WEBVTT - Equities and the Fed 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:21.240 on Apple car Play or Android Auto with the Bloomberg 0:00:21.320 --> 0:00:24.880 Business app. Listen on demand wherever you get your podcasts, 0:00:25.280 --> 0:00:27.040 or watch us live on YouTube. 0:00:27.400 --> 0:00:30.760 Joining us now Edward YARDNNY for a two hour conversation. 0:00:31.040 --> 0:00:33.080 I got eight ways to go here. You have a 0:00:33.120 --> 0:00:35.840 young Turk in the green room with you this morning. Yeah, 0:00:35.880 --> 0:00:39.320 what's your number one advice to a twenty year twenty 0:00:39.360 --> 0:00:42.840 two year old kid? Who's my god? I'm sitting next 0:00:42.840 --> 0:00:45.200 to Edward Yard, Denny, what do you tell the young 0:00:45.320 --> 0:00:46.680 turks read my books? 0:00:47.560 --> 0:00:49.800 I did buy them before you read that, right, You don't. 0:00:49.680 --> 0:00:53.120 Have to buy them. They're open to the public, you know. 0:00:54.200 --> 0:00:57.440 I share the knowledge that I've gained over the years. 0:00:57.440 --> 0:01:00.000 So in twenty eighteen I wrote a book called predict 0:01:00.080 --> 0:01:02.920 in the Markets, turned out to be six hundred pages long, 0:01:02.960 --> 0:01:05.200 about what I learned in the first forty years of 0:01:05.560 --> 0:01:07.400 my career. Now I'm working in the next four. 0:01:07.360 --> 0:01:10.200 What's the maxim that's been most true across the emotion 0:01:10.840 --> 0:01:12.640 of this bull market that won't go down? 0:01:13.400 --> 0:01:15.640 Well, I think it's earnings. I mean, it won't go 0:01:15.680 --> 0:01:18.559 down because earnings won't go down. I think the reason 0:01:18.680 --> 0:01:21.120 earnings have been so resident is because the economy has 0:01:21.120 --> 0:01:25.520 been so resident. You know, it's it's every time we 0:01:25.840 --> 0:01:28.400 throw something at it, it just hangs in. 0:01:28.440 --> 0:01:30.600 There. Are we getting a free launch from a set 0:01:30.640 --> 0:01:34.520 of stimuli that have goosed revenues to generate their free 0:01:34.560 --> 0:01:35.120 cash flow? 0:01:35.319 --> 0:01:38.400 And I think there's certainly something to be said for 0:01:38.440 --> 0:01:42.880 that one and a half to two trillion dollar government deficits. 0:01:42.880 --> 0:01:47.160 Certainly are stimulative, but we've also had a very strong 0:01:47.200 --> 0:01:51.720 consumer not kind of inconsistent with the so called K 0:01:51.920 --> 0:01:55.240 economy thesis. I call it the G economy thesis. It's 0:01:55.280 --> 0:01:58.520 really about the baby boomers that are keeping spending going 0:01:58.560 --> 0:02:02.560 because they're retiring. They've got eighty nine trillion dollars of 0:02:02.920 --> 0:02:04.480 retirement as the money. 0:02:04.560 --> 0:02:07.280 Lawrence McDonald's talked about it. I mean, it's just there. 0:02:07.320 --> 0:02:08.400 It's just a wall of money. 0:02:08.520 --> 0:02:11.680 And then of course there's the AI capital spending boom, 0:02:11.720 --> 0:02:14.280 and there's a lot of controversy about whether that's going 0:02:14.360 --> 0:02:17.720 to pay off or whether it's not. And it's one 0:02:17.720 --> 0:02:20.200 big bubble that's going to burst. I think it's going 0:02:20.240 --> 0:02:20.760 to pay off. 0:02:21.240 --> 0:02:22.600 So that's kind of where I want to go ed. 0:02:22.639 --> 0:02:25.560 I mean, you've seen so many cycles, so many major 0:02:25.639 --> 0:02:29.880 themes in this marketplace, whether it's the Internet or how 0:02:29.919 --> 0:02:32.280 do you think about AI here? I mean, it seems 0:02:32.280 --> 0:02:34.080 like a lot of folks are telling us this is 0:02:34.200 --> 0:02:35.440 bigger than anything we've seen. 0:02:35.840 --> 0:02:40.000 Well, that's that's my view. And the way I put 0:02:40.040 --> 0:02:42.720 in perspective is AI is not a revolution, It's an 0:02:42.800 --> 0:02:46.679 evolution in the digital revolution. The digital revolution started in 0:02:46.720 --> 0:02:49.800 the mid nineteen sixties with the IBA mainframes, and the 0:02:49.840 --> 0:02:54.000 digital revolution is all about processing as much information data 0:02:54.040 --> 0:02:56.560 as we possibly can, as quickly as we can, as 0:02:56.639 --> 0:02:59.200 cheaply as we can. And we've made a tremendous amount 0:02:59.200 --> 0:03:02.280 of progress, growing from the IBM mainframe to be soon 0:03:02.280 --> 0:03:06.920 as laptops, the cloud, and now AIS. I kind of 0:03:07.160 --> 0:03:10.000 I think time will like this. I view us now 0:03:10.040 --> 0:03:14.560 as having four factors of production land, labor, capital, and 0:03:14.639 --> 0:03:17.560 data and data. And we never really thought of data 0:03:17.560 --> 0:03:20.400 as a factor of production. And this ties into my 0:03:20.880 --> 0:03:24.760 buzz like your theory to infinity and beyond, there will 0:03:24.800 --> 0:03:26.040 never be a shortage. 0:03:25.639 --> 0:03:28.480 Of data, right and Bloomberg, we are at our heart 0:03:28.560 --> 0:03:30.600 a data nice. 0:03:30.520 --> 0:03:32.640 And you're creating more and more data and the world 0:03:32.919 --> 0:03:37.920 that was so good you get to work tomorrow. 0:03:37.280 --> 0:03:39.560 And the analytics around all that data. This is kind 0:03:39.560 --> 0:03:40.560 of what we do here at Bloomberg. 0:03:40.800 --> 0:03:42.920 So what are we doing here? 0:03:43.040 --> 0:03:45.920 Ed? I mean, can we feel comfortable with this earnings 0:03:45.960 --> 0:03:48.600 environment out there to continue to support this market exploit 0:03:48.680 --> 0:03:50.880 we just came through the last couple of quarters have 0:03:50.960 --> 0:03:52.280 just been extraordinary for earnings. 0:03:52.640 --> 0:03:57.000 Well, let me give you some some lingo on that. 0:03:57.440 --> 0:04:00.480 I'm a believer that we're better off with a bull 0:04:00.560 --> 0:04:04.840 market based on FEMO than FOMO. Fomo is fear of 0:04:04.880 --> 0:04:08.160 missing out, and if people have fear of missing out, 0:04:08.240 --> 0:04:12.120 that'll affect the pe. You'll get the valuation multiple too high, 0:04:12.160 --> 0:04:16.040 You'll get a bubble and it's bound to burst. Femo 0:04:16.200 --> 0:04:19.839 is fabulous earnings moment them, earnings have been absolutely fabulous, 0:04:20.160 --> 0:04:22.239 and I'd rather have a melt up based on earnings 0:04:22.240 --> 0:04:24.400 than one on evaluation multiples. 0:04:24.480 --> 0:04:26.760 And that's what we have, EDJR. Denny with the Sacks, 0:04:26.800 --> 0:04:29.479 and we continue. We welcome all of you across America. 0:04:29.839 --> 0:04:32.440 So if I line up my ten most important dinners 0:04:33.000 --> 0:04:35.240 across the yark of this privilege of the Bloomberg. One 0:04:35.240 --> 0:04:38.320 of them was of the Richard Berner years ago, and 0:04:38.400 --> 0:04:41.480 it was in the vicinity of twenty twelve, fourteen years ago. 0:04:42.040 --> 0:04:45.160 This is Berner of Morgan Stanley building out that franchise 0:04:45.200 --> 0:04:48.159 with Stephen Roach and then his public service to the nation, 0:04:48.839 --> 0:04:51.000 and Dick Berner and I sat there and he was 0:04:51.080 --> 0:04:55.440 on fire at yard Denny over the dots. The dots 0:04:55.480 --> 0:04:59.320 go back to January twenty twelve. I would suggest we 0:04:59.360 --> 0:05:03.280 had a shift tectonic. Will know in time. Were the 0:05:03.320 --> 0:05:05.960 dots efficacious? Were they of Vailue? 0:05:07.400 --> 0:05:09.599 Well, I'm kind of biased. I'm a Fed watchers. So 0:05:09.680 --> 0:05:12.479 the more and the more noise they provide for me 0:05:12.520 --> 0:05:16.000 to try to interpret for people, the better. I like 0:05:16.040 --> 0:05:18.880 the dot plot. I think it's it's a good insight 0:05:18.920 --> 0:05:22.680 into where the committee's meeting in the statistic. Yeah, the 0:05:22.720 --> 0:05:26.440 medium is important, but I think so is the distribution. 0:05:27.520 --> 0:05:30.760 To me, the funniest thing about the dot plot is 0:05:31.640 --> 0:05:35.239 and when you ask them for their long term estimate 0:05:35.480 --> 0:05:38.599 for the FED funds rate, and this is often called 0:05:38.600 --> 0:05:40.800 the neutral rate, and you would think that there's some 0:05:40.920 --> 0:05:43.240 science of the neutral rate at the Fed, but no 0:05:43.400 --> 0:05:47.719 science at all. They just nineteen of them, tell them, 0:05:47.920 --> 0:05:50.600 tell us what they think it is, and sometimes the 0:05:50.680 --> 0:05:53.520 spread is between three and four percent. It's like, you 0:05:53.520 --> 0:05:55.080 know that, Well, that's really helpful. 0:05:56.080 --> 0:05:59.720 I look at where mister Worrish is taking us. Yes, 0:05:59.760 --> 0:06:02.520 that much power, I mean, chairmany have that much power 0:06:02.960 --> 0:06:04.719 to shift the dialogue, don't they. 0:06:05.240 --> 0:06:08.479 Well, I think the dialogue stays the same, But then 0:06:08.600 --> 0:06:10.760 how much of it gets communicated to the public is 0:06:10.760 --> 0:06:13.479 what he seems to be focusing on. I mean, I 0:06:13.520 --> 0:06:16.800 think the dialogue at the FED is going to actually 0:06:16.839 --> 0:06:19.200 turn out to be more independent than it had been, 0:06:19.760 --> 0:06:24.640 you know. But he's actually come around to the old 0:06:24.720 --> 0:06:27.400 view that a FED chair needs to have a consensus. 0:06:27.440 --> 0:06:31.760 I mean, he could have been the only dissenter at 0:06:31.800 --> 0:06:35.599 that meeting, but he wasn't. He joined the committee. Email 0:06:35.640 --> 0:06:38.040 comes in, Mike. He's on the parade roots somewhere. Mike, 0:06:38.120 --> 0:06:40.520 thank you so much for emailing in today. Can you 0:06:40.560 --> 0:06:45.240 reaffirm your roaring twenties scenario? And where is your SPI 0:06:45.320 --> 0:06:47.839 statistic right now? Well, I'm looking for the S and 0:06:47.880 --> 0:06:50.080 P five hundred to get the eight two hundred and 0:06:50.120 --> 0:06:52.400 fifty by the end of the year and. 0:06:52.279 --> 0:06:53.560 Still at the end of this year. 0:06:53.640 --> 0:06:56.200 Yeah, yeah, yeah, I mean seventy seven hundred. I mean 0:06:57.279 --> 0:07:00.320 we're at seventy five hundred, so we're moving the right direction. 0:07:01.640 --> 0:07:04.960 And there's still several months left. And then by the 0:07:05.040 --> 0:07:07.839 end of the decade, at the end of twenty twenty nine, 0:07:07.960 --> 0:07:11.040 I'm you're still using ten thousand, and the Roaring twenty 0:07:11.040 --> 0:07:13.120 twenties has worked out pretty well here for the first 0:07:13.160 --> 0:07:16.160 sevent you think, yeah, yeah, I think so. You know, 0:07:16.360 --> 0:07:19.040 it's getting to be more and more roaring. 0:07:19.000 --> 0:07:20.960 Ed Jo Denny, thank you so much for joining us 0:07:20.960 --> 0:07:25.160 today in historic day with signature at Versailles, Doctor Yard Denny. 0:07:25.240 --> 0:07:29.040 Look for his spectacular note. Can't say enough about it. 0:07:29.160 --> 0:07:29.840 Stay with us. 0:07:30.080 --> 0:07:33.320 More from Bloomberg Surveillance coming up after this. 0:07:40.560 --> 0:07:44.160 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:07:44.200 --> 0:07:47.360 weekday afternoons from seven to ten am Eastern Listen on 0:07:47.480 --> 0:07:50.880 Apple Karplay and Android Auto with the Bloomberg Business app, 0:07:51.040 --> 0:07:52.760 or watch us live on YouTube. 0:07:53.160 --> 0:07:58.160 Anastasia, welcome to Bloomberg Surveillance, obviously with partners seek as well. 0:07:58.200 --> 0:08:01.960 Once again, you nailed it by having the courage to 0:08:02.040 --> 0:08:04.119 stay in the market. I want you to go back 0:08:05.040 --> 0:08:07.200 and at the bottom of this war one hundred and 0:08:07.240 --> 0:08:10.400 twenty dollars a barrel, et cetera. How did you know 0:08:10.960 --> 0:08:12.400 don't go to cash? 0:08:12.480 --> 0:08:15.840 Well, I guess it was a tough call to make, 0:08:15.960 --> 0:08:18.240 or maybe a brave call to make right because a 0:08:18.240 --> 0:08:20.960 lot of people at the peak were calling for recession 0:08:21.000 --> 0:08:24.080 probabilities to go up, and there were calls for stressed 0:08:24.080 --> 0:08:26.440 test scenarios of what if we stayed one hundred and 0:08:26.480 --> 0:08:29.320 twenty plus a barrel of crude oil? And I think 0:08:29.360 --> 0:08:33.440 what we ultimately looked at is, you know, fortunately we 0:08:33.480 --> 0:08:38.360 went into this largest supply outage with buffers and whether 0:08:38.400 --> 0:08:40.800 it's the inventories that we had on hand, and we 0:08:40.880 --> 0:08:44.280 could cover two hundred days worth of net imports, and 0:08:44.360 --> 0:08:47.319 so that you know, allowed for a lot of cushion 0:08:47.400 --> 0:08:50.079 that in my view, would have prevented us from going 0:08:50.160 --> 0:08:50.880 into recession. 0:08:51.240 --> 0:08:52.520 And then the other side of that. 0:08:52.559 --> 0:08:55.720 Is, you know, we never I don't think really anybody 0:08:55.720 --> 0:08:58.160 thought that this conflict would drag on for quarters and 0:08:58.240 --> 0:09:01.520 quarters in years. We know that there's a political time clock, 0:09:01.679 --> 0:09:04.320 and you know, there's a level of market patients that 0:09:04.480 --> 0:09:07.440 was going to force a resolution at some point. So 0:09:08.120 --> 0:09:11.120 I'm glad to see that we are here and it's 0:09:11.160 --> 0:09:13.080 been a stunning turn around to the price of oil. 0:09:13.120 --> 0:09:15.240 Tom to your point, from one hundred and twenty to now, 0:09:15.440 --> 0:09:17.760 you know the forward strip pricing and seventy. 0:09:17.400 --> 0:09:19.760 Five dollars average for the back half of the year. 0:09:20.120 --> 0:09:24.200 That is a much much better backdrop fortunately for risk 0:09:24.240 --> 0:09:24.800 assets now. 0:09:25.160 --> 0:09:27.079 So I guess investors are probably you know, over the 0:09:27.160 --> 0:09:29.720 last several days, trying to reset a little bit. And 0:09:29.800 --> 0:09:31.760 what do we focus on now? 0:09:31.960 --> 0:09:34.000 Is it earnings? What do we focus at the Fed? 0:09:34.200 --> 0:09:36.600 We heard from the Fed yesterday they're not going to 0:09:36.600 --> 0:09:38.480 give us any any love there. So what are the 0:09:38.480 --> 0:09:39.600 market's focusing on these days? 0:09:39.720 --> 0:09:42.200 Well, I think it is that interplay between where we 0:09:42.240 --> 0:09:44.120 are with the state of the economy and where we 0:09:44.160 --> 0:09:47.000 are with a state of interest rates, and the focus 0:09:47.080 --> 0:09:49.920 should be on the strength of economic activity first of all, 0:09:50.000 --> 0:09:53.480 whether you look at the consumer and this continued momentum 0:09:53.480 --> 0:09:55.480 that we see there, whether you look at the corporations 0:09:55.520 --> 0:09:57.679 and the great earning season that we just came out of. 0:09:58.320 --> 0:10:01.079 You know, you look at the upsizing of Varning's estimates 0:10:01.120 --> 0:10:02.160 for example. 0:10:02.000 --> 0:10:03.760 And then there's the Cappec story. 0:10:03.800 --> 0:10:06.320 If you look at the last quarters GDP, you know, 0:10:06.360 --> 0:10:08.880 the kind of the bright object there has actually been 0:10:08.880 --> 0:10:12.200 the fixed asset investment. The capex is accelerating in the 0:10:12.280 --> 0:10:15.679 US thanks to hyperscalers, but also others. So that's the 0:10:15.720 --> 0:10:18.560 economic backdrop. That's why I think you stay in the markets. 0:10:18.800 --> 0:10:21.760 The other side is the FED. And look my take 0:10:21.800 --> 0:10:24.280 on that is the markets have interpreted this as in, 0:10:24.800 --> 0:10:27.240 you know, this is hawkage guidance where we're going to 0:10:27.320 --> 0:10:29.559 high grates. It's not guidance. As you know, there was 0:10:29.640 --> 0:10:32.160 no forward guidance. And I think a lot is going 0:10:32.200 --> 0:10:33.520 to change in the next few months. 0:10:33.600 --> 0:10:36.679 Nasty chamorroso whaus we will continue, whether Edward jar Danny 0:10:36.760 --> 0:10:39.160 to join, you know a moment futures of fifty five. 0:10:39.200 --> 0:10:41.560 The vix is surprising. I thought it'd be in it's 0:10:41.559 --> 0:10:44.640 in a stick seventeen point twenty seven, but it's screaming 0:10:45.040 --> 0:10:48.880 sixteen handled to me. The Bank of England just does 0:10:48.880 --> 0:10:51.080 a seven to two vote. Meghan Green, who's spent on 0:10:51.080 --> 0:10:53.960 the show many times, and Hugh Pill a full time 0:10:54.240 --> 0:10:58.679 a few Pill times over the years, but Meghan Green 0:10:58.760 --> 0:11:02.360 in Pill vote against it, looking for a rate increase. 0:11:02.400 --> 0:11:07.120 Bank of England stay static, Pound retreats, Guilts retreat and 0:11:07.120 --> 0:11:09.760 Paul It goes to this idea of a backdrop of 0:11:09.880 --> 0:11:12.000 fighting inflation, fighting inflation time. 0:11:12.320 --> 0:11:15.000 So, Anastasia, one of the issues for this market is 0:11:15.040 --> 0:11:17.760 AI and we're trying to figure out o've the investors 0:11:18.240 --> 0:11:20.520 how to play it other than in Vidia, and it's 0:11:20.520 --> 0:11:23.720 been an ongoing I think play for this marketplace to 0:11:23.720 --> 0:11:25.640 figure out where do we go, how do we play it? 0:11:25.880 --> 0:11:27.360 Are you guys thinking about series? 0:11:27.559 --> 0:11:29.640 I mean, look, there's actually so much more to do 0:11:29.720 --> 0:11:32.720 in both public and private markets beyond Nvidia. You know, 0:11:32.800 --> 0:11:34.560 first of all, you know, one thing that's happened, Paul 0:11:34.640 --> 0:11:37.480 is over the last few years, the total adressable market 0:11:37.480 --> 0:11:40.720 for semiconductors because of AI has expanded. So it's started 0:11:40.720 --> 0:11:43.559 with GPUs, but now as we know, the total addressable 0:11:43.600 --> 0:11:46.600 market for CPUs for memberships, all of that is being 0:11:46.679 --> 0:11:49.680 upside so that trade on its own has broadened out. 0:11:49.840 --> 0:11:49.959 You know. 0:11:50.120 --> 0:11:52.760 Then you think about the infrastructure, and you know, look, 0:11:52.800 --> 0:11:54.319 there was the first leg I would say, of the 0:11:54.440 --> 0:11:58.360 data center opportunity, and you know, there's some concern about 0:11:58.400 --> 0:12:00.800 maybe we've done too much too fast, but the reality 0:12:00.960 --> 0:12:03.960 is looking ahead, what's happening is we're transitioning from the 0:12:04.080 --> 0:12:07.200 use of chatbots, the conversational commerce to the use of 0:12:07.320 --> 0:12:12.080 agentic AI and workflow automation. And what that does is 0:12:12.120 --> 0:12:16.280 it's likely to drive much more token consumption over the 0:12:16.320 --> 0:12:18.240 next few years and that's going to require a whole 0:12:18.240 --> 0:12:20.880 lot of compute. So the next phase of the data 0:12:20.880 --> 0:12:24.600 center build out has to support this move to agentic AI. 0:12:25.120 --> 0:12:28.360 So we're absolutely looking at data centers. We have several 0:12:28.400 --> 0:12:32.640 portfolio companies in the space, and you know, they're seeing 0:12:32.760 --> 0:12:35.840 very strong appetites for their compute capacity. 0:12:35.920 --> 0:12:38.160 Partner Group is out of Switzerland. You've got to handle 0:12:38.160 --> 0:12:39.920 on continental Europe because you have to go over there 0:12:39.960 --> 0:12:44.040 and speak to people about American exceptionalism. Do they still 0:12:44.080 --> 0:12:46.840 want to buy American after all we've been through with 0:12:46.920 --> 0:12:47.960 the president in the war. 0:12:48.280 --> 0:12:51.239 Yes, the answer is yes. And look, you know there's 0:12:51.280 --> 0:12:54.040 been a kind of an evolution there, but absolutely, And 0:12:54.080 --> 0:12:56.640 I was in Europe recently and look, when you think 0:12:56.679 --> 0:13:01.160 about Europe, you've got extremely depressed consumer confidence, you have 0:13:01.280 --> 0:13:04.840 sluggish consumer spending. You have the ECB that hiked rates 0:13:04.960 --> 0:13:08.120 presumably or arguably they shouldn't have. You know, you don't 0:13:08.120 --> 0:13:10.920 have the cap X momentum, you don't have the support 0:13:11.000 --> 0:13:14.079 of corporate tax rates. And then if you flip all 0:13:14.120 --> 0:13:16.199 of that around and look at to the United States. 0:13:16.280 --> 0:13:19.480 We've checked all those boxes. So I think that's why 0:13:19.559 --> 0:13:23.359 whether in Europe, whether you're Asian Asian investor, you continue 0:13:23.400 --> 0:13:26.480 to look to the United States, not for the political 0:13:26.600 --> 0:13:29.840 backdrop that we have, but for the economic backdrop that 0:13:29.840 --> 0:13:30.120 we have. 0:13:31.240 --> 0:13:33.160 What are we doing with emerging markets here, because that's 0:13:33.200 --> 0:13:35.839 been a play really for the last I don't know, 0:13:35.840 --> 0:13:37.880 a couple of years. Your merging markets have done very well. 0:13:38.520 --> 0:13:42.480 Yeah, I think some parts of emerging markets are quite interesting. 0:13:42.760 --> 0:13:46.080 And you know, let's let's kind of extend the AI 0:13:46.520 --> 0:13:49.280 trade to Asia for example, and it was also recently 0:13:49.320 --> 0:13:51.599 in Asian you know, you look around and sixty or 0:13:51.640 --> 0:13:54.600 seventy percent of what we need to actually build out 0:13:54.640 --> 0:13:58.040 AI infrastructure is manufactured right there in Asia, whether it's 0:13:58.160 --> 0:14:01.600 you know, data center chips where, whether it's servers, you know, 0:14:01.640 --> 0:14:04.800 whether it's all the components. So so I like emerging 0:14:04.880 --> 0:14:08.920 markets that are enabling that tech trade. Then selectively, you know, 0:14:09.040 --> 0:14:11.920 I wouldn't say that you just invest in all emergent markets, 0:14:11.920 --> 0:14:14.920 but if you can identify a theme. For example, we 0:14:14.960 --> 0:14:17.240 have invested in a company in Brazil which is a 0:14:17.320 --> 0:14:20.560 fintech company, because it's what scaling in fintech is not 0:14:20.680 --> 0:14:21.680 just a US story. 0:14:21.920 --> 0:14:25.040 I don't care when you say you're in Europe, Are 0:14:25.040 --> 0:14:27.640 you really talking about lining up? And Angelina's on the 0:14:27.720 --> 0:14:30.440 root of Rivilee for that chocolate. Is that what we're 0:14:30.480 --> 0:14:31.280 really talking about? 0:14:31.320 --> 0:14:35.040 No, I'm not lining up there, but is absolutely easy. 0:14:36.160 --> 0:14:38.400 Do we predict that Europe's going to have a huge summer. 0:14:38.880 --> 0:14:43.200 I'd like some guests coming down, maybe the fair competition and. 0:14:43.320 --> 0:14:45.240 Go into parts of Europe. 0:14:47.000 --> 0:14:49.600 Parts. What does Kirby do this morning at United? His 0:14:49.680 --> 0:14:53.080 head must be spinners? Fine, All good, all good, and 0:14:53.120 --> 0:14:55.520 as as you're anam. Also, thank you so much and 0:14:55.600 --> 0:14:59.440 congratulations on an important call for the last twelve months, Scuria. 0:15:00.840 --> 0:15:05.040 Stay with us. More from Bloomberg Surveillance coming up after this. 0:15:12.280 --> 0:15:15.840 You're listening to the Bloomberg Surveillance podcast. Catch us Live 0:15:15.920 --> 0:15:19.080 weekday afternoons from seven to ten am Eastern Listen on 0:15:19.160 --> 0:15:22.840 Applecarplay and Android Otto with the Bloomberg Business app, or 0:15:22.960 --> 0:15:24.680 watch us live on YouTube. 0:15:25.240 --> 0:15:27.560 Julie bial has been more than patient. We extended that 0:15:27.600 --> 0:15:30.280 discussion because Sweeny was trying to get pass into the 0:15:30.320 --> 0:15:33.880 city hall areas from the Comptroller features of sixty eight 0:15:34.840 --> 0:15:38.120 Nancy Cup and now dancing in further one point six percent. 0:15:38.520 --> 0:15:41.360 Julie feel's wonderful with a very different perspective with Kane 0:15:41.360 --> 0:15:45.239 Anderson at Rodney, Julie, how do you deploy new cash 0:15:45.360 --> 0:15:46.000 this morning? 0:15:47.640 --> 0:15:49.480 I think that right now you really have to be 0:15:49.560 --> 0:15:51.520 if you're in small and MidCap, you really have to 0:15:51.520 --> 0:15:52.800 be thinking about quality. 0:15:53.200 --> 0:15:55.880 The low quality to high quality. 0:15:55.600 --> 0:15:58.760 Is kind of a pretty extreme levels right now, and 0:15:58.800 --> 0:16:00.960 so I think it's a good opportunity to be able 0:16:00.960 --> 0:16:04.400 to buy nice things for cheap. Normally we don't get 0:16:04.400 --> 0:16:07.040 to have these things, these opportunities to buy things at 0:16:07.040 --> 0:16:10.120 better prices, and so that's pretty attractive for us right now. 0:16:11.000 --> 0:16:13.680 What did you hear from our new FED chair yesterday 0:16:13.800 --> 0:16:16.040 and did that change kind of how you're thinking about 0:16:16.080 --> 0:16:17.080 asset allocation? 0:16:18.320 --> 0:16:20.920 I think, you know, it didn't really change very much. 0:16:21.080 --> 0:16:23.240 I think that what we heard was less. 0:16:23.040 --> 0:16:26.320 Which is an interesting dynamic for most of us, as 0:16:26.800 --> 0:16:31.120 the trend has really been towards more disclosure, more words, more. 0:16:30.920 --> 0:16:31.920 Graphs, more charts. 0:16:31.960 --> 0:16:35.040 And I think that this kind of austerity of words 0:16:35.120 --> 0:16:37.840 is probably a positive thing for markets, because I think 0:16:37.920 --> 0:16:39.720 a lot of that can create a lot of noise, 0:16:39.760 --> 0:16:42.520 and what really is driving most of the decision making 0:16:42.600 --> 0:16:44.960 is the data that we can all see. So I 0:16:45.000 --> 0:16:48.200 think it's an interesting posture. I think reducing the balance 0:16:48.240 --> 0:16:51.400 sheet is probably a positive thing, particularly if it gives 0:16:51.480 --> 0:16:54.480 us the opportunity if we do get into a stressful 0:16:54.480 --> 0:16:56.280 situation in the markets. 0:16:56.160 --> 0:16:57.800 To be able to add more liquidity. 0:16:57.880 --> 0:17:01.760 So I think I agree, and I'm the hawkish tone 0:17:01.880 --> 0:17:04.879 really shouldn't be surprising anyone. That was really the movement 0:17:04.920 --> 0:17:07.440 and direction that we were going in. So I think 0:17:07.440 --> 0:17:09.840 it's kind of in line with most people's expectations. 0:17:11.040 --> 0:17:16.760 Where are you the stocks, bonds, commodities, alternatives, How are 0:17:16.760 --> 0:17:18.320 you thinking about allocation these days? 0:17:20.080 --> 0:17:23.480 I think that when you are looking at a broader portfolio, 0:17:23.880 --> 0:17:26.480 the balance of it is really important. I think we 0:17:26.600 --> 0:17:30.880 continue on the equity side to struggle in part because 0:17:31.000 --> 0:17:33.920 credit looks pretty good. Parts of credit look really good. 0:17:34.240 --> 0:17:36.479 But I do think that we have to be really 0:17:36.640 --> 0:17:41.480 mindful of quality, the importance of making sure that you're 0:17:41.520 --> 0:17:44.720 exposed to businesses that have the really strong cashlows and 0:17:44.760 --> 0:17:47.800 that can withstand higher interest rates if that should happen. 0:17:48.040 --> 0:17:49.560 I think it's pretty important, right. 0:17:49.560 --> 0:17:51.440 I wouldn't want to be in a position where we're 0:17:51.800 --> 0:17:55.320 significantly overlevered. And when we think about the AI trade, 0:17:55.720 --> 0:17:58.560 now that we've moved past this point where everything was 0:17:58.600 --> 0:18:01.200 funded with free cash flows, so need to worry. Now 0:18:01.240 --> 0:18:03.560 there's a lot more debt, Now there's a lot more equity. 0:18:03.840 --> 0:18:06.680 I think that that creates an important movement towards thinking 0:18:06.680 --> 0:18:09.520 about fundamentals and earnings, not just growth. 0:18:10.000 --> 0:18:12.960 What does the East Coast not get about the world 0:18:12.960 --> 0:18:14.760 of Julie Bale. I mean, you look out at the 0:18:14.760 --> 0:18:18.080 West Coast and I think for so many psychologically, it's 0:18:18.160 --> 0:18:20.919 just really different at Julia. I mean, does this the 0:18:20.960 --> 0:18:24.119 whole tech thing, Does it just to have a permanence 0:18:24.160 --> 0:18:27.359 to you? Like you're not worried about a cyclic ending 0:18:27.440 --> 0:18:29.480 of it? No? 0:18:29.680 --> 0:18:32.560 I mean, look I was. I'm French originally, so. 0:18:32.520 --> 0:18:36.119 I worry about literally everything that's just that's a lifestyle 0:18:36.200 --> 0:18:39.640 for me, that's like a personality trade. And I think, 0:18:39.640 --> 0:18:43.480 actually that's why I've been relatively successful. But no, I 0:18:43.520 --> 0:18:47.919 think that what I really believe is that the opportunities 0:18:47.960 --> 0:18:50.840 that we're being presented in AI to me look wonderful. 0:18:50.880 --> 0:18:53.600 They look really positive, and they look like they can 0:18:53.640 --> 0:18:56.360 be really profound in terms of the nature and quality 0:18:56.359 --> 0:19:00.320 of work. But they're complicated and they're not without their 0:19:00.359 --> 0:19:03.960 own costs. So while I'm really enthusiastic and excited about 0:19:03.960 --> 0:19:06.719 AI for the very long term and the potential it 0:19:06.760 --> 0:19:09.200 has to unlock things in healthcare and all the stuff 0:19:09.240 --> 0:19:11.760 that they tell us is super important, what is a 0:19:11.800 --> 0:19:14.880 little bit different about this build out from a Capex 0:19:14.960 --> 0:19:18.240 standpoint is that what we're building and what we're spending 0:19:18.280 --> 0:19:21.240 a lot of money on has a depreciation and a 0:19:21.400 --> 0:19:24.400 utility that's much shorter than things like the big tech 0:19:24.640 --> 0:19:27.320 you know, the big buildous that we had in telecom, 0:19:27.680 --> 0:19:30.800 in railroads, et cetera. That's that creates a little bit 0:19:30.800 --> 0:19:33.320 of a different dynamic in terms of the pressure to 0:19:33.440 --> 0:19:36.040 create returns in the here and now, and I think 0:19:36.080 --> 0:19:38.640 that that's something that's a little bit different than other 0:19:39.119 --> 0:19:40.520 Capex cycles we've had. 0:19:41.440 --> 0:19:43.720 Julie, how about US versus non US? We did have 0:19:43.760 --> 0:19:46.920 a rotation I don't know, late last year early this year, 0:19:46.920 --> 0:19:49.119 but it seemed like that's reversed a little bit. How 0:19:49.119 --> 0:19:49.800 do you think about it? 0:19:50.720 --> 0:19:53.360 I think that we saw a lot of valuation opportunities, 0:19:53.400 --> 0:19:55.200 particularly outside the US. 0:19:55.280 --> 0:19:56.760 It had gotten pretty extreme. 0:19:56.840 --> 0:20:00.119 How overbought the US looked, and so I think that 0:20:00.200 --> 0:20:03.360 broadly speaking, things look more in balance to me now 0:20:03.359 --> 0:20:06.600 where you don't see the depth of the value that 0:20:06.720 --> 0:20:09.640 is being that we could really find as particularly in Europe, 0:20:09.760 --> 0:20:13.240