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

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

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

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

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Speaker 1: us live on YouTube for the next.

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Speaker 2: Good amount of time. Bob Michael will join us. You

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Speaker 2: know him from the Fed decides driving all of JP

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Speaker 2: morgan fixed income. Huge advice he has to give to

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Speaker 2: mister Diamond and the senior management. I'd go back to

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Speaker 2: Maynard Keynes at Bretton Woods, but why not. Let's go

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Speaker 2: back to the guy that really said it, Paul Samuelson,

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Speaker 2: his iconic textbook of nineteen forty eight. When the facts change,

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Speaker 2: I change. What do you do, sir? For Bob Michael

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Speaker 2: and JP Morgan Have the facts changed?

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Speaker 3: Well, first, Tom, thank you for reminding Jess forget about

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Speaker 3: this equity stuff. Bonds are at the top of the

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Speaker 3: Capitol staff.

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Speaker 2: This is really important, folks. Bob and I are going

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Speaker 2: to talk about this. The way you learn that bonds

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Speaker 2: matter when you're a mouthy equity guy like me is

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Speaker 2: you lose money and realize you wouldn't have lost it

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Speaker 2: if you paid attention to bonds continue.

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Speaker 3: We welcome everyone who wants to conserve capital.

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Speaker 2: Where are we right now? The facts change, mister Michael.

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Speaker 3: I'm going to up you one on Maynard Keynes and

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Speaker 3: go with rogue off Ryan Hart. I wonder what they're thinking.

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Speaker 3: After spending years writing a series of papers on financial

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Speaker 3: repression and warning governments about the problems with excessive borrowing

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Speaker 3: and debt to GDP climbing, it has all changed. What

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Speaker 3: we knew as core Europe and fiscal austerity is gone.

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Speaker 3: They've looked at the US and China. They want to

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Speaker 3: join the party and they're coming in and doing it. So, yes,

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Speaker 3: everything has changed.

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Speaker 2: Two days after this, I had the honor of David

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Speaker 2: Folkertzlande of Deutsche Bank, who you and I know is

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Speaker 2: work with Peter Garber in AWE, and he was heated

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Speaker 2: that Europe would shift to fiscal liquidity. So I guess

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Speaker 2: that's happening now. Within all the research capabilities of your

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Speaker 2: mind platform and your economics platform, is your confidence Europe

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Speaker 2: can make the shift with or without NATO.

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Speaker 3: We would argue they have to. If you look back

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Speaker 3: over the last couple decades, Europe has underinvested in itself,

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Speaker 3: and that's a result of decades of fiscal austerity. And

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Speaker 3: they realize, certainly in Germany, that they have to catch up.

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Speaker 3: They have to invest in their military, they have to

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Speaker 3: invest in fiber optic, they have to invest in roads, bridges,

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Speaker 3: all that kind of stuff, and they're going to and

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Speaker 3: they have the fiscal capacity to do it.

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Speaker 4: So when we're looking at the ten year treasury peaking

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Speaker 4: at around actually four point eight in the middle of January,

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Speaker 4: to where it is now around four to two, what

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Speaker 4: do you think the bond market is telling us in

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Speaker 4: the US and the economy.

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Speaker 3: The bond market is telling us, we are your safe harbor.

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Speaker 3: We are the anchor in the storm. We have yield now,

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Speaker 3: so when there's volatility in policy, when there's volatility and

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Speaker 3: risk assets, come in and join us. We will protect you.

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Speaker 4: So what is the best way when you're talking to

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Speaker 4: your clients to position at this point.

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Speaker 3: I'm having meetings with clients every single day. I had

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Speaker 3: a meeting yesterday with the University Endowment thinking about these issues,

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Speaker 3: and we met with them five years ago. Five years ago,

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Speaker 3: the aggregate bond market was yielding two two and a

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Speaker 3: quarter percent today it's hielding four and a half percent.

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Speaker 3: They didn't invest in, they're coming and now they're making

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Speaker 3: smart decisions. Investors want to get into a bond market

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Speaker 3: with yield you're starting at four and a half percent,

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Speaker 3: can construct a portfolio of over five percent. That's very

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Speaker 3: different than zero and negative interest rate policy.

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Speaker 2: I look at the yield space and the answer is

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Speaker 2: we've got a Bob Michael vector. You have called for

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Speaker 2: price up, yield down. Maybe this is not the reasons

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Speaker 2: that you looked for, but can you get this price up,

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Speaker 2: yield down with tangible economic growth to sustain the machine?

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Speaker 2: Dovetail this with Michael Feroli's work. Are we heading towards

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Speaker 2: some form of Nber recession where we don't get the

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Speaker 2: growth or are you're more optimistic that we can get

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Speaker 2: the Michael yield plus some potential GDP growth.

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Speaker 3: I think the Fed has done a really good job

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Speaker 3: of taking us into a soft landing. I think they're

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Speaker 3: going to pull it off. I think we're going to

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Speaker 3: get yields to stabilize here, maybe the front end come

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Speaker 3: down a little bit. The FET still feels uncomfortable that

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Speaker 3: they're too far away from their neutral rate. I think

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Speaker 3: there are a couple more cuts coming. I'd like yields

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Speaker 3: to just stabilize. And here I don't actually want the

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Speaker 3: ten year to tray too far below the mid forest.

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Speaker 3: I wish it would just stay there. I wish the

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Speaker 3: two year would stay about four percent and give investors

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Speaker 3: the opportunity to get into this bond market.

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Speaker 2: You and I know, you know with the Pope so Ill,

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Speaker 2: there's the Vatican and we hope for his healthy recovery.

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Speaker 2: Bob Michael for you and me, the Vaticans on Madison Avenue,

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Speaker 2: who at the JP Morgan Library, and you go in

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Speaker 2: that red velure room where he locked the door and said,

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Speaker 2: we have to save the country. We didn't have a

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Speaker 2: FED in the Gilded Age. Doug Erwin's in the Ft,

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Speaker 2: I believe it is today with a brilliant interview of

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Speaker 2: Dartmouth saying, look, it is the nineteenth century. Abby Joseph

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Speaker 2: Cohen said yesterday it is the nineteenth century. How does

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Speaker 2: this FED help the nation? Given tariffs?

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Speaker 3: The FED has to balance all of these things. And

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Speaker 3: I think a month ago everyone and the market looked

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Speaker 3: at tariffs as an impulse to hire inflation. Today they're

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Speaker 3: looking at it as a drag on growth the material one.

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Speaker 3: I tend to look at tarifs as economy killers. So yeah,

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Speaker 3: you get a price shock hire, but that's going to

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Speaker 3: dial down aggregate final demand. And that's what I think

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Speaker 3: the FED will be focusing on. They're going to be

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Speaker 3: laser focused on the labor market. They're going to see

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Speaker 3: if businesses and households retrench.

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Speaker 2: I agree with you in the labor market, kerl Weinberg

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Speaker 2: on yesterday high Frequency Economics solficer Leman is at a

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Speaker 2: four point eight percent unemployment rate in the vicinity of

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Speaker 2: labor day. We welcome all of you on your commute

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Speaker 2: accrastination on YouTube worldwide. Good evening in India. I've got

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Speaker 2: a special focus off of Ray YouTube on what you're

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Speaker 2: doing in Bangalore and in Mumbai. We say good morning

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Speaker 2: internationally on YouTube. Subscribe outit YouTube to Bloomberg Podcast, growing

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Speaker 2: each and every day.

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Speaker 4: Jess Well, Bob, this is as you know last week,

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Speaker 4: we're going to hear FED speakers before they go into

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Speaker 4: that blackout period before the decision in the middle of

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Speaker 4: this month, and of course we will hear from Fedshaer

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Speaker 4: Jerome Pale on Friday when he gives a keynote speech

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Speaker 4: at the Chicago Boost twenty twenty five US Monetary Forum.

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Speaker 4: So what do you think markets want to hear from

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Speaker 4: Fed officials before this week wraps up? Versus in reality,

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Speaker 4: what we will end up hearing from them.

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Speaker 3: I think what we want to hear is how they're

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Speaker 3: weighing taris and are they still looking for an opportunity

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Speaker 3: to bring rates down to what they believe is a

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Speaker 3: neutral rate. We'll also get the infamous dot plot, so

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Speaker 3: we'll have some idea of how much higher the long

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Speaker 3: term neutral FED funds rate will have crept up. I

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Speaker 3: think it goes up about a quarter of a percent.

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Speaker 3: I'd expect jpwell to be very very balanced and basically

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Speaker 3: try to take a pass.

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Speaker 2: It's almost medical. First, do no harm. Tell me about

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Speaker 2: the dynamics of the market. I noticed like three months,

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Speaker 2: seven year when inverted the other day. Nothing I ever

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Speaker 2: look at. But how does when you go? Bob has

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Speaker 2: three bloombergs with twelve screens. Finally, the glow in the

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Speaker 2: new JP Morgan building, it shines off Citadel across the street.

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Speaker 2: It's amazing how that were They're on their binoculars across

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Speaker 2: what's Bob Michael doing today. They're looking at them on

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Speaker 2: your Bloomberg. How do you perceive the vanilla two tens spread,

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Speaker 2: the ten year or the two year real yield? What

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Speaker 2: does Bob Michael look at to ascertain this market?

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Speaker 3: What I'm looking at is is yield settling in at

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Speaker 3: levels higher than I believed a year ago they would

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Speaker 3: settle in at. And I like it. I like the

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Speaker 3: fact that we may have a German yell curve from

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Speaker 3: two percent to three percent, we may have a US

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Speaker 3: yell curve from four percent to four and a half

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Speaker 3: percent two tens. I like credit spreads holding where they

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Speaker 3: are because they're pricing in a soft landing. Those are

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Speaker 3: the things I look for, and I think it's a

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Speaker 3: great environment. By the way, we didn't talk about Japan

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Speaker 3: ten year Japan one and a half amazing.

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Speaker 2: Jordan Rochester at Missoulu. You should have hired him. Jordan

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Speaker 2: Rochester says, this is a sea change for Japan.

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Speaker 3: I can't can't remember the last time we were one

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Speaker 3: and a half percent.

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Speaker 2: Martin years, the late Martin Feldstein who was exquisite on this,

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Speaker 2: Robbie Feldman at Morgan Stanley, that's a different bank, Bob

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Speaker 2: uh They you know they said this would never happen,

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Speaker 2: and here we are. Here, we are happening. You're laughing

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Speaker 2: at me, Bob, Bob.

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Speaker 3: I think I think we were one before glass, but

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Speaker 3: I'm not sure.

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Speaker 2: It was a d burgercepthing that we won't go there,

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Speaker 2: folks and said, when mister Diamond comes in, we'll harass

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Speaker 2: him about it. Bob. I look at this market and

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Speaker 2: your advising clients right now. Is it a total return market?

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Speaker 2: The great Dan fuss at Lumas sales. Is it that

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Speaker 2: kind of market where you can make total return or

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Speaker 2: you're clipping coupons in the basement.

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Speaker 3: I think you're going to get some total return with

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Speaker 3: yield settling a bit lower with the FED coming in

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Speaker 3: and cutting rates a couple more times this year. But

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Speaker 3: I think it's mostly a Carrie market. I think it's

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Speaker 3: mostly an opportunity for active managers to do what we

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Speaker 3: used to do pre financial crisis. When sectors get a

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Speaker 3: little bit ahead of themselves, you dial them down and

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Speaker 3: go into sectors that live. I think this is also

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Speaker 3: a bond market for more diversified portfolios to look overseas.

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Speaker 3: Now it's safe to go into nine dollars assets.

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Speaker 2: Just this is so charming. There was what we call

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Speaker 2: the blue Book, which was a standard and Poores thick

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Speaker 2: blue book and the value line you trip over on

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Speaker 2: the floor and Bob and I would be going, oh

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Speaker 2: the Boise cascade. It looks so good today. It's like

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Speaker 2: you know, remember it's like a real bond market.

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Speaker 5: Yeah.

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Speaker 3: Then we didn't know how to price it. There was

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Speaker 3: no babk. We had to punch it into our Monro

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Speaker 3: bond calculators.

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Speaker 2: Yeah. Bill grow still has his own this Good morning Bill.

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Speaker 2: Out on the left coast, you had a Monro trader

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Speaker 2: and he and Charlie Gogelact were kick field goals. They

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Speaker 2: tried to make three points on a twenty year piece

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Speaker 2: and a guy named Secunda in Bloomberg showed up and

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Speaker 2: they said, no, you're not in overnight. Just the museum's

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Speaker 2: right behind us here, folks. Overnight, the Bob Michael act

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Speaker 2: went away because people can do to convex the duration.

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Speaker 2: Boom boom, Oh God, I can't charge your field goal.

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Speaker 2: Get another question.

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Speaker 4: Of course, I have to bring up our star everyone's

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Speaker 4: favorite topic when people want to debate about the neutral rate.

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Speaker 4: Because you were bringing up the dop blots. Obviously we

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Speaker 4: get those quarterly. We last saw it in December, so

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Speaker 4: when we get those in a couple of weeks from

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Speaker 4: the Fed. The longer term rate that they had updated

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Speaker 4: was at three used to be closer in recent years

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Speaker 4: to two and a half percent. Where do you expect

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Speaker 4: when people are debating where the neutral rate is actually is?

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Speaker 3: Remember they started doing this in twenty twelve because they

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Speaker 3: had gone to QE. They had brought rates down this zero.

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Speaker 3: They didn't think we in the bond market were smart

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Speaker 3: enough to know what neutral was anymore, so they were

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Speaker 3: going to help us out. That first long term neutral

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Speaker 3: dot was four and a quarter percent, so that was textbook.

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Speaker 3: That's two percent inflation targeting, plus the long term real

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Speaker 3: yield on the FED funds rate was two and a

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Speaker 3: quarter percent. Four and a quarter that's where we are today.

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Speaker 3: I think it's closer to four than three twenty seconds.

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Speaker 2: Is it stagflation or is it legit damp and but

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Speaker 2: good nominal GDP?

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Speaker 3: I think it's good nominal GDP. I think we're getting

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Speaker 3: the bad stuff now as far away from the midterms

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Speaker 3: as possible. The good stuff will come at the back

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Speaker 3: end of this year. Extension of the tax cutting Jobs

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Speaker 3: Acts some deregulation closer to the midterms, if you will.

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Speaker 2: I'll editorialize, folks, for those of you in a panic

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Speaker 2: after what we saw it in historic Tuesday. I agree

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Speaker 2: with mister Michael, Bob Michael, thank you so much, with JP.

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Speaker 6: Morgan and the spirits a nation here and on what

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Speaker 6: we see in a constructive nominal GDP, given all the

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Speaker 6: policy out there.

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Speaker 1: Listening to the Bloomberg Surveillance Podcast. Catch us live weekday

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Speaker 1: afternoons from seven to ten am Eastern Listen on Apple

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Speaker 1: Karplay and Android Otto with the Bloomberg Business app, or

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Speaker 1: watch us live on YouTube.

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Speaker 2: Joly Now My Grammarian Terence Hayes joins us with Beengaea policy. Terry,

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Speaker 2: thank you for the love note yesterday. Mark, the wonderful

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Speaker 2: Mark Crumpton keeps a list of the names I mispronounce,

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Speaker 2: starting with Jess Manton, and it's a long list. Terry,

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Speaker 2: thank you for adding to it yesterday. So eighty five

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Speaker 2: percent of potassium chloride that Republicans in the Midwest need

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Speaker 2: comes from Canada. You got fenestra in the fourth Congressional

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Speaker 2: District of Iowa. When does the Republican from Southwest Iowa,

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Speaker 2: dial one eight hundred Trump and say stop it. When

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Speaker 2: does that happen?

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Speaker 7: Terry the case of Brandy Finstra, I don't think that

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Speaker 7: happens at all, frankly. But the issue here is kind

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Speaker 7: of how to manage the tariff relationship and what what

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Speaker 7: the United States gets out of it?

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Speaker 8: Uh.

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Speaker 7: Scott Besson has a great uh, a great phrase for this,

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Speaker 7: and the you know the essence of it is that, uh,

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Speaker 7: it's path dependent. It's path dependent on upon what the

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Speaker 7: other side does in tariff negotiations. So uh, I doubt

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Speaker 7: mister Fienstra is going to be in a situation where

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Speaker 7: he needs more potash from other So you're.

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Speaker 2: Optimistic where you able to work out of this or

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Speaker 2: do we get into the game theory of reciprocity tip

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Speaker 2: for tap Well.

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Speaker 7: I think the answer is both. Frankly, you're going to

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Speaker 7: have individual tariff negotiations with Canada and Mexico ongoing based

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Speaker 7: on geopolitical matters. You're going to get the UH, You're

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Speaker 7: going to get the reciprocity overlay on top of it.

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Speaker 7: I think what markets aren't fully digesting is that the

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Speaker 7: endgame of this is not more and more tariffs. The

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Speaker 7: endgame of this for the for the Trump people is

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Speaker 7: less and less tariffs. And I don't say that in

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Speaker 7: any sort of matter or manner, but the goal is

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Speaker 7: to actually reduce trade barriers.

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Speaker 2: So let me bring in jes Met here, Jess to

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Speaker 2: Terry Haines. Don't say I'll.

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Speaker 3: Avoid of that.

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Speaker 4: Terry is something I'm thinking about heading into next week

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Speaker 4: because those implied volatility is picking up steam for the

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Speaker 4: equity market here. So, as you know, we still have

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Speaker 4: that deadline for a government shutdown coming on March fourteenth,

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Speaker 4: but then also on March twelfth, even ahead of that,

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Speaker 4: there's still is supposed to be those tariffs on all

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Speaker 4: aluminum products, And so what do you think that really

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Speaker 4: means is we're getting closer to those deadlines as well

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Speaker 4: as other ones that are supposed to happen in the

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Speaker 4: beginning of April.

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Speaker 7: I think there's still going to be some tariffs on aluminum.

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Speaker 7: They're going to want to show Trump's going to want

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Speaker 7: to show bona fides on that, and I think there's

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Speaker 7: a rising potential for a government shutdown. You see Democrats

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Speaker 7: last night grasp you get anything they can to show

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Speaker 7: resistance to show differences and the shutdowns, because what they're

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Speaker 7: about at root is more spending. What Trump's about it

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Speaker 7: root is less spending. You know, and you know there

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Speaker 7: are three parties in the negotiation Congressional Democrats, Republicans, and Trump.

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Speaker 7: Two of those three benefit politically from a shutdown, frankly,

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Speaker 7: Democrats and Trump. So you know, there might be one

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Speaker 7: short term that never matters for markets particularly, but stylistically

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Speaker 7: it's a bad look.

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Speaker 2: How do you respond, Terry Haynes to where is John Thune? Well,

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Speaker 2: people say, Okay, the House is fracticed, everybody's running for

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Speaker 2: office starting Friday. Great, the Senate is more measured. Where

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Speaker 2: is the senator from the Dakotas John Thune?

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Speaker 7: I think has done a very good job of keeping

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Speaker 7: everybody together number one in his party. Number two, he's

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Speaker 7: doing a very good job of quietly establishing the Senate

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Speaker 7: as an effective counter to Trump. You have to look

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Speaker 7: no farther than defense spending to get that. At a

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Speaker 7: time where markets think that defense spending is going down

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Speaker 7: because of some cost savings that Pete Hegsas wants to do,

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Speaker 7: the reality is that there's kind of a dream team

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Speaker 7: of senators that are going to pump up defense spending

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Speaker 7: in no small part to react to China's announcement that

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Speaker 7: it's going to increase by seven plus percent.

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Speaker 2: I mean, I look Terry at Ruster. Scharmer's book arguably

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Speaker 2: could be my book of the year. I'm not there yet,

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Speaker 2: folks on capitalism, and basically he says, whatever the process,

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Speaker 2: spending will go up. After the speech last night, after

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Speaker 2: what we've witnessed deep into the Trump second term, do

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Speaker 2: you see any frugality out there. I don't observe it.

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Speaker 7: No, there's no frugality out there. And the reason why

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Speaker 7: is because they judge. I mean, to them, this is

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Speaker 7: not economic policy only. This is not an economic crisis

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Speaker 7: or problem only. What this is all about is marshaling

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Speaker 7: and improving the US economy as much as possible, turbocharging

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Speaker 7: it to meet geopolitical goals. Everything's arts from debt service.

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Speaker 7: We now pay more in debt service than anything else.

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Speaker 7: That is an intolerable situation if you're interested in United

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Speaker 7: States hegemony, as Trump is, and what they're going to

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Speaker 7: want to do is turbo charge the economy, frankly to

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Speaker 7: meet those geopolitical needs. That's one reason why you heard

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Speaker 7: so much about manufacturing for defense. Last night shift building, steelmaking,

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Speaker 7: all that.

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Speaker 2: Oh, that's the politics of the moment, Terry Haynes with us,

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Speaker 2: and we're going to continue in a moment. A bit

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Speaker 2: ago seven oh two am a headline the United States

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Speaker 2: cuts off intelligence sharing with Ukraine. That from the Financial Times,

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Speaker 2: and now a headline coming out a Ukrainian official says

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Speaker 2: the nations still getting US intelligence. We'll see what the

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Speaker 2: next headline says jes Terry.

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Speaker 4: Of course, there's so much focus on those pro growth

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Speaker 4: expectations potentially from tax cuts and deregulation. What is exactly

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Speaker 4: the timeline of when investors as well as Americans could

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Speaker 4: potentially see some of that happen through Krongers.

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Speaker 7: Well, this is the problem. Just is that in a nutshell,

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Speaker 7: is that Trump this time out is front loading the

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Speaker 7: bad news for markets, the tariff's news, with the expectation

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Speaker 7: that things are going to improve throughout the year in

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Speaker 7: markets as they understand that the tax cuts, deregulation, energy dominance,

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Speaker 7: and so on. Is very likely that happens, the tax

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Speaker 7: cut bill happens in the fourth quarter of calendar twenty

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Speaker 7: twenty five. I'd give it eighty percent today. Eight years ago,

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Speaker 7: I was almost alone in the markets and telling people

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Speaker 7: that the task cut bill was going to happen and

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Speaker 7: it was going to be a big one. But the

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Speaker 7: same dynamic exists today. It's going to take them that

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Speaker 7: long to get to the finish line for a variety

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Speaker 7: of procedural reasons.

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Speaker 2: Hey, Terry, I got to get this in from Greg

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Speaker 2: Juro and Bloomberg government, and you're expert at this. What

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Speaker 2: are Republicans saying to mister Trump, President Trump, who are

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Speaker 2: in in close districts. Do they have a say in

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Speaker 2: the discussion or are they so marginalized nobody cares.

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Speaker 7: Well, they have a huge say in the discussion. And

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Speaker 7: you know, I point immediately to the New York and

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Speaker 7: New Jersey members to whom Trump has owed a House

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Speaker 7: majority on the salt negotiations. Right, So, eight years ago,

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Speaker 7: salt didn't matter at all. Salt went away. This time out,

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Speaker 7: Trump's listening very closely and positive to those who want

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Speaker 7: the salt deduction to come back. They will fundamentally, they'll

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Speaker 7: play the smartest politics they can and try to make

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Speaker 7: sure they do everything to maintain their majorities. Part of

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Speaker 7: that is getting the tax bill done in fourth quarter

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Speaker 7: of twenty five, so that they can run on it

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Speaker 7: right right, benefits in twenty six thirty seconds.

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Speaker 2: Is there an El Domato out there to save the

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Speaker 2: middle ground? Gop.

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Speaker 7: Yeah, there's a bunch of them, actually, you know, and

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Speaker 7: I'd put Thune in there among others. But yeah, there's

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Speaker 7: there's a bunch of them. And you know, there are

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Speaker 7: lots of good pragmatists French Hills one. So yeah, I

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Speaker 7: think there's a bunch out there.

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Speaker 5: Terry.

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Speaker 2: I email me every time I love emails from Terry.

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Speaker 2: Email me Terry, every time I mispronounced something. It'd be great,

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Speaker 2: Terry as pangea. Thank you so much. There in the

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Speaker 2: state of play.

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Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

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Speaker 1: starting at seven am Eastern on Apple Corplay and Android

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Speaker 1: Auto with the Bloomberg Business app. You can also listen

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Speaker 1: live on Amazon Alexa from our flagship New York station,

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Speaker 1: Just say Alexa play Bloomberg eleven thirty.

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Speaker 2: Someone who's absolutely nailed this, Bullmark at Brian Belski joins

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Speaker 2: from FEMO. Right now, have you adjusted your call? Wow?

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Speaker 8: No, I mean, as I stand here next to a

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Speaker 8: Red Sox.

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Speaker 2: Excuse me, Can we notice Lisa how canned Intersted? He

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Speaker 2: is everybody else, you know, it's all about the deep sleep.

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Speaker 8: Midnight Tom and I get that hotel room down to

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Speaker 8: about sixty degree.

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Speaker 2: Where are we right now? Have you made an adjustment?

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Speaker 8: No, we haven't. In fact, we're sticking behind our sixty

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Speaker 8: seven hundred target. And remember we put our peace out

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Speaker 8: for the year ahead November eighteenth. Typically, historically during an

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Speaker 8: election year, we do it right away after the election,

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Speaker 8: as soon as possible. And a lot of quite frankly,

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Speaker 8: strategies that have been late to the game in terms

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Speaker 8: of entering this bull market have much higher targets than

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Speaker 8: us because they published them after And that's okay, welcome

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Speaker 8: to the party. I'll just pull the great Ricky Bobby

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Speaker 8: and say, if it ain't first year, last we've been.

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Speaker 8: We've been bullish and resolutely bullish since two thousand and nine.

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Speaker 8: It's in a record, it's published and all of that.

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Speaker 8: But I think what's happening is that this is a

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Speaker 8: return to normalcy. Many people don't understand that, but we've

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Speaker 8: had several shots across the bow. I think that momentum

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Speaker 8: investing is changing into fundamental investment thing I heard Jess

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Speaker 8: is a fran I just can't help myself. I just

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Speaker 8: had to do that talk about correlations. Correlations short term. Yeah,

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Speaker 8: I are certainly doing that, and that's why the hedge

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Speaker 8: funds are getting crushed. And that's fantastic news as far

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Speaker 8: as I'm concerned, because they're the ones that are causing

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Speaker 8: a lot of the noise and they don't invest, they

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Speaker 8: trade and they follow everybody else. So if you're an investor,

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Speaker 8: you want to be more fundamental, more stock picking, and

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Speaker 8: the correlations are actually very low, which means you actually

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Speaker 8: want to be a stockpicker.

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Speaker 4: Right, So those correlations have actually been hovering around their

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Speaker 4: lowest level on record if you look at the c

435
00:23:33,600 --> 00:23:36,600
Speaker 4: Bow indicator over the three month timeframe. So they've spiked

436
00:23:36,680 --> 00:23:39,200
Speaker 4: up close to where the highest they've been in early September,

437
00:23:39,200 --> 00:23:41,119
Speaker 4: so coming off of the heels of the yen carry

438
00:23:41,119 --> 00:23:43,160
Speaker 4: trade unwinding and also the worst week of the year

439
00:23:43,320 --> 00:23:45,760
Speaker 4: in twenty twenty four. So in relations still low compared

440
00:23:45,760 --> 00:23:48,080
Speaker 4: to history, but spiking a bit higher now when things

441
00:23:48,119 --> 00:23:50,360
Speaker 4: were a little bit more volatile at certain points last year.

442
00:23:50,400 --> 00:23:53,320
Speaker 4: So that's sixty seven hundred price target. That's actually implying

443
00:23:53,359 --> 00:23:55,720
Speaker 4: to sixteen percent rise for the end of the year

444
00:23:55,760 --> 00:23:58,160
Speaker 4: based on yesterday's close. So what do you think would

445
00:23:58,160 --> 00:24:01,000
Speaker 4: need to change in the economy in the view for

446
00:24:01,080 --> 00:24:03,840
Speaker 4: corporate earnings for you to adjust your target in any way.

447
00:24:03,920 --> 00:24:09,080
Speaker 8: Well, first off, there's been this rhetoric that earnings have changed.

448
00:24:09,119 --> 00:24:09,800
Speaker 2: They haven't changed.

449
00:24:09,840 --> 00:24:12,600
Speaker 8: In fact, earnings have actually continued to improve over the

450
00:24:12,640 --> 00:24:13,480
Speaker 8: last two or three months.

451
00:24:13,520 --> 00:24:16,000
Speaker 4: And actually twenty twenty six, you still have fourteen percent

452
00:24:16,040 --> 00:24:17,280
Speaker 4: earnings growth for the S and P five.

453
00:24:17,480 --> 00:24:19,880
Speaker 8: Yes, we do, and I think actually just that could

454
00:24:19,880 --> 00:24:22,040
Speaker 8: be too low. And I think why that's too low

455
00:24:22,080 --> 00:24:23,800
Speaker 8: as you have an increasing amount of companies in the

456
00:24:23,840 --> 00:24:28,840
Speaker 8: technology space, discretionary space, communication services space that are taking

457
00:24:29,640 --> 00:24:32,160
Speaker 8: the mantle in terms of leadership away from the meg

458
00:24:32,240 --> 00:24:35,280
Speaker 8: seven in terms of earnings growth, that's number one. Number two.

459
00:24:36,520 --> 00:24:40,280
Speaker 8: I do believe that earnings and financials are consistently and

460
00:24:40,520 --> 00:24:43,040
Speaker 8: way understated, and I think we can get a lot

461
00:24:43,040 --> 00:24:44,720
Speaker 8: of kiss there In terms of the upside.

462
00:24:44,800 --> 00:24:46,040
Speaker 4: What's the risk to your target?

463
00:24:46,760 --> 00:24:47,199
Speaker 2: Risking of the.

464
00:24:47,200 --> 00:24:50,760
Speaker 8: Target quite frankly, is more on the inflationary side. In

465
00:24:50,800 --> 00:24:54,000
Speaker 8: our view, it's been a little bit stickier. I think

466
00:24:54,040 --> 00:24:56,240
Speaker 8: that could be the biggest issue. And I think too

467
00:24:56,600 --> 00:24:58,200
Speaker 8: Tommy and I have been talking about this for years.

468
00:24:58,200 --> 00:25:00,720
Speaker 8: I mean, the whole focus on fed Fun's futures and

469
00:25:00,760 --> 00:25:03,000
Speaker 8: all this kind of stuff. I mean, let's just stop

470
00:25:03,040 --> 00:25:05,560
Speaker 8: focusing on that. Let's just look more at what's happening

471
00:25:05,600 --> 00:25:07,479
Speaker 8: in the underlying parts of the stock market.

472
00:25:08,119 --> 00:25:10,840
Speaker 2: Yeah, I'm looking here. I mean, I mean, all right,

473
00:25:11,040 --> 00:25:14,600
Speaker 2: help me here. Who got buried by the Minnesota Vikings.

474
00:25:14,720 --> 00:25:17,320
Speaker 2: Here we go, Sam Darnold. They just said, see you.

475
00:25:17,480 --> 00:25:19,480
Speaker 2: I mean, they just didn't give him.

476
00:25:19,720 --> 00:25:24,959
Speaker 8: Listen, if you if you look at his eyes right, okay,

477
00:25:25,320 --> 00:25:30,720
Speaker 8: looking to look into his eyes, brother, the last lid.

478
00:25:30,880 --> 00:25:33,399
Speaker 2: If I ever do this, Lisa, if I ever do

479
00:25:33,480 --> 00:25:35,440
Speaker 2: this to you today, h violation.

480
00:25:37,880 --> 00:25:40,800
Speaker 9: This week to see to see the swaks and and

481
00:25:42,080 --> 00:25:45,240
Speaker 9: anyway look into his eyes versus the lions and then

482
00:25:45,240 --> 00:25:47,639
Speaker 9: look into his eyes during the playoff game, he was

483
00:25:47,680 --> 00:25:48,120
Speaker 9: not there.

484
00:25:48,200 --> 00:25:52,240
Speaker 2: Man, was you mentioned? Ricky? Bobby? Are your kids as well? Managed?

485
00:25:52,280 --> 00:25:53,199
Speaker 2: Just Texas Ranger?

486
00:25:53,640 --> 00:25:57,919
Speaker 8: You know, listen, we always Last night, I think my

487
00:25:58,040 --> 00:26:00,840
Speaker 8: daughter had some delicious taco bell. But she also informed

488
00:26:00,840 --> 00:26:03,200
Speaker 8: me this morning in Saint Bonifaceia's, Minnesota, they got five

489
00:26:03,200 --> 00:26:05,840
Speaker 8: inches of snow. They had ten inches of snow in Lakeville, Minnesota.

490
00:26:05,920 --> 00:26:08,920
Speaker 2: Okay, in Duluth they got snow as well. I noticed

491
00:26:08,960 --> 00:26:12,520
Speaker 2: Duluth exports to Canada. There's second word of just exports

492
00:26:12,560 --> 00:26:16,480
Speaker 2: to Algeria. It's iron ore. It's like real people, some

493
00:26:16,600 --> 00:26:19,320
Speaker 2: type of those people. How I mean, you're giving me

494
00:26:19,359 --> 00:26:23,440
Speaker 2: optimism about America and I'm looking at Duluth, Minnesota crushed

495
00:26:23,880 --> 00:26:25,800
Speaker 2: on tariffs. How can you have the two?

496
00:26:26,760 --> 00:26:29,200
Speaker 8: Well, the other thing about Duluth, Minnesota, you know that Duluth,

497
00:26:29,240 --> 00:26:32,200
Speaker 8: Minnesota has the largest Polish cemetery in the world outside

498
00:26:32,240 --> 00:26:33,639
Speaker 8: of Poland. Did you know that? I did not know,

499
00:26:33,760 --> 00:26:37,680
Speaker 8: So you know what, Listen, I think that there's there's

500
00:26:37,720 --> 00:26:41,280
Speaker 8: different things going on in terms of Duluth in Minnesota,

501
00:26:41,359 --> 00:26:44,080
Speaker 8: particular because you have the North in the south which

502
00:26:44,080 --> 00:26:48,159
Speaker 8: are dominated by mining up north and farming in the south,

503
00:26:48,520 --> 00:26:51,680
Speaker 8: which obviously heard the President's address with respect to the farmers.

504
00:26:51,920 --> 00:26:53,600
Speaker 8: But in terms of the North, it's been kind of

505
00:26:53,600 --> 00:26:56,160
Speaker 8: a more of a mixed picture, and there is still

506
00:26:56,160 --> 00:26:58,840
Speaker 8: a lot of obviously back and forth trade between let's

507
00:26:58,840 --> 00:27:01,119
Speaker 8: call it Duluth and Under Bay, Ontario, if you know

508
00:27:01,240 --> 00:27:05,560
Speaker 8: your your geography. But I do think that Minnesota, given

509
00:27:05,680 --> 00:27:08,760
Speaker 8: given the massive amounts of stage GDP that is tied

510
00:27:08,800 --> 00:27:12,560
Speaker 8: to Ontario in particular, this is actually more emotional with

511
00:27:12,600 --> 00:27:15,639
Speaker 8: respect to to Minnesota. But obviously you've heard with respect

512
00:27:15,680 --> 00:27:17,399
Speaker 8: to some of the news, who knows how long these

513
00:27:17,440 --> 00:27:18,119
Speaker 8: tariffs are gonna be?

514
00:27:18,280 --> 00:27:21,159
Speaker 2: You know, that's the key thing. You're Here's the way I.

515
00:27:21,160 --> 00:27:23,119
Speaker 8: Want you to think about this, Tom, This will be

516
00:27:23,119 --> 00:27:26,439
Speaker 8: in your your knowledge. I don't know much about fixed income,

517
00:27:26,560 --> 00:27:30,880
Speaker 8: but in terms of bonds, it's all about duration and convexity, right,

518
00:27:31,160 --> 00:27:33,159
Speaker 8: So let's talk about the duration of terriffs.

519
00:27:33,160 --> 00:27:34,680
Speaker 2: How long they could be gone today.

520
00:27:34,800 --> 00:27:35,600
Speaker 8: I mean, that's the risk.

521
00:27:35,840 --> 00:27:38,280
Speaker 2: Gotta mccundav Yell was just do and said the same

522
00:27:38,359 --> 00:27:41,840
Speaker 2: thing we had from PGM. They're leading quant analyst. He

523
00:27:41,960 --> 00:27:45,240
Speaker 2: said the same thing MIT physics, and I'm sure Ian

524
00:27:45,359 --> 00:27:49,560
Speaker 2: Lingol would say the same thing. Folks the Exexus right now,

525
00:27:49,840 --> 00:27:55,359
Speaker 2: the media doesn't look at the timeline, and Professor Belski

526
00:27:55,480 --> 00:27:58,920
Speaker 2: is correct. It's all about the length and you get

527
00:27:58,960 --> 00:28:03,080
Speaker 2: to optimism like Belski when you believe the timeline is shorter.

528
00:28:03,400 --> 00:28:06,400
Speaker 2: The leader of Mexico, Shane Bauma, is out now. If

529
00:28:06,480 --> 00:28:10,760
Speaker 2: tariffs continue, Comma Mexico will reach out to Canada.

530
00:28:11,359 --> 00:28:13,840
Speaker 4: Well, we've been talking so much about the Midwest, Middle America.

531
00:28:13,880 --> 00:28:15,560
Speaker 2: Do you want to get something in your right idea?

532
00:28:15,840 --> 00:28:20,240
Speaker 2: Do you see Talladega Max? Of course, Okay, you can continue.

533
00:28:20,440 --> 00:28:24,399
Speaker 2: Are you going to say with all respect, no, not

534
00:28:24,480 --> 00:28:24,719
Speaker 2: at all.

535
00:28:24,720 --> 00:28:26,800
Speaker 4: I was going to pick your braid on Obviously, when

536
00:28:26,840 --> 00:28:28,320
Speaker 4: it comes to the page book, I mean, it's never

537
00:28:28,440 --> 00:28:30,639
Speaker 4: really market moving here, but I feel like it's going

538
00:28:30,680 --> 00:28:31,959
Speaker 4: to be more closely watched.

539
00:28:32,000 --> 00:28:32,200
Speaker 5: Now.

540
00:28:32,320 --> 00:28:34,280
Speaker 4: Obviously it's gonna be a little bit more backward looking.

541
00:28:34,320 --> 00:28:36,520
Speaker 4: But when it comes to the different districts and particularly

542
00:28:36,520 --> 00:28:38,680
Speaker 4: in the Midwest or other regions, what kind of sticks

543
00:28:38,680 --> 00:28:40,600
Speaker 4: out to you and what kind of indicators within those

544
00:28:40,640 --> 00:28:42,560
Speaker 4: types of reports do you keep a close eye on.

545
00:28:42,720 --> 00:28:46,440
Speaker 8: You know, we're we're seeing the most economic and population

546
00:28:46,520 --> 00:28:48,920
Speaker 8: growth is clearly those areas that are more state front,

547
00:28:49,320 --> 00:28:52,120
Speaker 8: some more tax friendly, so the Southeast or even Texas

548
00:28:52,160 --> 00:28:54,520
Speaker 8: and Tennessee and some of those areas. So if we're

549
00:28:54,520 --> 00:28:56,520
Speaker 8: going to see weakness in those areas, I think that

550
00:28:56,520 --> 00:29:01,000
Speaker 8: would be a telling on that number one. Number two again,

551
00:29:01,480 --> 00:29:05,320
Speaker 8: macro data I've always had an issue with historically. You know,

552
00:29:05,600 --> 00:29:08,280
Speaker 8: you mentioned m I T PhD. I'm from Saint Claus

553
00:29:08,320 --> 00:29:10,800
Speaker 8: State University. I mean, there's not much difference between that

554
00:29:11,160 --> 00:29:14,360
Speaker 8: quite frankly, but you know, it is what happened yesterday.

555
00:29:14,880 --> 00:29:18,240
Speaker 8: And I think we have to remind ourselves that stock

556
00:29:18,600 --> 00:29:21,479
Speaker 8: stocks lead earnings, which lead the economy. And oh, by

557
00:29:21,480 --> 00:29:23,400
Speaker 8: the way, stocks are leading indicators, and they've kind of

558
00:29:23,400 --> 00:29:26,000
Speaker 8: told us what's happening. And so are we seeing a

559
00:29:26,040 --> 00:29:28,320
Speaker 8: slow down? You ask me earlier what the risk is

560
00:29:28,640 --> 00:29:31,560
Speaker 8: if we slow down too much? Right, and we're throwing

561
00:29:31,560 --> 00:29:35,160
Speaker 8: these tariffs which again duration in convexity, and we still

562
00:29:35,160 --> 00:29:38,280
Speaker 8: have this mixed inflation picture that kind of puts in

563
00:29:38,320 --> 00:29:40,240
Speaker 8: a more of a muddle type market scenario.

564
00:29:40,440 --> 00:29:45,880
Speaker 2: Parse serious question, parse stagflation versus a lesser but still

565
00:29:45,960 --> 00:29:50,040
Speaker 2: buoyant nominal GDP that keeps American business going.

566
00:29:50,200 --> 00:29:53,840
Speaker 8: Yeah, I think the stake inflation argument has become increasingly

567
00:29:54,680 --> 00:29:57,320
Speaker 8: let's call it consensus. I think what's what's happening. Let's

568
00:29:57,320 --> 00:29:59,440
Speaker 8: go back to the normal seat side of things. When

569
00:29:59,480 --> 00:30:02,680
Speaker 8: Tom was at Rascher Pearson, I was at a place

570
00:30:02,720 --> 00:30:04,920
Speaker 8: called Dame Bosworth. We had these periods in the mid

571
00:30:05,000 --> 00:30:07,600
Speaker 8: nineties where we had kind of single digit, low single

572
00:30:07,600 --> 00:30:11,840
Speaker 8: digit GDP five percent, four to ten year treasuries, remember

573
00:30:11,880 --> 00:30:14,600
Speaker 8: that Tommy and ten percent Ernie scrowth. I think that's

574
00:30:14,640 --> 00:30:15,240
Speaker 8: kind of where.

575
00:30:15,040 --> 00:30:16,000
Speaker 2: We're going shot.

576
00:30:16,720 --> 00:30:18,960
Speaker 8: And I think we just don't know what normal is

577
00:30:19,000 --> 00:30:21,280
Speaker 8: because we think that normal is zero percent interest rates

578
00:30:21,440 --> 00:30:23,240
Speaker 8: and all these wild moves in the market.

579
00:30:23,000 --> 00:30:24,880
Speaker 2: In the modern day. You don't know what, folks. But

580
00:30:25,040 --> 00:30:28,200
Speaker 2: Minnesota was a massive and this was off of IDs

581
00:30:28,200 --> 00:30:31,760
Speaker 2: and all a huge financial component and a good morning

582
00:30:31,800 --> 00:30:34,240
Speaker 2: to all up in the northwest of Piper, Jeffrey and

583
00:30:34,360 --> 00:30:38,440
Speaker 2: Dame Bosworth from years ago. It was really something. And

584
00:30:38,480 --> 00:30:41,720
Speaker 2: the Canadians came in and said, these are the smartest

585
00:30:41,720 --> 00:30:44,160
Speaker 2: guys in the block, let's buy them. And that's how

586
00:30:44,200 --> 00:30:47,520
Speaker 2: you get RBC and BEMO Bank of Montreal into it.

587
00:30:47,640 --> 00:30:51,080
Speaker 2: With Brian Belski with his optimism on inequity, marcut's a

588
00:30:51,080 --> 00:30:52,960
Speaker 2: little red on the screen. We've given it back off

589
00:30:53,000 --> 00:30:57,040
Speaker 2: ADP into the jobs report on Friday just meant to

590
00:30:57,080 --> 00:30:57,840
Speaker 2: Brian Belski.

591
00:30:58,040 --> 00:31:00,080
Speaker 4: So the past two years, of course, the boom in

592
00:31:00,240 --> 00:31:03,120
Speaker 4: the markets, adding eighteen trillion dollars to the market cap

593
00:31:03,120 --> 00:31:04,720
Speaker 4: for the S and P five hundred up close to

594
00:31:04,720 --> 00:31:07,040
Speaker 4: fifty percent for the past two years. So the third

595
00:31:07,120 --> 00:31:09,360
Speaker 4: year in the bull market typically you do see those

596
00:31:09,400 --> 00:31:12,120
Speaker 4: games slow down throughout history, but of course you have

597
00:31:12,160 --> 00:31:14,200
Speaker 4: such a strong road. Does this make sense where we're

598
00:31:14,240 --> 00:31:15,960
Speaker 4: at in the calendar, and especially when you think about

599
00:31:15,960 --> 00:31:18,640
Speaker 4: the presidential cycle typically weaker at this point in the

600
00:31:18,640 --> 00:31:19,840
Speaker 4: first quarter post.

601
00:31:19,680 --> 00:31:23,320
Speaker 8: Election hundred percent. You typically in especially February and March

602
00:31:23,560 --> 00:31:27,920
Speaker 8: have weaker seasonality because the platforms are coming out and

603
00:31:27,960 --> 00:31:31,440
Speaker 8: people are reacting to what's happening and actually typically seeing

604
00:31:32,320 --> 00:31:34,560
Speaker 8: things be put to work. Now, clearly in the last

605
00:31:34,560 --> 00:31:36,320
Speaker 8: forty two or forty three days, we haven't seen this

606
00:31:36,400 --> 00:31:40,320
Speaker 8: kind of flurry of activity that President Trump's been doing.

607
00:31:40,520 --> 00:31:41,840
Speaker 8: That at the end of the day, do you kind

608
00:31:41,840 --> 00:31:43,800
Speaker 8: of take two steps back, just and think about what's

609
00:31:43,800 --> 00:31:48,520
Speaker 8: happened in the last couple of years. Twenty twenty four, sorry,

610
00:31:48,560 --> 00:31:52,200
Speaker 8: twenty twenty three was really an overreaction to tech being

611
00:31:52,280 --> 00:31:55,320
Speaker 8: massively oversold. Remember the first two or three weeks you

612
00:31:55,360 --> 00:31:59,520
Speaker 8: were crazy writing about these massive reversion to be in

613
00:31:59,560 --> 00:32:02,960
Speaker 8: tech technology names, and then twenty twenty four was, oh,

614
00:32:03,000 --> 00:32:06,360
Speaker 8: my gosh ai is actually real and we are not

615
00:32:06,560 --> 00:32:09,840
Speaker 8: invested there. So then now you started to see this notion.

616
00:32:09,960 --> 00:32:12,400
Speaker 8: I really believe the broadening out trade is happening I

617
00:32:12,440 --> 00:32:14,800
Speaker 8: really believe it. I really believe it. And you've seen

618
00:32:14,800 --> 00:32:17,560
Speaker 8: how value is massively outperformed. Some of that is the

619
00:32:17,640 --> 00:32:20,440
Speaker 8: defensive trade into healthcare. We don't think that's we think

620
00:32:20,480 --> 00:32:23,680
Speaker 8: that's less fundamental and more about momentum into defense. But

621
00:32:23,760 --> 00:32:28,320
Speaker 8: we think ultimately value true value stocks, small MidCap. I

622
00:32:28,320 --> 00:32:29,760
Speaker 8: think ten years from now, town, we're going to be

623
00:32:29,800 --> 00:32:31,760
Speaker 8: looking back, how come we didn't buy more small MidCap.

624
00:32:31,960 --> 00:32:35,160
Speaker 2: I look at this in the heart of the matter, Brian,

625
00:32:35,320 --> 00:32:39,360
Speaker 2: and we've all lived. This is a really down market.

626
00:32:39,360 --> 00:32:43,000
Speaker 2: It's negative thirty five percent. Yeah, a bear market. Dow

627
00:32:43,120 --> 00:32:47,160
Speaker 2: Jones Industrial average is negative eighteen percent, and a normal

628
00:32:47,440 --> 00:32:51,400
Speaker 2: healthy correction is ten percent. In the Ute of America,

629
00:32:52,120 --> 00:32:56,960
Speaker 2: they've never experienced it. They were done six percent, blended,

630
00:32:57,360 --> 00:33:00,280
Speaker 2: and it's like people are in a panic, like I

631
00:33:00,280 --> 00:33:00,840
Speaker 2: don't get it.

632
00:33:01,080 --> 00:33:03,240
Speaker 8: Well exactly when you think about year to date, we're

633
00:33:03,240 --> 00:33:05,560
Speaker 8: basically flat and we're acting like we're down twenty to

634
00:33:05,560 --> 00:33:07,360
Speaker 8: twenty five percent. And I think that comes to the

635
00:33:07,400 --> 00:33:11,560
Speaker 8: reactive nature investors, which was exacerbated during COVID. I actually

636
00:33:11,600 --> 00:33:15,560
Speaker 8: think all this stuff started. I think all this stuff

637
00:33:15,600 --> 00:33:19,239
Speaker 8: started during the financial crisis, and then obviously that was

638
00:33:19,400 --> 00:33:21,360
Speaker 8: much more near and dear to New York and our

639
00:33:21,440 --> 00:33:23,760
Speaker 8: hearts in terms of the financial world, in terms of

640
00:33:23,760 --> 00:33:26,000
Speaker 8: our jobs and everything. But that really.

641
00:33:25,960 --> 00:33:29,040
Speaker 2: Right, Well, Sharma has this this book likely by book

642
00:33:29,040 --> 00:33:32,520
Speaker 2: of the year, and basically we've become addicted to Let's

643
00:33:32,880 --> 00:33:35,600
Speaker 2: fix It. So everyone's happy. Yeah, that's the heart of

644
00:33:35,600 --> 00:33:36,000
Speaker 2: the matter.

645
00:33:36,120 --> 00:33:37,479
Speaker 8: It is, it really is okay.

646
00:33:37,640 --> 00:33:41,280
Speaker 2: In one final big questionaire, the vikings have blown up

647
00:33:41,280 --> 00:33:44,480
Speaker 2: because Sam, siya, do the Lions look good this year?

648
00:33:44,560 --> 00:33:47,080
Speaker 2: I mean, you know, I mean I think you know

649
00:33:47,200 --> 00:33:49,480
Speaker 2: the lines, the lines that they didn't prove.

650
00:33:49,680 --> 00:33:53,280
Speaker 8: I was rooting for them. I really wanted to see

651
00:33:53,280 --> 00:33:56,560
Speaker 8: the lines and the Bills in the Super Bowls. And

652
00:33:56,760 --> 00:34:00,320
Speaker 8: but you know that now that the Bears have their

653
00:34:00,360 --> 00:34:03,040
Speaker 8: offensive coordinator, that was a huge loss and the Bears

654
00:34:03,080 --> 00:34:05,120
Speaker 8: have a real coach now. Whether or not they have

655
00:34:05,200 --> 00:34:08,320
Speaker 8: the right quarterback there, who knows. But I think the

656
00:34:09,160 --> 00:34:12,839
Speaker 8: NFC north Man is going to be really really competitive again.

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00:34:12,880 --> 00:34:14,600
Speaker 2: I mean, Caleb to the rescue, right.

658
00:34:14,880 --> 00:34:18,440
Speaker 8: Well, we'll see JJ to the rescue with the biking.

659
00:34:18,560 --> 00:34:22,759
Speaker 2: Let's go. Brian Belski, thank you so much. Capital Markets.

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00:34:31,080 --> 00:34:35,000
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

661
00:34:35,040 --> 00:34:38,440
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

662
00:34:38,480 --> 00:34:41,279
Speaker 1: with the Bloomberg Business app. You can also watch us

663
00:34:41,320 --> 00:34:44,680
Speaker 1: live every weekday on YouTube and always on the Bloomberg

664
00:34:44,760 --> 00:34:45,960
Speaker 1: terminal Right.

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Speaker 2: Now, Regina Mayor James Global Ahead of Clients and Markets

666
00:34:49,520 --> 00:34:55,760
Speaker 2: at KPMG, truly expert on the emotion of Texas oil production,

667
00:34:55,880 --> 00:34:59,840
Speaker 2: for that matter, global oil production as well. Regina had

668
00:34:59,880 --> 00:35:02,279
Speaker 2: the the phrase I believe from the President is drill

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00:35:02,360 --> 00:35:06,480
Speaker 2: baby drill. Does Texas does the Permian? Do they want

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00:35:06,480 --> 00:35:07,600
Speaker 2: to drill baby drill?

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Speaker 5: I think absolutely, It's been a sentiment that has dominated

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00:35:11,760 --> 00:35:14,960
Speaker 5: the industry for a decade. I think drill baby drill

673
00:35:15,120 --> 00:35:18,239
Speaker 5: emanated from the Permian. I think we have to look

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00:35:18,280 --> 00:35:21,280
Speaker 5: at what does it really take though to drill baby drill,

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00:35:21,320 --> 00:35:24,920
Speaker 5: and how quickly you can get the production running. What

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00:35:24,960 --> 00:35:28,480
Speaker 5: are the economic incentives? I will say, with WTI and

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00:35:28,560 --> 00:35:33,960
Speaker 5: Brent below seventy where WTI was eighty dollars in mid January,

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00:35:34,280 --> 00:35:38,160
Speaker 5: that doesn't give you a great economic incentive to drill more.

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00:35:38,560 --> 00:35:40,760
Speaker 5: And then you have to think about it takes time

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00:35:41,200 --> 00:35:45,320
Speaker 5: to find, develop, produce the wells. It's not like you

681
00:35:45,440 --> 00:35:47,920
Speaker 5: can turn a tap on or off. But it's a

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00:35:48,000 --> 00:35:51,640
Speaker 5: positive environment for the industry, absolutely, and the administration is

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00:35:51,680 --> 00:35:54,120
Speaker 5: taking steps that the industry welcomes.

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00:35:54,680 --> 00:35:57,840
Speaker 4: So, as you know, oilfield service providers in big energy

685
00:35:57,880 --> 00:36:00,759
Speaker 4: companies used to comprise so much more of percentage of

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00:36:00,800 --> 00:36:03,680
Speaker 4: the top companies and big equity indexes like the S

687
00:36:03,719 --> 00:36:05,760
Speaker 4: and P five hundred, but that changed a lot post

688
00:36:05,880 --> 00:36:09,400
Speaker 4: housing crisis, and even during Trump's last term, you still

689
00:36:09,440 --> 00:36:13,239
Speaker 4: didn't see energy companies in aggregate performing that well, even

690
00:36:13,280 --> 00:36:16,920
Speaker 4: had Excellon eventually kicked out of the Dow Jones Industrial average,

691
00:36:16,920 --> 00:36:19,399
Speaker 4: but has recovered from since and then. So what makes

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00:36:19,440 --> 00:36:21,760
Speaker 4: this a little bit different? Even with oil prices treading

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00:36:22,239 --> 00:36:23,239
Speaker 4: around lows.

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00:36:24,560 --> 00:36:26,640
Speaker 5: In terms of the stock crisis, I don't know that

695
00:36:26,840 --> 00:36:30,880
Speaker 5: we'll see huge surges in those valuations. And I do

696
00:36:31,040 --> 00:36:33,080
Speaker 5: think certain parts of the sector that you mentioned. While

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00:36:33,120 --> 00:36:37,239
Speaker 5: field services they're just not gonna become the darlings that

698
00:36:37,280 --> 00:36:39,440
Speaker 5: maybe they were in the past. I think, you know,

699
00:36:39,600 --> 00:36:44,440
Speaker 5: they're competitive now, they've figured out ways to manage effectively

700
00:36:44,480 --> 00:36:48,400
Speaker 5: in a very cost constrained environment. They're coming back into

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00:36:48,560 --> 00:36:51,960
Speaker 5: being able to be profitable and seeing growth in their backlogs.

702
00:36:52,640 --> 00:36:56,920
Speaker 5: But I don't know that it's a basket of investments

703
00:36:57,040 --> 00:37:02,200
Speaker 5: that will necessarily outperform in in amazingly different ways. I

704
00:37:02,200 --> 00:37:04,600
Speaker 5: do think it's a strong sector to continue to bet

705
00:37:04,680 --> 00:37:07,040
Speaker 5: in that. I don't know if it's going to be

706
00:37:07,200 --> 00:37:09,359
Speaker 5: anything like the Super seven or some of the tech

707
00:37:09,400 --> 00:37:10,320
Speaker 5: stocks that we're seeing.

708
00:37:10,520 --> 00:37:13,640
Speaker 4: When it comes to the outlook for oil and fuel prices,

709
00:37:13,719 --> 00:37:16,160
Speaker 4: especially when you're thinking about the tariffs on trading partners

710
00:37:16,200 --> 00:37:18,440
Speaker 4: like Canada in general, who do you think has more

711
00:37:18,480 --> 00:37:22,760
Speaker 4: of the upper hand here, is it America or Canada.

712
00:37:22,800 --> 00:37:24,759
Speaker 5: Well, I think it depends on what you mean by

713
00:37:25,200 --> 00:37:29,200
Speaker 5: a quote unquote upper hand. But the US imports four

714
00:37:29,239 --> 00:37:32,840
Speaker 5: million barrels per day of crude from Canada. Seventy percent

715
00:37:32,880 --> 00:37:36,080
Speaker 5: of that is processed in the Midwest, and that our

716
00:37:36,120 --> 00:37:39,200
Speaker 5: refineries are really geared in certain parts of the country

717
00:37:39,480 --> 00:37:43,160
Speaker 5: to process only that type of crude, heavy sour, and

718
00:37:43,200 --> 00:37:46,279
Speaker 5: that you can't swap it out. So definitely we'll see

719
00:37:46,360 --> 00:37:50,040
Speaker 5: retail gas prices increase. We're already seeing wholesale gas prices

720
00:37:50,040 --> 00:37:53,840
Speaker 5: increase in the US Northeast and will likely see retail

721
00:37:53,840 --> 00:37:57,920
Speaker 5: gasoline prices increase in the Midwest as these tariffs continue.

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00:37:58,200 --> 00:38:00,799
Speaker 5: I think the rest of the country will continue to

723
00:38:00,880 --> 00:38:05,080
Speaker 5: benefit from relatively lower gasoline prices, but for sure, I

724
00:38:05,120 --> 00:38:08,080
Speaker 5: think we'll see upward pressure now. Keep in mind gas

725
00:38:08,160 --> 00:38:10,839
Speaker 5: prices are even lower than they were a year ago,

726
00:38:11,000 --> 00:38:13,799
Speaker 5: so we're working with a pretty low base to come

727
00:38:13,880 --> 00:38:14,280
Speaker 5: up from.

728
00:38:14,520 --> 00:38:17,000
Speaker 2: Regina. Thank you so much. Too short a visit. Let's

729
00:38:17,000 --> 00:38:19,719
Speaker 2: do it longer next time, Regina Mayor with us with

730
00:38:19,840 --> 00:38:21,640
Speaker 2: KPMG on oil.

731
00:38:22,120 --> 00:38:26,920
Speaker 1: This is the Bloomberg Surveillance Podcast, available on Apple, Spotify,

732
00:38:27,040 --> 00:38:31,320
Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,

733
00:38:31,480 --> 00:38:34,680
Speaker 1: seven to ten am Easter and on Bloomberg dot Com,

734
00:38:34,840 --> 00:38:38,680
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app.

735
00:38:38,960 --> 00:38:42,080
Speaker 1: You can also watch us live every weekday on YouTube

736
00:38:42,360 --> 00:38:44,400
Speaker 1: and always on the Bloomberg terminal