1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:22,000 Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App. 4 00:00:22,360 --> 00:00:25,680 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:25,760 --> 00:00:27,000 Speaker 1: us live on YouTube. 6 00:00:27,120 --> 00:00:29,360 Speaker 2: This is the money Conversation of the day. Tell me 7 00:00:29,560 --> 00:00:33,520 Speaker 2: your shows up with Wealth Consulting Group. But it's got 8 00:00:33,720 --> 00:00:37,519 Speaker 2: a note, a research note with twelve items. Wow, it's 9 00:00:37,600 --> 00:00:40,839 Speaker 2: Bloomberg Surveillance. Tell we don't have time for twelve items. 10 00:00:41,240 --> 00:00:45,839 Speaker 2: Of the twelve items that you mentioned, sentiment, policy, fundamentals, 11 00:00:46,159 --> 00:00:48,840 Speaker 2: which is the one that gloom crew most gets wrong. 12 00:00:50,000 --> 00:00:52,240 Speaker 3: I think it's got to be earnings front and center, 13 00:00:52,280 --> 00:00:55,160 Speaker 3: and I think they're probably more important here Tom than 14 00:00:55,160 --> 00:01:00,200 Speaker 3: they have been given what was a public data out. 15 00:01:00,240 --> 00:01:03,560 Speaker 3: And I have to say technology is leading the charge 16 00:01:03,600 --> 00:01:06,720 Speaker 3: here with the best revenue growth, some of the best 17 00:01:06,720 --> 00:01:10,520 Speaker 3: margins in the market, and the best earnings growth. And 18 00:01:10,560 --> 00:01:13,120 Speaker 3: that's why we're willing to pay a higher multiple for 19 00:01:13,160 --> 00:01:13,800 Speaker 3: these companies. 20 00:01:14,600 --> 00:01:16,640 Speaker 4: Well, we were paying to hire multiple for these companies, 21 00:01:16,680 --> 00:01:19,200 Speaker 4: and that's got a lot of people concerned. Do you 22 00:01:19,240 --> 00:01:22,480 Speaker 4: believe the underlying cash flow and earnings are there to 23 00:01:22,480 --> 00:01:24,560 Speaker 4: support these valuations. 24 00:01:24,160 --> 00:01:27,440 Speaker 3: One hundred percent. And so I think investors, while this 25 00:01:27,600 --> 00:01:31,920 Speaker 3: hopes and dreams are well placed for those very reasons. 26 00:01:31,959 --> 00:01:35,119 Speaker 3: It's all about the quality. And we've talked about this before, Tom. 27 00:01:35,160 --> 00:01:37,839 Speaker 3: I don't think this is an environment where the Bodie 28 00:01:37,880 --> 00:01:40,480 Speaker 3: Marcus Kine text is really going to help you. This 29 00:01:40,520 --> 00:01:43,200 Speaker 3: is the Charles Kindelberger text that you've got to. 30 00:01:43,240 --> 00:01:46,559 Speaker 2: Do stuff to explain to Charles kindelbergers. 31 00:01:46,640 --> 00:01:53,000 Speaker 3: So the late famous economists who penned the book Mania's 32 00:01:53,040 --> 00:01:56,240 Speaker 3: Panics and Crashes. And I think that this, if we're right, 33 00:01:56,880 --> 00:02:01,600 Speaker 3: is the Mania development stage. That's the part of the framework. 34 00:02:01,760 --> 00:02:05,480 Speaker 2: But the fear crew Paul in the research notes structural fear, 35 00:02:06,360 --> 00:02:10,840 Speaker 2: and that crew of legitimate people are worried about the 36 00:02:10,880 --> 00:02:14,320 Speaker 2: back end of the Charles Kindelberger book, which I'm. 37 00:02:14,200 --> 00:02:17,160 Speaker 4: Just googling right now, like the rest of the audience 38 00:02:17,160 --> 00:02:21,560 Speaker 4: out there. Yeah, talk to us about those earnings again, 39 00:02:21,600 --> 00:02:23,679 Speaker 4: and what was your takeaway from this earning sego. We're 40 00:02:23,720 --> 00:02:25,079 Speaker 4: just kind of finishing up here. 41 00:02:25,200 --> 00:02:27,840 Speaker 3: So I mean it depends on what provider you look at. 42 00:02:27,880 --> 00:02:30,240 Speaker 3: We look at all them, fact said is probably top 43 00:02:30,360 --> 00:02:32,600 Speaker 3: top of mind and not here. 44 00:02:32,520 --> 00:02:33,280 Speaker 2: Not at Bloomberg. 45 00:02:33,320 --> 00:02:35,880 Speaker 3: Of course I shouldn't say those things, but we also 46 00:02:35,919 --> 00:02:39,040 Speaker 3: look at Bloomberg as well. We're loyal followers and they're 47 00:02:39,040 --> 00:02:42,200 Speaker 3: coming in better than expected. And I think that speaks 48 00:02:42,240 --> 00:02:45,840 Speaker 3: to the analyst bar which is still structurally too low. 49 00:02:45,960 --> 00:02:48,800 Speaker 3: And so that's why I like to say it's really 50 00:02:48,840 --> 00:02:52,160 Speaker 3: the fundamental tech dominance that is supporting this market here. 51 00:02:52,400 --> 00:02:54,320 Speaker 5: How about this Federal Reserve here? 52 00:02:54,440 --> 00:02:57,200 Speaker 4: We had a FED cutting interest rates in the September meeting, 53 00:02:57,400 --> 00:02:59,880 Speaker 4: but then kind of interjected a little bit of uncertainty 54 00:03:00,400 --> 00:03:03,519 Speaker 4: to December. Do you care about timing when these rates pets? 55 00:03:03,560 --> 00:03:05,679 Speaker 4: Are you happy just to say I know my FED 56 00:03:05,760 --> 00:03:07,920 Speaker 4: is cutting rates? Are that Timing's not as important to me. 57 00:03:08,160 --> 00:03:08,840 Speaker 5: It's a good point. 58 00:03:08,880 --> 00:03:10,920 Speaker 3: So I am more of a directional guy than a 59 00:03:10,960 --> 00:03:14,840 Speaker 3: false precisionist, and so I think that's right to expect 60 00:03:15,400 --> 00:03:16,720 Speaker 3: probably another cut this year. 61 00:03:17,520 --> 00:03:19,080 Speaker 5: Of the sixty five. 62 00:03:18,960 --> 00:03:22,000 Speaker 3: Percent that are in that camp, I would be among them. 63 00:03:22,040 --> 00:03:25,640 Speaker 3: And I think what's supporting another cut before we close 64 00:03:26,160 --> 00:03:30,359 Speaker 3: twenty five is the notion that the labor market is weakening. 65 00:03:30,360 --> 00:03:30,680 Speaker 2: Here. 66 00:03:30,840 --> 00:03:35,760 Speaker 3: That's part of the margin story guys powering earnings, but 67 00:03:35,880 --> 00:03:38,560 Speaker 3: also the bond market is telling us the message here 68 00:03:38,600 --> 00:03:39,840 Speaker 3: fed you got to cut. 69 00:03:40,640 --> 00:03:43,120 Speaker 4: How about are there sectors here that screen well for 70 00:03:43,160 --> 00:03:45,440 Speaker 4: you guys, because a lot of stuff's expensive, a lot 71 00:03:45,480 --> 00:03:46,360 Speaker 4: of stuff is lagged. 72 00:03:46,400 --> 00:03:46,520 Speaker 3: You know. 73 00:03:46,560 --> 00:03:48,400 Speaker 4: You look at the four hundred and ninety three names 74 00:03:48,440 --> 00:03:49,480 Speaker 4: the SMP happened. 75 00:03:49,280 --> 00:03:50,560 Speaker 5: There's a lot of laggards there. 76 00:03:50,800 --> 00:03:51,120 Speaker 2: Yeah. 77 00:03:51,240 --> 00:03:55,480 Speaker 3: So generally we have strategically been of the mind that 78 00:03:55,800 --> 00:03:59,200 Speaker 3: we'd be shopping the sales in the pro cyclical economy 79 00:03:59,640 --> 00:04:02,520 Speaker 3: sense of areas of the market, and that's the game 80 00:04:02,560 --> 00:04:05,760 Speaker 3: plan we're sticking to it. Tech is still at the 81 00:04:05,800 --> 00:04:09,000 Speaker 3: top of our list, but we also like old economy industrials, 82 00:04:09,760 --> 00:04:13,440 Speaker 3: materials I think are showing some promise, probably more A 83 00:04:13,520 --> 00:04:16,400 Speaker 3: twenty twenty sixth story at the stage. 84 00:04:16,360 --> 00:04:20,880 Speaker 2: Tell you as you're with us here with Wealth Consulting Group, 85 00:04:20,920 --> 00:04:25,400 Speaker 2: with just a brilliant note pushing back against the gloom crew. 86 00:04:26,080 --> 00:04:28,680 Speaker 2: There's beginning a partition. I felt it this weekend, and 87 00:04:28,760 --> 00:04:31,039 Speaker 2: some of it is the politics of New York City 88 00:04:31,080 --> 00:04:32,200 Speaker 2: and frankly the nation. 89 00:04:32,920 --> 00:04:39,039 Speaker 6: There's people in stock market prospering and everyone else. Do 90 00:04:39,120 --> 00:04:44,440 Speaker 6: you sense that dichotomy in your practice Wealth Consulting Group? 91 00:04:44,720 --> 00:04:45,599 Speaker 5: Absolutely so. 92 00:04:45,720 --> 00:04:47,880 Speaker 3: I think it's important Tom to your point to parse 93 00:04:47,960 --> 00:04:51,960 Speaker 3: through the consumer sentiment data, and once you do that, 94 00:04:52,240 --> 00:04:55,719 Speaker 3: trend reveals itself and it's really the asset owners, and 95 00:04:55,760 --> 00:04:59,440 Speaker 3: those are the people we do business with, our clients 96 00:04:59,600 --> 00:05:04,120 Speaker 3: that have actually been benefiting from this powerful wealth effect 97 00:05:04,160 --> 00:05:08,080 Speaker 3: and the surge in the stock market. And so I 98 00:05:08,120 --> 00:05:12,560 Speaker 3: think the best strategy here is to participate in these markets. 99 00:05:12,600 --> 00:05:15,680 Speaker 3: Even at these levels. We're at the midpoint between our 100 00:05:15,720 --> 00:05:18,800 Speaker 3: baseline and uber bolish case of seven thousand. I don't 101 00:05:18,800 --> 00:05:20,799 Speaker 3: think we're going to stay down here for that much longer. 102 00:05:20,800 --> 00:05:21,880 Speaker 3: We're probably going to in the year. 103 00:05:21,880 --> 00:05:25,480 Speaker 4: In a high note, alternatives alts as the kids call them, 104 00:05:25,880 --> 00:05:28,159 Speaker 4: hedge funds, private equity, private credit. 105 00:05:29,120 --> 00:05:31,400 Speaker 5: How did they fit in with your discussions with your clients. 106 00:05:31,880 --> 00:05:37,960 Speaker 3: So we do have liquid alternative strategy that serves as 107 00:05:38,920 --> 00:05:41,479 Speaker 3: a kind of non correlated bucket to some of the 108 00:05:41,520 --> 00:05:44,559 Speaker 3: traditional asset classes like stocks and bonds, and they've done 109 00:05:45,120 --> 00:05:47,960 Speaker 3: their job very well this year, and they include things 110 00:05:48,080 --> 00:05:52,760 Speaker 3: like bitcoin and gold and listed infrastructure. We've got an 111 00:05:52,760 --> 00:05:56,679 Speaker 3: absolute return tracker in there as well, and really powered 112 00:05:56,680 --> 00:05:59,719 Speaker 3: through the break in the market back in April and 113 00:05:59,760 --> 00:06:02,560 Speaker 3: have been holding their own And I think it just 114 00:06:02,640 --> 00:06:06,760 Speaker 3: generally tells the story that diversification is really the only relaunch. 115 00:06:06,839 --> 00:06:07,400 Speaker 2: Guys. 116 00:06:08,160 --> 00:06:10,520 Speaker 4: All right, Tally, So, I guess the real question here 117 00:06:10,560 --> 00:06:12,360 Speaker 4: is anything keep you up at night? 118 00:06:12,640 --> 00:06:14,839 Speaker 5: Or is this just cracking along here? 119 00:06:15,000 --> 00:06:17,520 Speaker 3: Well, it was the government shutdown. But guys, I got 120 00:06:17,520 --> 00:06:19,960 Speaker 3: to say, these Bloomberg appearances are the lucky charm for 121 00:06:20,040 --> 00:06:22,960 Speaker 3: markets because here it looks like we're staring at a 122 00:06:23,040 --> 00:06:25,600 Speaker 3: reopening of the government, and I think we rally into 123 00:06:25,640 --> 00:06:26,000 Speaker 3: your end. 124 00:06:26,720 --> 00:06:28,640 Speaker 2: They just told me I can't take off any more 125 00:06:28,720 --> 00:06:31,480 Speaker 2: days to the end of the year. We just keep 126 00:06:31,520 --> 00:06:34,760 Speaker 2: going up. Yep. We protect the copyright of all of 127 00:06:34,800 --> 00:06:37,880 Speaker 2: our guests. Tally Legieri. I can't say enough about his 128 00:06:38,000 --> 00:06:41,600 Speaker 2: research note. Look for that from Wealth Consulting Group or 129 00:06:41,680 --> 00:06:45,200 Speaker 2: he has chief market strategist. Stay with us. More from 130 00:06:45,240 --> 00:06:47,920 Speaker 2: Bloomberg Surveillance coming up after this. 131 00:06:55,160 --> 00:06:58,720 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 132 00:06:58,800 --> 00:07:01,960 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 133 00:07:02,040 --> 00:07:05,719 Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app or 134 00:07:05,839 --> 00:07:09,240 Speaker 1: watch us live on YouTube Blackrock Amanda Line and gets 135 00:07:09,240 --> 00:07:11,640 Speaker 1: to start at on a Monday in a really. 136 00:07:11,320 --> 00:07:15,680 Speaker 2: Important week as well. I don't read your note. I 137 00:07:15,680 --> 00:07:20,200 Speaker 2: did a word search, okay, issuers, issuings and all that. 138 00:07:20,520 --> 00:07:23,520 Speaker 2: I mean, you're so experienced in this before black Rock 139 00:07:23,560 --> 00:07:25,760 Speaker 2: and at black Rock. Are we going to get a 140 00:07:25,840 --> 00:07:30,040 Speaker 2: tsunami of billions of dollars of debt being issued? 141 00:07:30,200 --> 00:07:32,560 Speaker 7: Good morning, Thank you for having me, I would say, Tom, 142 00:07:32,560 --> 00:07:33,240 Speaker 7: it's a great question. 143 00:07:33,280 --> 00:07:34,840 Speaker 8: It's kind of already in process. 144 00:07:35,280 --> 00:07:38,680 Speaker 7: Twenty twenty five is on pace to set the most 145 00:07:38,720 --> 00:07:41,880 Speaker 7: active year since the pandemic era boom of twenty twenty, 146 00:07:41,920 --> 00:07:44,800 Speaker 7: which was just off the charts almost two trillion of 147 00:07:44,920 --> 00:07:48,280 Speaker 7: USIG issuance. I think what's more notable to us outside 148 00:07:48,280 --> 00:07:51,040 Speaker 7: of the robust headline figure has been the sector composition. 149 00:07:51,360 --> 00:07:54,200 Speaker 7: We've seen sectors that historically have contributed a lot of 150 00:07:54,200 --> 00:07:56,880 Speaker 7: issues like healthcare kind of pair back a bit, and 151 00:07:57,000 --> 00:08:00,280 Speaker 7: tech has been off the charts in terms of jenating 152 00:08:00,280 --> 00:08:02,200 Speaker 7: a new record, and that's something that's been notable. 153 00:08:02,480 --> 00:08:05,600 Speaker 2: We don't talk about it, folks, but it's prodigious Villanova 154 00:08:05,640 --> 00:08:09,520 Speaker 2: accounting abilities, price, Waterhouse whatever. I don't know what vintage 155 00:08:09,600 --> 00:08:12,200 Speaker 2: they were. Then you know it's like Ernst and winning 156 00:08:12,320 --> 00:08:14,760 Speaker 2: the old Nets I go, and then Golden Sex and 157 00:08:14,800 --> 00:08:17,680 Speaker 2: now with Blackrock. I mean, you're incredibly steeped in this, 158 00:08:18,480 --> 00:08:24,040 Speaker 2: can you, under Merton Mdigliani, can big tech substitute equity 159 00:08:24,040 --> 00:08:28,200 Speaker 2: issue ins and equity excitement by putting out debt? How 160 00:08:28,240 --> 00:08:29,360 Speaker 2: do you treat their debt? 161 00:08:29,520 --> 00:08:31,679 Speaker 8: So I think there are two things to consider. 162 00:08:31,760 --> 00:08:34,520 Speaker 7: One is a lot of these companies are still in 163 00:08:34,240 --> 00:08:37,480 Speaker 7: a net cash position, which is important. So they're adding 164 00:08:37,520 --> 00:08:40,240 Speaker 7: debt to their capital structure, but their leverage is still 165 00:08:40,280 --> 00:08:42,599 Speaker 7: incredibly low because they have all of this cash on 166 00:08:42,640 --> 00:08:45,360 Speaker 7: their baland yet the question is why that's left over 167 00:08:45,400 --> 00:08:48,840 Speaker 7: from the pre twenty seventeen era when cash was generated 168 00:08:48,840 --> 00:08:51,080 Speaker 7: overseas and then it needed to be taxed to be 169 00:08:51,200 --> 00:08:54,640 Speaker 7: repatriated back to the US. So there's still some cash 170 00:08:54,679 --> 00:08:57,520 Speaker 7: over there, is the point. The second point is that 171 00:08:57,960 --> 00:09:00,480 Speaker 7: there's a bit of an upper bound to how big 172 00:09:00,520 --> 00:09:03,840 Speaker 7: these capital structures can get. So in our note, which 173 00:09:04,400 --> 00:09:07,160 Speaker 7: you know we outline, we estimate that if you look 174 00:09:07,160 --> 00:09:10,520 Speaker 7: at just like the mag seven X Tesla, so removing autos, 175 00:09:10,800 --> 00:09:15,120 Speaker 7: there's probably an incremental four hundred billion plus of incremental 176 00:09:15,160 --> 00:09:17,640 Speaker 7: debt capacity if you just increase the gross leverage by 177 00:09:17,640 --> 00:09:20,840 Speaker 7: half a turn, really modest, that's a really large number. 178 00:09:21,000 --> 00:09:23,120 Speaker 7: But we don't expect that to be utilized because these 179 00:09:23,120 --> 00:09:26,440 Speaker 7: capital structures we think cannot get that large, and also 180 00:09:26,520 --> 00:09:29,240 Speaker 7: that deck capacity will just be used gradually over time 181 00:09:29,280 --> 00:09:30,600 Speaker 7: for strategic opportunities. 182 00:09:30,720 --> 00:09:33,640 Speaker 2: This is what surveillance is about, folks. What you just heard. 183 00:09:33,720 --> 00:09:37,640 Speaker 2: There is a window and do a two pm meeting 184 00:09:38,280 --> 00:09:42,320 Speaker 2: at Blackrock with fourteen animals in the room and Amanda 185 00:09:42,400 --> 00:09:46,120 Speaker 2: begins to discuss and everybody takes notes. It's about their 186 00:09:46,160 --> 00:09:48,720 Speaker 2: ability and this is a Richard Berning word from Morgan 187 00:09:48,800 --> 00:09:53,520 Speaker 2: Stanley years ago. It's the fact that they can leverage 188 00:09:53,600 --> 00:09:57,880 Speaker 2: that's on the income statement. They can leverage to greater profits. 189 00:09:57,880 --> 00:10:01,120 Speaker 7: There's right plenty of balance sheet capacity, even in some 190 00:10:01,160 --> 00:10:03,560 Speaker 7: cases within the construct of the current debt rating, which 191 00:10:03,600 --> 00:10:05,680 Speaker 7: is at the very high end of investment grade, to 192 00:10:05,760 --> 00:10:08,800 Speaker 7: add debt to the capital structure. Our view is that 193 00:10:09,200 --> 00:10:10,920 Speaker 7: this reminds me actually a lot of when I covered 194 00:10:10,920 --> 00:10:13,720 Speaker 7: pharma in two thousand and nine. There was a wave 195 00:10:13,760 --> 00:10:16,800 Speaker 7: of m and A as pharma combined with biotech and 196 00:10:16,880 --> 00:10:19,440 Speaker 7: CFOs and treasurers made the conscious decision to take a 197 00:10:19,440 --> 00:10:21,920 Speaker 7: couple of notches of downgrade to their debt rating. They 198 00:10:21,920 --> 00:10:25,120 Speaker 7: stayed comfortably within investment grade, but they added some debt 199 00:10:25,120 --> 00:10:26,000 Speaker 7: to the capital structure. 200 00:10:26,040 --> 00:10:27,760 Speaker 8: It reminds me very much of that. 201 00:10:27,880 --> 00:10:29,959 Speaker 7: But what's happening in AI and tech is obviously on 202 00:10:30,000 --> 00:10:30,960 Speaker 7: a much bigger scale. 203 00:10:31,160 --> 00:10:34,280 Speaker 4: Is your market comfortable with the amount of or the 204 00:10:34,320 --> 00:10:36,200 Speaker 4: use of proceeds here the fund AI? 205 00:10:36,320 --> 00:10:38,720 Speaker 5: Because a lot of it's kind of we're not really 206 00:10:38,760 --> 00:10:39,959 Speaker 5: sure what all this. 207 00:10:42,600 --> 00:10:43,400 Speaker 2: Proceeds. 208 00:10:43,440 --> 00:10:45,960 Speaker 7: I would say the short answer is yes. You can 209 00:10:46,000 --> 00:10:47,880 Speaker 7: see that very much in the order books. They're well 210 00:10:47,880 --> 00:10:50,600 Speaker 7: over subscribed relative to the debt deals. The second point 211 00:10:50,679 --> 00:10:53,280 Speaker 7: kind of goes back to the pharma biotech experience I 212 00:10:53,360 --> 00:10:55,640 Speaker 7: was sharing. In some cases, this is a bet on 213 00:10:55,679 --> 00:10:58,160 Speaker 7: the management team and pharma. It's not unusual to have 214 00:10:58,200 --> 00:11:00,880 Speaker 7: a thirty or forty year bond sures well after the 215 00:11:00,880 --> 00:11:03,920 Speaker 7: patent expires. In some cases, companies are betting on drug 216 00:11:03,960 --> 00:11:06,959 Speaker 7: discovery that hasn't materialized yet. So in many cases it's 217 00:11:06,960 --> 00:11:08,680 Speaker 7: a bet on the management team in the industry to 218 00:11:08,720 --> 00:11:10,480 Speaker 7: figure it out. I think there's still a lot of 219 00:11:10,480 --> 00:11:13,800 Speaker 7: open questions about who will benefit most, what's the ultimate spending, 220 00:11:13,880 --> 00:11:16,440 Speaker 7: what's the timeline. But it's very clear that there's a 221 00:11:16,480 --> 00:11:18,840 Speaker 7: shortage of computing power and there's a lot. 222 00:11:18,679 --> 00:11:22,240 Speaker 4: Of needs for this absent to tech names that tech 223 00:11:22,280 --> 00:11:25,240 Speaker 4: sector how's a credit quality just in the investment grade 224 00:11:25,880 --> 00:11:26,640 Speaker 4: area these days? 225 00:11:26,720 --> 00:11:30,120 Speaker 7: Sure, so half of the IG market is triple B, right, 226 00:11:30,160 --> 00:11:33,640 Speaker 7: so still really solid credit metrics. Actually, we were talking 227 00:11:33,640 --> 00:11:35,800 Speaker 7: about kind of all all of the newsflow and what's 228 00:11:35,920 --> 00:11:36,679 Speaker 7: changed over. 229 00:11:36,520 --> 00:11:37,520 Speaker 8: The past few months. 230 00:11:37,600 --> 00:11:40,679 Speaker 7: One thing that stayed the same is actually moving selectively 231 00:11:40,679 --> 00:11:43,079 Speaker 7: down in credit quality has been the right outcome double 232 00:11:43,120 --> 00:11:45,480 Speaker 7: b's So the high end of high yield have been 233 00:11:45,520 --> 00:11:47,760 Speaker 7: outperforming the low end of investment grade. 234 00:11:47,840 --> 00:11:48,120 Speaker 5: Okay. 235 00:11:48,400 --> 00:11:50,240 Speaker 7: Part of that is driven by we think we're past 236 00:11:50,320 --> 00:11:54,120 Speaker 7: peak tariff uncertainty, we see scope for growth to reaccelerate. 237 00:11:54,160 --> 00:11:55,199 Speaker 8: At the end of the day, this is. 238 00:11:55,160 --> 00:11:57,320 Speaker 7: Just a growth sensitive assea class, and we also are 239 00:11:57,400 --> 00:11:59,560 Speaker 7: past the peak head wins on rates, and so we're 240 00:11:59,600 --> 00:12:01,080 Speaker 7: still pret comfortable with that view. 241 00:12:01,360 --> 00:12:03,240 Speaker 2: I want to go back to big tech. Okay, let's 242 00:12:03,240 --> 00:12:06,120 Speaker 2: pick it. Let's pick a small company like Microsoft. They 243 00:12:06,120 --> 00:12:09,880 Speaker 2: have tons of ability to issue debt. You see no 244 00:12:10,200 --> 00:12:14,800 Speaker 2: threat to their build of cash or the fortress balance 245 00:12:14,840 --> 00:12:15,640 Speaker 2: sheet that they have. 246 00:12:15,720 --> 00:12:18,840 Speaker 7: So leaving single names aside, I think there are a 247 00:12:18,840 --> 00:12:21,440 Speaker 7: couple There are a couple of There are a couple 248 00:12:21,520 --> 00:12:23,600 Speaker 7: of tail ones at play. One is a bunch of 249 00:12:23,640 --> 00:12:26,040 Speaker 7: these companies just want to get to a net cash 250 00:12:26,360 --> 00:12:28,160 Speaker 7: neutral position versus their debt. 251 00:12:28,280 --> 00:12:29,280 Speaker 2: Catch it up with Apple Lot. 252 00:12:29,440 --> 00:12:30,559 Speaker 8: So that's been in. 253 00:12:30,480 --> 00:12:31,960 Speaker 7: Place for a couple of years for some of these 254 00:12:32,000 --> 00:12:34,280 Speaker 7: big names, and so I would say over time we 255 00:12:34,280 --> 00:12:37,120 Speaker 7: should expect those cash balances to decline slightly, but they'll 256 00:12:37,120 --> 00:12:40,319 Speaker 7: still hold larger cash balances I think relative to most sectors. 257 00:12:40,360 --> 00:12:41,960 Speaker 8: Just the cash generation warrants it. 258 00:12:42,440 --> 00:12:44,960 Speaker 7: The second is is that there is some scope probably 259 00:12:44,960 --> 00:12:47,319 Speaker 7: for ratings to drift lower, but we're starting from an 260 00:12:47,320 --> 00:12:50,680 Speaker 7: exceptionally high level double a territory for most of these companies, 261 00:12:51,200 --> 00:12:53,480 Speaker 7: and so really their cost of capital is not that 262 00:12:53,600 --> 00:12:55,360 Speaker 7: much more onerous if they took a couple of not 263 00:12:55,440 --> 00:12:55,960 Speaker 7: just down grades. 264 00:12:56,000 --> 00:12:58,280 Speaker 8: Again, I want to emphasize we don't expect that. 265 00:12:58,320 --> 00:13:00,880 Speaker 7: Capacity to be used in the near term, selectively and 266 00:13:00,920 --> 00:13:03,760 Speaker 7: gradually for strategic opportunities for premier mortals out. 267 00:13:03,600 --> 00:13:06,199 Speaker 2: There who don't understand leverage and all the other fancy 268 00:13:06,280 --> 00:13:08,840 Speaker 2: jargon you're giving us. Is next year a year to 269 00:13:08,880 --> 00:13:11,360 Speaker 2: clip coupons or for total return. 270 00:13:11,600 --> 00:13:14,480 Speaker 7: I think it's still to clip the coupons because tom 271 00:13:14,559 --> 00:13:17,200 Speaker 7: spreads at high yield, for example, still really tight below 272 00:13:17,240 --> 00:13:20,120 Speaker 7: three hundred basis points. So if we start twenty twenty six. 273 00:13:20,160 --> 00:13:22,280 Speaker 7: Anywhere in the vicinity where we are now, there's just 274 00:13:22,320 --> 00:13:24,880 Speaker 7: not a lot of room for spreads to move materially lower, 275 00:13:24,960 --> 00:13:26,520 Speaker 7: and we don't expect rates to move. 276 00:13:26,360 --> 00:13:28,319 Speaker 8: Materially lower either. So it will be about a yield 277 00:13:28,320 --> 00:13:29,359 Speaker 8: and income story. 278 00:13:29,120 --> 00:13:31,400 Speaker 2: From do the beasts like you at black Rock? Do 279 00:13:31,440 --> 00:13:33,760 Speaker 2: you talk to the full faith and credit people or 280 00:13:33,800 --> 00:13:35,920 Speaker 2: do you just hate each other across the right? 281 00:13:36,000 --> 00:13:38,439 Speaker 7: No, of course, I think the information flow in an 282 00:13:38,480 --> 00:13:40,320 Speaker 7: environment like this that's so dynamic. I would add our 283 00:13:40,320 --> 00:13:42,360 Speaker 7: equity colleagues to that afore next day. 284 00:13:45,040 --> 00:13:46,880 Speaker 8: I think we we. 285 00:13:47,280 --> 00:13:49,600 Speaker 7: I think sharing information is the way to actually have 286 00:13:49,640 --> 00:13:50,400 Speaker 7: a competitive ad mission. 287 00:13:50,440 --> 00:13:53,760 Speaker 2: She nailed That means still it's great. I'm gone them. 288 00:13:54,200 --> 00:13:57,520 Speaker 2: That was amazing brief, folks. Seriously, folks, an amazing brief 289 00:13:57,559 --> 00:14:01,480 Speaker 2: there on the MAGS seven debt time build out. Stay 290 00:14:01,520 --> 00:14:12,480 Speaker 2: with us. More from Bloomberg Surveillance coming up after this. 291 00:14:12,480 --> 00:14:16,360 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 292 00:14:16,400 --> 00:14:19,400 Speaker 1: starting at seven am Eastern on Apple Coarplay and Android 293 00:14:19,440 --> 00:14:22,480 Speaker 1: Auto with the Bloomberg Business app. You can also listen 294 00:14:22,560 --> 00:14:25,840 Speaker 1: live on Amazon Alexa from our flagship New York station 295 00:14:26,360 --> 00:14:29,840 Speaker 1: Just say, Alexa play Bloomberg eleven thirty joining us. 296 00:14:29,720 --> 00:14:33,080 Speaker 2: Now Liverpool corresponding Greg battle with BMP Perry. But let's 297 00:14:33,080 --> 00:14:35,960 Speaker 2: do this first. Are you kidding me? Man City has 298 00:14:36,000 --> 00:14:39,200 Speaker 2: been flat out dead and they whooped him three nothing 299 00:14:39,280 --> 00:14:40,800 Speaker 2: this weekend. What happened? 300 00:14:41,160 --> 00:14:44,040 Speaker 9: It was turbulence. We've seen some turbulence in the market 301 00:14:44,040 --> 00:14:46,440 Speaker 9: and I would consider this pocket of turbulence and not 302 00:14:46,480 --> 00:14:47,680 Speaker 9: something to read too much into. 303 00:14:48,160 --> 00:14:50,880 Speaker 2: What is it like being a Liverpool fan knowing that 304 00:14:50,960 --> 00:14:54,440 Speaker 2: they like the Red Sox or the Pittsburgh Penguins more 305 00:14:54,480 --> 00:14:56,960 Speaker 2: than they like Liverpool? Do you feel like this American 306 00:14:56,960 --> 00:14:59,160 Speaker 2: ownership is like too far away? 307 00:15:00,000 --> 00:15:01,360 Speaker 9: It is a little bit of an issue. It is 308 00:15:01,360 --> 00:15:03,120 Speaker 9: a little bit of an issue. Obviously, we get the 309 00:15:03,120 --> 00:15:06,320 Speaker 9: World Cup here in next summer, so maybe that will 310 00:15:06,360 --> 00:15:09,880 Speaker 9: help the americanization of the game and increase the atally. 311 00:15:09,640 --> 00:15:11,560 Speaker 2: Ask a question for nine to two nine FM up 312 00:15:11,560 --> 00:15:14,720 Speaker 2: in Boston. Good morning to Fenway Sports Group. Let's get 313 00:15:14,720 --> 00:15:17,000 Speaker 2: to a Greg Bottle where us the VMP parabout with 314 00:15:17,080 --> 00:15:21,640 Speaker 2: an absolutely spectacular note and basically your notes through all 315 00:15:21,680 --> 00:15:24,600 Speaker 2: your derivative expertise says go along. 316 00:15:25,080 --> 00:15:28,120 Speaker 9: Why Well, essentially, what we've seen is this kind of 317 00:15:28,160 --> 00:15:30,720 Speaker 9: pocket of turbulence the last couple of weeks. Government shut 318 00:15:30,720 --> 00:15:32,320 Speaker 9: down has been a part of it. Part of it, 319 00:15:32,400 --> 00:15:34,680 Speaker 9: we think is kind of positioning led that the market 320 00:15:34,680 --> 00:15:37,560 Speaker 9: got a bit of ahead of itself in September with 321 00:15:37,640 --> 00:15:40,840 Speaker 9: this kind of real reach for upside, this exuberant rally. 322 00:15:41,200 --> 00:15:43,200 Speaker 9: But what we've seen over the last say three or 323 00:15:43,200 --> 00:15:46,280 Speaker 9: four weeks is a pullback inequities, pick up in volatility 324 00:15:46,560 --> 00:15:48,680 Speaker 9: at a time when the news flow that we have had, 325 00:15:48,720 --> 00:15:50,359 Speaker 9: the bottom up news blow has actually. 326 00:15:50,120 --> 00:15:50,720 Speaker 2: Been very strong. 327 00:15:51,800 --> 00:15:52,240 Speaker 5: Earnings. 328 00:15:52,280 --> 00:15:54,520 Speaker 4: We've just been through kind of the vast majority of earnings. 329 00:15:54,520 --> 00:15:56,520 Speaker 4: Were they good enough for this market? With a good 330 00:15:56,560 --> 00:15:58,040 Speaker 4: enough for you and your call on this market? 331 00:15:58,120 --> 00:15:59,840 Speaker 9: Yeah, I think they were a really good earning season. 332 00:15:59,880 --> 00:16:02,200 Speaker 9: And you can start with the large cap tech and 333 00:16:02,240 --> 00:16:03,800 Speaker 9: I think one of the best ways to look at 334 00:16:03,920 --> 00:16:07,200 Speaker 9: the lens of earnings and distill the information is what 335 00:16:07,880 --> 00:16:10,720 Speaker 9: did all the analysts do that cover the stocks with 336 00:16:10,840 --> 00:16:13,400 Speaker 9: next year's numbers? And they took all of those numbers higher. 337 00:16:14,040 --> 00:16:16,880 Speaker 9: So they digested that news from the calls, from the releases, 338 00:16:16,960 --> 00:16:18,160 Speaker 9: and they increased their forecast. 339 00:16:18,440 --> 00:16:20,800 Speaker 2: Is it too early to do jargon alert? No jargon 340 00:16:20,840 --> 00:16:23,960 Speaker 2: alert with Greg Bodle BMP Perry bout what in God's 341 00:16:24,080 --> 00:16:26,920 Speaker 2: name is cleaner positioning? Cleaner positioning? 342 00:16:26,960 --> 00:16:30,440 Speaker 9: So we track equity positioning the different various buyers and sellers, 343 00:16:30,440 --> 00:16:32,920 Speaker 9: and some of those are pretty predictable, particularly some of 344 00:16:32,960 --> 00:16:35,440 Speaker 9: the systematics strategies. So you have things like CTA is 345 00:16:35,600 --> 00:16:40,440 Speaker 9: essentially trend following systematics. You have things like Volatility Target portfolios. 346 00:16:40,440 --> 00:16:43,320 Speaker 9: They target the volatility of a portfolio, and these flows 347 00:16:43,320 --> 00:16:46,360 Speaker 9: are quite predictable. And what we saw three weeks or 348 00:16:46,360 --> 00:16:48,560 Speaker 9: so ago is that they were as extended as they 349 00:16:48,600 --> 00:16:50,960 Speaker 9: have been as long US equities as they have been 350 00:16:51,000 --> 00:16:53,680 Speaker 9: in the last five years. So it wasn't necessarily surprising 351 00:16:53,680 --> 00:16:56,200 Speaker 9: that we saw some selling flows from that pocket get 352 00:16:56,320 --> 00:16:57,240 Speaker 9: when the market corrected. 353 00:16:57,480 --> 00:16:59,040 Speaker 2: Overall, we're in neutral territory. 354 00:16:59,080 --> 00:17:02,600 Speaker 9: So our positioning indicator peaked at eighty three three weeks ago. 355 00:17:02,640 --> 00:17:04,800 Speaker 9: That was a year to date high. It's come back 356 00:17:05,000 --> 00:17:07,200 Speaker 9: just below fifty. That's neutral territory. 357 00:17:07,240 --> 00:17:09,600 Speaker 2: How do you measure short squeeze when there's so much 358 00:17:09,640 --> 00:17:12,320 Speaker 2: gloom out there? Oops are going the wrong way, they 359 00:17:12,359 --> 00:17:14,920 Speaker 2: repair the trays and up, up we go with convexity. 360 00:17:15,400 --> 00:17:17,399 Speaker 2: Can you measure a short squeeze at B and B 361 00:17:17,520 --> 00:17:18,320 Speaker 2: pair about Yeah. 362 00:17:18,359 --> 00:17:21,679 Speaker 9: So we have a particular strand of our indicator that 363 00:17:21,920 --> 00:17:25,080 Speaker 9: is directed to do specifically that it looks at both 364 00:17:25,119 --> 00:17:27,840 Speaker 9: the absolute level of short interest in stocks, but also 365 00:17:27,880 --> 00:17:30,840 Speaker 9: looks at the relative performance the most shorted stocks. And 366 00:17:30,840 --> 00:17:33,399 Speaker 9: what we saw was that those names massively performed in 367 00:17:33,400 --> 00:17:35,879 Speaker 9: that squeeze in September. That's been a really what I 368 00:17:36,000 --> 00:17:38,720 Speaker 9: consider again healthy correction in those names last couple weeks. 369 00:17:39,160 --> 00:17:43,560 Speaker 4: Arguably a valuable concern about this market is the concentration risk. 370 00:17:43,600 --> 00:17:45,760 Speaker 4: And we've been talking about it for two years I 371 00:17:45,760 --> 00:17:48,600 Speaker 4: would say maybe even longer it does. It seem to 372 00:17:48,880 --> 00:17:52,280 Speaker 4: necessarily be a problem for SAE at the index level. 373 00:17:52,320 --> 00:17:53,960 Speaker 4: But how do you guys think about that? Do you 374 00:17:54,000 --> 00:17:55,320 Speaker 4: try to hedge it a little bit? Do you just 375 00:17:55,400 --> 00:17:56,160 Speaker 4: let it ride? 376 00:17:56,600 --> 00:17:59,480 Speaker 9: I think fundamentally we could be in a cycle where 377 00:17:59,520 --> 00:18:02,760 Speaker 9: with full to take concentration risk, if you have avoided 378 00:18:02,800 --> 00:18:05,159 Speaker 9: those relative winners in the early parts of the cycle, 379 00:18:05,160 --> 00:18:07,880 Speaker 9: it would have been obviously very problematic. So as this 380 00:18:08,000 --> 00:18:11,280 Speaker 9: kind of structural bull story around AI continues, there is 381 00:18:11,359 --> 00:18:14,119 Speaker 9: undoubted to be going to be concentration within that industry, 382 00:18:14,160 --> 00:18:16,800 Speaker 9: and that's invariably going to translate into the market. So 383 00:18:16,800 --> 00:18:18,159 Speaker 9: I think it's something that we have to learn to 384 00:18:18,200 --> 00:18:19,120 Speaker 9: live with rather than avoid. 385 00:18:19,880 --> 00:18:23,119 Speaker 4: Other than those big tech names that again have performed 386 00:18:23,160 --> 00:18:25,520 Speaker 4: so well. Are there other sectors that you guys like 387 00:18:25,560 --> 00:18:27,959 Speaker 4: at this time or is there a factor out there 388 00:18:28,040 --> 00:18:28,920 Speaker 4: that screams wall. 389 00:18:29,000 --> 00:18:30,640 Speaker 9: I guess there's two things that we would look at. 390 00:18:30,640 --> 00:18:32,720 Speaker 9: One is probably a little bit more medium term. That's 391 00:18:32,720 --> 00:18:35,119 Speaker 9: looking at the industrials. We think we saw some pretty 392 00:18:35,119 --> 00:18:39,000 Speaker 9: good earnings from the cyclical sectors this past Q three. 393 00:18:39,080 --> 00:18:40,679 Speaker 9: We think there is a CAPEC story as we go 394 00:18:40,720 --> 00:18:43,720 Speaker 9: into next year. If you want something more tactical over 395 00:18:43,760 --> 00:18:46,240 Speaker 9: the next six weeks, we think the retail sector is 396 00:18:46,240 --> 00:18:47,520 Speaker 9: one that's interesting to look at. 397 00:18:47,640 --> 00:18:49,119 Speaker 2: The lot of headwinds for retail. 398 00:18:49,359 --> 00:18:51,840 Speaker 9: There's concerns over the CA shaped economy and what's going 399 00:18:51,880 --> 00:18:54,320 Speaker 9: on with the consumer. But it's a sector that's underperformed 400 00:18:54,359 --> 00:18:56,240 Speaker 9: a lot has been quite bombed out and has a 401 00:18:56,240 --> 00:18:58,280 Speaker 9: lot of catalysts coming up over the next six weeks. 402 00:18:58,320 --> 00:19:01,600 Speaker 2: A good bottle with you as Secuity Drive strategy we continue. 403 00:19:01,600 --> 00:19:05,280 Speaker 2: He's at BMP PERRYBA. This morning, Good morning across the nation. 404 00:19:05,400 --> 00:19:07,240 Speaker 2: The way you listen to us to get your day 405 00:19:07,359 --> 00:19:10,600 Speaker 2: your weeks started. Good morning on serious XM Channel one 406 00:19:10,640 --> 00:19:13,760 Speaker 2: twenty one and a particular good morning to YouTube. Paul 407 00:19:13,800 --> 00:19:16,560 Speaker 2: and I blown away, the whole team, just blown away 408 00:19:16,600 --> 00:19:22,440 Speaker 2: by the commitment to YouTube listeners and viewers. It's subscribed 409 00:19:22,480 --> 00:19:25,280 Speaker 2: to Bloomberg podcasts. It's the best way to do that, Paul, 410 00:19:25,359 --> 00:19:28,760 Speaker 2: There you go. Nasdaq down six point three seven percent 411 00:19:29,280 --> 00:19:32,480 Speaker 2: is a drawdown from the peak the day before Halloween, 412 00:19:33,000 --> 00:19:36,000 Speaker 2: and we've bounced back. This morning we're up three point 413 00:19:36,000 --> 00:19:38,560 Speaker 2: twenty seven percent. We haven't made it halfway back, but 414 00:19:38,560 --> 00:19:39,200 Speaker 2: we're getting. 415 00:19:39,040 --> 00:19:41,920 Speaker 5: We're getting there. We're getting there. Derivdi of strategy. 416 00:19:42,080 --> 00:19:44,840 Speaker 4: What's the conversation you're having with your clients these days 417 00:19:44,880 --> 00:19:48,639 Speaker 4: about derivatives? Are they Are they to accentuate risk in 418 00:19:48,680 --> 00:19:49,960 Speaker 4: the market, to hedge out the risk? 419 00:19:50,200 --> 00:19:52,640 Speaker 5: How rest of work are they using derivaives? 420 00:19:52,680 --> 00:19:55,080 Speaker 9: I mean people are using them for both those things. 421 00:19:55,080 --> 00:19:55,280 Speaker 2: I mean. 422 00:19:55,359 --> 00:19:57,560 Speaker 9: Certainly, one of the things which raised a warning flak 423 00:19:57,640 --> 00:20:00,000 Speaker 9: to us towards the end of September was the fact 424 00:20:00,080 --> 00:20:02,720 Speaker 9: that we saw this big reach for upside i e. 425 00:20:02,840 --> 00:20:04,879 Speaker 9: People buying call options as a way to kind of 426 00:20:04,920 --> 00:20:08,119 Speaker 9: accinuate risks, take more risk. So you certainly saw that 427 00:20:08,160 --> 00:20:11,119 Speaker 9: in large cap tech where things became very extreme. If 428 00:20:11,160 --> 00:20:13,240 Speaker 9: you look at a chart of just the trading volumes 429 00:20:13,280 --> 00:20:16,960 Speaker 9: of call options in the US, it exploded going into 430 00:20:16,960 --> 00:20:18,960 Speaker 9: that short term market peak. So that was a sign 431 00:20:18,960 --> 00:20:20,600 Speaker 9: of a little bit too much for off on exuberance. 432 00:20:21,080 --> 00:20:24,120 Speaker 5: And how is it different these days? If at all? 433 00:20:24,359 --> 00:20:25,920 Speaker 9: So, I mean the thing which is different is there 434 00:20:25,960 --> 00:20:28,679 Speaker 9: is a broader range of users, there's more use of 435 00:20:28,720 --> 00:20:32,560 Speaker 9: derivative products, there are more expiries, more shortter dated options, 436 00:20:32,680 --> 00:20:35,520 Speaker 9: so there's a ton of volume and risk taken. So 437 00:20:35,560 --> 00:20:38,000 Speaker 9: it's incredibly important to track that to understand the market. 438 00:20:38,040 --> 00:20:40,600 Speaker 2: The people listen to this, particularly people with gray hair, 439 00:20:41,440 --> 00:20:45,159 Speaker 2: are like, Okay, nineteen eighty seven, we didn't see this coming. 440 00:20:45,640 --> 00:20:48,399 Speaker 2: Nineteen ninety eight, we didn't see this coming. What's that 441 00:20:48,520 --> 00:20:52,159 Speaker 2: we didn't see this coming? Right now? What's the Greg 442 00:20:52,240 --> 00:20:57,159 Speaker 2: Boutel phantom shadowy thing out there? Is it private credit? 443 00:20:57,240 --> 00:21:00,159 Speaker 2: What is it? Yeah? I think ultimately we don't know. 444 00:21:00,240 --> 00:21:02,439 Speaker 9: But I think the obvious elephant in the room is 445 00:21:02,800 --> 00:21:05,679 Speaker 9: large cap tech and these huge CAPEX numbers. So I 446 00:21:05,720 --> 00:21:07,520 Speaker 9: think the question that we try and ask a little 447 00:21:07,560 --> 00:21:09,760 Speaker 9: bit more is where are we in that cycle and 448 00:21:09,800 --> 00:21:10,840 Speaker 9: what are the right ways start? 449 00:21:10,920 --> 00:21:14,399 Speaker 2: Because the mandal linement Blackrock was appallingly optimistic. Now do 450 00:21:14,480 --> 00:21:17,280 Speaker 2: you feel like the solid and the bond issuance and 451 00:21:17,720 --> 00:21:19,520 Speaker 2: the equity performance is normative. 452 00:21:19,640 --> 00:21:23,160 Speaker 9: I think it points the bond issuance points to us 453 00:21:23,200 --> 00:21:25,720 Speaker 9: moving to the next stage of that cycle. But to me, 454 00:21:25,800 --> 00:21:28,080 Speaker 9: if I had to look back in history and look anywhere, 455 00:21:28,119 --> 00:21:30,840 Speaker 9: I just I see some similarities to nineteen ninety eight 456 00:21:30,880 --> 00:21:33,400 Speaker 9: where we got a series of FED rate cuts when 457 00:21:33,520 --> 00:21:36,000 Speaker 9: earnings grown it was pretty strong, we didn't necessarily need it, 458 00:21:36,320 --> 00:21:40,000 Speaker 9: and that drew an incredibly volatile move higher. 459 00:21:40,080 --> 00:21:42,159 Speaker 2: How far out are we? What was a Paul helping 460 00:21:42,280 --> 00:21:44,960 Speaker 2: march of a one oh yeah, was that when we 461 00:21:45,000 --> 00:21:45,400 Speaker 2: went off. 462 00:21:45,320 --> 00:21:47,600 Speaker 5: A cliff March of two thousand, March. 463 00:21:47,440 --> 00:21:50,280 Speaker 2: Of two thousand. How close are your wise one to 464 00:21:50,320 --> 00:21:53,000 Speaker 2: a march of two thousand? I do want to Liverpool. 465 00:21:53,359 --> 00:21:55,000 Speaker 9: So when we look at the risks at the moment, 466 00:21:55,040 --> 00:21:58,720 Speaker 9: we think the largest risk at the moment is being underinvested. 467 00:21:58,840 --> 00:22:01,400 Speaker 9: If we do have those kind of bubble type tendency 468 00:22:01,440 --> 00:22:04,399 Speaker 9: start to emerge. The lessons from the late nineties is 469 00:22:04,480 --> 00:22:06,119 Speaker 9: that if you were right and you felt there was 470 00:22:06,160 --> 00:22:08,879 Speaker 9: too much exuberance and there was a crash coming, but 471 00:22:08,960 --> 00:22:11,159 Speaker 9: you were too early in calling that that was actually 472 00:22:11,160 --> 00:22:14,160 Speaker 9: worse than worse than not realizing we were in a bubble. 473 00:22:14,280 --> 00:22:16,480 Speaker 2: Good Bob, thank you so much for the BNP paragraph. 474 00:22:16,600 --> 00:22:27,800 Speaker 2: Stay with us. More from Bloomberg Surveillance coming up after this. 475 00:22:27,800 --> 00:22:31,720 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 476 00:22:31,760 --> 00:22:35,159 Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto 477 00:22:35,200 --> 00:22:38,160 Speaker 1: with the Bloomberg Business app. You can also listen live 478 00:22:38,200 --> 00:22:41,800 Speaker 1: on Amazon Alexa from our flagship New York station. Just 479 00:22:41,840 --> 00:22:44,280 Speaker 1: say Alexa play Bloomberg eleven thirty. 480 00:22:44,359 --> 00:22:47,520 Speaker 2: Maybe she has some diversions, some distractions for us. 481 00:22:48,800 --> 00:22:51,879 Speaker 10: Then I tried my very best's okay, we want to 482 00:22:51,880 --> 00:22:55,440 Speaker 10: talk about the Disney blackout on YouTube TV because yes, 483 00:22:55,760 --> 00:22:57,400 Speaker 10: Monday Night football has been effected. 484 00:22:57,480 --> 00:22:58,640 Speaker 5: Dancing with the Stars. 485 00:22:58,720 --> 00:23:00,720 Speaker 10: People want to see these things is okay, and they 486 00:23:00,760 --> 00:23:03,720 Speaker 10: can't on YouTube TV now because of this. So what 487 00:23:03,760 --> 00:23:05,919 Speaker 10: they're doing is they're coming up with these clever hacks 488 00:23:05,960 --> 00:23:08,439 Speaker 10: so that they can still get to watch it. The 489 00:23:08,480 --> 00:23:11,720 Speaker 10: Wall Street Journal has this breakdown. It says one guy 490 00:23:11,840 --> 00:23:14,639 Speaker 10: he used an unwound paper clip stuck it in his 491 00:23:14,680 --> 00:23:17,600 Speaker 10: TV's coaxial port to get a signal. Others are going 492 00:23:17,640 --> 00:23:20,680 Speaker 10: to target the Best Buy they're going to purchase antennas, 493 00:23:20,880 --> 00:23:23,760 Speaker 10: they're hooking them up. They're going over school. They really 494 00:23:23,800 --> 00:23:26,520 Speaker 10: want to see this programming. Paul, up Comcast Charter and 495 00:23:26,520 --> 00:23:29,520 Speaker 10: get a cable bill, or you can do that, yes, 496 00:23:29,720 --> 00:23:33,000 Speaker 10: or you can do that. And then actually, Business Insider 497 00:23:33,040 --> 00:23:36,080 Speaker 10: are saying that YouTube TV is offering customers a twenty 498 00:23:36,119 --> 00:23:38,400 Speaker 10: dollars free fund, a credit that they're going to put 499 00:23:38,440 --> 00:23:39,960 Speaker 10: to the next bill to kind of help out with 500 00:23:40,040 --> 00:23:40,840 Speaker 10: all this going on. 501 00:23:41,720 --> 00:23:44,600 Speaker 2: Can I ask a dumb question Paul reaches back to 502 00:23:44,640 --> 00:23:47,520 Speaker 2: where we were thirty years ago. Well, they're paying for 503 00:23:47,600 --> 00:23:51,800 Speaker 2: two million channels, yep, but we're only watching three exactly exactly. 504 00:23:51,800 --> 00:23:53,760 Speaker 4: And yet this time though, you can just you can 505 00:23:53,800 --> 00:23:56,159 Speaker 4: cancel very easily. Just look at your y Yeah, just 506 00:23:56,200 --> 00:23:57,879 Speaker 4: look at your billy, look at your phone and actually 507 00:23:57,920 --> 00:24:00,119 Speaker 4: see what I'm subscribing to and just hit disconnect this. 508 00:24:00,560 --> 00:24:02,800 Speaker 10: Yeah, but it just goes to show like how frustrated 509 00:24:02,800 --> 00:24:03,240 Speaker 10: people are. 510 00:24:03,800 --> 00:24:04,320 Speaker 2: There's no. 511 00:24:06,000 --> 00:24:06,399 Speaker 5: I don't know. 512 00:24:06,480 --> 00:24:09,760 Speaker 4: I mean, if your YouTube, your Google, you have no incentive. 513 00:24:09,800 --> 00:24:11,240 Speaker 4: I mean, you got plenty of cash to wait this 514 00:24:11,320 --> 00:24:11,640 Speaker 4: thing out. 515 00:24:11,880 --> 00:24:12,680 Speaker 2: True? True? You know. 516 00:24:13,040 --> 00:24:15,960 Speaker 10: Next, Okay, this one was in the Wall Street Journal. 517 00:24:16,000 --> 00:24:19,320 Speaker 10: It says you could be seeing less Italian pasta on 518 00:24:19,520 --> 00:24:21,960 Speaker 10: US store shelves. I know, hold on, hold on, here 519 00:24:21,960 --> 00:24:25,840 Speaker 10: we go. So Italy's biggest pasta exporters, they say import 520 00:24:25,880 --> 00:24:28,840 Speaker 10: anti dumping duties. They are totally one hundred and seven 521 00:24:28,960 --> 00:24:32,080 Speaker 10: percent on their pasta brands. So coming to the US 522 00:24:32,160 --> 00:24:34,120 Speaker 10: is going to be a little bit too expensive for them, 523 00:24:34,160 --> 00:24:35,840 Speaker 10: So you might have to deal with, you know, the 524 00:24:35,880 --> 00:24:38,520 Speaker 10: American brands that you kind of see out there. They 525 00:24:38,520 --> 00:24:41,280 Speaker 10: spoke to the CEO at La Moi Sana. His name 526 00:24:41,320 --> 00:24:44,600 Speaker 10: is Giuseppe Farrow, okay, oh boy, and he said he 527 00:24:44,680 --> 00:24:47,160 Speaker 10: makes those dozens you know, pasta made from flour from 528 00:24:47,160 --> 00:24:50,360 Speaker 10: the company's own mill. Like it's it's good quality pasta 529 00:24:51,000 --> 00:24:53,600 Speaker 10: and it could be missing out on it. Anti dumping 530 00:24:53,600 --> 00:24:56,840 Speaker 10: probe is actually into Italian pasta makers. It's actually not new. 531 00:24:56,880 --> 00:24:59,360 Speaker 10: A lot of importers were flooding the US with cheaper pasta, 532 00:24:59,640 --> 00:25:02,760 Speaker 10: but the penalties were usually small. But now those penalties 533 00:25:02,800 --> 00:25:05,400 Speaker 10: are higher, so getting them here is going to cost 534 00:25:05,400 --> 00:25:06,560 Speaker 10: them a lot more money. 535 00:25:06,600 --> 00:25:09,119 Speaker 4: I see at firsthand in my own house with Joe's 536 00:25:09,160 --> 00:25:11,879 Speaker 4: Deli and spring like NUTRITIONA can't get the chickpeas you 537 00:25:11,920 --> 00:25:13,280 Speaker 4: had a chickpea problem. 538 00:25:12,960 --> 00:25:15,720 Speaker 5: There for a while. No, shit be too expensive for them. Yeah, 539 00:25:15,720 --> 00:25:18,440 Speaker 5: but they're back, they're back. You fixed it. But it 540 00:25:18,560 --> 00:25:19,680 Speaker 5: was touching though there for a while. 541 00:25:19,840 --> 00:25:23,960 Speaker 10: Yeah, it gets expensive for them with all the tariffs. Okay, 542 00:25:23,960 --> 00:25:26,960 Speaker 10: and this one is kind of a shift. Okay. So 543 00:25:27,080 --> 00:25:31,640 Speaker 10: luxury has this new competition from affordable French brands. Okay, 544 00:25:31,920 --> 00:25:35,080 Speaker 10: I hope I'm pronouncing this right, Sison. Okay, it's become 545 00:25:35,119 --> 00:25:37,840 Speaker 10: the global go to for these preppy you know, French 546 00:25:37,840 --> 00:25:41,360 Speaker 10: girls style. They have higher prices and thet's say like Azara, 547 00:25:41,440 --> 00:25:44,920 Speaker 10: but lower than those high priced luxury brands. So they 548 00:25:44,920 --> 00:25:47,359 Speaker 10: cater customers who are willing to pay, like, you know, 549 00:25:47,480 --> 00:25:50,080 Speaker 10: over three hundred dollars for bag or maybe one hundred 550 00:25:50,080 --> 00:25:53,280 Speaker 10: and twenty dollars for jeans instead of like three thousand 551 00:25:53,320 --> 00:25:57,919 Speaker 10: dollars for a designer bag. Luxury, Yes, accessible luxury, that's 552 00:25:57,960 --> 00:26:01,480 Speaker 10: what it's about, because they're just tyves spending all this money, 553 00:26:01,480 --> 00:26:03,760 Speaker 10: like ten thousand dollars on a Chanel bag when they 554 00:26:03,800 --> 00:26:07,000 Speaker 10: can get more for their money. I know it's taken 555 00:26:07,040 --> 00:26:10,440 Speaker 10: this long to get to that point, but there's other 556 00:26:10,600 --> 00:26:13,000 Speaker 10: like brands that are doing it. So there's like Ami Paris, 557 00:26:13,119 --> 00:26:17,960 Speaker 10: there's Polene, there's Lulu des Sasson. I'm trying my very best, 558 00:26:17,960 --> 00:26:21,320 Speaker 10: so I'm killing it. But yeah, smart luxury, that's what 559 00:26:21,359 --> 00:26:24,560 Speaker 10: they're getting to where they're paying for, like the quality clues, 560 00:26:24,600 --> 00:26:25,119 Speaker 10: not the fashion. 561 00:26:25,440 --> 00:26:29,440 Speaker 2: I gotta go to what is dumb luxury luxuries? Hey? 562 00:26:29,640 --> 00:26:31,080 Speaker 10: Ten thousand dollars from a bag? 563 00:26:31,400 --> 00:26:34,520 Speaker 2: That okay, it's good to know smart luxury in that. 564 00:26:34,640 --> 00:26:37,440 Speaker 2: Do you have one more quick twenty seconds? I don't. 565 00:26:37,520 --> 00:26:41,200 Speaker 2: That's nice. There's too much. I'm killing well. Thin gets 566 00:26:41,200 --> 00:26:43,720 Speaker 2: a week started as well newspapers and Lisa Manteo. 567 00:26:43,800 --> 00:26:47,840 Speaker 1: We thank her for the This is the Bloomberg Surveillance podcast, 568 00:26:48,280 --> 00:26:52,680 Speaker 1: available on Apple, Spotify, and anywhere else you get your podcasts. 569 00:26:53,119 --> 00:26:56,200 Speaker 1: Listen live each weekday, seven to ten am Easter and 570 00:26:56,520 --> 00:27:00,119 Speaker 1: on Bloomberg dot Com, the iHeartRadio app, tune In, and 571 00:27:00,520 --> 00:27:03,879 Speaker 1: the Bloomberg Business app. You can also watch us live 572 00:27:03,960 --> 00:27:07,680 Speaker 1: every weekday on YouTube and always on the Bloomberg terminal