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 --> 00:00:27,040 Speaker 1: us live on YouTube. 6 00:00:27,280 --> 00:00:30,560 Speaker 2: I'm cue here. Ian Lincoln publishes BM on Capitol Americans. 7 00:00:30,600 --> 00:00:33,800 Speaker 2: We're double barrel, yeah, Ian Lnoln Publishing, and Dan Scully 8 00:00:34,120 --> 00:00:36,400 Speaker 2: just darkened the door. Lets me get better than this. 9 00:00:36,560 --> 00:00:39,280 Speaker 2: Let me quote exactly for Global Wall Street. Mister Lincoln, 10 00:00:39,720 --> 00:00:42,600 Speaker 2: with this backdrop, we struggle with the notion of wanting 11 00:00:42,640 --> 00:00:46,880 Speaker 2: to aggressively fade the rally. That's price up, yield down. 12 00:00:47,560 --> 00:00:50,480 Speaker 2: Don't go against that. On the other hand, is three 13 00:00:50,640 --> 00:00:54,800 Speaker 2: handle tens approach the four point zero zero to four 14 00:00:54,840 --> 00:00:58,280 Speaker 2: point zero two percent zone will be difficult to breach 15 00:00:58,400 --> 00:01:02,760 Speaker 2: solely based on sentiment in from the holiday weekend. Ian Lincoln, 16 00:01:02,800 --> 00:01:06,440 Speaker 2: there moments ago, we are so advantaged that Dan Skelly's 17 00:01:06,480 --> 00:01:10,080 Speaker 2: here off of that statement from Bank of Montreal. Mister 18 00:01:10,120 --> 00:01:13,759 Speaker 2: Skelley is with Morgan Stanley Wealth Management. Is it a 19 00:01:13,800 --> 00:01:16,840 Speaker 2: new bond regime. I'm looking at the Bloomberg and it's 20 00:01:16,880 --> 00:01:19,880 Speaker 2: saying there's a trend in place. Do you buy it? 21 00:01:20,480 --> 00:01:22,920 Speaker 3: Good morning, Tom. It does feel like people are risk 22 00:01:23,000 --> 00:01:26,319 Speaker 3: off at the moment. Obviously, you've got this on the 23 00:01:26,360 --> 00:01:28,680 Speaker 3: one hand, dissonance in the fact that people want to 24 00:01:28,680 --> 00:01:32,880 Speaker 3: play global reflation, small caps international, and on the other 25 00:01:32,959 --> 00:01:36,000 Speaker 3: hand you're seeing just bondyields lower in terms of I 26 00:01:36,040 --> 00:01:39,839 Speaker 3: think further fears of further concern around the AI trade 27 00:01:39,880 --> 00:01:40,440 Speaker 3: within the US. 28 00:01:40,440 --> 00:01:44,080 Speaker 2: We're linking the AI trade dynamics over to price up, 29 00:01:44,200 --> 00:01:44,759 Speaker 2: yield down. 30 00:01:45,040 --> 00:01:47,240 Speaker 3: You can't do it with the economic data, whether it 31 00:01:47,319 --> 00:01:50,680 Speaker 3: be the surprise index at multi month highs, whether it 32 00:01:50,760 --> 00:01:52,920 Speaker 3: be the jobs data as of the last week or two. 33 00:01:53,160 --> 00:01:55,440 Speaker 3: So you can't link it that way, Dan, I. 34 00:01:55,440 --> 00:01:59,360 Speaker 4: Mean, nobody does tech research better than the Morgan Stanley complex. 35 00:01:59,360 --> 00:02:01,200 Speaker 5: You guys have been leading on that for decades. Here, 36 00:02:01,440 --> 00:02:03,560 Speaker 5: what do you guys make of this fade? 37 00:02:03,640 --> 00:02:06,520 Speaker 4: Software just broadly defined, I mean, software is a story 38 00:02:06,520 --> 00:02:08,280 Speaker 4: that just works for everybody all the time. 39 00:02:08,520 --> 00:02:10,480 Speaker 5: Now it's really under some risk here. 40 00:02:10,360 --> 00:02:12,920 Speaker 3: Sure, and thank you, Paul, appreciate that that kudos, so 41 00:02:13,200 --> 00:02:15,440 Speaker 3: number one. I think it's one of these many examples 42 00:02:15,440 --> 00:02:17,800 Speaker 3: of dissonance at the moment. On the one hand, the 43 00:02:17,840 --> 00:02:20,760 Speaker 3: market is fearful over AI spending on the other hand 44 00:02:20,760 --> 00:02:21,720 Speaker 3: of the market saying. 45 00:02:21,520 --> 00:02:23,480 Speaker 6: Software is going to be disrupted. So I can't. 46 00:02:23,280 --> 00:02:28,440 Speaker 3: Explain that one in terms of efficacy versus disruption. And look, 47 00:02:28,480 --> 00:02:30,640 Speaker 3: I would say not all software, not to be that 48 00:02:31,080 --> 00:02:34,240 Speaker 3: completely out of consensus, but not all software is created equal. 49 00:02:34,280 --> 00:02:37,120 Speaker 3: When I look at the varying types of software. Some 50 00:02:37,200 --> 00:02:39,040 Speaker 3: of these companies are actually. 51 00:02:38,760 --> 00:02:41,799 Speaker 6: Partnered with the AI model makers today. 52 00:02:41,880 --> 00:02:44,480 Speaker 4: You know, it's funny we were talking about software and 53 00:02:44,639 --> 00:02:47,200 Speaker 4: just tech research and think Mary Meeker. 54 00:02:47,440 --> 00:02:48,960 Speaker 5: She was in the news again this weekend. 55 00:02:48,960 --> 00:02:51,480 Speaker 4: Mary Meeker, she won the AT and T Pebble Beach 56 00:02:51,560 --> 00:02:54,359 Speaker 4: pro am No Way, Way. 57 00:02:54,919 --> 00:02:55,880 Speaker 2: Go Way. 58 00:02:56,120 --> 00:02:58,280 Speaker 4: What does she do hand or power I don't know, 59 00:02:58,720 --> 00:02:59,960 Speaker 4: Hardoin I saw that. 60 00:03:00,360 --> 00:03:04,200 Speaker 2: Remember power Point to sit there in a bar Alexis, 61 00:03:04,240 --> 00:03:07,160 Speaker 2: you'd sit at a bar in midtime Manhattan, right with 62 00:03:07,280 --> 00:03:12,080 Speaker 2: the beverages of your choice, beverages. It'd be what Dan, 63 00:03:12,120 --> 00:03:15,280 Speaker 2: It'd be sixty four pages. And the problem with Mary, 64 00:03:15,440 --> 00:03:16,760 Speaker 2: every page had vailue. 65 00:03:16,840 --> 00:03:18,200 Speaker 5: Yep, yep, that was a problem. 66 00:03:18,200 --> 00:03:20,160 Speaker 6: You know it was sixty four was the intro? 67 00:03:20,720 --> 00:03:23,560 Speaker 5: Yes, yes, exactly. So what are we doing here? 68 00:03:25,480 --> 00:03:30,040 Speaker 4: Broady defined with equities here twenty twenty five, excellent returns 69 00:03:30,080 --> 00:03:32,360 Speaker 4: in the US, even better returns outside of the US. 70 00:03:32,480 --> 00:03:34,280 Speaker 4: What's the set up here for twenty twenty six? 71 00:03:34,400 --> 00:03:36,520 Speaker 3: So number one, we're saying to stick with the international 72 00:03:36,560 --> 00:03:39,320 Speaker 3: trade right, So on the one hand, whereas the AI 73 00:03:39,640 --> 00:03:44,560 Speaker 3: centric optimism has now seeded to concern that's obviously benefiting 74 00:03:44,640 --> 00:03:48,440 Speaker 3: international number one. Number Two, you've got policy and fiscal 75 00:03:48,480 --> 00:03:52,640 Speaker 3: tailwinds helping Japan, helping Latin America, helping arguably Europe in 76 00:03:52,640 --> 00:03:56,320 Speaker 3: some degree with this defense spending in a revamping of 77 00:03:56,400 --> 00:03:57,920 Speaker 3: the military industrial complex. 78 00:03:57,960 --> 00:03:58,200 Speaker 6: There. 79 00:03:58,680 --> 00:04:02,280 Speaker 3: Number two, we're telling folks don't abandon the large cap 80 00:04:02,360 --> 00:04:05,240 Speaker 3: quality adopters in the US. I think the biggest dissonance 81 00:04:05,560 --> 00:04:08,480 Speaker 3: I've observed over the last month, and we've known software 82 00:04:08,560 --> 00:04:10,200 Speaker 3: is going to be disrupted for the last two years, 83 00:04:10,240 --> 00:04:13,640 Speaker 3: so that's not the big surprise. It's that every other 84 00:04:13,800 --> 00:04:17,080 Speaker 3: sector of the market has seemingly been taken out to 85 00:04:17,080 --> 00:04:19,920 Speaker 3: the disruption. Woodshed and a lot of these, by the way, 86 00:04:19,920 --> 00:04:23,280 Speaker 3: were the names that were the biggest adopters of AI previously. 87 00:04:23,560 --> 00:04:24,560 Speaker 6: That's the big dissonance. 88 00:04:25,160 --> 00:04:28,279 Speaker 5: Earnings were, you know, three quarters the way through earnings. 89 00:04:28,320 --> 00:04:29,320 Speaker 5: It seems pretty. 90 00:04:29,080 --> 00:04:32,719 Speaker 4: Solid out there as earning's been solid enough for this market. 91 00:04:32,800 --> 00:04:33,760 Speaker 6: Not at the moment. 92 00:04:33,880 --> 00:04:37,000 Speaker 3: Yeah, I think the market is losing sight of We 93 00:04:37,040 --> 00:04:41,120 Speaker 3: talked about the macroeconomic data earlier pretty solid and above itself, 94 00:04:41,400 --> 00:04:43,679 Speaker 3: and earnings is broadening out. I think the key trend 95 00:04:43,720 --> 00:04:46,040 Speaker 3: at the moment is that you're seeing Russell three thousand 96 00:04:46,600 --> 00:04:50,520 Speaker 3: median earnings growth of around eleven percent, and that's up 97 00:04:50,520 --> 00:04:52,600 Speaker 3: from call it, low single digits the last year or so. 98 00:04:52,800 --> 00:04:54,640 Speaker 2: I mean, I look at the Google bond deal the 99 00:04:54,680 --> 00:04:57,440 Speaker 2: other day, Lisa Shell loaded the boat for Morgan Staly 100 00:04:57,520 --> 00:05:01,400 Speaker 2: one hundred year British piece. But I'm sitting there this week, 101 00:05:01,440 --> 00:05:04,760 Speaker 2: You're going, Okay, Microsoft's in the tank, down a couple 102 00:05:04,839 --> 00:05:08,039 Speaker 2: dollars this morning as well. It's closed at four oh one, 103 00:05:08,040 --> 00:05:12,640 Speaker 2: it's trading three ninety nine. Okay, Dan Skelly fine, But 104 00:05:12,920 --> 00:05:19,000 Speaker 2: can't they and others in one Bloomberg headline change the 105 00:05:19,120 --> 00:05:22,359 Speaker 2: zeitgeist by saying we're going to do a ginormous bond 106 00:05:22,400 --> 00:05:26,680 Speaker 2: deal off Dan Skelly's desk it Morgan Stanley, Well. 107 00:05:26,520 --> 00:05:29,760 Speaker 6: We'd welcome that, welcome the partnership, no doubt. Listen. 108 00:05:29,839 --> 00:05:32,080 Speaker 3: I think when you look at the majority of AI 109 00:05:32,279 --> 00:05:35,719 Speaker 3: spend it's still being funded from cash flow. On the margin, 110 00:05:35,800 --> 00:05:38,160 Speaker 3: there is leverage coming into the system. But tom, as 111 00:05:38,200 --> 00:05:40,440 Speaker 3: you know, many of the Max seven balance sheets are 112 00:05:40,440 --> 00:05:41,599 Speaker 3: net cash balance sheet. 113 00:05:42,080 --> 00:05:44,440 Speaker 6: They could afford to take on some leverage. 114 00:05:44,440 --> 00:05:46,040 Speaker 2: Am I right that they could do one? What do 115 00:05:46,120 --> 00:05:48,160 Speaker 2: your tech people say? Can they do one? Trunch? 116 00:05:48,480 --> 00:05:48,680 Speaker 7: Two? 117 00:05:48,760 --> 00:05:52,440 Speaker 2: Trunch? Thirty billionaire, twenty billionaire? Sixteen point five? 118 00:05:52,520 --> 00:05:54,760 Speaker 6: Demand is off the charts, as you know, and so 119 00:05:55,200 --> 00:05:55,680 Speaker 6: you know, we. 120 00:05:55,600 --> 00:05:57,039 Speaker 2: Think there's some nuts pot. 121 00:05:57,200 --> 00:05:58,000 Speaker 5: No, I'm with you. 122 00:05:58,480 --> 00:06:00,320 Speaker 3: We think there's some room to take on on some 123 00:06:00,520 --> 00:06:02,200 Speaker 3: leverage here. But look, at the end of the day, 124 00:06:02,560 --> 00:06:06,680 Speaker 3: we think the market is efficiently and probably rightfully taking 125 00:06:06,720 --> 00:06:09,400 Speaker 3: a pause on MAG seven at the moment, and the 126 00:06:09,480 --> 00:06:13,080 Speaker 3: SMP because we've had this massive spending ramp up, we 127 00:06:13,160 --> 00:06:16,080 Speaker 3: have alternatives for the first time in a decade, We 128 00:06:16,120 --> 00:06:18,880 Speaker 3: have other markets with momentum. And we all know what 129 00:06:19,120 --> 00:06:21,600 Speaker 3: momentum as a factor has meant for equities over the 130 00:06:21,720 --> 00:06:24,320 Speaker 3: last several years. It has truly taken the baton from 131 00:06:24,400 --> 00:06:27,280 Speaker 3: valuation and so at the moment, momentum matters. 132 00:06:27,880 --> 00:06:31,680 Speaker 4: So does that lean outside of the US versus US here? 133 00:06:31,720 --> 00:06:34,280 Speaker 4: Because I mean, when you look at the Europeans markets, 134 00:06:34,279 --> 00:06:36,120 Speaker 4: they've both traded at a discount to those because they 135 00:06:36,120 --> 00:06:37,599 Speaker 4: don't have that tech exposure that we have. 136 00:06:38,080 --> 00:06:39,840 Speaker 5: Is that now the time for them to shine as 137 00:06:39,839 --> 00:06:40,600 Speaker 5: they did last year. 138 00:06:40,680 --> 00:06:44,080 Speaker 3: Yeah, it's a fabulous point, Paul. And number one, that's true, 139 00:06:44,120 --> 00:06:47,200 Speaker 3: it's the absence of a negative at the moment. Number two, 140 00:06:47,279 --> 00:06:50,120 Speaker 3: it's real fundamental catalyst. So whether it be defense we 141 00:06:50,160 --> 00:06:53,720 Speaker 3: talked about in a post Ukraine recovery effort, we might 142 00:06:53,720 --> 00:06:57,559 Speaker 3: see a Marshall Plan type equivalent rebuilding infrastructure out there. 143 00:06:58,080 --> 00:07:00,839 Speaker 3: And number three, when I look at fiscal policy, right, 144 00:07:01,240 --> 00:07:04,280 Speaker 3: we've talked a lot about the US fiscal and political situation. 145 00:07:04,640 --> 00:07:07,160 Speaker 3: Look at what's going on with Japan post the elections. 146 00:07:07,320 --> 00:07:08,760 Speaker 3: We now have a super majority. 147 00:07:08,960 --> 00:07:11,680 Speaker 2: I point out Microsoft there out thirty five years on 148 00:07:11,720 --> 00:07:15,880 Speaker 2: their longest piece. I mean, I'm sorry, Margot Stanley needs 149 00:07:15,920 --> 00:07:19,000 Speaker 2: to bring a one hundred year Microsoft Sure they get 150 00:07:19,160 --> 00:07:20,640 Speaker 2: six point xx per se. 151 00:07:20,640 --> 00:07:21,760 Speaker 5: I know what they're doing over there. 152 00:07:22,000 --> 00:07:24,200 Speaker 2: So let's just squeeze one more question. And here, Dan 153 00:07:24,280 --> 00:07:28,280 Speaker 2: Skelley to all the people listening across this nation watching 154 00:07:28,360 --> 00:07:32,559 Speaker 2: on YouTube, do you quote unquote go to cash here? 155 00:07:33,240 --> 00:07:37,080 Speaker 3: We would not, Tom, We would say stay invested. Right, 156 00:07:37,400 --> 00:07:40,640 Speaker 3: We've been telling folks to be diversified, right, and we've 157 00:07:40,680 --> 00:07:41,200 Speaker 3: said this. 158 00:07:41,080 --> 00:07:41,760 Speaker 6: For over a year. 159 00:07:41,800 --> 00:07:45,280 Speaker 3: And initially a year ago I commented Max seven would 160 00:07:45,280 --> 00:07:48,160 Speaker 3: go from this monolith everything up together to more of 161 00:07:48,200 --> 00:07:51,480 Speaker 3: a peloton where there's more dispersion within the MAC seven. 162 00:07:51,720 --> 00:07:54,720 Speaker 3: That's played out, and roughly six to nine months ago 163 00:07:54,720 --> 00:07:57,640 Speaker 3: we started thinking about broadening out, whether that be value 164 00:07:57,680 --> 00:08:00,920 Speaker 3: trades within the US or whether that be internationally. So 165 00:08:01,000 --> 00:08:03,480 Speaker 3: we think there's enough opportunities at the moment not to 166 00:08:03,480 --> 00:08:04,040 Speaker 3: go to the cat. 167 00:08:04,200 --> 00:08:06,800 Speaker 2: I thought you were talking for you and me that 168 00:08:07,240 --> 00:08:10,080 Speaker 2: it was a peloton trade because we were broadening out. 169 00:08:10,480 --> 00:08:14,440 Speaker 2: We get a three day weekend report from Surveillance Peloton 170 00:08:14,560 --> 00:08:18,160 Speaker 2: corresponding Paul Sweeney, how many times are you on the 171 00:08:18,200 --> 00:08:19,520 Speaker 2: beast this weekend? 172 00:08:19,640 --> 00:08:23,880 Speaker 4: Multiple times on the bike and the treadmill, both full service. 173 00:08:24,000 --> 00:08:25,640 Speaker 2: This is getting in the beachway right? 174 00:08:25,680 --> 00:08:28,400 Speaker 5: Oh yeah, absolutely, yeah, very good. It's just you know, 175 00:08:28,440 --> 00:08:29,520 Speaker 5: we're there, We're there. 176 00:08:29,560 --> 00:08:34,640 Speaker 2: I don't know, it's it's Skelly. Thank you so much. 177 00:08:34,720 --> 00:08:37,960 Speaker 2: Really important comments there from Morgan Steia had to market 178 00:08:37,960 --> 00:08:43,440 Speaker 2: research and strategy Morgan Stanley Wealth Management. Stay with us. 179 00:08:43,679 --> 00:08:47,040 Speaker 2: More from Bloomberg Surveillance coming up after. 180 00:08:46,720 --> 00:08:57,439 Speaker 1: This you're listening to the Bloomberg Surveillance Podcast. Catch US 181 00:08:57,480 --> 00:09:00,960 Speaker 1: Live weekday afternoons from seven to ten am. Listen on 182 00:09:01,040 --> 00:09:04,680 Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or 183 00:09:04,840 --> 00:09:06,360 Speaker 1: watch US live on YouTube. 184 00:09:06,520 --> 00:09:09,199 Speaker 2: We start strawing this morning over Schmedia joins us with 185 00:09:09,280 --> 00:09:14,520 Speaker 2: Wrenberg Bank Just fabulous on the Transatlantic tensions of the moment, Holgar, 186 00:09:14,679 --> 00:09:20,600 Speaker 2: do you see a global disinflation? Is China messed up 187 00:09:20,720 --> 00:09:27,199 Speaker 2: enough where they export price stability or price decline, which 188 00:09:27,280 --> 00:09:29,080 Speaker 2: means BUN prices. 189 00:09:28,760 --> 00:09:33,200 Speaker 7: Up yields down well on its own. This is exactly 190 00:09:33,200 --> 00:09:34,880 Speaker 7: what China is, of course doing. 191 00:09:35,040 --> 00:09:38,800 Speaker 8: It's dumping the results of its industrial over capacities on 192 00:09:38,920 --> 00:09:40,119 Speaker 8: global markets. 193 00:09:40,520 --> 00:09:43,160 Speaker 7: But there are other forces pointing the other way. 194 00:09:43,559 --> 00:09:47,359 Speaker 8: Of course, the US tariffs are not yet fully reflected 195 00:09:47,440 --> 00:09:49,079 Speaker 8: in US consumer prices. 196 00:09:49,120 --> 00:09:52,760 Speaker 7: There is some further upward pressure on US consumer prices 197 00:09:52,760 --> 00:09:56,400 Speaker 7: to come. Also, many raw materials are telling a very 198 00:09:56,400 --> 00:10:00,480 Speaker 7: different story, namely that global inflation pressures will stay a 199 00:10:00,480 --> 00:10:04,320 Speaker 7: little elevated or could rise over time and longer term 200 00:10:04,440 --> 00:10:09,360 Speaker 7: simply labor shortages on both sides of the Atlantic, and 201 00:10:09,600 --> 00:10:13,439 Speaker 7: also longer term in China, labor shortages will probably mean, 202 00:10:13,559 --> 00:10:17,800 Speaker 7: in the end a rebound in wage pressures, perhaps not immediately, 203 00:10:17,880 --> 00:10:21,120 Speaker 7: but say next year and thereafter. So I would not 204 00:10:21,280 --> 00:10:23,520 Speaker 7: bet too much on global disinflation. 205 00:10:24,720 --> 00:10:25,040 Speaker 5: Oger. 206 00:10:25,080 --> 00:10:28,400 Speaker 4: Here in the US we have a lot of economic data. 207 00:10:28,440 --> 00:10:30,960 Speaker 4: Last week we received in terms of inflation data, labor 208 00:10:31,000 --> 00:10:31,640 Speaker 4: market data. 209 00:10:32,080 --> 00:10:33,800 Speaker 5: The data suggests that maybe. 210 00:10:33,520 --> 00:10:36,440 Speaker 4: The FED can sit idly by and let's say, economy 211 00:10:36,880 --> 00:10:39,400 Speaker 4: hero along, what do you think this United States, for 212 00:10:39,480 --> 00:10:40,280 Speaker 4: the Reserve. 213 00:10:40,120 --> 00:10:40,800 Speaker 5: Should be doing. 214 00:10:42,400 --> 00:10:45,040 Speaker 7: That's exactly what the FED should be doing. There is 215 00:10:45,080 --> 00:10:48,160 Speaker 7: no reason in the US to cut rates further. Rates 216 00:10:48,200 --> 00:10:52,120 Speaker 7: are already fairly low, especially against the backdrop of a 217 00:10:52,320 --> 00:10:57,000 Speaker 7: very expoundary fiscal policy. The US economy is clearly still 218 00:10:57,040 --> 00:10:59,480 Speaker 7: expanding above its trend rate, which in our of you 219 00:10:59,640 --> 00:11:02,080 Speaker 7: is now one point five percent the trend rate. But 220 00:11:02,160 --> 00:11:06,000 Speaker 7: the current pace of growth is above two percent, and well, yes, 221 00:11:06,200 --> 00:11:10,080 Speaker 7: the labor market does not require further central bank help 222 00:11:10,200 --> 00:11:13,240 Speaker 7: for the time being, so the FED should stay put. 223 00:11:13,559 --> 00:11:16,360 Speaker 7: Our call remains that when the new FED chair comes 224 00:11:16,400 --> 00:11:19,240 Speaker 7: into an office, the committee may grant him one twenty 225 00:11:19,240 --> 00:11:23,480 Speaker 7: five basis point rate cut, but thereafter probably vans it 226 00:11:23,559 --> 00:11:25,000 Speaker 7: for the FED. In terms of cuts. 227 00:11:25,040 --> 00:11:27,199 Speaker 2: You're the first one to overtly mention that, I mean, 228 00:11:27,240 --> 00:11:29,880 Speaker 2: this is a huge deal. Do you think, within your 229 00:11:29,960 --> 00:11:32,760 Speaker 2: reading of central bank history that when a new guy 230 00:11:32,880 --> 00:11:36,120 Speaker 2: shows up, what do you call it in golf? Is 231 00:11:36,120 --> 00:11:36,920 Speaker 2: it like a mulligan? 232 00:11:37,000 --> 00:11:37,320 Speaker 7: Is that ye? 233 00:11:38,520 --> 00:11:42,960 Speaker 2: Preskice book chairman wors get a mulligan, Holger Schmieding, Well, 234 00:11:43,200 --> 00:11:44,520 Speaker 2: that's that's possible. 235 00:11:44,720 --> 00:11:47,600 Speaker 8: By that the time he comes in, we may see 236 00:11:47,679 --> 00:11:50,160 Speaker 8: that the labor market is not quite as strong as 237 00:11:50,160 --> 00:11:53,400 Speaker 8: it was in the January data. You can always argue 238 00:11:53,440 --> 00:11:56,240 Speaker 8: sort of about twenty five basis points yes or no. 239 00:11:56,960 --> 00:11:59,719 Speaker 8: So to bet on in our view, one further rate 240 00:11:59,760 --> 00:12:02,400 Speaker 8: cut to come under the new president makes sense. A 241 00:12:02,400 --> 00:12:04,960 Speaker 8: boy betting on more rate cuts to come in the US, 242 00:12:05,040 --> 00:12:07,360 Speaker 8: as many in the market are doing, in our view, 243 00:12:07,480 --> 00:12:11,480 Speaker 8: is overdone done. Simply, the US economy does not need 244 00:12:11,520 --> 00:12:15,000 Speaker 8: a rate cut, and longer term, while the US economy 245 00:12:15,120 --> 00:12:19,800 Speaker 8: will likely lose momentum next year, longer term inflationary pressure 246 00:12:19,920 --> 00:12:24,319 Speaker 8: stemming from basically a lack of labor, including the immigration clampdown, 247 00:12:24,640 --> 00:12:26,880 Speaker 8: should then see to it that there is no further 248 00:12:26,920 --> 00:12:27,920 Speaker 8: reason for a cut. 249 00:12:28,760 --> 00:12:29,080 Speaker 6: Holger. 250 00:12:29,720 --> 00:12:32,360 Speaker 4: Almost a year ago, we in response to the tariff 251 00:12:32,720 --> 00:12:36,360 Speaker 4: issues we saw European economy step up and really talk 252 00:12:36,440 --> 00:12:42,040 Speaker 4: about spending more on infrastructure, spending more on defense. 253 00:12:42,520 --> 00:12:46,600 Speaker 5: Have we actually seen those funds be committed. 254 00:12:48,240 --> 00:12:51,200 Speaker 7: Well, you use the right word. We are seeing those 255 00:12:51,280 --> 00:12:54,720 Speaker 7: funds being committed. That is, we've seen a major search, 256 00:12:54,800 --> 00:12:59,439 Speaker 7: for instance, in German industrial orders late last year, huge 257 00:12:59,480 --> 00:13:03,640 Speaker 7: search related largely to defense, similar things and to some 258 00:13:03,840 --> 00:13:05,800 Speaker 7: extent to infrastructure spending. 259 00:13:06,160 --> 00:13:08,240 Speaker 8: We are seeing it in orders. We are not you're 260 00:13:08,280 --> 00:13:11,920 Speaker 8: really seeing it yet in production. It takes time for 261 00:13:12,040 --> 00:13:15,720 Speaker 8: companies to ramp up production, but the orders are coming 262 00:13:15,760 --> 00:13:18,840 Speaker 8: in and on a much smaller scale. Even countries such 263 00:13:18,880 --> 00:13:22,840 Speaker 8: as Italy, France and the UK are trying to raise 264 00:13:22,920 --> 00:13:27,360 Speaker 8: their defense spending somewhat. Yes, there is a fiscal stimulus coming. 265 00:13:28,120 --> 00:13:30,640 Speaker 2: How do you frame euro holgersh meeting? I mean it 266 00:13:30,720 --> 00:13:33,480 Speaker 2: gets away from your you know, I mean, I get 267 00:13:33,480 --> 00:13:37,400 Speaker 2: that Beerenberg Bank's acutely aware of the euro but against 268 00:13:37,400 --> 00:13:40,520 Speaker 2: the dollar. Are we in for some boldness here of 269 00:13:40,640 --> 00:13:41,400 Speaker 2: euro movement? 270 00:13:43,200 --> 00:13:46,160 Speaker 7: Well, probably not much in the near term. We have 271 00:13:46,440 --> 00:13:50,760 Speaker 7: serious geopolitic attendance, which tend to be a bit dollar positive. 272 00:13:51,240 --> 00:13:54,480 Speaker 7: We also do not expect the FAT to deliver as 273 00:13:54,600 --> 00:13:58,080 Speaker 7: much as many rate cuts as others in the market think, 274 00:13:58,240 --> 00:14:01,680 Speaker 7: so that's a bit of dollar positive. Having set all that, 275 00:14:01,800 --> 00:14:06,040 Speaker 7: the European economy last year surprised a little to the upside, 276 00:14:06,360 --> 00:14:09,160 Speaker 7: and there is come again for the European economy this 277 00:14:09,280 --> 00:14:11,560 Speaker 7: year to do a little better than last year, not 278 00:14:11,640 --> 00:14:15,079 Speaker 7: extremely well, but a little better. Also, there is this 279 00:14:15,360 --> 00:14:18,679 Speaker 7: long run erosion of global trust in the US, it's 280 00:14:18,800 --> 00:14:22,800 Speaker 7: institutions and its currency, as we see with this switch 281 00:14:22,880 --> 00:14:27,480 Speaker 7: of some emerging market central banks out of dollar assets 282 00:14:27,520 --> 00:14:31,479 Speaker 7: into gold. So longer run, I think the dollar remains 283 00:14:31,560 --> 00:14:32,400 Speaker 7: on the way down. 284 00:14:32,560 --> 00:14:35,000 Speaker 2: I mean, this is if we're gonna hold her about 285 00:14:35,000 --> 00:14:38,640 Speaker 2: the Swiss franc, the ft Holger right up the Swiss franc. 286 00:14:38,720 --> 00:14:41,360 Speaker 2: I think that once but twice this weekend. I'm looking 287 00:14:41,400 --> 00:14:45,680 Speaker 2: at the two church EuroSwiss and also dollars Swissy and 288 00:14:45,880 --> 00:14:49,280 Speaker 2: the bottom line years there's some huge Swiss strength. What 289 00:14:49,320 --> 00:14:52,040 Speaker 2: does that signal to our American audience. 290 00:14:53,080 --> 00:14:57,120 Speaker 7: Well, that signals a bit of a move to safe havens, 291 00:14:57,320 --> 00:15:00,560 Speaker 7: and Switzerland is a safe haven seen as very safe, 292 00:15:00,600 --> 00:15:03,280 Speaker 7: but it's very very small, a bit like goat. A 293 00:15:03,360 --> 00:15:06,920 Speaker 7: small move into safe havens makes a huge difference to gold, 294 00:15:07,080 --> 00:15:09,760 Speaker 7: makes a huge difference to the Swiss Frau, but much 295 00:15:09,840 --> 00:15:13,040 Speaker 7: less of a difference. Say to the US dollar Halger. 296 00:15:12,760 --> 00:15:15,000 Speaker 2: Thank you so much. Hugers schmeeting with us with Wareenberg 297 00:15:15,040 --> 00:15:20,280 Speaker 2: a brief stay with us. More from Bloomberg Surveillance coming 298 00:15:20,360 --> 00:15:21,360 Speaker 2: up after this. 299 00:15:28,600 --> 00:15:32,200 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch US live 300 00:15:32,280 --> 00:15:35,400 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 301 00:15:35,520 --> 00:15:38,920 Speaker 1: Apple Karplay and Android Otto with the Bloomberg Business app, 302 00:15:39,080 --> 00:15:41,000 Speaker 1: or watch US live on YouTube. 303 00:15:41,440 --> 00:15:45,200 Speaker 2: Blimmy Caretrel joins US now managing director, head a public 304 00:15:45,360 --> 00:15:52,760 Speaker 2: policy at Pimco. My basic take, Libby, is everything's rushed. 305 00:15:53,200 --> 00:15:56,920 Speaker 2: Like in February. We're living what would be a normal 306 00:15:57,040 --> 00:15:59,760 Speaker 2: may or June before an election year. Am I right 307 00:15:59,800 --> 00:16:01,400 Speaker 2: out that? 308 00:16:01,400 --> 00:16:01,800 Speaker 5: That is right? 309 00:16:01,880 --> 00:16:02,080 Speaker 2: Yeah? 310 00:16:02,080 --> 00:16:02,800 Speaker 5: Good morning Tom. 311 00:16:02,880 --> 00:16:07,360 Speaker 9: Yeah, I mean you're absolutely right. This year is compressed 312 00:16:07,480 --> 00:16:09,960 Speaker 9: just because of course the midterm elections. I think both 313 00:16:10,000 --> 00:16:12,040 Speaker 9: the House and the Senate leaders are going to be 314 00:16:12,080 --> 00:16:15,520 Speaker 9: eager for their members to go back to their districts 315 00:16:15,560 --> 00:16:19,560 Speaker 9: and states to campaign in advance of November. So our 316 00:16:19,600 --> 00:16:24,560 Speaker 9: expectation is in many ways this Congress probably will likely 317 00:16:25,080 --> 00:16:29,560 Speaker 9: come to kind of its end, you know, near July. Now, 318 00:16:29,600 --> 00:16:31,920 Speaker 9: of course they'll be back in session in September to 319 00:16:31,960 --> 00:16:35,160 Speaker 9: fund the government, hopefully fund the government once again for 320 00:16:35,240 --> 00:16:38,240 Speaker 9: a fiscal year twenty twenty seven. But outside of that, 321 00:16:38,400 --> 00:16:41,440 Speaker 9: we're not really expecting much legislation, you know, beyond the 322 00:16:41,960 --> 00:16:43,600 Speaker 9: August or the summer recess. 323 00:16:44,440 --> 00:16:46,720 Speaker 4: Libby in one of your recent notes in your Washington 324 00:16:46,800 --> 00:16:51,760 Speaker 4: Watch note you have entitled was twenty twenty five peak Trump? 325 00:16:51,840 --> 00:16:54,000 Speaker 2: What do you mean by that? Yeah? 326 00:16:54,040 --> 00:16:57,920 Speaker 9: So, in many ways, this is pretty consistent with other 327 00:16:58,080 --> 00:17:03,600 Speaker 9: presidential cycles. The first year of an administration, particularly when 328 00:17:03,600 --> 00:17:07,320 Speaker 9: the party in the White House controls both chambers of Congress, 329 00:17:07,840 --> 00:17:11,960 Speaker 9: does see its sort of peak presidential power. Congress is 330 00:17:12,800 --> 00:17:16,480 Speaker 9: usually gives a wide berth to their president to sort 331 00:17:16,480 --> 00:17:19,600 Speaker 9: of do what they want to do. The courts in 332 00:17:19,640 --> 00:17:21,720 Speaker 9: this case of Trump, have been sort of slow to 333 00:17:21,760 --> 00:17:25,560 Speaker 9: catch up. So in twenty twenty five, like twenty twenty 334 00:17:25,600 --> 00:17:28,199 Speaker 9: one was for Biden, for President Biden, like in some 335 00:17:28,240 --> 00:17:31,960 Speaker 9: ways two thousand and nine was for President Obama, we 336 00:17:32,080 --> 00:17:35,439 Speaker 9: do believe that twenty twenty five was peak Trump in 337 00:17:35,520 --> 00:17:38,639 Speaker 9: that it was sort of his apex of presidential power. 338 00:17:38,960 --> 00:17:41,919 Speaker 9: Twenty twenty six and we've already seen some signs of 339 00:17:41,960 --> 00:17:44,119 Speaker 9: this at the end of twenty twenty five, in the 340 00:17:44,160 --> 00:17:48,240 Speaker 9: beginning of this year, we think the constraints of both 341 00:17:48,240 --> 00:17:52,760 Speaker 9: the Congress and the courts will bind this President Mortigan. 342 00:17:53,000 --> 00:17:56,800 Speaker 9: This is less of something sort of specific to President Trump, 343 00:17:57,160 --> 00:18:01,480 Speaker 9: and it's much more indicative of the general political cycle, 344 00:18:01,880 --> 00:18:04,920 Speaker 9: where you know, members of Congress in particular start pivoting 345 00:18:04,960 --> 00:18:08,520 Speaker 9: to their own survival and pivot to midterms, and as 346 00:18:08,520 --> 00:18:12,200 Speaker 9: a result, you know, start pushing back on on their president, 347 00:18:12,280 --> 00:18:14,439 Speaker 9: even when it's the president of their own party. 348 00:18:14,680 --> 00:18:18,040 Speaker 2: Is the Senate at risk? I mean, can the Democrats 349 00:18:18,080 --> 00:18:18,680 Speaker 2: win the Senate? 350 00:18:18,720 --> 00:18:21,960 Speaker 9: From where you sit, Livy, You know, I think if 351 00:18:21,960 --> 00:18:24,720 Speaker 9: you had asked me several months ago, I would have 352 00:18:24,760 --> 00:18:29,040 Speaker 9: said absolutely not. Now I still it's still not our 353 00:18:29,040 --> 00:18:33,400 Speaker 9: base case. We still think that the GOP will control 354 00:18:33,440 --> 00:18:37,320 Speaker 9: the Senate. But there are some primaries that are going 355 00:18:37,359 --> 00:18:40,520 Speaker 9: to be quite important. Texas in particular on March third. 356 00:18:40,840 --> 00:18:43,639 Speaker 9: You know, who wins that on the Republican and Democratic 357 00:18:43,760 --> 00:18:47,000 Speaker 9: side I think will be you know, we'll sort of 358 00:18:47,040 --> 00:18:50,360 Speaker 9: tell whether that state is actually in play. But as 359 00:18:50,400 --> 00:18:54,360 Speaker 9: you know, Tom, right now, Republicans control the Senate by 360 00:18:54,400 --> 00:18:58,360 Speaker 9: four seats. Not only would Democrats have to defend seats 361 00:18:58,359 --> 00:19:01,480 Speaker 9: in Georgia and Michigan. Those are seats that they have 362 00:19:01,600 --> 00:19:03,760 Speaker 9: right now that of course Trump won in those states, 363 00:19:04,000 --> 00:19:06,960 Speaker 9: but they would have to win four of six, you know, 364 00:19:07,080 --> 00:19:12,240 Speaker 9: pretty reddish pinkish states, including North Carolina and Maine, but 365 00:19:12,320 --> 00:19:16,240 Speaker 9: also Ohio, Texas, Iowa, Alaska. You know, again, they would 366 00:19:16,240 --> 00:19:17,960 Speaker 9: have to have a perfect night. I think to take 367 00:19:18,000 --> 00:19:20,120 Speaker 9: back the House they would have to have a soso night, 368 00:19:20,440 --> 00:19:22,200 Speaker 9: but in order to take back the Senate, they would 369 00:19:22,240 --> 00:19:23,239 Speaker 9: have to have a perfect night. 370 00:19:24,119 --> 00:19:27,159 Speaker 4: So Lebby, you mentioned the courts here, I guess we're 371 00:19:27,359 --> 00:19:32,080 Speaker 4: still waiting on Supreme Courts ruling on tariffs A. Are 372 00:19:32,080 --> 00:19:34,560 Speaker 4: you surprised that it's taken this long? And does that 373 00:19:35,000 --> 00:19:38,480 Speaker 4: tip your the hand to maybe how they may vote here? 374 00:19:39,840 --> 00:19:41,840 Speaker 9: Yeah, I'm gonna I'm going to defer to to the 375 00:19:41,880 --> 00:19:45,000 Speaker 9: sort of the court experts, which I am not one of. 376 00:19:45,119 --> 00:19:47,720 Speaker 9: Ian I think, you know, according to those experts, though 377 00:19:47,760 --> 00:19:52,640 Speaker 9: this timing doesn't seem you know, all that suspicious or 378 00:19:52,840 --> 00:19:55,480 Speaker 9: or all that much of a tell. I do think 379 00:19:55,520 --> 00:19:59,800 Speaker 9: that that Roberts is likely trying to, if you know, 380 00:20:00,080 --> 00:20:03,280 Speaker 9: if this verdict does go against the White House, probably 381 00:20:03,320 --> 00:20:05,879 Speaker 9: trying to get as much of a majority on that 382 00:20:06,000 --> 00:20:10,960 Speaker 9: opinion as possible, so that may justify the delay or 383 00:20:11,000 --> 00:20:13,560 Speaker 9: what have your explained the delay. I think the bottom 384 00:20:13,600 --> 00:20:16,320 Speaker 9: line here for markets and what we're telling our clients 385 00:20:16,400 --> 00:20:18,600 Speaker 9: is that even if the even if the court does 386 00:20:18,720 --> 00:20:21,280 Speaker 9: rule against the White House, and again just based on 387 00:20:21,320 --> 00:20:23,600 Speaker 9: the oral arguments, it looks like at least in some 388 00:20:23,680 --> 00:20:27,000 Speaker 9: form or fashion, they may But this White House still 389 00:20:27,040 --> 00:20:30,359 Speaker 9: has many other tools that Congress has given them. Maybe 390 00:20:30,359 --> 00:20:33,159 Speaker 9: not AIPA, which is the law that's you know in 391 00:20:33,240 --> 00:20:36,239 Speaker 9: jeopardy here, but section one twenty two, section three ZHO 392 00:20:36,240 --> 00:20:39,600 Speaker 9: one sort of this number soup of provisions. They can 393 00:20:39,680 --> 00:20:41,520 Speaker 9: still impose their their tariff agenda. 394 00:20:41,680 --> 00:20:44,080 Speaker 2: Let me talked to Peter Navarro last week and he 395 00:20:44,200 --> 00:20:46,800 Speaker 2: was spirited to say the least be saying, mister doctor 396 00:20:46,880 --> 00:20:52,000 Speaker 2: Navarro for his appearance, and I got him upset talking 397 00:20:52,040 --> 00:20:56,879 Speaker 2: about how McKinley, late in his term before his tragic assassination, 398 00:20:57,840 --> 00:21:01,080 Speaker 2: made what was called the buffalo pivot. Are we in 399 00:21:01,119 --> 00:21:05,280 Speaker 2: a slow motion buffalo pivot right now? Is a president 400 00:21:05,440 --> 00:21:09,240 Speaker 2: brings down tariffs? Yeah? 401 00:21:09,280 --> 00:21:13,159 Speaker 9: Well, I think they look. I think there's likely some 402 00:21:13,400 --> 00:21:16,359 Speaker 9: sort of suggestion that you know, some folks in the 403 00:21:16,359 --> 00:21:19,960 Speaker 9: White House do realize that you know, tariffs on things 404 00:21:19,960 --> 00:21:23,080 Speaker 9: that the US cannot produce, you know, bananas and coffee 405 00:21:23,119 --> 00:21:27,000 Speaker 9: for instance, Are you know areas where maybe some tariff 406 00:21:27,040 --> 00:21:30,440 Speaker 9: relief is necessary. There's of course some reports that there 407 00:21:30,520 --> 00:21:33,600 Speaker 9: is you know, some tweaking of the steel and aluminum 408 00:21:33,640 --> 00:21:37,639 Speaker 9: tariffs as well. So I mean, could we see a 409 00:21:37,760 --> 00:21:41,439 Speaker 9: bit of a softening on tariffs, sure as sort of 410 00:21:41,480 --> 00:21:44,880 Speaker 9: again real politique kind of sets in here in advance 411 00:21:44,920 --> 00:21:49,119 Speaker 9: of the midterms. I think though, however, Tom to underestimate 412 00:21:49,160 --> 00:21:53,000 Speaker 9: this president and his sincerity and conviction on tariffs is 413 00:21:53,040 --> 00:21:55,000 Speaker 9: something the markets continue to do, and I think they 414 00:21:55,000 --> 00:21:59,479 Speaker 9: continue to be on the wrong side of that. This 415 00:21:59,560 --> 00:22:02,280 Speaker 9: is this is an ideology of course he's had for decades. 416 00:22:02,800 --> 00:22:05,760 Speaker 9: The president feels a sense of urgency to administer his 417 00:22:05,800 --> 00:22:08,880 Speaker 9: trade agenda. And again, even if there is some sort 418 00:22:08,920 --> 00:22:12,200 Speaker 9: of political expediency that sets in, I think our view 419 00:22:12,320 --> 00:22:14,239 Speaker 9: is that the markets and the economy are still going 420 00:22:14,280 --> 00:22:17,760 Speaker 9: to have to digest tariff policy and trade policy risk 421 00:22:18,040 --> 00:22:20,040 Speaker 9: as long as this president's in the White House. 422 00:22:20,920 --> 00:22:24,600 Speaker 4: Libby affordability has become a big issue in this cycle 423 00:22:24,640 --> 00:22:27,480 Speaker 4: of economic discussion here, and particularly one of the areas 424 00:22:27,560 --> 00:22:30,000 Speaker 4: is housing, and then the lack of affordability in housing. 425 00:22:30,800 --> 00:22:32,680 Speaker 4: And I know that the House is expected to pass 426 00:22:32,720 --> 00:22:36,280 Speaker 4: the Housing for the twenty first Century Act. What does 427 00:22:36,320 --> 00:22:39,159 Speaker 4: this act and does it have a chance to become law? 428 00:22:39,280 --> 00:22:42,200 Speaker 4: And how are leaders trying to make housing more affordable? 429 00:22:43,160 --> 00:22:45,840 Speaker 9: Yeah, so it does, and it did, and the House 430 00:22:45,840 --> 00:22:47,960 Speaker 9: and the Senate have now passed their own sort of 431 00:22:48,040 --> 00:22:51,040 Speaker 9: respective bills. This will now go into what's called the 432 00:22:51,080 --> 00:22:54,639 Speaker 9: Conference committee, which, as you guys know, is sort of 433 00:22:54,640 --> 00:22:56,919 Speaker 9: the fancy way of basically saying that the House and 434 00:22:56,960 --> 00:22:59,080 Speaker 9: the Senate will kind of hammer out their differences in 435 00:22:59,119 --> 00:23:02,119 Speaker 9: that legislation and then we'll have to go past a 436 00:23:02,200 --> 00:23:05,120 Speaker 9: unified bill. I do think this will be signed into law. 437 00:23:06,040 --> 00:23:08,159 Speaker 9: This does the thing show you that both sides of 438 00:23:08,160 --> 00:23:11,520 Speaker 9: the aisle are quite worried about this issue. Just politically speaking, 439 00:23:11,640 --> 00:23:14,679 Speaker 9: of course, housing affordability continues to be one of the 440 00:23:14,720 --> 00:23:17,639 Speaker 9: big laments among voters on both sides of the aisle. 441 00:23:18,080 --> 00:23:21,520 Speaker 9: The reality is, however, that at the federal level, they're 442 00:23:21,600 --> 00:23:25,000 Speaker 9: just you know, few lovers that policymakers can really pull 443 00:23:25,119 --> 00:23:29,760 Speaker 9: that have a meaningful impact on supply. One thing that 444 00:23:29,800 --> 00:23:32,919 Speaker 9: we do think that the White House has done and 445 00:23:32,960 --> 00:23:36,480 Speaker 9: probably will continue to do that could help is for 446 00:23:36,600 --> 00:23:40,040 Speaker 9: the GSS to continue to buy mortgages. That's what they've 447 00:23:40,080 --> 00:23:42,800 Speaker 9: been doing that over the last few months. That has 448 00:23:42,840 --> 00:23:45,480 Speaker 9: brought down mortgage rates at least incrementally. We continue to 449 00:23:45,680 --> 00:23:46,840 Speaker 9: expect them to do more of that. 450 00:23:46,960 --> 00:23:50,280 Speaker 2: But the key thing I heard there, Libby, is from 451 00:23:50,359 --> 00:23:55,879 Speaker 2: here to eternity, you don't see any more legislation coming 452 00:23:56,000 --> 00:23:59,240 Speaker 2: out of the Senate or the House signed by the President. 453 00:24:00,359 --> 00:24:01,800 Speaker 9: No, and sorry, I know I do. 454 00:24:01,920 --> 00:24:02,200 Speaker 7: We do. 455 00:24:02,240 --> 00:24:03,120 Speaker 5: I think the House will. 456 00:24:03,160 --> 00:24:06,240 Speaker 9: I think that the President will sign this housing bill 457 00:24:07,000 --> 00:24:07,720 Speaker 9: into law. 458 00:24:09,480 --> 00:24:11,120 Speaker 5: But outside of that. 459 00:24:11,560 --> 00:24:14,760 Speaker 9: And then again a funding bill for fiscal year twenty 460 00:24:14,800 --> 00:24:17,520 Speaker 9: twenty seven, there just may not be very much. I 461 00:24:17,520 --> 00:24:21,000 Speaker 9: think there's been some hope among market participants or some 462 00:24:21,080 --> 00:24:24,600 Speaker 9: expectation that the Congress may pass something in advance of 463 00:24:24,640 --> 00:24:27,240 Speaker 9: the midterms that could boost the economy. We don't think 464 00:24:27,280 --> 00:24:29,800 Speaker 9: that is the case. We don't think there will be 465 00:24:29,880 --> 00:24:33,679 Speaker 9: this another reconciliation bill, no more tariff dividends or what 466 00:24:33,800 --> 00:24:36,920 Speaker 9: have you, which Congress of course has to authorize. So yeah, 467 00:24:36,920 --> 00:24:38,760 Speaker 9: I think that's going to be you know, some cats 468 00:24:38,760 --> 00:24:42,199 Speaker 9: and dogs, Tom, but nothing really significant from a markets personality. 469 00:24:42,240 --> 00:24:46,320 Speaker 2: Cancill, thank you so much with Pimco. Stay with us 470 00:24:46,560 --> 00:24:49,800 Speaker 2: more from Bloomberg Surveillance coming up after this. 471 00:24:57,040 --> 00:25:01,040 Speaker 1: You're listening to the Bloomberg Surveillance podcast just Live weekday 472 00:25:01,080 --> 00:25:04,680 Speaker 1: afternoons from seven to ten am Eastern Listen on Applecarplay 473 00:25:04,720 --> 00:25:08,000 Speaker 1: and Android Otto with the Bloomberg Business app, or watch 474 00:25:08,040 --> 00:25:09,440 Speaker 1: us live on YouTube. 475 00:25:09,680 --> 00:25:10,879 Speaker 2: Newspapers, what do you have? 476 00:25:11,280 --> 00:25:13,760 Speaker 10: I want to start with Goldman Sachs because it's going 477 00:25:13,840 --> 00:25:18,199 Speaker 10: to remove DEI criteria for its board members. This is 478 00:25:18,320 --> 00:25:20,440 Speaker 10: an exclusive in the Wall Street Journal. So last year 479 00:25:20,680 --> 00:25:23,480 Speaker 10: you'll remember, Goldman Sachs removed a requirement that companies have 480 00:25:23,560 --> 00:25:27,720 Speaker 10: at least two diverse board members before advising that company 481 00:25:27,880 --> 00:25:30,919 Speaker 10: ongoing public. So now this is taking it a step further. 482 00:25:31,080 --> 00:25:34,680 Speaker 10: So it plans to diversify, to remove diversity equity inclusion 483 00:25:34,680 --> 00:25:38,840 Speaker 10: criteria from factors considered in identifying potential board members. It's 484 00:25:38,880 --> 00:25:40,720 Speaker 10: going to be having a shareholder meeting in the spring. 485 00:25:40,760 --> 00:25:43,200 Speaker 10: So it's doing this change now. And this was really 486 00:25:43,280 --> 00:25:47,320 Speaker 10: at the request of the conservative activity or activist nonprofit 487 00:25:47,400 --> 00:25:50,119 Speaker 10: National League and Policy Center, which I didn't realize owns 488 00:25:50,119 --> 00:25:53,080 Speaker 10: a small stake in Goldman Sacks. But they're not the 489 00:25:53,119 --> 00:25:55,399 Speaker 10: first ones to do this. City groups, banks. How America 490 00:25:55,440 --> 00:25:55,760 Speaker 10: did it is? 491 00:25:55,920 --> 00:25:57,520 Speaker 2: It was a topic this weekend. What do you think? 492 00:25:57,920 --> 00:26:00,200 Speaker 2: Was it like an era that's drifting away? 493 00:26:00,280 --> 00:26:00,480 Speaker 5: Yep? 494 00:26:00,760 --> 00:26:03,320 Speaker 2: It seems like after President Trump, does it just come 495 00:26:03,400 --> 00:26:03,840 Speaker 2: right back? 496 00:26:04,000 --> 00:26:06,440 Speaker 5: Don't I don't know. I don't think so. I think 497 00:26:06,480 --> 00:26:09,040 Speaker 5: the EI, for whatever reason, just this hads time in 498 00:26:09,080 --> 00:26:09,400 Speaker 5: the sun. 499 00:26:09,560 --> 00:26:10,280 Speaker 2: Next, where do you go? 500 00:26:10,440 --> 00:26:12,399 Speaker 10: All right, we're gonna do a hard turn here and 501 00:26:12,760 --> 00:26:16,000 Speaker 10: go to a New York Post story. Costco transforming the 502 00:26:16,000 --> 00:26:19,040 Speaker 10: way you can now order your custom cakes because Tom, 503 00:26:19,080 --> 00:26:22,000 Speaker 10: I know you like to get your custom cakes to Coscod. Yeah, 504 00:26:22,040 --> 00:26:24,359 Speaker 10: so customers are soon going to be able to place 505 00:26:24,400 --> 00:26:27,760 Speaker 10: those cake and deli tray orders directly through the company's 506 00:26:27,800 --> 00:26:32,439 Speaker 10: mobile app and website. How revolutionary is that because prior 507 00:26:32,480 --> 00:26:35,560 Speaker 10: to this, you had to drive to Costco, take out 508 00:26:35,600 --> 00:26:38,640 Speaker 10: your pen and fill out a paper form in order 509 00:26:38,680 --> 00:26:40,280 Speaker 10: to get your custom cakes. So they're moving into the 510 00:26:40,320 --> 00:26:43,119 Speaker 10: twenty first century and now you can actually make that 511 00:26:43,320 --> 00:26:44,440 Speaker 10: order online. 512 00:26:44,560 --> 00:26:50,000 Speaker 2: Imagine Costco more digital, more like online savvy. Yeah sure, amazing. 513 00:26:50,040 --> 00:26:52,160 Speaker 10: I mean they should they kind of have to. They 514 00:26:52,160 --> 00:26:54,040 Speaker 10: didn't even say when this is going to happen. They 515 00:26:54,080 --> 00:26:56,280 Speaker 10: just said later this year, And fans are already taking 516 00:26:56,280 --> 00:26:56,880 Speaker 10: to social media. 517 00:26:56,920 --> 00:26:59,360 Speaker 5: They're very excited about this. Okay, very good, let's still 518 00:26:59,359 --> 00:27:01,439 Speaker 5: get the hot and I like. 519 00:27:01,480 --> 00:27:03,040 Speaker 10: This story a lot. This is something I didn't know. 520 00:27:03,080 --> 00:27:05,080 Speaker 10: So you learn something new every day with newspapers. In 521 00:27:05,080 --> 00:27:07,480 Speaker 10: the New York Times, a story about how a President 522 00:27:07,560 --> 00:27:11,399 Speaker 10: Trump tax break is helping breathe new life into horse racing. 523 00:27:12,000 --> 00:27:15,439 Speaker 10: So look, horse racing. It's been plagued by cheating scandals, 524 00:27:15,840 --> 00:27:19,480 Speaker 10: worries about animal safety, but the sportive kings seeing a 525 00:27:19,480 --> 00:27:22,840 Speaker 10: bit of a renaissance here. Last year, owners spent about 526 00:27:22,840 --> 00:27:25,479 Speaker 10: one and a half billion on racehorses. That is up 527 00:27:25,560 --> 00:27:28,800 Speaker 10: twenty one percent from twenty twenty four. A big reason 528 00:27:29,280 --> 00:27:31,879 Speaker 10: is a tax break tucked away in President Trump's One Big, 529 00:27:31,920 --> 00:27:35,840 Speaker 10: Beautiful Bill. It's called a bonus depreciation. That means businesses 530 00:27:35,880 --> 00:27:39,320 Speaker 10: can immediately deduct the full cost of certain assets like 531 00:27:39,400 --> 00:27:43,280 Speaker 10: machinery and equipment to enhance their cash flow. So now 532 00:27:43,560 --> 00:27:47,399 Speaker 10: it applies to racehorses, and it's helping turn these animals 533 00:27:47,440 --> 00:27:49,840 Speaker 10: into a hot investment for wealthy people. 534 00:27:49,920 --> 00:27:54,720 Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify, 535 00:27:54,840 --> 00:27:58,640 Speaker 1: and anywhere else you get your podcasts. Listen live each 536 00:27:58,680 --> 00:28:02,720 Speaker 1: weekday seven to ten Eastern on Bloomberg dot com, the 537 00:28:02,800 --> 00:28:06,840 Speaker 1: iHeartRadio app tune In, and the Bloomberg Business app. You 538 00:28:06,880 --> 00:28:10,240 Speaker 1: can also watch us live every weekday on YouTube and 539 00:28:10,440 --> 00:28:12,160 Speaker 1: always on the Bloomberg terminal