaker 2: But the I'm afraid to ask cowmedy. See, so you

796
00:38:39,920 --> 00:38:40,800
Speaker 2: keeping it under.

797
00:38:40,600 --> 00:38:42,960
Speaker 10: Ten thousand, they were keeping it under ten thousand. This

798
00:38:43,000 --> 00:38:44,680
Speaker 10: is gonna this is gonna be a really cool addition.

799
00:38:44,719 --> 00:38:46,960
Speaker 10: Downtown Schenectady has gone through real boon in the last

800
00:38:47,000 --> 00:38:49,799
Speaker 10: twenty years. As ge he has come back very cool.

801
00:38:49,840 --> 00:38:51,120
Speaker 10: I didn't know that it's exciting to.

802
00:38:51,040 --> 00:38:55,200
Speaker 2: Watch, which is a remote in the fall. I promise

803
00:38:55,239 --> 00:38:58,319
Speaker 2: I'd learned how to spell D one. Hockey is like

804
00:38:58,360 --> 00:38:59,839
Speaker 2: an addiction, isn't it?

805
00:39:00,320 --> 00:39:04,480
Speaker 10: College hockey with these smaller five days and you're right

806
00:39:04,520 --> 00:39:05,319
Speaker 10: on top of the ice.

807
00:39:05,360 --> 00:39:08,719
Speaker 2: It's exciting, it really is. Now, Pat Haskell, thank you

808
00:39:08,760 --> 00:39:11,439
Speaker 2: so much from Union College. Also by way of black

809
00:39:11,520 --> 00:39:12,120
Speaker 2: Rock as.

810
00:39:11,920 --> 00:39:21,600
Speaker 1: Well, this is the Bloomberg Surveillance Podcast. Listen live each

811
00:39:21,640 --> 00:39:24,680
Speaker 1: weekday starting at seven am Eastern on Apple Corplay and

812
00:39:24,680 --> 00:39:27,720
Speaker 1: Android Auto with the Bloomberg Business app. You can also

813
00:39:27,840 --> 00:39:31,000
Speaker 1: watch us live every weekday on YouTube and always on

814
00:39:31,040 --> 00:39:32,160
Speaker 1: the Bloomberg terminal.

815
00:39:32,280 --> 00:39:34,239
Speaker 2: Right, economis of the year last year, Lindsay Pigs that

816
00:39:34,360 --> 00:39:37,239
Speaker 2: joins us on chief economists at Stefel and Lindzie with

817
00:39:37,280 --> 00:39:40,960
Speaker 2: great respect, let's go short term. My head is spinning

818
00:39:41,080 --> 00:39:44,439
Speaker 2: looking at the Eco co screen all the different things

819
00:39:44,440 --> 00:39:47,480
Speaker 2: in Michigan to come on. One year inflation seven point

820
00:39:47,520 --> 00:39:51,160
Speaker 2: one percent, five to ten year inflation four point six percent.

821
00:39:51,600 --> 00:39:55,359
Speaker 2: How are you framing out? A Q three Q four

822
00:39:55,560 --> 00:39:59,960
Speaker 2: call at Steefel? Can you count up the American economy? Right?

823
00:40:00,160 --> 00:40:02,960
Speaker 5: No, Well, we have to be careful when we're looking

824
00:40:03,040 --> 00:40:05,480
Speaker 5: at the soft data. The soft data seems to be

825
00:40:05,520 --> 00:40:09,439
Speaker 5: pricing in more of a worst case scenario, consumers vocalizing

826
00:40:09,480 --> 00:40:12,160
Speaker 5: all of this concern. But as we saw this morning,

827
00:40:12,200 --> 00:40:14,239
Speaker 5: in the hard data, the consumer is still out in

828
00:40:14,280 --> 00:40:17,520
Speaker 5: the marketplace spending, so there seems to be again more

829
00:40:17,560 --> 00:40:21,200
Speaker 5: of this erosion of confidence than an actual change in behavior.

830
00:40:21,280 --> 00:40:22,839
Speaker 5: We see that on the court side as well.

831
00:40:22,880 --> 00:40:27,400
Speaker 2: So what's your number forward? I'm sorry, what's your number forward?

832
00:40:27,480 --> 00:40:28,360
Speaker 2: You're real GDP?

833
00:40:29,680 --> 00:40:32,000
Speaker 5: I think GDP in the second half of the year

834
00:40:32,160 --> 00:40:33,800
Speaker 5: is going to recover to about a one and a

835
00:40:33,840 --> 00:40:37,399
Speaker 5: half one point seven percent pace, So positive, we're back

836
00:40:37,400 --> 00:40:40,560
Speaker 5: in positive territory, but certainly nothing to write home about.

837
00:40:40,640 --> 00:40:44,000
Speaker 5: But again I think against that backdrop of almost two

838
00:40:44,040 --> 00:40:48,440
Speaker 5: percent growth upside risk to inflation, the conversation for the

839
00:40:48,480 --> 00:40:51,560
Speaker 5: FED is going to shift dramatically from where it is

840
00:40:51,640 --> 00:40:55,160
Speaker 5: right now, as FED officials are saying we're well positioned

841
00:40:55,280 --> 00:40:59,320
Speaker 5: or they're looking for potential justification for additional policy easing.

842
00:41:00,160 --> 00:41:04,040
Speaker 4: So do we have have we taken recession off the table? Lindsay,

843
00:41:04,080 --> 00:41:05,799
Speaker 4: because say earlier in New Year, when people were trying

844
00:41:05,800 --> 00:41:08,320
Speaker 4: to run their models in there thinking about one hundred

845
00:41:08,320 --> 00:41:12,160
Speaker 4: and plus percent tariffs in various countries. That was very

846
00:41:12,239 --> 00:41:14,640
Speaker 4: much the talk of the town. But is that off

847
00:41:14,680 --> 00:41:15,279
Speaker 4: the table now?

848
00:41:16,080 --> 00:41:18,680
Speaker 5: Well, remember recession was never in our base case scenario.

849
00:41:18,800 --> 00:41:21,600
Speaker 5: We were looking for a slowdown in momentum, and we

850
00:41:21,640 --> 00:41:23,960
Speaker 5: certainly saw that come to fruition in the first quarter,

851
00:41:24,400 --> 00:41:26,880
Speaker 5: but by Q two we are looking for a return

852
00:41:26,960 --> 00:41:30,840
Speaker 5: to minimal positive growth. So yes, that does remove the

853
00:41:30,920 --> 00:41:34,640
Speaker 5: near term fear of a recession. Now again, things can change,

854
00:41:34,680 --> 00:41:37,400
Speaker 5: so recession is not necessarily off the table, but our

855
00:41:37,440 --> 00:41:40,759
Speaker 5: base case says that the worst of the brunt of

856
00:41:41,280 --> 00:41:44,800
Speaker 5: that anticipation, that concern around tariffs has already been felt.

857
00:41:44,960 --> 00:41:46,239
Speaker 5: January to March.

858
00:41:46,520 --> 00:41:49,160
Speaker 4: Lindsay, we've seen a lot of risk assets, particularly the

859
00:41:49,280 --> 00:41:53,320
Speaker 4: US equity markets, bounce back nicely. Big exception is the

860
00:41:53,440 --> 00:41:56,840
Speaker 4: US dollar. What's your view there, Well, there's.

861
00:41:56,640 --> 00:41:58,680
Speaker 5: Going to continue to be a lot of volatility, I

862
00:41:58,680 --> 00:42:01,480
Speaker 5: think as the currency market is trying to gauge, just

863
00:42:01,560 --> 00:42:05,000
Speaker 5: like investors broadly are trying to gauge what the endgame

864
00:42:05,080 --> 00:42:07,759
Speaker 5: for tariffs is going to be. Now, of course, this

865
00:42:07,960 --> 00:42:11,279
Speaker 5: back and forth that the most recent disappointing news in

866
00:42:11,440 --> 00:42:14,520
Speaker 5: terms of trade talks with China, This is going to

867
00:42:14,520 --> 00:42:17,600
Speaker 5: continue to put pressure or at least volatility on the

868
00:42:17,760 --> 00:42:20,040
Speaker 5: US dollar, and I think this is going to be

869
00:42:20,040 --> 00:42:21,719
Speaker 5: a storyline that we're not going to be able to

870
00:42:21,760 --> 00:42:23,799
Speaker 5: shake maybe through the year end.

871
00:42:24,560 --> 00:42:28,640
Speaker 2: Helping here with the asset move, we're going to see

872
00:42:29,160 --> 00:42:33,080
Speaker 2: if we have tariffs up and Lisa Mateo's reporting the

873
00:42:33,160 --> 00:42:37,399
Speaker 2: gap is having some challenges. They go from twenty eight

874
00:42:37,920 --> 00:42:41,000
Speaker 2: to twenty three right now on stock price. Do we

875
00:42:41,120 --> 00:42:45,960
Speaker 2: just see lindsay in your world and asset erosion due

876
00:42:46,040 --> 00:42:48,360
Speaker 2: to well stagflation sense.

877
00:42:49,640 --> 00:42:53,120
Speaker 5: I think stagflation is the biggest concern because again, as

878
00:42:53,120 --> 00:42:55,120
Speaker 5: we talk about our forecast for growth in the second

879
00:42:55,160 --> 00:42:58,200
Speaker 5: half of the year, while moving back into positive territory,

880
00:42:58,239 --> 00:43:00,680
Speaker 5: a one and a half percent growth rate is is

881
00:43:01,120 --> 00:43:03,560
Speaker 5: well below the bare minimum. Let's say that you should

882
00:43:03,560 --> 00:43:06,840
Speaker 5: expect for a developed economy one percent from productivity gains

883
00:43:06,880 --> 00:43:10,319
Speaker 5: one percent from population growth, so two percent is really

884
00:43:10,360 --> 00:43:13,200
Speaker 5: the minimum, and we're expected to fall below that, so

885
00:43:13,719 --> 00:43:17,799
Speaker 5: it's essentially a non accelerating economy. Then you layer on

886
00:43:17,920 --> 00:43:20,959
Speaker 5: the upside risks of price pressures, which I do think

887
00:43:21,080 --> 00:43:24,719
Speaker 5: will filter back in as tariffs become more solidified in

888
00:43:24,800 --> 00:43:28,239
Speaker 5: terms of their implementation, and stagflation is going to be

889
00:43:28,320 --> 00:43:31,000
Speaker 5: a very real scenario when you think about what keeps

890
00:43:31,000 --> 00:43:33,360
Speaker 5: you up at night, it's not the recessionary scenario.

891
00:43:33,760 --> 00:43:34,560
Speaker 6: There we get the.

892
00:43:34,560 --> 00:43:39,759
Speaker 5: Recovery boomed, but the stagflation scenario limits the impact of

893
00:43:39,840 --> 00:43:43,120
Speaker 5: market policy on either side and could be a lingering

894
00:43:43,160 --> 00:43:45,120
Speaker 5: scenario for years to come.

895
00:43:45,320 --> 00:43:49,480
Speaker 2: This is a major May insight, folks. Is this new

896
00:43:49,560 --> 00:43:54,920
Speaker 2: rewaighting of modest or if you're gloomy, tangible stagflation. She's

897
00:43:55,040 --> 00:43:58,359
Speaker 2: recovering from primes right now with the market opening here,

898
00:43:58,640 --> 00:44:01,920
Speaker 2: don't stop believing, Lisa Matteo, Lisa, what do you got it?

899
00:44:01,920 --> 00:44:03,640
Speaker 11: And we've got a lower open. That's what we have

900
00:44:03,760 --> 00:44:05,640
Speaker 11: right now. This is the last trading day of the month.

901
00:44:05,719 --> 00:44:07,720
Speaker 11: S and P five hundred down two tens a percent,

902
00:44:07,800 --> 00:44:10,839
Speaker 11: fourteen points, five thousand, eight hundred ninety seven, the Dow

903
00:44:10,920 --> 00:44:13,480
Speaker 11: off two tens of percent eighty five points forty two thousand,

904
00:44:13,520 --> 00:44:16,160
Speaker 11: one hundred twenty three, and the NA deck down about

905
00:44:16,160 --> 00:44:18,680
Speaker 11: two tens percent fifty five points and nineteen thousand, one

906
00:44:18,760 --> 00:44:20,799
Speaker 11: hundred and twenty taking it to the two year yield

907
00:44:20,840 --> 00:44:23,360
Speaker 11: three point nine four percent, that's little change, and the

908
00:44:23,400 --> 00:44:25,880
Speaker 11: yield on the tenure four point four two percent, that

909
00:44:26,040 --> 00:44:28,319
Speaker 11: is little change. We'll check in with commodities. We have

910
00:44:28,360 --> 00:44:30,760
Speaker 11: spot gold down about six tens of percent, three thousand,

911
00:44:30,800 --> 00:44:33,120
Speaker 11: two hundred and ninety five dollars an ounce. Over to

912
00:44:33,160 --> 00:44:35,879
Speaker 11: oil Brent crude down three tens of percent, sixty three

913
00:44:35,960 --> 00:44:38,799
Speaker 11: dollars a barrel, WTI crewed sixty dollars a barrel. The

914
00:44:38,800 --> 00:44:41,360
Speaker 11: Bloomberg dollars Spot Index up about a ten to percent,

915
00:44:41,600 --> 00:44:44,080
Speaker 11: and Bitcoin down half a percent at just above one

916
00:44:44,160 --> 00:44:47,200
Speaker 11: hundred five thousand. That is your Bloomberg opening Bell report.

917
00:44:47,320 --> 00:44:50,480
Speaker 2: All in, Tom, thanks so much, Lisa, greatly appreciate that. Again,

918
00:44:50,560 --> 00:44:53,359
Speaker 2: negative one twenty six on the Dow Vix, not out

919
00:44:53,400 --> 00:44:56,440
Speaker 2: your twenty but getting there again. The presidential press conference

920
00:44:56,840 --> 00:44:59,000
Speaker 2: with mister I guess I'm calling it a press conference.

921
00:44:59,000 --> 00:45:01,440
Speaker 2: I think it's okay. With Elon Musk, we'll see that

922
00:45:01,480 --> 00:45:05,359
Speaker 2: at one thirty. An important tweet here in China an

923
00:45:05,360 --> 00:45:07,560
Speaker 2: hour an hour and a half ago. Maybe we'll get more.

924
00:45:07,800 --> 00:45:11,319
Speaker 2: Lindsay piigser with us here. Lindsey a lot of and

925
00:45:11,400 --> 00:45:13,800
Speaker 2: I sort of like the chart. It's an elegant chart.

926
00:45:14,280 --> 00:45:19,879
Speaker 2: Continuing claims reach out to a new worser, going back

927
00:45:19,920 --> 00:45:25,080
Speaker 2: to the pandemic, going back to twenty twenty two, twenty one.

928
00:45:25,440 --> 00:45:30,200
Speaker 2: Is there a significance at once twice three four five

929
00:45:30,400 --> 00:45:34,840
Speaker 2: On the six try we break through nineteen hundred on claims.

930
00:45:36,080 --> 00:45:38,759
Speaker 5: I think the claims data wall well, very volatile, has

931
00:45:38,840 --> 00:45:44,040
Speaker 5: been more indicative of this slow loss of momentum in

932
00:45:44,080 --> 00:45:47,000
Speaker 5: the labor market. The second part of the labor equation,

933
00:45:47,200 --> 00:45:51,120
Speaker 5: fears about losing one's job, is not overly robust at

934
00:45:51,200 --> 00:45:54,240
Speaker 5: this point, and when we look at the job creation component,

935
00:45:54,360 --> 00:45:58,319
Speaker 5: that's still relatively positive as well, again down from an

936
00:45:58,280 --> 00:46:01,800
Speaker 5: earlier more robust pace. We're talking about second derivative decline here,

937
00:46:02,080 --> 00:46:05,280
Speaker 5: But overall, the labor market picture is still very solid,

938
00:46:05,320 --> 00:46:09,120
Speaker 5: and that's the component that continues to support the momentum

939
00:46:09,200 --> 00:46:12,400
Speaker 5: of the consumer out in the marketplace. This thesis of

940
00:46:12,480 --> 00:46:15,439
Speaker 5: resilience on the part of the consumer, it's coming from

941
00:46:15,440 --> 00:46:18,719
Speaker 5: these ongoing solid conditions in the labor market. So I'm

942
00:46:18,760 --> 00:46:23,040
Speaker 5: not overly concerned about the volatility of the continuing or

943
00:46:23,080 --> 00:46:24,520
Speaker 5: initial jobless claims data.

944
00:46:25,239 --> 00:46:29,160
Speaker 4: So the consumer is resilient. But we keep hearing about

945
00:46:29,560 --> 00:46:33,960
Speaker 4: a bifurcated view of the consumer. The higher ends doing fine,

946
00:46:34,000 --> 00:46:37,080
Speaker 4: maybe even better than fine, and the lower ends really

947
00:46:37,160 --> 00:46:40,799
Speaker 4: facing the challenges out there, how sustainable is that?

948
00:46:41,840 --> 00:46:45,120
Speaker 5: Well, we are facing challenges. I don't want to over

949
00:46:45,360 --> 00:46:48,120
Speaker 5: sell the strength of the consumer. The average American, the

950
00:46:48,120 --> 00:46:51,560
Speaker 5: average household is feeling pain from higher prices over the

951
00:46:51,640 --> 00:46:55,560
Speaker 5: past years, higher borrowing costs, the resumption of student debt payments,

952
00:46:55,560 --> 00:46:58,120
Speaker 5: and now you layer on the fear of changes to

953
00:46:58,160 --> 00:46:59,880
Speaker 5: trade policy or additional tariffs.

954
00:47:00,120 --> 00:47:01,279
Speaker 6: There absolutely is.

955
00:47:01,280 --> 00:47:03,800
Speaker 5: Pain being felt, and we see that in that loss

956
00:47:03,800 --> 00:47:08,000
Speaker 5: of momentum. But nominally, across the board, consumers are still spending.

957
00:47:08,040 --> 00:47:10,239
Speaker 5: Now you're right in the middle and the upper end

958
00:47:10,320 --> 00:47:13,680
Speaker 5: of the income spectrum, we see consumers benefiting more from

959
00:47:13,760 --> 00:47:17,040
Speaker 5: this massive run up in household net worth thanks to

960
00:47:17,040 --> 00:47:20,440
Speaker 5: an accumulation of asset prices which the lower end is

961
00:47:20,520 --> 00:47:24,640
Speaker 5: largely precluded from enjoying. Just statistically speaking, they're less likely

962
00:47:24,680 --> 00:47:26,680
Speaker 5: to have a stake in the equity market, less likely

963
00:47:26,719 --> 00:47:29,839
Speaker 5: to own property, and so again having enjoyed this run

964
00:47:29,920 --> 00:47:33,200
Speaker 5: up in household net worth that many Americans have. But

965
00:47:33,400 --> 00:47:37,080
Speaker 5: when we look where consumers are spending, even those at

966
00:47:37,080 --> 00:47:39,840
Speaker 5: the lower end are still benefiting from that more organic

967
00:47:39,920 --> 00:47:44,799
Speaker 5: growth in income from the access to additional short term

968
00:47:44,800 --> 00:47:47,560
Speaker 5: spending options such as buy now, pay later four oh

969
00:47:47,560 --> 00:47:51,839
Speaker 5: one K hardship withdrawals an intergenerational wealth transfer, so there

970
00:47:51,880 --> 00:47:56,400
Speaker 5: are still a number of inorganic factors supporting consumers. But

971
00:47:56,920 --> 00:48:00,239
Speaker 5: even at the lower end, income growth component is really

972
00:48:00,280 --> 00:48:01,200
Speaker 5: a positive notion.

973
00:48:01,440 --> 00:48:03,680
Speaker 2: I hate you. I've got eight more questions in no time,

974
00:48:03,760 --> 00:48:07,280
Speaker 2: Lindsay Pigs, thank you so much, Chief Economists and Steve

975
00:48:07,320 --> 00:48:10,360
Speaker 2: O my Economists of the Year. Last year, her optimism

976
00:48:10,760 --> 00:48:13,840
Speaker 2: on the economy really measured. She was just really, really,

977
00:48:13,880 --> 00:48:17,560
Speaker 2: really good job day to day, grinding out the view

978
00:48:17,600 --> 00:48:21,280
Speaker 2: for the crystal ball and this American economy.

979
00:48:21,520 --> 00:48:25,440
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

980
00:48:25,480 --> 00:48:28,759
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

981
00:48:28,880 --> 00:48:31,839
Speaker 1: with the Bloomberg Business app. You can also listen live

982
00:48:31,920 --> 00:48:35,520
Speaker 1: on Amazon Alexa from our flagship New York station. Just

983
00:48:35,560 --> 00:48:39,319
Speaker 1: say Alexa play Bloomberg eleven thirty something different right now.

984
00:48:39,320 --> 00:48:43,720
Speaker 2: Philip Deal joins as president of US Money Reserve. Also

985
00:48:43,840 --> 00:48:47,040
Speaker 2: Tory duty at the US men is public service to

986
00:48:47,120 --> 00:48:48,920
Speaker 2: the nation. Showed he could join us here. It's on

987
00:48:49,040 --> 00:48:52,759
Speaker 2: gold and you know the usual krugarands. Yeah, you know that,

988
00:48:53,560 --> 00:48:56,560
Speaker 2: Philip dial Just to cut to the chase, what's the

989
00:48:56,600 --> 00:49:02,640
Speaker 2: biggest misconception Lisa Matteo, and I'm keen about the US Mint.

990
00:49:04,719 --> 00:49:08,520
Speaker 9: About the US Mint, well, it's a fortune five hundred

991
00:49:09,080 --> 00:49:15,440
Speaker 9: sized company has a marketing and and manufacturing component, but

992
00:49:15,440 --> 00:49:19,520
Speaker 9: it also protects the gold at Fort Knock, so that's

993
00:49:19,560 --> 00:49:21,160
Speaker 9: one of its major claims to fame.

994
00:49:22,360 --> 00:49:24,960
Speaker 2: Is a penny going away? Excuse me?

995
00:49:25,120 --> 00:49:26,440
Speaker 4: Yeah, that's a good question, I think.

996
00:49:26,800 --> 00:49:27,839
Speaker 2: Phil, What do you think about?

997
00:49:27,920 --> 00:49:28,040
Speaker 8: Mean?

998
00:49:28,080 --> 00:49:30,480
Speaker 2: Come on, I had a coin collection. Did you have

999
00:49:30,520 --> 00:49:33,240
Speaker 2: a coin collection? Phil? Did you have a little punching

1000
00:49:33,320 --> 00:49:34,520
Speaker 2: blue things on the floor?

1001
00:49:34,800 --> 00:49:37,360
Speaker 9: Director of the United States meant then I did.

1002
00:49:37,960 --> 00:49:41,000
Speaker 4: Ye, not a big coin collection. What is happening with

1003
00:49:41,040 --> 00:49:42,920
Speaker 4: the US penny? Do we have any We have a

1004
00:49:43,080 --> 00:49:44,080
Speaker 4: conclusion there.

1005
00:49:45,000 --> 00:49:50,280
Speaker 9: Yes, US penny's going away by executive order. The President

1006
00:49:50,440 --> 00:49:55,120
Speaker 9: has ordered the penny production to stop. The penny is

1007
00:49:55,160 --> 00:49:59,279
Speaker 9: going to continue in circulation. It's not being demonetized, right,

1008
00:49:59,320 --> 00:50:02,440
Speaker 9: but I think a period of a few years it's

1009
00:50:02,560 --> 00:50:06,120
Speaker 9: going to it's gonna wind its way out of the

1010
00:50:06,160 --> 00:50:09,759
Speaker 9: economy and right be an item of the past, just

1011
00:50:09,800 --> 00:50:10,640
Speaker 9: like the halfpenny.

1012
00:50:10,760 --> 00:50:13,239
Speaker 2: Is you Phil? I'm gonna cut to the chase. The

1013
00:50:13,280 --> 00:50:16,680
Speaker 2: whole thing with gold, the perception as well as a

1014
00:50:16,680 --> 00:50:19,000
Speaker 2: bunch of flakes. You're not a flake, You're like an

1015
00:50:19,080 --> 00:50:23,200
Speaker 2: actual adult with real world experience with this. What's the

1016
00:50:23,239 --> 00:50:28,880
Speaker 2: most efficacious way to acquire tangible gold? Now, like my

1017
00:50:29,000 --> 00:50:31,480
Speaker 2: mother bought Kruger rans a million years ago.

1018
00:50:33,440 --> 00:50:36,200
Speaker 9: Well, of course, being a former director of the United

1019
00:50:36,239 --> 00:50:40,320
Speaker 9: States meant I like American Eagles the gold coin of

1020
00:50:40,360 --> 00:50:44,160
Speaker 9: the United States, and it has been you know, it

1021
00:50:44,239 --> 00:50:48,040
Speaker 9: dates back to the mid nineteen eighties. And my company

1022
00:50:48,120 --> 00:50:51,600
Speaker 9: US Money Reserve sells eagles and that's our biggest seller,

1023
00:50:51,960 --> 00:50:55,160
Speaker 9: but we have a wide range of products as well.

1024
00:50:55,200 --> 00:50:59,040
Speaker 9: But the Eagle is legal tender of the United States

1025
00:50:59,080 --> 00:51:01,600
Speaker 9: and it's back by the full faith and credit of

1026
00:51:01,600 --> 00:51:04,640
Speaker 9: the United States for its purity of gold.

1027
00:51:04,880 --> 00:51:08,600
Speaker 4: Philip, why has gold been on such a tear recently.

1028
00:51:10,080 --> 00:51:12,759
Speaker 9: Well, there's a lot of history behind gold, of course,

1029
00:51:12,800 --> 00:51:17,400
Speaker 9: about three thousand years history of being wealth insurance essentially.

1030
00:51:18,080 --> 00:51:22,520
Speaker 9: And the story begins the day after the Harmas attack

1031
00:51:22,600 --> 00:51:28,680
Speaker 9: on Israel, and that really illustrates one of the main

1032
00:51:28,800 --> 00:51:33,200
Speaker 9: drivers of gold prices over decades, hundreds of years, and

1033
00:51:33,239 --> 00:51:39,239
Speaker 9: that is war and great economic uncertainty. And as the

1034
00:51:39,280 --> 00:51:43,720
Speaker 9: war spread through the Middle East, then gold really began

1035
00:51:43,800 --> 00:51:48,399
Speaker 9: its ascent. The second major factor was in November of

1036
00:51:48,520 --> 00:51:52,560
Speaker 9: twenty twenty three. About a month later, we got the

1037
00:51:52,600 --> 00:51:56,800
Speaker 9: first report good inflation report from the Department of Commerce,

1038
00:51:57,440 --> 00:52:02,640
Speaker 9: and with that report began that the Fed would began

1039
00:52:02,760 --> 00:52:07,200
Speaker 9: lowering interest rates, and gold immediately responded to that. And

1040
00:52:07,239 --> 00:52:09,920
Speaker 9: I'd say, there are other factors, but the other major

1041
00:52:10,000 --> 00:52:15,160
Speaker 9: factor is central banks have buying gold hand over fist

1042
00:52:15,239 --> 00:52:18,160
Speaker 9: for the last three years. Yes, and that has been

1043
00:52:18,200 --> 00:52:19,000
Speaker 9: a major driver.

1044
00:52:19,840 --> 00:52:23,719
Speaker 2: So one more question. I think it's really important, and

1045
00:52:24,120 --> 00:52:27,400
Speaker 2: Paul's been much better at this moment. I go Mental

1046
00:52:27,520 --> 00:52:31,040
Speaker 2: filled deal like Texas A and m Mental. He said,

1047
00:52:31,080 --> 00:52:33,560
Speaker 2: we got another valmore. No, I don't know what that's

1048
00:52:33,600 --> 00:52:37,160
Speaker 2: about it, Phil, I go Texas A and m Mental.

1049
00:52:37,200 --> 00:52:41,799
Speaker 2: When people tell me bitcoin is a gold equivalent, how

1050
00:52:41,800 --> 00:52:44,800
Speaker 2: do you respond, is a former head of the Mint,

1051
00:52:45,080 --> 00:52:48,319
Speaker 2: you're actually an adult in the gold coin business. When

1052
00:52:48,400 --> 00:52:52,520
Speaker 2: somebody tells you bitcoin is a gold eagle equivalent.

1053
00:52:54,440 --> 00:52:56,600
Speaker 9: Yeah, I try to be more civil about it.

1054
00:52:56,600 --> 00:52:59,520
Speaker 2: But my reaction, my intern reaction is like yours.

1055
00:53:00,880 --> 00:53:06,000
Speaker 9: I mean, it's sort of ridiculous because gold is you know,

1056
00:53:06,080 --> 00:53:09,960
Speaker 9: for hundreds of thousands of years, has been held and

1057
00:53:10,080 --> 00:53:13,640
Speaker 9: today is being held by central banks and individuals as

1058
00:53:13,680 --> 00:53:16,480
Speaker 9: a store of value, which means you can count on

1059
00:53:16,520 --> 00:53:20,719
Speaker 9: its value. And can you do that with bitcoin? I mean,

1060
00:53:20,840 --> 00:53:23,200
Speaker 9: what over the last several months it's gone up and

1061
00:53:23,280 --> 00:53:31,680
Speaker 9: down thirty So no, it's not competition for gold at all.

1062
00:53:32,280 --> 00:53:35,279
Speaker 9: And people who would put it in I mean, you

1063
00:53:35,320 --> 00:53:38,680
Speaker 9: can't put it in your IRA, but it's not included

1064
00:53:38,719 --> 00:53:44,359
Speaker 9: in federal government policy. But even if you could, I mean,

1065
00:53:44,400 --> 00:53:48,319
Speaker 9: you'd have mighty disappointments, unlike with gold. I mean, so

1066
00:53:48,360 --> 00:53:50,480
Speaker 9: what we've had with gold is sort of the best

1067
00:53:50,480 --> 00:53:54,799
Speaker 9: of both worlds. Gold I've been seen for forever as

1068
00:53:54,880 --> 00:54:00,879
Speaker 9: bad news investment, but it's been performing extraordinarily and good times.

1069
00:54:01,400 --> 00:54:04,040
Speaker 2: Your political hitter down there in Texas, phil Deal, I

1070
00:54:04,120 --> 00:54:08,080
Speaker 2: need a and m longhorns Thanksgiving Day. That's what we

1071
00:54:08,200 --> 00:54:11,520
Speaker 2: need to return here, Philip Deal with us money Reserve

1072
00:54:11,600 --> 00:54:14,000
Speaker 2: of bustin Texas. Thank you for the time there.

1073
00:54:14,440 --> 00:54:19,319
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,

1074
00:54:19,400 --> 00:54:23,200
Speaker 1: and anywhere else you get your podcasts. Listen live each

1075
00:54:23,239 --> 00:54:27,080
Speaker 1: weekday seven to ten am Eastern on Bloomberg dot Com,

1076
00:54:27,200 --> 00:54:31,040
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app.

1077
00:54:31,320 --> 00:54:34,440
Speaker 1: You can also watch us live every weekday on YouTube

1078
00:54:34,719 --> 00:54:36,760
Speaker 1: and always on the Bloomberg terminal