WEBVTT - Tech Selloff Drives Second Day of Stock Losses 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:21.240 on Apple car Play or Android Auto with the Bloomberg 0:00:21.320 --> 0:00:24.840 Business app. Listen on demand wherever you get your podcasts, 0:00:25.280 --> 0:00:27.120 or watch us live on YouTube. 0:00:27.320 --> 0:00:30.840 Is this the beginning of maybe something bigger? Let's talk 0:00:30.880 --> 0:00:33.479 it over with Cameron Dawson, chief investment officer at New 0:00:33.560 --> 0:00:37.159 Edge Wealth, joining us here in our studios Interactive Broker Studios. 0:00:37.200 --> 0:00:38.960 So good to have you, Cameron, Thanks for being here. 0:00:38.840 --> 0:00:39.680 Thank you for having me. 0:00:40.120 --> 0:00:43.000 Let's talk about twenty twenty six for a minute. Let's 0:00:43.000 --> 0:00:45.960 look into the crystal ball. What do you see as 0:00:46.080 --> 0:00:48.400 the biggest challenges for this market. 0:00:48.720 --> 0:00:51.120 Well, certainly as we get into twenty twenty six, we 0:00:51.200 --> 0:00:55.000 will be trading at high valuations with high earnings expectations. 0:00:55.280 --> 0:00:58.080 You've seen valuations just like last week they got over 0:00:58.160 --> 0:01:01.720 twenty three times forward earnings. You have earning sexpectations for 0:01:01.880 --> 0:01:05.080 mid teens growth that's baked in already into S and 0:01:05.080 --> 0:01:08.240 P five hundred estimates, and so that does create a 0:01:08.360 --> 0:01:11.319 high bar for the market to jump over. And I 0:01:11.319 --> 0:01:13.720 think the question will be as a is there further 0:01:13.840 --> 0:01:17.160 upside to earning sestiments because of things like AI productivity 0:01:17.200 --> 0:01:19.959 and AI investment. I think that remains a big question mark. 0:01:20.319 --> 0:01:23.199 And B and this is a little bit nebulous, which 0:01:23.240 --> 0:01:26.720 is do you still have a liquidity environment that supports 0:01:26.800 --> 0:01:30.520 even more margin or multiple expansion, because if liquidity starts 0:01:30.560 --> 0:01:34.600 to receive, then twenty three times looks pretty darn expensive. 0:01:34.800 --> 0:01:37.360 Particularly with the MAG seven still putting up some big numbers. 0:01:37.400 --> 0:01:39.959 But the growth rates are decelerated for the MAC seven, 0:01:40.040 --> 0:01:43.600 so that means the four hundred and ninety three need 0:01:43.720 --> 0:01:45.520 to really perform. 0:01:46.720 --> 0:01:47.720 How do you think about that? 0:01:48.080 --> 0:01:50.880 Hope springs a tournament a lot in the broadening out 0:01:50.920 --> 0:01:54.280 trade if that is something that market participants we're hoping 0:01:54.320 --> 0:01:56.960 for in twenty twenty five, this idea that you would 0:01:56.960 --> 0:01:59.120 see the four ninety three catch up even as MAG 0:01:59.200 --> 0:02:02.320 seven dece and what ended up happening is MAG seven 0:02:02.400 --> 0:02:05.000 surprise to the upside and four ninety three surprise to 0:02:05.080 --> 0:02:07.840 the downside. And you didn't see that kind of catchup. 0:02:08.120 --> 0:02:10.960 But if we look at what's going on in twenty six, 0:02:11.160 --> 0:02:14.120 you have this law of large numbers that's pulling MAG 0:02:14.160 --> 0:02:16.960 seven earnings growth lower, and of course secondaryvet is matter 0:02:17.000 --> 0:02:17.560 in markets. 0:02:17.720 --> 0:02:19.200 Do you have a name like Meta. 0:02:18.880 --> 0:02:22.000 Decelerating from forty percent growth this year to a potential 0:02:22.320 --> 0:02:25.079 decline of about two percent next year? And you see 0:02:25.120 --> 0:02:28.320 that across the mag seven names, and this baking in 0:02:28.440 --> 0:02:31.160 of the idea of the broadening out really relies on 0:02:31.280 --> 0:02:35.280 the economy a being very strong and b these businesses 0:02:35.320 --> 0:02:38.880 being able to generate margin expansion. And they don't necessarily 0:02:38.919 --> 0:02:41.160 deserve the benefit of the doubt as we look at 0:02:41.160 --> 0:02:45.000 that four ninety three because they've continuously underperformed or disappointed 0:02:45.040 --> 0:02:46.840 on the earnings front over the last few years. 0:02:47.280 --> 0:02:50.320 What are you looking at at outside the AI trade, 0:02:50.360 --> 0:02:52.640 because there's a lot of good stuff out there that 0:02:52.680 --> 0:02:55.040 we just don't talk a lot about. Is doesn't garner 0:02:55.040 --> 0:02:55.639 the headlines. 0:02:55.800 --> 0:03:00.679 Yeah, our equity portfolio manager j Peters has been absolutely 0:03:00.720 --> 0:03:03.280 salbrating at some of the deals that he's starting to 0:03:03.320 --> 0:03:06.160 see where you have had names simply get left behind 0:03:06.200 --> 0:03:09.040 in the rally. Remember that September and October have been 0:03:09.360 --> 0:03:13.880 incredibly low quality rallies and incredibly narrow rallies, So a 0:03:13.919 --> 0:03:16.680 lot of junk moving higher very very fast, and then 0:03:16.720 --> 0:03:19.640 the quality things that have been moving higher really just 0:03:19.720 --> 0:03:22.440 been in that MAC seven. So if you can broaden 0:03:22.480 --> 0:03:25.760 out the aperture into more value oriented names as well 0:03:25.800 --> 0:03:28.240 as MidCap names, is where we're finding a lot of 0:03:28.280 --> 0:03:31.040 opportunities of parts of the market again that have just 0:03:31.080 --> 0:03:34.200 simply been left behind, but remaining very disciplined on those 0:03:34.280 --> 0:03:38.520 quality metrics, not chasing the junk, not chasing the dumpster dives, 0:03:38.720 --> 0:03:40.960 I think is incredibly important at this time. 0:03:41.440 --> 0:03:43.640 The most powerful leadership in this market over the last 0:03:43.640 --> 0:03:48.320 six months has been low quality, junkie, no profit, no revenue, 0:03:48.640 --> 0:03:51.600 specultive parts of the market that reminds me of me 0:03:51.640 --> 0:03:54.720 in nineteen ninety eight, nineteen ninety nine, parts of two 0:03:54.720 --> 0:03:56.880 thousands of stuff I was selling when I was a banker. 0:03:57.640 --> 0:03:58.720 How concerned are you about that? 0:03:59.040 --> 0:04:02.200 Yeah, it's been some thing that has definitely caused us 0:04:02.200 --> 0:04:04.200 to raise an eyebrow. We wrote about it over the 0:04:04.240 --> 0:04:07.600 week and saying this is not sustainable. We looked at 0:04:07.640 --> 0:04:10.800 the rally that you saw in for example, Korean fried 0:04:10.880 --> 0:04:11.800 chicken stocks in. 0:04:11.760 --> 0:04:13.320 Response freaking fried chicken. 0:04:13.440 --> 0:04:16.159 There was a picture of Ginsen Wong eating fried chickens 0:04:16.360 --> 0:04:18.720 one viral, and you saw this big, huge surge in 0:04:18.760 --> 0:04:19.440 Korean stocks. 0:04:19.440 --> 0:04:21.480 But if you look at the costp it. 0:04:21.600 --> 0:04:26.960 Rallied twenty six percent in October alone, So you. 0:04:26.839 --> 0:04:29.520 Talk about irrational exuberance exactly. 0:04:29.240 --> 0:04:31.920 And the COSTPI has oftentimes had these kind of casino 0:04:31.960 --> 0:04:35.480 capitalism types of moves. So it's a global dynamic, and 0:04:35.760 --> 0:04:39.520 we why we remain really disciplined about qualities because what 0:04:39.680 --> 0:04:41.960 tends to happen is these names can go up a 0:04:42.000 --> 0:04:44.240 lot in a very short period of time, but they 0:04:44.240 --> 0:04:45.880 can also go down a lot in a short period 0:04:45.920 --> 0:04:48.600 of time. So from a portfolio perspective, they actually don't 0:04:48.600 --> 0:04:52.160 add any incremental return and at the same time, they 0:04:52.200 --> 0:04:53.320 just add to volatility. 0:04:53.720 --> 0:04:56.400 What do you like in terms of alternative assets? I mean, 0:04:56.400 --> 0:04:59.400 we saw bitcoin have a little bit more volatility. I 0:04:59.400 --> 0:05:01.400 think it's back up of one hundred thousand dollars now, 0:05:02.160 --> 0:05:04.960 but failled to its lowest level since June. Gold continues 0:05:05.000 --> 0:05:07.719 to hang in there despite whatever is happening in the 0:05:07.720 --> 0:05:10.719 equity market. What do you like in terms of ald assets? 0:05:10.800 --> 0:05:12.839 So when we think about bitcoin, we see it really 0:05:12.920 --> 0:05:16.400 as a function of liquidity, which appears to be tightening 0:05:16.480 --> 0:05:18.880 at this time given the fact that it is broken down, 0:05:18.920 --> 0:05:23.279 but also encapsulating some of these fears about dollar debasement. 0:05:23.320 --> 0:05:25.440 Et cetera, which of course we know is the relationship 0:05:25.480 --> 0:05:29.000 with gold. I would add on to that spectrum of 0:05:29.040 --> 0:05:31.480 real assets, which we would consider gold and bitcoin to 0:05:31.520 --> 0:05:34.159 be a part of infrastructure. Is something that we've really 0:05:34.279 --> 0:05:36.600 liked and added to portfolios. This idea that you can 0:05:36.640 --> 0:05:39.440 get high single digit, low double digit returns depending on 0:05:39.960 --> 0:05:42.839 how you're positioned, and have something that's less correlated to 0:05:42.880 --> 0:05:45.880 equity markets. We like that in a world where equity 0:05:45.880 --> 0:05:48.720 markets could have lower forward returns. So that's been an 0:05:48.760 --> 0:05:52.240 area where it's certainly peaked our interest over the course 0:05:52.279 --> 0:05:54.440 of the last year and definitely into twenty twenty six. 0:05:54.880 --> 0:05:56.200 What are we doing in the bond market here? 0:05:56.240 --> 0:05:58.520 I could sit there and to your treasury three point 0:05:58.520 --> 0:06:02.120 five three point six percent, that's not a bad way 0:06:02.120 --> 0:06:02.840 to make a living here. 0:06:02.880 --> 0:06:04.640 Do we stick there or do we take some credit version? 0:06:04.880 --> 0:06:07.599 Yeah? I mean continuously we keep talking about how this 0:06:07.720 --> 0:06:11.040 idea that credit really isn't compensating you for the risk 0:06:11.160 --> 0:06:14.960 that is potentially embedded in some of these businesses and 0:06:15.040 --> 0:06:18.760 remaining higher quality and credit doing active management within credit 0:06:18.800 --> 0:06:20.880 to be able to make sure that the right issues 0:06:20.920 --> 0:06:24.560 are being put into portfolios. And I think that high 0:06:24.640 --> 0:06:27.200 yield is what is causing us also to kind of 0:06:27.240 --> 0:06:29.320 look a little bit with a higher eyebrow at this 0:06:29.440 --> 0:06:32.080 market because you've seen those spreads start to widen out. 0:06:32.320 --> 0:06:34.159 The thing to remember about high yield is that it 0:06:34.240 --> 0:06:37.719 is coincident and it is episodic, So spreads will widen 0:06:37.760 --> 0:06:40.599 out as there is pain in other places. Not necessarily 0:06:40.680 --> 0:06:41.640 a leading indicator. 0:06:42.080 --> 0:06:44.000 Now we talk a lot about how this market is 0:06:44.200 --> 0:06:46.080 priced for perfection, and all you need to do is 0:06:46.080 --> 0:06:49.000 look at a stock like Palenteer, right, I mean, by 0:06:49.040 --> 0:06:51.680 all metrics, that was a really good earnings report, yet 0:06:51.760 --> 0:06:54.359 they were punished. What do you make of that? And 0:06:54.360 --> 0:06:56.279 what's an investor to do if you're looking for those 0:06:56.360 --> 0:06:57.240 quality names. 0:06:57.400 --> 0:06:59.359 Yeah, a high bar is a high bar is a 0:06:59.440 --> 0:07:02.560 high bar. And the reality is is that what might 0:07:02.600 --> 0:07:05.560 be baked into the cell side estimates that generates some 0:07:05.640 --> 0:07:09.480 beaten rays might not be being baked into the buy 0:07:09.640 --> 0:07:11.920 side estimates the people who actually own the stock and 0:07:11.960 --> 0:07:14.800 the forecast that they need to drive them to buy more. 0:07:14.920 --> 0:07:18.080 So we think that these reactions to good earnings reports 0:07:18.240 --> 0:07:20.960 is a reflection of a buy side estimates are probably 0:07:21.000 --> 0:07:24.880 too high, and b the fact that positioning is probably 0:07:24.920 --> 0:07:29.200 already very crowded in these areas. So valuations always do matter, 0:07:29.720 --> 0:07:33.120 but they matter eventually, and it's that catalyst of what 0:07:33.200 --> 0:07:36.480 causes evaluation to unwind. That's a really key component of 0:07:36.640 --> 0:07:39.960 potentially driving these high flying stocks lower. 0:07:40.160 --> 0:07:42.680 All right, but again we've got futures on the downside 0:07:42.760 --> 0:07:45.960 right now, looking at possibly back to back down days 0:07:46.040 --> 0:07:49.840 for Wall Street. Cameron Dawson, Chief Investment Officer knew Edge. Well, 0:07:49.880 --> 0:07:51.400 thanks so much for stopping by the studios. 0:07:51.480 --> 0:07:54.600 Stay with us. More from Bloomberg Surveillance coming up after this. 0:08:00.800 --> 0:08:04.400 You're listening to the Bloomberg Surveillance podcast. Catch us Live 0:08:04.440 --> 0:08:07.600 weekday afternoons from seven to ten am Eastern Listen on 0:08:07.720 --> 0:08:11.120 Apple Karplay and Android Otto with the Bloomberg Business app 0:08:11.280 --> 0:08:12.880 or what Us Live on YouTube. 0:08:13.000 --> 0:08:13.960 Jennifer Lawless, Georgia. 0:08:14.000 --> 0:08:16.360 She's a professor of politics and public policy at the 0:08:17.120 --> 0:08:21.520 University of Virginia and lovely Charlottesville, Virginia. Been there many 0:08:21.680 --> 0:08:25.640 many times, Jennifer, talk to us about what you saw 0:08:25.680 --> 0:08:30.080 coming out of Virginia and New Jersey with democratic wins, 0:08:30.080 --> 0:08:32.160 pretty solid wins as well. 0:08:32.160 --> 0:08:35.400 What did you take away from those governorship races? 0:08:36.320 --> 0:08:37.120 Well, good morning. 0:08:37.240 --> 0:08:39.800 I think it was a good night for Democrats because 0:08:39.800 --> 0:08:44.040 both Abigails Bamberger and Mikey Cheryl had double digit wins. 0:08:44.080 --> 0:08:47.720 They both exceeded expectations, and they were able to, especially 0:08:47.760 --> 0:08:50.840 in the case of Virginia, bring a long down ballot 0:08:50.880 --> 0:08:54.439 candidates that included j Jones for Attorney General in Virginia 0:08:54.520 --> 0:08:57.720 as well as flipping as of right now, thirteen House 0:08:57.760 --> 0:09:00.360 of Delegate seats. So there was a moment on the 0:09:00.400 --> 0:09:03.800 Democratic side. There was excitement for these candidates at. 0:09:03.679 --> 0:09:04.280 The top of the. 0:09:04.200 --> 0:09:08.240 Ticket, and that's necessary, although not sufficient, if the Democrats 0:09:08.240 --> 0:09:11.400 are going to do well in twenty twenty six, professor. 0:09:12.120 --> 0:09:16.040 Professor, were these races the sweep by Dems last night, 0:09:17.200 --> 0:09:19.560 is it a verdict on Trump's second term? Do you think? 0:09:21.000 --> 0:09:22.480 I think it's a mix of factors. 0:09:22.520 --> 0:09:26.200 Some of it is certainly dissatisfaction with Trump, but that's 0:09:26.240 --> 0:09:30.240 really among Democrats who were enthusiastic and independents who got 0:09:30.240 --> 0:09:33.720 out to vote. There's not much evidence that Republicans decided 0:09:33.760 --> 0:09:36.719 that they were no longer going to support the Republican administration. 0:09:37.240 --> 0:09:40.160 It was just they weren't that excited about their candidates 0:09:40.160 --> 0:09:42.880 at the top of the ticket, and Democratic turnout surge. 0:09:43.080 --> 0:09:46.439 So it was in part a referendum on the Trump administration. 0:09:46.960 --> 0:09:48.400 But the Democratic candidates who. 0:09:48.320 --> 0:09:51.760 Won last night were not only running as alternatives to Trump, 0:09:51.920 --> 0:09:54.679 they were also putting forward their own plans that would 0:09:54.679 --> 0:09:56.199 resonate with independent voters. 0:09:56.840 --> 0:10:00.240 It's interesting, Jennifer. I'm a resident of New Jersey and 0:10:00.800 --> 0:10:02.920 President Trump had a very, i want to say, a 0:10:03.000 --> 0:10:06.160 low profile in this race here in terms of supporting 0:10:06.200 --> 0:10:10.480 the Republican candidate, mister Chittarelli, What does that tell you, 0:10:10.520 --> 0:10:13.160 if anything, Well. 0:10:13.000 --> 0:10:16.960 I think the Trump administration and the Republican candidate's campaigns 0:10:17.320 --> 0:10:21.040 are aware of the liabilities associated with Donald Trump. 0:10:20.720 --> 0:10:21.640 In blue states. 0:10:21.960 --> 0:10:23.000 There's no question that. 0:10:22.920 --> 0:10:27.200 Trump overperformed expectations in New Jersey in twenty twenty four, 0:10:27.480 --> 0:10:29.800 but it's important to keep in mind that Kamala Harris 0:10:29.840 --> 0:10:32.839 didn't really campaign there. So I think the Republicans thought 0:10:32.840 --> 0:10:35.200 that they were stronger in some of these blue states 0:10:35.240 --> 0:10:38.439 than they actually were, simply because there was one presidential 0:10:38.440 --> 0:10:41.840 candidate campaigning there last year and not two. And the 0:10:41.880 --> 0:10:45.880 outcomes in both Virginia and New Jersey suggest that Donald 0:10:45.920 --> 0:10:49.880 Trump can be a liability, especially when Democrats are excited 0:10:49.920 --> 0:10:51.800 and energized about their own candidates. 0:10:52.520 --> 0:10:54.240 Triser, I want to step away from the elections for 0:10:54.240 --> 0:10:55.880 a moment and just talk about what's going on with 0:10:55.880 --> 0:10:58.560 the Supreme Court today, going to hear arguments over Trump's 0:10:58.640 --> 0:11:03.640 unilateral decision too sweeping global tariffs. What's at stake here, 0:11:04.160 --> 0:11:08.319 besides possibly trillions of dollars in refunds needing to be given. 0:11:08.080 --> 0:11:12.040 Back, This is one of the cases where we're really 0:11:12.080 --> 0:11:15.079 going to see what the Supreme Court thinks about presidential 0:11:15.160 --> 0:11:18.760 power and executive power and the ability of the president 0:11:18.840 --> 0:11:23.000 to engage in unilateral action. If we've learned anything over 0:11:23.040 --> 0:11:25.360 the course of the last several months is that the 0:11:25.400 --> 0:11:28.600 Supreme Court seems to be willing to grant Donald Trump 0:11:29.160 --> 0:11:31.760 more in the way of authority than previous presidents thought 0:11:31.800 --> 0:11:33.080 they were entitled or sought. 0:11:33.160 --> 0:11:35.480 So this is just one more example of that. We'll 0:11:35.480 --> 0:11:36.479 see what happens. 0:11:37.240 --> 0:11:40.000 So, given the what we saw yesterday, just kind of 0:11:40.040 --> 0:11:44.199 the elections here, Professor, what are the takeaways for I 0:11:44.200 --> 0:11:47.240 don't know the Democratic Priority writ large, the Republican Party 0:11:47.240 --> 0:11:47.800 writ large? 0:11:47.800 --> 0:11:49.280 Are there lessons to be learned here? 0:11:50.440 --> 0:11:53.240 I'm always a little bit leery about using a couple 0:11:53.240 --> 0:11:56.280 of races to forecast what could be done in the future, 0:11:56.320 --> 0:11:57.840 but I do think there are a few lessons. 0:11:58.240 --> 0:12:00.320 The first is that despite the. 0:12:00.080 --> 0:12:02.800 Fact that the overwhelming majority of the American people are 0:12:02.800 --> 0:12:05.560 turned off to politics are disgusted with what's going on, 0:12:06.080 --> 0:12:09.200 they voted in record numbers yesterday, and that bodes well 0:12:09.200 --> 0:12:12.239 for the Democrats. It suggests that even though the Democrats 0:12:12.240 --> 0:12:15.240 have been demoralized and have felt that they haven't had 0:12:15.240 --> 0:12:17.560 a win in a long time, when push came to shove, 0:12:17.640 --> 0:12:20.079 they turned out. They turned out with enthusiasm, and they won. 0:12:20.679 --> 0:12:23.480 The second take home I think is that different kinds 0:12:23.480 --> 0:12:26.680 of Democratic candidates win in different kinds of places, which 0:12:26.720 --> 0:12:29.480 is not rocket science, but it's something that we often forget. 0:12:29.920 --> 0:12:31.640 And so the kind of Democrat that can win in 0:12:31.640 --> 0:12:33.640 New York City does not look like the kind of 0:12:33.679 --> 0:12:34.880 Democrat who can win. 0:12:34.960 --> 0:12:36.199 Statewide in Virginia. 0:12:36.400 --> 0:12:38.720 That doesn't mean that Democrats can't win in both of 0:12:38.760 --> 0:12:42.240 those places, and that should also be encouraging for the 0:12:42.280 --> 0:12:44.560 Democratic Party heading into twenty twenty six. 0:12:44.920 --> 0:12:46.960 And the final message I think is that. 0:12:47.400 --> 0:12:50.880 When Donald Trump is not on the ballot, Republicans have 0:12:50.960 --> 0:12:55.640 a tougher time. He's really what motivates turnout among Republican candidates, 0:12:55.760 --> 0:12:57.439 and he's not going to be on the ballot in 0:12:57.480 --> 0:13:01.120 twenty twenty six. So I think last night should have 0:13:01.240 --> 0:13:05.040 injected some enthusiasm into the Democratic Party. 0:13:05.080 --> 0:13:06.520 We'll see what they do with it over the course 0:13:06.559 --> 0:13:07.760 of the next twelve months. 0:13:09.280 --> 0:13:10.600 All right, very good. 0:13:10.640 --> 0:13:13.320 So I guess one final question here at Monica is 0:13:13.480 --> 0:13:18.520 just simply who is the face of this Democratic Party? 0:13:18.559 --> 0:13:18.719 Here? 0:13:18.880 --> 0:13:20.880 It doesn't seem to be mister Schumer, doesn't seem to 0:13:20.960 --> 0:13:24.120 be even King Jefferies. Might it be one of these 0:13:24.160 --> 0:13:25.320 folks who won yesterday? 0:13:27.160 --> 0:13:27.800 It's unclear. 0:13:27.840 --> 0:13:31.560 There was definitely a generational shift yesterday. All of these 0:13:31.600 --> 0:13:36.040 candidates are relatively young, some younger than others, but a 0:13:36.080 --> 0:13:39.520 lot of them have not been career politicians either. They've 0:13:39.559 --> 0:13:42.319 been elected just for the last three or four cycles. 0:13:42.400 --> 0:13:44.560 And so I think the face of the Democratic Party 0:13:45.040 --> 0:13:47.400 might be just fresh faces. 0:13:46.920 --> 0:13:48.880 And new ideas and new energy. 0:13:49.320 --> 0:13:52.679 And as long as Jeffries and Schumer embraced that, I 0:13:52.720 --> 0:13:55.839 think that the twenty twenty six elections could go better 0:13:55.840 --> 0:13:57.680 than they probably anticipated a week ago. 0:13:59.000 --> 0:14:02.160 And shutdown who's paying the cost here? I mean, we're 0:14:02.200 --> 0:14:04.600 in day thirty something or that. I can't even keep track. 0:14:04.920 --> 0:14:08.679 Is there anybody paying a cost here for these shutdown. 0:14:09.160 --> 0:14:12.560 The American people are clearly paying the cost. It seems 0:14:12.600 --> 0:14:14.599 based on last night that at least in terms of 0:14:14.640 --> 0:14:18.520 the Virginia results, federal workers broke for spam Berger. And 0:14:18.800 --> 0:14:21.920 it seems like they are blaming the Republicans. When the 0:14:21.920 --> 0:14:25.400 Republicans have unified control of government, when they control the House, 0:14:25.440 --> 0:14:27.960 the Senate, and the White House, it's hard not to 0:14:27.960 --> 0:14:30.880 blame them for the shutdown. And it seems that at 0:14:30.960 --> 0:14:33.160 least in terms of the ballots cast yesterday, they are 0:14:33.200 --> 0:14:33.920 bearing the brunt. 0:14:34.280 --> 0:14:36.120 All right, Jennifer, thank you so much. We appreciate that. 0:14:36.160 --> 0:14:40.200 Jennifer Lolas, Professor of politics and public Policy at the 0:14:40.320 --> 0:14:42.800 University of Virginia, to stay with us. More from Bloomberg 0:14:42.840 --> 0:14:44.520 Surveillance coming up after this. 0:14:50.720 --> 0:14:54.320 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:14:54.360 --> 0:14:57.520 weekday afternoons from seven to ten am Eastern Listen on 0:14:57.600 --> 0:15:01.280 Applecarplay and Android Otto with the Work Business up, or 0:15:01.440 --> 0:15:02.920 watch us live on YouTube. 0:15:03.160 --> 0:15:05.720 Daniel Di Martino Booth joins us. She's one of our faves. 0:15:05.960 --> 0:15:09.680 She's a CEO and chief strategistic QI Research. She looks 0:15:09.680 --> 0:15:13.000 at data that I don't even know where it comes from. 0:15:13.320 --> 0:15:15.960 And you know, she doesn't rely upon the government stuff. 0:15:16.000 --> 0:15:18.400 She gets her own data sets. I have no idea 0:15:18.400 --> 0:15:20.280 where that comes from. But it's really really smart and 0:15:20.280 --> 0:15:23.160 really helpful here. Danielle, thanks so much for joining us 0:15:23.160 --> 0:15:26.880 here again with the dearth of economic data out there 0:15:27.040 --> 0:15:28.920 for those of us that are trying to figure out 0:15:28.920 --> 0:15:31.120 where this economy is going? What are you looking at? 0:15:31.160 --> 0:15:33.920 What are you seeing at there in this US economy? 0:15:35.280 --> 0:15:37.360 So I mean, I think the good news a month 0:15:37.400 --> 0:15:41.359 ago is that QI Research was always looking at alternative 0:15:41.440 --> 0:15:42.000 data sets. 0:15:42.000 --> 0:15:43.840 The Reuters poll that. 0:15:43.760 --> 0:15:45.960 Came out that said that eighty nine percent of economists 0:15:45.960 --> 0:15:49.000 did not trust the official data prior to the shutdown, 0:15:49.040 --> 0:15:51.560 So I don't think that I'm necessarily alone. But anyways, 0:15:51.560 --> 0:15:54.960 to answer your question, we look at macro Edge, which 0:15:55.120 --> 0:15:57.720 is an alternative to Challenger. They use kind of big 0:15:57.800 --> 0:16:00.760 data to scrape headlines. For the month of October, we 0:16:00.880 --> 0:16:02.920 learned that it was almost one hundred and fifty five 0:16:02.960 --> 0:16:06.000 thousand job cuts that were announced, and that helps to 0:16:06.080 --> 0:16:09.000 kind of put into context what we heard from ADP 0:16:09.160 --> 0:16:12.200 this morning. Because these are large companies making big job 0:16:12.240 --> 0:16:14.800 cut announcements and yet what we saw for the month 0:16:14.800 --> 0:16:19.000 of October is that ADP job creation was exclusively with 0:16:19.120 --> 0:16:22.080 the largest companies. Of course, you count an employee as 0:16:22.080 --> 0:16:25.080 being on the payroll until their severance runs out, so 0:16:25.120 --> 0:16:27.160 we know that that's kind of a ticking time bomb. 0:16:27.840 --> 0:16:32.120 We follow Google trends every day Americans search or don't 0:16:32.200 --> 0:16:35.720 search to file for unemployment, and when you look at 0:16:35.720 --> 0:16:39.600 that the five twenty twenty five trend really has gone 0:16:39.640 --> 0:16:42.360 off of what we saw in twenty two, twenty three, 0:16:42.760 --> 0:16:46.720 and twenty four. We also follow individual state warn notices, 0:16:46.920 --> 0:16:49.520 which they have to provide to workers when they're going 0:16:49.520 --> 0:16:52.080 to be laid off, and right now, in the aggregate, 0:16:52.160 --> 0:16:54.560 on a nationwide basis, warn notices are running at the 0:16:54.840 --> 0:16:57.080 highest pace since September two thousand and nine. 0:16:57.240 --> 0:16:59.160 So the data has always been there. You just have 0:16:59.200 --> 0:16:59.880 to know where to look. 0:17:00.360 --> 0:17:02.080 And what does all this mean for the FED and 0:17:02.120 --> 0:17:05.080 that December meeting. You know, in just a few weeks 0:17:05.080 --> 0:17:07.240 are we going to get one more cut? Do you 0:17:07.280 --> 0:17:08.400 think before the end of the year. 0:17:09.560 --> 0:17:13.240 Well, I think given the headlines that we've seen subsequent 0:17:13.400 --> 0:17:17.639 to Powell being at the podium in the beginning, that 0:17:17.680 --> 0:17:19.359 the odds of a rate cut tick down to like 0:17:19.400 --> 0:17:21.720 fifty five percent. Now as of today, we're back up 0:17:21.760 --> 0:17:24.480 at seventy percent, and I think that that's because we're 0:17:24.520 --> 0:17:27.439 not seeing, especially when you hear from companies like Cava 0:17:27.520 --> 0:17:30.760 and Chipotle, we're not seeing companies able to pass through 0:17:31.200 --> 0:17:34.240 higher costs to their end customers. 0:17:34.480 --> 0:17:36.119 And that means that there's not going. 0:17:36.000 --> 0:17:39.040 To be as much pressure on the Fed's inflation mandate 0:17:39.280 --> 0:17:41.760 as there is going to be on its employment mandate. 0:17:41.800 --> 0:17:44.280 And I think that that's why we've seen odds of 0:17:44.320 --> 0:17:47.520 a subsequent December rate cut stay hover around this seventy 0:17:47.560 --> 0:17:51.480 percent level. And Jerome Pals never defied markets when it's 0:17:51.520 --> 0:17:54.560 been north of even fifty percent, so there is the 0:17:54.560 --> 0:17:56.480 presumption in the markets that we will see this next 0:17:56.480 --> 0:17:56.880 break cut. 0:17:57.760 --> 0:18:01.040 Danielle, So we've seen a lot of I guess, headlines 0:18:01.119 --> 0:18:04.600 on layoffs and from companies we all know and people 0:18:04.600 --> 0:18:08.119 can relate to. Is that headline risk or does that 0:18:08.240 --> 0:18:11.280 really reflect oh boy, we've got a labor market that's 0:18:11.880 --> 0:18:14.080 at the margin, really kind of struggling here. 0:18:15.560 --> 0:18:19.040 Well, I think it's the ladder of the two. Yesterday 0:18:19.040 --> 0:18:23.040 we heard from trip Advisor, American Airlines IBM, and every 0:18:23.119 --> 0:18:26.720 day we seem to get a new laundry list of companies, 0:18:26.800 --> 0:18:29.680 and I think that that it's indegative, that it's more 0:18:29.800 --> 0:18:32.399 endemic kind of At the beginning of the year, we 0:18:32.440 --> 0:18:37.480 had this so called low hiring, low firing situation, and 0:18:37.800 --> 0:18:40.760 Powell warned when he gave a speech a few weeks 0:18:40.760 --> 0:18:44.920 ago that if we see a continued lack of hiring 0:18:45.240 --> 0:18:48.560 but also see a pickup in firing, that that really 0:18:48.600 --> 0:18:51.240 does change the construct. It's going to change the FEDS thinking. 0:18:51.240 --> 0:18:53.959 And I think that that's where we are at this point, Danielle. 0:18:54.000 --> 0:18:57.159 I just want to get your thoughts on AI because 0:18:57.320 --> 0:18:59.159 we seem to be doing that every day with our guests. 0:18:59.440 --> 0:19:02.960 And earlier we had Brad Konger on he's a chief 0:19:02.960 --> 0:19:06.119 investment officer over at Hurdle Callahan, and he said that 0:19:06.200 --> 0:19:09.280 he thought the AI data center boom was a big, 0:19:09.880 --> 0:19:13.000 huge bubble. He went on record saying that what are 0:19:13.040 --> 0:19:13.720 your thoughts on that? 0:19:15.040 --> 0:19:17.160 Well, you know, I'm not an expert in this field, 0:19:17.200 --> 0:19:19.160 but I would have to say that Main Capital would 0:19:19.160 --> 0:19:23.280 have agreed. Just yesterday when they came out and they 0:19:23.280 --> 0:19:25.080 said that they were not going to be joining with 0:19:25.160 --> 0:19:28.879 other large investors in trying to pump up this boom. 0:19:29.280 --> 0:19:32.040 We also know, you know, this is the day after 0:19:32.080 --> 0:19:34.280 election day. We also know that a lot of communities 0:19:34.440 --> 0:19:37.480 are pushing back against these data centers being in their 0:19:37.520 --> 0:19:40.760 backyard because one of the main sources of inflation are 0:19:40.880 --> 0:19:44.879 food prices and electricity prices. But yes, when when the 0:19:45.000 --> 0:19:48.399 United States has ten x that of Germany or China 0:19:48.480 --> 0:19:51.280