1 00:00:02,400 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amerie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,239 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,680 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,280 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:37,120 Speaker 2: Terminal and the Bloomberg Business App. Going into the FED 10 00:00:37,120 --> 00:00:40,240 Speaker 2: decision with a quarter point cut expected, the path forward 11 00:00:40,560 --> 00:00:44,040 Speaker 2: is much much murkier, Lisa Shalladan Morgan Stanley saying, the 12 00:00:44,040 --> 00:00:46,519 Speaker 2: implication of twenty twenty five is that it will be 13 00:00:46,560 --> 00:00:49,800 Speaker 2: tough for more cuts and disinflationary growth acceleration to both 14 00:00:49,840 --> 00:00:53,680 Speaker 2: play out. We believe that growth will likely disappoint first, 15 00:00:53,960 --> 00:00:57,920 Speaker 2: and further FED action will be constrained. Lisa joins us, 16 00:00:57,960 --> 00:00:59,520 Speaker 2: now for more. Lisa, It's good to see you. 17 00:00:59,800 --> 00:01:00,920 Speaker 3: Great to see you, Jonathan. 18 00:01:01,080 --> 00:01:03,320 Speaker 2: Let's build on that. Why will further FAT action be 19 00:01:03,440 --> 00:01:04,920 Speaker 2: constrained in twenty twenty five? 20 00:01:05,000 --> 00:01:09,080 Speaker 4: So our perspective is we're already seeing inflationary pressures built. 21 00:01:09,760 --> 00:01:13,760 Speaker 4: You know again, I know that the traditional economists among 22 00:01:13,840 --> 00:01:15,840 Speaker 4: us like to you know, take apart the data to 23 00:01:15,840 --> 00:01:19,800 Speaker 4: fit the narrative that you know that they've assumed. But 24 00:01:19,959 --> 00:01:21,800 Speaker 4: when we just look at the top line data, we've 25 00:01:21,800 --> 00:01:27,479 Speaker 4: had four months of accelerating core CPI data, flat flat out. 26 00:01:28,160 --> 00:01:32,440 Speaker 4: And that's with the advantage and the tailwind of a 27 00:01:32,480 --> 00:01:36,679 Speaker 4: twenty percent drop in oil prices year over year. If 28 00:01:36,720 --> 00:01:39,919 Speaker 4: in fact, oil prices have bottomed out because global growth 29 00:01:39,959 --> 00:01:43,080 Speaker 4: has bottomed out, and that if we assume that some 30 00:01:43,160 --> 00:01:45,440 Speaker 4: of the cuts that have been put put into the 31 00:01:45,440 --> 00:01:48,880 Speaker 4: global system start to take effect in twenty twenty six, 32 00:01:48,920 --> 00:01:51,120 Speaker 4: if we get a little bit of stimulus out of China, 33 00:01:51,480 --> 00:01:54,200 Speaker 4: if oil starts coming back, and we look at some 34 00:01:54,320 --> 00:01:59,120 Speaker 4: of the dynamics and inflation, we could have very sticky inflation. 35 00:01:59,240 --> 00:01:59,640 Speaker 3: Last year. 36 00:01:59,640 --> 00:02:02,360 Speaker 4: I mean this last print, you had goods prices up, 37 00:02:02,560 --> 00:02:05,280 Speaker 4: and food and grocery prices led the way. 38 00:02:05,720 --> 00:02:08,400 Speaker 2: Bigger not hatsa was a thing for twenty twenty four. Yes, 39 00:02:08,520 --> 00:02:10,480 Speaker 2: you've referenced that in your note. Yes, why do you 40 00:02:10,480 --> 00:02:13,280 Speaker 2: think that changes? What underpins that change going into next year? 41 00:02:13,320 --> 00:02:14,800 Speaker 2: Bigger and hatsa. 42 00:02:14,880 --> 00:02:15,200 Speaker 3: Yeah. 43 00:02:15,240 --> 00:02:20,519 Speaker 4: So you know, our senses that animal spirits are real clearly, 44 00:02:20,720 --> 00:02:24,000 Speaker 4: you know, there's an enthusiasm and an expectation. 45 00:02:24,440 --> 00:02:26,640 Speaker 3: You know that folks should be investing. 46 00:02:27,560 --> 00:02:31,400 Speaker 4: But at the same time our senses that demand can 47 00:02:31,400 --> 00:02:35,240 Speaker 4: out strip supply. Here we continue to have this have 48 00:02:35,360 --> 00:02:41,080 Speaker 4: and have not economy where you know, the the largest corporations, 49 00:02:41,280 --> 00:02:45,880 Speaker 4: the richest households are somewhat you know, interest rate insensitive, 50 00:02:46,240 --> 00:02:49,640 Speaker 4: and they've been powering consumption in this economy really for 51 00:02:49,720 --> 00:02:52,239 Speaker 4: two and a half to three years now. And the 52 00:02:53,080 --> 00:02:56,440 Speaker 4: sentiment among those two cohorts is pretty strong right now. 53 00:02:56,720 --> 00:02:58,840 Speaker 1: So when you start to talk about this idea that 54 00:02:58,880 --> 00:03:02,160 Speaker 1: we could see downside to growth and that we could 55 00:03:02,200 --> 00:03:06,240 Speaker 1: see more weakness than people expect with ongoing stickiness to inflation, 56 00:03:06,320 --> 00:03:09,280 Speaker 1: I mean that kind of sounds like dreaded stagflation. Is 57 00:03:09,320 --> 00:03:11,160 Speaker 1: that kind of where you're going with us? 58 00:03:11,280 --> 00:03:14,120 Speaker 4: It is, and it's one of the things you know 59 00:03:14,160 --> 00:03:16,359 Speaker 4: that we've kind of said a sequencing will matter. 60 00:03:17,240 --> 00:03:19,440 Speaker 3: You know, we expect that that we're. 61 00:03:19,240 --> 00:03:22,800 Speaker 4: Going to get a barrage literally a machine gun of 62 00:03:22,919 --> 00:03:27,640 Speaker 4: policy proposals, right you guys, you know, as journalists are 63 00:03:27,680 --> 00:03:31,640 Speaker 4: accustomed to the ten headlines a day and he tries 64 00:03:31,680 --> 00:03:34,360 Speaker 4: to figure out, okay, which four stick of the ten, 65 00:03:34,800 --> 00:03:36,880 Speaker 4: and then he goes with those four in another six 66 00:03:36,960 --> 00:03:37,600 Speaker 4: the next day. 67 00:03:38,560 --> 00:03:42,200 Speaker 3: Our best guess is that that barrage. 68 00:03:41,760 --> 00:03:45,520 Speaker 4: Is going to create a level of noise that does 69 00:03:45,840 --> 00:03:49,320 Speaker 4: undermine some of that animal spirits and creates uncertainty for 70 00:03:49,360 --> 00:03:53,000 Speaker 4: the other sixty percent of the economy, the low end consumer, 71 00:03:53,280 --> 00:03:56,280 Speaker 4: the smaller cap companies, because they can't figure it out. 72 00:03:57,080 --> 00:03:59,120 Speaker 4: And so I think it's that that we're going to 73 00:03:59,160 --> 00:04:03,280 Speaker 4: see early in year. There's an unbelievable, you know sense that, hey, 74 00:04:03,320 --> 00:04:06,200 Speaker 4: consumers are going to get tax cuts now, they're not 75 00:04:06,200 --> 00:04:08,440 Speaker 4: not in twenty twenty five, where it's going to be 76 00:04:08,520 --> 00:04:11,360 Speaker 4: on a on a on a derivative basis, on you know, 77 00:04:11,400 --> 00:04:14,880 Speaker 4: the first and second derivative or the rates of change. 78 00:04:15,120 --> 00:04:17,960 Speaker 5: Right, your taxes are going to be exactly the same. 79 00:04:17,720 --> 00:04:21,760 Speaker 4: In twenty twenty five. Right, there's no talwind. Right, that's 80 00:04:21,800 --> 00:04:23,159 Speaker 4: all coming in twenty twenty six. 81 00:04:23,240 --> 00:04:25,240 Speaker 1: And this is the reason why in some ways you're 82 00:04:25,279 --> 00:04:29,080 Speaker 1: advocating to unwind some of the Trump trades that. 83 00:04:29,000 --> 00:04:30,040 Speaker 5: People have put on. 84 00:04:30,200 --> 00:04:31,320 Speaker 3: Can you talk about. 85 00:04:31,080 --> 00:04:34,279 Speaker 1: Which you think are most vulnerable to the reality check 86 00:04:34,400 --> 00:04:37,320 Speaker 1: of sequencing to the reality check of the delay of 87 00:04:37,360 --> 00:04:38,840 Speaker 1: how long it will take to implement. 88 00:04:39,160 --> 00:04:41,560 Speaker 4: So look, I think that you know, some of these 89 00:04:41,600 --> 00:04:45,720 Speaker 4: Trump trades have been so staggering it's almost obvious. 90 00:04:46,240 --> 00:04:48,839 Speaker 3: Uh So, uh, you know, the the. 91 00:04:49,200 --> 00:04:54,800 Speaker 4: Cryptocurrency trades, you know, up fifty percent in fifty trading days, extraordinary. 92 00:04:55,360 --> 00:04:55,560 Speaker 6: Uh. 93 00:04:55,800 --> 00:05:01,799 Speaker 4: You know, we have you know, Taesla similar type of move. 94 00:05:03,520 --> 00:05:03,839 Speaker 7: Uh. 95 00:05:04,240 --> 00:05:06,080 Speaker 4: You know, I think some of the small cap move 96 00:05:06,160 --> 00:05:07,560 Speaker 4: has begun to fade. 97 00:05:08,160 --> 00:05:08,360 Speaker 7: Uh. 98 00:05:08,600 --> 00:05:10,800 Speaker 3: You know, in the last ten days. 99 00:05:11,320 --> 00:05:14,800 Speaker 4: Our best gas is that that will that's the fading 100 00:05:14,880 --> 00:05:18,080 Speaker 4: of that small cap trade is what reflects this potential 101 00:05:18,120 --> 00:05:21,599 Speaker 4: stagflation that hey, wait a minute, everything's great, but maybe 102 00:05:21,640 --> 00:05:25,840 Speaker 4: it's not great for us, you know, because we're still 103 00:05:25,960 --> 00:05:29,000 Speaker 4: you know, broadly a set of unprofitable companies that have 104 00:05:29,160 --> 00:05:32,320 Speaker 4: you know, struggled to deliver upside surprise and earnings. 105 00:05:32,360 --> 00:05:33,360 Speaker 5: So do you still like gold? 106 00:05:34,080 --> 00:05:38,039 Speaker 4: We still do like gold here and and and the 107 00:05:38,360 --> 00:05:41,760 Speaker 4: for us, the gold story really is about inflation and 108 00:05:41,880 --> 00:05:45,120 Speaker 4: dollar debasement. It's it's a lot about this debt and 109 00:05:45,200 --> 00:05:49,479 Speaker 4: deficit story. Again, the bond market it has sniffed out 110 00:05:49,920 --> 00:05:53,599 Speaker 4: this joke and on various days, you see, you know, 111 00:05:54,680 --> 00:05:58,600 Speaker 4: you know, uh, some folks trying to express a desire 112 00:05:58,640 --> 00:06:00,600 Speaker 4: for term premium in the long end to the curve. 113 00:06:01,560 --> 00:06:05,320 Speaker 4: Our best guess is, as these debates get underway, the 114 00:06:05,360 --> 00:06:10,400 Speaker 4: debt and deficit storyline is going to have to So 115 00:06:10,480 --> 00:06:11,920 Speaker 4: do you think get higher probra. 116 00:06:12,000 --> 00:06:13,800 Speaker 8: The peak dollar right now? 117 00:06:14,600 --> 00:06:17,920 Speaker 4: I don't know if we're probably close to peak dollar, 118 00:06:18,839 --> 00:06:21,200 Speaker 4: but look, I think a lot of things are at 119 00:06:21,240 --> 00:06:23,520 Speaker 4: play here, and one of the things that I think 120 00:06:23,600 --> 00:06:26,120 Speaker 4: is a profound risk. Again, this is not a market 121 00:06:26,120 --> 00:06:30,560 Speaker 4: that's pricing many risks, but we have an extraordinarily bifurcated 122 00:06:30,640 --> 00:06:34,160 Speaker 4: currency market around the world where the dollar is strong 123 00:06:34,720 --> 00:06:37,000 Speaker 4: versus virtually every other currency. 124 00:06:37,640 --> 00:06:41,040 Speaker 3: If in fact, you know, we come out, you know. 125 00:06:41,000 --> 00:06:45,839 Speaker 4: On day one after the inauguration and are extraordinarily aggressive 126 00:06:45,880 --> 00:06:49,760 Speaker 4: with China. I think that there's a non zero risk 127 00:06:49,880 --> 00:06:53,640 Speaker 4: that China could come back and say, okay, we're devaluating. 128 00:06:54,000 --> 00:06:55,040 Speaker 3: A devaluation of. 129 00:06:55,000 --> 00:06:59,240 Speaker 4: The room and bee would be hugely destabilizing across the 130 00:06:59,240 --> 00:07:02,960 Speaker 4: global trade. And you know, those types of risks are 131 00:07:03,000 --> 00:07:05,599 Speaker 4: just not being priced right here. So, you know, is 132 00:07:05,640 --> 00:07:09,400 Speaker 4: the dollar at peak at peak strength? I'm not sure, 133 00:07:10,680 --> 00:07:12,920 Speaker 4: but I think we're getting close and we're just at 134 00:07:12,920 --> 00:07:15,640 Speaker 4: this very fragile and unstable place. 135 00:07:15,840 --> 00:07:17,520 Speaker 1: If someone were to hear everything that you put together, 136 00:07:17,520 --> 00:07:19,720 Speaker 1: they would say, wow, what a raging bear. Oh my god, 137 00:07:19,800 --> 00:07:22,160 Speaker 1: you must be predicting forty two hundred for next year. 138 00:07:22,280 --> 00:07:23,040 Speaker 3: You're out at all. 139 00:07:23,160 --> 00:07:26,360 Speaker 1: Okay, So let's talk about why not, because basically you're 140 00:07:26,360 --> 00:07:28,960 Speaker 1: talking about debasement of the dollar and the end of 141 00:07:29,000 --> 00:07:31,440 Speaker 1: the Trump trade and sagflationd. 142 00:07:30,680 --> 00:07:32,840 Speaker 5: So give us where you really are with this. 143 00:07:33,120 --> 00:07:36,240 Speaker 4: So look, I think that there are risks out there 144 00:07:36,280 --> 00:07:38,360 Speaker 4: that we want to see priced. At the same time, 145 00:07:38,400 --> 00:07:42,560 Speaker 4: there is value because this is an extraordinarily bifurcated market. 146 00:07:43,440 --> 00:07:45,600 Speaker 4: So we're saying that this is going to be an 147 00:07:45,680 --> 00:07:48,440 Speaker 4: environment where there are winners and losers. So we do 148 00:07:48,480 --> 00:07:52,119 Speaker 4: see some winners, right, So we see financials, we see 149 00:07:52,160 --> 00:07:56,880 Speaker 4: domestic industrials, We see portions of consumer services that again 150 00:07:56,920 --> 00:08:01,040 Speaker 4: are domestically based as big winners here. We recently upgraded 151 00:08:01,640 --> 00:08:06,640 Speaker 4: mid cap growth companies as areas. We're you know, we've 152 00:08:06,680 --> 00:08:10,880 Speaker 4: built some diversification. We're owning, you know, Japan, we're owning 153 00:08:11,720 --> 00:08:14,640 Speaker 4: some parts of emerging markets. So we think that there 154 00:08:14,640 --> 00:08:16,760 Speaker 4: are things to do out there. We think that this 155 00:08:16,880 --> 00:08:20,920 Speaker 4: is a index that next year can chug along at 156 00:08:21,120 --> 00:08:25,239 Speaker 4: at the index level, maybe give you five to seven percent. 157 00:08:25,640 --> 00:08:27,440 Speaker 4: But at the same time, what we're saying is, if 158 00:08:27,440 --> 00:08:30,240 Speaker 4: you're getting five to seven percent in a stock market 159 00:08:30,240 --> 00:08:35,960 Speaker 4: that is extraordinarily richly priced on extraordinarily ambitious expectations, why 160 00:08:36,040 --> 00:08:38,480 Speaker 4: not own a better risk adjusted return and an investment 161 00:08:38,520 --> 00:08:41,880 Speaker 4: grade bond and clip the coup and just you know, 162 00:08:43,200 --> 00:08:44,280 Speaker 4: make it to the end of the year. 163 00:08:44,760 --> 00:08:47,280 Speaker 2: You mentioned them what you like in the m which you. 164 00:08:47,600 --> 00:08:52,079 Speaker 4: So so so we've we've been long bulls on India. 165 00:08:52,160 --> 00:08:53,640 Speaker 3: We know India has stalled out. 166 00:08:54,600 --> 00:08:57,719 Speaker 4: We think Mexico is way over sold, and that by 167 00:08:57,720 --> 00:08:59,880 Speaker 4: the end of the year, you know, we're going to 168 00:09:00,200 --> 00:09:02,840 Speaker 4: a better footing there and some of the tensions. 169 00:09:02,400 --> 00:09:04,800 Speaker 3: With the US will be mitigated. 170 00:09:05,480 --> 00:09:05,679 Speaker 5: You know. 171 00:09:05,760 --> 00:09:13,199 Speaker 4: Brazil obviously, you know now significantly tightening. We believe that 172 00:09:13,200 --> 00:09:15,640 Speaker 4: that's going to get priced and that there's going to 173 00:09:15,679 --> 00:09:19,000 Speaker 4: be opportunities, you know, to buy some value in Brazil. 174 00:09:19,040 --> 00:09:21,120 Speaker 2: I've got the foreign exchange screen in front of me. 175 00:09:21,320 --> 00:09:26,200 Speaker 2: Yees today, imagine markets. It's amazing. The peso in Mexico. 176 00:09:26,400 --> 00:09:29,400 Speaker 2: You have sixteen percent in Brazil, the currency down by 177 00:09:29,440 --> 00:09:32,959 Speaker 2: more than twenty Likewise, in Argentina go up to Russia 178 00:09:33,400 --> 00:09:38,080 Speaker 2: down thirteen percent, in Hungary down eleven, Colombia down eleven, 179 00:09:38,200 --> 00:09:40,640 Speaker 2: double digit moves in foreign exchange in AM. 180 00:09:40,760 --> 00:09:42,319 Speaker 1: You have to wonder at what point you hit sort 181 00:09:42,320 --> 00:09:43,360 Speaker 1: of a bottom. 182 00:09:43,160 --> 00:09:45,480 Speaker 3: Given the fact that you have a lot of. 183 00:09:45,400 --> 00:09:47,480 Speaker 1: Potential trade wars being priced in. 184 00:09:47,760 --> 00:09:49,959 Speaker 2: Yeah, Lisa Schanott, it's going to see it as We 185 00:09:50,400 --> 00:09:52,760 Speaker 2: appreciate your time. Thank you, Thank you, Lisa Shanott. There 186 00:09:52,760 --> 00:10:05,240 Speaker 2: of Morgan Stanley, we began at this hour, which stocks 187 00:10:05,280 --> 00:10:07,200 Speaker 2: hire ahead of the final FED decision of the year. 188 00:10:07,280 --> 00:10:09,840 Speaker 2: Victoria fanatis a cross mark, saying the problem is that 189 00:10:09,880 --> 00:10:12,360 Speaker 2: both sides of the dual mandate are hating up. The 190 00:10:12,480 --> 00:10:15,520 Speaker 2: question comes down to is the Fed still restrictive? And 191 00:10:15,559 --> 00:10:18,559 Speaker 2: according to Powell, the answer is yes. Victoria joins us 192 00:10:18,559 --> 00:10:20,840 Speaker 2: now for more. What's the answer, recording. 193 00:10:20,480 --> 00:10:24,560 Speaker 7: To you, I don't think we're as restrictive as the 194 00:10:24,559 --> 00:10:25,880 Speaker 7: FED wants us to believe. 195 00:10:25,920 --> 00:10:27,240 Speaker 5: I mean, you look at growth. 196 00:10:27,240 --> 00:10:29,000 Speaker 7: You've got Atlanta Fed GDP. 197 00:10:29,120 --> 00:10:31,640 Speaker 5: Now what three point three percent? You've got inflation? 198 00:10:31,760 --> 00:10:35,760 Speaker 7: We had CPI and PPI reports come out, big revisions there, 199 00:10:35,840 --> 00:10:39,800 Speaker 7: inflation being sticky, and you have really high centiment right now. 200 00:10:40,000 --> 00:10:44,040 Speaker 5: Look at NFIB small business three year high on cinniment. 201 00:10:44,200 --> 00:10:47,839 Speaker 7: You've got bull bear ratios very strong on the bulls. Now, 202 00:10:47,880 --> 00:10:50,200 Speaker 7: that can be a contrarian signal. I get that, but 203 00:10:50,320 --> 00:10:52,559 Speaker 7: you still have really strong sentiment that. 204 00:10:52,640 --> 00:10:53,280 Speaker 5: Is out there. 205 00:10:53,440 --> 00:10:55,800 Speaker 7: With these elements, I don't know how you can say 206 00:10:55,960 --> 00:11:00,600 Speaker 7: this economy feels restrictive. I say, yes, there are underlying 207 00:11:00,640 --> 00:11:03,080 Speaker 7: elements right under the surface that I think will start 208 00:11:03,120 --> 00:11:05,520 Speaker 7: bubbling up that I don't think it will be until 209 00:11:05,600 --> 00:11:06,319 Speaker 7: early next year. 210 00:11:06,559 --> 00:11:08,560 Speaker 2: Isn't that disconnect just super boolished So long as the 211 00:11:08,559 --> 00:11:10,760 Speaker 2: Federal Reserve chair thinks they're restrictive and keeps kind of 212 00:11:10,760 --> 00:11:12,520 Speaker 2: interest rights, isn't that just the green light just to 213 00:11:12,559 --> 00:11:13,360 Speaker 2: keep on buying? 214 00:11:13,480 --> 00:11:15,520 Speaker 7: It is for now, and I think that's why you're 215 00:11:15,559 --> 00:11:17,040 Speaker 7: seeing the market. 216 00:11:16,760 --> 00:11:17,600 Speaker 5: Continue to move up. 217 00:11:17,679 --> 00:11:19,480 Speaker 7: Yes, the past few days we've had a little bit 218 00:11:19,520 --> 00:11:22,520 Speaker 7: more volatility in play, but the market is going and 219 00:11:22,559 --> 00:11:23,000 Speaker 7: you've got. 220 00:11:22,920 --> 00:11:26,960 Speaker 5: The seasonality along with it. You've got earnings. 221 00:11:26,280 --> 00:11:29,680 Speaker 7: Expectations that people think, I think a little optimistic, but 222 00:11:29,760 --> 00:11:30,840 Speaker 7: double digit growth. 223 00:11:30,679 --> 00:11:32,640 Speaker 5: Again next year in earnings. 224 00:11:32,679 --> 00:11:35,920 Speaker 7: You're not having the labor market completely fall apart. So 225 00:11:35,960 --> 00:11:38,240 Speaker 7: I do think there's elements that are tail winds to 226 00:11:38,320 --> 00:11:41,160 Speaker 7: this economy, and you add Powell in which I know 227 00:11:41,200 --> 00:11:43,120 Speaker 7: you said you think it'll be boring Amory, but I 228 00:11:43,120 --> 00:11:44,480 Speaker 7: do think he's going to come out and say the 229 00:11:44,480 --> 00:11:48,520 Speaker 7: same we're data dependent, recalibration, blah blah blah, and everyone's 230 00:11:48,559 --> 00:11:50,680 Speaker 7: just going to look to the dot plot. Regardless of 231 00:11:50,720 --> 00:11:53,120 Speaker 7: what Jim Bullard said earlier. They're going to look to 232 00:11:53,160 --> 00:11:55,000 Speaker 7: that dot plot and go, what are you really thinking. 233 00:11:55,200 --> 00:11:56,640 Speaker 7: I don't think it's going to be boring. I think 234 00:11:56,679 --> 00:11:57,640 Speaker 7: it's going to be fascinating. 235 00:11:57,640 --> 00:11:59,480 Speaker 1: And I cannot wait for the meeting and the dot 236 00:11:59,480 --> 00:12:01,319 Speaker 1: plot and the press conference afterwards. 237 00:12:01,320 --> 00:12:03,280 Speaker 5: In particular because. 238 00:12:03,040 --> 00:12:05,680 Speaker 1: As you're saying that this is a tailwind essentially the 239 00:12:05,720 --> 00:12:07,240 Speaker 1: idea of a FED cutting. 240 00:12:07,200 --> 00:12:09,560 Speaker 5: There is a question of for what assets. 241 00:12:09,800 --> 00:12:10,240 Speaker 2: Is it a. 242 00:12:10,160 --> 00:12:13,680 Speaker 1: Tailwind for stocks, is it a tailwind for bonds at 243 00:12:13,679 --> 00:12:16,480 Speaker 1: a time or you have a real discussion longer term 244 00:12:16,600 --> 00:12:20,320 Speaker 1: about whether this actually increases the chance of stickier inflation 245 00:12:20,440 --> 00:12:23,120 Speaker 1: over twenty twenty five and twenty twenty six. What do 246 00:12:23,160 --> 00:12:25,600 Speaker 1: you expect to be the reaction in the bond market, 247 00:12:25,640 --> 00:12:26,920 Speaker 1: particularly the longer end. 248 00:12:27,200 --> 00:12:29,760 Speaker 5: Should this be a FED that does lean more. 249 00:12:29,760 --> 00:12:32,240 Speaker 1: Duvish than say, what the market is expecting Yeah. 250 00:12:32,080 --> 00:12:35,040 Speaker 7: If you get a more duvish feel to the press conference, 251 00:12:35,080 --> 00:12:37,520 Speaker 7: I do think you'll have equity markets rally a little 252 00:12:37,520 --> 00:12:40,960 Speaker 7: bit and bond yields will probably come down, at least 253 00:12:41,040 --> 00:12:43,240 Speaker 7: in the near term. I think they come down a 254 00:12:43,280 --> 00:12:45,480 Speaker 7: little bit with the expectation that the Fed will continue 255 00:12:45,520 --> 00:12:48,960 Speaker 7: to cut. However, bond vigilanes are not going to be 256 00:12:49,000 --> 00:12:51,319 Speaker 7: happy with that, so let's give it a little bit 257 00:12:51,360 --> 00:12:53,720 Speaker 7: of time. I think they'll come in, they'll start singing, 258 00:12:54,160 --> 00:12:57,560 Speaker 7: and we'll see yields move up intermediate term from there. 259 00:12:57,600 --> 00:13:00,640 Speaker 7: But the initial reaction if the Fed is devish, I 260 00:13:00,640 --> 00:13:02,280 Speaker 7: think you'll see yields come down a little bit. 261 00:13:02,360 --> 00:13:04,880 Speaker 1: That raises this question about whether the market does not 262 00:13:04,920 --> 00:13:07,960 Speaker 1: believe inflation to actually be a real threat. 263 00:13:08,040 --> 00:13:09,199 Speaker 5: I mean, which is it. 264 00:13:09,200 --> 00:13:12,000 Speaker 1: It seems like there are different messages from different asset classes. 265 00:13:12,000 --> 00:13:13,880 Speaker 1: In the bond market, it seems like there isn't a 266 00:13:13,880 --> 00:13:15,960 Speaker 1: great deal of concern, but it's definitely a sense that 267 00:13:16,000 --> 00:13:18,680 Speaker 1: things are stickier. And then the stock market, they're just saying, 268 00:13:18,720 --> 00:13:21,240 Speaker 1: we don't care. If it's mildly inflationary, that's great, let's 269 00:13:21,280 --> 00:13:21,920 Speaker 1: go right. 270 00:13:22,000 --> 00:13:24,959 Speaker 7: And there's other elements that could cause inflation to go high. 271 00:13:25,040 --> 00:13:26,959 Speaker 7: It's why it's such a difficult story right now. I mean, 272 00:13:27,240 --> 00:13:29,480 Speaker 7: we don't know what tariffs are going to do exactly. 273 00:13:29,520 --> 00:13:32,120 Speaker 7: We don't know what kind of corporate tax cuts or 274 00:13:32,160 --> 00:13:34,120 Speaker 7: individual tax cuts are coming in, and is that going 275 00:13:34,160 --> 00:13:36,079 Speaker 7: to be inflationary. I think the key to a lot 276 00:13:36,080 --> 00:13:39,600 Speaker 7: of this, though, is productivity. That can really be the 277 00:13:39,679 --> 00:13:43,440 Speaker 7: element that comes in and buffers inflation and helps growth 278 00:13:43,480 --> 00:13:46,040 Speaker 7: move higher. So if the expectation is that you're going 279 00:13:46,080 --> 00:13:49,240 Speaker 7: to get some productivity coming in, maybe that's one reason 280 00:13:49,280 --> 00:13:52,280 Speaker 7: why the markets are not as concerned right now with 281 00:13:52,320 --> 00:13:53,280 Speaker 7: what inflation is saying. 282 00:13:53,320 --> 00:13:53,559 Speaker 3: Well, J. 283 00:13:53,720 --> 00:13:55,960 Speaker 8: Powell won't assume what Trump two point zero will look like, 284 00:13:56,000 --> 00:13:58,280 Speaker 8: but the market certainly is what sectors do you think 285 00:13:58,320 --> 00:13:59,199 Speaker 8: will do well next year? 286 00:14:00,080 --> 00:14:01,960 Speaker 7: A lot of it depends on the policies that we 287 00:14:02,040 --> 00:14:04,240 Speaker 7: see come through, but I think you can imagine we'll 288 00:14:04,280 --> 00:14:06,000 Speaker 7: probably have capex. 289 00:14:05,880 --> 00:14:07,480 Speaker 5: Stronger going forward. 290 00:14:07,800 --> 00:14:10,600 Speaker 7: If you have federal spending come down, that helps on capex, 291 00:14:10,640 --> 00:14:13,199 Speaker 7: It helps corporations in regards to margin. So I think 292 00:14:13,200 --> 00:14:16,760 Speaker 7: you'll see industrials do well. I've liked financials all year. 293 00:14:16,800 --> 00:14:19,320 Speaker 7: It's been a story we've had. I think you'll continue 294 00:14:19,320 --> 00:14:21,320 Speaker 7: to see financials do well. They've had a little bit 295 00:14:21,320 --> 00:14:25,160 Speaker 7: of consolidation, but you have that deregulation story coming in. 296 00:14:25,400 --> 00:14:28,320 Speaker 7: You have a positive yield curve lone growth should grow 297 00:14:28,720 --> 00:14:30,640 Speaker 7: M and A should grow. So that gives you some 298 00:14:30,720 --> 00:14:33,920 Speaker 7: bumps there. On financials as well. We don't invest in crypto, 299 00:14:34,040 --> 00:14:36,000 Speaker 7: so I'm not going to say that, but it's been 300 00:14:36,000 --> 00:14:36,960 Speaker 7: going a little crazy. 301 00:14:37,080 --> 00:14:40,280 Speaker 8: You like indust Fill's because potentially the tax rate story right, 302 00:14:40,440 --> 00:14:42,800 Speaker 8: tax rate in Capex, I think we continue to see 303 00:14:42,800 --> 00:14:43,560 Speaker 8: growing onshoring. 304 00:14:43,600 --> 00:14:46,960 Speaker 5: Well, what about tariffs, Yeah, I mean I think we. 305 00:14:46,960 --> 00:14:49,120 Speaker 7: Have to separate the tariff story out, and you probably 306 00:14:49,160 --> 00:14:50,840 Speaker 7: know better than I do when we look at the 307 00:14:50,880 --> 00:14:53,000 Speaker 7: history of this. I think when you're talking about tariffs 308 00:14:53,000 --> 00:14:55,720 Speaker 7: as it relates to China, that's one story. I think 309 00:14:55,760 --> 00:14:57,800 Speaker 7: we can assume that that's going to be pretty quickly 310 00:14:58,080 --> 00:15:00,760 Speaker 7: after January twentieth, we're going to see some movement there. 311 00:15:00,880 --> 00:15:03,240 Speaker 5: When you're looking at tariffs for the rest of the world. 312 00:15:03,440 --> 00:15:04,960 Speaker 7: I know there's been a lot of talks in the 313 00:15:05,080 --> 00:15:08,320 Speaker 7: conversations with Canada and the conversations with Mexico, but I 314 00:15:08,360 --> 00:15:11,160 Speaker 7: think that's a different story and I wouldn't anticipate we're 315 00:15:11,160 --> 00:15:13,760 Speaker 7: going to see those come to fruition as quickly or 316 00:15:13,760 --> 00:15:16,320 Speaker 7: maybe as high a level of tariff is what we're 317 00:15:16,320 --> 00:15:17,000 Speaker 7: hearing right now. 318 00:15:17,080 --> 00:15:19,200 Speaker 3: Let's talk about breath, bad breath. 319 00:15:19,320 --> 00:15:20,920 Speaker 1: We've been seeing a lot of bad breath over the 320 00:15:20,920 --> 00:15:24,880 Speaker 1: past twelve days, throughout the entire month of December, and 321 00:15:24,920 --> 00:15:27,000 Speaker 1: it raises a question, is this a taste of what's 322 00:15:27,000 --> 00:15:29,720 Speaker 1: to come next year or if this basically is just 323 00:15:29,760 --> 00:15:32,560 Speaker 1: a breather of the Trump trade and it will reassert 324 00:15:32,600 --> 00:15:34,040 Speaker 1: itself come twenty twenty five. 325 00:15:34,520 --> 00:15:35,520 Speaker 5: Where do you fall on that. 326 00:15:35,960 --> 00:15:37,440 Speaker 7: I think we do have to be a little bit 327 00:15:37,480 --> 00:15:40,120 Speaker 7: concerned here. I know we're having a little revival here 328 00:15:40,120 --> 00:15:42,480 Speaker 7: and tech names are doing well, yes, and videos pulling back, 329 00:15:42,520 --> 00:15:45,320 Speaker 7: but Broadcom's stepping in, so we're seeing those go. But 330 00:15:45,680 --> 00:15:49,640 Speaker 7: then you look at how much concentration there is in 331 00:15:49,680 --> 00:15:52,720 Speaker 7: these names. I mean top ten names are thirty seven 332 00:15:52,840 --> 00:15:54,560 Speaker 7: thirty eight percent of the weight of the S and 333 00:15:54,600 --> 00:15:57,960 Speaker 7: P five hundred, so you don't have that diversification. You're 334 00:15:57,960 --> 00:16:00,320 Speaker 7: seeing a little bit more breadth down cap But I 335 00:16:00,320 --> 00:16:02,280 Speaker 7: think we have to be concerned when we hit next 336 00:16:02,360 --> 00:16:04,800 Speaker 7: year and you have the debt sealing crisis come in 337 00:16:05,120 --> 00:16:08,040 Speaker 7: and we start to see tariffs go into play. I 338 00:16:08,080 --> 00:16:10,960 Speaker 7: think we have a little more volatility next year. I 339 00:16:11,000 --> 00:16:13,120 Speaker 7: don't think this is just a small pause and then 340 00:16:13,120 --> 00:16:15,120 Speaker 7: we're going to go full on bowl market from here. 341 00:16:15,240 --> 00:16:17,040 Speaker 7: I do think there are some concerns that we have 342 00:16:17,120 --> 00:16:18,000 Speaker 7: to be leary about. 343 00:16:18,080 --> 00:16:21,080 Speaker 1: What's the hedge at a time where there's equal risks 344 00:16:21,120 --> 00:16:25,080 Speaker 1: of both some sort of acceleration and inflation or a downturn. 345 00:16:26,120 --> 00:16:30,000 Speaker 7: For us and for our clients, it's really being diversified. 346 00:16:30,160 --> 00:16:32,440 Speaker 7: So not just in your stock picks that you have, 347 00:16:32,560 --> 00:16:34,720 Speaker 7: but yes, we want to be in the market. You've 348 00:16:34,720 --> 00:16:37,040 Speaker 7: got tail when's going right now. I mean path of 349 00:16:37,120 --> 00:16:39,480 Speaker 7: least resistance is higher for now, So you don't want 350 00:16:39,520 --> 00:16:40,760 Speaker 7: to ignore that you want to be. 351 00:16:40,720 --> 00:16:41,400 Speaker 5: In that market. 352 00:16:41,560 --> 00:16:43,480 Speaker 7: But we like those areas we talked about put some 353 00:16:43,560 --> 00:16:46,360 Speaker 7: names in financials, look at some of the industrial's longer 354 00:16:46,440 --> 00:16:48,760 Speaker 7: term play. You know, I'm a fixed income person, so 355 00:16:48,840 --> 00:16:51,040 Speaker 7: I think you still lock in some of these rates. 356 00:16:51,080 --> 00:16:53,720 Speaker 7: We maybe go up to a four seventy five or 357 00:16:53,720 --> 00:16:55,840 Speaker 7: so on the tenure. I think you can lock that 358 00:16:55,920 --> 00:16:58,440 Speaker 7: in because with global rates as low as they are, 359 00:16:58,840 --> 00:17:01,440 Speaker 7: I mean you look at Germany like two and a half, right, 360 00:17:01,440 --> 00:17:03,960 Speaker 7: we look and see what's happening in China. 361 00:17:04,080 --> 00:17:06,200 Speaker 5: I think you can capture some of that as well 362 00:17:06,280 --> 00:17:06,880 Speaker 5: and have some. 363 00:17:06,800 --> 00:17:10,280 Speaker 8: Exposure to SMB talking about how negative rates do work. 364 00:17:10,640 --> 00:17:13,480 Speaker 8: Do you like anything when you're looking at diversifying outside 365 00:17:13,480 --> 00:17:16,119 Speaker 8: of the United States, It's tough right now. 366 00:17:16,400 --> 00:17:18,560 Speaker 7: I would have said a few months ago, Yes, put 367 00:17:18,600 --> 00:17:20,440 Speaker 7: your toe into Europe. I think that they're going to 368 00:17:20,520 --> 00:17:22,720 Speaker 7: start to see things with the ECB cutting rate. 369 00:17:23,119 --> 00:17:24,280 Speaker 5: But the issues that we're. 370 00:17:24,160 --> 00:17:26,360 Speaker 7: Seeing out of France, the issues that we're seeing out 371 00:17:26,359 --> 00:17:30,119 Speaker 7: of Germany, the poor manufacturing there. I mean, we have 372 00:17:30,200 --> 00:17:32,560 Speaker 7: it here, but it's even worse there. We're seeing a 373 00:17:32,600 --> 00:17:35,919 Speaker 7: two hundred and thirty basis point differential between UK and 374 00:17:35,960 --> 00:17:37,240 Speaker 7: German ten years. 375 00:17:37,960 --> 00:17:39,440 Speaker 5: I think you have to be concerned. 376 00:17:39,440 --> 00:17:41,800 Speaker 7: I need to see a little bit more positive movement 377 00:17:42,240 --> 00:17:45,240 Speaker 7: coming out of Europe before I think you go there 378 00:17:45,640 --> 00:17:48,040 Speaker 7: and Asia. I think you know there's some concerns there. 379 00:17:48,080 --> 00:17:51,080 Speaker 7: In China as well, domestic demand is really slow. We 380 00:17:51,160 --> 00:17:53,879 Speaker 7: saw it in retail sales. They had the highest month 381 00:17:54,080 --> 00:17:57,639 Speaker 7: of outflow, its like forty six billion last month, So 382 00:17:57,840 --> 00:17:59,080 Speaker 7: I think there's some concern there. 383 00:17:59,080 --> 00:18:00,640 Speaker 5: I think you got to stick with you for now. 384 00:18:00,760 --> 00:18:03,480 Speaker 2: Disinflation redflation rey traps are difficult to get out of. 385 00:18:03,560 --> 00:18:06,600 Speaker 2: Japan lift it went through it for a while. We've 386 00:18:06,640 --> 00:18:08,840 Speaker 2: seen that start to take place in China. Is that 387 00:18:08,920 --> 00:18:11,240 Speaker 2: what that shot of Chinese government bond yot is all about? 388 00:18:11,440 --> 00:18:13,800 Speaker 2: Somebody says, I think that's part of it. 389 00:18:13,840 --> 00:18:16,720 Speaker 7: But I also think when they're looking at tariffs that 390 00:18:16,840 --> 00:18:19,359 Speaker 7: could be coming, you see some flight out for that 391 00:18:19,520 --> 00:18:20,120 Speaker 7: reason too. 392 00:18:20,160 --> 00:18:22,440 Speaker 5: There's some concern you have China. 393 00:18:22,200 --> 00:18:25,480 Speaker 7: Saying that they're going to be more proactive in regards 394 00:18:25,560 --> 00:18:27,119 Speaker 7: to the stimulus that they put forward. 395 00:18:27,160 --> 00:18:28,640 Speaker 5: They OpEd their federal deficit. 396 00:18:28,680 --> 00:18:30,680 Speaker 7: They're saying it's going to be four percent now next 397 00:18:30,720 --> 00:18:33,720 Speaker 7: year instead of three percent. Not a huge move, but 398 00:18:33,760 --> 00:18:36,119 Speaker 7: they're trying to do some things. There is somewhat of 399 00:18:36,119 --> 00:18:37,399 Speaker 7: a trap there. You have to be Laria. 400 00:18:37,520 --> 00:18:39,920 Speaker 2: Bond market doesn't believe them, looking at that shop doesn't 401 00:18:39,920 --> 00:18:40,360 Speaker 2: believe them. 402 00:18:40,359 --> 00:18:41,920 Speaker 5: Untill and neither do a lot of other people. 403 00:18:41,960 --> 00:18:43,400 Speaker 1: I mean that there is sort of a sugar high 404 00:18:43,480 --> 00:18:46,919 Speaker 1: the equity markets perhaps, but realistically, are they going to 405 00:18:46,920 --> 00:18:48,800 Speaker 1: be able to juice growth at a time or consumers 406 00:18:48,840 --> 00:18:51,240 Speaker 1: are reluctant to spend that ultimately is the question. 407 00:18:51,400 --> 00:18:53,800 Speaker 2: Victoria good to say to catch out. Thanks for being here, 408 00:18:53,880 --> 00:19:07,720 Speaker 2: Victory Ferinandez, there a Crossmark Global. Anna Nikolaevsky is the 409 00:19:07,840 --> 00:19:11,600 Speaker 2: founder and CIO of long short firm Axle Capital Management 410 00:19:11,640 --> 00:19:13,480 Speaker 2: and has been bending on the name since twenty twenty 411 00:19:13,520 --> 00:19:15,000 Speaker 2: three and place to say that Ana's with us now 412 00:19:15,040 --> 00:19:15,880 Speaker 2: and a good morning. 413 00:19:15,840 --> 00:19:17,480 Speaker 5: Good morning, how are you? Thanks for having me to you. 414 00:19:17,560 --> 00:19:19,639 Speaker 2: It's been a great year for sun chip makers, but 415 00:19:19,760 --> 00:19:22,680 Speaker 2: not all true. It depends what you're exposed to PC, 416 00:19:22,880 --> 00:19:25,639 Speaker 2: smartphone data centers. When we talk about Micron, what kind 417 00:19:25,680 --> 00:19:27,359 Speaker 2: of exposure are we talking about. 418 00:19:28,280 --> 00:19:30,840 Speaker 6: I think at the moment, people are expecting the quarter 419 00:19:31,359 --> 00:19:35,320 Speaker 6: to have up asps in the five percent range. I 420 00:19:35,400 --> 00:19:38,680 Speaker 6: think the XP's are going forward may actually be flat 421 00:19:38,720 --> 00:19:41,439 Speaker 6: to down and you're probably not going to see your 422 00:19:41,440 --> 00:19:45,040 Speaker 6: recovery until the back half of twenty twenty five because 423 00:19:45,040 --> 00:19:46,280 Speaker 6: there are going to be a little bit of a 424 00:19:46,280 --> 00:19:49,560 Speaker 6: push out for smartphones and PCs at the moment. 425 00:19:49,640 --> 00:19:51,520 Speaker 2: What is it about the back end of twenty five 426 00:19:51,600 --> 00:19:53,399 Speaker 2: where you start to get a better tail went for 427 00:19:53,400 --> 00:19:54,360 Speaker 2: those kind of businesses. 428 00:19:54,400 --> 00:19:58,879 Speaker 6: There's going to be a replacement cycle across smartphones. 429 00:19:58,440 --> 00:19:59,879 Speaker 5: Across smartphones and PC. 430 00:20:00,200 --> 00:20:02,320 Speaker 6: I think at the moment you are not seeing one 431 00:20:02,400 --> 00:20:06,639 Speaker 6: hundred percent adoption by the consumer of AI PCs I 432 00:20:06,640 --> 00:20:09,720 Speaker 6: think Best Buy has hired several thousands of people to 433 00:20:09,800 --> 00:20:14,359 Speaker 6: help train consumers on the aipcs. But there's no major 434 00:20:14,440 --> 00:20:17,600 Speaker 6: major uptake right now for the Christmas season as far 435 00:20:17,640 --> 00:20:20,920 Speaker 6: as I'm hearing, So there may be an uptick later 436 00:20:20,960 --> 00:20:24,320 Speaker 6: on next year when there's a natural upgrade cycle for 437 00:20:24,520 --> 00:20:25,680 Speaker 6: enterprise and consumer. 438 00:20:25,880 --> 00:20:28,080 Speaker 1: What's fascinating to me is that people have been trying 439 00:20:28,119 --> 00:20:31,159 Speaker 1: to pick the next Nvidia, the next big winner from 440 00:20:31,200 --> 00:20:33,680 Speaker 1: the whole chip cycle, and the fact that we've seen 441 00:20:34,080 --> 00:20:37,640 Speaker 1: some real massive winners. Broadcom seems to be the latest superstar. 442 00:20:37,760 --> 00:20:40,520 Speaker 1: We've just seen this moonshot in the shares with them 443 00:20:40,560 --> 00:20:42,920 Speaker 1: falling right behind Tesla as sort of the Magnificent eight, 444 00:20:42,920 --> 00:20:44,920 Speaker 1: and people are playing around with what the name could be. 445 00:20:45,480 --> 00:20:49,240 Speaker 1: What gives you confidence that Micron's growth has that type 446 00:20:49,280 --> 00:20:51,720 Speaker 1: of moonshot at a time where people are trying to 447 00:20:51,800 --> 00:20:55,800 Speaker 1: imagine what the sort of evolution of AI adoption looks like. 448 00:20:56,520 --> 00:20:58,679 Speaker 6: I think when I think of Micron, I think of DRAM. 449 00:20:58,800 --> 00:21:02,600 Speaker 6: I think of a global commodity that is actually going 450 00:21:02,600 --> 00:21:03,959 Speaker 6: to be benefiting. 451 00:21:03,520 --> 00:21:06,320 Speaker 5: From some of the US chip stimulus. 452 00:21:06,640 --> 00:21:08,959 Speaker 6: But I think long term, you're going to see more 453 00:21:09,000 --> 00:21:11,000 Speaker 6: and more DRAM across the board and everything. 454 00:21:11,040 --> 00:21:12,400 Speaker 5: Memory is extremely important. 455 00:21:12,640 --> 00:21:15,359 Speaker 6: So I think about Micron in terms of that long 456 00:21:15,480 --> 00:21:20,520 Speaker 6: term cycle that right now probably is going to decline 457 00:21:20,600 --> 00:21:23,720 Speaker 6: a little bit, but will come back up again later, 458 00:21:23,840 --> 00:21:27,200 Speaker 6: although last year Micron was telling us that twenty twenty 459 00:21:27,280 --> 00:21:30,439 Speaker 6: five will be the peak. So it's a function of 460 00:21:30,480 --> 00:21:34,440 Speaker 6: what overall tech adoption will be like in terms of hardware. 461 00:21:34,600 --> 00:21:37,040 Speaker 1: When you talk about your investments, you're investing on the 462 00:21:37,040 --> 00:21:40,320 Speaker 1: tech side with Micron, but you're also very low tech 463 00:21:40,440 --> 00:21:41,520 Speaker 1: with respect. 464 00:21:41,160 --> 00:21:43,080 Speaker 3: To just what people buy every day. 465 00:21:43,359 --> 00:21:47,040 Speaker 1: Maybe some of the nature Valley bars that some people 466 00:21:47,119 --> 00:21:50,480 Speaker 1: like and hogandize that some people like and enjoy. Its thankful, 467 00:21:51,480 --> 00:21:53,159 Speaker 1: Actually in our household it is a staple. 468 00:21:53,200 --> 00:21:54,920 Speaker 2: And we got a lot of suce across the amount 469 00:21:54,920 --> 00:21:56,679 Speaker 2: of snice for America, and that's okay, that's what they 470 00:21:56,680 --> 00:21:57,080 Speaker 2: want to hear. 471 00:21:57,160 --> 00:21:59,480 Speaker 1: Some people grow up with lucky charms and turn out 472 00:21:59,560 --> 00:21:59,920 Speaker 1: just fine. 473 00:22:00,040 --> 00:22:02,199 Speaker 5: But I will just say, how much are you. 474 00:22:02,200 --> 00:22:05,160 Speaker 1: Really going towards some of these staples and why now. 475 00:22:06,320 --> 00:22:10,000 Speaker 6: We've taken a very conservative approach to investing right now 476 00:22:10,080 --> 00:22:14,560 Speaker 6: where we have large holdings in BJ in Costco, in 477 00:22:14,640 --> 00:22:18,080 Speaker 6: Walmart across the board. One of the reasons for that is, 478 00:22:18,119 --> 00:22:20,680 Speaker 6: we're trying to go to where the puck is going, 479 00:22:21,119 --> 00:22:25,000 Speaker 6: and at the moment we're seeing a slowdown in AI adoption. 480 00:22:25,200 --> 00:22:27,800 Speaker 6: I think we're seeing the opposite of the FOMO that 481 00:22:27,840 --> 00:22:30,600 Speaker 6: we saw in the beginning of last year, where managements 482 00:22:30,600 --> 00:22:34,800 Speaker 6: were virtually throwing money at GPUs. It was all about 483 00:22:34,920 --> 00:22:38,160 Speaker 6: speed and scale, and this year I think we've seen 484 00:22:38,280 --> 00:22:42,360 Speaker 6: a significant transition in terms of how are you going 485 00:22:42,359 --> 00:22:44,240 Speaker 6: to monetize this AI? 486 00:22:44,400 --> 00:22:45,800 Speaker 5: What is really what is it. 487 00:22:45,760 --> 00:22:51,720 Speaker 6: Going to cost, what is the must have app and 488 00:22:51,760 --> 00:22:54,040 Speaker 6: what is it going to cost on a long run 489 00:22:54,080 --> 00:22:58,040 Speaker 6: basis to operate the AI once you get past the 490 00:22:58,119 --> 00:22:59,080 Speaker 6: training part. 491 00:22:59,119 --> 00:23:03,080 Speaker 8: These names Cosco, Walmart, Target, it's where you can find 492 00:23:03,160 --> 00:23:04,840 Speaker 8: good deals precisely. 493 00:23:04,920 --> 00:23:06,480 Speaker 5: Do you see you slow down in the consumer? 494 00:23:07,440 --> 00:23:09,840 Speaker 6: I think we're seeing a slow down to the consumer already. 495 00:23:09,920 --> 00:23:12,240 Speaker 6: I went to buy some coffee the other day and 496 00:23:12,680 --> 00:23:17,119 Speaker 6: a pack of twenty Starbucks CA cups cost me forty dollars, 497 00:23:18,640 --> 00:23:21,800 Speaker 6: So I think that everyone's kind of migrating towards cost saving. 498 00:23:21,840 --> 00:23:24,359 Speaker 6: But I'm literally thinking about what's going to happen to 499 00:23:24,400 --> 00:23:27,280 Speaker 6: the S and P If there is a slow down 500 00:23:27,400 --> 00:23:30,159 Speaker 6: in tech, where will that money migrate and to me, 501 00:23:30,280 --> 00:23:33,800 Speaker 6: that's going the money is going to migrate towards more conservative, 502 00:23:34,040 --> 00:23:38,520 Speaker 6: stable cash flow generating areas of the market. That being said, 503 00:23:38,880 --> 00:23:42,160 Speaker 6: I think that Trump is one hundred percent pro the market, 504 00:23:42,240 --> 00:23:45,800 Speaker 6: and he's surrounded by extremely, extremely smart people. I think 505 00:23:45,920 --> 00:23:48,960 Speaker 6: very highly of Scott Bessont. I think Elon Musk is 506 00:23:48,960 --> 00:23:53,520 Speaker 6: one of the greatest innovators just beyond this generation obviously, 507 00:23:53,600 --> 00:23:55,879 Speaker 6: maybe of all time. So I'm very impressed by the 508 00:23:55,880 --> 00:23:59,840 Speaker 6: team that he's assembled. But that being said, I think 509 00:23:59,840 --> 00:24:02,800 Speaker 6: that technology is on a cycle of its own, and 510 00:24:03,080 --> 00:24:06,560 Speaker 6: we're seeing changes in terms of focus ROI. We're looking 511 00:24:06,560 --> 00:24:10,560 Speaker 6: at intellectual property and security issues to consider, and also 512 00:24:10,640 --> 00:24:14,360 Speaker 6: in terms of AI data governance also needs to be addressed. 513 00:24:14,600 --> 00:24:16,800 Speaker 2: You've been super gracious with your time already this morning, 514 00:24:16,840 --> 00:24:18,719 Speaker 2: but this is not the reason you're with us. You're 515 00:24:18,760 --> 00:24:21,560 Speaker 2: with us because you're passive supplying the robin hood. Stop 516 00:24:21,600 --> 00:24:24,880 Speaker 2: picking contest whereby I have to pick one long one 517 00:24:24,960 --> 00:24:26,760 Speaker 2: shot and see who wins out of six months, we 518 00:24:26,760 --> 00:24:28,760 Speaker 2: can put the later board up on the screen. Can 519 00:24:28,800 --> 00:24:31,119 Speaker 2: you share with us your longer shot and what's behind 520 00:24:31,160 --> 00:24:32,080 Speaker 2: each one of those pegs? 521 00:24:33,119 --> 00:24:36,880 Speaker 6: So my long is BJ just primarily generates a lot 522 00:24:36,880 --> 00:24:39,760 Speaker 6: of cash flow, and I think that if GDP does 523 00:24:39,920 --> 00:24:42,760 Speaker 6: slow down, I think the stock will be pretty resilient. 524 00:24:43,960 --> 00:24:48,200 Speaker 6: My short is in technology. As I said, I think 525 00:24:48,240 --> 00:24:50,280 Speaker 6: you're going to see a slow down. I think right now, 526 00:24:50,359 --> 00:24:54,760 Speaker 6: when you're looking at prices of GPU rentals, they've come 527 00:24:54,800 --> 00:24:59,400 Speaker 6: down pretty considerably because there's a lot of server optimization, 528 00:25:00,200 --> 00:25:05,719 Speaker 6: and once you've stopped trying to train your AI, you 529 00:25:05,800 --> 00:25:08,960 Speaker 6: may have excess GPUs that now you're starting to re 530 00:25:09,040 --> 00:25:11,720 Speaker 6: rent to other people. So now it looks like there's 531 00:25:11,760 --> 00:25:16,160 Speaker 6: a lot more competition on the GPU rental front. It's 532 00:25:16,160 --> 00:25:18,960 Speaker 6: a longer term that's extremely positive because it's going to 533 00:25:19,000 --> 00:25:23,320 Speaker 6: lower the barriers to entry for new companies to come 534 00:25:23,400 --> 00:25:25,280 Speaker 6: to train and create new business models. 535 00:25:25,480 --> 00:25:26,720 Speaker 5: But in the short term. 536 00:25:26,520 --> 00:25:30,119 Speaker 6: That may create some pressure for data centers and the 537 00:25:30,200 --> 00:25:31,160 Speaker 6: chip manufacturers. 538 00:25:31,240 --> 00:25:33,320 Speaker 1: That is fascinating to me. How much do you think 539 00:25:33,320 --> 00:25:35,479 Speaker 1: that that is underappreciated right now? I mean that sort 540 00:25:35,520 --> 00:25:37,400 Speaker 1: of speaks to the short position. Why do you think 541 00:25:37,400 --> 00:25:38,159 Speaker 1: that's overlooked? 542 00:25:39,600 --> 00:25:42,600 Speaker 6: I think the CEO of Microsoft mentioned it last week 543 00:25:42,720 --> 00:25:45,280 Speaker 6: when he said there's no longer a chip shortage. I 544 00:25:45,320 --> 00:25:49,240 Speaker 6: think we were chip constraint for eighteen months. But I 545 00:25:49,280 --> 00:25:52,600 Speaker 6: think that started to resolve itself probably in the middle 546 00:25:52,760 --> 00:25:56,240 Speaker 6: of this year, and now I think volumes are coming 547 00:25:56,280 --> 00:25:59,520 Speaker 6: to the market and you're seeing a large reseller market 548 00:26:00,080 --> 00:26:03,080 Speaker 6: in supply. Come on to eBay and Ali Baba of 549 00:26:03,280 --> 00:26:08,920 Speaker 6: entire GPU clusters, which is going to depress pricing. 550 00:26:09,359 --> 00:26:10,520 Speaker 2: And it's all for a worthy cause. 551 00:26:10,600 --> 00:26:11,840 Speaker 5: So it's good to see you and thank you for 552 00:26:11,880 --> 00:26:12,720 Speaker 5: Shane so much. 553 00:26:12,840 --> 00:26:15,679 Speaker 2: Thank you very much. That was Anna Nikola Yeskivi of 554 00:26:15,760 --> 00:26:20,680 Speaker 2: Axel Capital Management. This is the Bloomberg Surveillance podcast, bringing 555 00:26:20,760 --> 00:26:24,359 Speaker 2: you the best in markets, economics, and geopolitics. You can 556 00:26:24,400 --> 00:26:27,160 Speaker 2: watch the show live on Bloomberg TV weekday mornings from 557 00:26:27,200 --> 00:26:30,480 Speaker 2: six am to nine am Eastern. Subscribe to the podcast 558 00:26:30,520 --> 00:26:34,040 Speaker 2: on Apple, Spotify or anywhere else you listen, and as always, 559 00:26:34,080 --> 00:26:36,640 Speaker 2: on the Bloomberg Terminal and the Bloomberg Business app.