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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day

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Speaker 2: for insight from the best in markets, economics, and geopolitics

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Speaker 2: from our global headquarters in New York City. We are

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Speaker 2: live on Bloomberg Television weekday mornings from six to nine

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Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or

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Speaker 2: anywhere else you listen, and as always on the Bloomberg

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Speaker 2: Terminal and the Bloomberg Business app. With us around the table,

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Speaker 2: Stephanie Roth of will three Search. Stephanie, good morning. And

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Speaker 2: reaction to this data so far.

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Speaker 3: Yeah, I mean it's an interesting one.

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Speaker 4: And like Mike just said, a lot the weakness came

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Speaker 4: from the Northeast, which is kind of interesting. It bounced back,

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Speaker 4: it came week after a strong month in September.

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Speaker 3: There's just a lot of sort of noise going on

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Speaker 3: in the data.

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Speaker 4: I think what we're going to see is it's the

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Speaker 4: housing market's going to have trouble bouncing back with mortgage

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Speaker 4: rates having increased after the even the FED has been cutting.

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Speaker 2: Why do you think rights have been going up, even

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Speaker 2: though the Fed's been counting.

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Speaker 4: It's all about the election, and it's all about the market. Certainly,

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Speaker 4: the market trades Trump as a yield curve steepener. We've

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Speaker 4: seen that to some extent. There are concerns about the deficit.

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Speaker 4: I don't think that's the primary driver. I think it's

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Speaker 4: the market's getting excited about a better growth outlook, and

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Speaker 4: for twenty twenty five, I think that's fair. For twenty

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Speaker 4: twenty six, I'm worried about the tariff impact on the economy.

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Speaker 5: Okay, I'm trying to understand this.

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Speaker 1: So if yields go up, makes mortgage more expensive, makes

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Speaker 1: it more difficult for people to afford homes because prices

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Speaker 1: aren't necessarily coming down.

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Speaker 5: At the same time, we saw confidence.

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Speaker 1: Yesterday among homebuilders rise to the highest level going back

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Speaker 1: seven months. And this whole idea is well, because of

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Speaker 1: the election, regulations will be get stripped back, the economy

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Speaker 1: will be going will be doing better than it otherwise

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Speaker 1: had been. So which is it.

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Speaker 4: I think there's an element of this animal spirits coming back.

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Speaker 4: So you saw for n to be it was driven

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Speaker 4: by expectations. This week we saw Empire fed increase a

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Speaker 4: three standard deviation move. There's probably an element that people

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Speaker 4: are feeling better about the Algho's right or wrong, but

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Speaker 4: that actually has an important impact of the economy, and

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Speaker 4: I think that's what's going to be driving an above

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Speaker 4: trend growth for next year until we start worrying about

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Speaker 4: tariffs again, probably not to the end of the year.

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Speaker 6: But why do you think the worry for terriffs comes

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Speaker 6: at the end of the year twenty twenty six when

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Speaker 6: that is the one thing we know that Donald Trump

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Speaker 6: can do unilaterally.

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Speaker 4: So our base case is that one he probably wants

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Speaker 4: to play this game with the number of the different

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Speaker 4: countries like he did last time, having a number of

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Speaker 4: meetings throughout the tariffs. We also think he'll probably wanta

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Speaker 4: to attach it to some sort of investigation which will

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Speaker 4: require comment period, And it makes sense for them to

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Speaker 4: tie it to T to t extending TCJA, whether or

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Speaker 4: not they explicitly included in a bill or he just

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Speaker 4: there's a handshake deal about let's include the revenue savings

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Speaker 4: for this bill.

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Speaker 3: It makes sense for them to do it around the same.

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Speaker 2: Time if that connected to the tax bill. What is

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Speaker 2: the true objective of these tariffs?

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Speaker 4: I guess it depends who you're asking. I mean, I

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Speaker 4: guess they're f From Trump's perspective, there's two benefits. I

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Speaker 4: think they're pretty risky, but from his perspective it's too

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Speaker 4: bad if it's one you can stick it to China

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Speaker 4: and and two they can raise trillions of dollars on

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Speaker 4: these on these tariffs at least a the way they

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Speaker 4: if you assume sort of static estimates se.

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Speaker 6: So you see both the good things and the bad

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Speaker 6: things that the market has to digest. When it comes

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Speaker 6: to Trump policy being connected in terms of he wants

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Speaker 6: to extend TCJA, he wants more tax cuts, and he's

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Speaker 6: going to say I'm gonna pay for this with tariffs,

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Speaker 6: so they all get rolled out at the same time,

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Speaker 6: so the sequencing is actually in parallel.

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Speaker 3: Yeah, kind of.

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Speaker 4: I think for now it's a better growth outlook for

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Speaker 4: twenty twenty five, better confidence, and then we start getting

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Speaker 4: into the twenty twenty six tax cuts, and then I

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Speaker 4: think it's it's a negative for the market because at.

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Speaker 3: That point it's tariffs.

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Speaker 4: And by the way, the tax cuts aren't really that large, right,

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Speaker 4: They're expensive, but it's really just extending current policy. The

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Speaker 4: incremental tax cuts that we're projecting is something like five

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Speaker 4: hundred million dollars, which isn't that big. It's things like

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Speaker 4: no tax on tips, or of the very narrow corporate

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Speaker 4: tax rate cut which is just for domestic manufacturers.

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Speaker 3: The rest of it is just a very expensive.

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Speaker 4: Bill to extend TCJA, which is not a stimulus to

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Speaker 4: the economy.

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Speaker 1: So, before we get there and going back to home building,

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Speaker 1: because I'm still trying to wrap my head around Okay,

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Speaker 1: you've got the tariffs and how this affects inflation, I'm

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Speaker 1: trying to get back to does this cause a revival

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Speaker 1: in the housing market at a time where everything that

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Speaker 1: you just painted does not suggest interest rates going down

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Speaker 1: that much? At the long end, can you see a

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Speaker 1: revival in housing in some of the basic staples that

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Speaker 1: people have been basically complaining about that they don't have

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Speaker 1: access to?

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Speaker 7: You?

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Speaker 1: Can you see a revival if you have mortgage rates

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Speaker 1: that say at these levels?

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Speaker 3: Probably not. It's a tough one.

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Speaker 4: I think the part of the economy that's going to

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Speaker 4: do better is on the investment capex investment.

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Speaker 3: Side, so less about less about housing.

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Speaker 4: I think mortgage rates are still going to be a

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Speaker 4: bit of a headwind could see a bit of an improvement.

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Speaker 4: The builders are excited from the regulatory front, and that's fair.

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Speaker 3: But I think the bigger stimulus.

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Speaker 4: For the economy is going to be on the corporate

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Speaker 4: investment side, because that's where the deregulation is going to

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Speaker 4: be important, and the sentiment is absolutely critical.

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Speaker 2: Before you go December portal cut.

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Speaker 4: It's a tough one base cases that they're gonna cut,

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Speaker 4: but I think it's fair for the market to be

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Speaker 4: pricing fifty fifty.

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Speaker 3: The most important thing is going to be.

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Speaker 4: Payrolls, and we'll get a hint of that today when

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Speaker 4: we get SAT employment at ten.

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Speaker 2: Payrolls coming out a little bit later December sixth, in

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Speaker 2: the next few weeks, and then December eleventh for CPI

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Speaker 2: that FED decision December eighteenth, Stephanie could to see you

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Speaker 2: to see it as I catch a number the Stephanie

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Speaker 2: Roth of Wolf Research. Let's have that conversation right now

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Speaker 2: which I've found of Tawsei Advisorycruit Joe, welcome to the show.

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Speaker 2: Following those numbers from Walmart, I'm gonna still lease this

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Speaker 2: question to kick off the conversation. What is Walmart these days?

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Speaker 2: And how much has that company changed.

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Speaker 7: Yeah, So Walmart is a terrific retailer that's grown its

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Speaker 7: ecosystem and it's much more than just a retailer these days.

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Speaker 7: I think, you know, they have become more similar to

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Speaker 7: what an Amazon is in terms of offering a marketplace,

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Speaker 7: offering advertising, and effectively selling across the board online, in stores,

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Speaker 7: and they've grown their whole ecosystem. As a result, They've

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Speaker 7: been able to capture a more affluent consumer. They're still

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Speaker 7: satisfying that lower income consumer that needs the low prices

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Speaker 7: on a day to day basis, and so they're really

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Speaker 7: serving the American customer very broadly right now. And this

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Speaker 7: quarter was very strong and I think it just shows

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Speaker 7: those results.

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Speaker 1: Yeah, Walmart's online sales now represent about eighteen percent of

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Speaker 1: the company's business. They also have things like coupons for

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Speaker 1: loyalty members to places like Burger King. I'm just wondering, Joe,

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Speaker 1: if there is still the read through from a Walmart

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Speaker 1: results to the rest of retailers. Do we get a

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Speaker 1: real sense of the consumer and the health therein Yeah.

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Speaker 7: No, I do think there's still a good read through.

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Speaker 7: I mean, Walmart is still the largest retail in the world.

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Speaker 7: And you know, they are still, especially in America, the largest,

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Speaker 7: and they're capturing customers day to day. I mean, over

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Speaker 7: around two thirds of their businesses groceries, and so they're

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Speaker 7: seeing that customer come in once a week. And their

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Speaker 7: grocery business was amid single digits in the Walmart US operations,

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Speaker 7: so the customer is still coming in on a regular basis.

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Speaker 7: They're seeking value. Their private brands have done well. As

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Speaker 7: I said, they've captured a more affluent consumer. So it

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Speaker 7: just seems like I do think it's still a good

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Speaker 7: read on the broader consumer. But what's really interesting here

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Speaker 7: is they do so much more now than just sell

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Speaker 7: stuff out of the store, and I think that's what's

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Speaker 7: gotten investors very excited. And you can see the strength

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Speaker 7: and the market share games that they've had with the

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Speaker 7: reports that they just did this morning.

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Speaker 1: Is their gain taking away from Amazon or is it

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Speaker 1: basically taking away from Target from all the other retailers

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Speaker 1: that are a bit smaller and less advantaged than they are.

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Speaker 7: Yeah, I think that the big guys kind of go

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Speaker 7: to battle with one another, but really the.

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Speaker 8: Share gains are coming from all those smaller, regional, local players.

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Speaker 7: I think that's where you still see a lot of it,

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Speaker 7: you know, because Amazon's operating quite well. I mean, they

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Speaker 7: have very good earnings recently, and they're expected to have

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Speaker 7: another good fourth quarter.

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Speaker 8: I think Target's been operating quite well.

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Speaker 7: We'll see tomorrow for sure, but I would expect, you know,

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Speaker 7: some similar directional trends that we got out of Walmart today.

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Speaker 7: But it's really as you go down. You know, the

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Speaker 7: dollar stores have been under a lot of pressure this year.

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Speaker 7: A lot of people believe that the Walmart's taking share

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Speaker 7: from some of the dollar stores.

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Speaker 8: I think that's somewhat true.

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Speaker 7: Again, they are capturing a more affluent consumer, so that's

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Speaker 7: coming from somewhere, you know, maybe the traditional grosser out there.

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Speaker 7: So the prices are so good at Walmart, they're so sharp,

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Speaker 7: and what's amazing is they're driving their business with increased traffic,

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Speaker 7: increased unit sales. Those are the good things you want

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Speaker 7: to see. It's not just ticket. Ticket's part of it,

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Speaker 7: but it's really because they're getting more people and doing

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Speaker 7: more frequently.

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Speaker 5: Jill, I want to talk about strategy.

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Speaker 1: Is the new strategy to start Christmas shopping in October

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Speaker 1: next year?

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Speaker 5: Is that what we're going to be talking.

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Speaker 8: About Yeah, I think we may be already happened this

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Speaker 8: year quite honestly.

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Speaker 7: I mean with Amazon Prime Day back in October, and

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Speaker 7: then Walmart did an event right around it, Target did

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Speaker 7: an event Best Buy.

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Speaker 8: Everybody else in retail tried to capture that week.

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Speaker 7: And you know, we've been seeing Black Friday ads for

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Speaker 7: quite a while now, and you know it started to

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Speaker 7: kick in even a little bit more. Just yesterday we

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Speaker 7: noticed a lot more emails and pushing that. So that

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Speaker 7: holiday season has definitely gotten stretched out.

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Speaker 8: Now.

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Speaker 7: This year is kind of unique because there are five

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Speaker 7: viewers days between Thanksgiving and Christmas, so that does compress

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Speaker 7: the season a little bit, and I think that a

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Speaker 7: lot of the retail has tried to take advantage by

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Speaker 7: elongating it on the front end. But it just seems

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Speaker 7: to us that you're going to see this continue for

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Speaker 7: some time now. Where you made to late October is

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Speaker 7: when things start really for the holiday season.

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Speaker 2: Joe, We're all living it. We're hearing the music. We

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Speaker 2: start hearing the music about a month or so ago, Joe,

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Speaker 2: I wanted to talk about a theme that we've been

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Speaker 2: discussing on this program for quite a while now, is

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Speaker 2: how battle hard and how battle test did these companies

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Speaker 2: have been the retailers over the last let's say eight years.

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Speaker 2: They had the pandemic in the Trump first term president

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Speaker 2: like Donald Trump will get a second term, they could

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Speaker 2: face the same again, the tariffs the pandemic as well

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Speaker 2: when they manage inventory. Joe, how have things changed over

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Speaker 2: the last several years for these retailers given the tests

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Speaker 2: that they've had, the unique tests over the last decade.

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Speaker 7: Yeah, one of the biggest things that's changed is that

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Speaker 7: the supply chain finally normalized in the past two years,

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Speaker 7: let's say, and as a result, the retailers have been

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Speaker 7: able to get back to more of that just.

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Speaker 8: In time ordering.

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Speaker 7: And we've seen the inventories be run very lean really

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Speaker 7: for the past year year and a half for many

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Speaker 7: of the retailers. You saw that again today even with Walmart,

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Speaker 7: where they don't need to necessarily order early. Now when

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Speaker 7: events happen like you know, the East Coast port strikes

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Speaker 7: that happened and by the way, we haven't resolved that

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Speaker 7: the contract has not been signed in the next round

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Speaker 7: is January. The retailers did bring in inventory a little

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Speaker 7: bit ahead of that. I know there's concern if and

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Speaker 7: when the new tariffs get put in place by the

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Speaker 7: new president Electroma. I think there is some concern that

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Speaker 7: we might see some inventories get accelerated prior.

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Speaker 8: To those terrffs. That makes sense.

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Speaker 7: The retailers have definitely gotten smarter about how they're ordering,

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Speaker 7: where they're ordering from. They've shifted their distribution or their

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Speaker 7: supply chains beyond China. They're much stronger in other parts

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Speaker 7: of Southeast Asia at this point and other parts of

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Speaker 7: the world. So there's a little less reliance than the

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Speaker 7: first go around with the tariffs back in twenty eighteen

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Speaker 7: twenty nineteen, but it's still going to be a big

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Speaker 7: pressure and it's going to likely pass on to the consumer,

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Speaker 7: and we see it as somewhat of attacks on the

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Speaker 7: consumer quite honestly, because it does it's likely to raise prices.

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Speaker 7: All the retailers are telling us they're going to have

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Speaker 7: to raise prices at the end of the day, maybe

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Speaker 7: not for the full amount of the tariff, but definitely

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Speaker 7: for a good portion of that, and we see that

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Speaker 7: as an inflationary impact as well.

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Speaker 1: Just to build on that, there is this feeling and

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Speaker 1: every time we see a tariff announcement retailers sell off

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Speaker 1: the most, and there are view to sort of sort

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Speaker 1: of ground zero when it comes to potential companies that

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Speaker 1: are most exposed to tariffs. Are you saying that maybe

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Speaker 1: that's already baked into some degree and that people have

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Speaker 1: basically prepared for that and these retailers have already plans

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Speaker 1: in place to offset that.

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Speaker 7: I think the retailers, the better ones at least, have

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Speaker 7: definitely been planning for it. It was interesting, you know,

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Speaker 7: the day after the election, the way the market trade,

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Speaker 7: and I know there was that the Trump trade and

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Speaker 7: everything went up. I think the market was up two

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Speaker 7: and a half percent that day. The retailers that have

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Speaker 7: more exposure to China were down that day in a

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Speaker 7: pretty big way, and so you saw that initial reaction.

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Speaker 7: So I think the market is already starting to think

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Speaker 7: that way, who has more exposure?

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Speaker 8: Where do they have to lighten up?

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Speaker 7: But we cover quite a few companies that, you know,

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Speaker 7: there's one example I have where, you know, several years

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Speaker 7: ago they had.

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Speaker 8: Fifty percent of their product coming out of China.

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Speaker 7: Today it's twenty Actually, it's probably getting close to twenty.

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Speaker 8: It was twenty five percent last year. It's probably twenty

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Speaker 8: ish this year.

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Speaker 7: So like you see the retailers move and reposition through

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Speaker 7: the past couple of years, and I think we'll see

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Speaker 7: more of that accelerate over the next six months.

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Speaker 2: Job, it's going to hear from you, sir, good stuff.

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Speaker 2: Joe Foundman there of TAUSI Advisory Group. We'll begin this

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Speaker 2: out with equity's lower and bonds running as Ukraine carries

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Speaker 2: out strikes in Russia using US weapons. Joining us now

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Speaker 2: is Emily Rowland of John Hancock. Emily, welcome to the program.

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Speaker 2: I want to turn to a quote that came from

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Speaker 2: Lori Calvicina of RBC to kick off the training wig

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Speaker 2: and she said this about valuations and positioning and sentiment

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Speaker 2: that the US equity market seems to have little capacity

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Speaker 2: to absorb bad news. What have we learned this morning

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Speaker 2: on that front, Well, we've seen the.

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Speaker 9: Modest bid John, for some of the geopolitical hedges out there.

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Speaker 9: You know, you're seeing the dollar strengthen you're seeing gold

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Speaker 9: catch a bid here, you know.

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Speaker 5: Notably, oil prices.

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Speaker 9: Are still looking at WTI below seventy dollars in barrel.

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Speaker 9: So we saw a big move of course yesterday that's

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Speaker 9: moderated a bit today and then again a modest bid

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Speaker 9: for treasuries here.

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Speaker 5: I think the treasury bond market.

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Speaker 9: Has been focused on nothing but the potential for pro

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Speaker 9: cyclical policies under the Trump administration. So you're seeing a

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Speaker 9: bit of a shift here, but it's certainly nothing that's

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Speaker 9: overly notable here given the prospects for heightened geopolitical risk.

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Speaker 2: When you think about all these issues on the table

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Speaker 2: at the moment, emily, it just feels like it might

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Speaker 2: be US driven in this case, a decision to allow

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Speaker 2: Ukraine to strike Russia inside Russia with US missiles, but

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Speaker 2: it's Europe's problem. Likewise with tariffs, tariffs ultimately Europe's problem.

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Speaker 3: This is just.

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Speaker 2: Reinforce the view of US exceptionalism. It's next year.

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Speaker 5: Well, certainly that's what markets are telling us.

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Speaker 9: You know, we've seen massive outperformance from US assets here

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Speaker 9: again that dollar strengthening trade. We've seen this almost speculative

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Speaker 9: frenzy across risk assets in the United States, everything from

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Speaker 9: cryptocurrencies and crypto related assets to lower quality grows stocks.

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Speaker 9: I think one of the things that we need to

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Speaker 9: think about here is the consensus around the US is

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Speaker 9: so overwhelmingly positive right now and when the consensus moves

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Speaker 9: to one side of the boat, sometimes it can flip.

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Speaker 9: We want to think about, you know, potentially fading some

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Speaker 9: of the move that we've seen into more speculative assets

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Speaker 9: and redeploying assets into higher quality, more defensive options here,

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Speaker 9: given the massive run that we've seen in more speculative assets.

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Speaker 1: So emily sell Tesla buy ten year treasure yields.

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Speaker 9: Well, you know, I think you got to own some

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Speaker 9: of that stuff. You know, Tesla's certainly come a long way,

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Speaker 9: you know. We look at, of course, the big event

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Speaker 9: after the close tomorrow with Navidia's earnings. Navidia is the

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Speaker 9: number one high quality stock. So we want to continue

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Speaker 9: to embrace quality, and that's according to quality indices that

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Speaker 9: we look at. We want to look for companies with

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Speaker 9: great balance sheets, good return on equity, a good ability

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Speaker 9: to maintain margins here, but I think the name of

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Speaker 9: the game right now is really quality at a reasonable price.

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Speaker 9: How can we think about embracing those quality companies but

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Speaker 9: not overpaying for them? And so we're following the earnings

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Speaker 9: going to be really interesting to see if Navidia can

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Speaker 9: once again deliver tomorrow.

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Speaker 1: Are we underestimating how much of a macro story and

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Speaker 1: video is going to be then basically this could be

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Speaker 1: the main event of the week in a pretty significant

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Speaker 1: way to send markets in a direction about if they

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Speaker 1: can raise and be in the same kind of way.

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Speaker 9: Yeah, I mean, I think it's just because of the

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Speaker 9: sheer size of the stock.

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Speaker 5: It's got to be critical. You know. I've been spending

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Speaker 5: a lot of time.

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Speaker 9: With investors over the course the last few weeks contending

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Speaker 9: with some of the issues around, for example, emerging market

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Speaker 9: equities and what to do with those positions. I've gotten

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Speaker 9: a lot of questions about you know, India for example,

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Speaker 9: and we've had those conversations. But it's like, look, Navidia

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Speaker 9: is twenty times a side of some of these markets.

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Speaker 9: So that's why it's so critical here to portfolios. Again,

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Speaker 9: we want to be there because the earnings are delivered

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Speaker 9: and it's high quality. We've got to think about diversifying

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Speaker 9: that exposure and finding areas of the market that are

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Speaker 9: still going to give us quality. Make paps industrials for example,

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Speaker 9: what that actually are trading at more reasonable valuations.

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Speaker 6: Emily, in your notes you talk about and you're talking

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Speaker 6: about here that you push back against this consensus, this

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Speaker 6: idea against higher inflation, higher growth narrative.

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Speaker 3: Then what do you.

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Speaker 6: Look at when you think about these policies that potentially

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Speaker 6: we're going to see next year, which many say they

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Speaker 6: actually could be inflationary.

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Speaker 5: Well, Amory, I.

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Speaker 9: Think potentially is the right word, and I think a

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Speaker 9: lot of us have been paying the word potentially over

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Speaker 9: the last couple of weeks.

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Speaker 5: Here.

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Speaker 9: You know, we looked back at the last Trump administration

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Speaker 9: and yes, there were some different dynamics from a macro perspective,

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Speaker 9: but core PCE, which you know is a FED preferred

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Speaker 9: measure of inflation average one point seven percent in the

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Speaker 9: last Trump administration. If these tariffs are more targeted, you

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Speaker 9: may see the impact to inflation be much more muted,

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Speaker 9: maybe a.

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Speaker 5: Tenth of one percent.

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Speaker 9: Per a lot of the economists that we've talked to

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Speaker 9: about this issue, the impact of these potential immigration issues

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Speaker 9: actually are going.

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Speaker 5: To possibly way on growth. So we're looking at some

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Speaker 5: of the.

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Speaker 9: Things that the bond market's really not sniffing out right now.

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Speaker 9: For one, wage growth that is coming down meaningfully, quits,

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Speaker 9: job quit rates are down, which should put downward pressure

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Speaker 9: on wage growth and corporate profits. Housing supply is increasing

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Speaker 9: significantly right now, which should cause that tricky shelter component

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Speaker 9: of inflation to finally moderate in our view. And then

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Speaker 9: the commodity story, which we mentioned earlier. If you're expecting

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Speaker 9: some kind of nineteen seventies boom and inflation, that has

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Speaker 9: to come alongside higher commodity prices, and we simply aren't

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Speaker 9: seeing it now, especially given more muted demand out of China.

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Speaker 9: So we think every backup in bond yields represents a

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Speaker 9: nice opportunity to lean into the income that's available, which

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Speaker 9: is now close to five percent on the aggregate bond inducks.

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Speaker 6: Two policy proposals you didn't mention. I'd love to get

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Speaker 6: your view on the idea of we're going to see

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Speaker 6: tax cuts at the end of next year, and also

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Speaker 6: that this is a president that wants to see deregulation

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Speaker 6: throughout the Washington complex.

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Speaker 9: Yeah, the deregulation story, I think you're primarily seeing in

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Speaker 9: the outperformance of financials. Regional banks are on an absolute tear.

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Speaker 9: Same thing happened post the twenty sixteen election. That trade

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Speaker 9: lasted for a couple of months after the election and

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Speaker 9: then basically moved sideways.

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Speaker 5: Not to say there wasn't value.

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Speaker 9: There, but really the bulk of the outperformance came on

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Speaker 9: the news. You know, we're also looking at corporate tax

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Speaker 9: cuts potentially again potentially, and that one's very accreative to

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Speaker 9: corporate earning. If you look at the S and P

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Speaker 9: five hundred next twelve month earnings growth, you saw spike

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Speaker 9: in twenty seventeen once those once those tax cuts went through.

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Speaker 5: So I think investors are betting on that.

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Speaker 9: The challenge is a lot of this great news, whether

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Speaker 9: it's continued stock prices running, whether it's the economy doing well.

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Speaker 5: A lot of that is in.

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Speaker 9: The price on the equity side, with the S and

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Speaker 9: P five hundred trading at about twenty two times forward

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Speaker 9: earnings twenty seven times trailing, which is expensive as stocks

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Speaker 9: have ever been third most expensive in history. So we

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Speaker 9: want to think about the fact that, you know, can

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Speaker 9: we get much more multiple expansion. We've just seen a

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Speaker 9: massive ball market that was all driven by multiple expansion.

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Speaker 9: Earnings have actually gone pretty much nowhere over the last

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Speaker 9: couple of years.

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Speaker 5: That's the reason we're thinking about bonds.

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00:20:15,480 --> 00:20:18,480
Speaker 9: We don't think that their price appropriately for what comes next.

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00:20:18,840 --> 00:20:19,920
Speaker 5: Ducks are already there.

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00:20:20,200 --> 00:20:21,560
Speaker 3: Emily I have to say.

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00:20:21,760 --> 00:20:24,159
Speaker 1: What I'm hearing from a lot of different investors is

447
00:20:24,359 --> 00:20:26,680
Speaker 1: a desire to try to get out from under the

448
00:20:26,680 --> 00:20:30,600
Speaker 1: whipsaw headlines of you know, the Treasury secretary race and

449
00:20:30,920 --> 00:20:33,240
Speaker 1: whether we will get tariffs and how much or how

450
00:20:33,320 --> 00:20:35,199
Speaker 1: not to and all of these kinds of things and

451
00:20:35,480 --> 00:20:37,840
Speaker 1: figure out what you can lean into. That's just sort

452
00:20:37,840 --> 00:20:40,320
Speaker 1: of a constant, is that basically what you guys have

453
00:20:40,400 --> 00:20:43,080
Speaker 1: been doing. How do we strip out the signal from

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00:20:43,160 --> 00:20:46,840
Speaker 1: the noise and really figure out our strategy independent of

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00:20:46,880 --> 00:20:48,320
Speaker 1: what some of these policies might be.

456
00:20:49,200 --> 00:20:51,520
Speaker 9: Yeah, and Lisa, You're right, it's tough and it might

457
00:20:51,560 --> 00:20:54,640
Speaker 9: be a little boring to people to you know, kind

458
00:20:54,640 --> 00:20:56,920
Speaker 9: of try to stay away from some of the conjecture

459
00:20:57,040 --> 00:21:00,480
Speaker 9: and think about what really drives markets or time.

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00:21:00,560 --> 00:21:01,560
Speaker 5: You know, you look at some of the.

461
00:21:01,520 --> 00:21:05,000
Speaker 9: Relative performance under the last two administrations and it's actually

462
00:21:05,160 --> 00:21:08,480
Speaker 9: exactly the opposite of what you might have guessed. For example,

463
00:21:08,560 --> 00:21:12,320
Speaker 9: under the Abiden administration, the best performing asset class by

464
00:21:12,400 --> 00:21:15,000
Speaker 9: far has been energy, Probably not what you would have

465
00:21:15,000 --> 00:21:17,520
Speaker 9: thought given the green energy policies that have been put

466
00:21:17,560 --> 00:21:20,800
Speaker 9: in place under Trump. The first Trump one of the

467
00:21:20,840 --> 00:21:24,560
Speaker 9: best performing asset classes you could have owned was Chinese stocks.

468
00:21:24,960 --> 00:21:27,840
Speaker 9: It's because we were in a period of global sannchronized growth.

469
00:21:27,880 --> 00:21:30,840
Speaker 9: That macro story was far more important than what was

470
00:21:30,880 --> 00:21:33,359
Speaker 9: happening from a policy perspective. So we think if you

471
00:21:33,440 --> 00:21:35,800
Speaker 9: can try to cancel out some of the noise, focus

472
00:21:35,840 --> 00:21:39,359
Speaker 9: on earnings trends, focus what's happening from an economic standpoint,

473
00:21:39,600 --> 00:21:41,760
Speaker 9: that's going to lead you to a better path forward.

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00:21:41,760 --> 00:21:44,080
Speaker 5: As far as cross asset performance, we.

475
00:21:44,119 --> 00:21:46,720
Speaker 1: Did just get Walmart earnings, we get Target tomorrow.

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00:21:46,760 --> 00:21:47,920
Speaker 3: We also get in video.

477
00:21:48,000 --> 00:21:51,119
Speaker 1: We've talked about in Vidia. Other than in Vidia, is

478
00:21:51,119 --> 00:21:53,520
Speaker 1: there an earning story that you think is kind of

479
00:21:53,560 --> 00:21:57,119
Speaker 1: a north star of some sort of signal versus just

480
00:21:57,160 --> 00:21:57,879
Speaker 1: simply noise.

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00:21:58,920 --> 00:22:01,640
Speaker 9: Well, I think it's really about the broader story here,

482
00:22:01,680 --> 00:22:04,160
Speaker 9: and the bar is just going up. You know, analysts

483
00:22:04,160 --> 00:22:08,480
Speaker 9: are penciling in fifteen percent earnings growth in twenty twenty five,

484
00:22:08,560 --> 00:22:11,000
Speaker 9: and we think that's an awfully high bar given the

485
00:22:11,040 --> 00:22:14,520
Speaker 9: fact that we're seeing decelerating growth trends. It doesn't mean

486
00:22:14,520 --> 00:22:17,879
Speaker 9: that there aren't pockets of the market that can achieve that,

487
00:22:18,280 --> 00:22:20,720
Speaker 9: but you've got to be really, really mindful here in

488
00:22:20,800 --> 00:22:23,879
Speaker 9: terms of reaching too far for risk, And again embracing

489
00:22:23,920 --> 00:22:27,560
Speaker 9: those higher quality, more defensive options. We like areas like

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00:22:27,680 --> 00:22:31,800
Speaker 9: utility companies. We continue to like technology companies at a

491
00:22:31,840 --> 00:22:36,400
Speaker 9: reasonable price. It's really about that internal market rotation and frankly,

492
00:22:36,440 --> 00:22:39,200
Speaker 9: finding an active manager that can identify those stories.

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Speaker 2: Emily, I appreciate your time this morning. Thanks for catching

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Speaker 2: up with us. Em Many run in there of John Hancock.

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Speaker 2: This is the Bloomberg Seventans podcast, bringing you the best

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00:22:48,480 --> 00:22:51,560
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Speaker 8: M