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 --> 00:00:27,240 Speaker 1: us live on YouTube. 6 00:00:27,720 --> 00:00:30,120 Speaker 2: Okay, folks, what we're going to talk about you. We're 7 00:00:30,160 --> 00:00:33,559 Speaker 2: not gonna talk dsge. We're not going to talk intercals 8 00:00:33,560 --> 00:00:37,199 Speaker 2: within intericals or derivatives the mathiveness that Richard Clarett has 9 00:00:37,200 --> 00:00:40,159 Speaker 2: acclaimed for the former vice chairman of the FED. I 10 00:00:40,240 --> 00:00:42,040 Speaker 2: don't want to know when the Fed's going to cut 11 00:00:42,120 --> 00:00:44,680 Speaker 2: rates or all that. We're going to talk about what 12 00:00:44,720 --> 00:00:48,160 Speaker 2: you did at Columbia. Okay, Richard Claret of folks went 13 00:00:48,200 --> 00:00:53,559 Speaker 2: into Columbia with some massive hires in retention of one 14 00:00:53,600 --> 00:00:56,440 Speaker 2: of the best faculties in the planet. It goes back 15 00:00:56,440 --> 00:00:59,080 Speaker 2: to Luvin in Belgium, it goes back to some of 16 00:00:59,080 --> 00:01:02,800 Speaker 2: the way back work in Germany, and of course the 17 00:01:02,880 --> 00:01:09,000 Speaker 2: combine out of England is well, you retained a laureate Stiglitz. Yeah, 18 00:01:09,480 --> 00:01:12,800 Speaker 2: you dealt with Jeff Sachs with all of his ability. 19 00:01:13,000 --> 00:01:16,760 Speaker 2: In that you have ned Phelps with this massive eclectic 20 00:01:17,480 --> 00:01:23,880 Speaker 2: view over time. Colombia owns the social analysis. Good morning Chicago, 21 00:01:24,200 --> 00:01:27,880 Speaker 2: and mister Becker, you own the social analysis of this 22 00:01:28,080 --> 00:01:32,000 Speaker 2: K shaped economy. Jeff Sacks wrote a book twenty years ago. 23 00:01:32,040 --> 00:01:35,120 Speaker 2: I'm going to say it was way out front on 24 00:01:35,280 --> 00:01:38,720 Speaker 2: this how case shaped are we? When you talk to 25 00:01:38,800 --> 00:01:43,040 Speaker 2: your friends and Romans and countrymen in Colombia, how K 26 00:01:43,200 --> 00:01:44,840 Speaker 2: shaped are we now? Doctor Claardon. 27 00:01:44,959 --> 00:01:48,720 Speaker 3: Well, and also you left out Bob Mandell, Chili a 28 00:01:48,760 --> 00:01:53,760 Speaker 3: giant and international monetary economics. So it certainly been a 29 00:01:53,760 --> 00:01:56,840 Speaker 3: treat to be at Columbia all these years. We're definitely 30 00:01:56,840 --> 00:02:00,280 Speaker 3: in a K shape economy. I think we've been moving 31 00:02:00,320 --> 00:02:03,800 Speaker 3: in that direction for thirty years. Not in a straight line, 32 00:02:03,840 --> 00:02:07,560 Speaker 3: but the trend has definitely been in that direction. I 33 00:02:07,560 --> 00:02:12,280 Speaker 3: think the events with the pandemic, the policy response, and 34 00:02:12,760 --> 00:02:17,480 Speaker 3: the like amplified some of those trends. You know, in America, 35 00:02:18,000 --> 00:02:21,400 Speaker 3: if you own your home, as sixty percent of people do, 36 00:02:21,760 --> 00:02:24,520 Speaker 3: and if you own stock, you've had a very good run. 37 00:02:24,600 --> 00:02:26,240 Speaker 4: But that means there's. 38 00:02:26,080 --> 00:02:30,079 Speaker 3: A substantial fraction of the country that has not been participating. 39 00:02:30,120 --> 00:02:32,399 Speaker 3: Maybe if I can just parachute a bit in on this. 40 00:02:33,560 --> 00:02:35,720 Speaker 3: You know, at the FED. When the economy slows, you 41 00:02:35,800 --> 00:02:38,320 Speaker 3: cut rates, and I certainly did that at my time 42 00:02:38,800 --> 00:02:39,480 Speaker 3: at the FED. 43 00:02:39,880 --> 00:02:40,520 Speaker 4: And the FED. 44 00:02:40,440 --> 00:02:43,240 Speaker 3: Understands that when it lowers rates, it's going to support 45 00:02:43,280 --> 00:02:45,160 Speaker 3: the labor market, which is good and for a lot 46 00:02:45,240 --> 00:02:48,400 Speaker 3: of people that is their stake in the economy. 47 00:02:48,000 --> 00:02:48,600 Speaker 5: Is their job. 48 00:02:49,360 --> 00:02:52,480 Speaker 3: But low rates also lead to higher acid valuations and 49 00:02:52,840 --> 00:02:56,079 Speaker 3: also leads to some of the trends that you've mentioned 50 00:02:56,120 --> 00:02:58,880 Speaker 3: in the case shape economy. And so I think central 51 00:02:58,919 --> 00:03:02,359 Speaker 3: bankers understand that, but their toolkit is really pretty limited. 52 00:03:02,400 --> 00:03:04,760 Speaker 3: So I think that's how we end up with this dynamic. 53 00:03:05,560 --> 00:03:08,359 Speaker 6: How does it fit a reserve? Any central bank deal 54 00:03:08,400 --> 00:03:10,920 Speaker 6: with a black swan like, oh, I don't know, a 55 00:03:10,960 --> 00:03:13,440 Speaker 6: war and rent that came out of nowhere. I mean, 56 00:03:13,720 --> 00:03:16,640 Speaker 6: how does a FED typically look at those types of events. 57 00:03:18,080 --> 00:03:22,560 Speaker 3: It's difficult to predict back swanp black swans almost by definition. 58 00:03:23,320 --> 00:03:24,960 Speaker 3: So what you try to do is you try to 59 00:03:24,960 --> 00:03:27,799 Speaker 3: do analysis. You try to look back at history. You know, 60 00:03:28,680 --> 00:03:32,400 Speaker 3: history doesn't repeat, but it rhymes as the saying goes. 61 00:03:32,480 --> 00:03:34,400 Speaker 3: And so I'm sure at the FED they're looking at 62 00:03:34,440 --> 00:03:38,560 Speaker 3: past oil shocks, past Middle East conflicts, but they'll also 63 00:03:38,640 --> 00:03:41,280 Speaker 3: have to fix factor in Paul that it's a different 64 00:03:41,360 --> 00:03:43,920 Speaker 3: US economy than you know back in my college years 65 00:03:43,920 --> 00:03:46,960 Speaker 3: in the nineteen seventies. In particular of the US is 66 00:03:47,000 --> 00:03:52,800 Speaker 3: a net energy export. Important, however, is in the FEDS 67 00:03:52,920 --> 00:03:56,400 Speaker 3: models it's still the case that when energy prices go up, 68 00:03:56,760 --> 00:03:59,400 Speaker 3: the economy slows, and I think the main reason for 69 00:03:59,480 --> 00:04:02,200 Speaker 3: that is that roads real incomes for a lot of workers. 70 00:04:03,440 --> 00:04:06,160 Speaker 3: Also the fact that the US imports a lot of 71 00:04:06,200 --> 00:04:09,320 Speaker 3: goods that have a high energy content, and so yes, 72 00:04:09,640 --> 00:04:11,840 Speaker 3: you'd better be an exporter than an importer. But the 73 00:04:12,000 --> 00:04:13,960 Speaker 3: US is not insulated from this shop. 74 00:04:14,360 --> 00:04:18,000 Speaker 2: Karl Marx comes from the giant Thomas soul Out at Hoover. Yeah, 75 00:04:18,279 --> 00:04:21,400 Speaker 2: and also from my great mentor in London, Megduan to Saia, 76 00:04:21,440 --> 00:04:24,560 Speaker 2: who we lost last year, Carl Marx said in the 77 00:04:24,560 --> 00:04:28,280 Speaker 2: British Museum reading room and wrote a treatise on the 78 00:04:28,400 --> 00:04:32,000 Speaker 2: end of capitalism, and the bottom line is by definition 79 00:04:32,080 --> 00:04:36,120 Speaker 2: we become ever more k shaped, evermore divided, and there's 80 00:04:36,200 --> 00:04:40,160 Speaker 2: corrective solutions. Do you worry that within all of the 81 00:04:40,200 --> 00:04:44,000 Speaker 2: institutions of you, as you've represented, that we're getting to 82 00:04:44,080 --> 00:04:46,359 Speaker 2: stress points where it falls apart. 83 00:04:48,160 --> 00:04:50,440 Speaker 4: Well, I'm not sure of that, but certainly. 84 00:04:50,080 --> 00:04:54,080 Speaker 3: The trends, as I mentioned, since twenty twenty have definitely 85 00:04:54,279 --> 00:04:57,239 Speaker 3: moved more in that direction. I would point out, though, 86 00:04:58,240 --> 00:05:00,600 Speaker 3: that we have had periods not all that long ago, 87 00:05:00,760 --> 00:05:04,080 Speaker 3: you know, certainly in the last part of Obama and 88 00:05:04,440 --> 00:05:08,920 Speaker 3: during the first Trump term, before the before the pandemic, 89 00:05:09,400 --> 00:05:12,160 Speaker 3: you actually had some of those K shaped trends reversing 90 00:05:12,520 --> 00:05:15,440 Speaker 3: and lower desk. And I can certainly tell you that 91 00:05:15,560 --> 00:05:17,400 Speaker 3: during my time at the FED, it was one of 92 00:05:17,400 --> 00:05:20,280 Speaker 3: my focuses. That's one reason why the FED got a 93 00:05:20,320 --> 00:05:23,679 Speaker 3: lot of criticism for cutting rates in twenty nineteen, because 94 00:05:23,920 --> 00:05:27,280 Speaker 3: the unemployment rate was below four percent, and some models 95 00:05:27,279 --> 00:05:29,760 Speaker 3: were saying, oh, you can't operate the economy below four 96 00:05:29,800 --> 00:05:32,960 Speaker 3: percent unemployment. And our attitude, well, let's see how the 97 00:05:33,000 --> 00:05:36,680 Speaker 3: economy operates. And I think that was a positive development. 98 00:05:36,800 --> 00:05:39,680 Speaker 3: And so I think policymakers do need when they are 99 00:05:39,720 --> 00:05:44,479 Speaker 3: in healthy economy to allow the economy to reach its potential. 100 00:05:44,839 --> 00:05:47,800 Speaker 6: Well, one could argue, I mean the war. Notwithstanding the 101 00:05:47,839 --> 00:05:51,240 Speaker 6: economy is generally performing well in terms of growth, the 102 00:05:51,320 --> 00:05:54,880 Speaker 6: unemployment still looks like at our near full employment. Sure, 103 00:05:55,560 --> 00:05:57,240 Speaker 6: I guess that's a recipe for the FED to say, 104 00:05:57,240 --> 00:05:59,160 Speaker 6: all right, we're doing our job and maybe we can 105 00:05:59,240 --> 00:06:01,880 Speaker 6: just sit down, stand down a little bit. Is that 106 00:06:01,920 --> 00:06:03,080 Speaker 6: what you expect the FED to do over the next 107 00:06:03,120 --> 00:06:03,920 Speaker 6: several meetings? 108 00:06:04,279 --> 00:06:04,680 Speaker 5: I do. 109 00:06:04,839 --> 00:06:08,480 Speaker 3: I think that they've pretty much signaled that the existing 110 00:06:08,520 --> 00:06:12,560 Speaker 3: FED before Kevin Warsh arrives, it is happy right now 111 00:06:13,000 --> 00:06:16,520 Speaker 3: to step back see how the economy evolves with its 112 00:06:16,640 --> 00:06:21,600 Speaker 3: energy shock. It is interesting, though, that they did indicate 113 00:06:21,680 --> 00:06:23,960 Speaker 3: that most of the members of the committee still see 114 00:06:24,000 --> 00:06:27,800 Speaker 3: at least one cut this year and next year as appropriate, 115 00:06:27,920 --> 00:06:31,440 Speaker 3: and so I would think that over time Kevin Warsh 116 00:06:31,480 --> 00:06:33,720 Speaker 3: will be able to get the Committee to cut rates 117 00:06:33,760 --> 00:06:36,120 Speaker 3: at least a couple more times, but it may not 118 00:06:36,240 --> 00:06:38,320 Speaker 3: happen for for a while. 119 00:06:38,560 --> 00:06:40,960 Speaker 2: Richard Clarina with this folks of Columbia, of course of 120 00:06:41,080 --> 00:06:45,000 Speaker 2: PIMCO as well, global economic advisor in the former chair 121 00:06:45,040 --> 00:06:47,840 Speaker 2: of the Federal former vice chair, It's going to give 122 00:06:47,839 --> 00:06:52,200 Speaker 2: you a promotion Therey formervice chair the Federal system as well. Okay, 123 00:06:52,200 --> 00:06:54,320 Speaker 2: I've got to get you in trouble. Myrone was and 124 00:06:54,360 --> 00:06:56,640 Speaker 2: Governor Myron was in with John Farrell. John I thought 125 00:06:56,680 --> 00:07:03,000 Speaker 2: was great. Good, there's a FED reacting after the fact, folks, 126 00:07:03,120 --> 00:07:05,800 Speaker 2: John Tucker told me the Latin is ex post, and 127 00:07:05,839 --> 00:07:08,360 Speaker 2: then there's this whole dream of getting out front and 128 00:07:08,360 --> 00:07:11,600 Speaker 2: fixing it before it screws up, called ex ANTI. I 129 00:07:11,640 --> 00:07:16,240 Speaker 2: would suggest Governor Myron is not nearly ex post. Is 130 00:07:16,280 --> 00:07:19,680 Speaker 2: his brethren at the FED. He genuinely wants to get 131 00:07:19,920 --> 00:07:23,360 Speaker 2: x anti. Is there any evidence of a successful central 132 00:07:23,400 --> 00:07:26,200 Speaker 2: bank trying to get out front of the model? 133 00:07:28,240 --> 00:07:32,240 Speaker 4: Well, you have to look pretty long and hard to 134 00:07:32,280 --> 00:07:32,680 Speaker 4: find that. 135 00:07:35,000 --> 00:07:35,720 Speaker 2: New testament. 136 00:07:35,880 --> 00:07:39,480 Speaker 3: Yeah, you know, models are tools, but they're backward looking, 137 00:07:39,600 --> 00:07:44,440 Speaker 3: and in particular, I think oftentimes the argument that Governor 138 00:07:44,480 --> 00:07:46,360 Speaker 3: Myron has made is he. 139 00:07:46,160 --> 00:07:48,960 Speaker 4: He has a personal individual belief that the. 140 00:07:48,960 --> 00:07:51,800 Speaker 3: Neutral interest rate in the US is well below the 141 00:07:51,800 --> 00:07:55,080 Speaker 3: current level and well below where the committee believes. You know, 142 00:07:55,400 --> 00:07:57,800 Speaker 3: he could be right, but I don't think that is 143 00:07:57,840 --> 00:08:00,680 Speaker 3: the view on the committee, So I think he'll continue 144 00:08:01,320 --> 00:08:04,120 Speaker 3: to be a minority view on that. 145 00:08:04,800 --> 00:08:09,480 Speaker 6: You mentioned mister Walsh taking the FED chair seat later 146 00:08:09,600 --> 00:08:10,280 Speaker 6: this year. 147 00:08:10,120 --> 00:08:10,960 Speaker 5: In several months time. 148 00:08:11,440 --> 00:08:13,360 Speaker 6: I'm not sure we've got a path for that to happen. 149 00:08:13,440 --> 00:08:16,920 Speaker 6: How concerned are you about some of the noise surrounding 150 00:08:16,960 --> 00:08:17,360 Speaker 6: that whole. 151 00:08:17,520 --> 00:08:20,840 Speaker 3: Well, I think it's pretty clear now that in order 152 00:08:20,880 --> 00:08:22,720 Speaker 3: to become a FED chair you've got to be confirmed 153 00:08:22,720 --> 00:08:24,880 Speaker 3: by the Senate, and to be confirmed by the Senate, 154 00:08:24,880 --> 00:08:26,440 Speaker 3: you have to have an affirmative. 155 00:08:26,040 --> 00:08:27,320 Speaker 4: Vote in the Banking Committee. 156 00:08:27,360 --> 00:08:31,960 Speaker 3: And right now, Senator till Us has indicated he will 157 00:08:31,960 --> 00:08:35,120 Speaker 3: not support any FED nominee, including Warsh, who he thinks 158 00:08:35,160 --> 00:08:40,320 Speaker 3: would be a good choice, until the current situation with 159 00:08:40,440 --> 00:08:44,160 Speaker 3: the Justice Department subpoenas and the FED is resolved. And 160 00:08:44,240 --> 00:08:46,320 Speaker 3: Power more or less said that himself that he's not 161 00:08:46,400 --> 00:08:49,840 Speaker 3: going anywhere until it's resolved. We do think it will 162 00:08:49,880 --> 00:08:53,840 Speaker 3: be resolved. We do think eventually Warsh becomes chair. The 163 00:08:53,920 --> 00:08:56,320 Speaker 3: timing of that is uncertain. Whether or not it happens 164 00:08:56,360 --> 00:08:58,960 Speaker 3: in time for the June meeting is too soon to tell. 165 00:08:59,000 --> 00:09:02,600 Speaker 3: But we do a thing eventually that it will get resolved. 166 00:09:02,600 --> 00:09:05,680 Speaker 2: The first thing I did with AI, yeah, Tom Sekunda 167 00:09:05,760 --> 00:09:08,760 Speaker 2: was our founders grabbed me by the cheese its rack 168 00:09:08,840 --> 00:09:10,840 Speaker 2: in the food court, so that we need a briefing. 169 00:09:10,880 --> 00:09:14,680 Speaker 2: And is mister Secunda's leadership. Folks on AI is noted 170 00:09:14,720 --> 00:09:19,439 Speaker 2: across a ten state area. Richard Clarita, he said, here's AI. 171 00:09:20,160 --> 00:09:22,600 Speaker 2: Get up to speed on it. Richard Clarita is up 172 00:09:22,600 --> 00:09:26,000 Speaker 2: to speed on AI right now? Is it a job 173 00:09:26,120 --> 00:09:28,959 Speaker 2: creator or is it a job loser? 174 00:09:29,600 --> 00:09:34,240 Speaker 3: Well, right now doesn't appear to be either in the data. 175 00:09:34,800 --> 00:09:38,040 Speaker 3: And I think there is as many opinions on this 176 00:09:38,120 --> 00:09:42,480 Speaker 3: as there are people that you talk to. Myself, I am. 177 00:09:42,840 --> 00:09:45,640 Speaker 3: I'm skeptical that in the next year or so we're 178 00:09:45,679 --> 00:09:48,280 Speaker 3: going to see a dramatic change in the labor market 179 00:09:48,320 --> 00:09:53,040 Speaker 3: because of AI. The models are impressive, but the analogy 180 00:09:53,120 --> 00:09:56,440 Speaker 3: I like to use is even their developers admit right 181 00:09:56,559 --> 00:09:57,360 Speaker 3: they hallucinate. 182 00:09:57,720 --> 00:09:59,600 Speaker 4: Hallucination is a feature, not a bug. 183 00:09:59,640 --> 00:10:01,200 Speaker 3: And I don't know about you, a Bloomber, but I 184 00:10:01,240 --> 00:10:04,240 Speaker 3: can tell you at PIMCO, we don't hire a lot 185 00:10:04,320 --> 00:10:07,360 Speaker 3: of employees who say part of my job description is 186 00:10:07,400 --> 00:10:09,640 Speaker 3: I'm going to hallucinate, And so I think until they 187 00:10:09,679 --> 00:10:12,280 Speaker 3: figure that out, it may not have as much an 188 00:10:12,280 --> 00:10:14,200 Speaker 3: effect on the labor market as people think. 189 00:10:14,280 --> 00:10:17,120 Speaker 2: You and I used a Kueful and Asker slide rule. Okay, 190 00:10:17,200 --> 00:10:19,480 Speaker 2: the only way you can learn logs is a slide rule. 191 00:10:19,679 --> 00:10:22,840 Speaker 2: Remember when the Hewlett Packard cat or the rich kids 192 00:10:23,200 --> 00:10:24,520 Speaker 2: had the Helett Packard. 193 00:10:25,320 --> 00:10:28,480 Speaker 4: What was it called reverse polish reverse polish notation. 194 00:10:28,679 --> 00:10:31,560 Speaker 2: I got one on my phone here, But to me, 195 00:10:31,640 --> 00:10:34,120 Speaker 2: it's the same shift where the professors are going mental 196 00:10:34,160 --> 00:10:37,360 Speaker 2: and clash and use your calculator and all that, and 197 00:10:37,480 --> 00:10:39,280 Speaker 2: we're just gonna get We're gonna deal with it. 198 00:10:39,559 --> 00:10:40,600 Speaker 5: I think we're gonna deal. 199 00:10:40,520 --> 00:10:43,200 Speaker 3: With it, and remember that near term, in order to 200 00:10:43,200 --> 00:10:45,960 Speaker 3: get the nirvana of AI benefits, there has to be 201 00:10:45,960 --> 00:10:49,720 Speaker 3: a lot of capital spending, data centers, power generation, and 202 00:10:49,760 --> 00:10:53,120 Speaker 3: so that the interesting thing about AI right now is 203 00:10:53,160 --> 00:10:55,360 Speaker 3: that it's really a driver of a lot of the 204 00:10:55,400 --> 00:10:57,640 Speaker 3: old traditional bricks and mortar economy. 205 00:10:57,960 --> 00:11:01,480 Speaker 2: One final question, Yes, sir own Powell. Yeah, you've been 206 00:11:01,520 --> 00:11:04,720 Speaker 2: a staunch defender of him. He's had a pretty good 207 00:11:04,800 --> 00:11:10,400 Speaker 2: ten days week here. Yeah. And so the governor as well, 208 00:11:10,480 --> 00:11:15,160 Speaker 2: under duress, what's his value add to the American people 209 00:11:15,760 --> 00:11:17,960 Speaker 2: to serve out all of his different tenures. 210 00:11:19,440 --> 00:11:20,600 Speaker 4: Well, I think it's important. 211 00:11:20,679 --> 00:11:21,480 Speaker 5: I think I think J. 212 00:11:21,679 --> 00:11:26,600 Speaker 3: Powell recognizes that, you know, the first sentence and eventually, 213 00:11:26,679 --> 00:11:30,000 Speaker 3: whenever his New York Times obituary is written, is he 214 00:11:30,080 --> 00:11:32,040 Speaker 3: wants to make sure that it says something along the 215 00:11:32,040 --> 00:11:36,280 Speaker 3: lines as chair Powell Report, restore price stability and maintained 216 00:11:36,360 --> 00:11:38,240 Speaker 3: the Fed's independence. 217 00:11:38,720 --> 00:11:41,360 Speaker 4: And I think that he is going to achieve that. 218 00:11:42,000 --> 00:11:44,480 Speaker 2: Thank you so much, Richard Claire to coming. Was this 219 00:11:44,559 --> 00:11:46,839 Speaker 2: okay that we didn't do monetary parlor game? 220 00:11:47,120 --> 00:11:49,440 Speaker 3: Can I also say it must be opening day because 221 00:11:49,480 --> 00:11:54,200 Speaker 3: mister Kean's wearing a tomorrow probably mister Sweeney, of course, 222 00:11:54,240 --> 00:11:55,200 Speaker 3: My god, where's the duke? 223 00:11:55,880 --> 00:11:58,560 Speaker 6: I know, are you going to the game? Not going 224 00:11:58,559 --> 00:12:00,000 Speaker 6: to the game, But it'll be a great game. 225 00:12:00,600 --> 00:12:02,760 Speaker 2: I'm afraid to ask. How's your bracket? 226 00:12:03,000 --> 00:12:06,280 Speaker 3: Yes, well, I'm a loyal alam of the University of 227 00:12:06,280 --> 00:12:07,800 Speaker 3: Illinois and I picked them. 228 00:12:08,160 --> 00:12:09,560 Speaker 4: At least on that part of the bracket. 229 00:12:09,640 --> 00:12:11,760 Speaker 3: I'm doing pretty well, although I got to tell you, 230 00:12:11,840 --> 00:12:15,200 Speaker 3: what's this playing a tournament game on a home court 231 00:12:15,480 --> 00:12:16,280 Speaker 3: for the number two? 232 00:12:17,080 --> 00:12:21,000 Speaker 2: Do they have a bracket pool at the FED? Oh yeah, 233 00:12:21,160 --> 00:12:26,640 Speaker 2: PhDs all the stuff? I think so ringer there, you know, 234 00:12:26,720 --> 00:12:29,360 Speaker 2: like Vince Ryanair years ago was reading three years in 235 00:12:29,400 --> 00:12:29,800 Speaker 2: a row. 236 00:12:30,960 --> 00:12:32,640 Speaker 4: Anyway, go line on. 237 00:12:33,000 --> 00:12:36,280 Speaker 2: Okay, Richard Claire, thank you so much, greatly, greatly appreciated. 238 00:12:37,960 --> 00:12:42,160 Speaker 2: Stay with us. More from Bloomberg Surveillance coming up after this. 239 00:12:49,400 --> 00:12:53,000 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 240 00:12:53,040 --> 00:12:56,200 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 241 00:12:56,280 --> 00:13:00,000 Speaker 1: Applecarplay and Android Otto with the Bloomberg business app or 242 00:13:00,160 --> 00:13:01,719 Speaker 1: watch us live on YouTube. 243 00:13:02,160 --> 00:13:05,040 Speaker 2: Tina Fordham is a force on LinkedIn and research effort 244 00:13:05,040 --> 00:13:08,280 Speaker 2: at Fordham Global Foresight is world class. Where thrilled we 245 00:13:08,320 --> 00:13:10,960 Speaker 2: could get a briefing this morning, Tina. And all the 246 00:13:11,040 --> 00:13:14,760 Speaker 2: years I've done this, I have never ever seen a 247 00:13:14,800 --> 00:13:19,760 Speaker 2: morning like this, a cacophony of news sources, headlines, different 248 00:13:19,840 --> 00:13:23,320 Speaker 2: cross currents this way that I'm completely relying on the 249 00:13:23,440 --> 00:13:28,080 Speaker 2: acclaimed t live of Bloomberg with its translation abilities. Give 250 00:13:28,160 --> 00:13:31,600 Speaker 2: us your update on the veracity of a fifteen point 251 00:13:31,960 --> 00:13:32,520 Speaker 2: piece plan. 252 00:13:35,120 --> 00:13:36,760 Speaker 7: No one knows Tom. 253 00:13:36,800 --> 00:13:39,920 Speaker 8: The idea of coordinating with Pakistan on this is interesting. 254 00:13:39,960 --> 00:13:42,720 Speaker 8: It is something that we heard through our sources over 255 00:13:42,760 --> 00:13:45,800 Speaker 8: the last couple of days. What I think is really, 256 00:13:46,480 --> 00:13:51,760 Speaker 8: you know, fascinating and so important for kind of gaming 257 00:13:51,760 --> 00:13:56,400 Speaker 8: out the power balance here is that Iran, having been 258 00:13:57,200 --> 00:14:02,840 Speaker 8: presumed to be a weak military force, actually finds itself 259 00:14:02,880 --> 00:14:06,600 Speaker 8: with more leverage than anybody thought right now and is 260 00:14:06,600 --> 00:14:11,319 Speaker 8: issuing some pretty robust statements about its commitment to defending 261 00:14:11,360 --> 00:14:15,400 Speaker 8: its land even as the eighty second Airborne is on 262 00:14:15,520 --> 00:14:15,840 Speaker 8: the way. 263 00:14:16,240 --> 00:14:21,320 Speaker 2: Does President Trump and whomver of America have an identified 264 00:14:21,440 --> 00:14:23,920 Speaker 2: Iranian leadership they can speak to. 265 00:14:25,760 --> 00:14:29,000 Speaker 8: Well there's some suggestion about who they might be speaking to. 266 00:14:29,600 --> 00:14:33,040 Speaker 8: But one of our problems, you know, and I put 267 00:14:33,120 --> 00:14:36,280 Speaker 8: both of us in the same boat here is the 268 00:14:37,480 --> 00:14:42,400 Speaker 8: presence of so many unreliable narrators, including the President of 269 00:14:42,440 --> 00:14:45,800 Speaker 8: the United States. Now he is clearly looking for an interlocutor, 270 00:14:47,040 --> 00:14:48,400 Speaker 8: as he said himself. 271 00:14:49,000 --> 00:14:51,640 Speaker 7: So many of them have been killed. 272 00:14:51,640 --> 00:14:55,920 Speaker 8: They've been assassinated by Israel, who have eliminated that whole 273 00:14:56,000 --> 00:14:57,200 Speaker 8: kind of middle. 274 00:14:57,120 --> 00:14:59,680 Speaker 7: Cadre of possible successors. 275 00:15:00,000 --> 00:15:03,720 Speaker 8: I know that the Iranian succession is for leaders deep, 276 00:15:04,120 --> 00:15:06,680 Speaker 8: but you've got to have somebody to talk to to 277 00:15:06,800 --> 00:15:10,280 Speaker 8: make a deal, and you have to have a counterparty 278 00:15:10,760 --> 00:15:12,280 Speaker 8: that wants to accept that. 279 00:15:12,480 --> 00:15:14,640 Speaker 7: Right now, Iran is signaling strength. 280 00:15:15,640 --> 00:15:19,200 Speaker 6: So Tina, I have to ask, where's the US State 281 00:15:19,240 --> 00:15:21,160 Speaker 6: Department in all of this? Don't we have like a 282 00:15:21,160 --> 00:15:23,920 Speaker 6: whole section of government that does this kind of stuff, 283 00:15:24,000 --> 00:15:27,960 Speaker 6: negotiates with the countries, really thinks about how to craft 284 00:15:28,720 --> 00:15:30,680 Speaker 6: these agreements. Is that is there any a sense that 285 00:15:30,720 --> 00:15:31,960 Speaker 6: there's involvement here? 286 00:15:33,360 --> 00:15:35,920 Speaker 8: Well, we haven't seen much from the Secretary of State. 287 00:15:36,000 --> 00:15:38,560 Speaker 8: And not only that at the kind of you know, 288 00:15:38,680 --> 00:15:42,720 Speaker 8: the line levels, so many of the embassy's US embassies 289 00:15:42,760 --> 00:15:46,160 Speaker 8: in the Middle East are without a US ambassador, so 290 00:15:46,680 --> 00:15:52,960 Speaker 8: everything's concentrated in the president who values surprise, it confuses 291 00:15:53,040 --> 00:15:57,200 Speaker 8: that Jesus out of market participants among others. I've been 292 00:15:57,240 --> 00:16:01,440 Speaker 8: talking to corporates, including in the Middle least, who are 293 00:16:01,760 --> 00:16:06,880 Speaker 8: you know, bewildered about all of this. The geopolitical butterfly effect, 294 00:16:06,920 --> 00:16:09,200 Speaker 8: as I call it, the kind of knock on effects 295 00:16:09,880 --> 00:16:12,920 Speaker 8: are manifold, but one of the ones that's caught my 296 00:16:13,120 --> 00:16:16,800 Speaker 8: attention is a reminder that after the nineteen seventy three 297 00:16:16,840 --> 00:16:22,040 Speaker 8: oil price shock, no incumbents in major countries were re elected. 298 00:16:22,160 --> 00:16:26,240 Speaker 7: So this is going to be sending a cool, you know, 299 00:16:26,480 --> 00:16:27,000 Speaker 7: chill win. 300 00:16:27,280 --> 00:16:30,200 Speaker 8: Not just the inflation shock, but the political outlook from 301 00:16:30,240 --> 00:16:35,080 Speaker 8: all of this is not going to endear the United 302 00:16:35,120 --> 00:16:37,320 Speaker 8: States to anybody. 303 00:16:36,960 --> 00:16:39,720 Speaker 2: Across the United States around the world. This morning, Tina 304 00:16:39,840 --> 00:16:42,840 Speaker 2: Fordham where it's a Ford and Global Foresight, Paul Sweeney 305 00:16:42,880 --> 00:16:46,040 Speaker 2: and Tom Keene with a news flow this morning extraordinary, 306 00:16:46,280 --> 00:16:48,800 Speaker 2: there's an upfield to it. With a fifteen point piece 307 00:16:48,880 --> 00:16:52,960 Speaker 2: plan futures up sixty down, futures up four forty six, 308 00:16:53,040 --> 00:16:56,360 Speaker 2: The vixen well over a stick, but oil now under 309 00:16:56,440 --> 00:16:59,440 Speaker 2: ninety eight ninety seven point seventy one on Brent Crude. 310 00:17:00,080 --> 00:17:04,720 Speaker 2: Your acclaim is a cultural synthesis of your study a 311 00:17:04,800 --> 00:17:08,960 Speaker 2: foreign policy of international relations. Now we have a presence 312 00:17:09,040 --> 00:17:13,159 Speaker 2: talking to Tim O'Brien of Bloomberg Opinion. Yesterday you go 313 00:17:13,240 --> 00:17:15,359 Speaker 2: up to the food court. I'm having a bag of 314 00:17:15,400 --> 00:17:19,240 Speaker 2: apricots and Tim O'Brien's having a full English. Sure up there, 315 00:17:19,280 --> 00:17:21,639 Speaker 2: you know the whole thing, And Tina, I'm talking to 316 00:17:21,680 --> 00:17:25,480 Speaker 2: Tim O'Brien, who owns the understanding of Trump. We've got 317 00:17:25,520 --> 00:17:30,640 Speaker 2: a guy who's deal transaction based in that Culturally, how 318 00:17:30,760 --> 00:17:36,160 Speaker 2: is that Trumpian deal transaction process greeted by the Arab 319 00:17:36,680 --> 00:17:39,200 Speaker 2: and separately by the Persian world. 320 00:17:41,119 --> 00:17:42,800 Speaker 7: How is it created by Well? 321 00:17:43,280 --> 00:17:46,720 Speaker 8: I mean he is somebody who values making a deal 322 00:17:46,880 --> 00:17:50,639 Speaker 8: above all, but also winning above all. And what I 323 00:17:50,680 --> 00:17:54,240 Speaker 8: think is very concerning is that it's hard to imagine 324 00:17:55,320 --> 00:17:58,320 Speaker 8: an easy win here. As we get further in, you 325 00:17:58,359 --> 00:18:01,760 Speaker 8: start to you know, hear references to that Q word 326 00:18:02,160 --> 00:18:04,480 Speaker 8: from the Vietnam era quagmire. 327 00:18:05,000 --> 00:18:08,720 Speaker 7: Now, the President probably won't want to allow that to happen. 328 00:18:08,520 --> 00:18:11,720 Speaker 8: But you know, thinking about your previous guest and what 329 00:18:11,800 --> 00:18:14,000 Speaker 8: others like Mohammed a Larian are saying. 330 00:18:14,680 --> 00:18:17,240 Speaker 7: The impact of this oil price shock. 331 00:18:17,359 --> 00:18:22,760 Speaker 8: Even if it's stopped tomorrow, it will you know, continue 332 00:18:22,760 --> 00:18:24,440 Speaker 8: for some months. 333 00:18:24,480 --> 00:18:26,600 Speaker 7: We're already in this shock. 334 00:18:26,760 --> 00:18:30,679 Speaker 8: So calling that a win, I mean most market participants 335 00:18:30,760 --> 00:18:32,880 Speaker 8: I speak to say, well, the president can kind of. 336 00:18:33,160 --> 00:18:35,480 Speaker 7: You know, he can quit any time. He can quit 337 00:18:35,520 --> 00:18:37,200 Speaker 7: this war and call it a victory anytime. 338 00:18:38,080 --> 00:18:42,400 Speaker 8: Maybe, But we still come back to first principles, which 339 00:18:42,480 --> 00:18:45,000 Speaker 8: is who's going to lead the country. And this notion 340 00:18:45,080 --> 00:18:50,480 Speaker 8: of the world's most unusual joint venture proposition with the Ayatola, 341 00:18:50,560 --> 00:18:53,880 Speaker 8: as President Trump put it, and himself, you know, kind 342 00:18:53,920 --> 00:18:58,399 Speaker 8: of co owning the Strait of Hormuz. It's hard to 343 00:18:58,440 --> 00:19:01,520 Speaker 8: think about how you execute that kind of arrangement, isn't. 344 00:19:01,359 --> 00:19:02,520 Speaker 4: It It is? 345 00:19:02,560 --> 00:19:04,199 Speaker 6: It's odd, And I think what it comes down to 346 00:19:04,320 --> 00:19:05,919 Speaker 6: for a lot of us that are just ramping up 347 00:19:05,920 --> 00:19:08,639 Speaker 6: our knowledge of this part of the world once again, 348 00:19:08,720 --> 00:19:10,600 Speaker 6: is it all comes down to the Strait of horror 349 00:19:10,600 --> 00:19:15,320 Speaker 6: moves and I just declaring victory and walking away. That 350 00:19:15,359 --> 00:19:17,399 Speaker 6: does nothing to really secure that part of the world. 351 00:19:17,760 --> 00:19:19,040 Speaker 2: Is reasonable, take it. 352 00:19:19,000 --> 00:19:23,240 Speaker 8: Away from Iran, It doesn't take Iran controls a major 353 00:19:23,280 --> 00:19:27,720 Speaker 8: economic choke hold. If you know, among the many pretexts 354 00:19:27,760 --> 00:19:31,719 Speaker 8: given for this war. One one that has appeared is 355 00:19:32,040 --> 00:19:36,080 Speaker 8: kind of eliminating Iran's leverage there. You know, there's some 356 00:19:36,160 --> 00:19:40,160 Speaker 8: reason to imagine that President Trump thinks about the Strait 357 00:19:40,200 --> 00:19:42,640 Speaker 8: of Hormuz, which he's been talking about for forty years, 358 00:19:42,680 --> 00:19:45,760 Speaker 8: by the way, and carg Island in the same way 359 00:19:45,800 --> 00:19:48,520 Speaker 8: that he thinks about the Panama Canal something that it 360 00:19:48,600 --> 00:19:51,399 Speaker 8: is like a toll road for global trade that it 361 00:19:51,480 --> 00:19:56,760 Speaker 8: is unacceptable for anyone to have control of without United 362 00:19:56,800 --> 00:20:00,240 Speaker 8: States as a as a kind of majority shareholder in 363 00:20:00,240 --> 00:20:01,000 Speaker 8: that arrangement. 364 00:20:01,520 --> 00:20:03,639 Speaker 2: Tina, thank you so much. I can't say enough, folks 365 00:20:03,680 --> 00:20:07,679 Speaker 2: about the LinkedIn effort of Fordham Global Foresight. As we 366 00:20:07,720 --> 00:20:10,600 Speaker 2: had way Lee of Blackrock on yesterday. It's just a 367 00:20:10,640 --> 00:20:14,120 Speaker 2: font of brilliance from Tina Fordham and her team out 368 00:20:14,160 --> 00:20:19,440 Speaker 2: at LinkedIn. Tina Fordham, thank you. Stay with us. More 369 00:20:19,560 --> 00:20:22,440 Speaker 2: from Bloomberg Surveillance coming up after this. 370 00:20:29,680 --> 00:20:33,280 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 371 00:20:33,359 --> 00:20:36,480 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 372 00:20:36,600 --> 00:20:40,240 Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or 373 00:20:40,400 --> 00:20:42,000 Speaker 1: watch us live on YouTube. 374 00:20:42,359 --> 00:20:46,760 Speaker 2: Brian Belski with us with Humillus investment strategies, and the 375 00:20:46,800 --> 00:20:50,720 Speaker 2: wonderment of his eight page note densely written, like damn, 376 00:20:50,760 --> 00:20:53,639 Speaker 2: I've got to read every word. Is he this is 377 00:20:53,680 --> 00:20:57,640 Speaker 2: the courage, this is the thinking to stay in the market. 378 00:20:58,080 --> 00:21:00,480 Speaker 2: Is the mood out there? A panic our people quote 379 00:21:00,600 --> 00:21:03,800 Speaker 2: unquote going to cash. 380 00:21:03,960 --> 00:21:06,560 Speaker 9: I think a lot of institutional accounts are kind of 381 00:21:06,560 --> 00:21:09,200 Speaker 9: waiting to see to happen. You know, the majority of 382 00:21:09,480 --> 00:21:12,400 Speaker 9: who we've talked to recently, obviously are a great wealth 383 00:21:12,400 --> 00:21:16,399 Speaker 9: management clients and they've been waiting for an opportunity. In Canada, 384 00:21:16,440 --> 00:21:18,480 Speaker 9: they're still a little bit worried with respect to what's 385 00:21:18,520 --> 00:21:20,200 Speaker 9: happening in the US, and they kind of see this. 386 00:21:20,160 --> 00:21:21,960 Speaker 5: As a replay of last year, so they're. 387 00:21:21,800 --> 00:21:22,919 Speaker 10: A little more emotional. 388 00:21:23,600 --> 00:21:26,240 Speaker 5: But in the US, we're ready to put money to work. 389 00:21:26,280 --> 00:21:27,560 Speaker 5: I think a lot of people. 390 00:21:29,280 --> 00:21:31,960 Speaker 9: Kind of redid their portfolios and re kind of configured 391 00:21:31,960 --> 00:21:33,879 Speaker 9: at the end of the year time, and there's been 392 00:21:33,920 --> 00:21:37,560 Speaker 9: a lot of talk with respect to some tax gains 393 00:21:37,600 --> 00:21:39,399 Speaker 9: taken at the end of the year, So I think 394 00:21:39,480 --> 00:21:41,639 Speaker 9: there's some cash on the sidelines that are ready to go. 395 00:21:41,800 --> 00:21:44,520 Speaker 2: Is Microsoft at a pea twenty two forward like a 396 00:21:44,560 --> 00:21:45,400 Speaker 2: new Microsoft? 397 00:21:46,160 --> 00:21:49,440 Speaker 9: You know what's interesting about Microsoft is that last year 398 00:21:49,480 --> 00:21:51,159 Speaker 9: it was kind of the darling in terms of the 399 00:21:51,200 --> 00:21:54,720 Speaker 9: war chest of cash and in terms of how we 400 00:21:54,800 --> 00:21:58,879 Speaker 9: look at Microsoft and kind of core and large cap portfolios. 401 00:21:59,280 --> 00:22:02,040 Speaker 9: It was tough to continue to be overweight that stock. 402 00:22:02,080 --> 00:22:05,480 Speaker 9: So we're more neutral in that stock where I think 403 00:22:05,520 --> 00:22:08,639 Speaker 9: that the Apples and the Amazons, which actually underperformed the 404 00:22:08,680 --> 00:22:11,480 Speaker 9: Max seven last year, are better. But I think Microsoft 405 00:22:11,480 --> 00:22:14,399 Speaker 9: Oracle Palenteer from a software perspective, We're gonna kind of 406 00:22:14,400 --> 00:22:16,760 Speaker 9: get through this malaise. Let's say, the thing that you 407 00:22:16,760 --> 00:22:18,760 Speaker 9: have to understand is you don't have to own everything, guys. 408 00:22:18,760 --> 00:22:21,080 Speaker 9: You don't have to own everything. And I think sometimes 409 00:22:21,119 --> 00:22:24,320 Speaker 9: the market has been trying to outsmart themselves by trying 410 00:22:24,359 --> 00:22:26,600 Speaker 9: to pick the bottom in some of these SaaS names. 411 00:22:26,640 --> 00:22:28,639 Speaker 2: It's a really important insight there. It goes back to 412 00:22:28,720 --> 00:22:30,600 Speaker 2: Munger where you don't have to look at it. Can 413 00:22:30,640 --> 00:22:34,160 Speaker 2: you hear me buttoning and unbuttoning my Red Sox jacket? Absolutely, 414 00:22:34,200 --> 00:22:36,280 Speaker 2: this is Don's the only one that fit me was 415 00:22:36,359 --> 00:22:39,800 Speaker 2: Don Zimmer's check exactly way back. I'm going to Scott 416 00:22:39,800 --> 00:22:41,840 Speaker 2: for those of you on radio, I'm wisconstant Red Sox 417 00:22:41,880 --> 00:22:45,240 Speaker 2: today and drawing it down for Giants Yankees Paul Sweeney 418 00:22:45,480 --> 00:22:47,679 Speaker 2: in his Yankees jacket with Brian Belts. 419 00:22:47,720 --> 00:22:50,240 Speaker 6: Absolutely, Hey, Brian, what we saw a little bit before 420 00:22:50,400 --> 00:22:52,359 Speaker 6: Iran started was a little bit of rotation in this 421 00:22:52,400 --> 00:22:55,080 Speaker 6: world out of some of the higher multiple tech names 422 00:22:55,080 --> 00:22:57,680 Speaker 6: maybe into some more cyclical name to being small and 423 00:22:57,800 --> 00:23:00,439 Speaker 6: mid cap. Is that a short term tray? Is that 424 00:23:00,520 --> 00:23:02,560 Speaker 6: something that place out in twenty six as well? 425 00:23:02,720 --> 00:23:03,600 Speaker 5: I think it's the real trade. 426 00:23:03,640 --> 00:23:06,600 Speaker 9: When we wrote our year ahead piece in first week 427 00:23:06,640 --> 00:23:08,800 Speaker 9: in January for both the United States and Canada, especially 428 00:23:08,800 --> 00:23:10,320 Speaker 9: in the US, we talked about a broadening out of 429 00:23:10,320 --> 00:23:13,160 Speaker 9: the market. Finally, we also talked about and defined what 430 00:23:13,280 --> 00:23:16,639 Speaker 9: an earnings driven market looks like. Typically and historically the 431 00:23:16,680 --> 00:23:20,280 Speaker 9: beginning stages of cyclical bulls which we saw in twenty three, 432 00:23:20,359 --> 00:23:24,080 Speaker 9: twenty four to twenty five was this momentum multiple driven market. 433 00:23:24,160 --> 00:23:26,320 Speaker 9: We've transitioned to more earnings driven market. Think about the 434 00:23:26,359 --> 00:23:28,600 Speaker 9: earnings growth is really good. So when that happens is 435 00:23:29,040 --> 00:23:33,320 Speaker 9: you see dispersion increasing, meaning stocks trade at different levels 436 00:23:33,600 --> 00:23:37,200 Speaker 9: in different technical type performance. But more importantly, the earning 437 00:23:37,240 --> 00:23:39,359 Speaker 9: side really tried to drive things. So I think investors 438 00:23:39,359 --> 00:23:41,280 Speaker 9: have a hard time dealing with that. And traditionally that's 439 00:23:41,280 --> 00:23:43,239 Speaker 9: the more volatile market. So if you look at an 440 00:23:43,240 --> 00:23:45,879 Speaker 9: earnings driven market relative to a multiple driven market, the 441 00:23:46,000 --> 00:23:48,280 Speaker 9: upside is roughly half. Let's just keep the math simple. 442 00:23:48,480 --> 00:23:52,000 Speaker 9: But it benefits names that have been underperforming, like small cap, 443 00:23:52,080 --> 00:23:56,840 Speaker 9: like financials, like some industrials, and I think that's where 444 00:23:56,840 --> 00:23:58,600 Speaker 9: we want to be longer term. Again, I've said this 445 00:23:58,640 --> 00:24:00,720 Speaker 9: for a while now, and we've been a little early, 446 00:24:00,800 --> 00:24:03,640 Speaker 9: but I think we're right. Ten years from now, we're 447 00:24:03,640 --> 00:24:06,120 Speaker 9: gonna be kicking ourselves if we don't own more small cap. 448 00:24:06,359 --> 00:24:09,679 Speaker 6: Okay, how about the AI trade? And I'm trying to 449 00:24:09,680 --> 00:24:11,680 Speaker 6: think about what's been going on in the market outside 450 00:24:11,680 --> 00:24:14,560 Speaker 6: of Iran, and of course AI trade is evolved. It 451 00:24:14,720 --> 00:24:17,080 Speaker 6: used to be just buy everything you know, and who's 452 00:24:17,119 --> 00:24:19,320 Speaker 6: ever spending more money? That's where you want to be Now. 453 00:24:19,320 --> 00:24:21,240 Speaker 6: The market's trying to be a little bit discerning winners 454 00:24:21,240 --> 00:24:23,600 Speaker 6: and losers. And you mentioned the SaaS stocks took it 455 00:24:23,640 --> 00:24:24,960 Speaker 6: on the chin earlier this year. 456 00:24:25,119 --> 00:24:25,600 Speaker 5: I think about that. 457 00:24:25,600 --> 00:24:27,520 Speaker 9: I think discerning is the great way to think about it. 458 00:24:27,600 --> 00:24:30,320 Speaker 9: So let's use a couple of terms, demand, supply, expenses 459 00:24:30,720 --> 00:24:33,040 Speaker 9: and revenue. I think what's happening is we're trying to 460 00:24:33,560 --> 00:24:36,520 Speaker 9: match what's happened in expenses and revenues or spending spending, 461 00:24:36,560 --> 00:24:39,000 Speaker 9: spending spending, So how much revenue can we derive from that? 462 00:24:39,320 --> 00:24:41,080 Speaker 9: And then in terms of the supply demand, who are 463 00:24:41,080 --> 00:24:42,560 Speaker 9: going to be the winner? So there's been so much 464 00:24:42,840 --> 00:24:45,080 Speaker 9: rhetoric in terms of what platform is going to be 465 00:24:45,119 --> 00:24:47,560 Speaker 9: the best. I still think that you just got to 466 00:24:47,640 --> 00:24:50,520 Speaker 9: kind of keep it simple and think about think about 467 00:24:50,680 --> 00:24:54,800 Speaker 9: here's an Apple, Here's the core of AI is an Apple, 468 00:24:54,920 --> 00:24:57,240 Speaker 9: and the core is in Vidia, So then what else 469 00:24:57,240 --> 00:24:59,320 Speaker 9: do you want to own and be around that? And 470 00:24:59,680 --> 00:25:01,640 Speaker 9: tour three in terms of every kind of theme, whether 471 00:25:01,720 --> 00:25:05,000 Speaker 9: or not software is cybersecurity, but especially with respect to 472 00:25:05,040 --> 00:25:08,240 Speaker 9: how you're the electrification of that, which would be the 473 00:25:08,240 --> 00:25:08,880 Speaker 9: sum how. 474 00:25:08,840 --> 00:25:11,160 Speaker 2: Many you quickly hear how many stocks is a minimum 475 00:25:11,200 --> 00:25:13,119 Speaker 2: portfolio for Brian Belski. 476 00:25:13,040 --> 00:25:15,280 Speaker 9: For us to fill a minimum portfolio to be properly 477 00:25:15,320 --> 00:25:17,639 Speaker 9: diversified in large scap money. We believe, and we've done 478 00:25:17,640 --> 00:25:19,760 Speaker 9: a lot of back testing on this, fifty stocks five 479 00:25:19,880 --> 00:25:22,640 Speaker 9: zero five zero because you can get a highway. 480 00:25:22,359 --> 00:25:24,120 Speaker 2: Of fun fidelity fifty. 481 00:25:24,400 --> 00:25:27,680 Speaker 9: Six five seven percent on the top end in terms 482 00:25:27,720 --> 00:25:29,919 Speaker 9: of a position one percent on the lowan for our 483 00:25:29,960 --> 00:25:32,800 Speaker 9: small MidCap money that we run a humorless it's anywhere 484 00:25:32,800 --> 00:25:35,720 Speaker 9: between sixty and seventy five. And I think going into 485 00:25:35,880 --> 00:25:38,439 Speaker 9: as we progress through this broadening out, you want to 486 00:25:38,440 --> 00:25:39,760 Speaker 9: own more names. 487 00:25:39,680 --> 00:25:42,119 Speaker 5: So you have the opportunity to make all your bets. 488 00:25:42,200 --> 00:25:45,080 Speaker 2: Okay, Brian Belski is all over the country folks in 489 00:25:45,119 --> 00:25:48,920 Speaker 2: this industry of investing away from what we do here. 490 00:25:48,960 --> 00:25:50,480 Speaker 2: I'm not a fan of this, but we're going to 491 00:25:50,520 --> 00:25:53,399 Speaker 2: get his knowledge base. James Diamond on the cover of 492 00:25:53,440 --> 00:25:56,359 Speaker 2: Barons this week. Mary Erda's front and center for JP 493 00:25:56,520 --> 00:26:00,680 Speaker 2: Morgan and they've had huge success with their hedgedat whatever 494 00:26:00,720 --> 00:26:05,320 Speaker 2: it is JPMI, whatever the code is. Brian Belski on 495 00:26:05,720 --> 00:26:10,399 Speaker 2: the modern rage of only SMP hedge it for a 496 00:26:10,440 --> 00:26:14,440 Speaker 2: more stable income and give away the upside. Your thoughts 497 00:26:14,760 --> 00:26:17,000 Speaker 2: on this what we see out there right now? 498 00:26:17,040 --> 00:26:20,640 Speaker 9: Well, and Jamie, we trust one of my great friends 499 00:26:21,440 --> 00:26:23,480 Speaker 9: in the business, Hamilton Render, does a lot of these 500 00:26:23,520 --> 00:26:27,200 Speaker 9: things that worked. That was a great client of mine 501 00:26:27,200 --> 00:26:29,480 Speaker 9: when I was on the institutional side. I think those 502 00:26:29,480 --> 00:26:32,400 Speaker 9: products are important. What we like to think is that 503 00:26:32,440 --> 00:26:37,360 Speaker 9: the passive market has peaked. Active investing own stocks, keep 504 00:26:37,400 --> 00:26:41,360 Speaker 9: it simple, nineteen ninety added the ability to meet Charles Schwab, 505 00:26:41,960 --> 00:26:44,320 Speaker 9: Peter Lynch, and Warren Buffett in the first six months 506 00:26:44,320 --> 00:26:47,440 Speaker 9: of the business at will Ammonio okay, and Warren Buffett said, 507 00:26:47,680 --> 00:26:49,480 Speaker 9: don't buy anyth unless you can reach out and touch it. 508 00:26:49,560 --> 00:26:52,000 Speaker 9: Keep it simple. And I think sometimes we try to 509 00:26:52,000 --> 00:26:53,879 Speaker 9: outsmart ourselves. That's why we got in trouble. I think 510 00:26:53,880 --> 00:26:56,600 Speaker 9: at private equity, Tommy, this time around, we're how. 511 00:26:56,520 --> 00:26:59,440 Speaker 2: Big is the upset in private credit? We run out 512 00:26:59,440 --> 00:26:59,680 Speaker 2: of time? 513 00:27:00,080 --> 00:27:03,639 Speaker 9: Think we see an unwinding there that was ultimately not 514 00:27:03,680 --> 00:27:06,000 Speaker 9: gonna It's not systemic. We've already I think we've already 515 00:27:06,040 --> 00:27:09,320 Speaker 9: established that. But ultimate, that ultimate unwinding is actually gonna 516 00:27:09,320 --> 00:27:12,760 Speaker 9: be positive for publicly traded securities, especially small midcast. 517 00:27:12,880 --> 00:27:16,560 Speaker 2: Is the Twins just a funding place for baseball teams 518 00:27:17,040 --> 00:27:20,560 Speaker 2: before they go to the Dodgers, the Giants in the Yankees? 519 00:27:20,640 --> 00:27:22,800 Speaker 9: The answer is yes, so your socks right, they've been 520 00:27:22,840 --> 00:27:25,040 Speaker 9: after Joe Ryan. They should just take him out of 521 00:27:25,040 --> 00:27:26,800 Speaker 9: his misery to I mean, the Twins are gonna win 522 00:27:26,880 --> 00:27:27,760 Speaker 9: seventy games, they. 523 00:27:27,680 --> 00:27:30,800 Speaker 5: Beat the Socks. The Twins beat the Socks. Yesterday's safeteen 524 00:27:30,840 --> 00:27:31,320 Speaker 5: to six. 525 00:27:31,160 --> 00:27:37,359 Speaker 2: Qui animies it's a beautiful ball part twenty six years, Tommy, twenty. 526 00:27:37,119 --> 00:27:39,359 Speaker 5: Six straight years of season tickets. What did they get me? 527 00:27:40,240 --> 00:27:42,879 Speaker 5: Here's your here's your code to blog into your tickets. Nothing. 528 00:27:43,240 --> 00:27:45,120 Speaker 2: I mean, it's a great divide. 529 00:27:45,359 --> 00:27:46,359 Speaker 5: It's a beautiful ballpark. 530 00:27:46,480 --> 00:27:48,440 Speaker 9: But you know, even the you know the Yankees. You 531 00:27:48,440 --> 00:27:51,320 Speaker 9: dont remember Don Zimmer ended his career with the Yankees. 532 00:27:51,359 --> 00:27:52,520 Speaker 9: So the Jack, you know the Jack. 533 00:27:53,240 --> 00:27:57,919 Speaker 2: It was a great trade. Like Babe, Ruth, you know, Okay, 534 00:27:58,240 --> 00:28:00,640 Speaker 2: this is a problem. Sarah emails, and it is time. 535 00:28:00,680 --> 00:28:04,080 Speaker 2: There's not enough Orioles talk. I was talking to Mindy 536 00:28:04,160 --> 00:28:08,080 Speaker 2: Ripkin yesterday up in the flute for she can't even concentrate. 537 00:28:08,200 --> 00:28:11,760 Speaker 5: She's so pumped. Tomorrow tomorrow, Oh. 538 00:28:11,720 --> 00:28:15,280 Speaker 2: Really must watch. You know they're our favorite team. 539 00:28:15,359 --> 00:28:18,440 Speaker 5: I know, I know they're going to get choice. Give 540 00:28:18,480 --> 00:28:19,880 Speaker 5: me like a twelfth of two game. 541 00:28:20,240 --> 00:28:22,399 Speaker 2: Mister Bloomberg's got a bag of Jesus is in an 542 00:28:22,480 --> 00:28:24,840 Speaker 2: handgoing time. I don't hear enough Orioles talk. 543 00:28:25,000 --> 00:28:27,000 Speaker 5: Yeah, exactly, Brian, thank you so much. 544 00:28:27,240 --> 00:28:28,720 Speaker 2: This is milst thing going. 545 00:28:28,720 --> 00:28:30,600 Speaker 5: Okay for it, it's going amazing. Thank you so much. 546 00:28:30,880 --> 00:28:31,920 Speaker 2: Look and rested. 547 00:28:32,119 --> 00:28:33,280 Speaker 5: Well it's it's Naples. 548 00:28:33,280 --> 00:28:35,600 Speaker 9: This is my this is my lunchtime Walker Tine and 549 00:28:35,720 --> 00:28:36,960 Speaker 9: I process and I listened. 550 00:28:37,000 --> 00:28:38,880 Speaker 5: I listened to Bloomberg Radio on my wah. 551 00:28:40,160 --> 00:28:42,160 Speaker 2: Are you doing? It was a very nice like that 552 00:28:42,800 --> 00:28:45,200 Speaker 2: a lot, I mean, are you squeezing? Like a seventy 553 00:28:45,240 --> 00:28:46,880 Speaker 2: hour work weekended eighty hour? 554 00:28:48,280 --> 00:28:50,440 Speaker 9: You know when you're the chief bottle washer, the chief 555 00:28:50,440 --> 00:28:53,720 Speaker 9: compliance officer, the chief of staff and picking stock kill 556 00:28:53,760 --> 00:28:54,280 Speaker 9: a lot. 557 00:28:54,360 --> 00:28:56,560 Speaker 2: Courage to stay in the market. He owns a high 558 00:28:56,560 --> 00:29:01,480 Speaker 2: ground on that. Brian Belski Stay with us. More from 559 00:29:01,560 --> 00:29:04,240 Speaker 2: Bloomberg Surveillance coming up after this. 560 00:29:11,480 --> 00:29:15,080 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 561 00:29:15,120 --> 00:29:18,280 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 562 00:29:18,400 --> 00:29:21,760 Speaker 1: Apple Karplay and Android Auto with the Bloomberg Business app, 563 00:29:21,960 --> 00:29:23,680 Speaker 1: or watch us live on YouTube. 564 00:29:24,200 --> 00:29:28,240 Speaker 2: Celebrate Franzos to Han just wonderful with his work over 565 00:29:28,280 --> 00:29:32,360 Speaker 2: the decades. Now Chief Investment Strategists Pimo at Capital Markets. 566 00:29:32,400 --> 00:29:35,400 Speaker 2: Did you fly in from the Carolina game last night? 567 00:29:35,600 --> 00:29:37,680 Speaker 2: Were you in the loge bmo. 568 00:29:37,480 --> 00:29:39,840 Speaker 10: As they call it, No, but I did. I did 569 00:29:39,920 --> 00:29:42,040 Speaker 10: watch it. I thank you for remembering. 570 00:29:42,200 --> 00:29:44,520 Speaker 2: Can they can they keep going? I'm watching every game 571 00:29:44,560 --> 00:29:45,160 Speaker 2: and show I'm. 572 00:29:45,000 --> 00:29:47,320 Speaker 10: Love Yeah, this is this is their year. I mean, 573 00:29:47,680 --> 00:29:50,080 Speaker 10: it's a talking because for the rest of the world 574 00:29:50,440 --> 00:29:51,560 Speaker 10: got in Montreal, Canadians. 575 00:29:51,640 --> 00:29:56,120 Speaker 2: The Rangers had nine shots last night. It's magical up 576 00:29:56,120 --> 00:29:58,160 Speaker 2: in Montreal right now, isn't it. Yeah. 577 00:29:58,200 --> 00:30:00,400 Speaker 10: I mean for a team that's been in rebuild mode 578 00:30:00,400 --> 00:30:03,040 Speaker 10: for so long, Yeah, to finally feel like we're getting there. 579 00:30:03,120 --> 00:30:05,920 Speaker 2: Are we rebuilding? With AI? You walked in the studio 580 00:30:06,000 --> 00:30:08,400 Speaker 2: and you said, I want to talk about AI. Your 581 00:30:08,520 --> 00:30:11,680 Speaker 2: synthesis is so odd and wonderful about the way you 582 00:30:11,920 --> 00:30:17,000 Speaker 2: bring economics, finance, investment in synthesize AI out. When the 583 00:30:17,040 --> 00:30:18,840 Speaker 2: Canadians win the Stanley Cup. 584 00:30:20,120 --> 00:30:25,280 Speaker 10: Well, AI, you know, it's a big pushback on our thesis, 585 00:30:25,320 --> 00:30:27,840 Speaker 10: and so you know what I've been was easier by 586 00:30:27,840 --> 00:30:29,840 Speaker 10: the way to pitch this a month ago, to be 587 00:30:29,880 --> 00:30:32,680 Speaker 10: perfectly honest. But you know, if you look at the 588 00:30:32,840 --> 00:30:35,920 Speaker 10: overall thesis, there's a lot of stimulus in the pipeline, 589 00:30:36,360 --> 00:30:38,480 Speaker 10: the type of stimulus that you see when you have 590 00:30:38,520 --> 00:30:41,640 Speaker 10: a recession. The issues We never had a recession, and 591 00:30:41,720 --> 00:30:44,920 Speaker 10: so we don't have a lot of excess capacity in 592 00:30:44,960 --> 00:30:47,719 Speaker 10: the economy. To see this kind of stimulus with a 593 00:30:47,760 --> 00:30:50,960 Speaker 10: fore handle on the unemployment rate, is a recipe for 594 00:30:51,200 --> 00:30:55,280 Speaker 10: inflation that comes back more quickly than we've been accustomed to. 595 00:30:55,880 --> 00:30:58,840 Speaker 10: So I don't think this time around we get goldilocks 596 00:30:59,000 --> 00:31:01,760 Speaker 10: for very long. So the pushback Tom is people say, 597 00:31:01,760 --> 00:31:05,320 Speaker 10: all right, we can't have non inflationary growth because we 598 00:31:05,400 --> 00:31:09,080 Speaker 10: don't have access capacity. Why can't AI play that role 599 00:31:09,320 --> 00:31:14,719 Speaker 10: with productivity? And that sounds logical when you think about it, 600 00:31:14,760 --> 00:31:17,720 Speaker 10: when you dig into the data, you realize that it's 601 00:31:17,760 --> 00:31:21,400 Speaker 10: not feasible in twenty twenty six and so, and the 602 00:31:21,440 --> 00:31:25,080 Speaker 10: reason for this is that AI is really for now 603 00:31:25,160 --> 00:31:29,200 Speaker 10: a phenomenon of the very large companies. Small business America 604 00:31:29,280 --> 00:31:33,080 Speaker 10: has not really embraced it, and small business America creates 605 00:31:33,360 --> 00:31:37,160 Speaker 10: three quarters of jobs in the US. And so until 606 00:31:37,600 --> 00:31:40,240 Speaker 10: you know this is adopted broadly, I don't think we're 607 00:31:40,240 --> 00:31:42,320 Speaker 10: going to see the employment phenomenon that a lot of 608 00:31:42,320 --> 00:31:44,400 Speaker 10: people are looking for. 609 00:31:45,360 --> 00:31:47,760 Speaker 6: So are you calling for higher inflation here and then 610 00:31:47,760 --> 00:31:48,800 Speaker 6: your intiate term? 611 00:31:48,920 --> 00:31:49,160 Speaker 4: Yeah? 612 00:31:49,200 --> 00:31:51,120 Speaker 10: And this is before you know the events in the 613 00:31:51,120 --> 00:31:51,720 Speaker 10: Middle East? 614 00:31:52,000 --> 00:31:54,280 Speaker 6: So how does that impact kind of where you want 615 00:31:54,320 --> 00:31:56,440 Speaker 6: to allocate capital here? What are the conversations you're having 616 00:31:56,480 --> 00:31:57,000 Speaker 6: with your quinity? 617 00:31:57,040 --> 00:31:59,960 Speaker 10: Yeah, So it's not easy because to me, it is 618 00:32:00,160 --> 00:32:04,520 Speaker 10: a pretty constructive backdrop. But really for cyclical assets, the 619 00:32:04,600 --> 00:32:06,600 Speaker 10: issue is that there's not a whole lot of that 620 00:32:06,720 --> 00:32:08,719 Speaker 10: left in the S and P nowadays. You know, the 621 00:32:08,760 --> 00:32:11,520 Speaker 10: S and P is now a growthier benchmark. You know, 622 00:32:11,520 --> 00:32:14,040 Speaker 10: on growth stocks are kind of allergic to higher inflation, 623 00:32:14,480 --> 00:32:17,480 Speaker 10: and so when you have this amount of stimulus, you know, 624 00:32:17,520 --> 00:32:19,840 Speaker 10: it is the tie that lifts all boats for earnings. 625 00:32:19,960 --> 00:32:22,680 Speaker 10: But I think when it comes to growth, their pees 626 00:32:22,720 --> 00:32:24,640 Speaker 10: are going to be you know, they're going to see 627 00:32:24,640 --> 00:32:26,760 Speaker 10: a bit of a headwind in the form of higher 628 00:32:26,760 --> 00:32:27,680 Speaker 10: inflation later. 629 00:32:27,520 --> 00:32:27,840 Speaker 2: In the year. 630 00:32:27,840 --> 00:32:29,960 Speaker 6: It doesn't sound like you're very constructive on the equity. 631 00:32:29,640 --> 00:32:33,560 Speaker 10: Markets I am. I mean, if you gave me the 632 00:32:33,600 --> 00:32:36,720 Speaker 10: S and p's version of twenty years ago, would be 633 00:32:37,040 --> 00:32:39,440 Speaker 10: jumping up and down right, you know, because that was 634 00:32:39,680 --> 00:32:42,400 Speaker 10: seventy nine percent of your earnings came from cyclicals. When 635 00:32:42,400 --> 00:32:44,600 Speaker 10: you're going into the GFC that was a very pro 636 00:32:44,680 --> 00:32:48,440 Speaker 10: cyclical index. It's just a different story nowadays. And so 637 00:32:48,560 --> 00:32:50,960 Speaker 10: I would say my comments, I have more enthusiasm for 638 00:32:51,480 --> 00:32:53,720 Speaker 10: the Russell two thousand index or the S and P 639 00:32:53,800 --> 00:32:56,240 Speaker 10: six hundred, you know, the smaller indices that just have 640 00:32:56,440 --> 00:32:58,040 Speaker 10: more cyclicals in them. 641 00:32:58,240 --> 00:33:02,080 Speaker 2: From late twenty twenty five may be Autumnal twenty twenty five. 642 00:33:02,680 --> 00:33:06,960 Speaker 2: Microsoft's enjoying a draw down of thirty two percent Max 643 00:33:07,080 --> 00:33:10,200 Speaker 2: seven in particularly these selected hyper scale it's whatever you 644 00:33:10,200 --> 00:33:12,760 Speaker 2: want to call them. Is that enough of a pullback 645 00:33:12,800 --> 00:33:14,800 Speaker 2: for transport? How to load the boat? 646 00:33:16,040 --> 00:33:16,160 Speaker 6: Uh? 647 00:33:16,440 --> 00:33:19,120 Speaker 10: Not yet? I think you know the issue is that 648 00:33:20,080 --> 00:33:22,520 Speaker 10: And this is part of the problem in pitching this story, 649 00:33:22,600 --> 00:33:24,320 Speaker 10: is that there's a real love affair with the MAC 650 00:33:24,400 --> 00:33:27,800 Speaker 10: seven because it's been so profitable for so long, and 651 00:33:27,840 --> 00:33:30,760 Speaker 10: so when you're telling people there's a lot of opportunities 652 00:33:30,760 --> 00:33:33,800 Speaker 10: in the marketplace, it's just in an unusual spot that 653 00:33:33,840 --> 00:33:38,080 Speaker 10: you haven't looked at in a while. And so to me, Tom, 654 00:33:38,120 --> 00:33:41,680 Speaker 10: the ideal time to load up on big growth stocks 655 00:33:41,720 --> 00:33:43,480 Speaker 10: like that is when we're going to be at the 656 00:33:43,520 --> 00:33:46,680 Speaker 10: top of the cycle. And I don't think that's the 657 00:33:46,720 --> 00:33:47,960 Speaker 10: story of twenty twenty six. 658 00:33:48,680 --> 00:33:53,000 Speaker 6: We saw a rotation beginning, I guess late last year 659 00:33:53,320 --> 00:33:56,480 Speaker 6: out of some of these tech names growth your names, 660 00:33:56,560 --> 00:33:58,520 Speaker 6: hire multiple names into Maybe it's more cyclical. 661 00:33:58,560 --> 00:33:58,920 Speaker 2: Correct. 662 00:33:59,200 --> 00:34:02,920 Speaker 6: Is that a investible trend in the next twelve to 663 00:34:02,920 --> 00:34:05,240 Speaker 6: eighteen months or is that a trade Because we saw 664 00:34:05,280 --> 00:34:07,240 Speaker 6: a little bit of a pulling back on that as 665 00:34:07,240 --> 00:34:07,800 Speaker 6: we kind of got. 666 00:34:08,280 --> 00:34:08,560 Speaker 2: Yeah. 667 00:34:09,120 --> 00:34:11,600 Speaker 10: No, I think it's the beginning. It's the early innings 668 00:34:11,640 --> 00:34:13,879 Speaker 10: of a recovery. You know, if you didn't know about 669 00:34:13,880 --> 00:34:16,479 Speaker 10: all the craziness going on in the world and you're 670 00:34:16,640 --> 00:34:20,000 Speaker 10: only looking at the market's behavior, you know, you've seen 671 00:34:20,040 --> 00:34:23,319 Speaker 10: the FED cut rates. Then we had fiscal stimulus and 672 00:34:23,480 --> 00:34:26,920 Speaker 10: leading indicators started to pick up, and alongside that we 673 00:34:26,960 --> 00:34:30,800 Speaker 10: saw change in leadership towards the more pro cyclical segments. 674 00:34:30,840 --> 00:34:33,520 Speaker 10: I want to say that starts like late summer, early fall, 675 00:34:34,000 --> 00:34:37,000 Speaker 10: pretty normal stuff, and so you know, you tell me 676 00:34:37,160 --> 00:34:39,640 Speaker 10: when the cycle tops out, and then we can talk 677 00:34:39,680 --> 00:34:42,600 Speaker 10: about when it will be time to revisit the growth 678 00:34:42,600 --> 00:34:43,600 Speaker 10: stock story again. 679 00:34:43,719 --> 00:34:46,719 Speaker 2: Franspha turn with us with the Bank of Montreal. I'm sorry, 680 00:34:46,760 --> 00:34:49,359 Speaker 2: I'm old fashion. It will always be the bank. It's 681 00:34:49,400 --> 00:34:52,959 Speaker 2: so spiritual where their offices are across from this most 682 00:34:53,000 --> 00:34:56,640 Speaker 2: beautiful church in North America. Early in the Western atmosphere, 683 00:34:56,680 --> 00:35:02,200 Speaker 2: just extraordinary female capital markets in you guys own with 684 00:35:02,280 --> 00:35:07,960 Speaker 2: your acquisitions to Minneapolis, the study of the Great Lakes. Paul, 685 00:35:07,960 --> 00:35:11,000 Speaker 2: when did we last mention tariffs? Yeah, exactly, I mean 686 00:35:11,040 --> 00:35:14,520 Speaker 2: I think it was yes, expos were going down. Frank Trahan. 687 00:35:14,640 --> 00:35:18,480 Speaker 2: Here a tariff update in the impact on the Canadian 688 00:35:18,520 --> 00:35:21,120 Speaker 2: Great Lakes, the Gordon Lightfoot territory. 689 00:35:22,680 --> 00:35:23,880 Speaker 10: You want to know what the impact is on the 690 00:35:24,160 --> 00:35:25,120 Speaker 10: See impact. 691 00:35:24,760 --> 00:35:27,879 Speaker 2: From the Bank of Montreal on tariffs. We haven't talked 692 00:35:27,920 --> 00:35:29,319 Speaker 2: about it in three months. 693 00:35:30,200 --> 00:35:32,440 Speaker 10: Of tariffs on inflation more broadly, and. 694 00:35:32,520 --> 00:35:36,080 Speaker 2: Inflation more broadly, windsor ow you know, autos and you 695 00:35:36,120 --> 00:35:38,560 Speaker 2: know the going over the two bridges which cars are 696 00:35:38,640 --> 00:35:39,960 Speaker 2: doing with Trump about. 697 00:35:39,840 --> 00:35:43,640 Speaker 10: And so it's uh, look, it's uh. I think uh 698 00:35:43,800 --> 00:35:47,600 Speaker 10: prime mister Carney sees it as it's intended. This is 699 00:35:47,640 --> 00:35:51,440 Speaker 10: a structural change in how we do business, and so 700 00:35:51,840 --> 00:35:53,719 Speaker 10: you know, I don't think it's unusual to think that 701 00:35:53,719 --> 00:35:56,600 Speaker 10: there's going to be a little friction in negotiations. To 702 00:35:56,640 --> 00:36:01,920 Speaker 10: be honest. You know, economists of my generation aren't fans 703 00:36:01,960 --> 00:36:05,200 Speaker 10: of tariffs because they're inflationary. And the reality is our 704 00:36:05,239 --> 00:36:08,319 Speaker 10: economy is consumption based. Nowadays, sixty eight percent of our 705 00:36:08,360 --> 00:36:12,160 Speaker 10: GDP comes from consumption, and inflation is like a variable 706 00:36:12,200 --> 00:36:15,400 Speaker 10: tax rate, if you will, And so you know, but 707 00:36:15,480 --> 00:36:16,839 Speaker 10: it is the policy we're dealing with. 708 00:36:17,840 --> 00:36:19,839 Speaker 6: One of the themes in twenty twenty five that worked out 709 00:36:19,920 --> 00:36:23,280 Speaker 6: very well is as well as a US equity markets 710 00:36:23,320 --> 00:36:24,799 Speaker 6: did the rest of the world. A lot of parts 711 00:36:24,840 --> 00:36:26,799 Speaker 6: of the resta world did really well, and part due 712 00:36:26,840 --> 00:36:30,440 Speaker 6: to the falling dollar, but other drivers as well. How 713 00:36:30,480 --> 00:36:33,680 Speaker 6: do you think about the US or North America vice 714 00:36:33,680 --> 00:36:34,600 Speaker 6: to be the rest of the world here. 715 00:36:34,680 --> 00:36:35,239 Speaker 5: Yeah, so. 716 00:36:36,800 --> 00:36:40,120 Speaker 10: You know, we've had very US centric comments here. But 717 00:36:40,160 --> 00:36:41,960 Speaker 10: the reality is the story I just told you is 718 00:36:41,960 --> 00:36:43,920 Speaker 10: the story of the world. Eighty nine percent of the 719 00:36:43,920 --> 00:36:47,840 Speaker 10: world's GDP is in countries that have monetary stimulus in 720 00:36:47,880 --> 00:36:51,239 Speaker 10: the pipeline. There's only a few large economies that have 721 00:36:51,520 --> 00:36:54,719 Speaker 10: raised rates, so it really is a global story. Up 722 00:36:54,800 --> 00:36:59,080 Speaker 10: until the events in Iran, most equity markets are outpacing 723 00:36:59,400 --> 00:37:02,400 Speaker 10: US equity, which is what you see in a global 724 00:37:02,920 --> 00:37:06,560 Speaker 10: in a global recovery. US equities have been really resilient 725 00:37:06,880 --> 00:37:10,200 Speaker 10: in the last month because we're a large oil producer 726 00:37:10,400 --> 00:37:14,720 Speaker 10: that insulates us to a certain extent, unlike the countries 727 00:37:14,760 --> 00:37:18,319 Speaker 10: that import, you know, much of their energy needs. We 728 00:37:18,360 --> 00:37:20,960 Speaker 10: have a lot of stimulus in the pipeline right that 729 00:37:21,040 --> 00:37:24,560 Speaker 10: also helps insulate us. Our earnings were growing before all 730 00:37:24,600 --> 00:37:28,680 Speaker 10: of this, and our stock market, our main benchmark, the 731 00:37:28,800 --> 00:37:31,680 Speaker 10: S and P five hundred, is very growthy and those 732 00:37:31,680 --> 00:37:34,440 Speaker 10: are stocks that tend to do well when the economic 733 00:37:34,440 --> 00:37:35,600 Speaker 10: outlook gets all murkier. 734 00:37:35,640 --> 00:37:38,400 Speaker 2: If you will, what's the energy component of the standard 735 00:37:38,480 --> 00:37:41,000 Speaker 2: and oh it's a single dish. 736 00:37:41,040 --> 00:37:42,880 Speaker 10: Oh yeah, single digits at least like six percent? 737 00:37:43,120 --> 00:37:46,680 Speaker 2: Should is an enormative basis. Does that expand over a decade? 738 00:37:47,680 --> 00:37:48,359 Speaker 10: I think it will. 739 00:37:48,440 --> 00:37:48,680 Speaker 5: Yes. 740 00:37:49,800 --> 00:37:53,080 Speaker 10: You know, it's shrunk dramatically largely. You know, it's been 741 00:37:53,200 --> 00:37:55,560 Speaker 10: squeezed out by what's taking place in technology. 742 00:37:56,400 --> 00:37:58,439 Speaker 2: There's so and I've got a distraction here. We're gonna 743 00:37:58,480 --> 00:38:00,279 Speaker 2: have to go to in a moment here off of 744 00:38:00,520 --> 00:38:04,800 Speaker 2: Dubai's the Bloomberg desk in Dubai. But first of Johan, 745 00:38:05,400 --> 00:38:09,640 Speaker 2: the earning season is upon us. Can you even model 746 00:38:10,360 --> 00:38:14,600 Speaker 2: double digit earnings growth? I guess before the war that's 747 00:38:14,640 --> 00:38:15,399 Speaker 2: what we're going to see. 748 00:38:15,680 --> 00:38:16,160 Speaker 5: Before the war. 749 00:38:16,239 --> 00:38:19,719 Speaker 10: Yeah, I think you can absolutely Again, when you have 750 00:38:19,800 --> 00:38:22,839 Speaker 10: the amount of stimulus that you get typically when you 751 00:38:22,880 --> 00:38:27,400 Speaker 10: have a recessionary backdrop, without one, our earnings were still growing. 752 00:38:28,080 --> 00:38:31,440 Speaker 10: I think you can get the double digit earnings territory. 753 00:38:31,640 --> 00:38:34,240 Speaker 6: How much credit risk are you taking in the fixing 754 00:38:34,280 --> 00:38:35,440 Speaker 6: come market these days? 755 00:38:36,680 --> 00:38:38,879 Speaker 10: I want to say that I'm a little bit less 756 00:38:38,920 --> 00:38:41,360 Speaker 10: concerned than the headlines when it comes to that. You know, 757 00:38:41,400 --> 00:38:44,720 Speaker 10: we're in this we're in this transition period right where 758 00:38:45,280 --> 00:38:48,160 Speaker 10: we have stimulus. We're starting to see it in leading 759 00:38:48,200 --> 00:38:51,400 Speaker 10: indicators of the economy. You know, all the pmis basically 760 00:38:51,480 --> 00:38:54,319 Speaker 10: have these smile patterns that start late last year, as 761 00:38:54,320 --> 00:38:56,839 Speaker 10: you pointed out a little earlier, but we haven't seen 762 00:38:56,880 --> 00:39:01,160 Speaker 10: it in the economic data itself, in retail sales, industrial production, 763 00:39:01,719 --> 00:39:04,759 Speaker 10: that sort of stuff, and that's usually when the earnings 764 00:39:04,920 --> 00:39:07,920 Speaker 10: really kick in the gear. So it's really rare that 765 00:39:08,040 --> 00:39:12,080 Speaker 10: something breaks when you're in recovery mode. You know, recovery 766 00:39:12,160 --> 00:39:14,799 Speaker 10: tends to patch a lot of things, if you will. 767 00:39:15,120 --> 00:39:16,920 Speaker 10: It's more on the other side of this that I 768 00:39:16,920 --> 00:39:19,680 Speaker 10: think you'll want to be concerned, meaning once we have 769 00:39:19,760 --> 00:39:21,839 Speaker 10: tightening and we have a slowdown in the pipeline, which 770 00:39:21,880 --> 00:39:22,959 Speaker 10: is probably a couple of years away. 771 00:39:23,200 --> 00:39:26,120 Speaker 2: TRANSPA, thank you so much. Congratulations on the new effort 772 00:39:26,160 --> 00:39:27,120 Speaker 2: at Female Capital. 773 00:39:27,320 --> 00:39:32,120 Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify, 774 00:39:32,239 --> 00:39:36,040 Speaker 1: and anywhere else you get your podcasts. Listen live each 775 00:39:36,080 --> 00:39:39,880 Speaker 1: weekday seven to ten am Eastern on Bloomberg dot Com, 776 00:39:40,040 --> 00:39:43,840 Speaker 1: the iHeartRadio app, Tune In, and the Bloomberg Business app. 777 00:39:44,160 --> 00:39:47,240 Speaker 1: You can also watch US live every weekday on YouTube 778 00:39:47,560 --> 00:39:49,560 Speaker 1: and always on the Bloomberg terminal