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Speaker 2: Julian Emmanuel starts us strowing this morning single best paragraph
Speaker 2: I've seen on innovation, bullmarkets and draw down quote.
Speaker 3: Don't fear a bullmarket draw down. It's normal. It's not
Speaker 3: a correction. Even it's sort of like a video was
Speaker 3: down four days in a row. How do you respond
Speaker 3: to that?
Speaker 2: As an investor not as sophisticated as Julian Emmanuel.
Speaker 3: You have to think long term.
Speaker 4: And again you hit it a few moments ago, people
Speaker 4: up in the snack court getting teary eyed because they're
Speaker 4: sending their kids.
Speaker 3: Back to school.
Speaker 4: September never fails to disappoint the bulls. There's always always
Speaker 4: a time, and it started that way yesterday. And from
Speaker 4: our point of view, none of the elements that end
Speaker 4: bull markets are present. And so you know, even if
Speaker 4: you look back at all the great bubbles nineteen ninety nine,
Speaker 4: for instance, you had four discrete ten percent plus drawdowns
Speaker 4: in a nine month period where the Nasdaq rowse over
Speaker 4: one hundred percent.
Speaker 3: So what are we doing here?
Speaker 5: Are we sticking with the big tech names, Julian, or
Speaker 5: are we trying to find some value outside of what
Speaker 5: has worked so well for so long.
Speaker 4: So our view into twenty twenty six is that big
Speaker 4: tech will continue to lead. This is an AI driven
Speaker 4: bull market, Okay, but again Stomaching that volatility isn't necessarily
Speaker 4: for everyone. And frankly, what we're trying to do is
Speaker 4: sort of isolate the people that would prefer to have
Speaker 4: an element of hedging in the portfolio, because quite honestly,
Speaker 4: if you sort of transfer a little bit of risk,
Speaker 4: it enables you to buy the dip that's inevitable. So
Speaker 4: for us, that's low evaluation stocks and a little bit
Speaker 4: of a defensive tilt.
Speaker 2: Can you go into La Techdor downtown the steakhouse Daniel
Speaker 2: Blue Steakhouse in the place the place falls quiet when
Speaker 2: Juliana Manuart walks in because you write the single best
Speaker 2: earning summary every day of the earning season. Nobody's talking
Speaker 2: about quarter ending September thirty. How do you and Ed
Speaker 2: Hyman frame out revenue growth off nominal.
Speaker 3: GDP and the earning season it begins October fourteenth.
Speaker 4: Well, it's it isn't going to be as strong as
Speaker 4: these last couple because it's.
Speaker 6: Just not I just said that last time I got
Speaker 6: it wrong, and well no, no, actually actually the person
Speaker 6: that concox our surprise guys in disease actually got it right.
Speaker 4: Hats off to my colleague Stan Schipley for that. But frankly,
Speaker 4: what it says in general is there's more to all
Speaker 4: of this than just the bump from inflation. There is
Speaker 4: organic growth going on across business, and frankly you're seeing it,
Speaker 4: you know, really broad based, given the fact that what's
Speaker 4: different about this bull market as opposed to the Internet
Speaker 4: in the nineteen nineties is you're seeing the vast majority
Speaker 4: of stocks advancing together. Tech is outperforming, but you're seeing
Speaker 4: them advance together.
Speaker 5: What do you think we're going to get from this
Speaker 5: Federal Reserve? What does a market need from the Fed?
Speaker 5: Does a market need a big easing kind of play
Speaker 5: over the next twelve months or.
Speaker 4: Not the market expects seizing. Certainly, the political will seems
Speaker 4: to be pointing towards more easing rather than less. I
Speaker 4: would say that if you look at the last couple
Speaker 4: of years, provided that the direction of travel in terms
Speaker 4: of the economy is an expected trough in BROW in
Speaker 4: the fourth quarter, and then you get gradually higher growth.
Speaker 4: We don't necessarily need that degree of easing, but we
Speaker 4: certainly do require a cut in September.
Speaker 2: How do you respond to the idea that retail has
Speaker 2: a wall of money, they have pension money. Eric Belchuna says,
Speaker 2: it's all going into ETFs almost is an immovable force,
Speaker 2: like an aircraft carrier going through the water.
Speaker 3: How does that change guessing the market?
Speaker 4: Well, Jack Bogel had been talking about this for twenty
Speaker 4: thirty years previously, and what it actually does at the margin,
Speaker 4: because there's so much money going into ETFs, is that
Speaker 4: it gives you more of an opportunity to isolate the
Speaker 4: winners and the losers because there are mispricings at the
Speaker 4: individual stock level, and we've seen that throughout this bull market,
Speaker 4: because correlations among stocks are at some of the lowest
Speaker 4: levels they've been in a generation.
Speaker 5: When you go talk to your institutional investor clients joining
Speaker 5: around the world, what do they want to talk about?
Speaker 5: What's the question they really hit you with the most.
Speaker 4: It's certainly all surrounding AI. You know, yeah, surprise, surprise,
Speaker 4: and then the other surprise is valuations. Look, it's an
Speaker 4: uncomfortable time if you're sensitive to valuations, and generally we are,
Speaker 4: but this is an environment that all the fundamental underlying
Speaker 4: trends support, you know, persist didn't higher valuation.
Speaker 2: One final question, way Lee from Blackrock, So she's gonna
Speaker 2: leave if if you don't answer this?
Speaker 3: Where's Dheimen on the American economy? Right now?
Speaker 4: We're troughing, and I go back to April when the
Speaker 4: entire world thought we were going.
Speaker 3: To have her Asuay Wally didn't.
Speaker 4: She was long well evercore is I certainly did not,
Speaker 4: and we don't see it either. And we also see
Speaker 4: inflation peaking in the fourth quarter and gently falling over valuable.
Speaker 3: Julian Emmanuel, thank you so much for getting us as
Speaker 3: started to stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch US Live
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Speaker 2: To Juliana Manuel the Way, lead global chief investment strategist
Speaker 2: at Blackrock well Waitalie. We can do like a two
Speaker 2: hour conversation here, but let me just dovetail it over
Speaker 2: to the bond. As to me, it still reads idiosyncratic
Speaker 2: story by story.
Speaker 3: Versus a large global bond sell off. Do I have
Speaker 3: that right?
Speaker 7: There is a fundamental theme underpinning this bond yield reprising
Speaker 7: and this is to do with Tim Premier needing to
Speaker 7: reprise to reflect the deeper fiscal trajectory and the broadly
Speaker 7: still persistent inflationary pressure. Now there is a country specific
Speaker 7: flavor to the individual country bond market. But for the
Speaker 7: reasons that I just laid out, we have long held
Speaker 7: the view that long dated bond yields needs to reprice higher.
Speaker 8: They never reprise gradually.
Speaker 7: They always reprise suddenly, which is where we are right now.
Speaker 3: That's very suddenly.
Speaker 2: Really, what does it mean when out past ten years
Speaker 2: we reprice?
Speaker 3: What does it mean for the shorter term paper that
Speaker 3: most of our listeners and viewers are in.
Speaker 7: So, Thomas, you know, we have had the view of
Speaker 7: the curve needing to steepen. So in part there is
Speaker 7: a underweight to the long end of the curve, but
Speaker 7: there is also a preference, an implicit overweight to the
Speaker 7: front end of the curve, and so far this year
Speaker 7: we have seen significant steepening, but more relative to the
Speaker 7: very long end, so on poking about thirty year rather
Speaker 7: than ten years. But what has also happened is that
Speaker 7: the front end of the curve actually priced in more raycards,
Speaker 7: especially kind of going out to the end of next year.
Speaker 7: So that is further supporting this deepening view, meaning that
Speaker 7: they actually played out better than we expect. We were
Speaker 7: expecting to just collect coupon from the front end of
Speaker 7: the curve, and we're also getting capital appreciation because of
Speaker 7: the rape repricing rape path repricing, so that's done really
Speaker 7: well and almost almost too well. We still have the
Speaker 7: steepening view, but because of the very significant steepening that
Speaker 7: we have already seen relative especially kind of all the
Speaker 7: way out of thirty years, I think that view is
Speaker 7: a lower connection at this point.
Speaker 5: Wait, we saw early this year when there's all the
Speaker 5: concern about some of the tariff policies, a mi A
Speaker 5: shift and asset allocation. Outside of the US, the rest
Speaker 5: of the world, including European equities and so on.
Speaker 8: How do you see that these days?
Speaker 5: How do you think about geographic allocation of capital?
Speaker 7: I would say from a part of consideration alone, that
Speaker 7: does not immediately translate to international markets over the US
Speaker 7: market because it has global read across, and international market
Speaker 7: have also come under pressure because of tariff read through,
Speaker 7: and we think about kind of the dynamics of negotiations.
Speaker 7: It does not automatically mean that tariffs because it's mostly
Speaker 7: uncertainty coming from the US. It needs to be negative
Speaker 7: for US and more positive for international market.
Speaker 8: What's happened so far this year in.
Speaker 7: Terms of the our performance of international market, specifically Europe
Speaker 7: and may be parts of emergent market relative to the US,
Speaker 7: has everything to do with a weaker dollar now. A
Speaker 7: weaker dollar now close to ten percent down on the year,
Speaker 7: has everything to do with number one cash path has
Speaker 7: reprised the lower and number two term premier has reprised higher,
Speaker 7: and the combination of both of those things would lead
Speaker 7: to a weaker dollar, which we have had, and that
Speaker 7: has meant international markets are looking on a relative basis better.
Speaker 7: But the bigger fundamental picture remains when we look at earnings,
Speaker 7: it's still mostly US markets that are driving meaningful earnings growth,
Speaker 7: and within US is still around the ecosystem of technology
Speaker 7: AI tech plus international markets are really struggling to grow earnings.
Speaker 7: The emerging markets are doing better, but there's a translation effact.
Speaker 2: Well, in one final question, the United Kingdom is an
Speaker 2: ungodly mess. We're going to be governors Marcus Ashworth folks
Speaker 2: out with a brilliant essay today.
Speaker 3: We hope to get them on tomorrow.
Speaker 2: Walley, how does that work out? I mean with Liz Trust,
Speaker 2: it was a true crisis. Are we like a list
Speaker 2: trust moment? Or is this different with the Chancellor of
Speaker 2: the Exchequer?
Speaker 7: Well, UK seems specific, but the challenge that they face
Speaker 7: is not specific to the UK. UK is perhaps more
Speaker 7: emblematic and more pronounced. But the bigger picture is this
Speaker 7: is a tougher trade off environment facing the government and
Speaker 7: facing central banks. The government is facing a taugher trade
Speaker 7: off between fiscal discipline and also the need to spend
Speaker 7: more to boost growth, and a central bank is facing
Speaker 7: a tafa trade off between supporting growth and managing price
Speaker 7: stability and inflation. So in this world shaped by a
Speaker 7: supply constraint because of mega forces, We've talked a lot
Speaker 7: about them. Tafer tradeoff is really characterizing the UK in particular,
Speaker 7: but across the major economies.
Speaker 3: Too. Short of visit, Whaley would love to get you
Speaker 3: in the studio here when you can again. Wally is
Speaker 3: with Blackrock. Stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or
Speaker 1: watch us live on.
Speaker 2: YouTube with us with City Group, head of Emerging Market Economics,
Speaker 2: Chief Asia Economists with a huge platform for the International Bank.
Speaker 2: You're at the University of Philippines. You're flying to Logan.
Speaker 2: Good morning, your first day at Harvard. What was it
Speaker 2: like your first day at Harvard in their PhD program?
Speaker 9: Well, this is back in the mid nineties. Completely intimidated.
Speaker 9: But hey, I'm a product of globalization. I mean, here's
Speaker 9: someone who came into Philippines, had nothing and it was
Speaker 9: a great experience.
Speaker 3: Who was your advisors at Harvard?
Speaker 8: So Martin, Marty Felsen, you're the privilege of Martin.
Speaker 9: Absolutely and David Cutler and you know other professor, fantastic professor.
Speaker 3: That's a good way to migrate to the fiscal debate.
Speaker 2: He got a little bit of that with Marty Feltsiegin folks,
Speaker 2: he was Professor Felsain was a huge supporter of what
Speaker 2: I've done for years. How messed up is it? Or
Speaker 2: is it idiosyncratic right now? Where the Philippines say we'll
Speaker 2: do well in Japan's killing over.
Speaker 9: No, it's really interesting the divergence we're seeing between emerging
Speaker 9: markets and developed economies. And I guess that's probably symptomatic
Speaker 9: of the fact that so many emerging market countries have
Speaker 9: gone through repeated bouts.
Speaker 8: Of crisis in the past.
Speaker 9: So in a way they've learned to kind of be
Speaker 9: They've been disciplined by the market to keep their fiscal indexes.
Speaker 8: Yes, but you look at us. You know, I'm an
Speaker 8: exorbitant privilege.
Speaker 9: So if you've gotten away with a lot of things,
Speaker 9: you know, it takes a lot politically, it becomes very
Speaker 9: difficult to actually self correct. So it is interesting to
Speaker 9: see some of these divergences happening. But of course, you know,
Speaker 9: we are still getting in. I mean, a lot of
Speaker 9: the sell off we're seeing in developed markets obviously seem
Speaker 9: to impact a lot more what's happening in DM markets
Speaker 9: for a lot of adiosyncratic reasons. And then we'll see
Speaker 9: to what extent parts of emerging markets can be relatively
Speaker 9: more insulated.
Speaker 3: You're based in Hong Kong. Yes, you're coming here to
Speaker 3: New York.
Speaker 5: You're meeting institutional investor clients. What's your message today that Asia?
Speaker 9: Look, I think the message is we are slowing down.
Speaker 9: I mean, we've had a lot of positive surprises in
Speaker 9: second quarter GDP growth, but I think there's really a
Speaker 9: risk going in the second half with the reversal of
Speaker 9: the export payback effects because a lot of these tariffs
Speaker 9: kick in belatedly, and then all this uncertainty is going
Speaker 9: to have an impact on capets, and capex is a
Speaker 9: very trade intensive activity. So overall, I mean, if Asia
Speaker 9: hasn't really had much inflation, I mean, even before all
Speaker 9: of this, we've had very benign core inflationary pressures, and
Speaker 9: so I really think there's not a lot of hurdles
Speaker 9: for central banks to continue to be relatively you know,
Speaker 9: dubbish and benign. And that's kind of the the macro
Speaker 9: theme is really more of a slowdown theme. But having
Speaker 9: said that, despite the slowdown, we can still have some
Speaker 9: kind of disconnect between macro fundamentals and financial markets.
Speaker 8: Look, what's happening to Chinese equities.
Speaker 3: So.
Speaker 5: How are the terrors playing out across Asia?
Speaker 3: Rit large?
Speaker 9: No, So it's really kind of interesting because at the
Speaker 9: start of the year, you know, Trump campaign sixty percent
Speaker 9: tariff on China and ten percent on everyone else, and
Speaker 9: there was a lot of hope that there will be
Speaker 9: a capex supply chain move to other parts of Asia,
Speaker 9: like Asion. But if anything, what's happened is China's net
Speaker 9: export engine has actually been stronger than expected, and the
Speaker 9: tiref differential is narrower than expected. And then when you
Speaker 9: factor in this shipment levee, it even complicates things. So
Speaker 9: in a way, this rebalancing is kind of not really happening.
Speaker 9: And so I think, you know, you know, I mean,
Speaker 9: obviously it's still a challenge. I do think we're not
Speaker 9: seeing it fully into data because of this front loading,
Speaker 9: but we are starting to see parts of Southeast Asia
Speaker 9: really see a slow down in exports, like Thailand, Malaysia, Singapore,
Speaker 9: and I think this kind of excess deflationary pressure, excess
Speaker 9: supply out of China impacting manufactured goods is a challenge,
Speaker 9: so overlay.
Speaker 3: A dollar call here.
Speaker 2: I don't want you to do effect strategy for City group,
Speaker 2: but to me, the heart of the matter is the
Speaker 2: release valve of the system, and a given structured trilemma
Speaker 2: is currency movement.
Speaker 3: How does the steam out of the pressure cooker in
Speaker 3: the dollar work out in the eighteen months forward?
Speaker 9: Okay, well, our view is that at least in the
Speaker 9: next you know, until by the end of the year,
Speaker 9: we are still expecting dollar weakness. And part of that
Speaker 9: is really on the view that we're expecting the FED
Speaker 9: to cut and we're you know, we're expecting to cut
Speaker 9: every meeting for the next five meetings. So as US
Speaker 9: economy is expected to slow down, I mean, we had
Speaker 9: this upburger vision in second quarter, but inevitably it's going
Speaker 9: to slow down. It's going to slow down faster than
Speaker 9: someone little pen pays.
Speaker 2: So strength, that's singing dollar strength, that's even yen strength.
Speaker 2: I mean, I don't want you to make a call
Speaker 2: in yen, but a one forty eight down to a
Speaker 2: one forty can they withstand now?
Speaker 3: Those strong currencies given the Trump terrafi.
Speaker 9: The case of Japan, I mean, the currency despite any movement,
Speaker 9: I mean, it's still relatively on a real effective exchange
Speaker 9: a quite cheap in Japan for the rest of Asia.
Speaker 9: I mean, this is why I kind of started off
Speaker 9: talking about central banks having more room to cut because
Speaker 9: if in the end, your economy is slowing down, and
Speaker 9: you know, dollars not really a hurdle. If anything, when
Speaker 9: you have an export slow down, rather than have the
Speaker 9: fts weaken as an automatic stabilizer, it's kind of going
Speaker 9: against you. It gives you a little bit more room
Speaker 9: to kind of ease monetary policy. The other interesting thing
Speaker 9: that's happening is kind of dollars cnah, you know, the
Speaker 9: dollars c and why fixings being relatively strong and stable.
Speaker 9: So again, I mean it's going to be interesting whether
Speaker 9: going into five fifteen to five year plan, if there's
Speaker 9: more messaging from China rebalancing to what extent does that
Speaker 9: get reflected with a greater acceptance of a bit of
Speaker 9: stronger redmen B.
Speaker 5: So, how does China view the US as an economic
Speaker 5: partner competitor? What's China thinking?
Speaker 9: I mean, obviously, I mean trust, Trust is something Once
Speaker 9: you lose that, it takes a lot of time. Look,
Speaker 9: I think China is going to be very very careful.
Speaker 9: They now realize the lesson that, Hey, you know, it
Speaker 9: pays to have economic leverage to have a choke point.
Speaker 9: So having that chokepoint of critical minerals really help them
Speaker 9: to de escalate the tariff, which is why I don't
Speaker 9: think they want to give up that choke point. It's
Speaker 9: very important to have leverage. And again, of course they
Speaker 9: still need to deal with China the US. It's still
Speaker 9: a very very important economic relationship. So I think they're
Speaker 9: going to want to, you know, obviously kind of stay
Speaker 9: engaged to a certain extent and have some positive overtures
Speaker 9: if there is a Sheet Trump summit by APEC in November.
Speaker 9: But I mean, China is still going to be diversifying
Speaker 9: its economic relationship.
Speaker 3: When you were at Harvard, did Ken Roga throw a
Speaker 3: piece of chalk at you?
Speaker 8: He wasn't at Harbor when I was there.
Speaker 2: He was lucky for you. Here's my book of the summer,
Speaker 2: Our dollariar problem, folks. I'll do all the books out,
Speaker 2: try to get it out today as we begin the
Speaker 2: autumnal season. Here our dollar your problems is wonderful compendium
Speaker 2: of fiscal financial crisis. Do you have in the back
Speaker 2: of your mind, given Trump tensions, France tensions, Italy, whatever,
Speaker 2: that where we could get to a point of volatility
Speaker 2: here them.
Speaker 8: I think it's really interesting.
Speaker 9: I mean, look, I think there are some debates about
Speaker 9: how much of dollar weakness is structural versus cyclical because
Speaker 9: US is going to slow down. Look, I think I
Speaker 9: don't want to over exaggerate the structural dedollarization story because
Speaker 9: the reality is there's not really be a lot of alternatives.
Speaker 9: But I do think something is happening in terms of
Speaker 9: markets wanting to have a higher term premium for a
Speaker 9: long data US treasuries because of fiscal risk, inflation risk,
Speaker 9: kind of mercantileist policy, wanting a weeker dollar, and any
Speaker 9: risk of economic coercion. So I think there is something
Speaker 9: there that's happening at the margin, but the dollar is
Speaker 9: the very dominant.
Speaker 3: I want to final question. We have a display back to.
Speaker 2: My ute of a Chinese military might in the last
Speaker 2: twenty four hours, North Korea, Russia, China all lined up
Speaker 2: lots of holding hands with the India and that what
Speaker 2: does it symbolize for your bank about the Pacific rim
Speaker 2: and over to South Asia.
Speaker 9: No, look, I think there is really a tug of
Speaker 9: war going on globally now about the kind of the
Speaker 9: levers of economic power. And I think, you know, there
Speaker 9: is a lot of changes. I mean, a lot of
Speaker 9: people are talking about changes in world order and to
Speaker 9: what extent are we moving towards multipolarity and this is
Speaker 9: going to be an orderly adjustment or not. And I
Speaker 9: think what we're seeing here is really a sign of
Speaker 9: kind of a posturing that's coming out of you know,
Speaker 9: obviously China and kind of showing them there.
Speaker 2: I need to get you in trouble with compliance, absolutely,
Speaker 2: I got to get you in trouble with your lawyers.
Speaker 3: Do you look at the Trump regime as one off
Speaker 3: which we will heal from or is this a seismic
Speaker 3: shift and global economics?
Speaker 9: Well, again, I am from you know, I'm hardly you
Speaker 9: probably know more about US politics than I do. So
Speaker 9: again I think hopefully this is part of an adjustment
Speaker 9: and pendulum swing, and they may be pivot a little bit.
Speaker 8: But look, I think he got elected twice.
Speaker 9: So it's hard to ignore the fact that there is
Speaker 9: something underpinning kind of this populist movement going on in
Speaker 9: the US.
Speaker 2: Why you're going to bring the m bar back at
Speaker 2: the Old Mandarin in Hong Kong. We'd like to see
Speaker 2: that they took it away. They had a brass plaquet
Speaker 2: in seats. Joanna, Thank you so much, Johanna and Shua
Speaker 2: where this was city group, Just wonderful. They're the Asian economists.
Speaker 3: Stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after this.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto
Speaker 1: with the Bloomberg Business app. You can also watch us
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Speaker 2: Time for your September Civix lesson only with Professor Cantrell
Speaker 2: of Pimpko Pocket Recision, Murkowski of Alaska's Mental about It,
Speaker 2: Mike Ground's pheasant Hunter from South Dakota, Mental about It,
Speaker 2: inform us what in God's name is a Trumpian pocket recision?
Speaker 10: Basically, this is an effort by the White House to
Speaker 10: cut spending that Congress has already approved. And this is
Speaker 10: a real poke in the eye to the institution of Congress.
Speaker 10: I think there have been several of those, actually, both
Speaker 10: President Trump and President Biden, and just I think the
Speaker 10: executive branch in general of the last few decades, as
Speaker 10: the executive branch has become more powerful and Congress has
Speaker 10: become less powerful. But pocket recision, I think is definitely
Speaker 10: exacerbating already already tensions on Capitol Hill. I don't think
Speaker 10: they'll allow for it. I don't think this will actually happen,
Speaker 10: but just the fact that we're talking about it and
Speaker 10: members of Congress are very upset about it, I think,
Speaker 10: will you know, cause even more frictions we get to
Speaker 10: New York.
Speaker 2: When they go out, they go back home, it's recess.
Speaker 2: A lot of people are getting yelled at in meetings.
Speaker 2: What's the internal body language of representatives and senators after
Speaker 2: going home and listening to the voters.
Speaker 10: Well, I think, you know, the Republicans in Congress, and
Speaker 10: both the House and the Senate were took a very
Speaker 10: bold vote by voting for the one Big, Beautiful bill
Speaker 10: of course that the extension of the Trump Task cuts,
Speaker 10: additional new task cuts, but also some Medicaid cuts. And
Speaker 10: they are hearing from those folks who are really upset
Speaker 10: about those cuts. I think they are trying to sell
Speaker 10: this as a pro growth, sort of pro middle class bill.
Speaker 10: I think remains to be seen if you look at polling,
Speaker 10: you know, I think that folks are a sort of
Speaker 10: skeptical of that narrative. I think the big question, though,
Speaker 10: will be in the beginning of twenty twenty six, when
Speaker 10: some of these tasks will come to fruition. It will
Speaker 10: that sort of the sentiment around this change. But it's
Speaker 10: been difficult. I mean, they are this was a big
Speaker 10: legislative feat honestly for Speaker Johnson to pass this with
Speaker 10: such a smull majority. But not sure not well sort
Speaker 10: of TBD on whether the electorate is, you know, how
Speaker 10: well we'll be received.
Speaker 5: Is our government going to shut down dan September?
Speaker 10: I think that's a big question, and actually this pocket
Speaker 10: decisions sort of makes it I think even more uh,
Speaker 10: you know, maybe more relevant. You know, of course, the
Speaker 10: government has to be funded every every fiscal year. That
Speaker 10: fiscal year begins October first. Unlike lots of different types
Speaker 10: of bills for government funding, that requires sixty votes in
Speaker 10: the Senate. That means that by definition, Republicans need democratic
Speaker 10: co operation. So you need by definition a bob bipartisan
Speaker 10: bill to avoid a government shutdown because of these things
Speaker 10: like pocket recisions, because of friction between Republicans and Democrats.
Speaker 10: Right now, I do think there is a pretty high
Speaker 10: chance that we could see at least a temporary government
Speaker 10: checkdown or at least a lot of drama around.
Speaker 3: Let's go micro here with Friendschill.
Speaker 2: I mean, we know Friendshill quite well Financial Services Committee, Arkansas.
Speaker 2: You know, I'm going to say he's putting up with
Speaker 2: a Trump Act as being a different kind of Republican.
Speaker 2: People like French Hill and the GOP. What's the backstory
Speaker 2: right now? Are they just trying to get to March
Speaker 2: where again it's the election frenzy of November.
Speaker 10: Well, look, I mean I think a lot of Republicans
Speaker 10: in Congress, I mean, I don't know about Chairman Hill,
Speaker 10: whether he feels this way or not, but presumably he does.
Speaker 10: Is that they have their majority much thanks to President Trump.
Speaker 10: So you know, I think that what we see in
Speaker 10: every cycle, every new administration, the party in power gives
Speaker 10: that their president a lot of wiggle room, a pretty
Speaker 10: wide birth in terms of doing whatever they want to do.
Speaker 10: I do think though, to your point that that starts
Speaker 10: that kind of window, that flexibility starts to close as
Speaker 10: we get closer to the midterm election, and.
Speaker 3: We'll book, don't give me a weaker day.
Speaker 10: Come on, Oh my goodness, I look, I think that
Speaker 10: next year, as we go closer in fundraising, what have
Speaker 10: you mean? Republicans have done a great job of fundraising.
Speaker 10: I mean really, the Democrats are much more in the wilderness,
Speaker 10: if you will, than Republicans particularly and fundraising. You know,
Speaker 10: the fundraising continues to be healthy. You know this they
Speaker 10: you know, the president may be able to keep his
Speaker 10: his party you know, together. But usually what you see
Speaker 10: is going into a midterm election cycle, usually the spring, Tom,
Speaker 10: to give you sort of a time frame, is usually white.
Speaker 3: Broncos rebuild for the next year.
Speaker 10: Okay, you know what, We're not going to have to
Speaker 10: rebuild Tom. This we are looking quite strong, thank you
Speaker 10: very much.
Speaker 5: So let me I mean, is it too early to
Speaker 5: start thinking about the mid midterm elections here?
Speaker 10: I mean I think it's uh, you know, we'll we'll
Speaker 10: see in terms of you know, the the the sentiment.
Speaker 10: I mean September of usually of the year before the midterm,
Speaker 10: usually pretty early, we'll have some elections that are happening
Speaker 10: in November, you know, the Virginia gubernatorial race. New Jersey
Speaker 10: has it. Yeah, so these are you know, these can
Speaker 10: be kind of canary in the coal mine, if you will.
Speaker 10: I think it's it's important not to extrapolate too much
Speaker 10: from those those sort off cycle elections. Broadly speaking, though,
Speaker 10: if passes prologue, you know, Republicans will probably lose some
Speaker 10: seats in the House. They of course only have a
Speaker 10: two seat majority right now. That's why you're seeing them
Speaker 10: really focus on this redistricting effort, which is quite unconventional.
Speaker 10: Usually redistricting happens every ten years after the census. They're
Speaker 10: accelerating that with the hopes that they can actually add
Speaker 10: some new Republican safe seats and potentially defy history and
Speaker 10: keep the House.
Speaker 3: Give one more here.
Speaker 5: I ask a lot of the Washington folks, where's the
Speaker 5: Democratic Party today? I don't hear them, I.
Speaker 3: Don't see them.
Speaker 8: I don't know who to likee.
Speaker 7: Rebuilding.
Speaker 10: There's gonna be a rebuilding year or rebuilding years. Yeah,
Speaker 10: I mean, look, their brand is incredibly tarnished. I mean
Speaker 10: you look at you know, polling. Take polling for what
Speaker 10: it's worth on both Republican and Democratic side, but the
Speaker 10: polling suggests that they have the lowest favorability rating that
Speaker 10: they've had for decades.
Speaker 3: Okay, but in nineteen sixty two Nixon he loses the
Speaker 3: California governor's race. He's at the absolute bottom in what
Speaker 3: six years later he was President of the United States.
Speaker 3: Where is that initiative on the part of the Democratic Party.
Speaker 10: Well, I think a lot of folks who are going
Speaker 10: to be the future leaders of the Democratic Party are
Speaker 10: trying to sort of, you know again, maybe give the
Speaker 10: Democrats in the House and the Senate a wide berth
Speaker 10: if you will. I think what you'll really start seeing
Speaker 10: after the maternal elections is folks are appearing kind of
Speaker 10: sticking their heads out of the sand and maybe start
Speaker 10: leading the Democratic Party. But until then, I think it's
Speaker 10: going to be what we're seeing, which is just you know,
Speaker 10: ail here. It may be too strong of a word,
Speaker 10: but it's it is pretty incompas shock.
Speaker 5: That's some young male or female hasn't just stepped up
Speaker 5: and says I'm going to be the face. You know,
Speaker 5: we haven't just haven't seen that.
Speaker 10: I mean, we do have a New York City mayror
Speaker 10: race that I think.
Speaker 2: Is Washington watching the race. We saw Mayor de Blasio
Speaker 2: endors mister.
Speaker 1: I think.
Speaker 10: I think Republicans are chomping at the bit. I think
Speaker 10: they would love to have a New York City mayor
Speaker 10: Mandannie because then they can, you know, demagog him.
Speaker 8: And even though, of course.
Speaker 10: As we all know, New York City politics is quite
Speaker 10: different than national It's a weekly visit.
Speaker 3: I love it, and a calendar.
Speaker 2: She's with Pimco, folks, a great student of what our
Speaker 2: elected officials are doing.
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