1
00:00:02,520 --> 00:00:13,760
Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

2
00:00:13,840 --> 00:00:17,920
Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern

3
00:00:18,200 --> 00:00:21,240
Speaker 1: on Apple car Play or Android Auto with the Bloomberg

4
00:00:21,320 --> 00:00:24,880
Speaker 1: Business App. Listen on demand wherever you get your podcasts,

5
00:00:25,280 --> 00:00:27,040
Speaker 1: or watch us live on YouTube.

6
00:00:27,320 --> 00:00:31,240
Speaker 2: The Luckiest Guy on the Street, Georgetown, John Hopkins Academics

7
00:00:31,880 --> 00:00:33,320
Speaker 2: is Axel pell or pale.

8
00:00:33,400 --> 00:00:34,400
Speaker 3: I don't know how to pronounce this.

9
00:00:34,479 --> 00:00:36,640
Speaker 2: Last time he gets to work with Stever Shudo over

10
00:00:36,640 --> 00:00:40,400
Speaker 2: at Miszoo each and every day. Stever Shudo joins us

11
00:00:40,880 --> 00:00:44,800
Speaker 2: right now as he provides wisdom to Alex and also

12
00:00:44,560 --> 00:00:49,680
Speaker 2: to us on the American economy. Steve, just for inflation

13
00:00:50,240 --> 00:00:53,760
Speaker 2: is all of our listeners and viewers have to Are

14
00:00:53,800 --> 00:00:56,080
Speaker 2: we growing adjusted for inflation?

15
00:00:57,480 --> 00:00:59,560
Speaker 3: I think we are growing adjusted for inflation.

16
00:00:59,600 --> 00:01:01,640
Speaker 4: I think we've You've got a fairly healthy growth rate

17
00:01:01,760 --> 00:01:04,680
Speaker 4: outside of the inflation environment. But I do think it's

18
00:01:04,680 --> 00:01:07,399
Speaker 4: a little bit too hot for the inflation environment. Even

19
00:01:07,440 --> 00:01:11,880
Speaker 4: the Chairman indicate that in his post meeting policy statement.

20
00:01:11,959 --> 00:01:15,200
Speaker 4: He talks about the you know, the the FEDS mandate

21
00:01:15,319 --> 00:01:19,680
Speaker 4: dual mandate being intentioned. Basically, the inflation numbers are running hotter,

22
00:01:20,280 --> 00:01:22,480
Speaker 4: but they have the weaker labor market numbers, and I

23
00:01:22,480 --> 00:01:25,200
Speaker 4: think you're getting a bit more productivity helping out the

24
00:01:25,240 --> 00:01:27,640
Speaker 4: overall real side of the economy.

25
00:01:27,720 --> 00:01:30,880
Speaker 5: So Steve going to the labor side of the economy here.

26
00:01:30,880 --> 00:01:33,039
Speaker 5: I mean, if you just look at the headline, you know,

27
00:01:33,280 --> 00:01:36,480
Speaker 5: on unemployment rate, it seems pretty darn solid, if not

28
00:01:36,520 --> 00:01:38,120
Speaker 5: close to full employment.

29
00:01:38,160 --> 00:01:40,600
Speaker 6: Here, how do you characterize this US labor market?

30
00:01:41,680 --> 00:01:44,160
Speaker 4: Well, I mean, like everything else, everything is a bit

31
00:01:44,200 --> 00:01:48,880
Speaker 4: of a tale of two stories. You know, you've got

32
00:01:48,880 --> 00:01:51,480
Speaker 4: in the economy. You've got certain sectors of the economy

33
00:01:51,520 --> 00:01:53,840
Speaker 4: that are doing extremely well, and you've got certain sectors

34
00:01:53,840 --> 00:01:56,000
Speaker 4: of the economy that are not doing very well. I

35
00:01:56,040 --> 00:01:58,080
Speaker 4: think when you look at the labor market as well,

36
00:01:58,160 --> 00:02:00,880
Speaker 4: you're seeing certain components of the labor market, like the

37
00:02:00,960 --> 00:02:04,480
Speaker 4: unemployment rate, because there's a scarcity of workers that's holding

38
00:02:04,480 --> 00:02:07,360
Speaker 4: the unemployment rate down. But by the same token, there's

39
00:02:07,400 --> 00:02:11,280
Speaker 4: a greater uncertainty out there in the business community about

40
00:02:11,360 --> 00:02:14,720
Speaker 4: where we're going, how sustainable things are, and therefore there's

41
00:02:14,760 --> 00:02:17,320
Speaker 4: a bit of a reluctance to hire workers. So you

42
00:02:17,360 --> 00:02:20,440
Speaker 4: wind up with the employment numbers coming off a little bit,

43
00:02:20,440 --> 00:02:23,400
Speaker 4: but you wind up with a tight unemployment rate remaining

44
00:02:24,040 --> 00:02:26,800
Speaker 4: an important component of the overall market environment.

45
00:02:27,160 --> 00:02:29,359
Speaker 5: So I guess with that background, Steve, the FED has

46
00:02:29,440 --> 00:02:32,239
Speaker 5: begun cutting rates with that twenty five basis point cut.

47
00:02:32,240 --> 00:02:35,400
Speaker 5: How do you think the cadence will kind of play

48
00:02:35,440 --> 00:02:36,800
Speaker 5: out over the coming meetings?

49
00:02:37,880 --> 00:02:39,640
Speaker 4: Well, I think you're probably going to definitely get an

50
00:02:39,639 --> 00:02:43,040
Speaker 4: October meeting. We put in three after the last payroll

51
00:02:43,080 --> 00:02:47,000
Speaker 4: employment number. I do think the December meeting will be

52
00:02:47,080 --> 00:02:51,639
Speaker 4: more data dependent than the October meeting, and I think

53
00:02:51,960 --> 00:02:55,560
Speaker 4: any meeting thereafter will also be more data dependent. You know,

54
00:02:55,600 --> 00:02:57,959
Speaker 4: it's interesting the chairman is able to pull off an

55
00:02:57,960 --> 00:03:01,520
Speaker 4: insurance rate cut against the dot plot telling you four

56
00:03:01,600 --> 00:03:05,160
Speaker 4: rate cuts were coming in fairly rapid order by talking

57
00:03:05,240 --> 00:03:07,760
Speaker 4: not just about the fact that the dual.

58
00:03:07,560 --> 00:03:10,840
Speaker 3: Mandate is in opposite directions.

59
00:03:10,560 --> 00:03:13,440
Speaker 4: But also getting into saying, what we're really looking at

60
00:03:13,560 --> 00:03:17,919
Speaker 4: is the risks underlying those dual mandates and making determination

61
00:03:18,120 --> 00:03:21,160
Speaker 4: based on those risks, and therefore it is an insurance

62
00:03:21,240 --> 00:03:23,120
Speaker 4: rate cut, and they've given themselves that out.

63
00:03:23,320 --> 00:03:26,120
Speaker 2: We welcome all of you across the nation this morning.

64
00:03:26,160 --> 00:03:28,160
Speaker 2: The way you listen to us, Good Morning ninety nine

65
00:03:28,240 --> 00:03:31,840
Speaker 2: one FM in Washington ninety two nine FM and Boston.

66
00:03:32,160 --> 00:03:34,240
Speaker 3: Little bit of serious baseball.

67
00:03:33,840 --> 00:03:37,080
Speaker 2: Starting today for the dreaded Toronto Blue Jays, we'll have

68
00:03:37,120 --> 00:03:39,680
Speaker 2: to see the Good Morning, Bloomberg Eleven's three O and

69
00:03:39,720 --> 00:03:44,480
Speaker 2: Miles Miller's New York. We continue with Steve Rshudo on YouTube. Steve,

70
00:03:44,600 --> 00:03:46,920
Speaker 2: you've sement you three rate cuts, but in your research

71
00:03:47,000 --> 00:03:49,520
Speaker 2: note you say the markets price are six rate cuts

72
00:03:50,560 --> 00:03:55,320
Speaker 2: If we don't get market pricing on FED easing in

73
00:03:55,400 --> 00:03:58,000
Speaker 2: all your experience with dominic constant, what does that do

74
00:03:58,080 --> 00:03:59,120
Speaker 2: to the stock market?

75
00:04:00,320 --> 00:04:02,600
Speaker 4: Well, I think the thing is the Fed's not going

76
00:04:02,640 --> 00:04:06,040
Speaker 4: to change the long term target for the FED funds

77
00:04:06,120 --> 00:04:09,920
Speaker 4: rate quickly. So therefore you know the concept of whether

78
00:04:10,000 --> 00:04:12,080
Speaker 4: we get to six rate cuts or not is going

79
00:04:12,160 --> 00:04:15,000
Speaker 4: to depend on the data, and the data will determine it.

80
00:04:15,000 --> 00:04:16,880
Speaker 3: But I don't think they're going to change.

81
00:04:16,520 --> 00:04:19,479
Speaker 4: The idea that their view on neutral is to get

82
00:04:19,560 --> 00:04:22,080
Speaker 4: back down to three percent. So then in that environment,

83
00:04:22,400 --> 00:04:24,920
Speaker 4: I think you avoid a lot of the worst case

84
00:04:25,000 --> 00:04:28,320
Speaker 4: scenarios that you would get if there was a sudden reprisal.

85
00:04:28,400 --> 00:04:31,880
Speaker 4: In terms of monetary policy, the dots are very very

86
00:04:31,920 --> 00:04:36,400
Speaker 4: important in terms of grounding the market to certain levels.

87
00:04:36,480 --> 00:04:40,640
Speaker 4: And unless those unless that grounding changes which we don't

88
00:04:40,640 --> 00:04:43,480
Speaker 4: see happening quickly. We're not going to have the end

89
00:04:43,520 --> 00:04:46,480
Speaker 4: result volatility that people would be concerned about normally.

90
00:04:46,600 --> 00:04:48,159
Speaker 3: Paul's too early to go, Nerd.

91
00:04:48,839 --> 00:04:49,240
Speaker 6: Can we go?

92
00:04:49,320 --> 00:04:52,520
Speaker 3: Nerd? Okay, let's get permission from Pall you go, Nerd? Okay?

93
00:04:52,520 --> 00:04:56,080
Speaker 2: Steve, what's roaring here after the Myron speech is a

94
00:04:56,120 --> 00:05:00,240
Speaker 2: tailor rule. The Bloomberg has a beautiful function TYL, so

95
00:05:00,320 --> 00:05:02,640
Speaker 2: you can do your own tailor role. I got so

96
00:05:02,839 --> 00:05:06,440
Speaker 2: upset about it, the certitude, the lack of humility, and

97
00:05:06,480 --> 00:05:10,400
Speaker 2: the speech Steve shutout that I looked up Robert Hetzel,

98
00:05:10,480 --> 00:05:13,720
Speaker 2: a paper I remembered from the Richmond fed like twenty

99
00:05:13,720 --> 00:05:17,800
Speaker 2: five years ago, maybe twenty eight years ago, and he

100
00:05:17,960 --> 00:05:22,480
Speaker 2: quotes the giant Orphanedes as well, that a little humilities

101
00:05:22,520 --> 00:05:27,640
Speaker 2: in order in guessing the output gap guessing nahru have

102
00:05:27,760 --> 00:05:31,360
Speaker 2: we lost our academic humility when we try to gain

103
00:05:31,480 --> 00:05:32,520
Speaker 2: this odd economy?

104
00:05:33,520 --> 00:05:33,680
Speaker 3: Well?

105
00:05:33,720 --> 00:05:36,520
Speaker 4: I think what happened is in that period post financial

106
00:05:36,600 --> 00:05:43,560
Speaker 4: crisis and post immediately post COVID, all the normal algorithms

107
00:05:43,680 --> 00:05:47,960
Speaker 4: got distorted, and therefore there is a data set that

108
00:05:48,120 --> 00:05:52,320
Speaker 4: supports things like Stephen Meron was talking about yesterday, which

109
00:05:52,400 --> 00:05:57,120
Speaker 4: is basically a zero R start environment. Again, I don't

110
00:05:57,160 --> 00:05:59,440
Speaker 4: think we're in that environment any where. We don't have

111
00:05:59,520 --> 00:06:04,159
Speaker 4: the balance sheet related issues that existed then, but that

112
00:06:04,279 --> 00:06:07,560
Speaker 4: kind of distortion is still out there. But again, I

113
00:06:07,600 --> 00:06:10,120
Speaker 4: think he's to a certain extent, he's pushed himself to

114
00:06:10,160 --> 00:06:13,240
Speaker 4: an extreme, and I think that will minimize his vote

115
00:06:13,279 --> 00:06:14,040
Speaker 4: to a certain extent.

116
00:06:14,160 --> 00:06:16,080
Speaker 3: Thank you, That's just what I wanted to hear.

117
00:06:16,320 --> 00:06:21,599
Speaker 2: With that said, do we have the institutional courage Stavershudo

118
00:06:21,800 --> 00:06:25,520
Speaker 2: to push against a zero R start or the eight

119
00:06:25,600 --> 00:06:29,839
Speaker 2: other flavors of that expansion, that lack of restrictiveness.

120
00:06:30,880 --> 00:06:31,040
Speaker 7: Yeah.

121
00:06:31,120 --> 00:06:31,160
Speaker 3: No.

122
00:06:31,279 --> 00:06:33,919
Speaker 4: I think the committee in general tries to do a

123
00:06:33,960 --> 00:06:37,680
Speaker 4: good job. I think the committee members are focused on

124
00:06:37,760 --> 00:06:40,359
Speaker 4: doing good job. I think the research staff tries to

125
00:06:40,440 --> 00:06:42,480
Speaker 4: do a very good job and a good thorough job,

126
00:06:42,720 --> 00:06:45,640
Speaker 4: and I think they do a good job of informing

127
00:06:45,800 --> 00:06:49,120
Speaker 4: the board and the members of the committee. And I

128
00:06:49,120 --> 00:06:52,840
Speaker 4: think in that environment, it's the institutional portion of it

129
00:06:53,160 --> 00:06:56,440
Speaker 4: that becomes more important than the one or two voices

130
00:06:56,800 --> 00:06:58,839
Speaker 4: that are leaning to one aggressive side.

131
00:07:00,080 --> 00:07:02,200
Speaker 6: Steve Hel's the US consumer doing well.

132
00:07:02,279 --> 00:07:05,160
Speaker 5: It's a pretty solid retail sales a week or so ago,

133
00:07:05,279 --> 00:07:08,240
Speaker 5: and boy, we hear about some of the challenges out there,

134
00:07:08,240 --> 00:07:09,920
Speaker 5: but the consumer seems to be hanging in there.

135
00:07:09,960 --> 00:07:12,680
Speaker 4: What do you think, Well, again, even though we're not

136
00:07:12,840 --> 00:07:16,280
Speaker 4: hiring a lot of workers, we're working people longer, we're

137
00:07:16,320 --> 00:07:19,440
Speaker 4: paying the more, and the net result is you have

138
00:07:19,560 --> 00:07:23,320
Speaker 4: consumer spending building on top of that. And again that's

139
00:07:23,360 --> 00:07:26,240
Speaker 4: a little bit of this tale of two different economies.

140
00:07:26,440 --> 00:07:29,040
Speaker 4: There are aspects that are doing well in their aspects

141
00:07:29,040 --> 00:07:30,040
Speaker 4: that are not doing well.

142
00:07:30,240 --> 00:07:30,880
Speaker 3: You've got an.

143
00:07:30,800 --> 00:07:34,800
Speaker 4: Economy that has very, very accommodated financial markets. It's an

144
00:07:34,800 --> 00:07:38,440
Speaker 4: economy that's benefiting from excess liquidity. It's an economy that's

145
00:07:38,480 --> 00:07:41,800
Speaker 4: benefiting from strong balance sheets. You put all that together,

146
00:07:41,840 --> 00:07:45,960
Speaker 4: you've got a healthy economic environment. If you're not generating employment,

147
00:07:46,000 --> 00:07:49,920
Speaker 4: you're generating hours. If you're generating hours, you're still generating income.

148
00:07:50,040 --> 00:07:52,400
Speaker 4: If you're generating income, you're generating spending.

149
00:07:53,080 --> 00:07:55,520
Speaker 3: Steve Shudel, thank you so much, greatly appreciate it.

150
00:07:55,520 --> 00:07:58,600
Speaker 2: With from the Zoo, Stay with us. More from Bloomberg

151
00:07:58,720 --> 00:08:00,720
Speaker 2: Surveillance coming up after this.

152
00:08:08,000 --> 00:08:11,560
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live

153
00:08:11,640 --> 00:08:14,640
Speaker 1: weekday afternoons from seven to ten am. E's durn Listen

154
00:08:14,720 --> 00:08:18,280
Speaker 1: on Applecarplay and Android Otto with the Bloomberg Business app,

155
00:08:18,440 --> 00:08:19,680
Speaker 1: or watch us live.

156
00:08:19,520 --> 00:08:21,880
Speaker 3: On YouTube, joining us Liz Sanders.

157
00:08:22,040 --> 00:08:24,520
Speaker 2: People don't I mean, Lizzy and you're so ubiquitous and

158
00:08:24,560 --> 00:08:27,680
Speaker 2: you know, definitive since lewer Kaiser and people don't actually

159
00:08:27,720 --> 00:08:30,840
Speaker 2: read your note and the end of the Lizanne Sanders

160
00:08:30,880 --> 00:08:34,800
Speaker 2: note today is absolute gold. Let's start with this. Only

161
00:08:34,880 --> 00:08:38,439
Speaker 2: seventy percent of S and P five hundred are outperforming

162
00:08:38,480 --> 00:08:41,000
Speaker 2: the index of past three months and pasted one year.

163
00:08:41,280 --> 00:08:44,080
Speaker 3: Does everybody own that? I mean, the xuberance out there

164
00:08:44,120 --> 00:08:44,920
Speaker 3: is everybody owns a.

165
00:08:45,000 --> 00:08:48,679
Speaker 8: Video, right, Yeah, even though within the mag seven you're

166
00:08:48,720 --> 00:08:51,920
Speaker 8: seeing dispersion. So four out of the seven are underperforming

167
00:08:51,960 --> 00:08:54,600
Speaker 8: the S and P five hundred. But you also have

168
00:08:54,679 --> 00:08:58,080
Speaker 8: to think about the difference between the performance of some

169
00:08:58,120 --> 00:09:01,559
Speaker 8: of those top names and the contribute. So Nvidia is

170
00:09:01,600 --> 00:09:04,520
Speaker 8: the best performer year to date among the Magnificent seven,

171
00:09:04,920 --> 00:09:08,120
Speaker 8: but it's the forty seventh best performing stock in.

172
00:09:08,080 --> 00:09:11,960
Speaker 3: The eighteenth until the last couple of days are standing.

173
00:09:11,640 --> 00:09:13,920
Speaker 8: We just had a little bit of a lift. Actually

174
00:09:13,960 --> 00:09:17,720
Speaker 8: in terms of contribution rank, in Vidia is still number one,

175
00:09:17,800 --> 00:09:19,720
Speaker 8: but as of a couple of days ago, Apple was

176
00:09:19,800 --> 00:09:22,960
Speaker 8: number five. Hundred and three. Within the S and P

177
00:09:23,000 --> 00:09:23,800
Speaker 8: five hundred.

178
00:09:24,320 --> 00:09:27,160
Speaker 3: There's only five. It's the most because.

179
00:09:27,200 --> 00:09:30,800
Speaker 8: To classes of service by alphabet and merge your pathway.

180
00:09:30,920 --> 00:09:33,520
Speaker 3: Only Kevin Gordon owns that. Okay, I got to ask

181
00:09:33,559 --> 00:09:37,240
Speaker 3: this right now. What are Schwab clients.

182
00:09:37,040 --> 00:09:40,280
Speaker 8: Doing depends on the Schwab client, so we a lot

183
00:09:40,320 --> 00:09:42,400
Speaker 8: of the inflow of new client assets for us are

184
00:09:42,480 --> 00:09:46,720
Speaker 8: actually younger investors. I almost said that with air quotes,

185
00:09:46,760 --> 00:09:48,760
Speaker 8: but of course we're on We're on radio, although on

186
00:09:48,800 --> 00:09:51,640
Speaker 8: YouTube as well, So I think there's a big differentiation

187
00:09:51,760 --> 00:09:55,480
Speaker 8: these days between what retail traders are doing and thinking

188
00:09:55,640 --> 00:09:59,400
Speaker 8: and what individual investors are doing and thinking. I will

189
00:09:59,440 --> 00:10:02,959
Speaker 8: say that I have a little bit of a sour

190
00:10:03,040 --> 00:10:05,640
Speaker 8: feeling given some of the anecdotal conversations I've had with

191
00:10:05,720 --> 00:10:10,200
Speaker 8: even some of our let's call it more seasoned, ostensibly

192
00:10:10,320 --> 00:10:14,920
Speaker 8: disciplined investors. I had two investors at an event I

193
00:10:14,960 --> 00:10:17,000
Speaker 8: did a couple of weeks ago, a great event at

194
00:10:17,080 --> 00:10:21,080
Speaker 8: Churchill Downs I've never been before, super cool venue. One

195
00:10:21,200 --> 00:10:23,559
Speaker 8: said that she her last two stocks that she had

196
00:10:23,559 --> 00:10:26,800
Speaker 8: bought she got from a from a TikTok influencer, and

197
00:10:26,840 --> 00:10:28,800
Speaker 8: she didn't even know the name of the person didn't

198
00:10:28,840 --> 00:10:31,360
Speaker 8: quite know what she had bought, and another said that

199
00:10:31,440 --> 00:10:34,600
Speaker 8: she had she had bought two stocks because the tickers

200
00:10:34,600 --> 00:10:37,840
Speaker 8: were her initials and her husband's initials. Okay, so those

201
00:10:37,880 --> 00:10:41,200
Speaker 8: anecdotes are a little bit unsettling, but I still believe

202
00:10:41,240 --> 00:10:43,240
Speaker 8: that that's the exception, not the rule.

203
00:10:44,040 --> 00:10:44,719
Speaker 3: How should we.

204
00:10:44,679 --> 00:10:47,480
Speaker 5: Think about this concentration risk that we hear about so much?

205
00:10:47,960 --> 00:10:49,960
Speaker 5: It's been expressed to mean so many different ways in

206
00:10:50,000 --> 00:10:52,920
Speaker 5: terms of move in the market cap, But it's they're

207
00:10:52,920 --> 00:10:54,920
Speaker 5: the biggest earnings contributors that don't worry about it.

208
00:10:54,920 --> 00:10:55,760
Speaker 6: How do you guys think about it?

209
00:10:55,760 --> 00:10:59,600
Speaker 8: Well, they are the biggest earnings contributors that said it's

210
00:10:59,600 --> 00:11:03,240
Speaker 8: accelerating pace of earnings growth. It depends on what cohort

211
00:11:03,280 --> 00:11:05,040
Speaker 8: you're talking about, if you're talking about the MAG seven

212
00:11:05,200 --> 00:11:09,319
Speaker 8: or the ten largest names or AIAI adjacent. Yes, the

213
00:11:09,440 --> 00:11:13,400
Speaker 8: earnings profile has been significantly higher than for the rest

214
00:11:13,520 --> 00:11:15,720
Speaker 8: of the S and P five hundred, but at a

215
00:11:15,760 --> 00:11:18,679
Speaker 8: decelerating pace. I think that was part and parcel to

216
00:11:19,480 --> 00:11:23,240
Speaker 8: the pullback. We not only got in the major averages

217
00:11:23,280 --> 00:11:25,720
Speaker 8: in that mid February to early April period of time,

218
00:11:25,760 --> 00:11:28,800
Speaker 8: but the further drag on performance was many of those

219
00:11:29,040 --> 00:11:32,840
Speaker 8: leadership names. Memories are short though, so a lot of

220
00:11:33,240 --> 00:11:35,920
Speaker 8: the players in those names don't remember as early as

221
00:11:35,960 --> 00:11:37,680
Speaker 8: recently as just earlier this year.

222
00:11:37,760 --> 00:11:40,360
Speaker 2: Across America, Lizzie Saunders with us this morning and the

223
00:11:40,360 --> 00:11:43,720
Speaker 2: way you listened to us Bloomberg Radio Good Morning, ninety

224
00:11:43,720 --> 00:11:46,679
Speaker 2: to nine FM in Boston, ninety ninety one, Nathan Hager

225
00:11:46,800 --> 00:11:52,000
Speaker 2: Radio in Washington as well on YouTube, subscribe to Bloomberg podcasts.

226
00:11:52,120 --> 00:11:55,160
Speaker 2: That's what the hipsters do. Like Kevin Gordon as well.

227
00:11:55,160 --> 00:11:57,320
Speaker 2: We're on YouTube and thank you for that, Paul.

228
00:11:57,800 --> 00:12:00,440
Speaker 5: So Liziane talked to usbout earnings because it's some point,

229
00:12:00,640 --> 00:12:02,880
Speaker 5: you know, earnings really have to come through, and arguably

230
00:12:02,840 --> 00:12:05,440
Speaker 5: that they did here so far this year earning second

231
00:12:05,520 --> 00:12:07,360
Speaker 5: quarter earnings very strong.

232
00:12:07,360 --> 00:12:08,440
Speaker 6: How do you think about it in the back half

233
00:12:08,480 --> 00:12:10,640
Speaker 6: of the year going into next year. Yeah, you're right.

234
00:12:10,760 --> 00:12:12,679
Speaker 8: When all was said and done in the aftermath of

235
00:12:12,720 --> 00:12:16,160
Speaker 8: first quarter and second quarter reporting season, actual earnings were

236
00:12:16,320 --> 00:12:18,760
Speaker 8: about double what the estimate was heading in. And what

237
00:12:18,800 --> 00:12:21,680
Speaker 8: was interesting about that first half is there was limited

238
00:12:21,720 --> 00:12:24,199
Speaker 8: extrapolation on the part of analysts into the second half

239
00:12:24,240 --> 00:12:27,559
Speaker 8: of this year and into twenty twenty six. Maybe justifiably

240
00:12:27,600 --> 00:12:32,000
Speaker 8: because of uncertainty with regard to policy that you could

241
00:12:32,080 --> 00:12:36,040
Speaker 8: argue sets the bar sufficiently low as we approach third

242
00:12:36,120 --> 00:12:38,320
Speaker 8: quarter earning season. But I also think that there's a

243
00:12:38,400 --> 00:12:43,200
Speaker 8: risk factor in if either you know, one or two

244
00:12:43,320 --> 00:12:47,280
Speaker 8: high profile names misses on earnings or you just get

245
00:12:47,320 --> 00:12:50,880
Speaker 8: an aggregate reporting season that is not quite as robust

246
00:12:50,920 --> 00:12:52,480
Speaker 8: as it was in the first half of the year.

247
00:12:52,480 --> 00:12:54,240
Speaker 8: So when I think about you know, I'm paid to

248
00:12:54,679 --> 00:12:59,000
Speaker 8: assess risks, not just opportunities, and I think either some

249
00:12:59,240 --> 00:13:03,040
Speaker 8: very specific Gurning's missus, I don't think that's a big case,

250
00:13:03,080 --> 00:13:04,160
Speaker 8: but I think that's a risk fact.

251
00:13:04,400 --> 00:13:06,679
Speaker 2: A wonderful tweet out today I highlighted in the last

252
00:13:06,720 --> 00:13:09,880
Speaker 2: hour of Paul Tutor Jones talking about the challenge of

253
00:13:09,880 --> 00:13:12,160
Speaker 2: investing in the back third of a bull market or

254
00:13:12,200 --> 00:13:15,199
Speaker 2: the back third of a bear market. Let's first identify,

255
00:13:15,480 --> 00:13:17,960
Speaker 2: does liz Ane Saunders think we're in the seventh, eighth,

256
00:13:18,440 --> 00:13:19,439
Speaker 2: ninth inning.

257
00:13:19,360 --> 00:13:20,199
Speaker 3: Of a bull market?

258
00:13:22,360 --> 00:13:25,520
Speaker 8: Yes, I would say, what we don't as a character, well,

259
00:13:25,559 --> 00:13:28,280
Speaker 8: what we don't know is whether it's an extra innings bullmarket,

260
00:13:28,400 --> 00:13:30,240
Speaker 8: like in the late nineteen nineteen to.

261
00:13:30,559 --> 00:13:33,600
Speaker 2: Put a video on second base, Okay, great, we're at

262
00:13:33,640 --> 00:13:35,640
Speaker 2: the back end of a bull market. How do you

263
00:13:35,840 --> 00:13:37,840
Speaker 2: behave what's the best practice.

264
00:13:38,120 --> 00:13:42,280
Speaker 8: So, notwithstanding baskets like the meme stocks and heavily shorted

265
00:13:42,280 --> 00:13:45,960
Speaker 8: stocks and nonprofitable tech which are dominating performance at the

266
00:13:46,040 --> 00:13:49,920
Speaker 8: sub cap weighted index level since the April eighth closing low,

267
00:13:50,480 --> 00:13:52,880
Speaker 8: I think you want to fade the low quality part

268
00:13:52,880 --> 00:13:55,320
Speaker 8: of the rally and lean into higher quality. In fact,

269
00:13:55,559 --> 00:14:00,600
Speaker 8: I'll use an acronym that was more popular twenty years ago,

270
00:14:00,640 --> 00:14:02,839
Speaker 8: and I've been doing this almost forty years. I think

271
00:14:02,880 --> 00:14:05,600
Speaker 8: the way to think about factor investing in this environment

272
00:14:05,720 --> 00:14:10,560
Speaker 8: is less about traditional quality factors but almost garb. I

273
00:14:10,600 --> 00:14:14,120
Speaker 8: think you don't want to sacrifice growth, but you want

274
00:14:14,160 --> 00:14:16,240
Speaker 8: to have that value eye on valuation.

275
00:14:16,400 --> 00:14:18,320
Speaker 3: I think it's the growth for those that have never

276
00:14:18,360 --> 00:14:18,680
Speaker 3: heard the.

277
00:14:18,720 --> 00:14:23,240
Speaker 8: Phrase growth at a reasonable price, okay, foreign con I.

278
00:14:23,160 --> 00:14:25,760
Speaker 3: Mean, and you don't do individual names Walmart or the

279
00:14:25,760 --> 00:14:28,160
Speaker 3: pe of forty. I don't think that's Garby, is it?

280
00:14:29,240 --> 00:14:31,720
Speaker 8: Maybe not? And that's why I think you want that blend.

281
00:14:32,600 --> 00:14:34,920
Speaker 3: You want reactor. It gives you the best blend.

282
00:14:35,760 --> 00:14:39,200
Speaker 8: I think monolithic sector based investing doesn't make sense in

283
00:14:39,240 --> 00:14:42,080
Speaker 8: this environment. So even the leadership sectors like tech and

284
00:14:42,120 --> 00:14:45,880
Speaker 8: communication services have a lot of losers embedded within them.

285
00:14:45,920 --> 00:14:47,560
Speaker 8: So I think factor based investing.

286
00:14:47,720 --> 00:14:51,160
Speaker 2: What is say I know the answer to her questions, Brockton,

287
00:14:51,160 --> 00:14:54,840
Speaker 2: it's not that hard with Lizan on a factor basis,

288
00:14:54,880 --> 00:14:59,600
Speaker 2: what is the most attractive factor nature of the meg seven.

289
00:15:00,360 --> 00:15:04,120
Speaker 8: Well, they have often been the momentum players. Now that said,

290
00:15:04,160 --> 00:15:06,560
Speaker 8: when momentum is discussed as a factor, it's more of

291
00:15:06,600 --> 00:15:10,040
Speaker 8: a concept. It's not a fundamental factor. So when momentum

292
00:15:10,160 --> 00:15:12,280
Speaker 8: is a factor at work is working, it just means

293
00:15:12,280 --> 00:15:14,480
Speaker 8: that the stocks that have been working continue to work.

294
00:15:14,600 --> 00:15:18,360
Speaker 8: You can have momentum in utility stocks. I think people

295
00:15:18,360 --> 00:15:22,080
Speaker 8: when they hear momentum, they automatically think high beta tech,

296
00:15:22,320 --> 00:15:26,560
Speaker 8: tech adjacent kind of names. But I think outside of that,

297
00:15:26,760 --> 00:15:28,600
Speaker 8: I think you still want to look for strength and

298
00:15:28,680 --> 00:15:32,240
Speaker 8: balance sheet, strong free cash flow, high interest coverage, reasonable

299
00:15:32,320 --> 00:15:35,200
Speaker 8: valuations on a pe, and a price to book. But

300
00:15:35,440 --> 00:15:37,480
Speaker 8: you want to also keep an eye on the growth

301
00:15:37,520 --> 00:15:41,040
Speaker 8: side of things, so positive forward earnings estimate trends and

302
00:15:41,160 --> 00:15:42,720
Speaker 8: positive earnings announcements.

303
00:15:42,840 --> 00:15:44,800
Speaker 2: Ll Zenne Saunders, thank you so much for being the

304
00:15:44,840 --> 00:15:47,040
Speaker 2: most real commitment to surveillance over the years.

305
00:15:47,440 --> 00:15:51,000
Speaker 3: Is with Charles Schwab Stay with us.

306
00:15:51,000 --> 00:16:01,320
Speaker 2: More from Bloomberg Surveillance coming up after this.

307
00:16:01,320 --> 00:16:05,200
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

308
00:16:05,240 --> 00:16:08,560
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

309
00:16:08,680 --> 00:16:11,640
Speaker 1: with the Bloomberg Business app. You can also listen live

310
00:16:11,720 --> 00:16:15,320
Speaker 1: on Amazon Alexa from our flagship New York station, Just

311
00:16:15,360 --> 00:16:18,119
Speaker 1: say Alexa play Bloomberg eleven thirty.

312
00:16:17,960 --> 00:16:20,480
Speaker 2: And an equity bullmarket. One thing you do is you

313
00:16:20,520 --> 00:16:22,920
Speaker 2: watch bonds. That's a cardinal world. Bonds are out front.

314
00:16:22,920 --> 00:16:26,720
Speaker 2: Sinje Bowen with a snow hiield bonds, senior bank loan

315
00:16:26,800 --> 00:16:31,920
Speaker 2: portfolio manager at Beach Point Capital Management. Love your note,

316
00:16:32,080 --> 00:16:35,520
Speaker 2: and my basic idea is bond c the agony First?

317
00:16:35,920 --> 00:16:38,200
Speaker 2: Is there any agony in bonds right now? Or is

318
00:16:38,240 --> 00:16:40,400
Speaker 2: it the same madness as an equity bull market?

319
00:16:41,640 --> 00:16:43,360
Speaker 8: Well, first of all, good morning, thanks for having me.

320
00:16:43,720 --> 00:16:44,600
Speaker 6: I would say it's both.

321
00:16:45,400 --> 00:16:49,320
Speaker 7: I mean, similar to other risk assets, leverage, credit shows

322
00:16:49,440 --> 00:16:53,040
Speaker 7: fairly rich valuations at this point. In high yield, for example,

323
00:16:53,720 --> 00:16:55,720
Speaker 7: there are a lot of double B rated bonds that

324
00:16:55,800 --> 00:16:59,560
Speaker 7: trade inside of two hundred basis points over treasuries. In

325
00:16:59,640 --> 00:17:02,480
Speaker 7: senior loans, over two thirds of the senior loan bank

326
00:17:02,480 --> 00:17:03,680
Speaker 7: market trades above par.

327
00:17:03,720 --> 00:17:07,000
Speaker 2: So you don't see stupidity yet inbounds, well, we do

328
00:17:07,080 --> 00:17:09,720
Speaker 2: see discharge like an equity guy or I wouldn't know

329
00:17:09,800 --> 00:17:12,240
Speaker 2: convexity if you hit me over the head. Is there

330
00:17:12,280 --> 00:17:14,280
Speaker 2: stupidity in the bond world that I need to be

331
00:17:14,280 --> 00:17:14,919
Speaker 2: worried about.

332
00:17:15,640 --> 00:17:18,080
Speaker 7: Probably not to the same extent as in other risk

333
00:17:18,240 --> 00:17:21,720
Speaker 7: asset classes. Credit fundamentals continue to hold in very well

334
00:17:22,200 --> 00:17:26,800
Speaker 7: in this macroeconomic backdrop. You know, credit tends to perform well,

335
00:17:27,840 --> 00:17:30,840
Speaker 7: and so there's not a lot of excess in terms

336
00:17:30,880 --> 00:17:36,000
Speaker 7: of just you know, irresponsible credit creation that's taken place

337
00:17:36,040 --> 00:17:39,080
Speaker 7: over the past few years. And so to the extent

338
00:17:39,119 --> 00:17:43,040
Speaker 7: that we do get problems within credit, they're usually idiosyncratic,

339
00:17:43,200 --> 00:17:47,600
Speaker 7: either related to the specific issuer or to the sector,

340
00:17:47,680 --> 00:17:51,080
Speaker 7: and that's usually an impact from one of the surprise

341
00:17:51,160 --> 00:17:55,240
Speaker 7: policies that we've had over the past year, you know,

342
00:17:55,240 --> 00:17:58,639
Speaker 7: potential geopolitical risk or or something that crops up that

343
00:17:59,040 --> 00:18:03,240
Speaker 7: poses surprise. And again, you know, similar to other asset classes,

344
00:18:03,320 --> 00:18:06,399
Speaker 7: just given where things trade, you know, it is an

345
00:18:06,440 --> 00:18:07,560
Speaker 7: asymmetric payoff.

346
00:18:07,640 --> 00:18:09,200
Speaker 3: If you do get something wrong.

347
00:18:09,480 --> 00:18:13,040
Speaker 5: The new issue market is just ripping. The desk can't

348
00:18:13,040 --> 00:18:16,199
Speaker 5: get this stuff off their books and fast enough. Is

349
00:18:16,240 --> 00:18:18,000
Speaker 5: it too much supply coming in the marketplace?

350
00:18:18,040 --> 00:18:18,879
Speaker 6: Are you guys buying?

351
00:18:18,920 --> 00:18:21,520
Speaker 5: What are you seeing when the desk call you up

352
00:18:21,560 --> 00:18:22,680
Speaker 5: and say, hey, we've got another deal.

353
00:18:23,600 --> 00:18:26,000
Speaker 3: Yeah, Well, there are two sides to the coin.

354
00:18:26,119 --> 00:18:28,359
Speaker 7: On the one hand, the market's open, so a lot

355
00:18:28,440 --> 00:18:31,560
Speaker 7: of companies across a lot of different sectors, and you know,

356
00:18:31,680 --> 00:18:34,520
Speaker 7: up and down the credit quality spectrum are able to

357
00:18:34,600 --> 00:18:38,560
Speaker 7: access the market refinance near term obligations, and so that

358
00:18:38,600 --> 00:18:40,800
Speaker 7: maturity wall that was a problem during the right hiking

359
00:18:40,880 --> 00:18:45,080
Speaker 7: cycle isn't really one anymore. And so you know, access

360
00:18:45,119 --> 00:18:47,600
Speaker 7: to capital is an important component that staves off the

361
00:18:47,680 --> 00:18:50,920
Speaker 7: faults and therefore credit losses. But at the same time,

362
00:18:51,640 --> 00:18:53,720
Speaker 7: you know, there are periods of time when the market

363
00:18:53,760 --> 00:18:57,760
Speaker 7: becomes technically imbalanced, where the amount of supply sort of

364
00:18:57,920 --> 00:19:01,760
Speaker 7: you know, it's too much for the market to absorb.

365
00:19:02,840 --> 00:19:04,800
Speaker 3: We are not really in that right now in.

366
00:19:04,760 --> 00:19:07,000
Speaker 7: Both high yield n loans, you know, especially in loans

367
00:19:07,040 --> 00:19:09,679
Speaker 7: given the amount of net new COLO creation, which is

368
00:19:09,680 --> 00:19:13,640
Speaker 7: the major buyer for senior bank loans, that's that's very

369
00:19:13,680 --> 00:19:15,359
Speaker 7: much in favor of issuers at this point.

370
00:19:15,920 --> 00:19:17,840
Speaker 5: Back early in my career, cut my teeth at the

371
00:19:17,920 --> 00:19:20,800
Speaker 5: chasement and bank making leverage loans to the TMT space.

372
00:19:21,040 --> 00:19:21,520
Speaker 6: We made a.

373
00:19:21,480 --> 00:19:25,040
Speaker 5: Small fortune doing that. How's that leverage loan business today?

374
00:19:25,160 --> 00:19:26,919
Speaker 5: And how much is going to private credit?

375
00:19:28,200 --> 00:19:31,159
Speaker 7: Well, the market share shift between private and public, and

376
00:19:31,160 --> 00:19:33,240
Speaker 7: we at beach point we do both private and public,

377
00:19:33,280 --> 00:19:35,919
Speaker 7: and so we sit back and we can see, you know,

378
00:19:35,960 --> 00:19:37,960
Speaker 7: what are the trade offs between the markets and how

379
00:19:38,000 --> 00:19:41,560
Speaker 7: these companies choose to finance themselves and what levers they

380
00:19:41,600 --> 00:19:43,960
Speaker 7: want to pull on in order to you know, get

381
00:19:43,960 --> 00:19:47,240
Speaker 7: the capital that they want or need. And so that

382
00:19:47,280 --> 00:19:52,200
Speaker 7: share shift changes depending on the technical inflows and outflows

383
00:19:52,240 --> 00:19:55,359
Speaker 7: between the two asset classes. And so for a while

384
00:19:55,680 --> 00:19:58,919
Speaker 7: private credit was taking share from the broadly syndicated market.

385
00:19:59,160 --> 00:20:01,679
Speaker 7: That's now, you know, turning around a little bit.

386
00:20:01,720 --> 00:20:03,320
Speaker 3: And so it comes and goes.

387
00:20:03,440 --> 00:20:05,520
Speaker 2: Yeah, but I mean there's a little private equity angst

388
00:20:05,520 --> 00:20:07,919
Speaker 2: out there in the zeitgeist this morning. Do you sense

389
00:20:08,080 --> 00:20:11,600
Speaker 2: angst within private credit? I mean, you know, we get

390
00:20:11,640 --> 00:20:14,320
Speaker 2: all sorts of cross messaging here. I'm hearing things I

391
00:20:14,359 --> 00:20:17,359
Speaker 2: heard thirty years ago, the same phrases in all that.

392
00:20:17,720 --> 00:20:19,880
Speaker 2: I mean, you've got the radar up on this, particularly

393
00:20:19,880 --> 00:20:23,320
Speaker 2: with loans. I mean what's your take on private credit?

394
00:20:23,359 --> 00:20:25,360
Speaker 2: Are there shadows out there we need to study?

395
00:20:26,200 --> 00:20:30,160
Speaker 7: Yeah, well, I mean commonly through market cycles. A rule

396
00:20:30,160 --> 00:20:32,359
Speaker 7: of thumb is, if you want to know where problem

397
00:20:32,359 --> 00:20:34,440
Speaker 7: areas are going to be, look at where the most

398
00:20:34,440 --> 00:20:38,040
Speaker 7: credit has been created recently. And private credit does fit

399
00:20:38,119 --> 00:20:41,520
Speaker 7: that profile. And so you do see right now, for example,

400
00:20:41,640 --> 00:20:44,719
Speaker 7: a higher backward looking default rate within private credit than

401
00:20:44,760 --> 00:20:48,000
Speaker 7: you do in public credit. But at the same time,

402
00:20:48,359 --> 00:20:53,600
Speaker 7: those vehicles are equipped with different mechanisms to be relatively defensive.

403
00:20:54,320 --> 00:20:56,440
Speaker 7: There's still a lot of capital that's waiting to be

404
00:20:56,520 --> 00:21:00,359
Speaker 7: deployed within that market, and so you know the ability

405
00:21:00,400 --> 00:21:04,280
Speaker 7: to navigate these different situations of higher default, you know

406
00:21:04,480 --> 00:21:05,760
Speaker 7: you may stave off credit loss.

407
00:21:05,800 --> 00:21:08,399
Speaker 2: Sinjya, thank you so much for joining Sidjon Barron Ruthers

408
00:21:08,960 --> 00:21:12,840
Speaker 2: from the Left Coast with Beach Point Capital Management.

409
00:21:12,920 --> 00:21:14,960
Speaker 3: Greatly appreciate that. Stay with us.

410
00:21:15,200 --> 00:21:25,879
Speaker 2: More from Bloomberg Surveillance coming up after this.

411
00:21:25,880 --> 00:21:29,760
Speaker 1: This is the Bloomberg Surveillance podcast. Listen live each weekday

412
00:21:29,800 --> 00:21:33,199
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

413
00:21:33,240 --> 00:21:36,080
Speaker 1: with the Bloomberg Business app. You can also watch us

414
00:21:36,119 --> 00:21:39,440
Speaker 1: live every weekday on YouTube and always on the Bloomberg

415
00:21:39,560 --> 00:21:40,359
Speaker 1: terminal joining.

416
00:21:40,440 --> 00:21:43,320
Speaker 2: So Margaret Franklin the CFA Institute. Full disclosure, I'm a

417
00:21:43,359 --> 00:21:46,520
Speaker 2: member of the CFA Institute. It's where you take three

418
00:21:46,560 --> 00:21:49,679
Speaker 2: exams and you try to pass them and they're very

419
00:21:49,720 --> 00:21:51,719
Speaker 2: British and that they throw a wall of stuff at

420
00:21:51,760 --> 00:21:54,440
Speaker 2: you and you flunk and then you pass. It's a

421
00:21:54,520 --> 00:21:57,120
Speaker 2: rite of passage in the on Wall Street and it's

422
00:21:57,119 --> 00:22:01,000
Speaker 2: gone worldwide. So Margaret Franklin's in Toronto, cushy job, the

423
00:22:01,040 --> 00:22:05,080
Speaker 2: whole thing, and in September twenty nineteen she gets this

424
00:22:05,160 --> 00:22:08,520
Speaker 2: piece of cake job to run the CFA Institute. How

425
00:22:08,560 --> 00:22:12,800
Speaker 2: about that COVID it showed up four months Efty dropped

426
00:22:12,800 --> 00:22:15,800
Speaker 2: in how did the CFA Institute survive COVID?

427
00:22:16,560 --> 00:22:20,439
Speaker 9: Well, Tom, actually, testing times give you the opportunity to

428
00:22:20,480 --> 00:22:21,680
Speaker 9: really change the directory.

429
00:22:21,760 --> 00:22:22,720
Speaker 8: So you talked about the.

430
00:22:22,680 --> 00:22:27,200
Speaker 9: Exam being that wall of material and testing we actually

431
00:22:27,240 --> 00:22:30,080
Speaker 9: took the time to wait to go from paper based tests,

432
00:22:30,119 --> 00:22:32,880
Speaker 9: which you would remember, to computer based tests, and that

433
00:22:33,000 --> 00:22:35,760
Speaker 9: was really reimagining how we can make it more learner centric.

434
00:22:35,800 --> 00:22:39,320
Speaker 9: So modular mobiles, it's way very else, the same way,

435
00:22:39,320 --> 00:22:41,840
Speaker 9: way better it is and it's the same rigger, it's

436
00:22:41,840 --> 00:22:44,640
Speaker 9: the same quality. But at the end of the day,

437
00:22:44,720 --> 00:22:47,520
Speaker 9: the idea is not to fail people. It's to demonstrate

438
00:22:47,520 --> 00:22:49,119
Speaker 9: that you have the knowledge, skills, and ability. And I

439
00:22:49,119 --> 00:22:50,360
Speaker 9: think the program really does that.

440
00:22:50,520 --> 00:22:53,159
Speaker 2: My life would be different when I was twenty with

441
00:22:53,280 --> 00:22:55,920
Speaker 2: perplexity or when I was doing CFA.

442
00:22:56,040 --> 00:22:58,480
Speaker 3: Thank you Fidelity for telling me just shut up and

443
00:22:58,520 --> 00:22:59,040
Speaker 3: go get it.

444
00:23:00,920 --> 00:23:04,360
Speaker 2: Show the difference between the three ratio or five ratio

445
00:23:04,520 --> 00:23:10,320
Speaker 2: DuPont analysis. It's laid out perfectly like CFA level two.

446
00:23:10,520 --> 00:23:14,680
Speaker 2: How is perplexity and AI? Can it change the capture

447
00:23:14,880 --> 00:23:15,800
Speaker 2: of knowledge?

448
00:23:16,000 --> 00:23:19,520
Speaker 9: So we think that AI, that stack on top of

449
00:23:19,520 --> 00:23:21,880
Speaker 9: the intelligence stack is really important. So if I look

450
00:23:21,920 --> 00:23:25,760
Speaker 9: back two years ago, certainly subject matter experts were really

451
00:23:25,840 --> 00:23:30,119
Speaker 9: anxious about their role within within almost everything. And what

452
00:23:30,119 --> 00:23:32,560
Speaker 9: we find is that the subject matter experts, those who know,

453
00:23:32,840 --> 00:23:36,320
Speaker 9: become really valuable. They know the questions to ask and

454
00:23:36,359 --> 00:23:38,960
Speaker 9: they know how to evaluate the output on the way out.

455
00:23:39,080 --> 00:23:43,560
Speaker 9: So the CFA program, and actually the broader portfolio that

456
00:23:43,600 --> 00:23:46,680
Speaker 9: we offer becomes I think more important because you need

457
00:23:46,720 --> 00:23:49,160
Speaker 9: people who actually know what they're doing to be able

458
00:23:49,200 --> 00:23:53,479
Speaker 9: to capitalize on really extraordinary things that AI can offer us.

459
00:23:53,560 --> 00:23:54,000
Speaker 3: Yeah, but like.

460
00:23:55,480 --> 00:23:59,000
Speaker 2: White Freed, Sandy with you know, Paul, it's like six

461
00:23:59,119 --> 00:24:01,680
Speaker 2: hundred pages. It's got a John de York, I never

462
00:24:01,680 --> 00:24:05,359
Speaker 2: got equipment leasing. I flanked it three times, Margaret, Is

463
00:24:05,440 --> 00:24:09,360
Speaker 2: AI going to replace the torture of readings V body

464
00:24:09,400 --> 00:24:12,320
Speaker 2: up at bu or White, Freed, Sandy accounting?

465
00:24:12,680 --> 00:24:15,719
Speaker 9: Well, the program actually is looking at the modality with

466
00:24:16,160 --> 00:24:18,560
Speaker 9: which we teach it. So I think the core content,

467
00:24:19,680 --> 00:24:24,720
Speaker 9: obviously modernized for what's important now is still the foundation

468
00:24:24,960 --> 00:24:27,760
Speaker 9: of it all. But how we teach it is increasingly

469
00:24:27,800 --> 00:24:29,520
Speaker 9: more accessible and more effective.

470
00:24:29,720 --> 00:24:33,399
Speaker 3: Paul, surveillance, correction, White, Sandy and Free.

471
00:24:33,480 --> 00:24:38,200
Speaker 5: Oh very good, Margaret, what is Global Wall Street asking

472
00:24:38,240 --> 00:24:39,440
Speaker 5: of the CFA institute?

473
00:24:39,520 --> 00:24:41,639
Speaker 6: These says what skills do they want? What context?

474
00:24:43,080 --> 00:24:45,959
Speaker 9: So what we've heard from employers loud and clear is

475
00:24:46,000 --> 00:24:49,280
Speaker 9: the knowledge is great from the CFA program. It differentiates.

476
00:24:49,320 --> 00:24:52,560
Speaker 9: It says something about your commitment, discipline, and ability to

477
00:24:52,640 --> 00:24:56,200
Speaker 9: master a really complex body of knowledge. But what they

478
00:24:56,200 --> 00:24:58,720
Speaker 9: are really focused on is making sure that candidates are

479
00:24:58,800 --> 00:25:02,600
Speaker 9: much more job ready when they arrive. So we introduced

480
00:25:02,640 --> 00:25:08,760
Speaker 9: our practical skills modules in this current curriculum, but we

481
00:25:08,880 --> 00:25:13,840
Speaker 9: have a strategic initiative to really advance our skills learning

482
00:25:13,920 --> 00:25:17,280
Speaker 9: and so that'll be a feature of the next duration,

483
00:25:17,359 --> 00:25:19,199
Speaker 9: and of course AI allows us to do that so

484
00:25:19,280 --> 00:25:19,760
Speaker 9: much better.

485
00:25:20,080 --> 00:25:22,240
Speaker 5: It is United Nation Week. Here in New York, it's

486
00:25:22,240 --> 00:25:28,840
Speaker 5: Climate Week. Sustainability ESG. It seemed to be really important

487
00:25:28,840 --> 00:25:32,359
Speaker 5: in the financial marketplace for a while. In the US

488
00:25:32,359 --> 00:25:34,639
Speaker 5: it seems to have faded pretty significantly. But I know

489
00:25:34,720 --> 00:25:37,320
Speaker 5: outside of the US that whole concept is sustainability and

490
00:25:37,280 --> 00:25:39,879
Speaker 5: incorporating that into your financial analysis.

491
00:25:39,920 --> 00:25:41,160
Speaker 6: How do you guys approach that?

492
00:25:41,600 --> 00:25:46,120
Speaker 9: So what I would say about sustainability is it's matured

493
00:25:46,320 --> 00:25:48,880
Speaker 9: over let's call it ten years ago when the tragedy

494
00:25:48,920 --> 00:25:51,800
Speaker 9: the horizon speech was and certainly the last five years.

495
00:25:53,040 --> 00:25:55,720
Speaker 9: It is not going away. It's just not being talked

496
00:25:55,720 --> 00:25:58,600
Speaker 9: about as much. And why is that? Because climate risk

497
00:25:58,760 --> 00:26:02,000
Speaker 9: is financial risk. It's financially material act owners. When we

498
00:26:02,040 --> 00:26:06,639
Speaker 9: look at pension plans, sovereign wealth funds, they are not

499
00:26:07,320 --> 00:26:11,720
Speaker 9: walking away from it at all. The skills required for it, though,

500
00:26:11,720 --> 00:26:17,720
Speaker 9: are being incorporated much more into mainstream portfolio management, risk analysis,

501
00:26:17,800 --> 00:26:22,399
Speaker 9: and investment research. What I will say is that the

502
00:26:22,520 --> 00:26:25,480
Speaker 9: opportunity set is different than it was five years ago.

503
00:26:25,560 --> 00:26:29,359
Speaker 9: It's investable, it's scalable. You know, the cost curve coming

504
00:26:29,400 --> 00:26:33,000
Speaker 9: down on for instance, renewable energy makes that much more

505
00:26:33,000 --> 00:26:36,600
Speaker 9: attractive from both a risk and return perspective. So I

506
00:26:36,640 --> 00:26:38,520
Speaker 9: don't think it's going away at all, and in fact,

507
00:26:38,640 --> 00:26:41,080
Speaker 9: our numbers bear that out. We have over fifty thousand

508
00:26:41,080 --> 00:26:47,119
Speaker 9: people who have taken our stack on our Sustainability Certificate

509
00:26:47,200 --> 00:26:48,600
Speaker 9: and that broader stack, so we don't.

510
00:26:48,400 --> 00:26:51,960
Speaker 3: See it going theay I haven't done that. There's still

511
00:26:52,040 --> 00:26:54,560
Speaker 3: time and h.

512
00:26:54,560 --> 00:26:59,760
Speaker 2: One b okay I remember the desperation of well meaning Indians.

513
00:26:59,800 --> 00:27:02,560
Speaker 2: Why need to take CFA one two three and like

514
00:27:02,600 --> 00:27:05,159
Speaker 2: they had to fly to Dubaia can't remember during COVID,

515
00:27:05,240 --> 00:27:06,800
Speaker 2: I mean a men's commitment on.

516
00:27:06,760 --> 00:27:10,040
Speaker 3: The part of these kids. You're away from the H

517
00:27:10,080 --> 00:27:10,840
Speaker 3: one v remit.

518
00:27:11,000 --> 00:27:17,520
Speaker 2: But nevertheless, the CFA Institute of Impact in India is extraordinary.

519
00:27:16,680 --> 00:27:20,480
Speaker 9: Color that for us, so I think there are India

520
00:27:20,600 --> 00:27:24,320
Speaker 9: is a great example of the globalization and the interconnectedness

521
00:27:24,320 --> 00:27:28,639
Speaker 9: of global markets and that CFA provides. That CFA provide

522
00:27:29,000 --> 00:27:32,280
Speaker 9: provides ethical training, very high quality education, but also a

523
00:27:32,320 --> 00:27:36,920
Speaker 9: common language. And we see that everywhere in international markets

524
00:27:37,200 --> 00:27:39,560
Speaker 9: that they want people talking the same language as they

525
00:27:39,560 --> 00:27:43,760
Speaker 9: export capital and import capital. India is our number one market,

526
00:27:43,960 --> 00:27:47,600
Speaker 9: really yeah, it's our under one number one candidate market

527
00:27:48,280 --> 00:27:50,720
Speaker 9: and that reflects two things. One is, you know, the

528
00:27:50,760 --> 00:27:55,679
Speaker 9: diaspora is everywhere, but importantly India as a capital market

529
00:27:55,800 --> 00:27:59,720
Speaker 9: and as a service provider to the financial markets is

530
00:27:59,760 --> 00:28:03,840
Speaker 9: in increasingly becoming more sophisticated. And so again that CFA

531
00:28:04,400 --> 00:28:07,040
Speaker 9: program and charter becomes a distinction for that market.

532
00:28:07,400 --> 00:28:09,600
Speaker 2: Is there going to be CFA Level four I've been

533
00:28:09,640 --> 00:28:12,440
Speaker 2: asking for. I'm sitting there with some panel with Michael

534
00:28:12,480 --> 00:28:15,040
Speaker 2: Mobison and we might go and we got to reach out.

535
00:28:15,080 --> 00:28:16,520
Speaker 2: Hare's got to be more. Is it going to be

536
00:28:16,560 --> 00:28:19,720
Speaker 2: CFA level four expanded? I need to I need the

537
00:28:19,760 --> 00:28:21,359
Speaker 2: agony of six months gone.

538
00:28:21,640 --> 00:28:24,480
Speaker 9: Well, Tom, what we have on offer for you is

539
00:28:24,520 --> 00:28:27,639
Speaker 9: an expanded portfolio with increasing specialization. So we have our

540
00:28:27,680 --> 00:28:32,200
Speaker 9: sustainability stack. Private markets are increasingly important in a permanent

541
00:28:32,240 --> 00:28:35,719
Speaker 9: feature in in portfolios, so we have a p Private

542
00:28:35,760 --> 00:28:41,320
Speaker 9: markets stack. There are specialized learning for people who are

543
00:28:41,400 --> 00:28:44,720
Speaker 9: changing careers. Uh, I want more specialized as they advance

544
00:28:44,760 --> 00:28:47,840
Speaker 9: into crews, and that hasn't been available prior, so it's

545
00:28:47,920 --> 00:28:48,440
Speaker 9: very important.

546
00:28:48,520 --> 00:28:52,000
Speaker 3: John Tucker, what do you think CFA radio blather it.

547
00:28:54,640 --> 00:28:56,960
Speaker 9: It's fun, Jo, that's fun.

548
00:28:57,000 --> 00:28:59,520
Speaker 2: How much okay, how much time am I going to

549
00:28:59,560 --> 00:29:02,920
Speaker 2: have to invest in studying to pass all levels?

550
00:29:03,400 --> 00:29:06,480
Speaker 9: To pass all levels? It still remains three hundred hours

551
00:29:06,520 --> 00:29:07,160
Speaker 9: per level.

552
00:29:07,880 --> 00:29:08,600
Speaker 3: You can do it.

553
00:29:08,840 --> 00:29:10,400
Speaker 9: You can do it nine hundred hours.

554
00:29:11,120 --> 00:29:11,920
Speaker 3: It's engaging.

555
00:29:13,480 --> 00:29:16,800
Speaker 6: Forty two kids. For the CFA the right passage for me?

556
00:29:16,920 --> 00:29:19,120
Speaker 2: Would you take the exam and you're certain you flunk

557
00:29:19,160 --> 00:29:21,720
Speaker 2: every time you take it? And we would go down

558
00:29:21,800 --> 00:29:25,080
Speaker 2: Newberry Street in Boston to some sushi bar I can't remember.

559
00:29:25,880 --> 00:29:29,440
Speaker 2: And one night I'm there, are getting completely plastered. Yeah

560
00:29:29,520 --> 00:29:33,400
Speaker 2: for CFA level whatever, and cam Neely's sitting next to me, like,

561
00:29:33,480 --> 00:29:35,920
Speaker 2: you know, six feet feet away, and we end up.

562
00:29:36,040 --> 00:29:37,480
Speaker 2: He goes, why are you you know, you know, blah

563
00:29:37,480 --> 00:29:41,160
Speaker 2: blah blah, and and you know, giant of the Boston Bruins. Oh,

564
00:29:41,200 --> 00:29:45,640
Speaker 2: I took an examined finance, and I had another beverage

565
00:29:45,640 --> 00:29:47,360
Speaker 2: in my choice.

566
00:29:47,560 --> 00:29:50,320
Speaker 3: Gets what's the latest pass rate for gas?

567
00:29:50,640 --> 00:29:51,239
Speaker 6: Are back up?

568
00:29:51,320 --> 00:29:53,160
Speaker 9: So they're back up, they're back up, so the back

569
00:29:53,200 --> 00:29:56,160
Speaker 9: up to historical norms. Level ones are at around forty

570
00:29:56,160 --> 00:30:01,200
Speaker 9: five percent. But interesting you ask that we have all deferrals,

571
00:30:01,240 --> 00:30:03,160
Speaker 9: so if you can't take it, you can you can

572
00:30:03,280 --> 00:30:06,800
Speaker 9: pay to get a deferral. And actually the deferred candidates

573
00:30:06,840 --> 00:30:11,560
Speaker 9: are performing really significantly below the average. And so for

574
00:30:11,640 --> 00:30:14,640
Speaker 9: all of you candidates who are out there, don't defer.

575
00:30:14,760 --> 00:30:17,880
Speaker 3: Yeah, tough yeah, tough it out. It's a guy.

576
00:30:17,760 --> 00:30:21,200
Speaker 2: At standish are years ago, Toby in Boston. It's a

577
00:30:21,320 --> 00:30:24,600
Speaker 2: rite of passage. Margaret Franklin, thank you so much for

578
00:30:24,680 --> 00:30:28,200
Speaker 2: joining us her leadership at the CFA Institute.

579
00:30:28,280 --> 00:30:33,040
Speaker 1: This is the Bloomberg Surveillance Podcast, available on Apple, Spotify,

580
00:30:33,160 --> 00:30:37,440
Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,

581
00:30:37,560 --> 00:30:41,040
Speaker 1: seven to ten am Eastern on Bloomberg dot com, the

582
00:30:41,120 --> 00:30:45,160
Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You

583
00:30:45,200 --> 00:30:48,560
Speaker 1: can also watch us live every weekday on YouTube and

584
00:30:48,760 --> 00:30:50,480
Speaker 1: always on the Bloomberg terminal