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Speaker 2: Joining us now we start struggling. A really wonderful Friday
Speaker 2: with Sebastian Page had a global multi asset share of
Speaker 2: Asset Allocation Steering Committee. Tro Price acclaimed author the best
Speaker 2: book on diversification I've seen in his new book is
Speaker 2: out as well, The Psychology of Leadership. I want to
Speaker 2: go to Jain's Nordvik. Damien came walking and screaming about
Speaker 2: with exante data and the single sentence from ends into
Speaker 2: the weekend is strategic shifts are in motion. What's in
Speaker 2: motions page?
Speaker 3: You know, the last forty eight hours, it's about the
Speaker 3: thirty year bond and it's gone up above five percent.
Speaker 3: I think that's a lot of hoopla about not much.
Speaker 3: If I look at the long run chart, you know,
Speaker 3: like Damien, it's a long weekend. I'm actually looking at
Speaker 3: charts and I'm interested.
Speaker 2: If look at the.
Speaker 3: Long run chart of the thirty year yield, it's actually
Speaker 3: not that far from five percent.
Speaker 4: Right, Well, I mean look for me, I think Ira
Speaker 4: Josie said it best our us SO chief rate strategist.
Speaker 4: He said, you know, the mark to market loss of
Speaker 4: putting a negative carried position on the thirty year. I mean,
Speaker 4: if you think thirty years are going to go up
Speaker 4: on austerity or whatever you're you know, whatever you're thinking.
Speaker 4: You know, it's just it's not a profitable prese mean,
Speaker 4: the negative tract.
Speaker 2: This is great, But the real issue is why is
Speaker 2: the dollar tanking? You know, on the what does trow
Speaker 2: price say about a new structural week dollar?
Speaker 3: So short term on our platform, we're C two on
Speaker 3: the dollars. C two means we're actually bullish short term
Speaker 3: on the dollar. But Tom, this is the question of
Speaker 3: the hour because if you look at April right by
Speaker 3: the way, the stock market was flat in April, or
Speaker 3: close to flat, if you can believe it, despite what
Speaker 3: happened during the month. But if you look at what's
Speaker 3: been happening with the dollar, it's unusual. Because economic theory
Speaker 3: will tell you when you put tariffs on the best
Speaker 3: way for the exporting country to offset them is to
Speaker 3: devalue their currency, so you cheapen their goods to make
Speaker 3: up for the tariff that is paid at the quarter.
Speaker 3: The market work, and for a while it looked like
Speaker 3: economic theory was working and the dollar should be stronger.
Speaker 3: But then it's not behaving that way. And second thing
Speaker 3: is even in the middle of selloffs I think April, third,
Speaker 3: and fourth and huge market volatility, as Tom would say,
Speaker 3: you know on the Vick spikes, Well the dollar was
Speaker 3: not necessarily the safe haven in all this volatility.
Speaker 4: Well, Tom, I'm disappointed, and I'll tell you why, because
Speaker 4: Sebastian came in this morning and it didn't bring in
Speaker 4: LinkedIn sensation daughter Olivia, and you know, I'm disappointed that
Speaker 4: she's not here, by the way, I know it's early.
Speaker 4: First sherobably a school, but you know, Sebastian, you're going
Speaker 4: to probably take Olivia to Europe. And I know one
Speaker 4: of your trade calls right now is you're bullish on
Speaker 4: international act I'm sorry, really European equities, let's be clear here,
Speaker 4: and it's not because of the value component there. It's
Speaker 4: because of the momentum of the dollar cell off.
Speaker 2: So talk to us a little bit about that.
Speaker 4: On a month of a month or quarter of Is
Speaker 4: there some longevity to the styllar weakness on a quarter
Speaker 4: of a quarter basis.
Speaker 3: Here Damien love that question. Love even more of the
Speaker 3: reference to our financial education video that I've been doing
Speaker 3: with my daughter. They're all over LinkedIn loving have a look.
Speaker 3: She's really interested about compound interests. By the way, behind
Speaker 3: the scenes, she still wants to spend more than she
Speaker 3: probably should. Look on Europe, we're long European equities. I
Speaker 3: think this is a shorter term view for US six
Speaker 3: to twelve months. Longer term. We're not in the camp.
Speaker 3: I'm not in the camp of this is the end
Speaker 3: of US exceptionalism. US tech is a force to.
Speaker 5: Be reckoned with.
Speaker 3: But right now there's still a valuation advantage for European equities,
Speaker 3: even if you neutralize the sector effect. You have stimulus,
Speaker 3: you have dovish central banks. You have a banking sector
Speaker 3: that's doing pretty well now they've escaped.
Speaker 2: What kind of European stocks I mean, are we buying
Speaker 2: Nesle or we buying BMP Perry book.
Speaker 3: So our stock pickers those that implement our slcation strategy,
Speaker 3: like industrial healthcare and banks that banks are at one
Speaker 3: time book one times book value. Before the financial crisis
Speaker 3: in Europe there were two times book value. They struggled
Speaker 3: limping out of the financial crisis and with negative interest rates,
Speaker 3: that's not good for banks. Now we're in a positive
Speaker 3: interest rate environment, they're still trending around one times book value.
Speaker 3: So we like those.
Speaker 4: So, Tom, you see what Impassion's done here. He's taken
Speaker 4: what is effectively a value call, but he's wrapped it
Speaker 4: up in a big fat momentum swing here in euro dollargy.
Speaker 2: I agree that right back to what you were saying,
Speaker 2: I mean, it's a huge gamble about the momentum.
Speaker 4: I mean it's it's not right now. I mean, look
Speaker 4: at the euro relative to and by the way, I
Speaker 4: mean it's on the i of the beholder, right. And
Speaker 4: if you look at emerging market currencies, for example, nineteen
Speaker 4: of twenty one of our versus you know, the dollar
Speaker 4: this year, but only three are up versus the Euro
Speaker 4: this year, So you're really leaning into the factor, at
Speaker 4: least you know your your currency strategist are leaning into
Speaker 4: the fact that you know there may be a little
Speaker 4: bit of like again, some legs to this euro strength here,
Speaker 4: just because it's the best of the of the rest.
Speaker 3: I guess well Themian Bloomberg Surveillance Radio is the only
Speaker 3: show where I can get a little bit more quantitative
Speaker 3: and theoretical. That's why Tom is my absolute favorite host
Speaker 3: and anchor.
Speaker 2: Are okay you non linear right now?
Speaker 3: Well, a lot of things are nonlinear in markets. Markets
Speaker 3: are more nonlinear than they've been historically. If you look
Speaker 3: at tails on both sides, the left side and the
Speaker 3: right side, positive and negative. But what it's going to
Speaker 3: say is valuation and momentum when they align together. Yes,
Speaker 3: historically that is a much stronger signal than either signal
Speaker 3: working alone, and that's been studied across markets.
Speaker 2: We welcome all of you across the nation. Good morning
Speaker 2: on Serious XM. I was lectured, did an event with Pimco.
Speaker 2: It's a small startup money on the West coast. Sebastian
Speaker 2: page of t row Price. How about those orioles that
Speaker 2: endorsements really working out this year? Anyways, folks, good morning
Speaker 2: across this Memorial Day nation. Damien Sassar and Time, can
Speaker 2: we welcome you. I can't say enough on a sleepy
Speaker 2: Friday as you get into the weekend, the markets are
Speaker 2: not sleepy the dollar dynamics right now are extraordinary. Berry
Speaker 2: King Green and Damien Sasa are in the eight o'clock
Speaker 2: hour that got Ducky bumps over that on YouTube. Subscribe
Speaker 2: to Bloomberg Podcasts. Thank you for that, just growing each
Speaker 2: in every day. Damien sas are to Sebastian.
Speaker 4: Page, well, I just think it's about growth expectations here
Speaker 4: in the US, right, I mean, they really are falling.
Speaker 4: I mean, and so you know, the question is how
Speaker 4: far do they go or how far before the FED
Speaker 4: catches up and wakes up to this. So I'm just
Speaker 4: curious to hear what you know. Your great expectations are
Speaker 4: for the great Fed expectations are sorry through the end
Speaker 4: of this year, but more importantly in the first half
Speaker 4: of now next year. It's just how deep do we
Speaker 4: think the terminal FED funds rate can go?
Speaker 3: You have to account for the possibility of an upside
Speaker 3: surprise and inflation when you answer that question. It's not
Speaker 3: just about growth. That's why it's tough to be the FED.
Speaker 2: Right now, that's right, I'm going to stop the show, folks.
Speaker 2: I'm interviewing Damian Sassar and Sebastian Page. Horse and cart
Speaker 2: does inflation go up as the cart because the horse
Speaker 2: is the dollar weaker, the debt and the deficit bigger.
Speaker 2: How's that sequence work to get higher inflation.
Speaker 4: Well, I'll hit that first, And it really comes down
Speaker 4: to whether the hard data catches up to the soft
Speaker 4: data and the resilience of the US economy and whether
Speaker 4: or not this can all play through. And I don't
Speaker 4: think we've really gotten a whiff of what a fourteen
Speaker 4: and a half percent effective tariff rate, because that's what
Speaker 4: we're talking about exxanthy right if you talk about China
Speaker 4: forty percent plus the sectoral and that's up.
Speaker 2: From two and a half percent from three to fourteen, right, right.
Speaker 4: So I mean like, I don't I don't know what
Speaker 4: that looks like, and I don't know what this US
Speaker 4: economy looks like in that environment, and so what the
Speaker 4: market I guess if I had to get asymmetric on you,
Speaker 4: I think the asymmetry is to deeper cuts.
Speaker 5: You know when they do.
Speaker 2: Come Sebastian, Damian, Sebastian, I'll get they're both the great
Speaker 2: tie up in Quebec. Sebastian, when when I did Quebec
Speaker 2: go for Kearney, they sort of did. Didn't that Edmonton?
Speaker 2: They did? Good morning Prime Minister Kearney Sebastian. Very importantly
Speaker 2: here do the Americans get more inflation because of what
Speaker 2: we see now in currencies and with the Build Better
Speaker 2: America BBB bill and all.
Speaker 3: It's part of it on imports. So you're today we're
Speaker 3: running at two point four percent inflation. If you analyze
Speaker 3: the monthly prints, that's not too bad. The one year
Speaker 3: swap is looking at three point three. So the expectation
Speaker 3: is that inflation's coming up. I think there's a risk
Speaker 3: to the upside because of commodities. Some commodities are trending up,
Speaker 3: precious metals and soft commodities because of wages.
Speaker 2: About thirty three dollars.
Speaker 4: Just the towers alone, right, it's you know, you would
Speaker 4: know better than I. Just what is the impact of
Speaker 4: these terror I mean, what is it going to do
Speaker 4: to inflation? To prices here? I mean Walmart cost conounts,
Speaker 4: is earnings next week? I mean we're not going to
Speaker 4: get any look, but they're certainly going to, you know,
Speaker 4: talk around some of that stuff. And it's just going
Speaker 4: to be interesting to see you right in the especially
Speaker 4: the input prices I mean and you know, all that
Speaker 4: stuff is starting to trend to act.
Speaker 3: Okay, So Tom, this is like we're having our mini
Speaker 3: asset allocation committee here, because in our ass location committee
Speaker 3: we have bulls and bears, and we have debate, and
Speaker 3: now we're neutral or close to neutral between stocks and bonds.
Speaker 3: But now Damien is sounding a bit bearish here, so
Speaker 3: I'm going to give Devil's advocate the other side of it.
Speaker 3: Earnings growing thirteen percent this quarter relative to the same
Speaker 3: quarter last year. The FED more interested in cutting than hiking,
Speaker 3: and growth, yes, is slowing, but most of it is
Speaker 3: in the soft data. There's been a massive drop in
Speaker 3: the soft data. But if you want to look at
Speaker 3: one data point on hard data, I would look at claims,
Speaker 3: and claims are still in the low two hundreds. People
Speaker 3: are not getting fired, right.
Speaker 2: We've heard this this week. I really can't say enough,
Speaker 2: folks about the anecdote that we see that America is
Speaker 2: vibrant and busy. At least the upper third of people
Speaker 2: consuming is they can. There's a wonderful book out now,
Speaker 2: The Psychology of Leadership by Sebastian Page. This comes after
Speaker 2: his tour de force on All the Traps and pitfalls
Speaker 2: of diversification for parents at home falling apart because the
Speaker 2: Brady kids are getting ready for summer. What is the
Speaker 2: psychology of leadership for parents to get through this summer
Speaker 2: with teenagers?
Speaker 3: You know I have two teenagers, so that question hits home.
Speaker 2: Tom. I'll say to that question, I'll.
Speaker 3: Say this, people underestimate how important it is to have
Speaker 3: long term goals, to think long terms. And I think
Speaker 3: that applies to the younger.
Speaker 2: You got to give your kids the gift.
Speaker 3: Of long term, the long term goal and thinking long
Speaker 3: term and and guiding your actions day to day based
Speaker 3: on what you're trying to do long term.
Speaker 2: Is it okay that the older teenager walks in, says
Speaker 2: nothing and closes the bedroom door discuss.
Speaker 4: I mean, for me and my experiences, when you come
Speaker 4: down to the kitchen and your daughter's they're eating, and
Speaker 4: I say, oh, hey, what you eat and then she
Speaker 4: goes stop badgaming me and she just runs out the door.
Speaker 4: So I understand what you're talking about. And she's beautiful anyway,
Speaker 4: don't get me started. But we all have our experiences there.
Speaker 4: I think we have to take this back to the
Speaker 4: job market, because you make a really, really really good point.
Speaker 4: What will it takes a bashing page for payrolls to
Speaker 4: come off here in the US? I mean what I
Speaker 4: mean what and when? I mean like, when do you
Speaker 4: if it were going to happen and we had to
Speaker 4: play that scenario out, what should we be looking for?
Speaker 5: What are the first indicators there?
Speaker 3: So of the lagging labor market indicators, the least lagging
Speaker 3: is the claims. So I would look at claims and
Speaker 3: right now they're holding in.
Speaker 2: Do you have a statistic on claims? Was a tip point?
Speaker 2: Is it two sixty to eighty?
Speaker 3: Look the long run app riche on claims is three fifty.
Speaker 3: I know, so they can go higher. They can go higher,
Speaker 3: But that is potentially the least lagging of the lagging
Speaker 3: labor marketing. Edvans and oilers bullish on the Oilers, Sebastian
Speaker 3: page of Quebec and sure book, thank you so much.
Speaker 2: He is the t road price.
Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live
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Speaker 2: Barry King Green at Berkeley Professor Ike and Green, thank
Speaker 2: you so much for joining Bloomberg this morning. Barry, I've
Speaker 2: got to go back to you start just staying in France,
Speaker 2: and you must read for any kid getting into the game.
Speaker 2: Exorbitant privilege is Donald Trump furtthering away. Our exorbitant privilege.
Speaker 6: Is I think the dollar has been tarnished significantly since
Speaker 6: Liberation Day. It's safe haven status is eroding more quickly
Speaker 6: than before. I've long thought that the dollar would have
Speaker 6: to share the international stage with other currencies. I didn't
Speaker 6: think that would that process would accelerate so grammatically this year.
Speaker 2: What is so important here, Barry, is a legacy back
Speaker 2: to the nineties of the unexpected. I was with you
Speaker 2: at a G seven meeting in Singapore, hugely historic, a
Speaker 2: lifetime ago. Then we were worried about the shadows in
Speaker 2: the unexpected. Now Here in twenty twenty five, what is
Speaker 2: the unexpected? You're studying at Berkeley. What's the surprise out
Speaker 2: there that concerns you well?
Speaker 6: I think that the markets have responded to the ninety
Speaker 6: day pause in the UK deal by thinking that the
Speaker 6: period of elevated uncertainty is over. And exactly as you
Speaker 6: said before, a few minutes ago. Tom, the uncertainty and
Speaker 6: the spike in the VIX continue. We haven't really seen
Speaker 6: that spill over into distress in financial markets, but I
Speaker 6: think that distress could be coming. I think what's happening
Speaker 6: in the cryptosphere could spill over and to mainstream financial markets.
Speaker 6: There's a lot to worry about that hasn't materialized yet.
Speaker 2: As very King Green looks at the long term, we
Speaker 2: must consider the data check is Professor Eiching Green states
Speaker 2: of vix's out now four big figures twenty four point
Speaker 2: five four, the SPX futures in negative ninety three now
Speaker 2: futures negative six twenty six, and dollars weaker. Barry a
Speaker 2: privileged to bring you, Damien SaaS Hour of Bloomberg Intelligence,
Speaker 2: truly expert on the interior dynamics of em currencies, Damien.
Speaker 4: Professor Eicken Green, you discussed this world of international capital mobility,
Speaker 4: and you know you talk about US its ability to
Speaker 4: run trade deficits in order to provide foreign reserves to
Speaker 4: the rest of the world. You know, just how much
Speaker 4: longer can it continue to do that? I mean, and
Speaker 4: what other currency might serve that role if the dollar
Speaker 4: is no longer you know, as you rightly point out,
Speaker 4: the world reserve currency.
Speaker 6: We're accelerating toward the cliff where the appetite for US
Speaker 6: free use abroad begins to cry up. I think we're
Speaker 6: already seeing hints of that in financial markets, at which
Speaker 6: point there will be a reluctance to acquire and hold
Speaker 6: and use dollars by secral banks and other investors around
Speaker 6: the world. But the answer to your second question, Damien,
Speaker 6: who can step up to provide that international liquidity if
Speaker 6: not the United States? The answer for the moment is
Speaker 6: no one. That there aren't enough high quality eurosecurities available
Speaker 6: to the rest of the world. China is still a
Speaker 6: small player financially, despite all the chatter about it growing role.
Speaker 6: Non traditional reserve currencies like the Aussie dollar and the
Speaker 6: Canadian dollar too small to make a difference. So I
Speaker 6: think we're staring down into the abyss of a global
Speaker 6: liquidity shortage.
Speaker 4: Professor I can Green. The dollar bulls would argue that
Speaker 4: the US military comes into play when you're thinking about
Speaker 4: the dollars reserve status. Talk to us about you know,
Speaker 4: the fact that the last seventy five years we've been
Speaker 4: free of war, there's been global financial security in the
Speaker 4: form of dollar reserve assets. Talk to us about the
Speaker 4: case for dollar bulls. Does it still hold up well?
Speaker 6: For the last seventy five years, our alliance partners have
Speaker 6: held and used dollars, partly as a show of thanks
Speaker 6: of goodwill, partly because they believe the US will be
Speaker 6: a reliable steward of their balances. Those alliances have been
Speaker 6: called into question. When and whether the US military will
Speaker 6: be deployed to defend our security partners is now up
Speaker 6: in the air, so is the appetite for dollars.
Speaker 2: Agreeing with us at Berkeley here on Global FX, I'm
Speaker 2: going to turn to the US debt and deficit here
Speaker 2: in a moment off of his iconic twenty twenty one
Speaker 2: book on our Public Debt. But Barry, first, I have
Speaker 2: to ask you, and I'm not going to say what's
Speaker 2: a question you would ask god Besson. It's far beneath
Speaker 2: you to act like a journalist. If you were at
Speaker 2: the White House today or at Treasury, if you were
Speaker 2: sitting there with a Secretary Treasury, what advice would you
Speaker 2: give him? Given the president that he serves well.
Speaker 6: Number one definitively takes some of the more hair brained
Speaker 6: ideas off the table, taxing foreign holdings of US securities.
Speaker 6: Number two get more serious about addressing the deficit problem,
Speaker 6: which is getting worse rather than better. And number three
Speaker 6: camp down the uncertainty around crede policy.
Speaker 2: The golden fetters, globalizing cap I love Hall of Mirrors,
Speaker 2: the Great Depression, Great Recession, and the uses and misuses
Speaker 2: of history. But the book very I can greed to
Speaker 2: stop me cold complete tangent. I thought in defense of
Speaker 2: public debt. Everyone of every political persuasion is apoplectic right now.
Speaker 2: It's the very log linear growth of our deficit and
Speaker 2: our debt. Are we becoming japan Like? Are we reaching
Speaker 2: a tipping point of too much debt, too much interest expense?
Speaker 6: Yes, the tipping point is coming. That book made the
Speaker 6: point that public debt can be useful in an emergency,
Speaker 6: in a financial crisis, in a war, in a pandemic,
Speaker 6: when you have to mobilize all available resources. But when
Speaker 6: the emergency passes, you want to restore the government's capacity
Speaker 6: to borrow in the future. And we did the first part.
Speaker 6: We did not do the second.
Speaker 4: Professor I can Green, my chief USA interest rate strategists,
Speaker 4: Ira Jersey, and we were just talking, and he discusses
Speaker 4: this new class of bond vigilantes that they're taking the reins,
Speaker 4: that they're rebuking fiscal large ass that the psychology of
Speaker 4: global government bond investors has shifted, and rather abruptly at that.
Speaker 4: What are your thoughts there?
Speaker 6: I think your interest rate strategists are exactly right. I
Speaker 6: think the US government has had a lot of leewaight
Speaker 6: incur debt to run deficits, the backdrop being that it
Speaker 6: is going to remain financially reliable and prudent in the
Speaker 6: longer run, and there is no evidence of the latter.
Speaker 6: There is no strategy for stabilizing the debt to GDP
Speaker 6: ratio and bringing down the deficits. So I think investors
Speaker 6: are really looking at treasuries in a very different way
Speaker 6: than they have in the past.
Speaker 2: Professor Aiki, We've got to move to the markets of
Speaker 2: folks who are blowing up the show. Given everything we see,
Speaker 2: I can grieve driving the vix out to a five
Speaker 2: handle twenty five point one four, the dowdown six hundred
Speaker 2: and thirty points. Barry Ike and Green and Ken Rogoff
Speaker 2: mentions you in my book of the Summer our dollar
Speaker 2: your problem. He mentions Ike and Green, like two thirds
Speaker 2: of the way through the book, where did our moral
Speaker 2: compass go, the calvinistic heritage of this nation to at
Speaker 2: least try to pay our bills in God's name? Barry,
Speaker 2: Ike and Green, where did that drift to? Well?
Speaker 6: I think it's drifted into the land of non facts,
Speaker 6: where everyone can any everyone can assert what they want
Speaker 6: about the state of the national finances. The Congressional Budget Office,
Speaker 6: which states the truth or the closest to reality we have,
Speaker 6: doesn't carry the weight on Capitol Hill or in the
Speaker 6: White House that it deserves that it should.
Speaker 2: Verry, I can mean honored to have you today. Thank
Speaker 2: you so much for joining Bloomberg, and we are fortunate
Speaker 2: to have you on this today of market crisis. Professor
Speaker 2: Eichingreen at the University of California at Berkeley.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 2: We try to find a sense of calm with Emily Rowland.
Speaker 2: She agreed to come on if I wouldn't mention the
Speaker 2: Boston Red Sox, where thrilled she could join us from
Speaker 2: the John Hancock Company. This morning, Emily, the panic here
Speaker 2: over the weekend at kitchens at barbecues is going to
Speaker 2: be sell US big stocks like Tariff, Layden, Apple. You disagree.
Speaker 7: You know, when we think about what's going on with
Speaker 7: markets right now, Tom, investors are really trading on feelings
Speaker 7: and not facts. This is a sentiment driven market, whether
Speaker 7: it's sell everything US, whether that's stocks, bonds, dollars. But
Speaker 7: when you look underneath the hood at the facts, earnings
Speaker 7: growth most importantly to US and the US. We just
Speaker 7: saw Q one earnings come in at fourteen percent. Nine
Speaker 7: percent is what analysts are penciling in for the year.
Speaker 7: You look over at Europe, earnings growth this quarter was
Speaker 7: negative eight percent, and analysts are revising down earnings estimates
Speaker 7: to around three percent in Europe. You look at the front,
Speaker 7: the macro backdrop, and the United States growth is holding
Speaker 7: in the city economic Surprise index is actually perking up.
Speaker 7: The hard data is coming in positive. We're seeing the
Speaker 7: opposite happen in Europe as their data is coming in.
Speaker 7: Weaker growth is struggling overseas. Yet you've seen this massive
Speaker 7: capital rotation out of the US into Europe. We would
Speaker 7: fade it and use those proceeds to invest in the
Speaker 7: United States.
Speaker 2: It's so opposite. So many of the actually think she
Speaker 2: actually thinks the reds sucks are going to win ten
Speaker 2: in a row in August.
Speaker 4: You know, And I got to ask you, and I
Speaker 4: just said it before. Two to three cuts are pricing
Speaker 4: before the end of the year by the Fed. And
Speaker 4: the Fed's made no secret about its asymmetric view on
Speaker 4: policy rates and inflation. Is there a possibility that the
Speaker 4: Fed can move more aggressively before the end of this year.
Speaker 7: Well, I probably not, especially given some of the fiscal
Speaker 7: developments that we've seen. I think one reason that the
Speaker 7: bond market is repriced for fewer rate cuts this year
Speaker 7: is because now we may have this fiscal thrust coming
Speaker 7: through as a result of this big, beautiful bill that's
Speaker 7: potentially coming through Washington. So the more fiscal stimulus you
Speaker 7: need to do, are that your plan to do the
Speaker 7: less monetary policy stimulus that you need to do. So
Speaker 7: we're seeing a big shift on that front, and I
Speaker 7: think that probably pushes out the FED to later in.
Speaker 2: The year and the big beautiful Bill. Margaret Brennan of
Speaker 2: CBS still scheduled to be with us at the top
Speaker 2: of the nine o'clock. Our Craig Moffatt on Apple will
Speaker 2: be with us. He's been canscious. Mike Green will join us.
Speaker 2: Some simplified asset management as well. Damien, please to Emily.
Speaker 4: Rowland, Emily, US GDP growth expectations have fallen off a cliff.
Speaker 4: I mean talking looking just at Q four our year
Speaker 4: over year, I mean, my goodness, I mean it just
Speaker 4: fell off a cliff here. And so I'm just curious
Speaker 4: to hear your thoughts about the dollar. I mean, what
Speaker 4: are your thoughts on the dollar here? I mean, what
Speaker 4: are you guys seeing on a forward basis? I mean,
Speaker 4: is the end of the dollar's hege money at risk here?
Speaker 7: No, we don't believe in the death of the US dollar.
Speaker 7: That narrative does tend to resurface every few years. The
Speaker 7: dollars still the world's reserve currency. We've seen this really
Speaker 7: notable dynamic where yields have backed up at the same
Speaker 7: time that the dollars weekend. That almost never happens, and
Speaker 7: I think it is a result of the sentiment around
Speaker 7: sell everything America.
Speaker 5: With the US.
Speaker 7: I'm not saying we're great, but we're sort of the
Speaker 7: cleanest shirt and the dirty laundry. From an economic growth
Speaker 7: perspective here, that should actually bring a flood of dollars
Speaker 7: onto our shores. Other central banks are cutting the US
Speaker 7: is on hold for now. All of those traditional dynamics
Speaker 7: that we look at suggest that the dollar should not
Speaker 7: be experiencing weakness, and that line.
Speaker 2: That optimism is like what you would hear from Bill Gross,
Speaker 2: the founder of PIMCO. He used to love to talk
Speaker 2: about the cleaner shirt. And the other thing I would say,
Speaker 2: Emily to your Boston college is one Pte Lynch at
Speaker 2: Fidelity years ago said you have to stay the course,
Speaker 2: explained people petrified or bewildered or confused, how to not
Speaker 2: panic and take the four to oh one k to cash.
Speaker 7: It's so important. Peter Lynch lives right down the street
Speaker 7: from me here, and another great investor, of course, Warren Buffett,
Speaker 7: said recently, just don't bet against America. When you think
Speaker 7: about the incredible innovation that these companies in the United
Speaker 7: States have. We have a massive overweight to high quality companies.
Speaker 7: A lot of those are found in the US technology space.
Speaker 7: And when we think about what really drives markets over time,
Speaker 7: I think one of the most important things to remember
Speaker 7: is stock prices follow profit. We are investing in companies,
Speaker 7: not countries, and we want to think about where can
Speaker 7: you find that earnings growth engine. And as we look
Speaker 7: across the world, we're still finding in the US. Yes,
Speaker 7: sentiment can be a powerful force over time. Momentum can
Speaker 7: be a powerful force over short periods of time. We
Speaker 7: do not use momentum and sentiment in our investment process.
Speaker 7: We use cycle analysis, we use fundamental analysis, and right
Speaker 7: now we want to gravitate to those high quality companies,
Speaker 7: most of them are found in the United States.
Speaker 2: Emily Roland, thank you so much.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 6: We get a.
Speaker 2: Huge response when Joel Lavorgna joins us. There's just no
Speaker 2: other way. Thank you so much for thanking time this morning. Short,
Speaker 2: did you speak to the president last night?
Speaker 5: I have not.
Speaker 8: No, I haven't, but thank you for having me, and.
Speaker 5: We have a lot to talk about.
Speaker 2: We have a lot to talk about. Help me here,
Speaker 2: Joe Lavorna, with the presumption of our global Wall Street
Speaker 2: listeners worldwide across this nation, that Besson will walk back
Speaker 2: the president's enthusiasms. Is that a strategy.
Speaker 8: The president has a negotiating strategy which I would argue
Speaker 8: has been largely successful.
Speaker 5: We probably will disagree on this.
Speaker 2: Ratings folks not known CNN had this. Thank you CNN.
Speaker 2: His ratings have gone up in the last ten days.
Speaker 8: Well, I'll actually you know me, well, I will say
Speaker 8: something else. If you look at the polling Tom polling
Speaker 8: that's been good in sixteen, twenty and twenty four take
Speaker 8: Rafts Mussin for example, Pauling as of last night had
Speaker 8: the economy moving in the right direction at its highest
Speaker 8: reading in sixteen years.
Speaker 5: So there's a lot of good stuff here.
Speaker 8: So I don't think there's a you cried, Well, this
Speaker 8: is a negotiation and the intent and desire is to
Speaker 8: read on shore and manufacturing high value out of here,
Speaker 8: So that will ultimately be the President's the president's decision,
Speaker 8: and Secretary Best will follow that.
Speaker 2: Joe, Damian wants to get inbod I got to follow
Speaker 2: that up as well. So we have a negotiating tactic
Speaker 2: the Secretary Treasure with David Weston here in exactly two hours.
Speaker 2: And then do you just presume there'll be some make
Speaker 2: nice nice delay where we get a sixty day ninety
Speaker 2: day delay.
Speaker 8: Maybe, or there'll be a deal tom there'll be a
Speaker 8: deal that come on. Well, let me say a framework,
Speaker 8: because people talked about the deals.
Speaker 5: I got all this pushback to President's not going to pivot.
Speaker 5: You can't get a deal done. It's a framework for
Speaker 5: a discussion.
Speaker 8: I'm optimistic that it will be resolved in the US's advantage.
Speaker 2: Should I define framework for you? A framework is where
Speaker 2: you're in negotiations to get afterthought, to empty the dishwasher.
Speaker 2: That's what a framework is.
Speaker 4: Joe, I'd love to get your opinion on the dollar
Speaker 4: as the world reserve currency. And the reason I ask
Speaker 4: it is this. I actually had long been a proponent
Speaker 4: of the thing that you know, the dollar. It's almost
Speaker 4: a bad thing for the Fed. It almost makes the
Speaker 4: Fed have to make decisions that are not necessarily based
Speaker 4: on the US economy alone, but the rest of the
Speaker 4: world writ large because of the dollars influenced the world's
Speaker 4: reserve currency. Now that it seems to be and again
Speaker 4: I'm not calling for the end of king dollar, but
Speaker 4: you know, some of the shine seems to be rubbing
Speaker 4: off of it. Here do we think does the president
Speaker 4: does the administration think that a weaker dollar is good
Speaker 4: for America?
Speaker 8: The administration does not want to lose this reserve status,
Speaker 8: and certain instances the dollar is artificially high visa these
Speaker 8: certain countries, but in general no. I think if strong
Speaker 8: dollar is reflective of the fact the US is basically
Speaker 8: the strongest industrial economy in the world from a GDP perspective. Perspective, however,
Speaker 8: your Bloomberg audience and Tom Kean will love this. The
Speaker 8: problem with the FED is this abundant reserve approach to
Speaker 8: operating monetary policy.
Speaker 5: We've got abundant reserves.
Speaker 8: I would move away from that and go back to
Speaker 8: the older system with the balance sheets smaller.
Speaker 2: Joeli Varna with this with SMBC Nico Securities part of
Speaker 2: the Sumatoma Group of Japan, I can talk about Jamands
Speaker 2: here in with this Damien Sasa this morning. Welcome across
Speaker 2: the nation. The doubt negative. My eyes are family, Damon, Yeah,
Speaker 2: I think it's negative three thirty seven.
Speaker 4: Right now, DJ, I mean we have to ask you
Speaker 4: about Japan, the boj's role in the global financial system,
Speaker 4: the systemic risk of it being the net creditor to
Speaker 4: the rest of the world. And you know now what
Speaker 4: we're seeing with inflation ticking up in Japan. Do you
Speaker 4: think there's any real risk that a lot of that
Speaker 4: those offshore holdings are going to need to be repatriated
Speaker 4: on shore now now?
Speaker 8: And you don't see I mean, because well we were
Speaker 8: worried about Taiwan a few weeks ago. It's a nice
Speaker 8: Bloomberg article. I give you guys a plug. And how
Speaker 8: long did that last? There was issues last summer, was
Speaker 8: on why we had a big move in the nick
Speaker 8: I and JG B eials. By the way, j G
Speaker 8: B eyals had been leading this recent rise higher, but
Speaker 8: it's also been globally, which is also like want to
Speaker 8: push back against the narrative that the market's selling off.
Speaker 8: By the way, the market's exactly where it was a
Speaker 8: week ago before the Moody's downgrade.
Speaker 5: The surprise downgrade.
Speaker 8: But this isn't about the budget being big and causing
Speaker 8: the market to sell off. So again the narrative I
Speaker 8: think is incorrect. But no, I'm not worried about systemic issues.
Speaker 2: And why are we worried about the budget then.
Speaker 8: Because that's just that's just the easy, low hanging fruit,
Speaker 8: simple narrative that people don't really have to think.
Speaker 2: Center GDP, I mean we on equivalent debt and deficit.
Speaker 8: The well, the thing is the numbers that are coming
Speaker 8: from CBO. Moodies apparently use CBO's numbers. Citizens sure it
Speaker 8: can be for a responsible budget. They all use the
Speaker 8: same numbers. I don't think they're correct. I mentioned this
Speaker 8: maybe the last time in that's all.
Speaker 2: The present, that CEO's data is not correct.
Speaker 8: That the forecasts are unbelievably pessimistic assuming one point eight
Speaker 8: percent GDP growth the next ten years.
Speaker 2: So as Malpass would say, it's the growthiness that's not
Speaker 2: in there. Granted you can't predict the growthiness, but you're
Speaker 2: saying we're going to have a sustained growth rate to
Speaker 2: get us through.
Speaker 8: Well, let's say let's say we had growth at say
Speaker 8: two and a half percent. That's I think we could
Speaker 8: be three, but let's say two and a half. That's
Speaker 8: an extra two trillion revenue to tariffs. They're going to
Speaker 8: raise two hundred billion this year. That's going to account
Speaker 8: for something over the next handful of years that won't
Speaker 8: even be in the numbers because it's not part of
Speaker 8: the official scoring.
Speaker 2: I'm going to say, everybody listening, whatever your political persuasion,
Speaker 2: this is a really, really valid study away from the
Speaker 2: debt gloom. Do you grow your way out of the
Speaker 2: problem that's worked for a few decades to.
Speaker 5: Say it worked in the late nineties.
Speaker 2: Yeah, Damien.
Speaker 4: Well Joe, I mean I have to ask you about
Speaker 4: the disconnect between the alt from the hard data here
Speaker 4: in the US and whether or not you think there's
Speaker 4: you know, something coming around the next corner. Do you
Speaker 4: know what I'm saying there? I mean, I know, this
Speaker 4: US economy has been exceptional, it really has been. I
Speaker 4: know it's resilient, it really has been. Earnings have been
Speaker 4: super resilient, and I agree with all of it, and
Speaker 4: it can continue. But I mean, you know the whispers
Speaker 4: that the hard data is going to catch up to
Speaker 4: this drop in sentiment. I mean, do you believe in
Speaker 4: that or do we have it reversed? I mean it's
Speaker 4: the yeah, so I would say. So what I did
Speaker 4: is I went back and looked.
Speaker 8: Because the weak data was telling us recession in twenty
Speaker 8: two and twenty three, it didn't happen. And then some
Speaker 8: of the data recently has suggested the same. I remember that,
Speaker 8: so of course, so I what I did is I
Speaker 8: went back to look, let's look at some of the harder,
Speaker 8: high frequency data. How did that perform in twenty two
Speaker 8: and twenty three. What's it look like now? Is saying recession?
Speaker 8: No change to our sales are strong, motor vehicle gasoline
Speaker 8: demand is strong.
Speaker 2: We've heard this joke.
Speaker 5: Yes, you've heard this claim. So no, I don't.
Speaker 8: The hard data will turn sorry the week data.
Speaker 5: The soft data rather will turn up. Hard data will
Speaker 5: stay firm.
Speaker 2: On a Friday for Global Wall Street, a great lineup
Speaker 2: in the back half of our Joelivorna with us with
Speaker 2: SNBC Nico.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on applecar Play and Android
Speaker 1: Auto with the Bloomberg Business app. You can also listen
Speaker 1: live on Amazon Alexa from our flagship New York station.
Speaker 1: Just say Alexa play Bloomberg eleven thirty.
Speaker 2: With Lisa Mateo.
Speaker 9: The newspapers, Okay, let's switch gears.
Speaker 8: Totally.
Speaker 9: Yeah, this one's in the Wall Street Journal. So you guys,
Speaker 9: we've heard a lot of stories about college players making
Speaker 9: big money playing sports like basketball, football, right, but not
Speaker 9: sports like golf, tennis. Softball is a big one.
Speaker 6: Okay.
Speaker 9: We now have softball's first million dollar pitcher.
Speaker 6: Wow getting paid.
Speaker 1: She's getting million?
Speaker 5: No, I wish, but it could.
Speaker 9: Be the last one. So let me get so. Her
Speaker 9: name is Niejerray Kennedy. I hope I'm not mispronouncing that.
Speaker 9: I'm sorry if I am. She was pitching for Stanford
Speaker 9: but transferred to Texas Tech, who's booster collective paid her
Speaker 9: one million dollars.
Speaker 2: I believe.
Speaker 9: But here's it could be the last because there's this
Speaker 9: new set of rules that could restrict how much boosters
Speaker 9: can pay college athletes. It's likely to come in the
Speaker 9: coming days, but it's for for low priles profile sports.
Speaker 2: Bloomberg Business Stores. Damian comment on this, With all the
Speaker 2: work you do with Scarlett.
Speaker 4: The average NBA WNBA player gets paid one hundred and
Speaker 4: forty seven and fifty dollars a year. That's a w
Speaker 4: NBA professional basketball player. And you're telling me this college
Speaker 4: wonderful softball.
Speaker 2: Tillion dollars just tied into Vanderbilt in Miami. Do you
Speaker 2: see name image like this school like Vanderbilt absolutely everywhere.
Speaker 4: I mean, the rumors are Cooper Flagg got paid, you know,
Speaker 4: a couple million dollars to play for Duke last year.
Speaker 4: You know, we got get Paul Sweeni back in here.
Speaker 4: But you know that's that's what you're up, the endorsement kind.
Speaker 2: Of we're going to interrupt newspapers right now. Lisa, you're
Speaker 2: living this in real time for our audience across this nation.
Speaker 2: You have a gifted daughter. You're living it. Do you
Speaker 2: think this trickles down from ten famous schools like Texas
Speaker 2: Tech and Stanford to one hundred and two hundred and
Speaker 2: three hundred other schools.
Speaker 9: I've just seen like the pressure on the young kids,
Speaker 9: like all the pressure they have now, like oh, I
Speaker 9: have to perform, Like I got to post this on
Speaker 9: social media.
Speaker 5: I gotta post this.
Speaker 2: You have a batting in your backyard?
Speaker 5: I do, yeah, I know, I know.
Speaker 9: All the extra coaching sessions.
Speaker 8: Yeah, I know, I know.
Speaker 9: Okay, happy Hour, It's Friday, right, Okay, memorial.
Speaker 2: Were coming up? Continue?
Speaker 9: Okay, So in these stories of people drinking less more,
Speaker 9: people ordering mocktails, Okay, that's the hot new thing. But
Speaker 9: a lot of those people are starting to go plane.
Speaker 9: There's just too much. They're paying fifteen dollars for juice
Speaker 9: and soda and sero, and they're saying, what's going on?
Speaker 9: And I get it because we go to the bar,
Speaker 9: the restaurant and I order a mocktail for my daughter.
Speaker 9: I'm paid fifteen dollars for it. My drink costs lesson
Speaker 9: and had alcohol in it.
Speaker 2: What's going on?
Speaker 4: I don't think my wife would like me very much
Speaker 4: if I participated and drive you liar sober October? Are
Speaker 4: you really doing? I don't think she'd be able to
Speaker 4: put up with me.
Speaker 2: Can slip one more? I can?
Speaker 5: Okay.
Speaker 9: So the Mission Impossible Final Reckoning that comes out today,
Speaker 9: too big, you know, movie weekend for the holidays. Tom
Speaker 9: Cruise actually really did get an aircraft carrier for the mission.
Speaker 9: The Pentagon granted him his crew access to the USS
Speaker 9: George H. W.
Speaker 5: Bush.
Speaker 9: For the movie, they spend like three days on it,
Speaker 9: so it's a really incredible.
Speaker 1: This is the Bloomberg Surveillance Podcast, available on Apple, Spotify,
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