1 00:00:02,400 --> 00:00:10,320 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:11,920 --> 00:00:16,320 Speaker 2: This is the Bloomberg Surveillance Podcast. Catch us live weekdays 3 00:00:16,320 --> 00:00:19,640 Speaker 2: at seven am Eastern on Apple car Player, Android Auto 4 00:00:19,720 --> 00:00:23,080 Speaker 2: with the Bloomberg Business App. Listen on demand wherever you 5 00:00:23,120 --> 00:00:26,120 Speaker 2: get your podcasts, or watch us live on YouTube. 6 00:00:26,200 --> 00:00:28,920 Speaker 3: Michael Purvis Joints Is. He's the CEO and founder. That's 7 00:00:28,920 --> 00:00:31,440 Speaker 3: all Bocking Capital Advisors. Hey Michael, it's been a heck 8 00:00:31,480 --> 00:00:34,760 Speaker 3: of a year for risk on investors, particularly on the 9 00:00:34,800 --> 00:00:38,200 Speaker 3: equity side of the ledger. People making twenty plus returns here. 10 00:00:38,640 --> 00:00:42,600 Speaker 3: How do you think about the beginning of twenty twenty five. 11 00:00:42,640 --> 00:00:44,320 Speaker 3: I mean, some of your clients might be getting a 12 00:00:44,360 --> 00:00:47,360 Speaker 3: little used to this twenty percent plus returns. What do 13 00:00:47,360 --> 00:00:48,440 Speaker 3: you say about twenty twenty five? 14 00:00:49,800 --> 00:00:50,920 Speaker 4: Well, yeah, like. 15 00:00:51,000 --> 00:00:55,720 Speaker 5: It's hard to be too bearish given that the economy 16 00:00:55,800 --> 00:00:59,600 Speaker 5: is strong, will probably stay strong, earnings will probably be 17 00:00:59,600 --> 00:01:03,000 Speaker 5: pretty good, and we have the FED doing some sort 18 00:01:03,040 --> 00:01:06,520 Speaker 5: of easing into you know, a very low unemployment rate 19 00:01:06,640 --> 00:01:08,720 Speaker 5: and at a at a you know, sort of a 20 00:01:08,760 --> 00:01:15,200 Speaker 5: resilient GDP. You know that that's that sort of textbook. Yeah, 21 00:01:15,240 --> 00:01:18,000 Speaker 5: you need to be allocated into risk assets such as equities, 22 00:01:18,480 --> 00:01:20,480 Speaker 5: but it comes with a lot of caveats here, and 23 00:01:20,560 --> 00:01:23,200 Speaker 5: I think certainly the ability for a three ped of 24 00:01:23,240 --> 00:01:29,400 Speaker 5: double digit games across the major indices is is going 25 00:01:29,480 --> 00:01:31,840 Speaker 5: to be very challenging for a couple of reasons, one 26 00:01:31,840 --> 00:01:33,759 Speaker 5: of which is that if you look at a long 27 00:01:33,840 --> 00:01:35,880 Speaker 5: term chart of the S and P five hundred over 28 00:01:35,880 --> 00:01:38,000 Speaker 5: the last ten years, you'll see it. So this is 29 00:01:38,040 --> 00:01:40,600 Speaker 5: a technical comment here, but I think it's important is 30 00:01:40,640 --> 00:01:42,840 Speaker 5: that we're right at the top of that sort of channel. 31 00:01:43,080 --> 00:01:46,440 Speaker 5: You can't really do this on radio, but but if you, 32 00:01:46,520 --> 00:01:48,200 Speaker 5: if you pull up a chart and I can send 33 00:01:48,200 --> 00:01:49,800 Speaker 5: it to you after the show, but it's it's a 34 00:01:49,840 --> 00:01:52,080 Speaker 5: great chart. It just we are at the top end 35 00:01:52,080 --> 00:01:55,080 Speaker 5: of that channel. Usually that sets up some choppy or 36 00:01:55,120 --> 00:02:00,120 Speaker 5: weak behavior at least in the coming months there. And 37 00:02:00,120 --> 00:02:01,720 Speaker 5: of course we're at the top of that channel at 38 00:02:01,760 --> 00:02:05,840 Speaker 5: a very expensive evaluation here. And then the third factor 39 00:02:05,880 --> 00:02:07,840 Speaker 5: here that why I think there's going to be choppiness 40 00:02:07,840 --> 00:02:09,760 Speaker 5: for the next few months here, is that we have 41 00:02:09,800 --> 00:02:13,200 Speaker 5: a US political risk premium that needs to be priced. 42 00:02:13,200 --> 00:02:15,600 Speaker 5: And what I'm talking about is we just simply don't 43 00:02:15,680 --> 00:02:18,600 Speaker 5: know where the art of the deal is going to 44 00:02:18,639 --> 00:02:23,639 Speaker 5: take us here, right, We just don't know, markets like certainty, 45 00:02:23,720 --> 00:02:27,280 Speaker 5: but the art of the deals is predicated on sort 46 00:02:27,280 --> 00:02:30,639 Speaker 5: of a lack of predictability from the commander in chief here, 47 00:02:30,720 --> 00:02:34,799 Speaker 5: so that will have to be ultimately priced. So I think, 48 00:02:34,919 --> 00:02:38,480 Speaker 5: you know, you'd like to expect a lot of oh yeah, 49 00:02:38,480 --> 00:02:40,760 Speaker 5: we bust on US equities because the US is about 50 00:02:40,840 --> 00:02:43,400 Speaker 5: best house on the block. We've got the mag seven 51 00:02:43,480 --> 00:02:45,560 Speaker 5: earnings machines and all. 52 00:02:45,360 --> 00:02:46,440 Speaker 4: That usual stuff. 53 00:02:46,919 --> 00:02:51,000 Speaker 5: But I think it's the allocation into the US, I 54 00:02:51,000 --> 00:02:53,919 Speaker 5: should say, incremental allocation into the US, and January and 55 00:02:53,960 --> 00:02:59,240 Speaker 5: February maybe a little less robust than might otherwise be 56 00:02:59,320 --> 00:03:01,919 Speaker 5: the case, because you just need to see what Trump 57 00:03:02,040 --> 00:03:06,400 Speaker 5: is going to lay out for US and what the 58 00:03:07,960 --> 00:03:10,720 Speaker 5: There are things like tariffs that are aggressive, what the 59 00:03:10,800 --> 00:03:13,400 Speaker 5: counter response is. There's a lot of unknown unknowns and 60 00:03:13,639 --> 00:03:16,720 Speaker 5: knowns here to consider, and that really needs to be 61 00:03:16,800 --> 00:03:20,359 Speaker 5: priced by equities there. So I think some valuation reset 62 00:03:20,520 --> 00:03:22,520 Speaker 5: is likely to happen in the next few months. 63 00:03:22,720 --> 00:03:24,480 Speaker 6: Michael, great to talk to you. Will allow the technical 64 00:03:24,480 --> 00:03:27,160 Speaker 6: comment here on this New Year's You've Day, but let 65 00:03:27,160 --> 00:03:29,000 Speaker 6: me ask you just about the amount of volatility that 66 00:03:29,000 --> 00:03:31,040 Speaker 6: we're seeing and likely to see. It's something that I 67 00:03:31,080 --> 00:03:35,040 Speaker 6: always turned to you for just insight into into volatility 68 00:03:35,080 --> 00:03:36,520 Speaker 6: and sort what are you looking for here as we 69 00:03:36,600 --> 00:03:40,120 Speaker 6: wait for that pricing of the political risk and all 70 00:03:40,160 --> 00:03:43,320 Speaker 6: of this to unfold here in twenty twenty five, Well. 71 00:03:43,400 --> 00:03:46,560 Speaker 5: You had a huge spike in volatilities with the FMC 72 00:03:46,760 --> 00:03:51,880 Speaker 5: in December, and then after that, after that jolt, you 73 00:03:52,040 --> 00:03:54,560 Speaker 5: saw the VIX really collapse, and you also saw the 74 00:03:54,640 --> 00:03:57,080 Speaker 5: move index, which is the VIX for the treasury curve 75 00:03:57,200 --> 00:04:00,320 Speaker 5: sort of collapse to basically the lowest levels since the 76 00:04:00,320 --> 00:04:04,920 Speaker 5: Fed started hiking there. I think the moving decks is 77 00:04:04,960 --> 00:04:08,560 Speaker 5: the first thing to focus on here, just because it 78 00:04:09,200 --> 00:04:12,560 Speaker 5: has been you know, really low, and I think so 79 00:04:12,720 --> 00:04:15,520 Speaker 5: much of the Trump's story or the you know, the 80 00:04:15,560 --> 00:04:19,800 Speaker 5: fiscal policy unknowns that we were just talking about, it 81 00:04:19,920 --> 00:04:22,359 Speaker 5: really comes back to the bond market almost before the 82 00:04:22,400 --> 00:04:25,560 Speaker 5: equity market here. And so if we do see a 83 00:04:25,600 --> 00:04:29,800 Speaker 5: real escalation in the term premia, and you know, we've 84 00:04:29,800 --> 00:04:33,839 Speaker 5: seen this sort of slow, steady sell off in treasuries 85 00:04:34,000 --> 00:04:38,200 Speaker 5: across the curve really since September, if that continues and 86 00:04:38,279 --> 00:04:41,000 Speaker 5: we get to five percent and beyond, and we start 87 00:04:41,040 --> 00:04:44,600 Speaker 5: seeing a lot of anxiety as to what the FED 88 00:04:44,640 --> 00:04:47,440 Speaker 5: response is going to be to white House policies and 89 00:04:47,440 --> 00:04:50,440 Speaker 5: so forth, You're going to start seeing treasury volatility up 90 00:04:50,480 --> 00:04:53,839 Speaker 5: at higher levels there, and that will ricochet into the VICS. 91 00:04:53,880 --> 00:04:58,000 Speaker 5: So the VIX right now, you know, is I would say, 92 00:04:58,200 --> 00:05:01,960 Speaker 5: not particularly cheap, not particularly expect It's not like, oh 93 00:05:01,960 --> 00:05:05,239 Speaker 5: my god, it's like the markets are wildly complacent here. 94 00:05:06,520 --> 00:05:09,520 Speaker 5: But nor is it like, you know, one of those 95 00:05:09,520 --> 00:05:11,320 Speaker 5: things where the VIX is at thirty five and it's 96 00:05:11,320 --> 00:05:12,960 Speaker 5: sort of like, okay, well this is a you know, 97 00:05:13,080 --> 00:05:15,679 Speaker 5: yet another inevitable volatility spike. 98 00:05:16,360 --> 00:05:18,159 Speaker 3: Mike, what do you expect this feder reserve to do, 99 00:05:18,960 --> 00:05:21,080 Speaker 3: you know, over the coming months here? I mean, I 100 00:05:21,120 --> 00:05:24,200 Speaker 3: think the market's kind of price in maybe a couple 101 00:05:24,200 --> 00:05:26,359 Speaker 3: of rates cuts next year. Is that kind of in 102 00:05:26,360 --> 00:05:27,200 Speaker 3: line with what you're thinking? 103 00:05:28,160 --> 00:05:31,560 Speaker 5: Yeah, I mean, look, the FED, I thought it's something 104 00:05:31,600 --> 00:05:34,920 Speaker 5: that was awkward but good. In the December meeting, I've 105 00:05:34,920 --> 00:05:36,799 Speaker 5: been on the view that we are in the middle 106 00:05:36,839 --> 00:05:39,880 Speaker 5: of a shift to a higher nominal GDP condition. I 107 00:05:39,880 --> 00:05:42,719 Speaker 5: didn't understand why they had to do fifty in September. 108 00:05:42,839 --> 00:05:45,120 Speaker 5: I didn't, you know, to me, if they did two 109 00:05:45,200 --> 00:05:48,320 Speaker 5: cuts this year, that would have been plenty. And I 110 00:05:48,320 --> 00:05:51,000 Speaker 5: think the FED is sort of you know, when you 111 00:05:51,160 --> 00:05:55,400 Speaker 5: go through what the economic projections were sort of telling 112 00:05:55,480 --> 00:05:58,280 Speaker 5: us out of that December meeting, the most important thing 113 00:05:58,320 --> 00:06:00,960 Speaker 5: I think was is that they meaningfully raised their real 114 00:06:01,080 --> 00:06:04,440 Speaker 5: rate fed fund forecast over the next three years and 115 00:06:04,480 --> 00:06:09,360 Speaker 5: in the long run without changing their GDP or employment forecasts, 116 00:06:09,800 --> 00:06:12,320 Speaker 5: and so that's I think what they're sort of saying 117 00:06:12,360 --> 00:06:17,000 Speaker 5: is that the economy can actually accommodate higher real interest rates. 118 00:06:17,520 --> 00:06:20,800 Speaker 5: And we've certainly seen many economic expansions over the last 119 00:06:20,839 --> 00:06:23,560 Speaker 5: forty years and had much higher real interest rates than 120 00:06:23,560 --> 00:06:25,880 Speaker 5: we have had now. And so I think, you know, 121 00:06:25,960 --> 00:06:29,000 Speaker 5: they've been going through this mental exercise of are we 122 00:06:29,120 --> 00:06:32,720 Speaker 5: normalizing to twenty nineteen type of real interest rate environment 123 00:06:32,839 --> 00:06:36,120 Speaker 5: or something perhaps before the two thousand and eight financial crisis, 124 00:06:36,120 --> 00:06:38,560 Speaker 5: And I think it's more the latter here, and I 125 00:06:38,600 --> 00:06:41,160 Speaker 5: think that's what's happening, just because there's so many structural 126 00:06:42,240 --> 00:06:47,080 Speaker 5: forces that are pushing upward support on growth and inflation. 127 00:06:47,520 --> 00:06:49,680 Speaker 3: Michael, thanks so much for joining us. I always appreciate 128 00:06:49,760 --> 00:06:52,440 Speaker 3: chatting with you. Michael Purvas, he's the CEO and he's 129 00:06:52,480 --> 00:06:55,640 Speaker 3: the founder a Toalbock and Capital Advisors. 130 00:07:00,880 --> 00:07:04,719 Speaker 2: You're listening to the Bloomberg surveillance podcast. Catch US live 131 00:07:04,839 --> 00:07:08,159 Speaker 2: weekday afternoons from seven to ten am. Easter Listen on 132 00:07:08,200 --> 00:07:11,440 Speaker 2: Apple car Play and Android Otto with a Bloomberg Business app, 133 00:07:11,560 --> 00:07:13,280 Speaker 2: or watch US live on YouTube. 134 00:07:13,680 --> 00:07:16,000 Speaker 3: Big problem for her next? Okay, I mean, Veronica Clark 135 00:07:16,120 --> 00:07:20,400 Speaker 3: us economists City. She's great. We lover challenging undergraduate. 136 00:07:20,680 --> 00:07:22,880 Speaker 6: Yes, well, I remember last she was here. We were 137 00:07:22,960 --> 00:07:27,280 Speaker 6: discussing the prospects of a Bill Belichick higher at UNC 138 00:07:27,440 --> 00:07:27,680 Speaker 6: and low. 139 00:07:27,760 --> 00:07:31,240 Speaker 3: It happened exact hours later. Hours later she knew something 140 00:07:31,560 --> 00:07:33,840 Speaker 3: of Roonka. Clark joins us here the pride of the 141 00:07:33,920 --> 00:07:37,040 Speaker 3: University of North Carolina, Chapel Hill. Veronica, what's the theme 142 00:07:37,640 --> 00:07:40,960 Speaker 3: you guys are going out with to your clients for 143 00:07:41,440 --> 00:07:43,480 Speaker 3: twenty twenty five from an economics perspective? 144 00:07:44,200 --> 00:07:46,000 Speaker 7: Yeah, yeah, thanks for having me. Happy New Year. 145 00:07:46,440 --> 00:07:48,160 Speaker 8: I mean, I think our theme is that, you know, 146 00:07:48,160 --> 00:07:50,960 Speaker 8: we are still relatively out of consensus, maybe very out 147 00:07:50,960 --> 00:07:53,960 Speaker 8: of consensus. I think the Fed and the markets are 148 00:07:54,000 --> 00:07:56,280 Speaker 8: maybe a bit complacent here on the weakness that. 149 00:07:56,240 --> 00:07:57,800 Speaker 7: We're seeing in the labor market. 150 00:07:58,320 --> 00:08:00,280 Speaker 8: I think it's been a couple months of data and 151 00:08:00,280 --> 00:08:03,000 Speaker 8: people have been convinced that this is a healthy labor market. 152 00:08:03,000 --> 00:08:05,880 Speaker 8: That's stabilizing, and we really don't see that. So I 153 00:08:05,880 --> 00:08:07,600 Speaker 8: do think that this is setting up for a more 154 00:08:07,640 --> 00:08:09,400 Speaker 8: dubvish FED than expected next year. 155 00:08:09,800 --> 00:08:11,200 Speaker 6: I'd love for you to talk about what I think 156 00:08:11,240 --> 00:08:14,560 Speaker 6: you characterize as a logical inconsistency in what we've heard 157 00:08:14,640 --> 00:08:17,240 Speaker 6: from from the Fed share in his recent comments. It's 158 00:08:17,240 --> 00:08:20,400 Speaker 6: assertion that policy rates are restrictive, but it's still appropriate 159 00:08:20,400 --> 00:08:22,600 Speaker 6: to keep the current levels over most of next year. 160 00:08:23,200 --> 00:08:24,960 Speaker 6: Expound upon that if you would just sort of what 161 00:08:26,160 --> 00:08:27,680 Speaker 6: he's saying, that sort of flu mixing. I think a 162 00:08:27,720 --> 00:08:29,640 Speaker 6: lot of people who are paying close attention to what 163 00:08:29,800 --> 00:08:31,800 Speaker 6: the Fed Chhair in particular is saying. 164 00:08:32,559 --> 00:08:35,280 Speaker 8: Yeah, it really goes back to that complacency on the 165 00:08:35,360 --> 00:08:38,000 Speaker 8: labor market data. You know, Chair Powells is not really 166 00:08:38,040 --> 00:08:40,800 Speaker 8: expecting to see much further weakness in the labor market. 167 00:08:41,360 --> 00:08:43,160 Speaker 8: If we go back to the forecast from a couple 168 00:08:43,160 --> 00:08:46,080 Speaker 8: of weeks ago, the media and unemployment rate forecast for 169 00:08:46,120 --> 00:08:48,040 Speaker 8: the end of next year is at four point three percent. 170 00:08:48,080 --> 00:08:49,559 Speaker 7: That's essentially where we are now. 171 00:08:50,120 --> 00:08:52,120 Speaker 8: So they're not expecting to see any more weakness in 172 00:08:52,200 --> 00:08:54,680 Speaker 8: the labor market, but yet rates are still restrictive. Why 173 00:08:54,679 --> 00:08:58,400 Speaker 8: wouldn't we see that further weakening in labor demand, especially 174 00:08:58,440 --> 00:09:00,400 Speaker 8: if it is intended of course to to you know, 175 00:09:00,440 --> 00:09:03,360 Speaker 8: soften demand and bring inflation down. So I do think 176 00:09:03,400 --> 00:09:06,440 Speaker 8: that's really the inconsistency, and ultimately we do think that 177 00:09:06,480 --> 00:09:08,679 Speaker 8: the labor market picture will win out and this will 178 00:09:08,720 --> 00:09:09,640 Speaker 8: be a more dubvish bed. 179 00:09:10,840 --> 00:09:14,240 Speaker 3: How do you think about the consumer here, Veronica in 180 00:09:14,320 --> 00:09:16,840 Speaker 3: twenty twenty five, I kind of feel like the consumer 181 00:09:17,280 --> 00:09:20,319 Speaker 3: buy and large, has a job. Wages are buying large 182 00:09:20,360 --> 00:09:23,520 Speaker 3: going higher, maybe higher than even the rate of inflation. 183 00:09:24,120 --> 00:09:25,559 Speaker 3: How do you view the consumer here today? 184 00:09:26,280 --> 00:09:28,840 Speaker 8: Yeah, I mean by a number of metrics. I mean, 185 00:09:28,880 --> 00:09:32,120 Speaker 8: consumption has been just incredibly strong. That really is the 186 00:09:32,440 --> 00:09:34,400 Speaker 8: engine of growth over the last year. I think that's 187 00:09:34,559 --> 00:09:36,679 Speaker 8: maybe especially true, and into the end of the year 188 00:09:36,679 --> 00:09:38,840 Speaker 8: we have seen some slowing in business investment. 189 00:09:39,600 --> 00:09:41,320 Speaker 7: But I do think, you know, if. 190 00:09:41,080 --> 00:09:43,960 Speaker 8: This is a weakening labor market, there are reasons to 191 00:09:43,960 --> 00:09:46,520 Speaker 8: think that consumption can slow down. The savings rate is 192 00:09:46,760 --> 00:09:49,680 Speaker 8: still very low in falling, it's below pre pandemic levels. 193 00:09:50,200 --> 00:09:53,439 Speaker 8: Consumer delinquencies for credit cards, auto loans, they're well above 194 00:09:53,480 --> 00:09:55,959 Speaker 8: twenty nineteen levels. So I do think there would be 195 00:09:56,000 --> 00:09:58,760 Speaker 8: reasons to pull back if the labor market just continues 196 00:09:58,800 --> 00:10:01,560 Speaker 8: to weaken. Maybe it's really those higher income consumers who 197 00:10:01,840 --> 00:10:05,200 Speaker 8: are feeling a wealth effect from equities and home prices 198 00:10:05,240 --> 00:10:07,280 Speaker 8: going up that are really supporting growth here. 199 00:10:07,600 --> 00:10:09,360 Speaker 6: We were talking to Michael Purvis just a few minutes 200 00:10:09,360 --> 00:10:12,280 Speaker 6: ago about political risk and what we're gonna have to 201 00:10:12,280 --> 00:10:15,040 Speaker 6: wait and see happens in twenty twenty five when it 202 00:10:15,040 --> 00:10:17,640 Speaker 6: comes to Tariff's policy or immigration policy. What kind of 203 00:10:18,000 --> 00:10:20,680 Speaker 6: bomb bass from the campaign trail may come to pass 204 00:10:20,720 --> 00:10:23,440 Speaker 6: in terms of policy. Curious sort of what you were 205 00:10:23,440 --> 00:10:24,839 Speaker 6: thinking in terms of when we're gonna be able to 206 00:10:24,840 --> 00:10:27,360 Speaker 6: get kind of sure signs of what's likely to happen here. 207 00:10:27,400 --> 00:10:31,120 Speaker 6: And we've just lived through this moment where government funding 208 00:10:31,160 --> 00:10:31,560 Speaker 6: was once. 209 00:10:31,440 --> 00:10:32,120 Speaker 3: Again in doubt. 210 00:10:32,160 --> 00:10:34,560 Speaker 6: We saw this letter from Treasury Secretary of Janet Yellen 211 00:10:34,600 --> 00:10:36,840 Speaker 6: about government running out of funding here in a matter 212 00:10:36,880 --> 00:10:40,280 Speaker 6: of weeks. Just dovetail that, if you would, with kind 213 00:10:40,280 --> 00:10:42,360 Speaker 6: of the uncertainty we're facing more broadly when it comes 214 00:10:42,400 --> 00:10:43,920 Speaker 6: to policy in twenty twenty five. 215 00:10:44,679 --> 00:10:48,160 Speaker 8: Yeah, we really don't have much insight into what is 216 00:10:48,320 --> 00:10:52,040 Speaker 8: feasible in terms of policy. Of course, we know the 217 00:10:52,080 --> 00:10:54,880 Speaker 8: campaign proposals and things like that, but what will actually 218 00:10:54,920 --> 00:10:55,840 Speaker 8: come to fruition is. 219 00:10:55,960 --> 00:10:56,840 Speaker 7: Still very uncertain. 220 00:10:57,480 --> 00:11:00,000 Speaker 8: Ideally, we learned more I think in the early days 221 00:11:00,360 --> 00:11:03,320 Speaker 8: of you know, a new government, you know, late January February, 222 00:11:03,880 --> 00:11:06,840 Speaker 8: maybe we can get some kind of large reconciliation bill 223 00:11:07,480 --> 00:11:11,040 Speaker 8: going through Congress and signed into law, maybe March or April, 224 00:11:11,920 --> 00:11:14,400 Speaker 8: assuming that we would see something in terms of tariffs, 225 00:11:14,440 --> 00:11:17,120 Speaker 8: you know, maybe additional tax cuts of course, extending the 226 00:11:17,480 --> 00:11:19,600 Speaker 8: tax cuts that are expiring at the end of this year. 227 00:11:20,160 --> 00:11:22,480 Speaker 8: But we really don't know a whole lot of specifics yet. 228 00:11:23,800 --> 00:11:28,120 Speaker 3: Vronco what's the city twenty twenty five GDP forecasting kind 229 00:11:28,120 --> 00:11:30,120 Speaker 3: of what are the the puts and take sure, what 230 00:11:30,160 --> 00:11:32,600 Speaker 3: are the kind of the key things that might impact 231 00:11:32,600 --> 00:11:33,120 Speaker 3: that number. 232 00:11:33,840 --> 00:11:37,679 Speaker 8: Yeah, we we certainly are on the more pessimistic end 233 00:11:37,720 --> 00:11:41,280 Speaker 8: of the spectrum. We're expecting something around one percent growth 234 00:11:41,320 --> 00:11:43,599 Speaker 8: for the year. Of course, that's much softer. 235 00:11:43,440 --> 00:11:46,040 Speaker 7: Than we've experienced. But I do think we've had a 236 00:11:46,080 --> 00:11:46,360 Speaker 7: couple of. 237 00:11:46,360 --> 00:11:49,560 Speaker 8: Year period here where we have been running above potential growth, 238 00:11:49,600 --> 00:11:52,280 Speaker 8: probably because we've had so much fiscal support, you know, 239 00:11:52,320 --> 00:11:56,199 Speaker 8: post pandemic and Infrastructure Inflation Reduction Act, and a lot 240 00:11:56,200 --> 00:11:59,040 Speaker 8: of that fiscal support is fading, and like Chapala was 241 00:11:59,040 --> 00:12:01,600 Speaker 8: saying rates are still so we should have some kind 242 00:12:01,600 --> 00:12:04,800 Speaker 8: of of slowdown. It is just maybe taking longer to 243 00:12:04,840 --> 00:12:06,280 Speaker 8: happen than a traditional cycle. 244 00:12:06,840 --> 00:12:08,080 Speaker 7: But we are already seeing that. 245 00:12:08,000 --> 00:12:12,440 Speaker 8: In sectors like housing, manufacturing, small businesses. And I do 246 00:12:12,520 --> 00:12:14,199 Speaker 8: think the labor market, you know, the rise and the 247 00:12:14,280 --> 00:12:15,760 Speaker 8: unemployment rate is telling. 248 00:12:15,559 --> 00:12:16,200 Speaker 7: Us the same thing. 249 00:12:16,960 --> 00:12:19,040 Speaker 6: We've got to get through the ball drop. We've got 250 00:12:19,080 --> 00:12:24,760 Speaker 6: to get through inauguration. Then it's January twenty ninth. All 251 00:12:24,800 --> 00:12:26,880 Speaker 6: the while we will get more economic data. What are 252 00:12:26,920 --> 00:12:28,520 Speaker 6: you going to be paying the closest attention to and 253 00:12:28,559 --> 00:12:30,120 Speaker 6: what do you think is going to be most determinative 254 00:12:30,160 --> 00:12:32,079 Speaker 6: in terms of what the Fed does at that meeting 255 00:12:32,240 --> 00:12:33,079 Speaker 6: and the one that follows. 256 00:12:33,760 --> 00:12:36,360 Speaker 7: Yeah, I think the single most important number maybe is the. 257 00:12:36,400 --> 00:12:38,960 Speaker 8: Unemployment rate, which is going to come out next Friday 258 00:12:38,960 --> 00:12:41,720 Speaker 8: on the tenth. Luckily we don't have a government shutdown, 259 00:12:41,760 --> 00:12:44,400 Speaker 8: so we will be getting that data. I think that 260 00:12:44,480 --> 00:12:47,560 Speaker 8: is probably the best summary statistic of what's happening in 261 00:12:47,600 --> 00:12:50,160 Speaker 8: the labor market. Of course, we have seen it rising, 262 00:12:50,240 --> 00:12:52,600 Speaker 8: you have to look at it on an unrounded basis. 263 00:12:52,640 --> 00:12:55,120 Speaker 8: Now it's essentially back to the highs that we were 264 00:12:55,160 --> 00:12:58,640 Speaker 8: at before the FED cut fifty and that's happened with 265 00:12:58,720 --> 00:13:01,920 Speaker 8: the decline in the labor force participation rate. So if 266 00:13:01,960 --> 00:13:04,080 Speaker 8: we do see some rebound there, you know, I do 267 00:13:04,160 --> 00:13:08,040 Speaker 8: think this could be a surprisingly high unemployment rate for 268 00:13:08,040 --> 00:13:09,920 Speaker 8: for the FED going into that January meeting. 269 00:13:10,640 --> 00:13:13,080 Speaker 7: They very well may be cutting again at that meeting. 270 00:13:14,320 --> 00:13:17,000 Speaker 3: But by and large, I mean, don't we call this 271 00:13:17,880 --> 00:13:20,760 Speaker 3: environment this labor market. Aren't we fully employed more or less? 272 00:13:21,880 --> 00:13:24,640 Speaker 8: Yeah, the level of the unemployment rate is is pretty healthy, 273 00:13:24,640 --> 00:13:27,480 Speaker 8: but it's really the trend that's concerning. We've really never 274 00:13:27,520 --> 00:13:30,760 Speaker 8: seen the unemployment rate rise this much without a recession. 275 00:13:31,640 --> 00:13:33,439 Speaker 8: I mean, I think the dynamics or the you know, 276 00:13:33,480 --> 00:13:35,520 Speaker 8: everyone understands that hiring is very low. 277 00:13:35,559 --> 00:13:37,040 Speaker 7: There aren't big layoffs yet. 278 00:13:37,600 --> 00:13:39,800 Speaker 8: But is this hiring that's weak because we were coming 279 00:13:39,880 --> 00:13:41,880 Speaker 8: off of a really tight labor market. Or is it 280 00:13:42,000 --> 00:13:44,319 Speaker 8: hiring that's weak because businesses are trying to cut labor 281 00:13:44,360 --> 00:13:46,960 Speaker 8: costs because borrowing costs are high. That's that's typically what 282 00:13:47,000 --> 00:13:49,760 Speaker 8: happens when rates are restrictive. And if that's the case, 283 00:13:49,800 --> 00:13:52,520 Speaker 8: that that really isn't changing and you might just be 284 00:13:52,559 --> 00:13:54,400 Speaker 8: getting to that last stage, which is layoff. 285 00:13:54,559 --> 00:13:57,400 Speaker 3: So all right, Ronica, thank you so much for joining 286 00:13:57,440 --> 00:14:01,040 Speaker 3: us New York YEP absolutely us economist with CITYA. 287 00:14:01,520 --> 00:14:05,800 Speaker 2: This is the Bloomberg Surveillance Podcast. Listen live each weekday 288 00:14:05,880 --> 00:14:09,080 Speaker 2: starting at seven am Eastern on applecar Play and Android 289 00:14:09,120 --> 00:14:12,000 Speaker 2: Auto with the Bloomberg Business app. You can also listen 290 00:14:12,080 --> 00:14:15,199 Speaker 2: live on Amazon Alexa from our flagship New York station, 291 00:14:15,559 --> 00:14:18,320 Speaker 2: just Say Alexa playing Bloomberg eleven thirty. 292 00:14:18,440 --> 00:14:21,000 Speaker 3: One of the themes in the marketplace for the last two 293 00:14:21,080 --> 00:14:26,960 Speaker 3: years has been AI usually the theme exactly and Alex 294 00:14:27,000 --> 00:14:29,120 Speaker 3: Steele and I were up at a Boston consulting Group 295 00:14:29,200 --> 00:14:32,480 Speaker 3: offsite in Boston, probably a year ago, and the consultants 296 00:14:32,480 --> 00:14:35,680 Speaker 3: there were saying, when our clients ask us, how do 297 00:14:35,760 --> 00:14:39,360 Speaker 3: we deploy AI in our business? They always say no, no, no. 298 00:14:39,280 --> 00:14:41,840 Speaker 3: Before we get to there, we want you to commit 299 00:14:42,120 --> 00:14:45,040 Speaker 3: to however you decide to deploy AI in your business, 300 00:14:45,280 --> 00:14:49,080 Speaker 3: you do it responsibly, interesting ethically. We need that buy 301 00:14:49,080 --> 00:14:51,440 Speaker 3: off at the board level, at the c suite level, 302 00:14:51,440 --> 00:14:54,760 Speaker 3: before we were even talking about Apple applications, because that's 303 00:14:54,760 --> 00:14:58,240 Speaker 3: how powerful potentially AI can be for a lot of business. 304 00:14:58,320 --> 00:14:59,880 Speaker 3: And I think our next guest thinks about that is 305 00:15:00,040 --> 00:15:03,160 Speaker 3: well Mark Weatherford. He is a vice president policy and standards. 306 00:15:03,200 --> 00:15:07,080 Speaker 3: The firm is a gruttle mark. Is it too soon 307 00:15:07,120 --> 00:15:13,440 Speaker 3: to talk about regulating the deployment of AI across businesses? 308 00:15:13,440 --> 00:15:14,560 Speaker 3: How do you guys think about that? 309 00:15:16,640 --> 00:15:19,320 Speaker 4: No? In fact, you know, I think we're at this 310 00:15:19,480 --> 00:15:24,840 Speaker 4: really interesting and unusual confluence of events with AI growing 311 00:15:24,880 --> 00:15:28,360 Speaker 4: and changing almost weekly, and then the new administration coming 312 00:15:28,400 --> 00:15:31,480 Speaker 4: in that you know, wants to undo, slow down, and 313 00:15:31,560 --> 00:15:35,440 Speaker 4: even stop regulation. So but because of the risks, I 314 00:15:35,480 --> 00:15:39,120 Speaker 4: think the business and maybe society more broadly, we are 315 00:15:39,160 --> 00:15:43,040 Speaker 4: definitely going to see regulation around AI. And you know 316 00:15:43,080 --> 00:15:45,280 Speaker 4: what that regulation looks like, I think is going to 317 00:15:45,360 --> 00:15:48,320 Speaker 4: be the big question. And you know, because of the 318 00:15:48,400 --> 00:15:53,000 Speaker 4: appointment David Sachson and Krishnan, you know, these guys are 319 00:15:53,000 --> 00:15:56,040 Speaker 4: both entrepreneurs who have worked under the burden of regulation 320 00:15:56,440 --> 00:15:58,040 Speaker 4: and they're going to be in the White House. So 321 00:15:58,160 --> 00:16:01,720 Speaker 4: I expect that they will try to moderate the legislature 322 00:16:01,800 --> 00:16:05,800 Speaker 4: as much as possible. But at the same time, you know, 323 00:16:05,920 --> 00:16:09,360 Speaker 4: the risks of uncontrolled AI demand some kind of guardrails, 324 00:16:09,640 --> 00:16:11,880 Speaker 4: and you know, legislators are going to do what they 325 00:16:11,880 --> 00:16:13,880 Speaker 4: do best, and that's legislat. 326 00:16:14,200 --> 00:16:16,880 Speaker 6: Well, let's talk about those guardrails and where they're being built. 327 00:16:16,920 --> 00:16:19,920 Speaker 6: So it's been happening at the federal level, I know, 328 00:16:20,120 --> 00:16:21,720 Speaker 6: been happening at the state level. Then you've got a 329 00:16:21,720 --> 00:16:23,680 Speaker 6: lot of companies who say, look, we can do it ourselves. 330 00:16:23,720 --> 00:16:26,400 Speaker 6: We have smart people working for us. We're keen to 331 00:16:26,480 --> 00:16:30,040 Speaker 6: think through the potential philosophical implications of what this might mean, 332 00:16:30,560 --> 00:16:33,040 Speaker 6: what disasters might be born of this. How do you 333 00:16:33,040 --> 00:16:34,840 Speaker 6: see all of that shaking out? I mean, we haven't 334 00:16:34,880 --> 00:16:36,520 Speaker 6: really been in a moment like this where we've had 335 00:16:36,560 --> 00:16:40,440 Speaker 6: a really nascent technology like this and had the regulatory 336 00:16:40,520 --> 00:16:43,880 Speaker 6: kind of structure being built around it in real time. 337 00:16:43,920 --> 00:16:46,080 Speaker 6: Who's who's taking the lead here? Which which guardrails are 338 00:16:46,080 --> 00:16:48,280 Speaker 6: going to be the first up and the strongest. 339 00:16:49,600 --> 00:16:52,720 Speaker 4: Well, I'm going to answer the first part of that first. 340 00:16:53,640 --> 00:16:57,160 Speaker 4: That is, I think you know it's been proven over 341 00:16:57,200 --> 00:16:59,520 Speaker 4: and over again self regulation is not going to work. 342 00:16:59,560 --> 00:17:02,960 Speaker 4: I mean, organizations don't just simply regulate and do the 343 00:17:03,040 --> 00:17:05,320 Speaker 4: right thing because it's the right thing to do. So 344 00:17:05,440 --> 00:17:07,600 Speaker 4: there there is going to there are going to be 345 00:17:07,600 --> 00:17:11,760 Speaker 4: some cardrails around. Now. In this year twenty twenty four, 346 00:17:11,800 --> 00:17:15,840 Speaker 4: there are over two hundred bills in the US Congress 347 00:17:16,200 --> 00:17:20,120 Speaker 4: related to artificial intelligence. At the same time, there were 348 00:17:20,280 --> 00:17:23,680 Speaker 4: seven hundred bills at the state level across forty five 349 00:17:23,720 --> 00:17:26,719 Speaker 4: different states, and I think one hundred and thirteen states 350 00:17:26,800 --> 00:17:31,080 Speaker 4: actually passed laws this year around AI. So I think 351 00:17:31,080 --> 00:17:33,879 Speaker 4: we're going to see it's going to happen much faster 352 00:17:34,119 --> 00:17:37,360 Speaker 4: at the state level, simply because it's easier to get 353 00:17:37,440 --> 00:17:40,639 Speaker 4: legislation done than at the federal level. But at the 354 00:17:40,720 --> 00:17:44,160 Speaker 4: same time, you know, you know, when the when the 355 00:17:44,200 --> 00:17:46,960 Speaker 4: safety of society is at risk, and I'm not saying 356 00:17:47,000 --> 00:17:50,600 Speaker 4: that that AI presents that kind of a risk, but 357 00:17:50,680 --> 00:17:54,080 Speaker 4: when when the safety and security of society is in question, 358 00:17:55,000 --> 00:17:57,280 Speaker 4: you know, legislators are going to do something about that. 359 00:17:57,400 --> 00:18:01,320 Speaker 4: And especially when there are so many people out there 360 00:18:01,359 --> 00:18:04,160 Speaker 4: and so many organizations out there that are in fact 361 00:18:04,520 --> 00:18:07,040 Speaker 4: raising their hand and saying, hey, let's kind of take 362 00:18:07,080 --> 00:18:09,520 Speaker 4: a slow approach to this. So there's going to be 363 00:18:09,560 --> 00:18:15,159 Speaker 4: some some uh, some influence to slow down. But at 364 00:18:15,200 --> 00:18:18,439 Speaker 4: the same time, put these guardrails in place. 365 00:18:19,440 --> 00:18:23,240 Speaker 3: What are we regulating today? What should we be regulating today? 366 00:18:23,280 --> 00:18:26,480 Speaker 3: Is it data privacy? What should these regulations cover? 367 00:18:26,560 --> 00:18:29,800 Speaker 4: Do you think, well, I think a couple of things, 368 00:18:29,800 --> 00:18:31,840 Speaker 4: and you hit on the right one. You know, AI 369 00:18:32,280 --> 00:18:37,919 Speaker 4: is data data AI doesn't exist without data. So so 370 00:18:38,040 --> 00:18:40,840 Speaker 4: what we're what we're we're regulating. What we need to 371 00:18:40,920 --> 00:18:46,000 Speaker 4: regulate is how is data being used? Is where is 372 00:18:46,040 --> 00:18:50,240 Speaker 4: the data coming from? Is it sensitive and private? Uh? Data? 373 00:18:50,400 --> 00:18:55,560 Speaker 4: Is it already regulated by GDPR or California Consumer Privacy 374 00:18:55,600 --> 00:18:59,880 Speaker 4: Protection APP or some of the other local a lot 375 00:19:01,000 --> 00:19:04,640 Speaker 4: laws in place already. So data is the key here, 376 00:19:04,680 --> 00:19:07,120 Speaker 4: and that really is what we need to regulate from 377 00:19:07,200 --> 00:19:12,720 Speaker 4: a privacy perspective, so that people know if their data 378 00:19:12,760 --> 00:19:15,920 Speaker 4: is being used, how it's being used, when it's being used, 379 00:19:15,960 --> 00:19:17,200 Speaker 4: and why it's being used. 380 00:19:18,800 --> 00:19:20,200 Speaker 6: I go back to what Paul was saying at the 381 00:19:20,240 --> 00:19:22,240 Speaker 6: top of the conversation that he had that Boston Consulting 382 00:19:22,320 --> 00:19:25,760 Speaker 6: Group meeting where you know their their barrier to entry 383 00:19:25,880 --> 00:19:28,480 Speaker 6: was is the board on board with kind of parameters 384 00:19:28,480 --> 00:19:31,600 Speaker 6: to govern this? Are we close to having any sort 385 00:19:31,600 --> 00:19:36,600 Speaker 6: of standardized formula for that across business? And if not, 386 00:19:36,680 --> 00:19:39,639 Speaker 6: where where should an executive look for some guidance on 387 00:19:39,680 --> 00:19:41,680 Speaker 6: what a company should be doing to do this kind 388 00:19:41,680 --> 00:19:43,440 Speaker 6: of safely and most effectively. 389 00:19:45,080 --> 00:19:48,600 Speaker 4: Yeah. I think there's two things there. First is, there 390 00:19:48,680 --> 00:19:52,840 Speaker 4: is no there is no standardshed although the National Institutes 391 00:19:52,880 --> 00:19:56,199 Speaker 4: of Science and Technology have put out some guidelines on 392 00:19:56,480 --> 00:20:00,600 Speaker 4: AI and the use of synthetic data. But you know, 393 00:20:01,280 --> 00:20:05,520 Speaker 4: from a business, purely business perspective, from a board member's perspective, 394 00:20:07,400 --> 00:20:12,440 Speaker 4: they're always they're always enticed by what's new and what's 395 00:20:12,960 --> 00:20:15,439 Speaker 4: what's fancy, and what's sexy. And I think, you know, 396 00:20:15,520 --> 00:20:18,119 Speaker 4: AI is certainly that right now. But I think you 397 00:20:18,160 --> 00:20:21,080 Speaker 4: know what what you're talking about there is what is 398 00:20:21,119 --> 00:20:24,280 Speaker 4: the business case? And there, you know, I think a 399 00:20:24,280 --> 00:20:27,639 Speaker 4: lot of times companies are reaching UH and trying to 400 00:20:27,720 --> 00:20:30,879 Speaker 4: find that business case and maybe you know, put the 401 00:20:31,280 --> 00:20:33,080 Speaker 4: square peg in a round hole and try to make 402 00:20:33,119 --> 00:20:35,280 Speaker 4: the case for it. There are a lot of great 403 00:20:35,320 --> 00:20:41,000 Speaker 4: business cases, UH for for artificial intelligence. But I think 404 00:20:41,119 --> 00:20:43,639 Speaker 4: board members need to do exactly what you just said, 405 00:20:43,640 --> 00:20:48,360 Speaker 4: and that is what is the real rationale for investing 406 00:20:48,480 --> 00:20:52,800 Speaker 4: in artificial intelligence. I think there's great business cases for that, 407 00:20:53,119 --> 00:20:56,159 Speaker 4: but maybe not in all in all aspects. 408 00:20:56,520 --> 00:20:59,520 Speaker 3: What are your expectations of the new administration as relates 409 00:20:59,560 --> 00:21:06,000 Speaker 3: to AI. I, you know, I think I am I'm optimistic, 410 00:21:06,480 --> 00:21:07,400 Speaker 3: like I said earlier. 411 00:21:07,440 --> 00:21:12,160 Speaker 4: You know, David Sachs and Sri ran Krishan on these 412 00:21:12,240 --> 00:21:19,440 Speaker 4: guys are they're technologists, they are AI. You know, professionals 413 00:21:19,520 --> 00:21:23,120 Speaker 4: as as well as anybody can be. So, and I think, 414 00:21:23,240 --> 00:21:27,240 Speaker 4: you know, far too often political appointments are made, you know, 415 00:21:27,520 --> 00:21:31,639 Speaker 4: to influential people, to friends or people who donated or 416 00:21:31,720 --> 00:21:36,480 Speaker 4: helped the campaign, regardless of their experience. So I'm optimistic 417 00:21:36,600 --> 00:21:40,359 Speaker 4: that we actually have people in the in these AI 418 00:21:40,560 --> 00:21:45,040 Speaker 4: roles that have real experience. Now again, working with the 419 00:21:45,200 --> 00:21:49,320 Speaker 4: legislature is a different story, you know, the executive branch 420 00:21:49,560 --> 00:21:53,720 Speaker 4: and legislative branch. So I think they're going certainly going 421 00:21:53,840 --> 00:21:59,160 Speaker 4: to try to influence the legislation coming out of Capitol Hill, 422 00:22:00,080 --> 00:22:01,520 Speaker 4: and that's where you know, it's going to be some 423 00:22:01,640 --> 00:22:03,960 Speaker 4: interesting dynamics, you know. Right, we're kind of at a 424 00:22:04,000 --> 00:22:07,440 Speaker 4: crazy time right now with this new administration coming in. 425 00:22:07,560 --> 00:22:10,520 Speaker 4: That's that's doing things completely different than I've ever been 426 00:22:10,600 --> 00:22:11,119 Speaker 4: done before. 427 00:22:11,240 --> 00:22:14,160 Speaker 3: Right yep, all right, Mark, we will pay attention along 428 00:22:14,200 --> 00:22:16,040 Speaker 3: with a lot of other folks. Mark Weatherford, he's a 429 00:22:16,160 --> 00:22:20,320 Speaker 3: vice president policy and standards firm. His name Gretel, talking 430 00:22:20,359 --> 00:22:24,280 Speaker 3: about cybersecurity and the need for regulation, particularly as it 431 00:22:24,359 --> 00:22:25,879 Speaker 3: relates to AI. 432 00:22:31,720 --> 00:22:36,000 Speaker 2: This is the Bloomberg Surveillance Podcast. Listen live each weekday 433 00:22:36,080 --> 00:22:39,280 Speaker 2: starting at seven am Eastern on applecar Play and Android 434 00:22:39,320 --> 00:22:42,240 Speaker 2: auto with the Bloomberg Business app. You can also watch 435 00:22:42,320 --> 00:22:45,560 Speaker 2: us live every weekday on YouTube and always on the 436 00:22:45,600 --> 00:22:46,560 Speaker 2: Bloomberg terminal. 437 00:22:46,800 --> 00:22:49,480 Speaker 3: All right, very good, Lisa Mitteil joins us here in 438 00:22:49,760 --> 00:22:52,240 Speaker 3: our studio with a look at some of the stories 439 00:22:52,320 --> 00:22:54,880 Speaker 3: in the newspapers. What are you looking at today, Lisa? 440 00:22:54,920 --> 00:22:56,680 Speaker 1: All right, we've been talking about New Year's Eve, right, 441 00:22:56,760 --> 00:22:58,399 Speaker 1: this is when the ball drops. We've already seen it 442 00:22:58,480 --> 00:22:59,320 Speaker 1: in a couple. 443 00:22:59,040 --> 00:23:00,560 Speaker 7: Of areas on the world. 444 00:23:01,240 --> 00:23:03,879 Speaker 1: But fireworks might not be the only thing lighting up 445 00:23:03,920 --> 00:23:07,600 Speaker 1: the sky. Noah is saying that this geomagnetic storm could 446 00:23:07,640 --> 00:23:11,040 Speaker 1: make the northern lights visible across the northern part of 447 00:23:11,040 --> 00:23:13,080 Speaker 1: the country today, so you could get a double bonus, 448 00:23:13,160 --> 00:23:15,200 Speaker 1: and then the storm could also make the lights visible 449 00:23:15,240 --> 00:23:18,680 Speaker 1: again after sundown on New Year's Day. Where are we 450 00:23:18,760 --> 00:23:21,920 Speaker 1: talking about, so Vermont, New Hampshire, Maine, not here in 451 00:23:22,000 --> 00:23:28,680 Speaker 1: New York, but also Washington, Idaho, Montana, North Dakota, South Dakota, Minnesota, Wisconsin, Michigan. 452 00:23:28,960 --> 00:23:30,280 Speaker 1: But it's still up in the air. A lot of 453 00:23:30,320 --> 00:23:31,880 Speaker 1: technical things to consider. 454 00:23:31,720 --> 00:23:34,639 Speaker 3: Generally have to be like in I don't know, Scotland 455 00:23:34,800 --> 00:23:37,840 Speaker 3: or Norway or Finland and places like that. This even North. 456 00:23:38,040 --> 00:23:39,760 Speaker 1: No, well that this is the third time you Actually 457 00:23:40,080 --> 00:23:43,600 Speaker 1: we've seen them here in May, also in October, so 458 00:23:43,680 --> 00:23:44,159 Speaker 1: we've seen them. 459 00:23:44,359 --> 00:23:46,000 Speaker 6: My brother lost sou them in Maine a few months 460 00:23:46,040 --> 00:23:48,640 Speaker 6: but day, so it was wild. This is very disorienting 461 00:23:48,760 --> 00:23:51,800 Speaker 6: and you know, an incredibly beautiful site. But yeah, I 462 00:23:51,800 --> 00:23:53,639 Speaker 6: think my sense was always you had to go to 463 00:23:53,680 --> 00:23:54,719 Speaker 6: scandinavi or right. 464 00:23:54,920 --> 00:23:58,000 Speaker 3: But if one's in bed by nine thirty later, problem 465 00:23:58,200 --> 00:23:58,920 Speaker 3: you can't. You can't. 466 00:23:59,119 --> 00:24:01,720 Speaker 1: Well maybe New Year's Day. There's another shot New Year's 467 00:24:01,760 --> 00:24:04,280 Speaker 1: Day on sundown. So if you if you're up for that, 468 00:24:04,880 --> 00:24:05,320 Speaker 1: ye for that? 469 00:24:05,440 --> 00:24:05,719 Speaker 2: All right? 470 00:24:05,720 --> 00:24:10,359 Speaker 3: Exactly? Someone those working Thursday and Friday. What else you got? Yes? Okay. 471 00:24:10,640 --> 00:24:14,080 Speaker 1: Investors actually pulled a record amount of actively managed stock 472 00:24:14,119 --> 00:24:16,440 Speaker 1: funds this year. There was a shift in cheaper index 473 00:24:16,520 --> 00:24:19,040 Speaker 1: trading investments. So you probably know more about this, am I, 474 00:24:19,200 --> 00:24:23,200 Speaker 1: but this is some data from EPFR. Outflows from stockpicking 475 00:24:23,240 --> 00:24:25,440 Speaker 1: mutual funds reach a record amount four hundred and fifty 476 00:24:25,560 --> 00:24:28,600 Speaker 1: billion dollars. Now, when you compare that to last year's 477 00:24:28,600 --> 00:24:31,840 Speaker 1: previous high, it was four hundred and thirteen billion dollars. 478 00:24:31,920 --> 00:24:35,280 Speaker 1: So they're saying that passive investing ETFs starting to affect 479 00:24:35,320 --> 00:24:38,280 Speaker 1: the market for active mutual funds. So what's the problem 480 00:24:38,359 --> 00:24:41,560 Speaker 1: They say that traditional stockpicking funds. Actually they have relatively 481 00:24:41,640 --> 00:24:44,520 Speaker 1: high fees and so that's like the issue with it, 482 00:24:44,880 --> 00:24:47,159 Speaker 1: and then their performance lags behind the Wall. 483 00:24:47,000 --> 00:24:49,200 Speaker 3: Street indensties that have like the big tech stocks, that's 484 00:24:49,240 --> 00:24:50,280 Speaker 3: all all the talk now. 485 00:24:51,080 --> 00:24:53,920 Speaker 1: So older investors who like them, they're starting to cash out, 486 00:24:54,160 --> 00:24:56,400 Speaker 1: and then you have the younger savers who are turning 487 00:24:56,440 --> 00:25:00,119 Speaker 1: to the cheaper passive strategies like an index ETF that. 488 00:25:00,160 --> 00:25:01,879 Speaker 3: With that thing exactly. I mean, it's been one of 489 00:25:01,960 --> 00:25:05,440 Speaker 3: the most amazing phenomena in my forty years on Wall 490 00:25:05,480 --> 00:25:07,840 Speaker 3: Street has been the growth of ETF yes, and it 491 00:25:07,960 --> 00:25:10,800 Speaker 3: is such it makes I mean I grew up. My 492 00:25:10,960 --> 00:25:13,040 Speaker 3: number one client was fied only. My number two client 493 00:25:13,119 --> 00:25:15,800 Speaker 3: was two Roar Price. My number three client was capital funds, 494 00:25:15,840 --> 00:25:18,840 Speaker 3: I mean, these big mutual fund complexes, because that's where 495 00:25:18,840 --> 00:25:21,520 Speaker 3: all the money went. Yeah, but now these ETF rappers, 496 00:25:21,560 --> 00:25:24,600 Speaker 3: as Eric Delun, you've got the lingo down. It has 497 00:25:24,600 --> 00:25:28,280 Speaker 3: been telling us for ten years, fifteen years, it's just 498 00:25:28,400 --> 00:25:32,080 Speaker 3: a much better rapper to manage these funds. 499 00:25:32,440 --> 00:25:34,760 Speaker 6: You're right, it's a decades long phenomenon. But this year 500 00:25:34,760 --> 00:25:36,840 Speaker 6: in particular, seems to've seen so incredible growth. 501 00:25:36,960 --> 00:25:38,720 Speaker 3: If I'm the folks that fed out your two prices, 502 00:25:38,960 --> 00:25:40,320 Speaker 3: I don't know what I do because I think the 503 00:25:40,359 --> 00:25:43,720 Speaker 3: fund I mean, it's the funds are they're just leaving 504 00:25:43,760 --> 00:25:46,120 Speaker 3: now that, as Eric bot Tunas points out, yeah, they're 505 00:25:46,200 --> 00:25:49,720 Speaker 3: doing okay because the value of their assets that made 506 00:25:49,760 --> 00:25:52,320 Speaker 3: relatively because the stock market's been going up, up, up up. 507 00:25:52,520 --> 00:25:55,640 Speaker 3: So even though you've had withdrawals out of the mutro funds, 508 00:25:55,720 --> 00:25:58,480 Speaker 3: the total assets in management still gracing. So they're still 509 00:25:58,520 --> 00:25:58,960 Speaker 3: making money. 510 00:25:59,000 --> 00:26:02,120 Speaker 1: But it's funny because the Financial Times article says, look 511 00:26:02,160 --> 00:26:04,680 Speaker 1: at black Rock, you know, they offer ETFs and things 512 00:26:04,720 --> 00:26:05,960 Speaker 1: like that, and I think. 513 00:26:05,840 --> 00:26:07,959 Speaker 3: It's great, great for investors, lowers the cost and makes 514 00:26:08,000 --> 00:26:09,960 Speaker 3: it more transparent. And you know, so we'll see. 515 00:26:10,320 --> 00:26:12,920 Speaker 1: All right, you've heard about you know, Party City, Big 516 00:26:13,000 --> 00:26:15,880 Speaker 1: Lots filing for bankruptcy, right, so now the former CEO 517 00:26:15,960 --> 00:26:19,359 Speaker 1: of Modell's, Mitch Modell, says he wants to buy them. Okay, 518 00:26:19,440 --> 00:26:21,360 Speaker 1: so actually Modell's filed for bankruptcy. 519 00:26:21,400 --> 00:26:25,040 Speaker 6: Before you say, Model's around the city work, No, No, that. 520 00:26:25,119 --> 00:26:27,719 Speaker 3: Was a pandemic. I think casualty correct. 521 00:26:27,800 --> 00:26:30,560 Speaker 1: Correct, We had him in Jersey to gone, but he 522 00:26:30,720 --> 00:26:32,640 Speaker 1: does tell The New York Post he wants to raise 523 00:26:32,680 --> 00:26:35,520 Speaker 1: a billion dollars to kind of give them this financial lifeline. 524 00:26:35,800 --> 00:26:38,320 Speaker 1: He wants to put his sons Matthew and Maxwell and 525 00:26:38,480 --> 00:26:41,399 Speaker 1: charges co presidents. They're actually twenty three and twenty two 526 00:26:41,480 --> 00:26:47,240 Speaker 1: years old. He's pready lined up some executives and he 527 00:26:47,280 --> 00:26:49,560 Speaker 1: wants to save jobs. That's what he's saying, because of combined, 528 00:26:49,560 --> 00:26:51,479 Speaker 1: they have about thirty three thousand workers, so that's why 529 00:26:51,520 --> 00:26:53,479 Speaker 1: he wants to do that. He wants to get rid 530 00:26:53,480 --> 00:26:55,440 Speaker 1: of the bulky furniture and big lots that they're known 531 00:26:55,520 --> 00:26:58,720 Speaker 1: for party city. He actually wants them to sell footwear 532 00:26:58,840 --> 00:27:02,000 Speaker 1: and sports gear and in addition to the party stuff. 533 00:27:02,440 --> 00:27:04,280 Speaker 3: So this is what he've was saying. 534 00:27:04,320 --> 00:27:05,960 Speaker 1: But I don't know if it's too late, because we 535 00:27:06,080 --> 00:27:08,159 Speaker 1: were talking about, you know, the deal that Big Lot 536 00:27:08,240 --> 00:27:13,040 Speaker 1: struck with Gordon Brothers that could be at risk now too. 537 00:27:13,160 --> 00:27:15,520 Speaker 3: So who knows where this can go, But he says 538 00:27:15,560 --> 00:27:16,159 Speaker 3: he's up for it. 539 00:27:16,320 --> 00:27:18,680 Speaker 6: I'll pause to say, as a dad with young kids, 540 00:27:18,800 --> 00:27:20,480 Speaker 6: it really is terrible that in the city now there's 541 00:27:20,520 --> 00:27:21,720 Speaker 6: no place to get sporting goods. 542 00:27:21,760 --> 00:27:23,359 Speaker 7: It's like if you have to get cleats. 543 00:27:23,320 --> 00:27:23,879 Speaker 4: Right, what do you do? 544 00:27:24,080 --> 00:27:25,159 Speaker 3: Oh, they don't really get. 545 00:27:26,760 --> 00:27:29,119 Speaker 6: No Dick sporting goods in the city that I know of. 546 00:27:29,359 --> 00:27:32,160 Speaker 6: But it's a real with Medel's gun, there's no place 547 00:27:32,240 --> 00:27:33,880 Speaker 6: to go for basics like them. 548 00:27:33,960 --> 00:27:35,320 Speaker 3: That's a good point, I mean. And so you buy 549 00:27:35,359 --> 00:27:37,080 Speaker 3: it online and you hope it fits. 550 00:27:37,000 --> 00:27:39,679 Speaker 6: Right and exchange it or they just have to squeeze 551 00:27:39,680 --> 00:27:40,119 Speaker 6: into those. 552 00:27:39,960 --> 00:27:44,000 Speaker 3: Shoes and then your kids crying. You gotta go to. 553 00:27:44,080 --> 00:27:47,680 Speaker 1: Most I love that that theme, all right, So this 554 00:27:47,920 --> 00:27:50,320 Speaker 1: is the last one. This stood out to me because 555 00:27:50,400 --> 00:27:53,200 Speaker 1: if you can't afford the ten thousand dollars or a 556 00:27:53,480 --> 00:27:56,720 Speaker 1: Mays Burke and bag, Walmart has an option for you. Okay, 557 00:27:56,880 --> 00:27:59,800 Speaker 1: it's a dupe. It's lessons one hundred dollars. It's US 558 00:28:00,080 --> 00:28:03,400 Speaker 1: seventy eight dollars. Everybody's talking about it all over social media. 559 00:28:03,560 --> 00:28:06,320 Speaker 1: It's called the Walmart Burkins, or some people call it 560 00:28:06,480 --> 00:28:10,480 Speaker 1: workins or wal Maze, and it looks if you look 561 00:28:10,480 --> 00:28:12,879 Speaker 1: at the pictures, it actually looks a lot like it. 562 00:28:13,400 --> 00:28:15,720 Speaker 1: But the problem is that they're selling out on Walmart's 563 00:28:15,720 --> 00:28:18,000 Speaker 1: website because that's where people are buying them. But I 564 00:28:18,080 --> 00:28:22,560 Speaker 1: didn't even realize that Walmart actually sells real pre owned burkin. 565 00:28:22,280 --> 00:28:24,199 Speaker 6: You can buy used Burken backs from Walmart. 566 00:28:24,240 --> 00:28:28,200 Speaker 1: From Walmart for like twenty four grand for twenty what 567 00:28:28,280 --> 00:28:31,560 Speaker 1: are the list for new No, I don't know, use 568 00:28:31,600 --> 00:28:33,199 Speaker 1: it twenty four and you can get it. You can 569 00:28:33,240 --> 00:28:35,280 Speaker 1: get a ten thousand dollars ber okay, just. 570 00:28:35,280 --> 00:28:38,320 Speaker 6: Being able to get one, I think a list list. 571 00:28:38,560 --> 00:28:40,920 Speaker 1: Yes, it's a nightmare to try and get one, and 572 00:28:41,040 --> 00:28:42,560 Speaker 1: you have to like wait on this list and you 573 00:28:42,640 --> 00:28:45,560 Speaker 1: have to have like a ridiculous salary word to get it. 574 00:28:46,080 --> 00:28:48,520 Speaker 1: But people are questioning, like how legal is this? 575 00:28:48,720 --> 00:28:51,120 Speaker 3: Like it looks so much like the bag? You know 576 00:28:51,840 --> 00:28:54,720 Speaker 3: why we we're you know, reading the book about Gucci 577 00:28:54,800 --> 00:28:57,840 Speaker 3: and then seeing the movie. The book was written by Holmberg, 578 00:28:57,840 --> 00:29:01,680 Speaker 3: which Woomberg News reported Sarah Ford and thank you Ariy, 579 00:29:02,360 --> 00:29:04,800 Speaker 3: great book on Gucci I recommended people take. And then 580 00:29:04,840 --> 00:29:07,479 Speaker 3: they made it into a movie. Really good. The Gucci 581 00:29:07,520 --> 00:29:09,600 Speaker 3: obviously the Gucci bags. You see him on every street 582 00:29:09,640 --> 00:29:13,160 Speaker 3: in Manhattaneseah. For a while, they didn't care because they're like, 583 00:29:13,520 --> 00:29:15,440 Speaker 3: it's no big deal. People are still gonna buy. They're 584 00:29:15,440 --> 00:29:18,360 Speaker 3: gonna then it's who they will know? Yeah, those will 585 00:29:18,640 --> 00:29:20,560 Speaker 3: I don't know, but it's it's been an issue out there. 586 00:29:20,960 --> 00:29:22,640 Speaker 3: For those of you who've walked around the streets of 587 00:29:22,800 --> 00:29:25,440 Speaker 3: New York and see these the people, you don't want 588 00:29:25,440 --> 00:29:26,760 Speaker 3: to go to the Walmart website. You don't have to 589 00:29:26,800 --> 00:29:28,400 Speaker 3: go to the Walmart well, so you can just walk 590 00:29:28,440 --> 00:29:32,200 Speaker 3: out in the corner and buy it, you know, all right? 591 00:29:32,280 --> 00:29:35,320 Speaker 3: That is our newspapers with Lisa Matteo. 592 00:29:35,560 --> 00:29:39,960 Speaker 2: This is the Bloomberg Surveillance Podcast, available on Apple, Spotify, 593 00:29:40,160 --> 00:29:44,240 Speaker 2: and anywhere else you get your podcasts. Listen live each weekday, 594 00:29:44,360 --> 00:29:47,400 Speaker 2: seven to ten am Eastern on Bloomberg dot com, the 595 00:29:47,520 --> 00:29:51,280 Speaker 2: iHeartRadio app, tune In, and the Bloomberg Business app. You 596 00:29:51,360 --> 00:29:54,640 Speaker 2: can also watch us live every weekday on YouTube and 597 00:29:54,800 --> 00:29:56,320 Speaker 2: always on the Bloomberg terminal. 598 00:30:00,040 --> 00:30:00,080 Speaker 4: The