WEBVTT - Bloomberg Surveillance TV: January 7th, 2026 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.520 --> 0:00:18.720 with Lisa Bromwitz and Amrie Hordernt. Join us each day 0:00:18.760 --> 0:00:22.320 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.720 live on Bloomberg Television weekday mornings from six to nine 0:00:27.760 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.360 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:37.000 Terminal and the Bloomberg Business app. We begin this out 0:00:37.040 --> 0:00:38.960 with stocks hovering near fresh records on the S and 0:00:39.000 --> 0:00:42.640 P five hundred. COO Group CEO David Balin joined us 0:00:42.680 --> 0:00:46.000 now for more. David Goodmonic, Murriy, pleasure to be congratulations 0:00:46.000 --> 0:00:47.599 on the new seat and we can talk about what 0:00:47.760 --> 0:00:49.559 the company is going to be doing in the not 0:00:49.640 --> 0:00:51.680 too distant future. But I want to take the temperature 0:00:51.720 --> 0:00:53.400 of this market with you. What are your thoughts about 0:00:53.400 --> 0:00:55.280 where we are, where we have been, and where we 0:00:55.320 --> 0:00:55.560 go it. 0:00:55.840 --> 0:00:57.840 Yeah, I mean it's pretty obvious that you've got a 0:00:58.400 --> 0:01:01.240 humanmentum bond situation. You've got out an earning growth situation. 0:01:01.320 --> 0:01:04.399 Earning a broadening situation. I think there are areas of 0:01:04.440 --> 0:01:07.120 the market where you're seeing even more of that internationally. 0:01:07.160 --> 0:01:10.520 You know, seventy percent of international markets last year outperformed 0:01:10.520 --> 0:01:15.080 in the US. US investors virtually exposed to those markets, right, 0:01:15.240 --> 0:01:19.080 lack of diversification in their portfolio. So I like the 0:01:19.160 --> 0:01:21.600 momentum of the market. I like where it's going, but 0:01:21.680 --> 0:01:23.680 I think there are lots of areas where people need 0:01:23.720 --> 0:01:26.759 to go, whether it's in pharmaceuticals, whether it's in energy, 0:01:26.800 --> 0:01:30.080 whether it's at MLPs where there's simply no real action 0:01:30.160 --> 0:01:32.520 on the part of investors. It's all about tech, all 0:01:32.600 --> 0:01:35.039 about big deals all the time. And I think, you know, 0:01:35.480 --> 0:01:38.200 I think the good news is we believe that will continue, 0:01:38.319 --> 0:01:42.440 but we also think that it indicates growing risk in portfolios. 0:01:42.480 --> 0:01:44.399 We let's go to the international story. So I'm with you, 0:01:44.400 --> 0:01:46.040 and we've seen that spreads away from a bigger way 0:01:46.080 --> 0:01:48.120 to start the year. Is it just a different flavor 0:01:48.160 --> 0:01:51.240 of the same story though, just tech tech elsewhere? 0:01:52.080 --> 0:01:54.280 In part that's true, but remember that it's really an 0:01:54.320 --> 0:01:56.840 earning story, right. It's where you're going to see you know, 0:01:57.080 --> 0:02:00.360 lower valuations at higher growth rates internationally, right, And you 0:02:00.400 --> 0:02:02.680 can see that in Japan, you could see that in India, right, 0:02:02.720 --> 0:02:04.520 and you can see it even in pockets of Europe 0:02:04.640 --> 0:02:06.600 and in Germany right as a result of the changes 0:02:06.600 --> 0:02:09.720 of the geopolitics. So you could play all of those things. 0:02:09.720 --> 0:02:11.680 But if you're an investor, you want to own that 0:02:11.760 --> 0:02:13.960 growth at a price if you can, and you can't 0:02:13.960 --> 0:02:16.280 find it at a cheap price in America anymore at all. 0:02:16.600 --> 0:02:18.359 Just to take what you're saying a step further, are 0:02:18.400 --> 0:02:21.680 you saying that anyone who invests completely in the US 0:02:21.760 --> 0:02:24.240 or more heavily in the US is exposed to a 0:02:24.280 --> 0:02:27.880 concentration risk that is historic and potentially really problematic. 0:02:28.320 --> 0:02:30.160 That is the number one thing that we're talking with 0:02:30.240 --> 0:02:33.440 clients about today is the fact that if a client 0:02:33.440 --> 0:02:36.240 has multiple advisors, right, and they're all besting on the 0:02:36.240 --> 0:02:39.000 same thing, and they don't rebalance portfolios, And that is 0:02:39.040 --> 0:02:41.760 the number one observation that we've seen in our data 0:02:41.800 --> 0:02:45.079 this past year, is that everyone is letting these trades ride. 0:02:45.400 --> 0:02:48.880 So you have one of the riskiest stock sectors, right, semiconductors, 0:02:49.280 --> 0:02:51.840 large compan right in Vidiot right leading the company leading 0:02:51.880 --> 0:02:53.880 the stock market, I mean, and it is in a 0:02:53.919 --> 0:02:56.400 highly volatile marketplace, and so we don't think there's a 0:02:56.400 --> 0:02:58.920 problem this year, fair enough. But the question is if 0:02:58.919 --> 0:03:01.359 a person's got you know, that type of concentration, where 0:03:01.360 --> 0:03:03.840 should they move that money and win? Right? And that 0:03:03.919 --> 0:03:06.440 is a twenty twenty six movement as far as we're concerned. 0:03:06.480 --> 0:03:08.840 So you think it's international, is it international equities? Is 0:03:08.840 --> 0:03:10.960 it in the commodity space? I mean, where exactly do 0:03:11.000 --> 0:03:14.280 you see actual diversification against something that's really global? 0:03:14.600 --> 0:03:17.120 So you can actually do that through dividend shares in 0:03:17.160 --> 0:03:19.480 Europe and specific sectors. Right, you can do it in 0:03:19.480 --> 0:03:22.920 pharmaceuticals here in the US and internationally, you could do 0:03:23.000 --> 0:03:25.200 it in tech in Asia in certain areas right in 0:03:25.320 --> 0:03:27.840 terms of what is where AIS can to influence consumer 0:03:27.880 --> 0:03:30.760 markets and consumer brands. So there's lots of places where 0:03:30.800 --> 0:03:33.840 you get the growth story, but you also get diversification 0:03:33.880 --> 0:03:36.640 as the industry. Everything that we're doing is focused on 0:03:36.680 --> 0:03:40.400 where earnings are going in those places, so it's lower evaluations, 0:03:40.680 --> 0:03:43.680 higher earnings growth rates non US. We're now about twenty 0:03:43.760 --> 0:03:46.560 percent non US in terms of our portfolios, which we 0:03:46.600 --> 0:03:50.160 can do because we're not limited to where we were 0:03:50.200 --> 0:03:51.440 when I was working a large bank. 0:03:51.600 --> 0:03:53.960 You also say treat cash as an asset class. Yes, 0:03:54.120 --> 0:03:55.920 how much should people be allocating? 0:03:56.200 --> 0:03:58.560 So two facts that I don't think people know. The 0:03:58.680 --> 0:04:01.080 average family right has more than nine percent of their 0:04:01.120 --> 0:04:03.640 portfolio and cash and has had it there for basically 0:04:03.680 --> 0:04:06.480 five to ten years, saying they'll be opportunistic, and they 0:04:06.520 --> 0:04:08.920 never are. The average cash yield to that family is 0:04:08.920 --> 0:04:11.720 two point seven percent. They could be earning four percent 0:04:11.720 --> 0:04:14.040 of treasuries. They could be earning five percent if they 0:04:14.080 --> 0:04:16.760 have a blended portfolio. And one of the reasons why 0:04:16.800 --> 0:04:18.960 that's true is that they have their cash in fifteen 0:04:19.000 --> 0:04:22.040 different accounts, none of it's aggregated, and it's not managed. 0:04:22.240 --> 0:04:24.400 So why is that the case. It's largely because it's 0:04:24.400 --> 0:04:27.400 a little bit everywhere, and so that's an enormous opportunity. 0:04:27.400 --> 0:04:29.440 If you have nine percent of your portfolio and you 0:04:29.440 --> 0:04:31.320 can make an extra one hundred and fifty basis points 0:04:31.320 --> 0:04:33.240 at it, right, you should be doing that. And these 0:04:33.240 --> 0:04:35.440 are the observations that we're now able to see because 0:04:35.960 --> 0:04:37.760 when you look across all of the accounts that the 0:04:37.800 --> 0:04:40.360 family as, you can actually just see how it is 0:04:40.600 --> 0:04:42.960 that they are really undermanaging certain assets. And that's why 0:04:43.000 --> 0:04:45.440 we call cashes an asset class, because it's a large 0:04:45.440 --> 0:04:48.000 portion of the portfolio and it's largely undermanaged. 0:04:48.080 --> 0:04:50.320 You'll land the foundations for broad a conversation about what 0:04:50.320 --> 0:04:52.919 you're doing now, how much extra insight do you have 0:04:53.040 --> 0:04:55.800 now versus what you had previously, And would you go 0:04:55.839 --> 0:04:57.839 as far as saying that this industry is letting some 0:04:57.839 --> 0:04:58.760 of those families down. 0:04:59.160 --> 0:05:01.160 I would actually go far as to say that I 0:05:01.160 --> 0:05:03.840 really didn't think that a year ago, right. But it's 0:05:03.880 --> 0:05:06.440 not only it's a structural issue, because if they can't 0:05:06.440 --> 0:05:09.120 see the assets, theoretically they can't comment on them. But 0:05:09.200 --> 0:05:12.240 what's really interesting to me is that the industry is 0:05:12.360 --> 0:05:16.520 charging an enormous amount in fees for the advice that 0:05:16.560 --> 0:05:18.640 they get. So the average family is probably paying one 0:05:18.640 --> 0:05:20.760 point four percent if you add up the cost of 0:05:20.760 --> 0:05:22.920 the funds they own and the cost of their advice, right, 0:05:23.120 --> 0:05:25.599 which in a fifteen percent a year is nine percent 0:05:25.640 --> 0:05:29.320 of what they actually made right, And yet they're basically 0:05:29.360 --> 0:05:33.400 index oriented. They're getting all of this exposure without getting diversification, 0:05:33.800 --> 0:05:36.200 and they're getting not very good yields on their cash. 0:05:36.200 --> 0:05:39.000 So I would just say that they're not getting the 0:05:39.040 --> 0:05:41.680 implementation of the advice that they should about you're following 0:05:41.680 --> 0:05:44.640 the basic rules of finance, which is diversification and meaning it. 0:05:45.040 --> 0:05:46.640 And that's what I would say, Yes. 0:05:46.520 --> 0:05:48.840 That's true at a time when there's so much focus 0:05:49.040 --> 0:05:51.840 on wealth management at big banks. Why do you think 0:05:51.880 --> 0:05:53.880 this is? Is it just groupthink or is it that 0:05:53.920 --> 0:05:57.120 there are certain incentives to be invested in certain areas. 0:05:57.279 --> 0:05:59.800 I just simply think that the industry is going under 0:06:00.160 --> 0:06:02.839 an amount of consolidation right now. You know RAA roll 0:06:02.920 --> 0:06:08.400 ups banks basically buying other wealth management institutions, consolidation and 0:06:08.440 --> 0:06:12.200 asset management. It's an extremely profitable time for the industry, right, 0:06:12.360 --> 0:06:14.640 so there's no real reason to take a look at 0:06:14.640 --> 0:06:17.880 the very nature of its fee structure given all of that, right, 0:06:18.040 --> 0:06:20.720 if you think about it right, clients can get I'll 0:06:20.760 --> 0:06:23.240 give you an example. If you take in our asset 0:06:23.240 --> 0:06:25.479 allocation and you actually look at the cost of the 0:06:25.520 --> 0:06:28.440 funds that we use, it's eighteen basis points to actually 0:06:28.440 --> 0:06:30.760 buy all of the atfs in the United States that 0:06:30.800 --> 0:06:35.880 we like, with extraordinary specificity as to what individual sectors 0:06:35.880 --> 0:06:37.200 you want to get exposure to. If you want to 0:06:37.200 --> 0:06:41.480 get exposure to ETFs in MLPs right now, which we're doing, 0:06:41.720 --> 0:06:45.440 or in pharma right, or in biotechnology you can literally 0:06:45.440 --> 0:06:47.880 buy those at very inexpensive things, so you can assemble 0:06:47.880 --> 0:06:50.239 a portfolio that way, or you can pay for active 0:06:50.240 --> 0:06:52.800 management at sixty or seventy basis points and not get 0:06:52.800 --> 0:06:53.680 any benefit from it. 0:06:53.760 --> 0:06:54.000 Right. 0:06:54.200 --> 0:06:56.960 Well, the industry is largely stuck on the way that 0:06:57.000 --> 0:06:59.159 it's done it. It has no incentive to change. 0:06:59.640 --> 0:07:02.280 Just before you go, it's a wealth bracket in particular 0:07:02.600 --> 0:07:04.480 that you think is vulnerable to some of the issues 0:07:04.480 --> 0:07:05.200 you just explained. 0:07:06.800 --> 0:07:09.400 Yes, it's a very wide bracket. But if a family 0:07:09.440 --> 0:07:12.680 has ten to five hundred million dollars, they're using multiple 0:07:12.720 --> 0:07:15.560 and they're using multiple advisors, which is a huge amount 0:07:15.600 --> 0:07:16.960 of wealth and extraordinary. 0:07:17.000 --> 0:07:17.160 Right. 0:07:17.240 --> 0:07:19.680 But if they've got ten to five hundred million dollars, right, 0:07:19.800 --> 0:07:23.200 and they're using multiple advisors, the probability that they're beating 0:07:23.200 --> 0:07:25.440 the market so that they actually have their money adequately 0:07:25.480 --> 0:07:27.520 and diversified and investor is extremely low. 0:07:27.760 --> 0:07:30.400 What happens five hundred and now they tend. 0:07:30.280 --> 0:07:33.240 To get more advice by having an individual inside the 0:07:33.280 --> 0:07:37.280 family who is actually coordinating the professional activities. And interesting 0:07:37.880 --> 0:07:40.560 is they actually have goals and an ips that they're 0:07:40.600 --> 0:07:44.440 following and are being checked on. It's when they don't 0:07:44.440 --> 0:07:47.240 have that and they're relying on multiple providers that they 0:07:47.280 --> 0:07:48.720 end up not having a sense of direction. 0:07:49.040 --> 0:07:52.560 Stay with us. Mult Bloomberg Surveillance coming up after this. 0:08:01.840 --> 0:08:04.480 John Builton of JP Morgan Asset Management, writing, given our 0:08:04.520 --> 0:08:06.880 expectation of a moderate pickup in the pace of growth 0:08:06.880 --> 0:08:10.760 in twenty six, we see potential for positive equity returns. 0:08:10.800 --> 0:08:12.840 John joined us now for Mott, JUHNK and Monich. Morning, 0:08:12.880 --> 0:08:14.720 it's going to see you. We've been flattered, We've been 0:08:14.720 --> 0:08:17.400 blessed by some really really decent double digit gains on 0:08:17.440 --> 0:08:19.840 the S and P five hundred. Is there more to come? 0:08:20.720 --> 0:08:23.120 Well, I think if you believe that the economy is 0:08:23.200 --> 0:08:25.240 in a decent place, you believe we're going to get 0:08:25.320 --> 0:08:29.480 fiscal stimulus coming through this year. We see unemployment behaving 0:08:29.480 --> 0:08:32.559 itself per your earlier comments just now. If we see 0:08:32.640 --> 0:08:36.199 the impact which is always delayed, of the FED cuts 0:08:36.280 --> 0:08:39.080 coming through and actually supporting the economy, which we think 0:08:39.280 --> 0:08:41.880 they will, then if you look back through history, nine 0:08:41.960 --> 0:08:45.240 times out of ten in a year with no recession, 0:08:45.480 --> 0:08:47.080 and we're not calling for a recession, we think the 0:08:47.080 --> 0:08:50.920 odds are pretty low. Then the SMP delivers positive total returns. 0:08:51.120 --> 0:08:53.600 So sure, if you want to bet against stocks, go crazy, 0:08:53.720 --> 0:08:55.200 but the odds are not your way. 0:08:55.240 --> 0:08:57.199 Skater, where the puck is going? Where do I want 0:08:57.200 --> 0:09:00.400 to be now? Already to take advantage to some of this, well, 0:09:00.440 --> 0:09:01.040 we think that what. 0:09:00.960 --> 0:09:03.120 We're going to be seeing this year is, you know 0:09:03.200 --> 0:09:05.560 a little bit more in terms of the continuation from 0:09:05.600 --> 0:09:07.840 some of the themes last year, things like that gradual 0:09:07.880 --> 0:09:10.079 weakening of the dollar, which is going to flatter some 0:09:10.120 --> 0:09:13.240 of the international markets. Of course, if we look at 0:09:13.240 --> 0:09:16.560 what happened with Europe with the US, you know, the 0:09:16.559 --> 0:09:19.240 indices in terms of their returns in local currency, we're 0:09:19.360 --> 0:09:22.000 not too dissimilar. But you've got a big boost as 0:09:22.000 --> 0:09:24.080 a US dollar investor if you were beginning to be 0:09:24.120 --> 0:09:27.840 a bit more adventurous and look outside. We've obviously got 0:09:27.880 --> 0:09:30.840 that Ai trade which continues. We think it's important in 0:09:30.880 --> 0:09:34.040 the US, but remember it's a concentrated piece of the market. 0:09:34.120 --> 0:09:36.520 People want to be able to find a different way 0:09:36.559 --> 0:09:39.040 to invest. Asia looks pretty good there, you know, some 0:09:39.160 --> 0:09:42.480 of the impact in terms of the investments that have 0:09:42.559 --> 0:09:45.280 been made in the last few years start to bear fruit. 0:09:45.280 --> 0:09:47.760 Does it broaden out across the economy. I think that's 0:09:47.840 --> 0:09:50.120 the sort of themes that folks are looking for this year, 0:09:50.280 --> 0:09:51.960 trying to put a few more eggs in a few 0:09:51.960 --> 0:09:52.760 different baskets. 0:09:52.840 --> 0:09:54.400 I was going to ask, how adventurous do you want 0:09:54.400 --> 0:09:56.760 to get Vamsung or Venezuela bonds? 0:09:57.040 --> 0:09:57.559 I think we. 0:10:00.080 --> 0:10:02.400 Okay, there's a few things there, aren't there. I mean, 0:10:02.520 --> 0:10:04.480 one of the other things which I think is supportive 0:10:04.520 --> 0:10:08.079 of the economy generally is is this emphasis on oil 0:10:08.120 --> 0:10:11.040 prices coming down. Right, So anything which is freeing up 0:10:11.040 --> 0:10:13.680 supply potentially being a bit of a sort of downward 0:10:13.760 --> 0:10:17.000 pressure on oil prices ultimately good for the consumer. 0:10:17.559 --> 0:10:20.760 That's ultimately good in the US. It's supportive globally as well, 0:10:20.800 --> 0:10:22.680 of course, but that's going to be something which matters 0:10:22.679 --> 0:10:25.560 a great deal, you know, just having another year of 0:10:25.559 --> 0:10:29.880 the economy being a global a going concern globally, I 0:10:29.880 --> 0:10:32.880 think that's really important for confidence, which in the US, 0:10:32.960 --> 0:10:36.640 if we look at consumer confidence, it's been hit pretty hard. Actually, 0:10:36.640 --> 0:10:38.600 if you look at where the stock market is versus 0:10:38.640 --> 0:10:41.600 where consumer sentiment is, you know, there's a big dichotomy there, 0:10:41.600 --> 0:10:43.040 and it's even worse in Europe. 0:10:43.200 --> 0:10:45.440 It's really a difficult narrative to get my head around. 0:10:45.480 --> 0:10:47.559 Pretty much the entirety of this year is going to 0:10:47.559 --> 0:10:49.240 be difficult thing to get my head around. But I 0:10:49.240 --> 0:10:51.439 am wondering. People say the commodity costs are going down 0:10:51.440 --> 0:10:53.240 because oil prices are going down, and then we look 0:10:53.280 --> 0:10:55.680 in copper, that we look at lithium, then we look 0:10:55.720 --> 0:10:58.320 at some of the other inputs at all time highs 0:10:58.320 --> 0:11:01.160 continuing to skyrocket at golden et cetera. So some of 0:11:01.160 --> 0:11:03.760 the other inputs that we're going to be using increasingly 0:11:03.800 --> 0:11:06.720 electricity costs. So how do you square this idea of 0:11:06.760 --> 0:11:10.040 the disinflation from oil prices and frankly the inflation from 0:11:10.080 --> 0:11:11.599 the rest of the commodity sector, which a lot of 0:11:11.600 --> 0:11:12.960 people are betting will continue. 0:11:13.040 --> 0:11:14.800 Well, I think you put it into the chain. It 0:11:14.840 --> 0:11:17.520 works in that the push up in commodities prices is 0:11:17.559 --> 0:11:20.080 a symptom of the investment that's being made. And the 0:11:20.080 --> 0:11:22.320 investments that are being made at the moment are in 0:11:22.360 --> 0:11:26.400 building productive capacity. It's in electrification, which will ultimately bring 0:11:26.480 --> 0:11:29.480 down costs. It's also in data centers, which is a 0:11:29.600 --> 0:11:33.160 huge part of the AI sort of infrastructure build out. 0:11:33.160 --> 0:11:35.680 We're going through a massive building phase at the moment, 0:11:36.000 --> 0:11:38.880 a phase where we're building productive capacity, and we know 0:11:38.960 --> 0:11:42.120 that the biggest driver of total factor productivity over the 0:11:42.120 --> 0:11:45.559 long run is the investment made in those productive assets. 0:11:45.800 --> 0:11:48.000 That's what we're seeing today. Yes, of course there's going 0:11:48.040 --> 0:11:50.640 to be tightless in places. I mean, the swing demand 0:11:50.760 --> 0:11:54.480 today for copper is not China as it always was 0:11:54.520 --> 0:11:56.920 for many, many years. It's much more what's going on 0:11:56.960 --> 0:11:59.120 in terms of electric vehicles, it's what's going on in 0:11:59.200 --> 0:12:02.800 terms of data center. So it's a symptom I believe 0:12:02.840 --> 0:12:05.480 of a bigger theme, which is this big investment phase 0:12:05.480 --> 0:12:06.360 that we're seeing right now. 0:12:06.440 --> 0:12:09.440 You say that you're becoming more constructive on Europe, specifically Germany. 0:12:09.440 --> 0:12:12.480 This made in Germany. How that possible when China has 0:12:12.520 --> 0:12:14.439 been decimating their industrial base. 0:12:15.240 --> 0:12:16.679 Well, I think we've got a few things. I mean, 0:12:16.840 --> 0:12:19.679 this is not new news. Chinese competition in Europe has 0:12:19.679 --> 0:12:22.600 been a big deal for the European Union for some time. 0:12:22.720 --> 0:12:26.560 There's been a lot of talk about concerns over product dumping, 0:12:26.559 --> 0:12:29.480 that sort of thing, But what's been happening beneath the 0:12:29.559 --> 0:12:32.360 surface is that you've gone through a couple of years 0:12:32.440 --> 0:12:35.880 of German industrial production really being on its knees, very 0:12:35.920 --> 0:12:39.760 little inward investment, very little infrastructure investment. And really what 0:12:39.800 --> 0:12:42.000 we saw last year was the opening up with the 0:12:42.000 --> 0:12:46.400 fiscal taps very rapidly followed by opening up of capex taps. 0:12:46.840 --> 0:12:51.440 Now European savings rates for households currently see it at 0:12:51.440 --> 0:12:54.880 fifteen point three percent. That's the highest level outside of 0:12:54.880 --> 0:12:57.880 the pandemic. You've got the biggest consumer block in the 0:12:57.920 --> 0:13:02.360 world not spending this year, We've got incomes now rising 0:13:02.960 --> 0:13:06.320 above the pace of inflation. Start to turn that back on. 0:13:06.400 --> 0:13:06.839 And I'm not. 0:13:06.760 --> 0:13:11.200 Suggesting European consumers suddenly become US consumer like, but just 0:13:11.240 --> 0:13:13.160 at the margin that can give a big boost. And 0:13:13.200 --> 0:13:16.040 although the pmis earlier this week were a little bit 0:13:16.120 --> 0:13:19.320 softer than expected, they're still coming in in line with 0:13:19.559 --> 0:13:22.520 a one point six percent GDP growth rate, which is 0:13:23.160 --> 0:13:25.240 half as much again as the growth rate in the 0:13:25.280 --> 0:13:26.320 first half of last year. 0:13:26.360 --> 0:13:29.280 Do you think the German fiscal impulse translates to the 0:13:29.280 --> 0:13:30.920 rest of continental Europe. 0:13:31.320 --> 0:13:33.439 Not necessarily, because this is the issue with Europe. But 0:13:33.480 --> 0:13:35.680 what holds it back in many regards is not everyone 0:13:35.720 --> 0:13:38.400 has the same fiscal space. But make no mistake, I 0:13:38.440 --> 0:13:42.240 mean the Germany still remained the biggest block within Eurozone, 0:13:42.280 --> 0:13:45.080 and it really is the heartland of industrial production within 0:13:45.080 --> 0:13:47.880 the Eurozone. So really sort of getting that piece right 0:13:48.040 --> 0:13:50.200 to sit alongside some of the strength we've seen in 0:13:50.240 --> 0:13:53.440 Spain other parts of the periphery and offset some of 0:13:53.440 --> 0:13:55.920 the concerns in France. That's a big deal in terms 0:13:55.960 --> 0:13:58.800 of taking it from a continent that many folks had forgotten, 0:13:58.960 --> 0:14:01.480 that still managed to do in dollar terms thirty percent 0:14:01.520 --> 0:14:03.719 on its equity index last year, and all of a 0:14:03.760 --> 0:14:05.480 sudden it can come out and surprise people. 0:14:05.679 --> 0:14:07.240 John, Can we finish on a simple but I think 0:14:07.320 --> 0:14:09.880 highly consequential question, which is what are the indicators I 0:14:09.920 --> 0:14:12.120 should track this year and what should ignore? We've got 0:14:12.120 --> 0:14:15.120 ADP in about six minutes time, we got payrolls on Friday. 0:14:15.360 --> 0:14:18.120 If I tracked those and just said, you know what, 0:14:18.280 --> 0:14:20.240 based on that data point, I'm going to be long 0:14:20.360 --> 0:14:22.520 or short this equity market, I'd've got things very wrong 0:14:22.920 --> 0:14:25.000 in the last twelve months. What should ignore? What should 0:14:25.000 --> 0:14:25.760 I pay attention to? 0:14:26.040 --> 0:14:28.360 Well, I think you know, if only there was one 0:14:28.360 --> 0:14:30.320 indicator we could all watch, I mean, you know, then 0:14:30.320 --> 0:14:31.520 frankly I'd be out of a job. 0:14:31.560 --> 0:14:34.280 So can to help you more? 0:14:34.360 --> 0:14:37.480 What I think matters most of all is the fundamentals. 0:14:37.520 --> 0:14:40.640 It's what a company's doing. Are they able to translate 0:14:41.000 --> 0:14:44.960 this massive investment flow into earnings. Remember, with the labor market, 0:14:45.000 --> 0:14:48.080 we've gone through seismic change last year. We've gone from 0:14:48.120 --> 0:14:52.160 a huge oversupply, a lot of excess capacity coming into 0:14:52.200 --> 0:14:55.400 the labor market that's now gone. So we've gone through 0:14:55.400 --> 0:14:56.960 that sort of right sizing, if you like. In the 0:14:57.000 --> 0:14:59.680 labor market. It's a much lower level of payrolls needed 0:15:00.120 --> 0:15:03.160 to keep track with trend GDP growth. It's in the 0:15:03.160 --> 0:15:05.800 fifty to sixty thousand range, not in the two hundred 0:15:05.800 --> 0:15:08.720 thousand ranges it was. She's talking smaller numbers. But at 0:15:08.720 --> 0:15:12.440 the end of the day, America's superpower is its corporate sector. 0:15:12.720 --> 0:15:15.760 If its corporate sector is building profits and it's creating 0:15:15.840 --> 0:15:19.480 a positive return on the massive investment that's coming through, 0:15:20.080 --> 0:15:22.160 then that's a reason to be constructive. 0:15:22.400 --> 0:15:25.960 Stay with us. More Bloomberg surveillance coming up after this. 0:15:35.240 --> 0:15:37.680 So here's the latest this morning. President Donald Trump pushing 0:15:37.760 --> 0:15:40.320 House Republicans to own the healthcare issue ahead of the 0:15:40.320 --> 0:15:43.800 midterms as voters show they are more concerned with affordability 0:15:44.120 --> 0:15:47.320 than foreign affairs. Jonathan samri If Bloomberg Government joins us 0:15:47.320 --> 0:15:49.600 now from Washington for more, Jonathan, that's at the top 0:15:49.600 --> 0:15:52.800 of the agenda for Americans in this country. How are 0:15:52.840 --> 0:15:54.400 they going to speak to that, What are they going 0:15:54.480 --> 0:15:56.200 to do in the year ahead. 0:15:57.440 --> 0:15:59.680 That's the really big question. One of the challenges for 0:16:00.040 --> 0:16:03.640 Looks is that they haven't laid out a clear affordability agenda. 0:16:03.840 --> 0:16:05.680 You know, the President is talking about trying to lower 0:16:05.720 --> 0:16:09.960 gas prices. He's made this kind of targeted pitch on healthcare, 0:16:10.080 --> 0:16:12.040 but these days are going to be really hard to 0:16:12.080 --> 0:16:15.360 make to happen quickly. Right now, there are millions of 0:16:15.400 --> 0:16:18.200 Americans who are paying higher premiums through the Affordable Care 0:16:18.240 --> 0:16:22.280 Act because some subsidies expired under Republicans watch this past year, 0:16:22.680 --> 0:16:25.040 and so it's a major challenge. And they have a 0:16:25.160 --> 0:16:27.080 very narrow majority in the House, so it's going to 0:16:27.080 --> 0:16:29.480 be hard to get any major legislation passed this year. 0:16:29.640 --> 0:16:32.480 Jonathan. We talked about the pitch that's going to come 0:16:32.480 --> 0:16:35.120 from Republicans. It's going to be the tax refunds and 0:16:35.120 --> 0:16:37.640 hopefully the economy picks up coming into the middle of 0:16:37.640 --> 0:16:40.040 the year. What's the pitch from the Democrats. What are 0:16:40.040 --> 0:16:43.240 they offering up gun into midterms, so. 0:16:43.160 --> 0:16:45.720 They yet to lay out their own affirmative agenda, which 0:16:45.800 --> 0:16:47.720 is a big challenge for them. It's something they've really 0:16:47.760 --> 0:16:50.640 struggled with during the Trump years. Right now, they're basically 0:16:50.720 --> 0:16:53.320 saying Trump promised you that he was going to lower prices, 0:16:53.360 --> 0:16:56.360 lower inflation, and that his focus has been elsewhere, that 0:16:56.400 --> 0:16:59.280 his focus has been on Venezuela, on immigration, on all 0:16:59.320 --> 0:17:03.000 these other things, and not on not on lowering prices 0:17:03.000 --> 0:17:06.280 the way he promised. As far as an affirmative democratic agenda, 0:17:06.320 --> 0:17:09.520 we're still honestly waiting for that outside of the healthcare space. 0:17:09.720 --> 0:17:12.640 Jonathan, Samawick, Downe and Washington. Jonathan, thank you. I appreciate 0:17:12.680 --> 0:17:14.240 you making some time for us this morning to build 0:17:14.240 --> 0:17:18.160 on this conversation. Henrita Trice A Vita Pounce joined usnapamore, Henriette, 0:17:18.200 --> 0:17:20.280 So happy new year and a welcome to the program, 0:17:20.280 --> 0:17:22.320 A warm welcome. What's it a company agenda? Do you 0:17:22.359 --> 0:17:25.000 think for Republicans what's achievable in the months ahead? 0:17:26.080 --> 0:17:28.880 Well, with a one seat majority, you have almost nothing 0:17:28.920 --> 0:17:31.479 that's achievable. And that's the state of play for Speaker 0:17:31.560 --> 0:17:34.040 Johnson right now. So, when President Trump spoke to the 0:17:34.040 --> 0:17:36.560 Conference yesterday. He laid out a whole host of things 0:17:36.600 --> 0:17:39.160 that Republicans would like to see, But the bottom line 0:17:39.240 --> 0:17:42.200 is this is where an understanding and being a legislative 0:17:42.200 --> 0:17:44.399 wonk is really helpful. You just don't have the votes, 0:17:44.720 --> 0:17:47.879 so talking about reorganizing healthcare is not an option. The 0:17:47.920 --> 0:17:50.840 best that they could do is extend the ACA subsidies 0:17:50.840 --> 0:17:52.960 that expired at the end of the last year. Twenty 0:17:53.000 --> 0:17:55.800 four million people, some people paying one thousand dollars more 0:17:55.800 --> 0:17:58.399 at ACU subsidies. That's going to be the bulk of it. 0:17:58.480 --> 0:18:00.760 And the real news from that event yesterday was around 0:18:00.800 --> 0:18:03.199 the High Amendment, which is related to abortion. We're on 0:18:03.240 --> 0:18:06.000 the same old issues we've been focused on for sixteen years, 0:18:06.000 --> 0:18:09.280 so expecting radical change on the healthcare front is just unrealistic. 0:18:09.359 --> 0:18:09.679 Henry. 0:18:09.760 --> 0:18:13.760 Is their appetite within the Republican Conference to expand those 0:18:13.800 --> 0:18:14.840 healthcare subsidies. 0:18:16.160 --> 0:18:19.000 I think there's appetite to extend, definitely, not to expand. 0:18:19.080 --> 0:18:23.000 So they put wage requirements on their duration requirements on 0:18:23.040 --> 0:18:26.359 there wouldn't be open ended. The duration is anywhere between 0:18:26.400 --> 0:18:28.920 six months to three years. There's even a five year bill, 0:18:28.960 --> 0:18:32.280 but expansion is not on the table, and so that's 0:18:32.320 --> 0:18:33.480 that's one of the best that they can help for 0:18:33.600 --> 0:18:34.080 going into this. 0:18:34.200 --> 0:18:35.719 So does this mean we will not have a government 0:18:35.760 --> 0:18:36.840