WEBVTT - S&P 500 Closes at Record High in Tech-Led Advance 0:00:00.080 --> 0:00:10.520 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg Business 0:00:10.520 --> 0:00:14.400 Week Daily reporting from the magazine that helps global leaders 0:00:14.440 --> 0:00:18.360 stay ahead with insight on the people, companies, and trends 0:00:18.360 --> 0:00:23.360 shaping today's complex economy, plus global business finance and tech 0:00:23.440 --> 0:00:27.320 news as it happens. The Bloomberg Business Week Daily Podcast 0:00:27.640 --> 0:00:31.720 with Carol Masser and Tim Steneveek on Bloomberg Radio. 0:00:32.040 --> 0:00:35.800 History has shown that stock analysts are famously bullish, right 0:00:36.120 --> 0:00:39.240 this year's no different. They're forecasting on average, a roughly 0:00:39.280 --> 0:00:42.160 eleven percent gain for US stocks next year. And that's 0:00:42.159 --> 0:00:46.519 despite things like inflation, like possibly rising unemployment. But guess what, 0:00:46.640 --> 0:00:50.280 all that optimism is actually putting some market watchers on edge. 0:00:50.520 --> 0:00:54.600 And Bloomberg's Alexandra Semenova wrote about this for the Bloomberg 0:00:54.720 --> 0:00:58.080 Terminal and she joins us here in an interactive broker studio. Alexander, 0:00:58.120 --> 0:01:01.120 great to see you. You would think, okay, well, people 0:01:01.120 --> 0:01:03.680 are feeling optimistic about next year. That should make market 0:01:03.680 --> 0:01:05.640 watchers happy. Why are they worried? 0:01:06.080 --> 0:01:06.319 Yeah? 0:01:06.440 --> 0:01:09.800 So it's this hardy annual ritual for Wall Street strategists 0:01:09.800 --> 0:01:12.160 to issue s and P five hundred forecasts for the 0:01:12.240 --> 0:01:14.080 end of the year, and we all know that it's 0:01:14.200 --> 0:01:16.880 very hard to hit such a spurious level of precision, 0:01:16.920 --> 0:01:19.040 but it gives us a sense of whether they're a 0:01:19.040 --> 0:01:20.880 bullish or bearish on the market. And if you look 0:01:20.920 --> 0:01:24.160 at the forecasts for twenty twenty six, there's this resounding 0:01:24.200 --> 0:01:27.240 sense of optimism. The lowest target on Wall Street is 0:01:27.400 --> 0:01:30.680 seven thousand, so that itself is already implying a modest 0:01:30.720 --> 0:01:32.960 gain on years that we've seen in the past where 0:01:33.319 --> 0:01:37.679 some were outliers and predicting some sort of loss. There 0:01:37.720 --> 0:01:40.880 were some bears, some contrarian calls, but this time around, 0:01:40.920 --> 0:01:43.160 even the lowest target on Wall Street is implying again. 0:01:43.200 --> 0:01:46.759 The highest sees the index ending at eighty one hundred. 0:01:46.800 --> 0:01:50.200 That's from Oppenheimer. So the gap between the lowest and 0:01:50.480 --> 0:01:53.760 the highest is actually the narrowest that it's been in 0:01:53.840 --> 0:01:56.800 nearly a decade. So they're bullish and they're clustered, and 0:01:56.800 --> 0:01:58.880 there's this sense that when everyone is on the same 0:01:58.920 --> 0:02:01.920 side of the boat, there is too much optimism baked 0:02:01.920 --> 0:02:04.880 into consensus and it'll take very little to disappoint the market, 0:02:04.880 --> 0:02:06.720 and that's kind of the fear among some investors. 0:02:07.080 --> 0:02:09.000 I feel like this story I loved it, by the way, 0:02:09.000 --> 0:02:12.120 because it was a fantastic story with a lot of nuggets. 0:02:12.280 --> 0:02:14.800 And you said, such locks of views are generally considered 0:02:14.840 --> 0:02:18.000 a contrarian signal. Why is that when some if you 0:02:18.000 --> 0:02:20.200 take the other side, you would think, oh, there's consensus, 0:02:20.240 --> 0:02:21.399 it must be going this way. 0:02:21.400 --> 0:02:25.160 Indeed, right, well, sentiment is usually a contrariant indicator. And 0:02:25.200 --> 0:02:27.960 in this case, when everyone thinks that nothing can go wrong, 0:02:28.000 --> 0:02:31.000 it'll take very little to surprise to the downside. So 0:02:31.040 --> 0:02:33.080 it won't take a recession. It could take something as 0:02:33.160 --> 0:02:36.359 much as you know, a miss on earnings expectations, any 0:02:36.440 --> 0:02:39.520 kind of little benign announcement from the Fed about to 0:02:39.560 --> 0:02:42.640 them scaling back their expectations for monetary easing. And that 0:02:42.760 --> 0:02:44.840 is kind of the fear going into nexture. When you 0:02:44.880 --> 0:02:47.120 think about it, there are still so many risks. We 0:02:47.200 --> 0:02:49.560 don't know when the next interest rate cut will be, 0:02:49.639 --> 0:02:52.400 despite a lot of investors hoping for another one. We 0:02:52.440 --> 0:02:55.359 don't know whether the AI story will continue the momentum 0:02:55.360 --> 0:02:57.520 that we've seen in recent years. Given some of these 0:02:57.560 --> 0:03:00.600 circular financing deals, we don't know why there will get 0:03:00.600 --> 0:03:03.560 any more sporadic announcements from the president. Obviously that spread 0:03:03.600 --> 0:03:06.200 volatility this year, So any of those little things could 0:03:06.240 --> 0:03:09.000 be risks to markets, and it seems like Wall Street 0:03:09.000 --> 0:03:11.520 strategists aren't really accounting for them going into next year. 0:03:11.560 --> 0:03:14.400 But it's understandable because when you look on the when 0:03:14.440 --> 0:03:16.519 you look back in the past three years, they have 0:03:16.680 --> 0:03:20.639 actually erred on being too cautious and that has obviously 0:03:20.720 --> 0:03:23.919 proven wrong given they underestimated the rally. So this time 0:03:23.960 --> 0:03:27.040 around they don't want to underestimate the market strength. 0:03:27.040 --> 0:03:29.200 So the pendulum has swung. And of course there are 0:03:29.320 --> 0:03:33.480 external shocks right and black swans that we can't foresee. 0:03:33.720 --> 0:03:35.960 What are they saying, is God, what are these forecasters 0:03:36.000 --> 0:03:38.560 saying is going to push the market hired by double 0:03:38.600 --> 0:03:39.360 digits next year? 0:03:39.440 --> 0:03:43.080 So we're still seeing expectations for double digit earnings growth. 0:03:43.120 --> 0:03:45.760 That has been time and time again that the thing 0:03:45.800 --> 0:03:48.880 that has made the market so resilient. Corporate America has 0:03:49.280 --> 0:03:54.440 defied you know, higher interest rate costs, it has defied tariffs, 0:03:54.480 --> 0:03:57.720 and it's still performed and grown profits. So that is 0:03:57.760 --> 0:04:02.320 expected to continue next year. A story largely is still 0:04:02.320 --> 0:04:04.720 intact for now, even though there are some concerns about 0:04:04.720 --> 0:04:07.480 how companies will monetize their investments. For the most part 0:04:07.640 --> 0:04:11.280 these hyper scalers have been delivering on their earnings. Economic 0:04:11.320 --> 0:04:14.080 growth is still solid, the labor market, although it is 0:04:14.320 --> 0:04:16.719 a little bit sluggish, it's still in a good spot. 0:04:16.800 --> 0:04:19.200 And there's this view that that will actually make the 0:04:19.200 --> 0:04:22.200 FED ease policy, so that is probably going to lift 0:04:22.200 --> 0:04:22.920 the market higher. 0:04:23.080 --> 0:04:25.919 As someone who watches this space very very closely, what 0:04:25.960 --> 0:04:27.760 do you make of this exercise of having year end 0:04:27.839 --> 0:04:30.920 targets because this whole year you've written, you have this 0:04:31.040 --> 0:04:33.599 story every year before we to set up the next year. 0:04:33.800 --> 0:04:36.279 But then during that year you write so many things 0:04:36.279 --> 0:04:39.719 about sales side strategies, either advising upwards or downwards, and 0:04:39.760 --> 0:04:42.760 sometimes you've written about shops saying no, we just won't 0:04:42.800 --> 0:04:44.839 put out targets at all because you're just prone to 0:04:45.360 --> 0:04:48.159 basically putting out something and then it being wrong. 0:04:48.240 --> 0:04:51.320 So is it still helpful? It's so funny, it's somewhat 0:04:51.360 --> 0:04:54.280 of a necessary evil. And actually ned Davis Research said 0:04:54.279 --> 0:04:56.279 that you kind of have to have a target to 0:04:56.320 --> 0:04:59.159 give investors a sense of how bullish you are, the 0:04:59.200 --> 0:05:00.159 magnitude of game. 0:05:00.160 --> 0:05:00.760 That you see. 0:05:00.880 --> 0:05:03.760 But at the same time, Cameron Christ actually did an 0:05:03.760 --> 0:05:07.080 analysis on this, the correlation between what the market does 0:05:07.120 --> 0:05:10.480 and what strategist targets are is actually zero. There's pretty 0:05:10.520 --> 0:05:13.960 much you almost never hit that exact number, and it 0:05:14.400 --> 0:05:16.640 feels like it's impossible to do. But at the same time, 0:05:16.960 --> 0:05:20.080 retail investors specifically are very interested in what these people 0:05:20.080 --> 0:05:22.479 have to say. Usually when I talk to these strategists, 0:05:22.480 --> 0:05:24.800 they say that their institutional clients don't care so much. 0:05:24.839 --> 0:05:28.440 They care about sector views and kind of tactical trade ideas, 0:05:28.440 --> 0:05:31.880 but retail clients wealth managers do care how they're thinking 0:05:31.880 --> 0:05:32.880 about the market and. 0:05:32.839 --> 0:05:36.240 What are they saying about outside of equities, because we've 0:05:36.240 --> 0:05:39.320 seen the run up that commodities have had really across 0:05:39.360 --> 0:05:42.560 the board, our forecasts for more bullishness there. 0:05:43.080 --> 0:05:45.159 Well, there's been a lot of talk this year about 0:05:45.200 --> 0:05:49.640 exploring opportunities outside of equities, given how lofty valuations are. 0:05:49.839 --> 0:05:51.960 We've seen the S and P five hundred return something 0:05:52.040 --> 0:05:54.599 like eighty percent since the bull market began at the 0:05:54.680 --> 0:05:57.599 end of October, So you're seeing time and time again 0:05:57.760 --> 0:06:01.719 that some firms are recommending al turn diversifying into real 0:06:01.760 --> 0:06:04.480 assets commodities, and that's likely to be a theme going 0:06:04.480 --> 0:06:05.440 into twenty twenty six. 0:06:05.600 --> 0:06:08.440 JP Morgan had in their outlook a sixty forty plus. 0:06:08.480 --> 0:06:09.039 I liked that. 0:06:09.360 --> 0:06:12.200 I was like, oh, that's catchy very quickly. Who got 0:06:12.200 --> 0:06:13.000 it right this year? 0:06:13.680 --> 0:06:18.440 So it's funny Chris Harvey, who Isabelle and I broke 0:06:18.480 --> 0:06:21.320 the story that he left Wills Fargo to go to 0:06:21.360 --> 0:06:23.920 his new firm. He had a target of seven thousand 0:06:23.960 --> 0:06:27.080 and seven going into this year, and during the trade war, 0:06:27.120 --> 0:06:30.360 he was one of the only people who didn't capitulate. 0:06:30.520 --> 0:06:32.960 A lot of strategists were slashing their outlooks, they were 0:06:33.000 --> 0:06:35.880 downwardly revising, and then they ultimately had to u turn 0:06:35.920 --> 0:06:38.200 and go back to their original targets, and he stuck 0:06:38.240 --> 0:06:40.360 to his guns. And here we are, we're pretty close 0:06:40.400 --> 0:06:42.000 to his target. So he's one of the people who 0:06:42.040 --> 0:06:44.920 got it right. Mike Wilson and Morgan Stanley is also 0:06:44.960 --> 0:06:47.320 one of them. He had a sixty five hundred target 0:06:47.320 --> 0:06:49.120 on the s and p five hundred were obviously above 0:06:49.160 --> 0:06:52.640 that level. But he's also someone who maintained confidence in 0:06:52.680 --> 0:06:54.920 his call that stocks would recover into the second half 0:06:54.920 --> 0:06:56.599 of the year. But for the most part, we did 0:06:56.600 --> 0:06:59.080 see a lot of flip flopping at Your Denny at 0:06:59.080 --> 0:07:01.640 Your Denny research that he's never had to change his 0:07:01.680 --> 0:07:03.520 target this many times ever in his career. 0:07:03.640 --> 0:07:06.719 I remember you we talk sometimes when we collaborate with stories, 0:07:06.720 --> 0:07:08.479 and you would say you would prefer and you would 0:07:08.520 --> 0:07:11.720 look up to someone more even if the even if 0:07:11.760 --> 0:07:14.120 he's so far from the consensus, but if he stuck 0:07:14.160 --> 0:07:16.360 to his guns rather than people who just keep on 0:07:16.400 --> 0:07:19.560 revising and whenever the market moves, you're just like, oh, okay, 0:07:19.640 --> 0:07:20.600 let me change my target. 0:07:20.680 --> 0:07:24.040 Exactly. It's almost somewhat paradoxical because as a strategist you 0:07:24.080 --> 0:07:26.240 have to be nimble, you have to be aware of 0:07:26.360 --> 0:07:28.720 changing economic data and earnings, and you have to be 0:07:28.760 --> 0:07:30.640 willing to change your views. But at the same time, 0:07:30.800 --> 0:07:34.040 conviction is so important, and obviously your credibility kind of 0:07:34.080 --> 0:07:35.920 diminishes once you're going back and forth. 0:07:35.920 --> 0:07:38.960 It's all at play. Bloomberg's Alexandra Simonova, thanks so much 0:07:38.960 --> 0:07:41.000 for stopping by. Really interesting stuff, great read on the 0:07:41.040 --> 0:07:41.920 Bloomberg Terminal. 0:07:43.280 --> 0:07:46.080 Stay with us. More from Bloomberg Business Week Daily coming 0:07:46.160 --> 0:07:47.040 up after this. 0:07:51.120 --> 0:07:55.000 You're listening to the Bloomberg Business Week Daily podcast. Catch 0:07:55.080 --> 0:07:57.800 us live weekday afternoons from two to fivey's During this 0:07:58.000 --> 0:08:01.840 listen on Applecarplay and Android with the Blueberk Business app 0:08:02.040 --> 0:08:04.600 or what is live on YouTube? 0:08:05.560 --> 0:08:07.720 The S and B five hundred is broken through sixty 0:08:07.800 --> 0:08:09.600 nine hundred in case you missed it. It's been a 0:08:09.680 --> 0:08:12.360 narrow tech lead. Advanced volume though not so great right, 0:08:12.400 --> 0:08:14.960 thirty five percent below the average of the past month 0:08:15.000 --> 0:08:17.720 ahead of the Christmas holiday, but that's to be expected. 0:08:17.720 --> 0:08:19.680 So what are the themes in the new year? Where 0:08:19.680 --> 0:08:22.280 are the opportunities? We've brought in David Shasler, he is 0:08:22.320 --> 0:08:24.360 here to lend his thoughts. He's head of multi Asset 0:08:24.400 --> 0:08:27.160 Solutions at van X Funds. David, great to see you. 0:08:27.440 --> 0:08:28.600 Thank you so much for having me. 0:08:28.960 --> 0:08:32.120 So you say that the long game in twenty twenty 0:08:32.160 --> 0:08:35.520 six has not changed. What is the long game in 0:08:35.559 --> 0:08:36.000 your view? 0:08:36.200 --> 0:08:38.680 So we are thematic investors, and let's be clear, what 0:08:38.720 --> 0:08:41.199 does a theme mean. The theme is a structural market driver. 0:08:41.679 --> 0:08:44.400 If you're a thematic investor, this is a target rich environment. 0:08:44.679 --> 0:08:46.280 There are a lot of opportunities. So I'm going to 0:08:46.360 --> 0:08:50.559 start with disruptive technology innovation. Yes we're talking about AI. Yes, 0:08:50.600 --> 0:08:55.360 we're talking about AI automation. It's under hyped in regardless, 0:08:55.360 --> 0:08:58.360 you're hyped. Yes, okay, it is going to drive more transformation, 0:08:58.480 --> 0:09:01.400 more productivity, more growth, and it's going to happen fast 0:09:01.400 --> 0:09:02.120 than people expect. 0:09:02.120 --> 0:09:02.920 So that's where we're at. 0:09:03.160 --> 0:09:07.600 It's under hype. There's going to be dislocation between expectations 0:09:07.679 --> 0:09:09.840 or reality and not expection bumpingess. So it doesn't mean 0:09:09.840 --> 0:09:12.480 it happens in twenty twenty six. A lot of competition there, 0:09:12.800 --> 0:09:16.000 But that's the first theme. The second theme is there's 0:09:16.000 --> 0:09:18.920 a stealth bull market in real assets. Real assets are 0:09:18.920 --> 0:09:23.280 performing extraordinarily well as Greatest Tech did last year. This 0:09:23.400 --> 0:09:26.600 year is Greatest Tech died in twenty twenty five. Lots 0:09:26.600 --> 0:09:29.200 of segments of real assets actually outperformed. Not a lot 0:09:29.200 --> 0:09:31.480 of people talking about it. The new world doesn't happen 0:09:31.520 --> 0:09:32.800 without the old world build So give. 0:09:32.720 --> 0:09:34.920 Us some examples of real world assets. 0:09:34.520 --> 0:09:34.920 That you like. 0:09:35.559 --> 0:09:37.200 Energy, how are you going to build it? 0:09:37.280 --> 0:09:37.439 Right? 0:09:37.480 --> 0:09:40.200 So we've been leaning into the energy that you have 0:09:40.320 --> 0:09:43.360 that's actually going to power things now, fossil fuels, where 0:09:43.360 --> 0:09:46.120 are we going, what's proven, what's reliable? And nuclear energy. 0:09:46.360 --> 0:09:48.280 We've made a lot of money with that, so we're 0:09:48.320 --> 0:09:51.160 leading into energy, but also the infrastructure build out need 0:09:51.240 --> 0:09:55.080 to facilitate not only energy transition, but infrastructure development to 0:09:55.080 --> 0:09:59.040 support the technology. So that's the second theme. The third, 0:10:00.120 --> 0:10:02.679 how are we going to pay for it? We've been 0:10:02.720 --> 0:10:07.199 perpetually overspending for decades. We're in the period of accountability. 0:10:07.320 --> 0:10:12.400 Financial accountability, sorry not sorry. Debt matters, Deficits matter. You 0:10:12.440 --> 0:10:16.120 can't just spend and spend and spend without repercussions. And 0:10:16.120 --> 0:10:17.800 now we're at the point where that is the case. 0:10:18.120 --> 0:10:21.640 In pre twenty twenty, you could do whatever you wanted, print, print, print, 0:10:21.880 --> 0:10:24.160 no inflation. That's not the world we're in now. We're 0:10:24.200 --> 0:10:26.839 the world of financial accountability. So if we're going to 0:10:26.880 --> 0:10:28.440 pay for all the sins of the past with all 0:10:28.440 --> 0:10:31.560 that perpetual spending, and then start to think about what's 0:10:31.640 --> 0:10:34.559 on our plate, what's on our plate. You've got reshoring, 0:10:34.600 --> 0:10:38.040 you've got an infrastructure bill out, you've got a global 0:10:38.760 --> 0:10:42.000 tech race. We're losing is existential And when you frame 0:10:42.040 --> 0:10:44.280 it that way, When you frame it that way, well, 0:10:44.320 --> 0:10:46.760 debt and deficits really don't matter as much. Losing is 0:10:46.760 --> 0:10:48.760 what matters. And how are we going to pay for it? 0:10:49.040 --> 0:10:50.920 You're gonna pay for it with the basement why, because 0:10:50.920 --> 0:10:54.239 you have no option. That's what happens when you perpetually overspend. 0:10:54.679 --> 0:10:57.240 So you need to own assets with embedded scarcity. You've 0:10:57.240 --> 0:11:00.360 got to own gold, You've got to own bitcoin, bitcoins rugged. 0:11:00.960 --> 0:11:02.800 We think it does really well later part. 0:11:02.679 --> 0:11:03.160 Of next year. 0:11:03.200 --> 0:11:05.480 So are we going to have another another year where 0:11:05.520 --> 0:11:08.040 we see gold rally right along with stocks? 0:11:09.160 --> 0:11:11.400 This I will be bold enough to frame it out. 0:11:11.440 --> 0:11:13.120 Give me a little bit of flexibility. So if we 0:11:13.120 --> 0:11:14.840 meet next year, give me a little bit of flexibility 0:11:14.840 --> 0:11:16.480 in this, because I'm gonna be very very specific. 0:11:16.640 --> 0:11:17.640 Okay, we like that. 0:11:18.520 --> 0:11:20.679 I think big coins a top performing asset next year. 0:11:21.559 --> 0:11:24.520 I'll frame out why think gold does well. I think 0:11:24.600 --> 0:11:27.920 real assets, broad based real assets. How do you actually 0:11:27.960 --> 0:11:29.800 build it? How do you power it does better than gold? 0:11:29.800 --> 0:11:33.200 Big gold does well. Technology stocks a bit behind that. 0:11:33.760 --> 0:11:35.840 All four of those do well. That's how I frame 0:11:35.920 --> 0:11:39.800 that up. Here's the thing, right, why will bitcoin do 0:11:39.920 --> 0:11:42.040 so well in the later part of the year. We're 0:11:42.080 --> 0:11:44.040 not saying we're in a battle liquidity environment, but we're 0:11:44.040 --> 0:11:46.000 saying the liquidity environment is going to get a lot better. 0:11:46.320 --> 0:11:48.720 You're gonna have a new fed share coming into office. 0:11:49.600 --> 0:11:54.040 Check that box. You've got a large portion of this 0:11:54.720 --> 0:11:57.040 of the public that's not participating. You've got a narrow 0:11:57.080 --> 0:12:00.800 growth market, you've got declining employment conditions, it's setting the 0:12:00.840 --> 0:12:05.360 backdrop for easing financial conditions. Bitcoin is the instrument that 0:12:05.440 --> 0:12:08.640 responds best to that. There's an emotional element to it, 0:12:08.679 --> 0:12:10.920 and there's a quiity element to it. If you're nervous, 0:12:11.520 --> 0:12:13.040 you're not going to lead into that. But if you 0:12:13.080 --> 0:12:16.080 get more exuberant and more confident, you're going to. If 0:12:16.120 --> 0:12:18.520 you've got bitcoin, which is outperformed almost every year of 0:12:18.559 --> 0:12:22.640 its existence and now underperformed by thirty percent relative to 0:12:22.679 --> 0:12:26.280 tech stocks last year, seventy five percent relative to gold 0:12:26.360 --> 0:12:29.760 last year, it's basically a coiled spring. We think it 0:12:29.800 --> 0:12:30.760 outperforms next year. 0:12:31.160 --> 0:12:35.560 So you oversee model portfolios and vanac. How do you 0:12:35.920 --> 0:12:38.200 think of bitcoin and gold when you put them in 0:12:38.200 --> 0:12:40.480 your model portfolios? Do you think they complement each other 0:12:40.559 --> 0:12:42.720 or do you think they're in either? Or because you 0:12:42.760 --> 0:12:45.160 say that bitcoin will gain next year, will be the 0:12:45.200 --> 0:12:49.000 top performing asset, what is bitcoin like to you? Because 0:12:49.040 --> 0:12:52.000 I feel like it still needs to mature. Some say 0:12:52.040 --> 0:12:54.400 it's like a risk asset. Some but the premise of 0:12:54.400 --> 0:12:56.640 bitcoin is not to be like a risk asset. It's 0:12:56.679 --> 0:12:58.720 to be a hedge against installation. 0:13:00.120 --> 0:13:03.960 It's definitely undergone an identity crisis over time, it's matured 0:13:04.000 --> 0:13:08.079 over time, it's a teenager now, and as it's continued 0:13:08.080 --> 0:13:11.080 to mature, it's starting to act more mature. It's volatility 0:13:11.120 --> 0:13:14.679 profiles more muted, the swings are less extreme, and it's 0:13:14.720 --> 0:13:17.000 starting to kind of set in its saddle in regards 0:13:17.000 --> 0:13:18.480 to what it is, and I think you could more 0:13:18.679 --> 0:13:21.640 correctly frame it and allocate to it. So we own 0:13:21.720 --> 0:13:23.880 gold and bitcoin, want a lot more gold than we 0:13:23.880 --> 0:13:27.120 do bitcoin. If the market sells off, I expect gold 0:13:27.120 --> 0:13:29.120 to be there for me. I expect bitcoin to be 0:13:29.200 --> 0:13:32.680 a risk asset. The similarity, the core similarity, is that 0:13:32.720 --> 0:13:36.439 they both have scarcity, and that's why they're both beneficiaries 0:13:36.480 --> 0:13:39.679 of financial access. However, when they perform and how they 0:13:39.720 --> 0:13:42.840 perform are very very different. Given the structural under performance 0:13:42.840 --> 0:13:45.319 of bitcoin over the last twelve eighteen months, we think 0:13:45.360 --> 0:13:48.160 it's set up for our performance next year. Gold we 0:13:48.160 --> 0:13:50.240 think still does great, but it's going to breathe a 0:13:50.280 --> 0:13:52.719 little bit. It's going to be volatile. It's not going 0:13:52.720 --> 0:13:56.679 to be a straight line. This way. The supply of 0:13:56.720 --> 0:13:59.959 gold static incremental investment demand. Given how small gold is 0:14:00.160 --> 0:14:03.200 relative to stocks and bonds, gold will become unhinged. It 0:14:03.200 --> 0:14:05.920 will become more volatile. People are gonna be surprised how 0:14:05.960 --> 0:14:08.439 voalatle it gets. That's the opportunity. It's a feature, it's 0:14:08.480 --> 0:14:09.040 not a flaw. 0:14:09.640 --> 0:14:11.760 And you have a five thousand price market for gold too. 0:14:12.080 --> 0:14:12.439 What was that? 0:14:12.640 --> 0:14:13.880 He has a five thousand price. 0:14:14.280 --> 0:14:17.160 Yes, we came out with that. We came out with 0:14:17.200 --> 0:14:19.520 that when gold was below three thousand dollars, so I 0:14:19.520 --> 0:14:21.080 think it was around twenty eight hundred. We said gold 0:14:21.120 --> 0:14:23.760 would go to five thousand dollars. Thought it would happen 0:14:23.840 --> 0:14:25.960 by the end this year. Miss that mark. We think 0:14:25.960 --> 0:14:28.880 it goes well above five thousand dollars in twenty twenty six. 0:14:29.840 --> 0:14:33.080 And just in about twenty seconds. What about Europe? Are 0:14:33.120 --> 0:14:35.080 they going to outperform us as much as they did 0:14:35.080 --> 0:14:35.560 this year? 0:14:36.040 --> 0:14:36.120 No. 0:14:36.560 --> 0:14:38.760 If you want to hedge, first off, you go where 0:14:38.760 --> 0:14:40.480 the growth is, invest where the growth is. If you 0:14:40.480 --> 0:14:41.960 want to hedge the dollar, go to gold, go to 0:14:41.960 --> 0:14:47.040 big one. So extract the currency, move out of European 0:14:47.040 --> 0:14:50.240 equities and the picture looks different, all right. 0:14:50.320 --> 0:14:54.320 David Chanstler, he is head of multi asset Solutions at 0:14:54.400 --> 0:14:58.240 van K Funds. Thank you for your predictions, some of them. 0:14:58.040 --> 0:15:02.560 Bold with us. More from Bloomberg Business Week Daily coming 0:15:02.640 --> 0:15:08.440 up after this. 0:15:08.440 --> 0:15:12.280 This is the Bloomberg Business Week Daily Podcast. Listen live 0:15:12.360 --> 0:15:15.960 each weekday starting at two pm Eastern on Applecarplay and 0:15:15.960 --> 0:15:18.800 Android Auto with the Bloomberg Business App. You can also 0:15:18.960 --> 0:15:22.000 listen live on Amazon Alexa from our flagship New York 0:15:22.000 --> 0:15:25.200 station Just Say Alexa played Bloomberg eleven thirty. 0:15:27.280 --> 0:15:30.120 Artificial intelligence. We keep talking about it. We talk about 0:15:30.160 --> 0:15:32.200 how it touches almost every part of our lives. Well, 0:15:32.200 --> 0:15:35.520 guess what. It's also changing the way life sciences companies 0:15:35.640 --> 0:15:38.240 use real estate, and guess what it's coming at a 0:15:38.280 --> 0:15:41.400 time when more than sixty million square feet of lab 0:15:41.480 --> 0:15:45.920 space is sitting vacant, vacant on US markets. Those are 0:15:45.960 --> 0:15:48.880 just some of the findings in jll's twenty twenty five 0:15:49.000 --> 0:15:53.120 Life Sciences Real Estate Perspective and Cluster Analysis. I know 0:15:53.160 --> 0:15:56.200 that's a mouthful, but Travis McCready he is head of 0:15:56.200 --> 0:15:59.320 Industries and Leading Advisory at JLLL and he joins US 0:15:59.360 --> 0:16:02.360 now remotely. Travis, thanks so much for being with us. 0:16:02.400 --> 0:16:04.280 I found this report to be really fascinating. I love 0:16:04.280 --> 0:16:06.680 this kind of stuff, and I really love real estate. 0:16:06.720 --> 0:16:10.200 So this is sort of a different way into real estate. Look, 0:16:10.240 --> 0:16:12.840 there was a lot of overbuilding in the life science 0:16:12.880 --> 0:16:13.920 real estate industry. 0:16:13.960 --> 0:16:14.680 This we know. 0:16:14.960 --> 0:16:18.160 How does this set up landlords, tenants and also those 0:16:18.200 --> 0:16:20.920 looking for to invest in this area? How does that 0:16:21.000 --> 0:16:22.760 set us up for twenty twenty six. 0:16:23.880 --> 0:16:29.840 Indeed, it's the asymmetry between demand and supply right now 0:16:29.920 --> 0:16:34.160 and the effect of overbuilding, building way too much too 0:16:34.200 --> 0:16:37.720 soon in the life science is really puts us at 0:16:37.720 --> 0:16:40.480 the bottom of a cycle heading into twenty twenty six. 0:16:40.560 --> 0:16:41.720 And that's the good news. 0:16:42.720 --> 0:16:45.480 As you mentioned, the artificial intelligence is changing the way 0:16:45.480 --> 0:16:49.320 that we engage in research and development, hopefully making it 0:16:49.360 --> 0:16:54.000 more efficient, making it more efficacious. So on the horizon 0:16:54.800 --> 0:16:58.800 will be an uptick in entrepreneurship and hopefully an uptick 0:16:58.800 --> 0:17:02.920 and demand. But right now, heading into twenty twenty six, 0:17:03.000 --> 0:17:06.520 make no mistake, with sixty million square feet of vacancies 0:17:06.920 --> 0:17:10.679 that we need to digest across the United States, we have, 0:17:11.359 --> 0:17:13.320 as the saying goes, we have a lot of wood 0:17:13.320 --> 0:17:17.760 to chop in order to return to equilibrium from a 0:17:17.880 --> 0:17:20.280 lab standpoint in the United States. 0:17:20.520 --> 0:17:22.639 So we've seen more than twenty five billion dollars in 0:17:22.680 --> 0:17:26.400 new US bio manufacturing commitments announced. Is this the start 0:17:26.440 --> 0:17:31.000 of US sustained resharing cycle or is this more tactical 0:17:31.080 --> 0:17:35.520 response to the current policy that the pressures we're seeing. 0:17:36.640 --> 0:17:39.320 I think it's a little bit of both. Those investments. 0:17:39.359 --> 0:17:41.920 That twenty five billion dollars worth of investment is both 0:17:42.119 --> 0:17:46.439 a reflection of policy change making it more favorable to 0:17:46.520 --> 0:17:51.680 engage in pharmaceutical manufacturing on US soil, US and Puerto Rico, 0:17:53.000 --> 0:17:56.160 but it's also a function of the fact that we 0:17:56.280 --> 0:18:01.040 have more drugs that actually need to be manufactured. 0:18:01.080 --> 0:18:02.720 There's been an. 0:18:02.119 --> 0:18:06.320 Increase in pharma m and A activity, there's a there's 0:18:06.320 --> 0:18:08.480 certainly going to be an increase in twenty twenty six 0:18:09.440 --> 0:18:13.119 in revenues, about an eighteen percent increase in revenues from 0:18:13.240 --> 0:18:15.080 the top ten drugs. 0:18:14.760 --> 0:18:18.240 Alone sold in the United States. 0:18:18.480 --> 0:18:21.920 So it's a combination of factors, both policy shifts and 0:18:22.359 --> 0:18:26.879 more drugs being on the market that's driving that's driving 0:18:26.880 --> 0:18:28.040 that investment. 0:18:28.240 --> 0:18:31.440 In Travis I know Boston for sure, but also San Francisco, 0:18:31.600 --> 0:18:34.880 the Bay Area, San Diego, there are big markets for 0:18:34.960 --> 0:18:39.439 the biosciences, for life science, real estate. Any you think 0:18:39.440 --> 0:18:41.800 they're going to hold onto those positions in the new year. 0:18:42.560 --> 0:18:45.240 What are some other opportunities or other markets that might 0:18:45.240 --> 0:18:46.080 may be catching up. 0:18:47.480 --> 0:18:50.280 Yeah, those two markets are and will continue to be 0:18:50.400 --> 0:18:54.280 the leading life sciences markets in North America. The Greater 0:18:54.359 --> 0:18:57.200 Boston area inclusive of Cambridge and Boston as well as 0:18:57.240 --> 0:19:00.840 the as the Bay Area. That's that's the major two. 0:19:01.560 --> 0:19:05.920 Rounding out the third, however, is San Diego. We've seen 0:19:06.080 --> 0:19:09.520 an enormous amount of activity over the past decade in 0:19:09.600 --> 0:19:13.840 terms of output and real estate in the southern California 0:19:13.880 --> 0:19:14.879 San Diego area. 0:19:15.600 --> 0:19:19.480 So those that's the that's the trilogy to the trinity. 0:19:19.000 --> 0:19:23.880 Of of of markets in in the life sciences. After that, 0:19:24.320 --> 0:19:27.159 there are just as a great number about a dozen 0:19:27.320 --> 0:19:32.119 of exciting markets across the US on both coasts, and 0:19:32.160 --> 0:19:36.080 a couple in in the Midwest as well. One I 0:19:36.200 --> 0:19:40.520 point out is Indianapolis, a great market right now for 0:19:40.720 --> 0:19:46.000