1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:22,000 Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App. 4 00:00:22,360 --> 00:00:25,680 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:25,760 --> 00:00:27,000 Speaker 1: us live on YouTube. 6 00:00:27,320 --> 00:00:30,760 Speaker 2: Ms Nordvig his book on the euro was outright courageous 7 00:00:31,240 --> 00:00:35,440 Speaker 2: over a decade ago, acclaimed on Wall Street and now 8 00:00:35,440 --> 00:00:38,760 Speaker 2: at exeenting data. Can dollar weakness continue? 9 00:00:40,600 --> 00:00:44,400 Speaker 3: I think it can? It can. It's we were talking 10 00:00:44,400 --> 00:00:47,199 Speaker 3: about a couple of months ago, and what happened a 11 00:00:47,240 --> 00:00:50,640 Speaker 3: couple of months ago is we had this pretty big 12 00:00:50,760 --> 00:00:55,600 Speaker 3: dramatic shift in how people think about asset location. So 13 00:00:55,640 --> 00:00:57,960 Speaker 3: a lot of our clients have been taken down the 14 00:00:58,120 --> 00:01:03,200 Speaker 3: dollar exposure from Cana that to Europe, to Asian countries. 15 00:01:03,240 --> 00:01:08,360 Speaker 3: So I think we're well and we're sort of well 16 00:01:08,440 --> 00:01:10,760 Speaker 3: into that process. People have done a lot of that. 17 00:01:11,360 --> 00:01:13,959 Speaker 3: So I think we're going into a new phase. And 18 00:01:14,160 --> 00:01:16,040 Speaker 3: I would echo what you're saying. I think then that 19 00:01:16,040 --> 00:01:21,080 Speaker 3: that's got best. An interview was fantastic, very transparent. But 20 00:01:21,160 --> 00:01:22,840 Speaker 3: I think we're going into a new phase where it's 21 00:01:22,880 --> 00:01:25,000 Speaker 3: it's more about the FED again, like it's the FED 22 00:01:25,120 --> 00:01:26,000 Speaker 3: going to do something. 23 00:01:26,720 --> 00:01:26,840 Speaker 4: Right. 24 00:01:27,400 --> 00:01:30,039 Speaker 3: Is the pressure on the FED going to have an 25 00:01:30,080 --> 00:01:33,040 Speaker 3: influence on the dollar? I think actually what you're seeing 26 00:01:33,959 --> 00:01:36,920 Speaker 3: this week is that the dollar is kind of leaking. 27 00:01:37,040 --> 00:01:39,640 Speaker 2: And exactly perfect. 28 00:01:39,840 --> 00:01:43,720 Speaker 3: It's kind of because investors are a little bit uncomfortable 29 00:01:43,720 --> 00:01:47,320 Speaker 3: with this pressure, and I think that's adding to a 30 00:01:47,360 --> 00:01:50,400 Speaker 3: new phase here that's not just about you know, FX hedging, 31 00:01:50,440 --> 00:01:52,160 Speaker 3: but it's think about what the FED is going to 32 00:01:52,200 --> 00:01:54,280 Speaker 3: do in coming quarters. 33 00:01:54,400 --> 00:01:57,280 Speaker 5: So I mean, all right, you're selling the dollar. We've 34 00:01:57,320 --> 00:01:59,920 Speaker 5: seen other risk assets come back to uses and ps 35 00:02:00,040 --> 00:02:03,280 Speaker 5: come back and so on. You're selling a dollar. What 36 00:02:03,400 --> 00:02:07,760 Speaker 5: are you buying? So I mean, am I getting better 37 00:02:07,800 --> 00:02:09,120 Speaker 5: growth than the US? 38 00:02:09,400 --> 00:02:13,120 Speaker 3: Yeah? So I get this question. I would say, not 39 00:02:13,600 --> 00:02:16,080 Speaker 3: every day, not every week, but regularly get this question 40 00:02:16,240 --> 00:02:18,760 Speaker 3: like what else? What else is there to buy? 41 00:02:19,080 --> 00:02:19,280 Speaker 6: Right? 42 00:02:19,320 --> 00:02:23,200 Speaker 3: So you look around the world, and the point I 43 00:02:23,200 --> 00:02:26,560 Speaker 3: would make is the following, Right, We're not in a 44 00:02:26,760 --> 00:02:31,720 Speaker 3: zero interest rate global environment anymore. Like there are fixed 45 00:02:31,720 --> 00:02:35,680 Speaker 3: income instruments you can own in Europe other places in 46 00:02:35,720 --> 00:02:37,760 Speaker 3: the world right where you can get some yield. Right, 47 00:02:37,840 --> 00:02:41,240 Speaker 3: So from a yield perspective, it's not as one sided 48 00:02:41,360 --> 00:02:43,520 Speaker 3: as it was where the US was the only place 49 00:02:43,520 --> 00:02:45,360 Speaker 3: in the world you can get any yield, right, So 50 00:02:45,440 --> 00:02:48,880 Speaker 3: there is some competition from a yield perspective, and we 51 00:02:48,960 --> 00:02:51,560 Speaker 3: obviously we've seen in equity markets, even though you've had 52 00:02:51,600 --> 00:02:55,880 Speaker 3: the big bounce in you as stocks, they're actually still 53 00:02:55,960 --> 00:02:59,040 Speaker 3: lagging relative to a number of global markets. Right. So 54 00:02:59,080 --> 00:03:02,480 Speaker 3: I think there's a lot of equity investors that after 55 00:03:02,960 --> 00:03:06,640 Speaker 3: several years where you had to be focused on the US, 56 00:03:06,880 --> 00:03:10,799 Speaker 3: there are alternatives, right. So people are looking at European banks, 57 00:03:11,200 --> 00:03:14,880 Speaker 3: like there's something going on with European investments where European 58 00:03:15,520 --> 00:03:17,480 Speaker 3: banks are going to play an important role, right, So 59 00:03:17,520 --> 00:03:19,880 Speaker 3: I think that's one place that people are looking. 60 00:03:21,440 --> 00:03:23,760 Speaker 7: Assets are still relatively cheap. 61 00:03:23,600 --> 00:03:26,000 Speaker 3: Around the world, right, So if you believe that valuation 62 00:03:26,120 --> 00:03:29,840 Speaker 3: has any role in as a location, that's an argument. 63 00:03:29,960 --> 00:03:34,480 Speaker 3: But there's also basic diversification argument. Bloomberg had a good 64 00:03:34,520 --> 00:03:38,160 Speaker 3: story yesterday about how some of the big Canadian pension 65 00:03:38,200 --> 00:03:42,040 Speaker 3: funds have diversified out of the dollar. It's very consistent 66 00:03:42,080 --> 00:03:46,240 Speaker 3: with the conversations we have with chief investments officers around 67 00:03:46,240 --> 00:03:49,280 Speaker 3: the world. Right, Dollar exposure has been taken down from 68 00:03:49,320 --> 00:03:51,800 Speaker 3: a very elevated level going into this year. 69 00:03:52,560 --> 00:03:56,160 Speaker 5: So inflation here we got to I think most people 70 00:03:56,160 --> 00:03:59,080 Speaker 5: feel like was kind of a benign reading yesterday, a 71 00:03:59,080 --> 00:04:01,120 Speaker 5: little bit of up depending upon it. How do you 72 00:04:01,120 --> 00:04:02,920 Speaker 5: want to look at it? But I think less than 73 00:04:03,240 --> 00:04:07,000 Speaker 5: maybe some people expected. Are are tariff's going to find 74 00:04:07,000 --> 00:04:08,480 Speaker 5: their way into the inflation data? 75 00:04:08,480 --> 00:04:11,680 Speaker 3: Do you think this has become a quite controversial topic 76 00:04:12,360 --> 00:04:15,040 Speaker 3: as you've seeing that. I was in touch with Jan 77 00:04:15,120 --> 00:04:19,600 Speaker 3: Hatzius yesterday, like he's obviously feeling some heat from having 78 00:04:19,640 --> 00:04:21,560 Speaker 3: put out views on this. 79 00:04:21,640 --> 00:04:25,599 Speaker 2: His badge works, his badge works downtown this morning. We 80 00:04:25,680 --> 00:04:28,719 Speaker 2: gotta we got to recapitulate this, folks and slow down here. 81 00:04:28,760 --> 00:04:31,120 Speaker 2: This is important. Yan's nord been working for years with 82 00:04:31,160 --> 00:04:35,000 Speaker 2: a younger Y Hatzias. Jim O'Neil set up Modern Goldman 83 00:04:35,120 --> 00:04:38,080 Speaker 2: sex Economics with a guy named Bill Dudley and Ed 84 00:04:38,200 --> 00:04:41,080 Speaker 2: mc kelvey. Mister Dudley, of course, went on to the 85 00:04:41,120 --> 00:04:44,120 Speaker 2: New York Fed. They had all these young whipper snappers 86 00:04:44,160 --> 00:04:46,400 Speaker 2: walking around, and one of them was a guy from 87 00:04:46,440 --> 00:04:52,680 Speaker 2: Germany named Jan Hatzias, who single handidly codified mortgage equity 88 00:04:52,839 --> 00:04:57,400 Speaker 2: withdrawal within Global Wall Street. That's how I first came 89 00:04:57,440 --> 00:05:01,400 Speaker 2: to know Jana Hatzias and Jan's nord Big was absolutely 90 00:05:01,720 --> 00:05:04,640 Speaker 2: this guy out of Copenhagen, like he knew every restaurant 91 00:05:04,839 --> 00:05:09,800 Speaker 2: in Copenhagen, and they and others they put together this 92 00:05:10,080 --> 00:05:14,599 Speaker 2: just incredibly eclectic and original team under Jim O'Neill and 93 00:05:14,760 --> 00:05:18,800 Speaker 2: Bill Dudley leaderships. Nordvik went off to do other things 94 00:05:18,839 --> 00:05:22,840 Speaker 2: including founding and excited Data, and mister Hatzius at some 95 00:05:22,960 --> 00:05:26,560 Speaker 2: point was promoted up the food chain to get the 96 00:05:26,680 --> 00:05:27,960 Speaker 2: radar of Donald Trump. 97 00:05:28,600 --> 00:05:30,039 Speaker 3: It's a good summary. 98 00:05:30,040 --> 00:05:31,960 Speaker 6: It sounds like actually like when I'm. 99 00:05:34,120 --> 00:05:37,960 Speaker 3: Well, it's a it's it's it's rare that you have 100 00:05:38,279 --> 00:05:40,880 Speaker 3: a situation where the president of the United States, like 101 00:05:42,000 --> 00:05:44,320 Speaker 3: is involved in some kind of tension with an economist 102 00:05:44,400 --> 00:05:46,760 Speaker 3: at a bank, right, So we're in an unusual situation. 103 00:05:47,040 --> 00:05:50,880 Speaker 3: So I think is going to continue to do his research, 104 00:05:50,960 --> 00:05:56,039 Speaker 3: continue to do his forecasting, and and hopefully the management 105 00:05:56,120 --> 00:05:58,440 Speaker 3: will be dealing with that appropriately. 106 00:05:58,600 --> 00:06:00,240 Speaker 2: But going back to the. 107 00:06:00,240 --> 00:06:06,640 Speaker 3: Question that the tariffs are coming through in the numbers, 108 00:06:07,240 --> 00:06:11,600 Speaker 3: but we should also be very aware, right that the 109 00:06:11,720 --> 00:06:15,680 Speaker 3: tariffs have not been going up linearly. We had a 110 00:06:15,760 --> 00:06:18,599 Speaker 3: huge tariff shock, and then the tariffs actually went down, 111 00:06:19,000 --> 00:06:21,680 Speaker 3: like the Chinese tariffs went up above one hundred percent 112 00:06:22,120 --> 00:06:25,800 Speaker 3: and then they went down. So when we analyzed the 113 00:06:26,160 --> 00:06:29,159 Speaker 3: monthly inflation reports, we have to be very precise about 114 00:06:29,400 --> 00:06:32,719 Speaker 3: was this a month where teriffs actually went up or down? 115 00:06:32,880 --> 00:06:35,720 Speaker 3: And I will argue that the report we had yesterday 116 00:06:36,520 --> 00:06:39,960 Speaker 3: was actually reflecting that the tariff rates on China came 117 00:06:40,120 --> 00:06:43,799 Speaker 3: down into that report. Right. So when we look into 118 00:06:43,839 --> 00:06:46,640 Speaker 3: the coming months, which is obviously what investors care about 119 00:06:46,680 --> 00:06:50,920 Speaker 3: the future, not the past, we are looking at a 120 00:06:51,000 --> 00:06:55,320 Speaker 3: new shock from the reciprocal tariffs kicking in here August tenth. 121 00:06:55,800 --> 00:06:58,440 Speaker 3: That's going to be in the inflation numbers mostly in 122 00:06:58,480 --> 00:07:01,520 Speaker 3: September and October, and it's not going to make the 123 00:07:01,520 --> 00:07:02,560 Speaker 3: fetch job easier. 124 00:07:03,080 --> 00:07:05,880 Speaker 2: I want you to take the microeconomic foundations at Bill 125 00:07:05,960 --> 00:07:11,000 Speaker 2: Dudley and Company demanded and you were expert at, and 126 00:07:11,160 --> 00:07:15,680 Speaker 2: walk through the X axis of tariffs in your study 127 00:07:15,800 --> 00:07:18,440 Speaker 2: in America, we would go back to William McKinley. I'm 128 00:07:18,480 --> 00:07:20,320 Speaker 2: going to say eighteen ninety nine off the top of 129 00:07:20,320 --> 00:07:26,200 Speaker 2: my head, the exporter adapts, the importer at the shore adapts, 130 00:07:26,600 --> 00:07:30,040 Speaker 2: and then it's passed on to the consumer. What's that 131 00:07:30,280 --> 00:07:31,320 Speaker 2: X axis look like. 132 00:07:33,080 --> 00:07:38,480 Speaker 6: Well, we we had an initial shock right in April 133 00:07:38,560 --> 00:07:41,600 Speaker 6: that only lasts a couple of days, So that's kind 134 00:07:41,600 --> 00:07:45,520 Speaker 6: of noise, Like, so where did we settle in April? 135 00:07:45,720 --> 00:07:52,800 Speaker 3: We had a shock in the region thirteen percent, right, 136 00:07:52,840 --> 00:07:55,080 Speaker 3: So if we put that thirteen percent in the context 137 00:07:55,120 --> 00:07:58,280 Speaker 3: of having had one or two percent before, it is 138 00:07:58,320 --> 00:08:02,880 Speaker 3: a dramatic shift, and companies are adjusting at different speed. 139 00:08:03,000 --> 00:08:06,800 Speaker 3: So there's some goods categories where companies have passed it 140 00:08:06,840 --> 00:08:12,000 Speaker 3: through already, and then there are sectors where companies have 141 00:08:12,080 --> 00:08:15,600 Speaker 3: a lot of influence on their price. Apple has a 142 00:08:15,640 --> 00:08:17,640 Speaker 3: lot of influence on their price. They don't have that 143 00:08:17,760 --> 00:08:21,360 Speaker 3: much competition for iPhones, right, so they can set it 144 00:08:21,400 --> 00:08:22,800 Speaker 3: and they have not passed it through. 145 00:08:24,080 --> 00:08:24,960 Speaker 5: In the auto. 146 00:08:24,800 --> 00:08:28,680 Speaker 3: Sector, Toyota is a very important company, very important company, 147 00:08:29,520 --> 00:08:32,800 Speaker 3: and they have not passed it through other companies in 148 00:08:32,800 --> 00:08:35,400 Speaker 3: that sector. Then waiting what's Toyota eventually going to do. 149 00:08:35,559 --> 00:08:38,120 Speaker 3: If Toyota moves, we're going to move as well, right, 150 00:08:38,559 --> 00:08:41,079 Speaker 3: So it really depends on what good it is, what 151 00:08:41,120 --> 00:08:44,280 Speaker 3: that passed through has been. It would be surprising if 152 00:08:44,320 --> 00:08:47,720 Speaker 3: there's not more passed through over time, especially since tariff 153 00:08:47,800 --> 00:08:51,000 Speaker 3: rates and no going going back up. But I think 154 00:08:51,280 --> 00:08:54,080 Speaker 3: what is also tricky is like how much should the 155 00:08:54,120 --> 00:08:58,640 Speaker 3: FED look through because like it used to be the 156 00:08:58,640 --> 00:09:01,400 Speaker 3: case that the FED viewed as kid's a one off 157 00:09:01,440 --> 00:09:03,360 Speaker 3: shift to the price level. We have to mostly look 158 00:09:03,440 --> 00:09:08,080 Speaker 3: through it. And I don't I don't want to be 159 00:09:08,120 --> 00:09:11,600 Speaker 3: too critical of Powell, but I do think there has 160 00:09:11,640 --> 00:09:13,800 Speaker 3: been a bit of an odd shift within the FED 161 00:09:13,960 --> 00:09:18,760 Speaker 3: where they're focusing very much on realized inflation, what is 162 00:09:18,800 --> 00:09:21,199 Speaker 3: the inflation next couple of months, as opposed to saying 163 00:09:21,679 --> 00:09:24,600 Speaker 3: there's an element of the pricelift the level shifting in 164 00:09:24,640 --> 00:09:26,360 Speaker 3: a one off way, and it used to be the 165 00:09:26,360 --> 00:09:28,720 Speaker 3: case that they want to look through that, and I think. 166 00:09:28,840 --> 00:09:30,240 Speaker 2: Yeah, Best alluded to that. 167 00:09:30,480 --> 00:09:32,920 Speaker 3: Yeah, I mean I think I actually agree with that criticism, 168 00:09:32,920 --> 00:09:33,520 Speaker 3: to be honest. 169 00:09:33,760 --> 00:09:34,000 Speaker 2: Yep. 170 00:09:34,320 --> 00:09:37,040 Speaker 5: And so so inflation is one thing we've got. We 171 00:09:37,120 --> 00:09:38,920 Speaker 5: got some data yesterday. How about the labor market? They 172 00:09:38,920 --> 00:09:40,880 Speaker 5: are also FED is also looking at the labor market, 173 00:09:41,320 --> 00:09:44,239 Speaker 5: and again we had some odd data with some revisions 174 00:09:44,400 --> 00:09:47,720 Speaker 5: last week. You know, it just kind of puts that 175 00:09:47,760 --> 00:09:48,839 Speaker 5: front and center once again. 176 00:09:49,400 --> 00:09:54,480 Speaker 3: Yeah, Like like when we looked at the labor data, 177 00:09:54,880 --> 00:09:57,640 Speaker 3: not in the last report, but in the before that, 178 00:09:58,000 --> 00:10:00,920 Speaker 3: it looked really odd that there was the surge in 179 00:10:01,000 --> 00:10:04,920 Speaker 3: governmental hiring like it was totally in conflict with all 180 00:10:05,880 --> 00:10:08,960 Speaker 3: the anecdotes we're getting right, So the data did look odd, 181 00:10:09,760 --> 00:10:12,520 Speaker 3: and now we have like a big revision to what's 182 00:10:12,559 --> 00:10:15,960 Speaker 3: happening in the government sector that actually makes it look 183 00:10:16,040 --> 00:10:20,479 Speaker 3: less odd. The private sector is probably. 184 00:10:20,120 --> 00:10:24,720 Speaker 7: Where we really should focus, right, because it's deliberate that 185 00:10:24,760 --> 00:10:28,520 Speaker 7: we're reducing the public sector employment, right, it's like an 186 00:10:28,559 --> 00:10:30,959 Speaker 7: actual policy steps that's very deliberate. 187 00:10:31,280 --> 00:10:34,360 Speaker 3: What's happening in the private sector is more important, and 188 00:10:34,440 --> 00:10:36,360 Speaker 3: I think the data there is very tricky. We have 189 00:10:36,760 --> 00:10:39,480 Speaker 3: a real time labor indicator that we're tracking right, where 190 00:10:39,480 --> 00:10:43,560 Speaker 3: we look at everything that is a second labor market, 191 00:10:43,960 --> 00:10:46,959 Speaker 3: and it's not falling off a cliff, that's for sure. 192 00:10:47,280 --> 00:10:51,320 Speaker 3: There's some gradual deterioration, and then recently it's actually not 193 00:10:51,400 --> 00:10:54,400 Speaker 3: obvious that it's getting worse. So the FED is dealing 194 00:10:54,400 --> 00:10:57,520 Speaker 3: with this thing where the revisions look very bad, but 195 00:10:57,559 --> 00:11:01,560 Speaker 3: it's not obvious that the momentum is getting worse. 196 00:11:01,600 --> 00:11:02,680 Speaker 5: It's tricky for the fact. 197 00:11:02,760 --> 00:11:06,120 Speaker 2: One final question, this is from Paul from New Jersey. 198 00:11:06,679 --> 00:11:09,200 Speaker 2: Your book is the follow the Euro? Can you get 199 00:11:09,200 --> 00:11:11,880 Speaker 2: the Euro to parody? Before the third week of September 200 00:11:11,920 --> 00:11:12,760 Speaker 2: when Paul's. 201 00:11:12,480 --> 00:11:17,559 Speaker 3: Going to Europe. My book was written a few years ago, 202 00:11:18,000 --> 00:11:20,880 Speaker 3: and we did have some problems with the euro in 203 00:11:20,920 --> 00:11:24,560 Speaker 3: the meantime. But as I think you you texted me 204 00:11:24,679 --> 00:11:27,240 Speaker 3: the other day, Tom, you said, don't why don't you 205 00:11:27,240 --> 00:11:29,480 Speaker 3: write the fall of the dollar instead, like the dollar 206 00:11:29,520 --> 00:11:31,600 Speaker 3: has some issues as well, and. 207 00:11:31,600 --> 00:11:33,360 Speaker 2: They get some news here can you give? Are we 208 00:11:33,400 --> 00:11:34,319 Speaker 2: going to get a new book? 209 00:11:35,320 --> 00:11:37,960 Speaker 3: I would I would like to write about the dollar. 210 00:11:37,960 --> 00:11:39,960 Speaker 3: I have to get approval from my wife before I 211 00:11:40,000 --> 00:11:46,280 Speaker 3: write another books. But the idea is that the administration 212 00:11:47,280 --> 00:11:51,320 Speaker 3: wants the dollar weekend right. So it's not like it's 213 00:11:51,320 --> 00:11:53,760 Speaker 3: not just like it's something that happened by action. It's 214 00:11:53,760 --> 00:11:57,840 Speaker 3: actually something that the administration wants by design. So there's 215 00:11:57,920 --> 00:12:02,920 Speaker 3: some structural changes here that we not under estimate. And 216 00:12:02,960 --> 00:12:06,120 Speaker 3: this is why I think we're going through these phases 217 00:12:06,160 --> 00:12:08,960 Speaker 3: where the dollar was weakening due to the capital flows 218 00:12:09,480 --> 00:12:13,080 Speaker 3: in the first half. Now we're going through the FED phase. 219 00:12:13,840 --> 00:12:17,160 Speaker 3: And we've been through such a long bull run for 220 00:12:17,240 --> 00:12:19,080 Speaker 3: the dollar up until this year that we can have 221 00:12:19,240 --> 00:12:21,280 Speaker 3: multiple phases of dollar weakness from here. 222 00:12:21,440 --> 00:12:23,520 Speaker 2: Yes, thank you, thank you, thank you, thank you for 223 00:12:23,559 --> 00:12:26,480 Speaker 2: waiting for after the best and comments. Well, yes, nord 224 00:12:26,520 --> 00:12:31,840 Speaker 2: Vic with Vick Sante Data. 225 00:12:33,840 --> 00:12:37,439 Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live 226 00:12:37,480 --> 00:12:40,640 Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on 227 00:12:40,760 --> 00:12:44,120 Speaker 1: Apple Karplay and Android Otto with the Bloomberg Business app, 228 00:12:44,320 --> 00:12:46,040 Speaker 1: or watch us live on YouTube. 229 00:12:46,320 --> 00:12:49,880 Speaker 2: Data Seef joins the Namura the ear lead economist, and 230 00:12:50,320 --> 00:12:53,679 Speaker 2: I do this because I can't convey to you, folks 231 00:12:54,360 --> 00:12:59,880 Speaker 2: the intimidation of this list of people. Harvey Rosen, Lawrence Summer's, 232 00:13:00,920 --> 00:13:05,160 Speaker 2: Jeffries Sachs, a guy named Almandorf who was pretty good 233 00:13:05,160 --> 00:13:08,360 Speaker 2: at CBO. As I recall Stephen Mirin very much in 234 00:13:08,400 --> 00:13:12,880 Speaker 2: the news with President Trump and David Cef. You had 235 00:13:12,920 --> 00:13:15,679 Speaker 2: the honor of studying with Martin Feldstein, who was such 236 00:13:15,679 --> 00:13:19,199 Speaker 2: a supporter of it. And let's start there. Do you worry, 237 00:13:19,240 --> 00:13:23,160 Speaker 2: with all the heritage of Marty Feldstein about our debt 238 00:13:23,240 --> 00:13:24,040 Speaker 2: and our deficit? 239 00:13:24,240 --> 00:13:24,440 Speaker 3: Oh? 240 00:13:24,480 --> 00:13:28,880 Speaker 8: Absolutely. I think this is a very indebted country that 241 00:13:28,920 --> 00:13:31,960 Speaker 8: we have, and there isn't much prospect of that closing 242 00:13:32,240 --> 00:13:36,280 Speaker 8: anytime soon. We're not running deficits right now in order 243 00:13:36,320 --> 00:13:39,280 Speaker 8: to stimulate an economy that's in recession. This is just 244 00:13:39,559 --> 00:13:43,520 Speaker 8: a very large structural deficit that has developed over decades, 245 00:13:43,559 --> 00:13:46,560 Speaker 8: and there's no sign of it going down at home. 246 00:13:46,440 --> 00:13:49,720 Speaker 2: Soon without getting you in trouble with compliance at namurra 247 00:13:49,880 --> 00:13:52,560 Speaker 2: Ken Rogoff in my book of the Summer our dollar 248 00:13:52,679 --> 00:13:56,160 Speaker 2: year Problem makes clear we could see the long end 249 00:13:56,200 --> 00:13:59,240 Speaker 2: of raids go priced down, yield up and burst through. 250 00:13:59,600 --> 00:14:01,760 Speaker 2: Is that I don't want to get in trouble at 251 00:14:01,800 --> 00:14:06,200 Speaker 2: the Murah? But is that an outcome that's possible not probable? 252 00:14:06,320 --> 00:14:08,679 Speaker 8: Unfortunately we've already written about that, so I'm not at 253 00:14:08,760 --> 00:14:10,959 Speaker 8: risk of getting controlla fer opine one. 254 00:14:11,160 --> 00:14:11,400 Speaker 6: Yeah. 255 00:14:11,440 --> 00:14:13,480 Speaker 8: I think this is I think this is an increasing 256 00:14:13,760 --> 00:14:16,600 Speaker 8: investor concern, and I would say a concern of mine 257 00:14:16,880 --> 00:14:20,080 Speaker 8: as well. Over the past couple of months, we've seen 258 00:14:20,120 --> 00:14:22,800 Speaker 8: i'd say, really starting in April with the sort of 259 00:14:22,840 --> 00:14:25,680 Speaker 8: post Liberation Day announcement and then you know, events in 260 00:14:25,720 --> 00:14:31,600 Speaker 8: the UK, events in exactly we've seen, crisis happens, the 261 00:14:31,640 --> 00:14:35,400 Speaker 8: back end sells off, the crisis then is resolved and 262 00:14:35,440 --> 00:14:38,160 Speaker 8: the back end doesn't come back, so the yield spikes, 263 00:14:38,640 --> 00:14:40,640 Speaker 8: and then when the crisis is solved, it just sort 264 00:14:40,640 --> 00:14:41,240 Speaker 8: of stays there. 265 00:14:41,240 --> 00:14:42,200 Speaker 5: It doesn't get any worse. 266 00:14:42,280 --> 00:14:45,760 Speaker 8: But we've seen the steady steepening of the curve and 267 00:14:45,800 --> 00:14:47,760 Speaker 8: it's not the good kind of steepening. It's not the 268 00:14:47,840 --> 00:14:49,760 Speaker 8: kind of steepening where people are like, oh, you know, 269 00:14:50,640 --> 00:14:54,960 Speaker 8: the economy is going to be growing better, and therefore longer. 270 00:14:54,640 --> 00:14:56,880 Speaker 5: Longer term rate should be or yield should be higher. 271 00:14:57,240 --> 00:14:59,240 Speaker 8: It's the kind of steepening where people are like, oh, 272 00:14:59,400 --> 00:15:01,920 Speaker 8: I'm a little worried about what inflation is going to be. 273 00:15:02,000 --> 00:15:04,840 Speaker 8: Like globally, I'm a little worried about, you know, what 274 00:15:04,880 --> 00:15:08,480 Speaker 8: the future holds in terms of risk, and therefore I 275 00:15:08,560 --> 00:15:11,440 Speaker 8: demand a higher risk premium for locking my money up, 276 00:15:11,520 --> 00:15:16,120 Speaker 8: even with these very safe developed market economies like in 277 00:15:16,160 --> 00:15:17,480 Speaker 8: the US, UK, Japan. 278 00:15:18,080 --> 00:15:21,320 Speaker 5: David, are you surprised that we haven't seen more inflation 279 00:15:21,440 --> 00:15:23,880 Speaker 5: in this US economy yet or is it just a 280 00:15:23,880 --> 00:15:27,400 Speaker 5: matter of time or maybe the corporations are just taking 281 00:15:27,440 --> 00:15:28,960 Speaker 5: it in the margin, we're not going to see it. 282 00:15:29,040 --> 00:15:31,280 Speaker 8: Well, I mean, you know, you can't argue with the 283 00:15:31,360 --> 00:15:34,520 Speaker 8: data from yesterday, we did not really see the signs 284 00:15:34,560 --> 00:15:38,560 Speaker 8: of tariff induced inflation that we had been expecting. You know, inflation, 285 00:15:39,040 --> 00:15:42,240 Speaker 8: core inflation did tick up a little bit, but really, 286 00:15:42,320 --> 00:15:45,320 Speaker 8: when when you broke it down, it was things that 287 00:15:45,360 --> 00:15:48,120 Speaker 8: were not related to the tariffs that happened yesterday, and 288 00:15:48,600 --> 00:15:51,520 Speaker 8: that was actually in contrast to a month prior where 289 00:15:51,520 --> 00:15:54,080 Speaker 8: you did see some signs, there wasn't the follow through 290 00:15:54,080 --> 00:15:57,400 Speaker 8: in the data yesterday, and I think that does open 291 00:15:57,400 --> 00:15:59,680 Speaker 8: the door for the Fed to certainly be cutting in 292 00:15:59,680 --> 00:16:02,000 Speaker 8: STIP at its next meeting as a result. 293 00:16:01,800 --> 00:16:03,240 Speaker 5: And I guess we went It seems like in the 294 00:16:03,280 --> 00:16:05,280 Speaker 5: space of twenty four hours, we went from saying okay, 295 00:16:05,280 --> 00:16:08,640 Speaker 5: I guess a twenty five basis point cut is locked 296 00:16:08,640 --> 00:16:11,560 Speaker 5: in for September. Now, the rhetoric over the past twelve 297 00:16:11,720 --> 00:16:14,600 Speaker 5: eighteen hours has been maybe fifty basic way drinking game. 298 00:16:18,160 --> 00:16:19,040 Speaker 5: How do you think about that? 299 00:16:19,480 --> 00:16:22,680 Speaker 8: You know, it certainly can't roll it out, but it's 300 00:16:22,720 --> 00:16:24,600 Speaker 8: not our view that it's going to happen right now. 301 00:16:25,160 --> 00:16:26,880 Speaker 8: There are a couple of things. The first thing is 302 00:16:26,880 --> 00:16:31,440 Speaker 8: that the economy still looks like it's okay. The economy 303 00:16:31,480 --> 00:16:35,600 Speaker 8: is still growing. We had, you know, a decently robust 304 00:16:35,840 --> 00:16:40,200 Speaker 8: second quarter GDP print, not perfect, but the labor market, 305 00:16:40,320 --> 00:16:43,760 Speaker 8: despite having a big negative downgrade, we still have a 306 00:16:43,800 --> 00:16:46,240 Speaker 8: four point two percent unemployment rate. And then on top 307 00:16:46,320 --> 00:16:48,800 Speaker 8: of that, I think that the Fed probably remembers last 308 00:16:48,840 --> 00:16:51,520 Speaker 8: year it looked like it overreacted by going fifty in 309 00:16:51,560 --> 00:16:53,200 Speaker 8: September last year, Paul, can. 310 00:16:53,160 --> 00:16:56,680 Speaker 2: I go theoretical, go it's Wednesday and no economic data. 311 00:16:56,840 --> 00:17:01,120 Speaker 2: If you have nominal GDP and it's an impulse from 312 00:17:01,200 --> 00:17:07,119 Speaker 2: real GDP less lesser inflation as compared to an impulse 313 00:17:07,280 --> 00:17:13,400 Speaker 2: of inflation rising with a lesser real GDP, are they equal? 314 00:17:13,560 --> 00:17:18,040 Speaker 2: Are they are they efficaciously benefit to society? Or is 315 00:17:18,080 --> 00:17:20,439 Speaker 2: there a difference in those two nominal GDPs. 316 00:17:20,560 --> 00:17:21,960 Speaker 8: I think that's a big difference. I mean, I think 317 00:17:21,960 --> 00:17:24,600 Speaker 8: we we we certainly would always hope that it's being 318 00:17:24,680 --> 00:17:28,240 Speaker 8: driven not by prices rising but by by real actual 319 00:17:28,280 --> 00:17:29,360 Speaker 8: production of stuff. 320 00:17:29,480 --> 00:17:31,000 Speaker 5: Right, that's what real gas. 321 00:17:30,680 --> 00:17:32,600 Speaker 2: Which you see right now. Yeah, well, right now. 322 00:17:32,480 --> 00:17:34,480 Speaker 8: We see a little bit of both, right, and and 323 00:17:34,880 --> 00:17:37,680 Speaker 8: so that's not necessarily quite as good as before, but 324 00:17:38,400 --> 00:17:40,720 Speaker 8: where we had more of it coming from the real 325 00:17:40,760 --> 00:17:43,760 Speaker 8: GDP growth side. But I would also say it's pretty 326 00:17:43,760 --> 00:17:47,160 Speaker 8: far from a disaster. However, companies, you know, companies are 327 00:17:47,440 --> 00:17:51,680 Speaker 8: trying to hit nominal targets and it's not as important 328 00:17:51,680 --> 00:17:53,680 Speaker 8: for them. And I think you know, when we had 329 00:17:53,720 --> 00:17:57,640 Speaker 8: the inflation you know episode in twenty two twenty three, 330 00:17:57,720 --> 00:18:01,080 Speaker 8: following COVID, a lot of companies did really well, just 331 00:18:01,119 --> 00:18:03,280 Speaker 8: because their nominal earnings were going. 332 00:18:03,160 --> 00:18:05,119 Speaker 5: Up as a result of that. 333 00:18:05,320 --> 00:18:07,679 Speaker 8: So I do think that for you know, going back 334 00:18:07,720 --> 00:18:09,680 Speaker 8: to what you were saying before about the stoff market, 335 00:18:10,440 --> 00:18:13,320 Speaker 8: a little bit of an increase in inflation, whatever the 336 00:18:13,359 --> 00:18:17,000 Speaker 8: cause may be, is probably you know, good for these 337 00:18:17,000 --> 00:18:18,200 Speaker 8: companies over the shorter run. 338 00:18:18,520 --> 00:18:21,600 Speaker 2: This is Phil Correy, a pioneer years ago. The bread 339 00:18:21,680 --> 00:18:23,400 Speaker 2: lights of inflation help everybody. 340 00:18:23,440 --> 00:18:26,200 Speaker 5: Exactly Friday, We're gonna get retail sales, David, how's the 341 00:18:26,240 --> 00:18:27,600 Speaker 5: consumer hanging in there? 342 00:18:27,640 --> 00:18:28,800 Speaker 2: Do you think the consumer? 343 00:18:28,800 --> 00:18:32,240 Speaker 8: We actually still think is pretty good. And you know, 344 00:18:32,280 --> 00:18:37,320 Speaker 8: we've seen retail sales growing slower than earnings have been growing. 345 00:18:37,640 --> 00:18:39,520 Speaker 8: And I think on top of that, one key thing, 346 00:18:39,520 --> 00:18:41,840 Speaker 8: and this does go back to the labor market. Even 347 00:18:41,880 --> 00:18:45,399 Speaker 8: though we're seeing we've seen now several months of relatively 348 00:18:45,440 --> 00:18:49,119 Speaker 8: weak job growth on a net basis, on a growth basis, 349 00:18:49,280 --> 00:18:53,360 Speaker 8: there's very few layoffs, right And what really kills retail 350 00:18:53,400 --> 00:18:57,240 Speaker 8: sales is not a lack of net jobs, but people 351 00:18:57,320 --> 00:19:01,320 Speaker 8: being laid off. Right and right now, job security remains 352 00:19:01,480 --> 00:19:04,240 Speaker 8: very high, almost as high as it's ever been, So 353 00:19:04,320 --> 00:19:07,119 Speaker 8: your odds of being laid off if you have a 354 00:19:07,200 --> 00:19:09,280 Speaker 8: job are extremely low. 355 00:19:09,600 --> 00:19:11,960 Speaker 2: I can't tell you how many of our listeners and 356 00:19:12,040 --> 00:19:14,440 Speaker 2: viewers disagree with what you just said. Yeah, I get 357 00:19:14,480 --> 00:19:18,320 Speaker 2: the mail on it. Well, Dan, same, job security is okay. 358 00:19:18,880 --> 00:19:22,280 Speaker 8: Job security is a lot better than it would typically 359 00:19:22,320 --> 00:19:24,000 Speaker 8: be with these level of NFP. 360 00:19:24,240 --> 00:19:26,280 Speaker 2: Absolutely, don't be a stranger, David C. Thank you so 361 00:19:26,400 --> 00:19:30,439 Speaker 2: much this morning. Really wonderful to have him in with 362 00:19:30,520 --> 00:19:34,520 Speaker 2: the privilege of studying with Martin Feldstein at Harvard years ago. 363 00:19:35,000 --> 00:19:38,920 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 364 00:19:38,920 --> 00:19:42,240 Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto 365 00:19:42,359 --> 00:19:45,320 Speaker 1: with the Bloomberg Business App. You can also listen live 366 00:19:45,400 --> 00:19:49,000 Speaker 1: on Amazon Alexa from our flagship New York station, Just 367 00:19:49,040 --> 00:19:51,560 Speaker 1: say Alexa play Bloomberg eleven thirty. 368 00:19:51,880 --> 00:19:56,840 Speaker 2: Everybody's going rationalize, rationalized, rationalize. What Brian Belski does at 369 00:19:56,840 --> 00:20:00,240 Speaker 2: Female Capital Markets is he just seven pages and you 370 00:20:00,320 --> 00:20:02,560 Speaker 2: hate them because you have to read usually ice skin 371 00:20:02,720 --> 00:20:05,280 Speaker 2: like the first paragraph and you know, move on shore. 372 00:20:05,600 --> 00:20:07,560 Speaker 2: I can't do it with Belski. You can't do that. 373 00:20:08,240 --> 00:20:12,920 Speaker 2: What's your paragraph for? Say right now, Brian Belski about 374 00:20:12,960 --> 00:20:17,240 Speaker 2: the fact there isn't exuberance like I look at some 375 00:20:17,280 --> 00:20:22,359 Speaker 2: of the major houses analysis of the hedge fun enthusiasm 376 00:20:22,480 --> 00:20:27,879 Speaker 2: the market l long only it's not a roaring bull market. 377 00:20:28,160 --> 00:20:29,840 Speaker 2: It is, but it's not. 378 00:20:31,440 --> 00:20:34,960 Speaker 4: WELLO, good morning. We've run out of ways to try 379 00:20:34,960 --> 00:20:37,399 Speaker 4: to explain this, whether or not we're climbing the walla 380 00:20:37,440 --> 00:20:40,160 Speaker 4: Werry or the most hated bullmarket ever, which we've talked 381 00:20:40,200 --> 00:20:41,479 Speaker 4: about ten years ago. 382 00:20:42,080 --> 00:20:43,000 Speaker 2: And I think it's just. 383 00:20:43,040 --> 00:20:46,840 Speaker 4: This notion of so many investors from the institutional perspective. 384 00:20:46,880 --> 00:20:51,239 Speaker 4: Tom just love making binary opinions, meaning I'm out, I'm in, 385 00:20:51,440 --> 00:20:52,679 Speaker 4: I'm bullish, I'm bearish. 386 00:20:52,720 --> 00:20:55,760 Speaker 2: There's no but you mean I studied it wasn't like that. 387 00:20:55,840 --> 00:20:58,600 Speaker 4: It wasn't like it wasn't like that. And there's so 388 00:20:58,760 --> 00:21:02,040 Speaker 4: much talk of small caps will never work again. Oh, 389 00:21:02,080 --> 00:21:04,160 Speaker 4: by the way, now everybody thinks we're going to cut rates, 390 00:21:04,200 --> 00:21:06,280 Speaker 4: so small caps are up today. I mean, that's not 391 00:21:06,400 --> 00:21:10,200 Speaker 4: investing right. And so we really believe that this big 392 00:21:10,280 --> 00:21:12,879 Speaker 4: secular bull market has had several different. 393 00:21:12,720 --> 00:21:13,399 Speaker 2: Versions of it. 394 00:21:13,440 --> 00:21:15,479 Speaker 4: We think we're entering a new version of it that 395 00:21:15,520 --> 00:21:18,320 Speaker 4: could last another ten years. Part of our twenty to 396 00:21:18,359 --> 00:21:21,280 Speaker 4: twenty five year secular bull market theme and theory that 397 00:21:21,280 --> 00:21:25,080 Speaker 4: we've been consistent on in the marketplace since two thousand 398 00:21:25,080 --> 00:21:28,159 Speaker 4: and nine to twenty ten. So this what's going on 399 00:21:28,280 --> 00:21:30,600 Speaker 4: right now. And to answer your question on hedge funds, remember, 400 00:21:30,600 --> 00:21:34,920 Speaker 4: hedge funds have had terrible performance, terrible performance the last 401 00:21:34,920 --> 00:21:37,760 Speaker 4: three to five years. Long only have been late to 402 00:21:37,800 --> 00:21:40,680 Speaker 4: come in. But people that have been right in terms 403 00:21:40,720 --> 00:21:44,680 Speaker 4: of investing have been private wealth and family offices because 404 00:21:44,720 --> 00:21:49,240 Speaker 4: they have maintained their investment perspective and been much more disciplined. 405 00:21:49,720 --> 00:21:51,960 Speaker 5: Y s and P five hundred futures just below sixty 406 00:21:52,080 --> 00:21:54,920 Speaker 5: five hundred is Thomas mentioning? You say your sixty seven 407 00:21:54,960 --> 00:21:56,560 Speaker 5: hundred target is too low. Why is that? 408 00:21:57,400 --> 00:22:01,760 Speaker 4: Well, I mean our bolcases is seventy seven seventy two hundred. 409 00:22:02,200 --> 00:22:03,800 Speaker 4: We think that earnings are going to be a little 410 00:22:03,800 --> 00:22:05,040 Speaker 4: bit better than everybody thinks. 411 00:22:05,640 --> 00:22:07,879 Speaker 2: And rolling forward three months. 412 00:22:07,760 --> 00:22:09,760 Speaker 4: Very much, Well, I think it's three to six months, Tom, 413 00:22:09,800 --> 00:22:11,440 Speaker 4: I really do. And I think where the big kick 414 00:22:11,520 --> 00:22:14,520 Speaker 4: is gonna come from our financials, uh, you know, the 415 00:22:14,560 --> 00:22:16,760 Speaker 4: financial strength in terms of the really big banks, but 416 00:22:16,800 --> 00:22:18,720 Speaker 4: also the brokers. I think we're gonna have a bang 417 00:22:18,760 --> 00:22:22,919 Speaker 4: on second half, especially fourth quarter, in terms of investment banking. 418 00:22:23,560 --> 00:22:26,920 Speaker 4: Tom mentioned the word exuberance, Paul, if you think about 419 00:22:27,240 --> 00:22:30,440 Speaker 4: irrational exuberance. Not everybody's making money yet, So the more 420 00:22:30,640 --> 00:22:34,120 Speaker 4: the more you talk about a bubble, there's no bubba though. 421 00:22:34,240 --> 00:22:36,119 Speaker 4: Just because things go up doesn't mean there's a bubble 422 00:22:36,440 --> 00:22:38,800 Speaker 4: when everybody's making money. So what do I mean by that? 423 00:22:38,840 --> 00:22:40,880 Speaker 4: Financial services big banks aren't making a lot of money 424 00:22:40,880 --> 00:22:43,840 Speaker 4: in terms of the tech trade or the AI trade 425 00:22:43,840 --> 00:22:47,320 Speaker 4: because we're not seeing massive amounts of IPOs. But more importantly, 426 00:22:47,520 --> 00:22:50,800 Speaker 4: we're not seeing quote unquote silly types of mergers, like 427 00:22:50,920 --> 00:22:53,960 Speaker 4: big company mergers done with stock. When we see that 428 00:22:54,000 --> 00:22:55,800 Speaker 4: type of stuff, then we're getting closer to the end. 429 00:22:55,840 --> 00:22:56,919 Speaker 4: But we're nowhere near that. 430 00:22:58,200 --> 00:23:03,480 Speaker 5: So are we sticking with what goddess here? Tech comm services, 431 00:23:03,520 --> 00:23:04,200 Speaker 5: that kind of thing. 432 00:23:04,400 --> 00:23:06,960 Speaker 4: You know what's interesting is that back in the nineties 433 00:23:08,080 --> 00:23:10,680 Speaker 4: we bought big cap stocks in nifty to fifty and 434 00:23:10,720 --> 00:23:14,600 Speaker 4: the rational exuberants that mister Greenspan talked about was that 435 00:23:14,720 --> 00:23:17,080 Speaker 4: actually about stocks like Procter and Gamble and Gillette and 436 00:23:17,080 --> 00:23:19,400 Speaker 4: Coca Cola. But you know what those stocks are now, 437 00:23:19,400 --> 00:23:23,240 Speaker 4: they're Google, Apple, Microsoft, their liquidity and so what happens 438 00:23:23,280 --> 00:23:25,440 Speaker 4: when people get worried is they come back right back 439 00:23:25,440 --> 00:23:28,600 Speaker 4: into liquidity because they can participate in the market. So 440 00:23:28,680 --> 00:23:31,160 Speaker 4: as the market kind of gets a little bit lofty here, 441 00:23:31,200 --> 00:23:33,919 Speaker 4: we're gonna see more broadening out. Then we'll get some 442 00:23:33,960 --> 00:23:35,680 Speaker 4: sort of a pullback. This is all very normal. And 443 00:23:35,720 --> 00:23:36,920 Speaker 4: guess what's gonna lead coming. 444 00:23:36,760 --> 00:23:37,520 Speaker 2: Out of the pullback? 445 00:23:38,000 --> 00:23:40,520 Speaker 4: Large cap tech again. So we think from a secular basis, 446 00:23:40,520 --> 00:23:43,320 Speaker 4: there's several areas of tech, not all of tech, right, 447 00:23:43,720 --> 00:23:45,800 Speaker 4: but there's several areas within tech that you can will 448 00:23:45,840 --> 00:23:47,480 Speaker 4: and should be more stockpicking oriented. 449 00:23:48,480 --> 00:23:50,720 Speaker 5: All Right, we got some data over the last couple 450 00:23:50,760 --> 00:23:53,480 Speaker 5: of days that seems to solidified a twenty five point 451 00:23:54,080 --> 00:23:56,960 Speaker 5: basis point cut. I don't know the last twelve hours. 452 00:23:57,000 --> 00:23:59,520 Speaker 5: I woke up to my scroll was saying, hey, how 453 00:23:59,520 --> 00:24:01,960 Speaker 5: about fifty basis points? What are we doing there? 454 00:24:02,600 --> 00:24:05,120 Speaker 4: Yeah, I think that's kind of wishful thinking. I think 455 00:24:05,119 --> 00:24:07,400 Speaker 4: that that that inn rview would be jumping the gun 456 00:24:07,440 --> 00:24:11,000 Speaker 4: at fifty. I think there's been an increased talk about 457 00:24:11,040 --> 00:24:13,760 Speaker 4: that quite frankly. And what we've said is that the 458 00:24:14,200 --> 00:24:19,159 Speaker 4: market's trend is not dependent not dependent on the FED cutting. 459 00:24:19,880 --> 00:24:22,359 Speaker 4: This is all about earnings and all about the market 460 00:24:22,400 --> 00:24:25,880 Speaker 4: recovering and actually people getting reinvested again after missing this move. 461 00:24:26,720 --> 00:24:29,399 Speaker 2: I want to get back to what our listeners and 462 00:24:29,480 --> 00:24:32,280 Speaker 2: viewers should do that don't speculate. I mean, they watched 463 00:24:32,320 --> 00:24:35,040 Speaker 2: the parlor game as I call it, and you know 464 00:24:35,080 --> 00:24:38,520 Speaker 2: they're entertained by it, but they just want to there's 465 00:24:38,520 --> 00:24:40,679 Speaker 2: a wall, as Larry McDonald says, there's a wall of 466 00:24:40,720 --> 00:24:43,240 Speaker 2: money out there and it's going to go in. Is 467 00:24:43,280 --> 00:24:46,600 Speaker 2: the money going into the market by conservative family office, 468 00:24:46,920 --> 00:24:49,959 Speaker 2: private wealth in that? Is that forever money that's going in. 469 00:24:50,040 --> 00:24:53,200 Speaker 2: You just assume they're buying at the margin, whatever sect 470 00:24:53,280 --> 00:24:55,920 Speaker 2: or whatever stuck whatever and it's like forever. 471 00:24:56,440 --> 00:24:59,560 Speaker 4: I well, I think what's happening is you obviously if 472 00:24:59,560 --> 00:25:01,879 Speaker 4: you have a lot of of baby boomers that are retiring, 473 00:25:02,040 --> 00:25:04,080 Speaker 4: and then with their retirement and that four oh one 474 00:25:04,160 --> 00:25:06,159 Speaker 4: k money, they're able to roll it over in an IRA. 475 00:25:06,320 --> 00:25:08,400 Speaker 4: I think a lot of people aren't talking enough about 476 00:25:08,440 --> 00:25:11,240 Speaker 4: that number one, number two in terms of this forever money. 477 00:25:11,280 --> 00:25:14,600 Speaker 4: Remember too, that because of the binary decisions of a 478 00:25:14,640 --> 00:25:17,160 Speaker 4: lot of people selling bonds quite frankly at the low, 479 00:25:18,400 --> 00:25:20,520 Speaker 4: I think that there's still an opportunity to be in 480 00:25:20,560 --> 00:25:24,280 Speaker 4: sixty forty and be more diversified on the forever money. 481 00:25:24,440 --> 00:25:28,200 Speaker 4: I think what we've encountered in our great private wealth 482 00:25:28,600 --> 00:25:30,960 Speaker 4: platform at BIMO in terms of not only private wealth 483 00:25:31,000 --> 00:25:34,960 Speaker 4: but asset management. They've been very consistent and more disciplined 484 00:25:35,000 --> 00:25:37,080 Speaker 4: in terms of when the market goes down, they add 485 00:25:37,480 --> 00:25:41,639 Speaker 4: they average back in and where the institutional world usually 486 00:25:41,640 --> 00:25:44,520 Speaker 4: has to sell because either they're getting a call from 487 00:25:44,520 --> 00:25:47,480 Speaker 4: their compliance department, they're over they're oversized in video, or 488 00:25:47,480 --> 00:25:49,560 Speaker 4: something where a private wealth person could say, well, I 489 00:25:49,640 --> 00:25:50,520 Speaker 4: need to mark the market. 490 00:25:50,600 --> 00:25:52,080 Speaker 2: So I think the forever money. 491 00:25:52,480 --> 00:25:55,280 Speaker 4: It's difficult to say forever, but I think the more consistent, 492 00:25:55,880 --> 00:25:59,720 Speaker 4: more deliberate type of strategies. Whatever your value growth or whatever, 493 00:26:00,000 --> 00:26:00,280 Speaker 4: all right. 494 00:26:00,280 --> 00:26:03,520 Speaker 2: I don't care. Here's what I care about. A kid is, 495 00:26:03,680 --> 00:26:05,840 Speaker 2: you know, like he's sort of recruited. He's not like 496 00:26:05,880 --> 00:26:08,240 Speaker 2: a star, he's not like, you know whatever, they call him, 497 00:26:08,320 --> 00:26:12,160 Speaker 2: five star high school kid. He ends up at Louisville. 498 00:26:12,840 --> 00:26:16,520 Speaker 2: So he grows up at Louisville, ends up at Florida, 499 00:26:17,040 --> 00:26:19,399 Speaker 2: and then through three teams he ends up making seventy 500 00:26:19,400 --> 00:26:23,680 Speaker 2: six million dollars with the Minnesota Vikings. This guy Jonathan 501 00:26:23,720 --> 00:26:26,520 Speaker 2: Greenard is like the real deal. Who is this guy 502 00:26:27,040 --> 00:26:27,639 Speaker 2: out of nowhere? 503 00:26:27,680 --> 00:26:30,160 Speaker 4: But you got to remember too that that coaches put 504 00:26:30,160 --> 00:26:32,320 Speaker 4: people in the right position. And we have an amazing 505 00:26:32,400 --> 00:26:36,960 Speaker 4: defensive coordinator Brian Flores that is basically a co head coach, 506 00:26:37,000 --> 00:26:38,879 Speaker 4: and I think he might be one of the highest 507 00:26:38,880 --> 00:26:41,679 Speaker 4: paid assistant coaches in the league. But this guy's amazing. 508 00:26:41,720 --> 00:26:46,000 Speaker 4: He can take anybody. He took Andrew Grinkell. He's got 509 00:26:46,000 --> 00:26:48,359 Speaker 4: a cool name from the Miami Dolphins last year. It 510 00:26:48,359 --> 00:26:49,120 Speaker 4: made him a superstar. 511 00:26:49,359 --> 00:26:51,439 Speaker 2: I do you think this is a like I had? 512 00:26:51,480 --> 00:26:54,000 Speaker 2: It almost like goosebumps here. This guy Greenard, you know, 513 00:26:54,240 --> 00:26:57,800 Speaker 2: was really sort of struggling bam with the Vikings. He's 514 00:26:57,840 --> 00:27:00,479 Speaker 2: a Pro Bowl superstar with mega money. 515 00:27:00,800 --> 00:27:02,920 Speaker 4: Vikings are Vikings are I mean you know this is 516 00:27:02,960 --> 00:27:05,639 Speaker 4: coming from a Minnesota Viking Minnesota fan. Really, I just 517 00:27:05,680 --> 00:27:08,159 Speaker 4: went through it time getting crushed by the Yankees again. 518 00:27:08,800 --> 00:27:12,640 Speaker 4: But but you're welcome. The Yankees need a little pick 519 00:27:12,680 --> 00:27:14,200 Speaker 4: me up. But at the end of the day, I 520 00:27:14,200 --> 00:27:16,480 Speaker 4: think the Vikings are well positioned within within a within 521 00:27:16,520 --> 00:27:18,240 Speaker 4: a division. As you know, I think the Lions are 522 00:27:18,280 --> 00:27:19,840 Speaker 4: gonna be down. I think the Packers are gonna be down. 523 00:27:20,640 --> 00:27:23,600 Speaker 2: JJ McCarthy against the Detroit Lions November three, I know 524 00:27:23,680 --> 00:27:26,000 Speaker 2: you'll be there. Can he can he do it? He 525 00:27:26,080 --> 00:27:31,399 Speaker 2: look good, and we look in the pre season. Finally, Brian, 526 00:27:31,640 --> 00:27:34,360 Speaker 2: you gotta understand, folks. Belski walks in with an entourage 527 00:27:34,400 --> 00:27:37,040 Speaker 2: of like seven people, and one of the interns whispered 528 00:27:37,080 --> 00:27:41,520 Speaker 2: to me talk about the Viking. Brian, thank you so much, 529 00:27:41,600 --> 00:27:43,840 Speaker 2: makes man, I can't you know, folks, we keep scoring here. 530 00:27:44,000 --> 00:27:45,760 Speaker 2: We really want to listen to the people that have 531 00:27:45,800 --> 00:27:48,240 Speaker 2: gotten it wrong. Okay, you can learn more from them, 532 00:27:48,560 --> 00:27:50,960 Speaker 2: but the people that we identify that have gotten this 533 00:27:51,040 --> 00:27:54,800 Speaker 2: bull market right, we want to listen to them now. 534 00:27:55,240 --> 00:27:59,439 Speaker 2: With futures sixty five hundred down, futures pushing up on 535 00:27:59,560 --> 00:28:02,680 Speaker 2: forty five five thousand. Brian Belski, BMO Capital. 536 00:28:07,600 --> 00:28:11,480 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 537 00:28:11,520 --> 00:28:14,560 Speaker 1: starting at seven am Eastern on Apple, Cocklay, and Android 538 00:28:14,560 --> 00:28:17,600 Speaker 1: Auto with the Bloomberg Business app. You can also watch 539 00:28:17,640 --> 00:28:20,600 Speaker 1: us live every weekday on YouTube and always on the 540 00:28:20,600 --> 00:28:21,680 Speaker 1: Bloomberg terminal. 541 00:28:21,920 --> 00:28:27,480 Speaker 2: Stephanie Baker, we're thrilled joins us here before Alaska. Stephanie, 542 00:28:27,480 --> 00:28:29,120 Speaker 2: thank you so much for joining us. And now we've 543 00:28:29,119 --> 00:28:32,920 Speaker 2: been gyrating around with some wire stories this morning. In 544 00:28:32,960 --> 00:28:39,440 Speaker 2: your book, you talk about capping Putin's war premium what 545 00:28:39,480 --> 00:28:42,840 Speaker 2: are we doing in Alaska? Are we trying to cap 546 00:28:43,240 --> 00:28:45,959 Speaker 2: the hopes in dreams of Vladimer Putin? 547 00:28:47,800 --> 00:28:50,680 Speaker 9: No, it does not look like that's what Trump's going 548 00:28:50,760 --> 00:28:54,760 Speaker 9: to do. You know, this summit of itself is a 549 00:28:54,840 --> 00:28:58,720 Speaker 9: huge victory for Putin. He's an indicted war criminal under 550 00:28:58,920 --> 00:29:03,480 Speaker 9: US sanctions being welcomed on US soil, and the symbolism 551 00:29:03,560 --> 00:29:06,800 Speaker 9: of holding this in Alaska is not lost on anyone. 552 00:29:06,960 --> 00:29:07,880 Speaker 5: You know, they. 553 00:29:09,560 --> 00:29:12,280 Speaker 9: Very close to the United States. They're going to sit 554 00:29:12,320 --> 00:29:16,320 Speaker 9: down at a military base. You know, the Friday deadline 555 00:29:16,360 --> 00:29:21,920 Speaker 9: of severe sanctions if Putin doesn't agree to a ceasefire 556 00:29:21,960 --> 00:29:26,200 Speaker 9: has come and gone, and we still don't have any 557 00:29:26,240 --> 00:29:30,760 Speaker 9: additional sanctions by the US. Trump hasn't imposed any additional 558 00:29:30,760 --> 00:29:34,440 Speaker 9: sanctions since he entered the White House. This additional tariffon 559 00:29:35,520 --> 00:29:37,800 Speaker 9: India of twenty five percent doesn't actually come into force 560 00:29:37,840 --> 00:29:40,760 Speaker 9: for several weeks, so you know, it really remains to 561 00:29:40,800 --> 00:29:42,760 Speaker 9: be seen whether or not we will be back at 562 00:29:42,840 --> 00:29:46,560 Speaker 9: the debate about, you know, whether to sanction Russia additionally. 563 00:29:47,720 --> 00:29:51,760 Speaker 2: You know, after Friday, Putin's been in office longer than 564 00:29:51,800 --> 00:29:54,640 Speaker 2: Peter the Great or Cat's in the Great. Stephanie Baker, 565 00:29:54,920 --> 00:29:58,080 Speaker 2: we're aware of, you know, with good spirit, how President 566 00:29:58,120 --> 00:30:02,240 Speaker 2: Trump is aged, how is edit or Putin age towards 567 00:30:02,240 --> 00:30:06,360 Speaker 2: this meeting from Helsinki and from his early years out 568 00:30:06,360 --> 00:30:07,080 Speaker 2: of the KGB. 569 00:30:10,360 --> 00:30:14,920 Speaker 9: Well, you know, Putina obviously has staying power, and the 570 00:30:14,960 --> 00:30:18,560 Speaker 9: war is part of his gambit to stay in power 571 00:30:19,080 --> 00:30:23,479 Speaker 9: until he dies. There's been a lot of speculation about 572 00:30:23,600 --> 00:30:29,440 Speaker 9: Putin's health and you know, rumors, wild rumors of body 573 00:30:29,480 --> 00:30:33,320 Speaker 9: doubles being seen, you know, you know, Putin lookalikes going 574 00:30:33,360 --> 00:30:37,200 Speaker 9: to visit troops, you know, with the border close to 575 00:30:37,240 --> 00:30:40,840 Speaker 9: the border with Ukraine. I think Putin, from all accounts 576 00:30:40,840 --> 00:30:44,280 Speaker 9: that I've familiar with, Putin is in fairly good health 577 00:30:44,320 --> 00:30:48,520 Speaker 9: for a Russian man of his age. So I don't 578 00:30:48,560 --> 00:30:52,200 Speaker 9: think he's aged in any material sense. In that sense 579 00:30:52,200 --> 00:30:57,000 Speaker 9: since twenty eighteen, you know, I am bracing myself for 580 00:30:57,720 --> 00:31:02,400 Speaker 9: what will inevitably be a very bizarre press conference after 581 00:31:02,640 --> 00:31:06,320 Speaker 9: this summit, because as we remember the twenty eighteen Helsinki summit, 582 00:31:06,840 --> 00:31:12,680 Speaker 9: it was a very bizarre and depressing, you know, press 583 00:31:12,720 --> 00:31:17,040 Speaker 9: conference afterwards where he Trump questioned the legitimacy of US 584 00:31:17,080 --> 00:31:21,400 Speaker 9: intelligence that Russia interfered in the twenty sixteen election. You know, 585 00:31:21,440 --> 00:31:24,160 Speaker 9: this is not going to be a straightforward press conference afterwards, 586 00:31:24,680 --> 00:31:27,280 Speaker 9: so I think that you know it'll be We'll be 587 00:31:27,360 --> 00:31:30,120 Speaker 9: watching the words very carefully as to what they agree on, 588 00:31:30,560 --> 00:31:31,160 Speaker 9: if anything. 589 00:31:31,760 --> 00:31:35,880 Speaker 2: Stephanie Vladimer Putin, does he have the support of the 590 00:31:35,920 --> 00:31:38,600 Speaker 2: elites of Russia or the Russian people. 591 00:31:42,040 --> 00:31:46,400 Speaker 9: You know, Putin runs Russia with an iron fist, and 592 00:31:47,240 --> 00:31:52,160 Speaker 9: there's no real room for dissent. You know, the fear 593 00:31:52,160 --> 00:31:56,280 Speaker 9: of being thrown into prison for even the slightest offense 594 00:31:57,360 --> 00:32:01,960 Speaker 9: is extremely high. So I think the elites would love 595 00:32:02,040 --> 00:32:05,120 Speaker 9: to see a deal here. They want the sanctions lifted 596 00:32:05,880 --> 00:32:09,360 Speaker 9: because for all the talk and the bravado of Putin 597 00:32:09,480 --> 00:32:12,560 Speaker 9: that Russia is doing just fine under the sanctions, in reality, 598 00:32:12,600 --> 00:32:16,400 Speaker 9: the Russian economy is in a real bind right now. 599 00:32:17,080 --> 00:32:22,280 Speaker 9: The economy is slowing, Inflation is high at almost ten percent, 600 00:32:22,840 --> 00:32:26,600 Speaker 9: high interest rates, the banking sector, as we have reported, 601 00:32:27,520 --> 00:32:31,520 Speaker 9: is worried about rising bad loans. And I think that 602 00:32:31,560 --> 00:32:36,240 Speaker 9: the elite is really counting on sanctions relief, so they 603 00:32:36,280 --> 00:32:39,640 Speaker 9: want him to do some kind of a deal. Of course, 604 00:32:39,640 --> 00:32:43,080 Speaker 9: he's got their support because if any of them, any 605 00:32:43,080 --> 00:32:46,240 Speaker 9: of these oligarchs, go against him, they will have their 606 00:32:46,240 --> 00:32:50,200 Speaker 9: assets taken and they will be thrown in jail at 607 00:32:50,200 --> 00:32:51,080 Speaker 9: the very least. 608 00:32:50,880 --> 00:32:52,720 Speaker 2: To the market opening. And we're thrilled to bring in 609 00:32:52,720 --> 00:32:56,520 Speaker 2: from Queen Victoria Street Stephanie Baker. The book is punishing Putin. 610 00:32:57,040 --> 00:33:00,440 Speaker 2: It's definitive. She is most up to speed and the 611 00:33:00,560 --> 00:33:04,040 Speaker 2: economic and political consequences of Russia. As we go to 612 00:33:04,040 --> 00:33:07,360 Speaker 2: this summit. Our Anne Marie Horden will be an anchorage. 613 00:33:07,400 --> 00:33:12,320 Speaker 5: Paul, Stephanie, are there any reasonable expectations for this meeting 614 00:33:12,320 --> 00:33:15,920 Speaker 5: between mister Trump and mister Putin? Can anything materiality get done? 615 00:33:15,920 --> 00:33:16,360 Speaker 5: Do you think? 616 00:33:18,320 --> 00:33:22,800 Speaker 9: I'm quite skeptical, because you know, usually with these big 617 00:33:22,920 --> 00:33:27,000 Speaker 9: US Russia summits, they are months of preparations ahead of time. 618 00:33:27,520 --> 00:33:30,120 Speaker 9: There's some kind of an agreement that is, you know, 619 00:33:30,560 --> 00:33:33,800 Speaker 9: worked out ahead of time, and that the leaders come 620 00:33:33,880 --> 00:33:35,960 Speaker 9: to just kind of seal the deal and sign it. 621 00:33:37,400 --> 00:33:40,920 Speaker 9: This time, Trump has billed it as a kind of 622 00:33:41,000 --> 00:33:43,280 Speaker 9: feel out summit, which is a very bizarre way of 623 00:33:43,320 --> 00:33:46,120 Speaker 9: going into the first US summit in four years and 624 00:33:46,200 --> 00:33:48,600 Speaker 9: the first time Putin has been welcomed on US soil 625 00:33:48,680 --> 00:33:52,600 Speaker 9: since two thousand and seven, So he doesn't have a 626 00:33:52,600 --> 00:33:57,560 Speaker 9: lot of Russia expertise at his side because they fired 627 00:33:57,600 --> 00:33:59,800 Speaker 9: so many people from the State Department, and they don't 628 00:33:59,840 --> 00:34:02,400 Speaker 9: have of the kind of Russia expertise in the National 629 00:34:02,480 --> 00:34:05,680 Speaker 9: Security a Council either. So the idea that He's going 630 00:34:05,720 --> 00:34:07,760 Speaker 9: to go into a meeting with Putin and come out 631 00:34:07,760 --> 00:34:12,279 Speaker 9: with some sort of detailed landswap is really unrealistic. I 632 00:34:12,320 --> 00:34:14,719 Speaker 9: think at best they will come out and say they're 633 00:34:14,719 --> 00:34:18,000 Speaker 9: going to kick this to working level groups and it 634 00:34:18,080 --> 00:34:22,280 Speaker 9: will continue to drag out, which is in Putin's interest 635 00:34:22,400 --> 00:34:27,759 Speaker 9: because actually Russian troops are gaining territory slowly and it's 636 00:34:27,760 --> 00:34:32,360 Speaker 9: a grind, huge enormous costs. But Putin's goals here have 637 00:34:32,480 --> 00:34:36,960 Speaker 9: not changed fundamentally. He does not want Ukraine to be 638 00:34:37,080 --> 00:34:41,920 Speaker 9: part of NATO. He wants caps on Ukrainian military and 639 00:34:42,160 --> 00:34:44,880 Speaker 9: his central demand is that he wants the remainder of 640 00:34:44,960 --> 00:34:47,920 Speaker 9: Dnetsk that he does not Russian forces do not control 641 00:34:47,960 --> 00:34:51,000 Speaker 9: on the ground, and that is a non starter for 642 00:34:51,360 --> 00:34:55,120 Speaker 9: Ukraine because that's where they have their strongest defenses protecting 643 00:34:55,680 --> 00:35:00,320 Speaker 9: other Ukrainian territory. If that goes, then that leaves Crane 644 00:35:00,440 --> 00:35:04,520 Speaker 9: very vulnerable for additional Russian attacks towards Kharkiv and other areas. 645 00:35:05,239 --> 00:35:11,640 Speaker 5: Stephanie, what role if any will President Zelenski play on Friday. 646 00:35:11,719 --> 00:35:13,759 Speaker 9: Well, he hasn't been invited to the table, which has 647 00:35:13,840 --> 00:35:16,520 Speaker 9: led to a lot of people comparing this to a 648 00:35:16,600 --> 00:35:20,200 Speaker 9: kind of modern day Munich. I think there's fear in 649 00:35:20,360 --> 00:35:23,880 Speaker 9: Ukraine that land will be handed over to Russia without 650 00:35:23,920 --> 00:35:28,279 Speaker 9: them even being at the table. Trump has said he 651 00:35:28,320 --> 00:35:33,160 Speaker 9: will call Zelenski right after the summit. They're having a 652 00:35:33,160 --> 00:35:40,200 Speaker 9: call today between Trump and European leaders, as well as 653 00:35:40,280 --> 00:35:43,480 Speaker 9: Jdvan and Zelensky, and I think they're trying to present 654 00:35:43,520 --> 00:35:49,359 Speaker 9: a united front warning Trump of the dangers of, you know, 655 00:35:50,520 --> 00:35:56,319 Speaker 9: legitimizing Russian territorial gains in Ukraine at this summit, that 656 00:35:56,440 --> 00:36:00,000 Speaker 9: they need to agree to ceasefire before any broader negotia 657 00:36:00,000 --> 00:36:04,200 Speaker 9: ciations actually begin. So whether or not that message gets through, 658 00:36:04,239 --> 00:36:07,680 Speaker 9: whether or not listens to it, I'm quite skeptical. But 659 00:36:07,719 --> 00:36:10,040 Speaker 9: I'm also quite skeptical that they're going to be able 660 00:36:10,040 --> 00:36:12,680 Speaker 9: to come up with anything meaningful out of this summit. 661 00:36:12,880 --> 00:36:15,440 Speaker 2: We'll say goodbye to Stephanie Baker and we'll get around again. 662 00:36:15,640 --> 00:36:19,520 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 663 00:36:19,560 --> 00:36:22,560 Speaker 1: starting at seven am Eastern on Apple, Corplay and Android 664 00:36:22,600 --> 00:36:25,640 Speaker 1: Auto with the Bloomberg Business app. You can also listen 665 00:36:25,719 --> 00:36:28,960 Speaker 1: live on Amazon Alexa from our flagship New York station. 666 00:36:29,520 --> 00:36:33,440 Speaker 1: Just say Alexa play Bloomberg eleven thirty saving. 667 00:36:33,120 --> 00:36:35,839 Speaker 2: Us this morning. We're not worried about a cable no 668 00:36:36,239 --> 00:36:38,359 Speaker 2: to Milwauk. Well we should be because the rain there 669 00:36:38,400 --> 00:36:41,279 Speaker 2: has been so bad. Her Lucky Brent Shooty's with us. 670 00:36:41,320 --> 00:36:45,279 Speaker 2: Brent shooting chief investment Strategies at Northwestern Brent quickly year 671 00:36:45,320 --> 00:36:48,879 Speaker 2: before the market opening, the flooding in Milwaukee. I did 672 00:36:48,880 --> 00:36:52,719 Speaker 2: the math. Fourteen inches of rain? Is that true? That 673 00:36:52,800 --> 00:36:53,520 Speaker 2: is absolutely true. 674 00:36:53,560 --> 00:36:56,120 Speaker 10: Unfortunately around my house we got about thirteen inches of rain, 675 00:36:56,120 --> 00:36:58,040 Speaker 10: which was quite a lot, and more than I've ever 676 00:36:58,080 --> 00:36:58,880 Speaker 10: seen in my life. 677 00:36:59,360 --> 00:37:02,200 Speaker 2: Absolutely man, with some real hardship from Milwaukee. We say 678 00:37:02,200 --> 00:37:05,920 Speaker 2: good morning to everybody in the mid Midwest brand. The 679 00:37:05,960 --> 00:37:09,880 Speaker 2: market grinding higher, almost a melt up. Are we just 680 00:37:09,920 --> 00:37:14,000 Speaker 2: looking out to more buoyant earnings? If Northwestern Mutual looks 681 00:37:14,040 --> 00:37:17,719 Speaker 2: at the pulse of the nation, is this about an 682 00:37:17,800 --> 00:37:23,600 Speaker 2: earnings driven new belief or is it fed driven bull market? 683 00:37:24,239 --> 00:37:25,880 Speaker 2: I think it's a combination of everything. 684 00:37:25,920 --> 00:37:27,480 Speaker 10: I mean, my big worry is where three to four 685 00:37:27,480 --> 00:37:30,200 Speaker 10: months into tariffs and we're all concluding at least investors are, 686 00:37:30,520 --> 00:37:32,439 Speaker 10: but they know exactly how this is going to end. 687 00:37:33,000 --> 00:37:34,120 Speaker 2: I think the tails are wider. 688 00:37:34,360 --> 00:37:36,160 Speaker 10: I think it's unlikely you have the same type of 689 00:37:36,160 --> 00:37:38,360 Speaker 10: economic environment that you had before, which led to that 690 00:37:38,400 --> 00:37:41,280 Speaker 10: market leadership that was pretty narrow. I think the biggest 691 00:37:41,280 --> 00:37:44,160 Speaker 10: thing for investors to me, is just diversify. That's how 692 00:37:44,160 --> 00:37:46,040 Speaker 10: you admit you don't know exactly what's going to happen 693 00:37:46,040 --> 00:37:47,320 Speaker 10: as you go from tariff rate it's a two and 694 00:37:47,360 --> 00:37:50,200 Speaker 10: a half percent to something probably over eighteen, which we 695 00:37:50,239 --> 00:37:52,600 Speaker 10: haven't done in one hundred years. And I think if 696 00:37:52,640 --> 00:37:55,520 Speaker 10: you think about that common alone, to me, that means 697 00:37:55,560 --> 00:37:58,720 Speaker 10: that everything that we're talking about potentially coming to fruition 698 00:37:59,239 --> 00:38:02,279 Speaker 10: is based upon economic theory, not actual reality in a 699 00:38:02,360 --> 00:38:04,800 Speaker 10: lab as large as the United States or the globe. 700 00:38:05,320 --> 00:38:07,680 Speaker 10: And so I do think there are opportunities out there 701 00:38:07,760 --> 00:38:11,040 Speaker 10: in small caps. I still think international stocks will hold 702 00:38:11,080 --> 00:38:13,160 Speaker 10: value because I do think the administration would like the 703 00:38:13,200 --> 00:38:15,520 Speaker 10: dollar lower, and so there are still opportunities. But I 704 00:38:15,560 --> 00:38:18,040 Speaker 10: would encourage investors to not get too far over their 705 00:38:18,080 --> 00:38:21,480 Speaker 10: skis and to maintain their asset allocation, which their financial 706 00:38:21,520 --> 00:38:24,719 Speaker 10: plan guides them towards because they're trying to meet their 707 00:38:24,719 --> 00:38:26,120 Speaker 10: long term goals and objectives. 708 00:38:26,640 --> 00:38:30,239 Speaker 5: Brett, We've I guess the twenty five basis point FED 709 00:38:30,320 --> 00:38:32,239 Speaker 5: cut for September is kind of locked in, is what 710 00:38:32,280 --> 00:38:34,239 Speaker 5: I've read off of the street over the past twenty 711 00:38:34,239 --> 00:38:37,120 Speaker 5: four hours. But now even here's some discussion about a 712 00:38:37,120 --> 00:38:42,080 Speaker 5: fifty point basis cut. Fifty basis point cut hit in September, 713 00:38:42,120 --> 00:38:42,640 Speaker 5: what do you think. 714 00:38:43,400 --> 00:38:45,359 Speaker 10: Tell me what the jobs market does in September. All 715 00:38:45,360 --> 00:38:47,600 Speaker 10: this CPI stuff is noise right now. Tell me what 716 00:38:47,640 --> 00:38:49,600 Speaker 10: the jobs market does and thats September print, and I'll 717 00:38:49,600 --> 00:38:51,319 Speaker 10: tell you whether it's twenty five or fifty or nothing 718 00:38:51,320 --> 00:38:51,680 Speaker 10: at all. 719 00:38:52,320 --> 00:38:53,400 Speaker 2: And that's where I think. 720 00:38:53,239 --> 00:38:56,680 Speaker 10: The reality is. Most FED members are more concerned about 721 00:38:56,719 --> 00:38:59,279 Speaker 10: the labor market. That's where if both policy sides of 722 00:38:59,320 --> 00:39:02,520 Speaker 10: the policy are disagreement or are moving in the wrong direction, 723 00:39:02,920 --> 00:39:05,320 Speaker 10: they will probably airr more towards the labor side equation. 724 00:39:05,719 --> 00:39:07,160 Speaker 10: And that's where I think is important. I don't think 725 00:39:07,160 --> 00:39:10,080 Speaker 10: the CPI report gave the Fed any room to cut rates, 726 00:39:10,520 --> 00:39:12,080 Speaker 10: but that's not the narrative right now. And even the 727 00:39:12,080 --> 00:39:15,160 Speaker 10: Treasury Secretary on your show this morning talked about his 728 00:39:15,239 --> 00:39:17,280 Speaker 10: belief they should cut by one hundred fifty basis points 729 00:39:17,320 --> 00:39:19,359 Speaker 10: because if they would have known what the labor market 730 00:39:19,440 --> 00:39:22,480 Speaker 10: numbers were, they would have cut. That is I think 731 00:39:22,480 --> 00:39:23,399 Speaker 10: it's all on that. 732 00:39:23,800 --> 00:39:25,239 Speaker 2: I mean, we got to get to the market, open 733 00:39:25,280 --> 00:39:27,440 Speaker 2: your brand good to tell you there's greed in the screen. 734 00:39:27,480 --> 00:39:30,720 Speaker 2: But isn't that just stimulus. Aren't we really just talking 735 00:39:30,760 --> 00:39:36,120 Speaker 2: about a fiscal pop and maybe a monetary pop driving 736 00:39:36,200 --> 00:39:38,160 Speaker 2: us forward? Absolutely? 737 00:39:38,239 --> 00:39:40,520 Speaker 10: I mean you're you're stimulating a later cycle economy, and 738 00:39:40,520 --> 00:39:42,880 Speaker 10: that's what I worry about. The good side of the equation. 739 00:39:42,960 --> 00:39:44,839 Speaker 10: The inflation has moved up, and I think that's where 740 00:39:44,840 --> 00:39:47,040 Speaker 10: people are suggesting that it's only point two percent with 741 00:39:47,120 --> 00:39:49,360 Speaker 10: tariffs being on right now for the second month in 742 00:39:49,360 --> 00:39:51,560 Speaker 10: a row. My concern is more what's happening on the 743 00:39:51,560 --> 00:39:55,160 Speaker 10: services side, and all the different inflation indicators we at 744 00:39:55,239 --> 00:39:57,719 Speaker 10: least have looked at in the past don't suggest that 745 00:39:57,760 --> 00:39:59,920 Speaker 10: inflation is going lower. They suggests it's going higher. 746 00:40:00,040 --> 00:40:02,759 Speaker 2: Bread shooting with us here with Northwestern Mutual? What's great 747 00:40:02,760 --> 00:40:05,960 Speaker 2: about Bret? I mean this, seriously, folks. If you're in 748 00:40:06,360 --> 00:40:10,120 Speaker 2: quiet money like Northwestern Mutual, you have to go into 749 00:40:10,160 --> 00:40:13,560 Speaker 2: a room with compliance people and lawyers and you have 750 00:40:13,600 --> 00:40:17,480 Speaker 2: to memorize. Paul. Yeah, this phrase part of a carefully 751 00:40:17,560 --> 00:40:21,560 Speaker 2: balanced portfolio. And what I love about bread shooting is 752 00:40:21,600 --> 00:40:24,640 Speaker 2: he's so far, he's got like eight policemen helping him. 753 00:40:24,719 --> 00:40:29,160 Speaker 2: Police supposed to say part of a carefully balanced portfolio. Bret, Well, 754 00:40:30,120 --> 00:40:32,759 Speaker 2: we all own the Meg seven? What do we do? 755 00:40:33,680 --> 00:40:35,399 Speaker 10: Oh, I don't think all. I'm sorry, Tom. I don't 756 00:40:35,400 --> 00:40:37,200 Speaker 10: think it's because of the policeman. I think it's because 757 00:40:37,200 --> 00:40:39,320 Speaker 10: of my beliefs. Look, I've done this for thirty years. 758 00:40:39,680 --> 00:40:42,640 Speaker 10: Towards the end of economic cycles, only certain parts of 759 00:40:42,640 --> 00:40:45,000 Speaker 10: the economy are doing well, which is why only certain 760 00:40:45,000 --> 00:40:46,960 Speaker 10: parts of the market do well. What happens on the 761 00:40:46,960 --> 00:40:48,960 Speaker 10: opposite side, at least in my thirty years of doing this, 762 00:40:49,160 --> 00:40:52,040 Speaker 10: is the market broadens out and the people who unfortunately 763 00:40:52,080 --> 00:40:55,200 Speaker 10: crowded into those areas that we're working, don't see their 764 00:40:55,239 --> 00:40:56,480 Speaker 10: portfolios work for years. 765 00:40:56,760 --> 00:40:57,680 Speaker 2: And if you're thinking. 766 00:40:57,440 --> 00:41:00,560 Speaker 10: About someone retiring and someone having cash flows and taking 767 00:41:00,600 --> 00:41:03,279 Speaker 10: money out of their portfolios, that's the enemy of that. 768 00:41:03,440 --> 00:41:05,240 Speaker 10: You can't have that happen. So I think about Japan 769 00:41:05,280 --> 00:41:07,760 Speaker 10: in the nineteen eighties, I think about the tech stocs 770 00:41:08,280 --> 00:41:11,279 Speaker 10: in two thousand. I think about financials and everything else 771 00:41:11,280 --> 00:41:13,440 Speaker 10: commodities in the two thousand and seven period. I think 772 00:41:13,440 --> 00:41:16,399 Speaker 10: about emerging markets back then. What happens is that there's 773 00:41:16,440 --> 00:41:19,560 Speaker 10: a new economic cycle. Look typically, what resets that is 774 00:41:19,600 --> 00:41:22,000 Speaker 10: a recession. This time, I don't know that we're going 775 00:41:22,040 --> 00:41:23,960 Speaker 10: to have one, but I think you have reset the 776 00:41:24,000 --> 00:41:26,120 Speaker 10: economic environment, and I think that means new leadership on 777 00:41:26,120 --> 00:41:28,320 Speaker 10: the opposite side of this. And that's where I encourage 778 00:41:28,360 --> 00:41:31,359 Speaker 10: investors to stay diversified. Everyone who comes on your show 779 00:41:31,400 --> 00:41:33,600 Speaker 10: and proclaims they know exactly what's going to happen. I 780 00:41:33,640 --> 00:41:36,279 Speaker 10: would have doubts they actually do, Otherwise they might not 781 00:41:36,320 --> 00:41:41,160 Speaker 10: be working. And that's where my SUCs remain diversified, and 782 00:41:41,239 --> 00:41:43,919 Speaker 10: to not concentrate, because it can make you spectatically rich 783 00:41:44,400 --> 00:41:47,080 Speaker 10: spectacular poor, and that's not the distribution that I want 784 00:41:47,080 --> 00:41:48,440 Speaker 10: to deal with when I deal with my clients. 785 00:41:48,600 --> 00:41:51,720 Speaker 2: PAF of Future's Paul driving to a new high into 786 00:41:51,760 --> 00:41:56,040 Speaker 2: the opening. In the opening, they continue, Futures up twenty 787 00:41:56,200 --> 00:41:59,200 Speaker 2: now up twenty five down, futures up one eight six, 788 00:41:59,560 --> 00:42:02,680 Speaker 2: market deck up two tenths of a percent, up half 789 00:42:02,719 --> 00:42:06,759 Speaker 2: a percent now the vics fourteen point three three. We're 790 00:42:06,760 --> 00:42:09,839 Speaker 2: not letting shooty go until the VIX is a thirteen handle. 791 00:42:09,840 --> 00:42:12,200 Speaker 5: Right real quick, about thirty seconds. How do we play 792 00:42:12,239 --> 00:42:13,479 Speaker 5: the fixed income side of the game. 793 00:42:14,600 --> 00:42:16,960 Speaker 10: Look, I think longer term to two percent inflation target 794 00:42:17,000 --> 00:42:18,640 Speaker 10: is dead. But I think in the near turn there's 795 00:42:18,760 --> 00:42:20,759 Speaker 10: enough economic stress out there. You saw that in the 796 00:42:20,800 --> 00:42:23,400 Speaker 10: labor market, You've seen that in consumer delinquencies. That you 797 00:42:23,480 --> 00:42:25,799 Speaker 10: want to be just a little bit longer duration right now, 798 00:42:25,840 --> 00:42:28,440 Speaker 10: because I do think there is some sort of potential 799 00:42:28,440 --> 00:42:31,680 Speaker 10: for economic downside. I think longer term, you know, I 800 00:42:31,760 --> 00:42:34,080 Speaker 10: think things like tips will be more attractive, just because 801 00:42:34,120 --> 00:42:36,759 Speaker 10: I do think inflation is a likely outcome from all this, 802 00:42:36,920 --> 00:42:39,520 Speaker 10: even tying in my opening comments on the Feaer reserve 803 00:42:39,560 --> 00:42:41,520 Speaker 10: airing on the side of the labor market over inflation. 804 00:42:41,600 --> 00:42:43,719 Speaker 2: Now bred shoot you, thank you so much. Then I'm 805 00:42:43,719 --> 00:42:45,799 Speaker 2: not supposed to be mutual. I really really appreciate that. 806 00:42:46,440 --> 00:42:51,279 Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify, 807 00:42:51,400 --> 00:42:55,680 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 808 00:42:55,800 --> 00:42:59,279 Speaker 1: seven to ten am Eastern on Bloomberg dot Com, the 809 00:42:59,360 --> 00:43:03,400 Speaker 1: Iheartrate a tune in, and the Bloomberg Business app. You 810 00:43:03,440 --> 00:43:06,799 Speaker 1: can also watch us live every weekday on YouTube and 811 00:43:07,000 --> 00:43:08,720 Speaker 1: always on the Bloomberg terminal