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 --> 00:00:24,840 Speaker 1: Business App. Listen on demand wherever you get your podcasts, 5 00:00:25,280 --> 00:00:27,240 Speaker 1: or watch us live on YouTube. 6 00:00:27,440 --> 00:00:30,600 Speaker 2: We welcome James Bianco. I will make it as clear 7 00:00:30,640 --> 00:00:34,360 Speaker 2: as I can. No one with a not an exception 8 00:00:34,440 --> 00:00:40,200 Speaker 2: of Mohammad Aalerian. No one nailed resilient inflation coming out 9 00:00:40,200 --> 00:00:43,479 Speaker 2: of COVID like Jim Bianco. He joins US today with 10 00:00:43,520 --> 00:00:47,840 Speaker 2: Bianco Research. Jim published moments ago at Apollo Global Management. 11 00:00:48,159 --> 00:00:51,880 Speaker 2: Torsten slocked that huge respect from his time at Deutsche Bank. 12 00:00:51,960 --> 00:00:52,880 Speaker 3: I quote Jim. 13 00:00:53,360 --> 00:00:57,680 Speaker 2: Container ship departures from China to the US are collapsing. 14 00:00:58,440 --> 00:01:01,240 Speaker 2: When consumers cannot get the the products they want from 15 00:01:01,280 --> 00:01:05,040 Speaker 2: abroad and the products that are imported are more expensive. 16 00:01:05,480 --> 00:01:09,160 Speaker 2: The outcome is a slow down in US consumer spending. 17 00:01:09,240 --> 00:01:12,920 Speaker 2: Gim you know consumption seventy percent of GDP. Are you 18 00:01:13,000 --> 00:01:15,319 Speaker 2: modeling out of tepid real GDP? 19 00:01:17,240 --> 00:01:17,440 Speaker 3: Yeah? 20 00:01:17,480 --> 00:01:20,280 Speaker 4: I think that the real growth in the economy is 21 00:01:20,360 --> 00:01:23,679 Speaker 4: going to slow. I don't have it going anywhere to 22 00:01:24,000 --> 00:01:26,560 Speaker 4: like a recession. I also think the other thing you 23 00:01:26,640 --> 00:01:29,120 Speaker 4: got to keep in mind that gets very little discussion 24 00:01:29,319 --> 00:01:31,959 Speaker 4: is the closing of the US border, because most of 25 00:01:32,000 --> 00:01:35,399 Speaker 4: the population growth of the United States comes from immigration, 26 00:01:35,760 --> 00:01:39,360 Speaker 4: whether it's illegal or legal, and that's going to dramatically 27 00:01:39,440 --> 00:01:42,000 Speaker 4: slow and that's also going to slow down the economy 28 00:01:42,040 --> 00:01:45,119 Speaker 4: as well. But again, I don't think these numbers are 29 00:01:45,120 --> 00:01:49,280 Speaker 4: going to produce anywhere near an inflation or excuse me, 30 00:01:49,320 --> 00:01:53,520 Speaker 4: a recession. And also I don't think that cutting interest 31 00:01:53,600 --> 00:01:57,080 Speaker 4: rates is going to solve these problems. All cutting interest 32 00:01:57,160 --> 00:02:00,160 Speaker 4: rates are going to do is try to inject what 33 00:02:00,200 --> 00:02:03,040 Speaker 4: we have with steroids, and it's just going to produce 34 00:02:03,080 --> 00:02:03,800 Speaker 4: more inflation. 35 00:02:04,120 --> 00:02:06,240 Speaker 3: It's not going to produce higher growth. I'm not going 36 00:02:06,280 --> 00:02:07,320 Speaker 3: to mince words, folks. 37 00:02:07,680 --> 00:02:10,680 Speaker 2: The conversation that John Farrah yesterday with the Secretary of 38 00:02:10,680 --> 00:02:15,000 Speaker 2: Treasury was the single best conversation I heard because it 39 00:02:15,160 --> 00:02:20,120 Speaker 2: allowed us to hear best in theory. John Authors is 40 00:02:20,200 --> 00:02:23,080 Speaker 2: quite critical. He'll be on later in the show. And 41 00:02:23,120 --> 00:02:26,400 Speaker 2: now we have Jim beyonco. What does Bessen get wrong? 42 00:02:26,520 --> 00:02:30,760 Speaker 2: Jim bionco about four or five, six, seven rate cuts? 43 00:02:32,880 --> 00:02:37,239 Speaker 3: Everything? Could I say that he's basically he says such 44 00:02:37,240 --> 00:02:37,840 Speaker 3: a gentleman. 45 00:02:38,720 --> 00:02:43,919 Speaker 4: Yeah, he basically said, any model suggests that that interest 46 00:02:44,000 --> 00:02:46,360 Speaker 4: rates should be cut by one and a half to 47 00:02:46,400 --> 00:02:49,040 Speaker 4: one and three quarter percent. I'll come back and say 48 00:02:49,040 --> 00:02:52,160 Speaker 4: to you that there's no model that says that if 49 00:02:52,160 --> 00:02:55,280 Speaker 4: you have a three percent interest rate, that you should 50 00:02:55,280 --> 00:02:58,040 Speaker 4: be cutting interest rates by that much. And John Author's 51 00:02:58,480 --> 00:03:00,800 Speaker 4: authored does something about that yes esterday, and he'll. 52 00:03:00,600 --> 00:03:02,000 Speaker 3: Talk more about that. 53 00:03:02,000 --> 00:03:05,520 Speaker 4: That the idea that interest rates should go below the 54 00:03:05,560 --> 00:03:09,320 Speaker 4: inflation rate when the inflation rate is this high is unprecedented. 55 00:03:09,639 --> 00:03:12,600 Speaker 3: It's never been there when it's been above three percent. 56 00:03:13,160 --> 00:03:17,200 Speaker 4: It should stay above the inflation rate by some premium. 57 00:03:17,560 --> 00:03:19,960 Speaker 4: And that's why I think that the current funds rate 58 00:03:20,000 --> 00:03:21,440 Speaker 4: at four and a quarter to four and a half 59 00:03:22,120 --> 00:03:24,800 Speaker 4: is very close to neutral. And that's why I was 60 00:03:24,800 --> 00:03:27,280 Speaker 4: saying earlier. If you want to cut interest rates and 61 00:03:27,320 --> 00:03:30,760 Speaker 4: the FED looks like they're going to, you're not going 62 00:03:30,800 --> 00:03:33,440 Speaker 4: to get the desired economic growth outcome. 63 00:03:33,560 --> 00:03:35,720 Speaker 3: You're going to get an inflationary outcome. 64 00:03:36,680 --> 00:03:39,840 Speaker 5: So Jim going back to the labor and again we're 65 00:03:39,840 --> 00:03:42,280 Speaker 5: going to get initial jobs claims today, what is a 66 00:03:42,400 --> 00:03:47,000 Speaker 5: reasonably I guess, decent growing economy. How many new jobs 67 00:03:47,040 --> 00:03:49,560 Speaker 5: per month does an economy need that's growing in a 68 00:03:49,600 --> 00:03:50,200 Speaker 5: decent clip. 69 00:03:51,480 --> 00:03:55,480 Speaker 4: This is the question that economist seem to be skirting within. 70 00:03:55,600 --> 00:03:58,560 Speaker 4: Population growth slowing as much as it has, and the 71 00:03:58,600 --> 00:04:01,920 Speaker 4: President putting out a truth social post last week saying 72 00:04:01,920 --> 00:04:06,120 Speaker 4: we might have net net negative immigration growth, more people 73 00:04:06,200 --> 00:04:08,640 Speaker 4: leaving the country than entering for the first time in 74 00:04:08,680 --> 00:04:09,600 Speaker 4: American history. 75 00:04:10,240 --> 00:04:13,120 Speaker 3: The population growth might be down around zero. 76 00:04:13,200 --> 00:04:15,080 Speaker 4: If that's the case, you can make the case that 77 00:04:15,280 --> 00:04:18,200 Speaker 4: anything and now you quote the American Enterprise Institute is 78 00:04:18,240 --> 00:04:21,360 Speaker 4: put pen to paper on this, anything around ten thousand 79 00:04:21,440 --> 00:04:24,400 Speaker 4: jobs a month might be enough. So when we freaked 80 00:04:24,400 --> 00:04:27,839 Speaker 4: out about nineteen thousand jobs, fourteen thousand jobs, seventy three 81 00:04:27,880 --> 00:04:31,080 Speaker 4: thousand jobs, what we were doing is we were assuming 82 00:04:31,200 --> 00:04:33,400 Speaker 4: this is the way it was when we had the 83 00:04:33,440 --> 00:04:36,279 Speaker 4: border open and we needed eighty or one hundred thousand 84 00:04:36,360 --> 00:04:39,440 Speaker 4: jobs a month. We're now in probably a ten thousand 85 00:04:39,520 --> 00:04:41,479 Speaker 4: job a month range. 86 00:04:41,800 --> 00:04:43,119 Speaker 3: And that is enough jobs. 87 00:04:43,160 --> 00:04:46,159 Speaker 4: And again, if you're going to cut rates because ten 88 00:04:46,160 --> 00:04:47,839 Speaker 4: thousand jobs is too small. 89 00:04:47,600 --> 00:04:50,320 Speaker 3: You're just going to produce inflation. Bottle it, folks. 90 00:04:50,320 --> 00:04:52,880 Speaker 2: What you just heard there from James biancle paul I 91 00:04:52,960 --> 00:04:56,919 Speaker 2: hereby call it the Great Reset That yeah, I'm stealing 92 00:04:56,920 --> 00:04:59,599 Speaker 2: that from Lisa Matteo. She has a great reset with 93 00:04:59,680 --> 00:05:03,320 Speaker 2: on ustibles, but I'm calling it the great reset. People 94 00:05:03,360 --> 00:05:06,520 Speaker 2: don't understand what mister Bianco said, and Paul, you know, 95 00:05:06,520 --> 00:05:09,359 Speaker 2: I got a bunch of questions on this. Please step 96 00:05:09,400 --> 00:05:12,279 Speaker 2: forward to your Paul and continue this discussion, Folks, this 97 00:05:12,560 --> 00:05:16,080 Speaker 2: is so important in honor of Angus Madison about a 98 00:05:16,200 --> 00:05:17,720 Speaker 2: changing America. 99 00:05:18,040 --> 00:05:20,039 Speaker 5: Jim, as a result of kind of what we've just 100 00:05:20,040 --> 00:05:22,279 Speaker 5: been talking about here is, are we in a world 101 00:05:22,279 --> 00:05:24,560 Speaker 5: of just elevated inflationship? 102 00:05:24,600 --> 00:05:26,840 Speaker 6: People get used to what they're paying in the supermarket. 103 00:05:26,920 --> 00:05:29,400 Speaker 3: For example, I think we are. 104 00:05:29,560 --> 00:05:32,719 Speaker 4: I mean, the Fed has a target of two percent. 105 00:05:33,640 --> 00:05:37,120 Speaker 4: They cut interest rates last year, when in September of 106 00:05:37,200 --> 00:05:40,440 Speaker 4: last year, a year ago, when the cornflation rate was 107 00:05:40,480 --> 00:05:43,920 Speaker 4: over three, the cornflation rates three point one. Right now, 108 00:05:44,080 --> 00:05:47,120 Speaker 4: they're about to cut interest rates again with it over three. 109 00:05:47,760 --> 00:05:50,880 Speaker 3: Forget what they say. Forget that, you know, j Paul, you. 110 00:05:50,800 --> 00:05:52,840 Speaker 4: Know, will say in a September press or that we're 111 00:05:52,839 --> 00:05:55,240 Speaker 4: strongly committed to our two percent target. 112 00:05:55,360 --> 00:05:58,239 Speaker 3: They're cutting interest rates with it above three. 113 00:05:58,560 --> 00:06:00,560 Speaker 4: So they're telling you that the two percent target is 114 00:06:00,600 --> 00:06:02,760 Speaker 4: no longer the target is closer to three. 115 00:06:02,960 --> 00:06:04,080 Speaker 3: Now why does that matter. 116 00:06:04,680 --> 00:06:08,960 Speaker 4: Indeed, the website that does jobs did a study and 117 00:06:09,000 --> 00:06:11,600 Speaker 4: they said something like thirty five or forty percent of 118 00:06:11,640 --> 00:06:15,680 Speaker 4: the American public is not getting raises equal to the 119 00:06:15,720 --> 00:06:19,280 Speaker 4: three percent inflation rate. So that's probably the bottom thirty 120 00:06:19,279 --> 00:06:21,680 Speaker 4: five or forty percent of income. So we're just going 121 00:06:21,720 --> 00:06:25,320 Speaker 4: to tell those people, sorry, your job is going to 122 00:06:25,360 --> 00:06:28,560 Speaker 4: continue to give you raised increases above the inflation rate. 123 00:06:28,640 --> 00:06:30,560 Speaker 4: So every time you go to store, you have to 124 00:06:30,560 --> 00:06:33,200 Speaker 4: buy less things because prices are moving up faster than 125 00:06:33,240 --> 00:06:36,520 Speaker 4: your paycheck. And that's where that becomes important. I know 126 00:06:36,560 --> 00:06:38,720 Speaker 4: a lot of people want to stroke their shoulder. Ah two, 127 00:06:38,800 --> 00:06:41,200 Speaker 4: make it three. What's the difference for a third of 128 00:06:41,200 --> 00:06:43,160 Speaker 4: the country. It's a big difference if you can't get 129 00:06:43,160 --> 00:06:45,400 Speaker 4: the inflation Jim, let me ask you the question again, folks. 130 00:06:45,400 --> 00:06:48,919 Speaker 2: An interpolation is where you have a belief and you 131 00:06:49,000 --> 00:06:51,560 Speaker 2: have something else to look at and you try to 132 00:06:51,680 --> 00:06:56,040 Speaker 2: guess or interpolate what the numbers should be. So, Jim Bianco, 133 00:06:56,120 --> 00:07:00,600 Speaker 2: if I have flat population growth as a general statement, and. 134 00:07:00,600 --> 00:07:02,800 Speaker 3: I've got the way we frame. 135 00:07:02,560 --> 00:07:05,240 Speaker 2: The unemployment rate, let's call it four point two four 136 00:07:05,240 --> 00:07:08,719 Speaker 2: point three percent to pick a number when you when 137 00:07:08,880 --> 00:07:13,160 Speaker 2: we do a Bianco interpolation is four point five percent 138 00:07:13,640 --> 00:07:16,320 Speaker 2: the new five percent unemployment rate. 139 00:07:17,640 --> 00:07:20,000 Speaker 4: No, I don't think it is at least in that 140 00:07:20,080 --> 00:07:22,280 Speaker 4: regard because you know, not to get tu wonky, but 141 00:07:22,320 --> 00:07:26,920 Speaker 4: the UH unemployment rate is measured on a household survey 142 00:07:27,320 --> 00:07:29,560 Speaker 4: and that's one of the reasons why I think you 143 00:07:29,600 --> 00:07:34,040 Speaker 4: saw with the payroll report falling, the unemployment rate didn't rise. 144 00:07:34,520 --> 00:07:39,040 Speaker 4: We don't have with slow population growth, every month thousands 145 00:07:39,040 --> 00:07:43,360 Speaker 4: of people entering the workforce, either they're turning eighteen, which 146 00:07:43,400 --> 00:07:45,800 Speaker 4: is one way you can enter the workforce, or they're 147 00:07:45,840 --> 00:07:49,320 Speaker 4: coming into the country new looking for a job. So 148 00:07:49,360 --> 00:07:53,600 Speaker 4: that's why you could have slow imp payroll growth and 149 00:07:53,680 --> 00:07:56,600 Speaker 4: not high unemployment. And I thought it was kind of 150 00:07:56,600 --> 00:08:01,080 Speaker 4: interesting because Chairman pol has mentioned the supply of labor, 151 00:08:01,120 --> 00:08:04,080 Speaker 4: which is their phrase for, you know, slowing population growth, 152 00:08:04,240 --> 00:08:07,560 Speaker 4: and said he's more interested in the unemployment rate than 153 00:08:07,600 --> 00:08:10,400 Speaker 4: he is in the payroll report, because if nobody's coming 154 00:08:10,440 --> 00:08:12,920 Speaker 4: into the country and no one's looking for a job, 155 00:08:13,320 --> 00:08:17,200 Speaker 4: these slow numbers may not produce higher unemployment. So I 156 00:08:17,240 --> 00:08:19,560 Speaker 4: think that you know, the four point two number is 157 00:08:19,560 --> 00:08:21,120 Speaker 4: what it used to be, and that's. 158 00:08:20,920 --> 00:08:23,000 Speaker 3: Why it's not going up. The unemployment rate. 159 00:08:23,120 --> 00:08:24,800 Speaker 4: It's four point two a year ago when we were 160 00:08:24,800 --> 00:08:26,000 Speaker 4: still producing one hundred thousand. 161 00:08:26,160 --> 00:08:28,760 Speaker 3: How do you carry this over to the equity market. 162 00:08:28,880 --> 00:08:33,120 Speaker 2: If we talk about a flatline demographics, does that mean 163 00:08:33,240 --> 00:08:36,800 Speaker 2: a more tipid demure stock market. 164 00:08:38,080 --> 00:08:40,680 Speaker 4: Not initially. I mean the stock market is all about 165 00:08:40,720 --> 00:08:42,880 Speaker 4: cheap money. And if they sees the FED is going 166 00:08:42,920 --> 00:08:45,960 Speaker 4: to be cutting rates and it's celebrating the idea that 167 00:08:46,120 --> 00:08:48,200 Speaker 4: cheaper borrowing costs are coming, and it's going to. 168 00:08:48,240 --> 00:08:49,120 Speaker 3: Keep going from there. 169 00:08:49,360 --> 00:08:53,080 Speaker 4: But over time, yes, it will take away some of 170 00:08:53,120 --> 00:08:55,640 Speaker 4: the growth of the country. Nominal GDP will go down. 171 00:08:55,679 --> 00:09:00,560 Speaker 4: That's real growth plus inflation. That should over time herd 172 00:09:00,600 --> 00:09:04,480 Speaker 4: earnings and over time, let me go on another direction 173 00:09:04,520 --> 00:09:07,640 Speaker 4: here for you, it should help to correct housing because 174 00:09:07,679 --> 00:09:10,120 Speaker 4: one of the problems with housing is there's not enough houses. 175 00:09:10,160 --> 00:09:13,840 Speaker 4: Everybody talks about the affordability crisis. When we have home 176 00:09:13,880 --> 00:09:17,040 Speaker 4: prices at all time highs, we don't have enough houses. Well, 177 00:09:17,040 --> 00:09:18,640 Speaker 4: if you slow down the number of people that meat 178 00:09:18,679 --> 00:09:22,120 Speaker 4: houses over time, that should correct itself too. 179 00:09:22,480 --> 00:09:23,440 Speaker 3: Now it's not all good. 180 00:09:23,559 --> 00:09:27,400 Speaker 4: I mean, you'd rather have growing population faster than slower, 181 00:09:27,800 --> 00:09:30,040 Speaker 4: But those are some of the immediate effects. 182 00:09:30,120 --> 00:09:33,240 Speaker 5: If this continues, jim are you surprised that US dollars 183 00:09:33,320 --> 00:09:36,240 Speaker 5: not rebounded like the US equity markets have rebounded. 184 00:09:38,320 --> 00:09:40,720 Speaker 4: Not really, because I think what the dollar did was 185 00:09:40,880 --> 00:09:46,040 Speaker 4: after Liberation Day, when it disconnected from interest rates, it reconnected, 186 00:09:46,440 --> 00:09:49,120 Speaker 4: and so when you get lower interest rates in the US, 187 00:09:49,240 --> 00:09:51,280 Speaker 4: you tend to get a lower dollar. When you get 188 00:09:51,360 --> 00:09:53,280 Speaker 4: higher interest rates, you tend to get a higher dollar. 189 00:09:53,559 --> 00:09:56,000 Speaker 4: So I think the big driver of the dollar right 190 00:09:56,040 --> 00:09:59,400 Speaker 4: now is back. It wasn't for a while, but it's 191 00:09:59,480 --> 00:10:02,040 Speaker 4: back to being interest rates. So as long as they're 192 00:10:02,080 --> 00:10:04,559 Speaker 4: headed down, I think that's going to keep the dollar 193 00:10:04,600 --> 00:10:05,520 Speaker 4: relatively weak. 194 00:10:05,800 --> 00:10:08,240 Speaker 3: Most currency traders are playing this relative interest. 195 00:10:08,080 --> 00:10:10,000 Speaker 4: Rate game, where can I get the highest interest rate, 196 00:10:10,200 --> 00:10:12,600 Speaker 4: and if our rates are going down, it becomes less attractive. 197 00:10:12,800 --> 00:10:15,040 Speaker 5: Hey, Jimmy, we pretty much three with the second quarter 198 00:10:15,120 --> 00:10:18,040 Speaker 5: earnings here, How did they look to you? Hou's corporate 199 00:10:18,080 --> 00:10:22,240 Speaker 5: America dealing with this current economic environment. 200 00:10:22,960 --> 00:10:23,800 Speaker 3: It's looking great. 201 00:10:23,960 --> 00:10:26,640 Speaker 4: I mean, more than eighty percent of the S and 202 00:10:26,640 --> 00:10:30,320 Speaker 4: P five hundred companies beat. The guidance that the companies 203 00:10:30,320 --> 00:10:33,200 Speaker 4: have given has been the most positive in four years. 204 00:10:34,000 --> 00:10:36,559 Speaker 4: The outlook for the second half of the year looks 205 00:10:36,720 --> 00:10:37,200 Speaker 4: very good. 206 00:10:37,679 --> 00:10:39,520 Speaker 3: So at least in the interim. 207 00:10:40,040 --> 00:10:42,800 Speaker 4: It looks like if you were to judge of Corporate 208 00:10:42,800 --> 00:10:44,880 Speaker 4: America as an economic indicator. 209 00:10:44,960 --> 00:10:47,400 Speaker 3: They're telling you that the economy is doing very well. 210 00:10:48,160 --> 00:10:50,920 Speaker 2: Jim, I think your comments on the Secretary Treasure are 211 00:10:50,920 --> 00:10:53,360 Speaker 2: apt and against John on authors is scathing, and we 212 00:10:53,559 --> 00:10:56,120 Speaker 2: have them on here later. At the beginning, I thought 213 00:10:56,200 --> 00:11:00,480 Speaker 2: John Farrell was brilliant. At the beginning, Jim Bianco, the 214 00:11:00,520 --> 00:11:05,640 Speaker 2: Secretary walked through his belief of the diffusion of tariffs 215 00:11:06,200 --> 00:11:10,240 Speaker 2: from the export country to the importer at the shore, 216 00:11:10,840 --> 00:11:14,920 Speaker 2: to the consumer, and to me, with all I've read, 217 00:11:14,960 --> 00:11:18,800 Speaker 2: including Douglas within the classic at Dartmouth, it was all 218 00:11:18,880 --> 00:11:24,400 Speaker 2: Greek to me, critique the Trump vestent theory that the 219 00:11:24,440 --> 00:11:28,000 Speaker 2: consumer won't pick up the burden of these tariffs, and 220 00:11:28,040 --> 00:11:31,040 Speaker 2: the zeitgeist. This morning, folks, is Michael Barr. He is 221 00:11:31,320 --> 00:11:33,839 Speaker 2: every morning in the food court, folks. Michael Barr has 222 00:11:33,880 --> 00:11:37,280 Speaker 2: a bowl. It's a bowl of raisin bran with a 223 00:11:37,280 --> 00:11:39,840 Speaker 2: banana on it, but it's actually a bowl of bananas 224 00:11:40,040 --> 00:11:42,880 Speaker 2: with some raisin brand I mean, I mean, Jim Bianco, 225 00:11:43,240 --> 00:11:46,959 Speaker 2: the bananas alone are already killing us. Are these tariffs 226 00:11:47,040 --> 00:11:50,440 Speaker 2: going to pass on to the consumer unlike what the 227 00:11:50,480 --> 00:11:52,000 Speaker 2: Secretary of Treasury says. 228 00:11:53,040 --> 00:11:54,200 Speaker 3: I think eventually they are. 229 00:11:54,320 --> 00:11:57,240 Speaker 4: You're right, there's three people that can Let's bear remind 230 00:11:57,240 --> 00:12:00,680 Speaker 4: that terraffs are up by about a quarter of a 231 00:12:00,760 --> 00:12:04,199 Speaker 4: trillion dollars, So to put it in the vernacular, somebody's 232 00:12:04,240 --> 00:12:07,080 Speaker 4: paying an extra two hundred and fifty billion dollars for 233 00:12:07,320 --> 00:12:10,480 Speaker 4: product that we weren't because of tariffs. Who's paying that? 234 00:12:10,559 --> 00:12:14,000 Speaker 4: We got three choices? The export country. That means China 235 00:12:14,040 --> 00:12:18,240 Speaker 4: cuts its rates, cuts its prices, Japan cuts its prices 236 00:12:18,600 --> 00:12:21,439 Speaker 4: of things that they ship to the United States. That 237 00:12:21,559 --> 00:12:23,880 Speaker 4: might have been happening in the first thirty or sixty 238 00:12:23,960 --> 00:12:25,720 Speaker 4: days after Liberation Day. 239 00:12:25,640 --> 00:12:27,439 Speaker 3: But it looks like it's reversing right now. 240 00:12:27,440 --> 00:12:29,560 Speaker 4: They did it as a panic right away, didn't know 241 00:12:29,559 --> 00:12:31,719 Speaker 4: what to do, but now they're starting to reverse that 242 00:12:31,800 --> 00:12:33,800 Speaker 4: and bring it up. The other one is the importer, 243 00:12:33,880 --> 00:12:36,400 Speaker 4: the company that imports it. They're going to cut their 244 00:12:36,440 --> 00:12:40,800 Speaker 4: prices to the consumer. Well, as I mentioned with Corporate America, 245 00:12:40,840 --> 00:12:43,120 Speaker 4: margins are fine and Corporate America earnings. 246 00:12:42,760 --> 00:12:46,599 Speaker 3: Are doing fine. There's no sign that they're eating a quarter. 247 00:12:46,400 --> 00:12:49,600 Speaker 4: For trillion dollars worth of prices. So that leaves the 248 00:12:49,640 --> 00:12:53,000 Speaker 4: price at the store that will eventually start to go up, 249 00:12:53,040 --> 00:12:56,040 Speaker 4: and there's some evidence that those prices are starting to 250 00:12:56,160 --> 00:12:59,920 Speaker 4: remember in May, June, July what you were paying for 251 00:13:00,080 --> 00:13:03,720 Speaker 4: with stuff that was already imported without tariffs. But as 252 00:13:03,760 --> 00:13:06,680 Speaker 4: you get into August, September, October, and further now, the 253 00:13:06,720 --> 00:13:08,839 Speaker 4: stuff that's going to be on the shelves have that 254 00:13:09,040 --> 00:13:11,560 Speaker 4: tariff price embedded in it, and that's going to start 255 00:13:11,640 --> 00:13:12,480 Speaker 4: to creep higher. 256 00:13:12,679 --> 00:13:14,800 Speaker 2: Jim, this has been absolutely brilliant. Thank you so much 257 00:13:14,880 --> 00:13:18,080 Speaker 2: Jim Bianco with us today. I really appreciate it. Bianco 258 00:13:18,760 --> 00:13:21,440 Speaker 2: Research can't say no, folks, this is what surveillance is about, 259 00:13:21,480 --> 00:13:25,359 Speaker 2: the conversation back and forth, not to say someone's. 260 00:13:25,000 --> 00:13:28,040 Speaker 3: Wrong or right, but to engage the debate, and we 261 00:13:28,120 --> 00:13:31,320 Speaker 3: see that right now. Stay with us. 262 00:13:31,559 --> 00:13:34,800 Speaker 2: More from Bloomberg Surveillance coming up after this. 263 00:13:42,040 --> 00:13:45,640 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live 264 00:13:45,679 --> 00:13:48,840 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 265 00:13:48,920 --> 00:13:52,600 Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or 266 00:13:52,760 --> 00:13:54,359 Speaker 1: watch us live on YouTube. 267 00:13:54,520 --> 00:13:57,160 Speaker 2: This is Joy And as we were talking earlier about 268 00:13:57,160 --> 00:13:59,560 Speaker 2: options of Greek letters, the movements of the market, we 269 00:13:59,600 --> 00:14:02,640 Speaker 2: continue you with Dean Kurrent and scrilled that he could 270 00:14:02,679 --> 00:14:05,880 Speaker 2: be with us today with macro risk advisors. 271 00:14:06,559 --> 00:14:07,440 Speaker 3: Know I'm kid about it. 272 00:14:07,640 --> 00:14:10,400 Speaker 2: I mean my father said, we are almost named Greek 273 00:14:10,480 --> 00:14:12,480 Speaker 2: letters alpha, beta, gamma, delta. 274 00:14:12,559 --> 00:14:14,400 Speaker 3: You didn't do that to your children, did you, No, 275 00:14:14,679 --> 00:14:17,160 Speaker 3: you just spare them, Spare them the Greek letters. 276 00:14:17,200 --> 00:14:20,480 Speaker 2: One of them is theta, which is the guestiment or 277 00:14:20,640 --> 00:14:23,680 Speaker 2: misjudgment of the time function. 278 00:14:24,360 --> 00:14:25,880 Speaker 3: How badly do. 279 00:14:25,840 --> 00:14:29,800 Speaker 2: You see us misjudging our economics now with a tariff 280 00:14:29,920 --> 00:14:34,760 Speaker 2: overlay that completely screws up our theta, completely screws up 281 00:14:34,800 --> 00:14:35,640 Speaker 2: our exxes. 282 00:14:35,840 --> 00:14:38,760 Speaker 7: Well, I would first want to start with the reality 283 00:14:38,800 --> 00:14:41,000 Speaker 7: that Theta has very much been on the mind of 284 00:14:41,040 --> 00:14:43,680 Speaker 7: those who have paid money to own options. 285 00:14:43,800 --> 00:14:45,960 Speaker 6: Options are valuable assets. 286 00:14:45,960 --> 00:14:48,040 Speaker 7: I always say the right to change your mind is 287 00:14:48,080 --> 00:14:51,080 Speaker 7: at the heart of options, and that's valuable bud you 288 00:14:51,120 --> 00:14:53,960 Speaker 7: pay for it. And Theta is a reflection of the 289 00:14:54,040 --> 00:14:58,600 Speaker 7: decay of that option price as time goes on. And 290 00:14:58,760 --> 00:15:00,760 Speaker 7: in an environment in which the S and P is 291 00:15:00,800 --> 00:15:04,200 Speaker 7: realizing ten, there was a stretch for the triple Q 292 00:15:04,440 --> 00:15:06,960 Speaker 7: even over the course of a month where they realize 293 00:15:07,080 --> 00:15:07,680 Speaker 7: was just eight. 294 00:15:08,360 --> 00:15:09,520 Speaker 6: That's a lot of data. 295 00:15:09,720 --> 00:15:15,520 Speaker 7: Your option, your insurance that you've paid for is decaying 296 00:15:15,560 --> 00:15:18,880 Speaker 7: over time when you're not getting the moves, And I think, 297 00:15:19,720 --> 00:15:22,000 Speaker 7: you know, that's an important thing you're looking forward. In 298 00:15:22,080 --> 00:15:26,920 Speaker 7: terms of thinking about tariffs and trying to understand the 299 00:15:27,040 --> 00:15:29,920 Speaker 7: lags with which they operate. I think that's a big thing. 300 00:15:30,080 --> 00:15:33,080 Speaker 7: You know, people say monetary policy operates with lags. I 301 00:15:33,120 --> 00:15:35,440 Speaker 7: think the same can be said for tariffs. 302 00:15:35,440 --> 00:15:37,000 Speaker 3: I should advice with Dean Kerner. 303 00:15:37,120 --> 00:15:40,640 Speaker 2: The amateur piles into an option certain that they're certain, 304 00:15:41,120 --> 00:15:44,720 Speaker 2: and they lose their money. Nassen teleb is one example, 305 00:15:45,160 --> 00:15:50,200 Speaker 2: says bet little bits of money farther out. Discuss those 306 00:15:50,240 --> 00:15:52,760 Speaker 2: two hugely different approaches, right. 307 00:15:52,880 --> 00:15:57,640 Speaker 7: So, I think in an environment of shortening attention spans, 308 00:15:57,800 --> 00:16:00,920 Speaker 7: where it's just the latest tweet, it seems everything is 309 00:16:00,960 --> 00:16:04,200 Speaker 7: happening on a very compressed time horizon. And I think 310 00:16:04,240 --> 00:16:06,840 Speaker 7: investing is an example of that, where we've got this 311 00:16:07,000 --> 00:16:11,520 Speaker 7: proliferation of zero days to expiration options, and I think 312 00:16:11,560 --> 00:16:15,600 Speaker 7: there's with that, there is a misjudging very consistently by 313 00:16:15,640 --> 00:16:18,280 Speaker 7: investors where they look at the nominal price of an 314 00:16:18,320 --> 00:16:21,160 Speaker 7: option and they think, oh, that's a very low price, 315 00:16:21,240 --> 00:16:23,600 Speaker 7: but it's only got one day to expiration. And so 316 00:16:23,640 --> 00:16:26,520 Speaker 7: it's just not worth that much. The opposite's also true. 317 00:16:26,880 --> 00:16:32,120 Speaker 7: Investors misjudge the value of time with respect to longer 318 00:16:32,240 --> 00:16:36,040 Speaker 7: term options, and so you know, as an example with 319 00:16:36,200 --> 00:16:39,640 Speaker 7: the private credit, really what you're doing there is you're 320 00:16:39,680 --> 00:16:43,160 Speaker 7: clipping some coupon some excess yield, but you have given 321 00:16:43,200 --> 00:16:46,760 Speaker 7: away a lot of optionality. And that optionality is the 322 00:16:46,880 --> 00:16:49,800 Speaker 7: right to change your mind, the right to unwind your portfolio. 323 00:16:50,240 --> 00:16:53,920 Speaker 7: So when time horizons get extended without the ability to 324 00:16:54,320 --> 00:16:58,840 Speaker 7: make decisions very quickly, you're effectively in some way short optionality. 325 00:16:58,880 --> 00:17:00,680 Speaker 7: And it's a big reason why I think at this 326 00:17:00,800 --> 00:17:06,119 Speaker 7: moment where I see uncertainty really building and uncertainty being 327 00:17:06,240 --> 00:17:10,840 Speaker 7: inconsistent with the price of insurance, I think it's very 328 00:17:10,880 --> 00:17:14,600 Speaker 7: important to do two things for your portfolio. One, as 329 00:17:14,640 --> 00:17:16,080 Speaker 7: you need to stay long in the S and P. 330 00:17:16,600 --> 00:17:18,880 Speaker 7: I say, it's a benchmark that's very easy to track, 331 00:17:19,200 --> 00:17:23,640 Speaker 7: very difficult to beat, but overlay some insurance basic put 332 00:17:23,680 --> 00:17:26,119 Speaker 7: spread insurance on the S and P five hundred, and 333 00:17:26,160 --> 00:17:29,920 Speaker 7: then also really search for diversifying assets. For me, those 334 00:17:30,000 --> 00:17:33,400 Speaker 7: are gold and bitcoin. I think those are valuable overlays 335 00:17:33,400 --> 00:17:34,119 Speaker 7: on a portfolio. 336 00:17:34,200 --> 00:17:35,680 Speaker 3: At this time in. 337 00:17:35,600 --> 00:17:38,040 Speaker 5: Your market, the futures and options market. Are your clients 338 00:17:38,480 --> 00:17:41,639 Speaker 5: are they buying protection these days? Are they buying risk 339 00:17:41,800 --> 00:17:43,360 Speaker 5: these days? What are they doing well? 340 00:17:43,400 --> 00:17:46,280 Speaker 6: I think it's impossible not to be long risk. 341 00:17:46,520 --> 00:17:46,760 Speaker 3: Boy. 342 00:17:46,840 --> 00:17:49,680 Speaker 7: That S and P is a beast of a bench markets. 343 00:17:49,880 --> 00:17:53,840 Speaker 7: You know, it's long the capex cycle, it's long the megacaps, 344 00:17:53,880 --> 00:17:58,280 Speaker 7: which are delivering so much you know, return, they're delivering 345 00:17:58,320 --> 00:18:00,920 Speaker 7: so much of the of the earth earnings twelve percent 346 00:18:01,000 --> 00:18:04,320 Speaker 7: year over year earnings. But they are buying protection and 347 00:18:04,320 --> 00:18:08,160 Speaker 7: they're frustrated. You know, Tom used that word theta. There's 348 00:18:08,200 --> 00:18:12,360 Speaker 7: an old saying in markets. Theta is the rent on gamma, 349 00:18:12,520 --> 00:18:15,080 Speaker 7: which is gamma is the good part. Gamma gama is 350 00:18:15,080 --> 00:18:17,560 Speaker 7: what you want. It's the convexity that Tom talks about. 351 00:18:17,600 --> 00:18:19,919 Speaker 7: It's the right to change your mind. Theda is the 352 00:18:19,920 --> 00:18:22,960 Speaker 7: tough part. That's the bleed, and there has been a. 353 00:18:22,840 --> 00:18:23,320 Speaker 6: Lot of it. 354 00:18:23,880 --> 00:18:27,040 Speaker 7: You know, we have had gone through a period. Just 355 00:18:27,080 --> 00:18:30,159 Speaker 7: to give you another statistic, the HyG right, which is 356 00:18:30,240 --> 00:18:33,760 Speaker 7: the junk bond ETF This is moving over the last 357 00:18:33,800 --> 00:18:37,160 Speaker 7: month less than twenty basis points a day. It's it's 358 00:18:37,200 --> 00:18:41,240 Speaker 7: as if the index was closed for a month. And again, 359 00:18:41,640 --> 00:18:45,240 Speaker 7: what happens is option prices get pulled down. 360 00:18:45,680 --> 00:18:47,679 Speaker 6: When there's that little movement. 361 00:18:47,840 --> 00:18:50,399 Speaker 7: And so the setup here as we enter what I 362 00:18:50,400 --> 00:18:54,679 Speaker 7: think is a seasonally valuable time to own options. As 363 00:18:54,720 --> 00:18:59,080 Speaker 7: we come back from vacation, people sharpen their pencils after 364 00:18:59,160 --> 00:19:01,520 Speaker 7: Labor Day, and it just tends to be the case 365 00:19:02,280 --> 00:19:04,840 Speaker 7: with some consistency that there is a little bit more 366 00:19:04,880 --> 00:19:08,760 Speaker 7: of a risk off character to the market late September 367 00:19:08,960 --> 00:19:11,800 Speaker 7: through October. So I think this is a time when 368 00:19:11,960 --> 00:19:14,320 Speaker 7: at least our advice to our clients at Macro Risk 369 00:19:14,359 --> 00:19:17,439 Speaker 7: Advisors is, let's take a very good look at your 370 00:19:17,480 --> 00:19:22,480 Speaker 7: portfolio what it's exposed to, and overlay some protection. Don't 371 00:19:22,520 --> 00:19:24,800 Speaker 7: break the bank, because you can over insure yourself. 372 00:19:24,880 --> 00:19:25,520 Speaker 3: That's for sure. 373 00:19:26,400 --> 00:19:28,600 Speaker 7: You can buy too much protection and if it doesn't 374 00:19:28,600 --> 00:19:32,840 Speaker 7: pay off, your left sacrificing return. But there are easy 375 00:19:32,920 --> 00:19:38,120 Speaker 7: to do basic and I would argue cheap option overlays. 376 00:19:37,640 --> 00:19:39,320 Speaker 6: To do that can protect the portfolio. 377 00:19:39,440 --> 00:19:42,639 Speaker 7: What's the one you like the most, really simple, something 378 00:19:42,720 --> 00:19:46,720 Speaker 7: like a two month put spread on the SMP struck 379 00:19:46,760 --> 00:19:49,359 Speaker 7: it five percent out of the money is your top strike. 380 00:19:49,760 --> 00:19:52,960 Speaker 7: And then to reduce the cost of it, which is 381 00:19:53,000 --> 00:19:56,159 Speaker 7: important because again the realized volatility is low, so you 382 00:19:56,640 --> 00:19:59,399 Speaker 7: can't spend too much. So sell something like a twenty 383 00:19:59,440 --> 00:20:01,600 Speaker 7: percent out of the money put that's going to get 384 00:20:01,640 --> 00:20:04,440 Speaker 7: you through October, which is again that seasonal period of 385 00:20:04,520 --> 00:20:05,119 Speaker 7: higher evolve. 386 00:20:05,240 --> 00:20:07,200 Speaker 3: Can you hedge MAG seven? 387 00:20:09,240 --> 00:20:09,600 Speaker 6: Listen? 388 00:20:09,680 --> 00:20:13,480 Speaker 7: The MAG seven is forty percent of the sub or 389 00:20:13,480 --> 00:20:15,640 Speaker 7: at least the top ten stocks. That's not the MAG seven, 390 00:20:15,680 --> 00:20:18,320 Speaker 7: but the top ten stocks are forty percent. They're also 391 00:20:18,640 --> 00:20:21,959 Speaker 7: remarkably twenty six percent of the MSCI World Index. 392 00:20:22,000 --> 00:20:22,840 Speaker 6: That's the top ten. 393 00:20:23,320 --> 00:20:24,119 Speaker 3: I did not know that. 394 00:20:24,480 --> 00:20:28,600 Speaker 2: That's the American MAG seven are one quarter of the 395 00:20:28,720 --> 00:20:30,240 Speaker 2: ginormous global index. 396 00:20:30,359 --> 00:20:33,000 Speaker 7: It's incredible, you know, I think I just saw a 397 00:20:33,040 --> 00:20:37,040 Speaker 7: statu was probably on the Bloomberg terminal. In Vidia is 398 00:20:37,080 --> 00:20:40,520 Speaker 7: bigger than the entire German stock market in terms of marketing. 399 00:20:40,560 --> 00:20:41,399 Speaker 3: How do you hedge that? 400 00:20:41,600 --> 00:20:44,160 Speaker 2: I mean, you know, you know, I know everybody out 401 00:20:44,160 --> 00:20:46,479 Speaker 2: there owns Nvidia and you're never going to sell it. 402 00:20:46,760 --> 00:20:49,560 Speaker 2: Adults in the pro market can't do that. How do 403 00:20:49,600 --> 00:20:51,400 Speaker 2: you hedge protect yourself? 404 00:20:51,560 --> 00:20:51,720 Speaker 6: Yeah? 405 00:20:51,720 --> 00:20:53,480 Speaker 7: And I think this is a really important point. It's 406 00:20:53,480 --> 00:20:55,359 Speaker 7: something I keep coming back to, is that these stocks 407 00:20:55,359 --> 00:21:00,600 Speaker 7: have hedged themselves. The correlation between Microsoft and Google or 408 00:21:00,640 --> 00:21:06,240 Speaker 7: in Vidia and Amazon, they're just, you know, unbelievably low, 409 00:21:06,400 --> 00:21:09,879 Speaker 7: and so I think people that's a that's a blind 410 00:21:09,880 --> 00:21:13,320 Speaker 7: spot for investors is that because these things are uncorrelated, 411 00:21:13,320 --> 00:21:16,480 Speaker 7: they're very low in terms of the overall volatility S 412 00:21:16,560 --> 00:21:19,080 Speaker 7: and P five hundred. And if we've learned one thing, 413 00:21:19,280 --> 00:21:23,160 Speaker 7: it's that missizing is your biggest risk, and that comes 414 00:21:23,200 --> 00:21:27,480 Speaker 7: from underestimating volatility. So honestly, back to the the put 415 00:21:27,560 --> 00:21:29,399 Speaker 7: spread on the S and P five hundred, because these 416 00:21:29,440 --> 00:21:31,000 Speaker 7: things are such a big part of the market cap, 417 00:21:31,400 --> 00:21:32,800 Speaker 7: just don't put spreads on the S and P. 418 00:21:33,080 --> 00:21:34,920 Speaker 3: Did I see some Beata come in here? 419 00:21:35,359 --> 00:21:38,560 Speaker 6: I mean you got sometimes I name him Ebsalon. 420 00:21:39,240 --> 00:21:41,200 Speaker 3: You got your key there in terms for you? 421 00:21:41,320 --> 00:21:41,439 Speaker 4: Right? 422 00:21:41,480 --> 00:21:43,080 Speaker 3: You make them work? I do. 423 00:21:43,320 --> 00:21:47,520 Speaker 7: We've he's on the terminal, he's doing spreadsheets. It's been 424 00:21:47,560 --> 00:21:49,959 Speaker 7: it's been really fun. It's been a great summix generation 425 00:21:50,040 --> 00:21:50,439 Speaker 7: coming up. 426 00:21:51,040 --> 00:21:52,800 Speaker 3: This is just great. How you do it? 427 00:21:53,200 --> 00:21:54,879 Speaker 2: I wish Bernard de Pierre was here, one of the 428 00:21:54,920 --> 00:21:58,840 Speaker 2: giants of derivative mathematics, wanders through our food court from 429 00:21:58,880 --> 00:22:02,159 Speaker 2: day to day. There's this thing called Eto's dilemma, which burnandapere. 430 00:22:02,200 --> 00:22:04,000 Speaker 2: That'd be great for your son to be plun I'm 431 00:22:04,000 --> 00:22:07,200 Speaker 2: going to figure that out. Dean Current, thank you so much, 432 00:22:07,320 --> 00:22:09,000 Speaker 2: really really wonderful. 433 00:22:10,600 --> 00:22:11,320 Speaker 3: Stay with us. 434 00:22:11,560 --> 00:22:14,800 Speaker 2: More from Bloomberg Surveillance coming up after this. 435 00:22:22,600 --> 00:22:26,160 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 436 00:22:26,240 --> 00:22:29,399 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 437 00:22:29,480 --> 00:22:33,159 Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or 438 00:22:33,320 --> 00:22:34,800 Speaker 1: watch us live on YouTube. 439 00:22:35,200 --> 00:22:38,440 Speaker 2: Kim Dawson briefs Now with NEWIG. What does an under 440 00:22:38,560 --> 00:22:41,000 Speaker 2: fifteen vix mean to you? 441 00:22:41,840 --> 00:22:45,920 Speaker 8: It means calm waters that this market has been extraordinarily 442 00:22:45,960 --> 00:22:49,560 Speaker 8: resilient in digesting headlines that we might have thought could 443 00:22:49,640 --> 00:22:52,560 Speaker 8: cause more volatility, mostly in a month like August where 444 00:22:52,600 --> 00:22:55,960 Speaker 8: trading volumes are lighter, But this market continues to just 445 00:22:56,040 --> 00:22:58,600 Speaker 8: power on. And we think it's driven by two key things. 446 00:22:58,640 --> 00:23:02,159 Speaker 8: The first one being that liquid remains very abundant, and 447 00:23:02,280 --> 00:23:05,000 Speaker 8: the second thing is that earning sestaments are going up. 448 00:23:05,359 --> 00:23:08,280 Speaker 8: Risk assets love it when earning sestaments and growth estimates 449 00:23:08,280 --> 00:23:10,280 Speaker 8: are going up. So when you dis sill it down 450 00:23:10,280 --> 00:23:12,680 Speaker 8: to those two things, you can see why we've been resilient. 451 00:23:12,760 --> 00:23:15,080 Speaker 8: But of course it makes you raise an eyebrow. If 452 00:23:15,119 --> 00:23:17,880 Speaker 8: we're thinking we could becoming complacent. 453 00:23:18,320 --> 00:23:22,320 Speaker 5: Any rotations out of what's really been working, what's always 454 00:23:22,359 --> 00:23:25,280 Speaker 5: seemly been working. The big cap tech names that we've 455 00:23:25,280 --> 00:23:27,440 Speaker 5: seen any are people trying to broaden that at all. 456 00:23:27,600 --> 00:23:29,520 Speaker 9: Yesterday was a big rotation day. 457 00:23:29,960 --> 00:23:32,840 Speaker 8: Under the surface, it looked calm on the surface of 458 00:23:32,840 --> 00:23:34,439 Speaker 8: the S and P five hundred, but kind of like 459 00:23:34,480 --> 00:23:37,800 Speaker 8: a duck spinning its legs under the water, we were 460 00:23:37,800 --> 00:23:41,479 Speaker 8: seeing huge rotations where you saw the Nasdaq AI trades 461 00:23:41,520 --> 00:23:44,320 Speaker 8: all trade off rather sharply, and things like Russell two 462 00:23:44,359 --> 00:23:46,560 Speaker 8: thousand doing all a lot under yesterday. 463 00:23:46,800 --> 00:23:48,680 Speaker 3: But that could be a one off, right, I mean 464 00:23:48,720 --> 00:23:52,160 Speaker 3: in this environment, yes, how does someone like you bet 465 00:23:52,240 --> 00:23:53,760 Speaker 3: on a rotational shift? 466 00:23:53,960 --> 00:23:55,919 Speaker 8: Well, I think the one thing that we've been noting 467 00:23:55,960 --> 00:23:57,719 Speaker 8: over the course of the last few days is that 468 00:23:57,840 --> 00:24:02,400 Speaker 8: growth versus value has gone parabolic in the last month 469 00:24:02,560 --> 00:24:05,679 Speaker 8: or so, meaning that growth is outperformed value almost in 470 00:24:05,720 --> 00:24:08,000 Speaker 8: a straight line up. And what we see is after 471 00:24:08,080 --> 00:24:11,040 Speaker 8: each of those parabolic moves we had one in December 472 00:24:11,080 --> 00:24:14,120 Speaker 8: of last year, we had one in July of last year, 473 00:24:14,320 --> 00:24:17,600 Speaker 8: that you typically see a correction, meaning just a reversion 474 00:24:17,640 --> 00:24:20,040 Speaker 8: back to the means. So We wouldn't be surprised if 475 00:24:20,080 --> 00:24:22,800 Speaker 8: you saw growth take a breather because it's been so strong, 476 00:24:23,200 --> 00:24:25,240 Speaker 8: But that doesn't mean it's not still in the nuptrend, 477 00:24:25,280 --> 00:24:26,720 Speaker 8: which it still very much is. 478 00:24:27,520 --> 00:24:29,320 Speaker 5: How much do we eat? Does this market need the 479 00:24:29,359 --> 00:24:32,720 Speaker 5: FED to cut? Do they need a gradual cut, did 480 00:24:32,760 --> 00:24:35,159 Speaker 5: they need something more aggressive? We've had talk of a 481 00:24:35,200 --> 00:24:37,560 Speaker 5: fifty basis point cut kind of creep into the conversation, 482 00:24:37,640 --> 00:24:39,119 Speaker 5: not just twenty five in September. 483 00:24:39,359 --> 00:24:41,920 Speaker 9: It's the why they're cutting, which is so important. 484 00:24:42,160 --> 00:24:45,719 Speaker 8: If they are cutting because growth is much weaker than expected, 485 00:24:45,960 --> 00:24:49,159 Speaker 8: we're marking down forecasts, then then doing a fifty basis 486 00:24:49,200 --> 00:24:51,440 Speaker 8: point cut because the economy. 487 00:24:50,880 --> 00:24:53,680 Speaker 9: Needs the stabilization. That's not good for markets. 488 00:24:53,960 --> 00:24:56,440 Speaker 8: If they're cutting because they can they want to get 489 00:24:56,480 --> 00:25:00,119 Speaker 8: to this idea of neutral inflation, has moderated, growth is 490 00:25:00,440 --> 00:25:04,000 Speaker 8: slowish and still healthy, then that's a place where markets 491 00:25:04,040 --> 00:25:04,960 Speaker 8: tend to celebrate. 492 00:25:05,040 --> 00:25:06,960 Speaker 9: But it's two very different scenarios. 493 00:25:07,359 --> 00:25:09,120 Speaker 2: I know you weren't listening to the show earlier, Kim, 494 00:25:09,160 --> 00:25:10,480 Speaker 2: because you're outside in autographs. 495 00:25:10,520 --> 00:25:12,760 Speaker 3: But the bottom the bottom line is off the best. 496 00:25:12,760 --> 00:25:16,560 Speaker 2: In the interview with Jonathan Farrow yesterday, this idea of 497 00:25:16,600 --> 00:25:21,440 Speaker 2: cutting rates massively has a massive ambiguity to I mean, 498 00:25:21,600 --> 00:25:24,920 Speaker 2: you know, on a microeconomic basis, it could cut either way. 499 00:25:25,000 --> 00:25:27,560 Speaker 8: Well, there was a line down Lexington for the autographs 500 00:25:27,560 --> 00:25:30,199 Speaker 8: if you were wondering. The second one is that it 501 00:25:30,320 --> 00:25:34,040 Speaker 8: really depends on where economic surprises go. For the response 502 00:25:34,119 --> 00:25:37,000 Speaker 8: to rate cuts last year, when the Fed cut rates 503 00:25:37,000 --> 00:25:39,360 Speaker 8: by one hundred basis points and the ten year went 504 00:25:39,600 --> 00:25:43,440 Speaker 8: up by one hundred basis points, is because economic surprises 505 00:25:43,640 --> 00:25:46,560 Speaker 8: were going straight up, data coming in better than expected, 506 00:25:46,920 --> 00:25:50,399 Speaker 8: as well as GDP forecasts being revised higher. 507 00:25:50,440 --> 00:25:53,160 Speaker 9: They were being revised hired by almost seventy basis points 508 00:25:53,200 --> 00:25:54,000 Speaker 9: during those months. 509 00:25:54,600 --> 00:25:55,160 Speaker 3: Do you have a. 510 00:25:55,200 --> 00:26:00,320 Speaker 2: Clue what earnings are lending? Nine to thirty, were going 511 00:26:00,359 --> 00:26:04,800 Speaker 2: to be ten sixteen, ten seventeen, ish, technology will be 512 00:26:04,840 --> 00:26:05,600 Speaker 2: November one? 513 00:26:06,320 --> 00:26:09,320 Speaker 3: Did any clue? How do you do it? 514 00:26:09,560 --> 00:26:13,040 Speaker 8: Well, we're in the two seventyish range for twenty twenty five. 515 00:26:13,160 --> 00:26:15,159 Speaker 8: We do know the earnings have continued to come in 516 00:26:15,200 --> 00:26:18,480 Speaker 8: better than expected. Look at the second quarter eleven point 517 00:26:18,520 --> 00:26:21,480 Speaker 8: eight percent growth versus the four point nine percent that 518 00:26:21,600 --> 00:26:24,439 Speaker 8: was expected going into the quarter. But then as you 519 00:26:24,520 --> 00:26:27,000 Speaker 8: turn your eyes to twenty twenty six, there's about a 520 00:26:27,040 --> 00:26:29,920 Speaker 8: three hundred dollars estimate for S and P five hundred earnings. 521 00:26:30,240 --> 00:26:33,600 Speaker 8: That includes not only an acceleration in the top line, 522 00:26:33,640 --> 00:26:36,399 Speaker 8: but over one hundred bases points of margin expansion. So 523 00:26:36,760 --> 00:26:39,200 Speaker 8: there's some optimism. That's are you being contemplated? 524 00:26:39,320 --> 00:26:41,800 Speaker 2: So we come down at least I had the right language. 525 00:26:41,800 --> 00:26:44,480 Speaker 2: Crater captures it. And then we come back a little 526 00:26:44,520 --> 00:26:49,400 Speaker 2: bit here and we stagger economic data to economic data. Cam, 527 00:26:49,520 --> 00:26:52,280 Speaker 2: what's someone with a portfolio supposed to do? 528 00:26:52,280 --> 00:26:53,720 Speaker 3: Do you ignore this? Yeah? 529 00:26:53,920 --> 00:26:56,040 Speaker 9: Well it does feel kind of staggy. 530 00:26:56,080 --> 00:26:59,520 Speaker 8: It's we've been calling it stagflation light, where we're saying 531 00:26:59,560 --> 00:27:02,920 Speaker 8: that doesn't taste great, less filling this idea that it's 532 00:27:02,960 --> 00:27:05,479 Speaker 8: not your full stagflation heavy that you got in the 533 00:27:05,520 --> 00:27:09,520 Speaker 8: seventies with higher unemployment and soaring inflation. But this is 534 00:27:09,560 --> 00:27:13,480 Speaker 8: an environment that is harder for earnings growth to operate in. 535 00:27:14,000 --> 00:27:15,720 Speaker 9: It's one thing when earnings. 536 00:27:15,280 --> 00:27:19,800 Speaker 8: Are strong because you have strong real GDP plus inflation, 537 00:27:20,160 --> 00:27:23,520 Speaker 8: but weaker real GDP plus inflation is something that is 538 00:27:23,560 --> 00:27:27,280 Speaker 8: harder for risk assets. So with valuations trading so high, 539 00:27:27,440 --> 00:27:30,119 Speaker 8: we are not surprised to see this be a cause 540 00:27:30,119 --> 00:27:30,920 Speaker 8: for volatility. 541 00:27:31,200 --> 00:27:33,920 Speaker 5: Yeah, I mean you see this again, This inflation data 542 00:27:33,960 --> 00:27:37,640 Speaker 5: on the PPI level, the producer level well higher than expected, 543 00:27:37,880 --> 00:27:40,800 Speaker 5: well higher than the last period. It suggests that maybe 544 00:27:40,840 --> 00:27:43,640 Speaker 5: somewhere in the machinery out there there is a. 545 00:27:43,720 --> 00:27:44,920 Speaker 3: Higher price pressure. 546 00:27:45,720 --> 00:27:47,800 Speaker 5: And then the question, I guess, becomes, at what extent, 547 00:27:47,840 --> 00:27:49,240 Speaker 5: if ever, does it get to the consumer. 548 00:27:49,359 --> 00:27:52,199 Speaker 8: We're run rating at over three hundred billion dollars of 549 00:27:52,240 --> 00:27:56,520 Speaker 8: tariff revenue raise, so at this point someone is paying 550 00:27:56,600 --> 00:27:59,159 Speaker 8: for it. And in the CPI data it looked like 551 00:27:59,200 --> 00:28:02,000 Speaker 8: the consumers aren't paying for it yet they saw the 552 00:28:02,040 --> 00:28:04,760 Speaker 8: business pan, but the PPI is telling you that businesses 553 00:28:04,800 --> 00:28:05,520 Speaker 8: are paying for it. 554 00:28:05,680 --> 00:28:08,560 Speaker 2: This is really important, Cam. I mean, I got nothing 555 00:28:08,560 --> 00:28:12,200 Speaker 2: to do tonight, and I'm looking. I'm looking at Newark, 556 00:28:12,280 --> 00:28:16,520 Speaker 2: New Jersey, and for five thousand, four hundred dollars, me 557 00:28:16,600 --> 00:28:19,879 Speaker 2: and missus Kan can sidle up really close the infinity 558 00:28:19,960 --> 00:28:22,439 Speaker 2: circle to see one Catherine Perry. 559 00:28:22,760 --> 00:28:23,679 Speaker 9: I'm going to that. 560 00:28:25,760 --> 00:28:29,320 Speaker 5: Unbelievable, What a what. 561 00:28:29,400 --> 00:28:32,080 Speaker 3: A small world Perry. 562 00:28:32,160 --> 00:28:34,480 Speaker 2: I mean, she's just like what she did with Greg 563 00:28:34,480 --> 00:28:37,520 Speaker 2: Wells is just amazing, the songs, how they've endured. 564 00:28:37,640 --> 00:28:40,960 Speaker 8: Look, I'm considering dressing up as a shark, specifically love shark. 565 00:28:41,320 --> 00:28:44,360 Speaker 3: Okay, do you have Rockstar Infinity Circle seats. 566 00:28:44,520 --> 00:28:47,360 Speaker 9: I doubt that, Yes, I doubt that. 567 00:28:47,400 --> 00:28:50,360 Speaker 2: It's almost sold out. I mean he's killing it. Newark 568 00:28:50,400 --> 00:28:53,280 Speaker 2: Prudential Center, Newark. Cam Dawson will be there. 569 00:28:56,080 --> 00:28:57,000 Speaker 3: Stay with us. 570 00:28:57,040 --> 00:29:07,680 Speaker 2: More from Bloomberg Surveillance coming up after this. 571 00:29:07,680 --> 00:29:11,600 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 572 00:29:11,640 --> 00:29:14,960 Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto 573 00:29:15,080 --> 00:29:17,920 Speaker 1: with the Bloomberg Business app. You can also watch us 574 00:29:17,920 --> 00:29:21,840 Speaker 1: live every weekday on YouTube and always on the Bloomberg Terminal. 575 00:29:22,440 --> 00:29:26,440 Speaker 2: Tina Fordham joins now for a good conversation to find 576 00:29:26,480 --> 00:29:32,480 Speaker 2: the moment here and frame not only Alaska, but after Alaska. 577 00:29:32,640 --> 00:29:36,160 Speaker 3: Tina, let's start with Helsinki. They're older. 578 00:29:36,600 --> 00:29:39,280 Speaker 2: I think we have a good understanding of mister Trump 579 00:29:39,520 --> 00:29:44,760 Speaker 2: being older. In what way is Vladimir Putin older as 580 00:29:44,840 --> 00:29:49,120 Speaker 2: compared to Helsinki in the first Trump administration. 581 00:29:49,920 --> 00:29:54,040 Speaker 10: Well, in fact, I've just returned from Helsinki for the 582 00:29:54,160 --> 00:29:57,000 Speaker 10: Geoeconomics Week where there was a lot of discussion about 583 00:29:57,040 --> 00:30:00,320 Speaker 10: this meeting. And you know what lessons my have been 584 00:30:00,400 --> 00:30:05,320 Speaker 10: learned since twenty eighteen when President Trump last met with 585 00:30:05,400 --> 00:30:08,560 Speaker 10: Putin again didn't have others. 586 00:30:08,240 --> 00:30:08,840 Speaker 3: In the room. 587 00:30:08,960 --> 00:30:12,520 Speaker 10: No one is exactly sure what was said, but have 588 00:30:12,640 --> 00:30:16,080 Speaker 10: both sides learned to understand each other better. Well, you 589 00:30:16,120 --> 00:30:20,160 Speaker 10: can see what President Trump is coming into this meeting with. 590 00:30:21,080 --> 00:30:24,720 Speaker 10: There's both, you know, more bad cop than we're used 591 00:30:24,720 --> 00:30:29,160 Speaker 10: to from from Trump to Putin. He's insisting that a 592 00:30:29,240 --> 00:30:33,960 Speaker 10: ceasefire emerged from this, but he's coming in with some some. 593 00:30:34,160 --> 00:30:35,240 Speaker 3: Carrots as well. 594 00:30:35,360 --> 00:30:39,680 Speaker 10: And so for Putin, who has been you know, running 595 00:30:39,880 --> 00:30:44,920 Speaker 10: Russia for twenty five years and does think in geopolitical 596 00:30:45,000 --> 00:30:50,479 Speaker 10: terms more than in transactional terms. You know, Putin's playing 597 00:30:50,520 --> 00:30:53,800 Speaker 10: a long game and he has said, you know, one 598 00:30:53,840 --> 00:30:57,840 Speaker 10: of his most famous quotes is that the greatest catastrophe 599 00:30:57,880 --> 00:31:01,120 Speaker 10: geopolitical catastrophe was the collapse of the Soviet Union. So 600 00:31:01,200 --> 00:31:06,840 Speaker 10: you have one leader coming in with a transactional perspective. 601 00:31:06,920 --> 00:31:09,200 Speaker 10: He wants to do a deal and then go straight 602 00:31:09,240 --> 00:31:12,719 Speaker 10: to a second meeting. I think Putin is going to 603 00:31:12,760 --> 00:31:15,000 Speaker 10: do a bait and switch on this one. 604 00:31:16,440 --> 00:31:20,520 Speaker 5: So, Tina, what are the expectations here? Usually when you 605 00:31:20,560 --> 00:31:23,840 Speaker 5: get a summit of the leaders of Russia's left Soviet 606 00:31:23,920 --> 00:31:26,840 Speaker 5: Union in the US, it's months and months of preparation 607 00:31:26,920 --> 00:31:29,800 Speaker 5: by underlings and then the two principles, come in and 608 00:31:29,800 --> 00:31:33,440 Speaker 5: sign a couple of documents and take photographs and claim victory. 609 00:31:33,720 --> 00:31:34,720 Speaker 6: That's not the case. 610 00:31:34,480 --> 00:31:37,440 Speaker 10: Here, is it, Well, not at all, And so it 611 00:31:37,480 --> 00:31:41,360 Speaker 10: strikes fear in the hearts of diplomats and foreign policy types, 612 00:31:41,400 --> 00:31:44,560 Speaker 10: because you never want to put your your leader in 613 00:31:44,640 --> 00:31:48,160 Speaker 10: a position where he's not sure what's going to come 614 00:31:48,200 --> 00:31:51,000 Speaker 10: out of the discussion. Right. You want to you know, 615 00:31:51,400 --> 00:31:56,160 Speaker 10: game out the possibilities. You want to have your you know, 616 00:31:56,240 --> 00:31:59,800 Speaker 10: your your responses in reserve. You don't want to leave 617 00:31:59,840 --> 00:32:02,920 Speaker 10: a chance. That's not the way that Trump works. He 618 00:32:03,200 --> 00:32:06,720 Speaker 10: said before that he likes to decide at the last minute. 619 00:32:06,760 --> 00:32:12,920 Speaker 10: He likes things to be less scripted, less choreographed. The 620 00:32:13,920 --> 00:32:19,000 Speaker 10: risk for Ukraine and for Europe is that Trump wings 621 00:32:19,040 --> 00:32:25,520 Speaker 10: it and accepts something that Putin suggests, which maybe sounds reasonable, 622 00:32:26,040 --> 00:32:30,280 Speaker 10: but Putin will have an ulterior motive behind it. 623 00:32:31,080 --> 00:32:34,960 Speaker 5: So, Tina, how unusual is it for this type of 624 00:32:34,960 --> 00:32:38,880 Speaker 5: discussion to take place without one of the principles? That 625 00:32:39,000 --> 00:32:42,480 Speaker 5: being Ukraine there? What can how limit? How much does 626 00:32:42,480 --> 00:32:43,920 Speaker 5: that limit? What can I actually get done? 627 00:32:45,760 --> 00:32:46,000 Speaker 3: Well? 628 00:32:46,160 --> 00:32:50,720 Speaker 10: Putin likes this construct right, It returns him to the 629 00:32:50,800 --> 00:32:54,000 Speaker 10: position of Russia being a great power, as it was 630 00:32:54,080 --> 00:32:58,280 Speaker 10: during the Soviet era. And I said before this that 631 00:32:58,640 --> 00:33:01,200 Speaker 10: he was never going to allow Zelensky to be in 632 00:33:01,240 --> 00:33:04,600 Speaker 10: the room for two reasons. One is that would elevate 633 00:33:04,680 --> 00:33:08,880 Speaker 10: Zelensky to being his peer, which he doesn't accept. And 634 00:33:09,000 --> 00:33:12,040 Speaker 10: second because he doesn't accept that Ukraine is a real country. 635 00:33:12,440 --> 00:33:15,160 Speaker 10: So it is going to be difficult to have this 636 00:33:15,280 --> 00:33:19,560 Speaker 10: trilateral meeting ever take place. But what Putin wants to 637 00:33:19,600 --> 00:33:25,080 Speaker 10: happen is to get hold of the concessions that that 638 00:33:25,200 --> 00:33:27,920 Speaker 10: Trump is ready to offer him. There's been some talk 639 00:33:28,000 --> 00:33:35,000 Speaker 10: of sanctions removal on aircraft for example, and you know, 640 00:33:35,120 --> 00:33:38,960 Speaker 10: kind of get on that new trajectory that will allow 641 00:33:39,040 --> 00:33:43,440 Speaker 10: Russia to you know, rejoin the international financial system across. 642 00:33:43,080 --> 00:33:44,200 Speaker 3: The nation and worldwide. 643 00:33:44,240 --> 00:33:47,800 Speaker 2: Tina Fordham Fordham Global Foresight with us this morning here 644 00:33:47,800 --> 00:33:52,920 Speaker 2: on the summit, and Reardon landing momentarily in Alaska, will 645 00:33:52,960 --> 00:33:59,640 Speaker 2: have complete coverage starting early early tomorrow from Anchorage. Tina, 646 00:34:00,400 --> 00:34:03,080 Speaker 2: Mister Trump has to calculate his term. 647 00:34:03,160 --> 00:34:06,160 Speaker 3: He's legacy building. I think Paul had a great phrase 648 00:34:06,200 --> 00:34:06,560 Speaker 3: for that. 649 00:34:07,280 --> 00:34:11,120 Speaker 2: I guess there are there midterm elections, there's senatorial elections. 650 00:34:11,400 --> 00:34:16,160 Speaker 2: We have a presidential election in twenty twenty eight. Putin's 651 00:34:16,200 --> 00:34:19,800 Speaker 2: serving two terms. He just had an election last year. 652 00:34:20,719 --> 00:34:24,080 Speaker 2: So is he a lane duck president or is he 653 00:34:24,400 --> 00:34:25,520 Speaker 2: president for life? 654 00:34:25,800 --> 00:34:26,400 Speaker 3: In Russia? 655 00:34:28,400 --> 00:34:30,960 Speaker 10: Well, he's president for life. I mean, I think that's 656 00:34:31,160 --> 00:34:36,320 Speaker 10: an easy answer. There's there's no bench, there are no successors. 657 00:34:37,520 --> 00:34:42,960 Speaker 10: You know, everyone always talks about the lifespan of Russian men. Clearly, 658 00:34:43,280 --> 00:34:46,200 Speaker 10: you know, Putin has the the you know, the best 659 00:34:46,239 --> 00:34:50,239 Speaker 10: in medical care. He seems very robust. He's not going anywhere, 660 00:34:50,320 --> 00:34:53,359 Speaker 10: and no one else is authorized to take decisions. 661 00:34:53,520 --> 00:34:55,000 Speaker 9: So he loves this idea of he. 662 00:34:55,520 --> 00:35:01,200 Speaker 10: And Trump together mano amano, you know, the freight, the 663 00:35:01,239 --> 00:35:04,920 Speaker 10: fate of the free world. That's a very comfortable position 664 00:35:05,000 --> 00:35:08,320 Speaker 10: for him, and likes it too, because he doesn't like middlemen. 665 00:35:08,800 --> 00:35:11,600 Speaker 2: Okay, but Trump has to face American politics and the 666 00:35:11,600 --> 00:35:15,040 Speaker 2: reality of what I believe is still a democracy. 667 00:35:15,239 --> 00:35:16,960 Speaker 3: What is the incentive for. 668 00:35:17,000 --> 00:35:22,120 Speaker 2: Vladimir Putin to do anything here except a photographic moment. 669 00:35:24,320 --> 00:35:26,880 Speaker 10: So the US has been very clear that they want 670 00:35:26,920 --> 00:35:29,480 Speaker 10: an agreement of a ceasefire. The reason why I said 671 00:35:29,520 --> 00:35:32,000 Speaker 10: my prediction is for a bait and switch is that 672 00:35:32,040 --> 00:35:34,200 Speaker 10: I think that Putin has to say yes, I'll agree 673 00:35:34,239 --> 00:35:37,239 Speaker 10: to a ceasefire. But with a bunch of conditions that 674 00:35:37,320 --> 00:35:40,759 Speaker 10: won't be met. And so what he wants is to 675 00:35:40,800 --> 00:35:43,880 Speaker 10: get to that second meeting, to start to get sanctions reversal, 676 00:35:44,200 --> 00:35:49,000 Speaker 10: and to bank on Trump's impatience with the duration of 677 00:35:49,040 --> 00:35:51,680 Speaker 10: this conflict. The other thing he wants to do. Putin 678 00:35:51,719 --> 00:35:54,319 Speaker 10: wants to do is is roll the clock back to 679 00:35:54,480 --> 00:35:58,000 Speaker 10: that meeting with Zielensky in the Oval office, you know, 680 00:35:58,080 --> 00:36:00,360 Speaker 10: being told off for not saying thank you you. It 681 00:36:00,440 --> 00:36:04,319 Speaker 10: was after that that that that Trump started talk to 682 00:36:04,360 --> 00:36:08,040 Speaker 10: talk about secondary sanctions. I don't think that Trump wants 683 00:36:08,120 --> 00:36:11,880 Speaker 10: to sanction Putin. We saw what his preference is to 684 00:36:12,000 --> 00:36:17,960 Speaker 10: sanctioned countries like India, ostensibly for buying cheap Russian gas. 685 00:36:18,000 --> 00:36:23,760 Speaker 10: So you know, markets have got themselves convinced of taco. 686 00:36:24,680 --> 00:36:29,279 Speaker 10: Switzerland didn't get taco, Indian India didn't get taco. But 687 00:36:29,480 --> 00:36:33,000 Speaker 10: China and Russia keep getting a pass to your points 688 00:36:33,040 --> 00:36:37,319 Speaker 10: about the midterms. You know, it's it's quite evident what 689 00:36:38,360 --> 00:36:42,399 Speaker 10: the play here is to generate you know a lot 690 00:36:42,440 --> 00:36:46,920 Speaker 10: of wins, a lot of you know, uh peace deals agreed, 691 00:36:46,960 --> 00:36:50,360 Speaker 10: whether that's between Armenia, AzID Bai John or or elsewhere. 692 00:36:50,520 --> 00:36:54,160 Speaker 10: To have a strong record to to run on. But 693 00:36:54,360 --> 00:36:58,239 Speaker 10: history suggests that that the Russia Ukraine conflict will will 694 00:36:58,239 --> 00:37:01,080 Speaker 10: most likely wear on Tina. 695 00:37:01,440 --> 00:37:04,640 Speaker 5: Yesterday there was a call between President Trump and the 696 00:37:04,760 --> 00:37:08,560 Speaker 5: leaders of the European Union, including Presidents Landscape. Presumably I 697 00:37:08,600 --> 00:37:11,760 Speaker 5: guess the preview President Trump's plan for the summit. 698 00:37:11,880 --> 00:37:14,319 Speaker 6: Do we know what was said on that call? 699 00:37:14,360 --> 00:37:16,120 Speaker 5: Do we know of any agreements came from that call? 700 00:37:17,520 --> 00:37:22,120 Speaker 10: Well, what we know is that the European leaders certainly 701 00:37:22,280 --> 00:37:26,920 Speaker 10: feel like it was a good conversation. Maybe they're putting 702 00:37:27,040 --> 00:37:30,280 Speaker 10: a brave face on it. Jd Vance has been here 703 00:37:30,360 --> 00:37:34,400 Speaker 10: in the UK. There's lots of talk in political circles 704 00:37:34,440 --> 00:37:39,120 Speaker 10: that he understands the context more than he did before. 705 00:37:40,120 --> 00:37:41,560 Speaker 9: And there is a sense that. 706 00:37:43,080 --> 00:37:46,600 Speaker 10: They the US will not kind of sell the farm 707 00:37:46,680 --> 00:37:50,640 Speaker 10: when it comes to the terms of a deal. But 708 00:37:51,120 --> 00:37:55,120 Speaker 10: you know, Land for Peace is going to be very 709 00:37:55,239 --> 00:38:00,520 Speaker 10: concerning for Europe because the strong sense is that after Ukraine, 710 00:38:00,960 --> 00:38:02,880 Speaker 10: next come the Baltic States. 711 00:38:03,160 --> 00:38:06,279 Speaker 2: Yeah, okay, thank you, let's let's end on that. I 712 00:38:06,320 --> 00:38:10,440 Speaker 2: think I just mentioned this with Leona fix over in Germany. 713 00:38:10,920 --> 00:38:14,400 Speaker 2: I mean to me, it's okay, let's bring it up, folks, 714 00:38:14,760 --> 00:38:19,600 Speaker 2: Tina Fordham, are we essentially heading towards a European Domino 715 00:38:19,719 --> 00:38:21,520 Speaker 2: theory with Vladimir Putin. 716 00:38:24,920 --> 00:38:28,080 Speaker 10: Not yet, not yet, but you can see who's building 717 00:38:28,120 --> 00:38:33,120 Speaker 10: up their military and who's meeting and exceeding that NATO 718 00:38:33,360 --> 00:38:36,600 Speaker 10: two percent target to five percent. It's all the countries 719 00:38:36,600 --> 00:38:39,600 Speaker 10: that are closest to Russia, and that is something that 720 00:38:39,680 --> 00:38:44,000 Speaker 10: I think if you're outside of this part of the world, 721 00:38:44,760 --> 00:38:47,399 Speaker 10: it can be very perplexing. It's not just a matter 722 00:38:47,480 --> 00:38:51,080 Speaker 10: of ending the war. It's about the terms, because a 723 00:38:51,360 --> 00:38:56,360 Speaker 10: bad peace deal in Ukraine is a green light further 724 00:38:56,480 --> 00:38:57,640 Speaker 10: Russian incursions. 725 00:38:58,239 --> 00:38:58,520 Speaker 3: Tina. 726 00:38:58,560 --> 00:39:00,719 Speaker 2: One final question. We've got to get back markets. But 727 00:39:00,920 --> 00:39:04,840 Speaker 2: I just think this is just absolutely critical. Do you 728 00:39:05,000 --> 00:39:10,240 Speaker 2: assume is a grizzled pro of international relations, that we're 729 00:39:10,280 --> 00:39:16,000 Speaker 2: onto some new regime or after Trump, do we find 730 00:39:16,080 --> 00:39:17,920 Speaker 2: ourselves back somehow? 731 00:39:18,280 --> 00:39:19,920 Speaker 3: To name your theory the. 732 00:39:19,880 --> 00:39:24,120 Speaker 2: Washington Consensus, zacharias post American world, I'll let you name 733 00:39:24,239 --> 00:39:25,480 Speaker 2: six other theories. 734 00:39:25,480 --> 00:39:26,520 Speaker 3: You're better than I am. 735 00:39:26,960 --> 00:39:29,799 Speaker 2: But are we like beyond what we grew up with 736 00:39:30,280 --> 00:39:34,000 Speaker 2: or do we revert back to that somewhere out there? 737 00:39:36,360 --> 00:39:42,200 Speaker 10: I think that I interpret President Trump's positions on changing 738 00:39:42,239 --> 00:39:45,560 Speaker 10: the US role in both the security and the economic 739 00:39:45,760 --> 00:39:52,640 Speaker 10: order as something that capitalized upon maybe a vague sense 740 00:39:53,360 --> 00:39:57,080 Speaker 10: amongst the American population that the system wasn't working for them. 741 00:39:57,160 --> 00:40:01,120 Speaker 10: So for the US to withdraw itself the global order 742 00:40:01,200 --> 00:40:06,440 Speaker 10: that it created post World War two is dramatic. But 743 00:40:07,239 --> 00:40:10,920 Speaker 10: we saw this in microcosm here in the UK with Brexit. 744 00:40:11,120 --> 00:40:15,280 Speaker 10: It's very difficult to unscramble the egg. You know. Trade 745 00:40:15,360 --> 00:40:19,040 Speaker 10: data tells us that globalization is continuing, but the world 746 00:40:19,200 --> 00:40:22,759 Speaker 10: is a security first world, and I think that is 747 00:40:22,800 --> 00:40:26,719 Speaker 10: the part that market participants and business leaders have had 748 00:40:26,760 --> 00:40:28,160 Speaker 10: trouble coming to terms with. 749 00:40:28,680 --> 00:40:31,240 Speaker 2: Terrific brief Thank you, thank you, Thank you, Tina fordham 750 00:40:31,239 --> 00:40:32,800 Speaker 2: Ford and Global Foresight. 751 00:40:34,239 --> 00:40:34,960 Speaker 3: Stay with us. 752 00:40:35,200 --> 00:40:46,200 Speaker 2: More from Bloomberg Surveillance coming up after this. 753 00:40:46,200 --> 00:40:50,080 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 754 00:40:50,120 --> 00:40:53,120 Speaker 1: starting at seven am Eastern on Apple, Cocklay and Android 755 00:40:53,160 --> 00:40:56,200 Speaker 1: Auto with the Bloomberg Business app. You can also watch 756 00:40:56,239 --> 00:40:59,200 Speaker 1: us live every weekday on YouTube and always on the 757 00:40:59,200 --> 00:41:00,480 Speaker 1: Bloomberg Term And all. 758 00:41:00,800 --> 00:41:04,000 Speaker 3: Ladies and gentlemen, missus Matteo the New. 759 00:41:03,960 --> 00:41:07,960 Speaker 11: Space Popular Demand. Okay, I want to start with Walmart. Okay, 760 00:41:07,960 --> 00:41:10,440 Speaker 11: they're the country's largest private employer. As you know, right, 761 00:41:10,520 --> 00:41:13,520 Speaker 11: but it's making this move to keep and attract new 762 00:41:13,520 --> 00:41:17,480 Speaker 11: workers because it is extending this popular employee perk. It 763 00:41:17,560 --> 00:41:21,560 Speaker 11: is a ten percent discount are nearly all grocery purchases 764 00:41:21,640 --> 00:41:24,000 Speaker 11: at its stores and online. That's huge those prices of 765 00:41:24,000 --> 00:41:27,439 Speaker 11: groceries now nowadays. So in the past, what they did 766 00:41:27,520 --> 00:41:31,040 Speaker 11: is that it applied to like fresh produce, general merchandise, 767 00:41:31,280 --> 00:41:33,960 Speaker 11: but it didn't include things like milk, which is big, 768 00:41:34,200 --> 00:41:38,360 Speaker 11: you know, pasta, frozen pizza, meat. It didn't include except 769 00:41:38,440 --> 00:41:41,439 Speaker 11: during the holidays like November and December. So now they're 770 00:41:41,440 --> 00:41:44,239 Speaker 11: bringing that back. And what it also does, it brings 771 00:41:44,280 --> 00:41:46,840 Speaker 11: it back closer to the competition because, for example, you 772 00:41:46,880 --> 00:41:49,239 Speaker 11: have Whole Foods, who's owned by Amazon, and they offer 773 00:41:49,280 --> 00:41:51,960 Speaker 11: workers a twenty percent discount you know, on their items. 774 00:41:51,960 --> 00:41:55,680 Speaker 11: Obviously their items are more expensive, but Target offers a 775 00:41:55,719 --> 00:41:58,239 Speaker 11: twenty percent discount on fresh and frozen produce for their 776 00:41:58,280 --> 00:42:01,759 Speaker 11: workers too, So this is really people are struggling to 777 00:42:01,760 --> 00:42:04,000 Speaker 11: pay the grocery bill and this is a huge help 778 00:42:04,000 --> 00:42:07,239 Speaker 11: for families. So that was a big, big, big, big 779 00:42:07,280 --> 00:42:08,440 Speaker 11: move by Walmart. 780 00:42:08,440 --> 00:42:09,960 Speaker 3: I want to make clear, folks, you don't we make 781 00:42:10,040 --> 00:42:10,680 Speaker 3: jokes about it. 782 00:42:10,680 --> 00:42:13,440 Speaker 2: There's nobody around the table here that's worried about the 783 00:42:13,480 --> 00:42:14,480 Speaker 2: marginal banana. 784 00:42:15,040 --> 00:42:17,719 Speaker 3: But the answer is this is serious stuff. I mean, 785 00:42:17,800 --> 00:42:18,960 Speaker 3: particularly for children. 786 00:42:19,320 --> 00:42:21,480 Speaker 2: Remember you used to look at a bag of groceries 787 00:42:21,520 --> 00:42:24,880 Speaker 2: and go, that costs me, you know, like eight dollars 788 00:42:25,000 --> 00:42:27,480 Speaker 2: or twelve. Now you look at a bag of groceries 789 00:42:27,480 --> 00:42:28,680 Speaker 2: and go, it's like. 790 00:42:28,680 --> 00:42:31,640 Speaker 5: Rent yep, yep, it's it's big. 791 00:42:31,680 --> 00:42:32,239 Speaker 6: And we saw that. 792 00:42:32,640 --> 00:42:35,160 Speaker 5: Yeah, the prices went up during the pandemic, and we said, 793 00:42:35,160 --> 00:42:36,200 Speaker 5: are they ever going to come down? 794 00:42:36,239 --> 00:42:37,640 Speaker 3: And they kind of knew they were. 795 00:42:38,239 --> 00:42:39,600 Speaker 6: They're not next. 796 00:42:39,880 --> 00:42:43,760 Speaker 11: Okay, Paul, when you go to Italy you can actually 797 00:42:43,800 --> 00:42:47,719 Speaker 11: bring your pup with you at a pet hotel. 798 00:42:50,120 --> 00:42:51,960 Speaker 5: I don't think they want anything to do with Shamus. 799 00:42:52,120 --> 00:42:54,320 Speaker 11: Shamus can live in luxury. 800 00:42:54,360 --> 00:42:54,640 Speaker 6: Okay. 801 00:42:54,640 --> 00:42:57,720 Speaker 11: This is a new trend in Italy because apparently families 802 00:42:57,760 --> 00:43:00,720 Speaker 11: have been having fewer kids, but the number of pets 803 00:43:00,760 --> 00:43:03,600 Speaker 11: in households in Italy have been on the rise. So 804 00:43:03,840 --> 00:43:07,200 Speaker 11: the country's pet service industry has really been exploding. So 805 00:43:07,880 --> 00:43:12,800 Speaker 11: in Rome Airports its newest luxury hotel. It's called dog Relay. 806 00:43:13,040 --> 00:43:15,200 Speaker 11: I'm sorry if I'm not pronouncing it right. It's r 807 00:43:15,280 --> 00:43:17,440 Speaker 11: E l Ai S. 808 00:43:18,200 --> 00:43:19,160 Speaker 9: Thank you. There you go. 809 00:43:19,680 --> 00:43:22,960 Speaker 11: It can house about forty pets, but they get underfloor cooling, 810 00:43:23,160 --> 00:43:27,520 Speaker 11: air conditioning, lavender oil sense, Arnica massages. 811 00:43:27,640 --> 00:43:29,040 Speaker 6: Okay, this communal garden. 812 00:43:29,320 --> 00:43:31,760 Speaker 9: They even have large screens so. 813 00:43:31,640 --> 00:43:34,879 Speaker 11: You can video call your pet when you miss them. 814 00:43:35,040 --> 00:43:37,640 Speaker 3: I'm looking to bring Fido here. It's a cap sig. Yes, 815 00:43:37,680 --> 00:43:39,640 Speaker 3: I want to know. Can we bring that bill and 816 00:43:39,719 --> 00:43:42,600 Speaker 3: canal fee to the hassler next time? Okay, here's the answer. 817 00:43:43,000 --> 00:43:46,600 Speaker 2: Hassler Roma does not allow dogs. Please choose a different 818 00:43:46,880 --> 00:43:50,680 Speaker 2: pet friendly hotel in row An Crush. 819 00:43:51,719 --> 00:43:53,560 Speaker 11: Now, as far as the price, though, I'm not sure 820 00:43:53,600 --> 00:43:55,160 Speaker 11: what you pay when you when you board your pets 821 00:43:55,200 --> 00:43:57,279 Speaker 11: because I'm not familiar with it, but their prices are 822 00:43:57,280 --> 00:44:00,200 Speaker 11: from about forty six dollars to seventy dollars a day. 823 00:44:00,320 --> 00:44:01,640 Speaker 3: Is that expensive? 824 00:44:01,719 --> 00:44:01,880 Speaker 4: Is that? 825 00:44:02,440 --> 00:44:03,240 Speaker 3: Is that fun? 826 00:44:03,360 --> 00:44:06,680 Speaker 12: Okay, Well, it's cheaper for me to pay the pair 827 00:44:06,800 --> 00:44:11,239 Speaker 12: to come over and take care of the beasts then 828 00:44:11,280 --> 00:44:15,000 Speaker 12: to go to the kenmel Kemel Fee's outrageous. 829 00:44:15,160 --> 00:44:18,600 Speaker 11: This last one, yeah, quick one. David Ellison he wants 830 00:44:18,640 --> 00:44:21,080 Speaker 11: to make more TV shows and movies. He plans a 831 00:44:21,120 --> 00:44:25,440 Speaker 11: boost film TV production. Yes, Paramount sky Dance more content 832 00:44:25,480 --> 00:44:28,920 Speaker 11: for Paramounts streaming and produce as many as twenty movies 833 00:44:28,960 --> 00:44:31,319 Speaker 11: a year. He's putting on the list of priorities. He 834 00:44:31,320 --> 00:44:33,200 Speaker 11: wants a third film in the Top Gun series. He 835 00:44:33,239 --> 00:44:36,000 Speaker 11: wants more Star Trek. So this is what he's talking to. 836 00:44:36,000 --> 00:44:38,120 Speaker 11: This the film studio, it hasn't turned an annual profit 837 00:44:38,160 --> 00:44:40,160 Speaker 11: since like twenty twenty two, so it's a big thing 838 00:44:40,200 --> 00:44:40,520 Speaker 11: for them. 839 00:44:40,600 --> 00:44:43,160 Speaker 5: Yeah, it's tough, you know, you have to have these. 840 00:44:43,400 --> 00:44:44,880 Speaker 5: You have to scale, You have to put out a 841 00:44:44,920 --> 00:44:48,040 Speaker 5: lot of films, like maybe a dozen big budget films 842 00:44:48,120 --> 00:44:50,960 Speaker 5: if you're more and more hits, no, just to get 843 00:44:51,080 --> 00:44:53,360 Speaker 5: you know, three or four that get you that billion 844 00:44:53,440 --> 00:44:56,520 Speaker 5: dollar global box office. And they didn't have they weren't 845 00:44:56,560 --> 00:44:58,680 Speaker 5: doing that, and they don't have the franchises that that 846 00:44:58,760 --> 00:44:59,319 Speaker 5: Disney has. 847 00:44:59,400 --> 00:45:01,279 Speaker 6: But maybe Top Gun at three. 848 00:45:01,320 --> 00:45:01,959 Speaker 3: Look at how many. 849 00:45:01,840 --> 00:45:04,520 Speaker 5: Mission Impossible cruises put out, like you know, six, seven, 850 00:45:04,560 --> 00:45:06,480 Speaker 5: eight of those did sing with Top Gun. 851 00:45:06,719 --> 00:45:09,279 Speaker 2: Do the sequels still do? Like I know there's like 852 00:45:09,400 --> 00:45:11,319 Speaker 2: Jurassic Park eight or whatever else? 853 00:45:11,360 --> 00:45:14,280 Speaker 6: You know, they trend down for the most cases. 854 00:45:14,440 --> 00:45:16,680 Speaker 5: Yeah, but everyone a while you get a top you know, 855 00:45:16,680 --> 00:45:18,759 Speaker 5: a Drastka Park four that that's great. 856 00:45:18,880 --> 00:45:21,680 Speaker 2: You know, newspapers let us go by email, by text, 857 00:45:21,760 --> 00:45:23,080 Speaker 2: by live chat on YouTube. 858 00:45:23,239 --> 00:45:26,520 Speaker 3: Should we do Newspapers Tomorrow? With Lisa Mateo. 859 00:45:26,960 --> 00:45:31,799 Speaker 1: This is the Bloomberg Surveillance Podcast, available on Apple, Spotify, 860 00:45:31,880 --> 00:45:36,200 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 861 00:45:36,320 --> 00:45:39,560 Speaker 1: seven to ten am Easter and on Bloomberg dot com, 862 00:45:39,680 --> 00:45:43,479 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app. 863 00:45:43,800 --> 00:45:46,920 Speaker 1: You can also watch us live every weekday on YouTube 864 00:45:47,200 --> 00:45:49,240 Speaker 1: and always on the Bloomberg terminal