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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern

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Speaker 1: on applecar Player, Android Auto with the Bloomberg Business App.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: We're gonna do an audible right now. This is a joy.

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Speaker 3: This could be a three hour interview. Monica Guerra is

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Speaker 3: at Morgan Stanley. She's looking at bigger Washington policy, the

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Speaker 3: election and all that. She comes out of the trenches

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Speaker 3: of Fitch ratings and had a tour of duty. And

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Speaker 3: I mean this is like the Marines coming out of

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Speaker 3: the trenches. For the City of New York. As Director

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Speaker 3: of Capital, Budget and Economic Development, I gotta go to

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Speaker 3: an audible here.

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Speaker 2: I don't want you to comment on the political mess

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Speaker 2: in the City of New York.

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Speaker 3: I do want you is by far and away the

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Speaker 3: number one expert we have on the future fiscal integrity

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Speaker 3: of this great city.

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Speaker 2: How does it look to Monica.

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Speaker 4: Aguera, Well, to me, I think that it does ultimately

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Speaker 4: look good. One of the things that the city does

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Speaker 4: they have this midnight budgeting move where they never have money.

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Speaker 4: There's all this fighting in fighting within the city council

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Speaker 4: and then at the last minute they'll come through with

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Speaker 4: the finalized budget. As far as you know, handling the

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Speaker 4: you know, addressing the bigger you know, sort of elephant

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Speaker 4: in the room, I don't want to name any names,

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Speaker 4: et cetera, but you know, we are looking out of

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Speaker 4: potential for change, right and so the thing you got

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Speaker 4: to remember is that politics are cyclical. They change.

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Speaker 5: People move on.

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Speaker 3: Okay, LaGuardia dump of America. Can no excuse me, Newark

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Speaker 3: is dump.

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Speaker 2: Of America, Thank you very much, Number tians dump of America.

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Speaker 3: LaGuardia just rated best airport in the country. It costs

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Speaker 3: eight billion. Whatever to do do we have the big

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Speaker 3: city vision to maintain the growth rate, the little g

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Speaker 3: to take care of our fiscal proclivities.

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Speaker 4: Here in New York City, there is you know, a

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Speaker 4: pendulum that swings right. So we went from you know,

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Speaker 4: I guess to name check Bloomberg since we're here, from

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Speaker 4: a very you know, pro business environment, something that was

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Speaker 4: more socially focused. And we see that at the federal

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Speaker 4: level as well, right where there are changes and trends,

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Speaker 4: and so I don't think that this is you know,

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Speaker 4: a dead end right where we can definitely continue to

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Speaker 4: capitalize on everything that makes itst I got to do.

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Speaker 3: His disclaimer here, of course. Michael Bloomberg, of course, signing

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Speaker 3: the checks for me and Paul, not Lisa's check that's

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Speaker 3: signed by someone else. Mister Bloomberg, of course, a part

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Speaker 3: of what.

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Speaker 2: We do each and every day. The former mayor of

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Speaker 2: New York and future owner of the New York Yan.

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Speaker 6: Case Monica, what are you telling your client's Morgan Stanley

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Speaker 6: Wealth managtrain. I'm sure you get it a thousand times

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Speaker 6: a day over the last several months. How do you

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Speaker 6: game out this election? How do you position your portfolio?

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Speaker 6: What are you telling your clients here? Because we're going

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Speaker 6: to have an election next Tuesday, whether we like it

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Speaker 6: or not.

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Speaker 4: Right well, one of the things that I emphasize over

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Speaker 4: and over and over again is that Congress is ultimately

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Speaker 4: more important in those sector and industry outlooks. The President

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Speaker 4: sets the tone essentially, you know, is a big part

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Speaker 4: in those final deal making measures. But we have to

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Speaker 4: see what happens in the House and Senate, and right

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Speaker 4: now as we stand, obviously I'm not calling the election.

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Speaker 4: Things could change the Senate looks like it's going to

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Speaker 4: go to the GOP. The House looks like it's going

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Speaker 4: to go to the Democrats. Now, the best sort of

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Speaker 4: news around that is that markets love gridlock, and they

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Speaker 4: outperform under both a split government scenario in Congress, but

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Speaker 4: also when you have a unify to Congress and an

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Speaker 4: opposition president. And so I really like to emphasize that

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Speaker 4: we have to watch what happens there, especially around taxes

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Speaker 4: and if we're going to position to really focus on

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Speaker 4: those tax mitigation strategies, if we're looking at any potential

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Speaker 4: changes that could you know, increase that number.

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Speaker 6: So how do you think this is if we do

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Speaker 6: have that kind of split government?

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Speaker 2: Here?

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Speaker 6: We are you telling them we're in Stanley clients to

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Speaker 6: do here? Is it just like, don't worry about it,

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Speaker 6: stick with your if your long equities or long bonds

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Speaker 6: or whatever. What are you telling the clients there? What

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Speaker 6: do you What are the advisors asking you?

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Speaker 4: I guess yeah, in the in the near term, it

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Speaker 4: stick to that long term strategy because around election day

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Speaker 4: you're going to have increased volatility. We could have rolling

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Speaker 4: volatility until the election is decided. And even though we

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Speaker 4: have created both Democratic and Republican long baskets, and the

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Speaker 4: Republican long baskets have been out performing the Democratic baskets

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Speaker 4: by thirteen percent. We don't say pilot the Republican yes.

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Speaker 6: And what's a Republican basket?

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Speaker 4: So the Republican basket includes twelve different ETFs that cover

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Speaker 4: every central sectors and industries, sectors and industries that would

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Speaker 4: benefit right from policy proposes that come out of the GOP.

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Speaker 4: So those would be things.

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Speaker 2: What's a democratic basket look like.

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Speaker 4: A Democratic basket?

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Speaker 7: It would be you know, your clean energy, no like

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Speaker 7: lead energy, things like you know, Medicare, managed care, beneficiaries,

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Speaker 7: et cetera.

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Speaker 4: And on the GOP side, you're looking at traditional energy.

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Speaker 4: Sort of a real justice.

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Speaker 2: I'm just gonna go to the zeitgeist right now. I

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Speaker 2: got eight ways to go here.

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Speaker 3: But Obamacare supposedly under some threat I see in the

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Speaker 3: zeitgt Exios and others. David Gera telling me the Republicans

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Speaker 3: begging the Trump campaign to stay away from Obamacare?

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Speaker 2: Is Obamacare a sacred cow?

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Speaker 4: I think it's symbolic the you know, there's not much

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Speaker 4: more that can be done to undercut Obamacare in the ACA.

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Speaker 3: What does Obamacare cost Lisa Mateo on her ten to

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Speaker 3: forty text form. The belief is I'm paying for Obamacare.

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Speaker 3: Am I is Lisa Matteo paying for Obamacare.

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Speaker 4: You can opt in right through these state exchanges, and

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Speaker 4: so that's the that's the important thing. You can opt

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Speaker 4: in and so it's a broader exchange that you can

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Speaker 4: participate in. Now, the you know what we are all

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Speaker 4: paying for is the is the me Care, medicaids or tax.

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Speaker 4: So that's a set a set number. Now, one of

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Speaker 4: the things that I do want to highlight as far

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Speaker 4: as broader risk is, you know, folks are looking or

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Speaker 4: sort of signaling that there might be tides moving towards

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Speaker 4: a Trump win. We see that in the betting markets.

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Speaker 4: You see that with you know again the baskets that

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Speaker 4: I just highlighted our ETF baskets. But I really want

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Speaker 4: to caution when we're thinking about risk that, because of

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Speaker 4: how tight this race is, if you pile in on that,

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Speaker 4: that could also be your biggest loss. So right now

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Speaker 4: and we're giving guidance, it's hold off, Let's wait and

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Speaker 4: see what happens with Congress, and then we can position.

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Speaker 6: I mean, how are you thinking about the timing of this.

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Speaker 6: I mean we might not know for days or even weeks.

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Speaker 6: Some people are suggesting about how this is. So that's

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Speaker 6: just another level of risk for.

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Speaker 4: Investors to deal with, right heightened volatility. But again it's

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Speaker 4: just emphasizing from especially from wealth perspective. When we're talking

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Speaker 4: to retail, point in time, stay focused and disciplined.

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Speaker 2: You're like, you can just tell to choose glass. I

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Speaker 2: mean she's in a meeting.

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Speaker 8: There's no there's no zoom.

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Speaker 3: Meetings with Monica girl. What are you gonna do with

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Speaker 3: the New York Yankees? I mean you go down to

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Speaker 3: Tampa here in spring training? What is the Monica Guera

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Speaker 3: prescription for the dreaded.

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Speaker 2: New York Yankees? I don't have one. I don't I

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Speaker 2: don't follow baseball.

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Speaker 7: Sorry, good here, all sorry.

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Speaker 4: All right.

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Speaker 6: Let me ask you this guy for our John Tucker

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Speaker 6: congestion U correspondent. What happened to our congestion text? I mean,

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Speaker 6: get all these cameras up on election tonight.

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Speaker 2: Okay, you can have a mimosa.

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Speaker 4: Yeah yeah, I mean when I when I've been smoking,

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Speaker 4: so it will we'll see.

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Speaker 6: Very good, Monica Guarer, Thank you so much for your

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Speaker 6: ahead of US policy of Morgan Stanley Wolf Management.

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Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live

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Speaker 1: weekday afternoons from seven to ten am. Easter Listen on

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Speaker 1: Apple car Play and Android Auto with a Bloomberg Business app,

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Speaker 1: or watch US live on you Tube.

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Speaker 3: Dannice joins us now as a report from Yankee Stadium.

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Speaker 2: How was that fifth inning, mister Rives?

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Speaker 9: Ah, that was That was a brutal fifth inning as

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Speaker 9: a Yankee fan, but it was Look, it was wild

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Speaker 9: to watch. Congrats a Dodgers, but just an exciting, exciting

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Speaker 9: night at the stadium.

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Speaker 3: Spin the wheel of fortune right now for Amazon and

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Speaker 3: Apple this afternoon after what you've seen in mag seven.

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Speaker 2: What's the wheel of fortune look like for those two

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Speaker 2: stocks this afternoon?

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Speaker 9: I think wheel fortune's bullsh specifically for Amazon on the

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Speaker 9: cloud side. I think that's gonna be the upside there

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Speaker 9: as well as advertising.

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Speaker 8: And for Apple. You know, as we've.

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Speaker 9: Talked about, this will be a better than expected iPhone number,

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Speaker 9: and I think optimistic in terms of cook going into

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Speaker 9: what I believe is just going to be a monster

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Speaker 9: December holiday season for iPhone sixteen AI driving that.

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Speaker 6: Yeah, I upgraded so I gotta figure everybody else's too.

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Speaker 6: It took me five years upgrade. How about let's go

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Speaker 6: back to Microsoft. Last night, I thought this was the

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Speaker 6: number of solid across the board. I mean, and I

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Speaker 6: know people a little bit concerned about maybe the cloud business.

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Speaker 6: Give us your read on our friends from Microsoft.

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Speaker 9: Oh, I mean, I'm more bullish today than I was

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Speaker 9: twenty four hours ago. I think it's a pound the

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Speaker 9: table because asure you're seeing growth accerating from an AI perspective.

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Speaker 9: I think Street will kind of try to pick hairs here,

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Speaker 9: split hairs in terms of the numbers. This is when

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Speaker 9: you walk away more bullish. I would be shocked if

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Speaker 9: this is a stock that's not up twenty four hours

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Speaker 9: from now, given what we see in terms of core numbers.

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Speaker 6: So how do you think about the Microsoft story and

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Speaker 6: specifically in the cloud. Just give us a sense of

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Speaker 6: their competitive positioning versus Amazon, versus Google and some of

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Speaker 6: the other players there.

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Speaker 8: Sure to get perspective.

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Speaker 9: Let's say a year ago, no growth essentially from AI

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Speaker 9: that that's attributed to Azure.

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Speaker 8: Maybe one percent.

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Speaker 9: Today twelve percent of the growth is AI driven. So

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Speaker 9: in terms of their backyard on the enterprise, thirty four

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Speaker 9: percent growth. AI's driving that now. Now others are getting

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Speaker 9: in on that party.

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Speaker 8: Google. I see what we'll see from Amazon tonight. But

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Speaker 8: it just speaks to the AI revolution. It's only the

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Speaker 8: second inning. As it all plays on.

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Speaker 9: You can meta look at that cap back to I mean,

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Speaker 9: they're spending money like a nineteen eight is rock Star.

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Speaker 8: But that's great for Nvidia and great for AI.

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Speaker 3: I mean, Dan, foreigners are loving the growth, and I

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Speaker 3: think American Wall Street said, well, look we took the CFA,

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Speaker 3: we did this course, we did this course. This isn't good.

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Speaker 3: I got a pe on Microsoft to thirty five. I

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Speaker 3: got a forward p tod June of next year of

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Speaker 3: thirty three. Ish to me, the issue which you're good at,

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Speaker 3: and even people less optimistic than you are.

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Speaker 2: Good at, is the X axis. How do we treat

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Speaker 2: the terminal value of our analysis of the mag seven?

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Speaker 9: What would happen if Dodgers didn't spend the last two

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Speaker 9: years they do, they have a chip right now. The

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Speaker 9: point is you look at what's happening in terms of

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Speaker 9: where this is all going. I mean, in my opinion,

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Speaker 9: some of the parts the AI piece could ultimately add.

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Speaker 8: Thirty to forty dollars per share.

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Speaker 9: You know, when as is all plays out in terms

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Speaker 9: of the story, because I think the street is underestimating

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Speaker 9: the next two three four years of free cashwa growth

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Speaker 9: and what AI ultimately is going to do the story.

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Speaker 3: I mean, help me with Call of Duty. They just

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Speaker 3: came out with it here, I saw sixty one percent

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Speaker 3: for that. Nobody talks about this, and I just think

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Speaker 3: it's an absolute sleeper.

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Speaker 2: The new Call of Duty's killing it right black Op six.

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Speaker 6: Oh boy, Yeah, look if you look look at Activision,

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Speaker 6: I mean what they've done there.

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Speaker 9: I mean there's so many growth levers in the Microsoft story,

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Speaker 9: more than we've ever seen leading AI. You got Activision

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Speaker 9: in the back pocket, and now what you really they're

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Speaker 9: seeing just a massive upgrade across enterprise, which is bullish

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Speaker 9: for Google, bullish for Amazon, and of course very bullish

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Speaker 9: for godfather of Ai.

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Speaker 8: Jens and a video.

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Speaker 9: And the last piece of that puzzle is the consumer

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Speaker 9: AI revolution.

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Speaker 8: We hear from Cooper Tino tonight in Cook I.

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Speaker 3: Mean Paul, the zombies, the Liberty Falls zombies and the

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Speaker 3: New Call of Duty.

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Speaker 2: I was on there for like two hours less.

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Speaker 6: Oh I'm sure you when you're not on the Gram

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Speaker 6: or on Facebook meta platforms. Let's switch scars there, Dan,

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Speaker 6: that's been kind of the best performing you know, a

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Speaker 6: big cap stock here, up sixty seven percent year to date.

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Speaker 6: Digital advertising it's still a thing, isn't it.

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Speaker 9: I mean that that's the hearts and lungs of the story.

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Speaker 9: And I think now you could criticize them for what

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Speaker 9: they're gonna spend capex in terms of AI, but that's

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Speaker 9: the next level of the growth story.

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Speaker 8: So when you get meta, I think.

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Speaker 9: We're only sort of still in the early days of

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Speaker 9: this growth transformation. And that's very important as this all

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Speaker 9: plays out. We see from that, we see from them,

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Speaker 9: we see from Google, and we see from Amazon as well.

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Speaker 3: So you got a paragraph like, you know, see if

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Speaker 3: a one oh one risk factors?

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Speaker 2: What's dan? I mean, wicked, bullish? I get it. People

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Speaker 2: making fun of your opinion out of Dan.

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Speaker 3: I mean, were people coming up with you last night

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Speaker 3: asking for price targets on Microsoft like this?

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Speaker 8: I will tell you when I was. I will tell

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Speaker 8: you when I was.

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Speaker 9: I was going to get a beverage of the Yankees

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Speaker 9: game and someone said, hey, should I be worried about Apple?

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Speaker 9: So there is some nervousness, But again, that just creates

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Speaker 9: the opportunity.

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Speaker 8: This is a techbole market that's gonna go on.

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Speaker 3: Okay, what's your lead So we gotta go what's your

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Speaker 3: lead risk factor? Here on Apple or Amazon today there's

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Speaker 3: a paragraph Dan Ice major risk factor.

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Speaker 9: Is lead risk factor is just good, But maybe conservative

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Speaker 9: guidance will kind of read into that knee jerk.

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Speaker 8: That just creates the golden buying opportunity. Hit pound the table.

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Speaker 2: How do the Mets look next year? Dan, gotta go,

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Speaker 2: how do the Mets look?

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Speaker 8: I'm optimistic on Mets. Hopefully Mets. You know they'll be

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Speaker 8: in the world.

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Speaker 3: Come on, Steve Cohen won Sodo Matchmade in Heaven exactly.

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Speaker 2: Thank you, dear that it's good.

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Speaker 1: Good websh This is the Bloomberg Surveillance Podcast. Listen live

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Speaker 1: each weekday starting at seven am Eastern on applecar Play

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Speaker 1: and Android Auto with a Bloomberg Business app. You can

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Speaker 1: also listen live on Amazon Alexa from our flagship New

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Speaker 1: York station Just Say Alexa playing Bloomberg eleven thirty.

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Speaker 2: Brian Love It with Us Now, Chief market strategist in Vesco.

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Speaker 3: Good morning to you. You walked in and you said

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Speaker 3: you're really not focused on the election. Get us beyond

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Speaker 3: the election, frankly, get us beyond the inauguration. What does

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Speaker 3: that do to give you confidence to participate in the

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Speaker 3: equity markets?

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Speaker 2: Yeah.

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Speaker 5: I always tell people that the things I like to

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Speaker 5: focus on is the direction of the economy and what

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Speaker 5: the Federal Reserve is going to do, and so I

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Speaker 5: try to avoid a lot of the other noise that

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Speaker 5: enters unless the outcomes to certain things meaningfully change the

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Speaker 5: direction of the economy or what the Fed's going to do.

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Speaker 5: And I think the latest reports, the numbers that were

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Speaker 5: just read are very consistent with what we're seeing, which

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Speaker 5: is a resilient economy and inflation and the comfort zone,

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Speaker 5: and so that's a nice backdrop for risk assets and

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Speaker 5: very little to suggest that this is an economy that's

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Speaker 5: losing steam. So you know, it's a backdrop in which

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Speaker 5: equities are still likely to be favored.

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Speaker 6: Earnings matter. As a former equity analyst, I like to

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Speaker 6: think earnings matter. It's not just the Fed. What have

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Speaker 6: you seen so far from this earning cycle? What do

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Speaker 6: you think the market needs to see?

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Speaker 5: Well, there's been a lot of focus on the megacaps,

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Speaker 5: and it's been a little bit mixed with the megacaps,

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Speaker 5: and yet the irony of it is you're seeing the

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Speaker 5: numbers come in with double digit growth, just perhaps slightly

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Speaker 5: below what the expectation was, or maybe a little bit

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Speaker 5: of weaker guidance. The reality is those names which been

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Speaker 5: driving the markets right now, our multi year stories, it's

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Speaker 5: hard to look at them as a quarter over quarter story.

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Speaker 8: There we do?

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Speaker 2: Why do we? Is it just the industry? Yeah, it's

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Speaker 2: just the industry, you do?

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Speaker 5: Yeah, I mean, because you know, it's a sentiment gets

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Speaker 5: out ahead of itself and we you know, we we

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Speaker 5: either rare it back in or you know, take it further.

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Speaker 5: But but the reality is those are companies you should

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Speaker 5: be looking at over multi year periods. But in terms

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Speaker 5: of thinking about it tactically, yeah, good, good economic backdrop.

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Speaker 2: Let's go to Paul Sweeney on this. I'm going to

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Speaker 2: ask right now if I can do the math. I'm

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Speaker 2: waiting for the durbim to move, and I got to

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Speaker 2: pay the terminal. I know I'm behind it.

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Speaker 3: There's sixty nine opinions on Microsoft, Paul Sweeney, do we

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Speaker 3: need sixty nine opinions on any given stock?

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Speaker 4: No?

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Speaker 6: That just goes to the inefficiencies of Wall Street. Here,

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Speaker 6: do we need sixty nine voices on Microsoft? Probably not.

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Speaker 6: Maybe ten of them are getting paid probably, Brian, uh,

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Speaker 6: talk to us about kind of something.

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Speaker 9: Whoo wha.

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Speaker 2: It was a little bit of folks inside baseball. Yeah,

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Speaker 2: exactly right.

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Speaker 6: What have you seen here? What are some of the

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Speaker 6: sectors that screen well for you guys? If the economy

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Speaker 6: is generally in a pretty good space, rates are coming down,

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Speaker 6: what sector screen well for you guys?

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Speaker 5: Yeah, if you believe that we're going to get through

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Speaker 5: this environment, you know, the with the economy intact and

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Speaker 5: rates coming down, you want to be more cyclical in

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Speaker 5: your exposure. And so you know, we've had a period

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Speaker 5: of here where our tactical indicator said, you know, be

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Speaker 5: a little bit more defensive in here. Things are going

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Speaker 5: to be a little bit challenging the short term. But

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Speaker 5: I think that looking out into twenty twenty five, more

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Speaker 5: of a pickup in activity with rates coming down, and

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Speaker 5: that that should favor the more cyclical parts of the economy.

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Speaker 6: Financials what's it call in financials? Just because I saw

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Speaker 6: some Jamie Dimond Brian mollinhan putting up some big numbers,

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Speaker 6: big numbers, and we.

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Speaker 5: Would expect M and A activity to pick up some

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Speaker 5: animal spirits. And you know this normalization of the Yelk curve,

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Speaker 5: which certainly helps helps the banks.

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Speaker 2: Is cash an asset? It's really what it comes down to.

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Speaker 3: I mean, people's let's assume most people are behind SPX

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Speaker 3: this year.

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Speaker 2: What do you do with cash? How do you deploy

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Speaker 2: right now?

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Speaker 5: The funny thing, Tom is we've been telling people to

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Speaker 5: get out of cash now for a year and a half.

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Speaker 5: So I guess at some point the well, look, I

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Speaker 5: mean the S and P five hundred up twenty something

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Speaker 5: percent this year, the cash looks good. The problem you

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Speaker 5: have with it, of course, is the reinvestment risk. And

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Speaker 5: you know, every time yields come down, you think investors

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Speaker 5: lost their chance to lock in the four or five percent.

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Speaker 5: And I guess this is the third bite at that apple.

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Speaker 5: I do think that rates are going to moderate. I

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Speaker 5: think you know, rates are probably a bye here, and

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Speaker 5: so investors sitting in cash, well, at some point fine

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Speaker 5: yields coming down significantly below the short rate, and you'll

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Speaker 5: below the long rate, and you'll want to have been

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Speaker 5: exposed to things like credit or things like longer duration treasuries.

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Speaker 6: How about credit risk here? How much credit risk going?

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Speaker 6: Do I want to take use and fix some space there?

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Speaker 6: Spreads still like records, super tight?

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Speaker 5: Right yea, spreads are tight, but yields are reasonably attractive

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Speaker 5: and the fundamentals look quite good. I mean, usually when

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Speaker 5: you look at you're going into a worrisome credit backdrop.

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Speaker 5: Usually see double digit borrowing growth. We're nowhere near that

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Speaker 5: right now.

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Speaker 3: We got a metal bar folks around our desk here.

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Speaker 3: We have the nicest radio studio in all of radio.

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Speaker 3: Don fin screens up here and thanks, it's really And

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Speaker 3: what what you don't know is the metal bar is

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Speaker 3: here to take our heart rate. The average heart rate

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Speaker 3: of Mateo, Levitt and Swingy is like a forty nine,

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Speaker 3: you know, and it's it's Lisa helped me here. Peloton's

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Speaker 3: up twenty five percent the.

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Speaker 6: Yeah, and they just announced the new CEO.

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Speaker 2: New CEO.

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Speaker 3: They go from one hundred and sixty to three. You

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Speaker 3: told me to buy I remember you told me to

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Speaker 3: buy I did not. I mean, Brian Levitt, you're so cut?

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Speaker 3: Do I need the bike plus from Peloton? Is that

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Speaker 3: the new Peloton? The way to go?

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Speaker 8: Here? Well?

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Speaker 5: I mean I think is as long as you eat

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Speaker 5: healthy and you and you move, that's that's my at least,

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Speaker 5: regardless regardless of how we do.

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Speaker 6: It sitting on barstool in an Irish pope.

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Speaker 2: That's not the way.

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Speaker 6: It doesn't seem like the best approach, but you know,

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Speaker 6: that's how I'm going, Lisa.

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Speaker 2: It seems like the fun approach is.

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Speaker 3: The exuberance there to investco across a huge platform you have.

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Speaker 3: Is there individual stock exuberance to pick on PTO N

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Speaker 3: or to pick on Microsoft or Apple Amazon today? Are

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Speaker 3: people engaged in the market or not? I don't see it.

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Speaker 5: They're not. I mean, it's not the irrational exuberance that

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Speaker 5: you usually see at the end of cycles. There's still

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Speaker 5: a lot of money. I mean, you can look at

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Speaker 5: seventeen trillion in deposits, you can look at six and

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Speaker 5: a half trillion in money markets. That's a lot of

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Speaker 5: money that's still sitting there. I talk to our portfolio

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Speaker 5: managers every time I go and grab a cup of coffee.

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Speaker 5: They seem pretty optimistic at what they're looking at. And

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Speaker 5: I think a lot of it comes down to the

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Speaker 5: fact that you're coming off of a year in which

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Speaker 5: things were good but but concentrated in a handful of names,

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Speaker 5: Versus if you bring rates down, the economy stays resilient.

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Speaker 5: That broadens out to other parts of the market that

442
00:21:13,800 --> 00:21:16,399
Speaker 5: have not participated. And you know, whether you look at

443
00:21:16,400 --> 00:21:19,480
Speaker 5: things like mid cap or or more value oriented parts

444
00:21:19,480 --> 00:21:21,440
Speaker 5: of the market, those portfolio managers are excited.

445
00:21:21,480 --> 00:21:22,480
Speaker 2: And Brian, we don't care.

446
00:21:22,640 --> 00:21:24,199
Speaker 3: The only reason we had you when we need an

447
00:21:24,240 --> 00:21:29,960
Speaker 3: outside expert on Penn State, Ohio State Michigan. It is

448
00:21:30,480 --> 00:21:33,439
Speaker 3: the line seven and zero, but against the heritage, a

449
00:21:33,560 --> 00:21:35,600
Speaker 3: juggernaut of the buck Eyes.

450
00:21:35,640 --> 00:21:37,800
Speaker 5: What do you think I think I'm going buck Eyes

451
00:21:37,840 --> 00:21:38,560
Speaker 5: on this one.

452
00:21:38,400 --> 00:21:40,520
Speaker 6: But probably pretty I don't know. I'm gonna stick with it.

453
00:21:40,600 --> 00:21:43,600
Speaker 6: My pen stake State, Yeah, I mean, got a great

454
00:21:43,680 --> 00:21:46,240
Speaker 6: coach is my producer will attest, and you know, we'll

455
00:21:46,280 --> 00:21:46,720
Speaker 6: stick with it.

456
00:21:47,680 --> 00:21:48,119
Speaker 10: We'll see.

457
00:21:48,200 --> 00:21:50,560
Speaker 6: But they're always waiting for the for the Ohio State

458
00:21:50,600 --> 00:21:53,280
Speaker 6: Michigan game. That's what even a whole year comes down.

459
00:21:53,840 --> 00:21:56,240
Speaker 5: We are and we're going And if anyone has tickets,

460
00:21:56,320 --> 00:21:58,720
Speaker 5: let me know, because the price on those things are still.

461
00:21:58,480 --> 00:22:00,199
Speaker 6: As where It's like where we're playing shar Is.

462
00:22:00,200 --> 00:22:02,920
Speaker 5: We're playing in Columbus, oh Okay. And when you're going,

463
00:22:03,000 --> 00:22:05,200
Speaker 5: We're going, and we had a fly to Cincinnati and

464
00:22:05,359 --> 00:22:08,200
Speaker 5: drive to Columbus because there's just it's impossible to get

465
00:22:08,200 --> 00:22:10,880
Speaker 5: there and there's no tickets to be found right now.

466
00:22:11,040 --> 00:22:14,000
Speaker 2: Wow, Well they could be found. You're just paying a pretty.

467
00:22:13,680 --> 00:22:16,240
Speaker 6: Price for it in Michigan. That's what it's all about.

468
00:22:16,440 --> 00:22:20,240
Speaker 2: Your Penn State, Ohio state, Michigan update. There everything for

469
00:22:20,400 --> 00:22:23,080
Speaker 2: the surveillance we're rebuilding.

470
00:22:23,119 --> 00:22:26,560
Speaker 3: Your correspondent, Brian Levitt Investco. Thank you so much.

471
00:22:32,720 --> 00:22:37,000
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

472
00:22:37,119 --> 00:22:40,280
Speaker 1: starting at seven am Eastern on applecar Play and Android

473
00:22:40,320 --> 00:22:43,280
Speaker 1: Auto with the Bloomberg Business app. You can also watch

474
00:22:43,359 --> 00:22:46,600
Speaker 1: us live every weekday on YouTube and always on the

475
00:22:46,600 --> 00:22:47,600
Speaker 1: Bloomberg terminal.

476
00:22:48,320 --> 00:22:53,800
Speaker 3: This is the conversation with someone with deep experience on trade.

477
00:22:53,800 --> 00:22:57,840
Speaker 3: I want you to push aside every single pundit and expert.

478
00:22:58,560 --> 00:23:02,560
Speaker 3: The path here is from my Michael Froman to Robert Leiittheiser,

479
00:23:03,000 --> 00:23:05,840
Speaker 3: and these are the two individuals that have most studied

480
00:23:05,880 --> 00:23:10,080
Speaker 3: and affected a trade policy for the United States of America.

481
00:23:10,119 --> 00:23:13,600
Speaker 3: Mister Frohman has moved on from his public service to

482
00:23:13,720 --> 00:23:18,680
Speaker 3: President Obama to the President of the Council on Foreign

483
00:23:18,720 --> 00:23:21,920
Speaker 3: Relations and importantly has written a new report, a new

484
00:23:22,040 --> 00:23:26,720
Speaker 3: essay I should say on the new Washington Consensus, Michael,

485
00:23:26,800 --> 00:23:30,000
Speaker 3: it's a required read for any student. Going back to

486
00:23:30,080 --> 00:23:34,800
Speaker 3: Smoot Hawley, Do we have a new Washington Consensus that

487
00:23:34,920 --> 00:23:37,520
Speaker 3: you and mister Leittheiser could agree upon.

488
00:23:38,960 --> 00:23:42,800
Speaker 11: Well, I think the old Washington Consensus, which was really

489
00:23:42,800 --> 00:23:47,120
Speaker 11: about hyper globalization and all the benefits of global integration,

490
00:23:47,400 --> 00:23:49,560
Speaker 11: I think that has very much been weekend. I think

491
00:23:49,560 --> 00:23:52,560
Speaker 11: we have the beginnings of a new consensus, but there

492
00:23:52,600 --> 00:23:56,000
Speaker 11: are a lot of unanswered questions still to address. And

493
00:23:56,040 --> 00:23:58,640
Speaker 11: that's what that essay talks about, which is a lot

494
00:23:58,680 --> 00:24:01,600
Speaker 11: of the actions that we're thinking about taking to reduce

495
00:24:01,640 --> 00:24:05,560
Speaker 11: our dependence on China, whether it's export controls or constraints

496
00:24:05,560 --> 00:24:09,399
Speaker 11: on foreign investment or protectionism, those also come with costs

497
00:24:09,520 --> 00:24:11,960
Speaker 11: like raising inflation or raising the cost of living, and

498
00:24:12,000 --> 00:24:14,480
Speaker 11: we need to address those trade offs and create some

499
00:24:14,520 --> 00:24:17,439
Speaker 11: sort of framework going forward if we're going to pursue

500
00:24:17,440 --> 00:24:18,360
Speaker 11: those kinds of tools.

501
00:24:18,400 --> 00:24:20,800
Speaker 3: But the heart of it within the polarization of America,

502
00:24:20,800 --> 00:24:25,400
Speaker 3: and we see this with the minted Nobel laureates Smoglar, Robinson,

503
00:24:25,400 --> 00:24:28,080
Speaker 3: and Johnson. The heart of the matter is the separation

504
00:24:28,200 --> 00:24:32,960
Speaker 3: of America into elites looking for some form of post

505
00:24:33,040 --> 00:24:39,000
Speaker 3: world to benevolent, egalitarian trade policy, and everybody else saying

506
00:24:39,000 --> 00:24:41,960
Speaker 3: we're getting killed. How do we bring that, how do

507
00:24:42,040 --> 00:24:45,720
Speaker 3: we amend that together beside permanent polarization.

508
00:24:46,960 --> 00:24:51,600
Speaker 11: Well, I think first we should recognize that, on one hand,

509
00:24:51,680 --> 00:24:56,840
Speaker 11: globalization has achieved some of the most significant gains in

510
00:24:56,920 --> 00:25:00,560
Speaker 11: human history in terms of reducing poverty, lifting hundreds of

511
00:25:00,560 --> 00:25:03,720
Speaker 11: millions a billion or more people out out of poverty,

512
00:25:04,200 --> 00:25:08,240
Speaker 11: increased a competitiveness, spread technology around the world. There have

513
00:25:08,240 --> 00:25:10,640
Speaker 11: been a lot of positives to it. I think all

514
00:25:10,760 --> 00:25:14,080
Speaker 11: along we knew that there are winners and losers in

515
00:25:14,080 --> 00:25:17,119
Speaker 11: in globalization, and that hopefully the economy makes up for

516
00:25:17,920 --> 00:25:21,000
Speaker 11: people who lose out from globalization by creating new jobs,

517
00:25:21,080 --> 00:25:24,359
Speaker 11: new industries that they go into. But that's not been simultaneous.

518
00:25:24,640 --> 00:25:27,399
Speaker 11: And we've seen the de industrialization of certain communities in

519
00:25:27,440 --> 00:25:30,320
Speaker 11: the US and that has had a real negative impact

520
00:25:30,400 --> 00:25:35,320
Speaker 11: on those workers, those communities and their families. I think,

521
00:25:35,640 --> 00:25:38,560
Speaker 11: Tom I think the real issue is trade policy at

522
00:25:38,600 --> 00:25:42,280
Speaker 11: Globalization itself is not enough. I think we always need

523
00:25:42,320 --> 00:25:46,040
Speaker 11: to be accompanied by domestic policies that are designed to

524
00:25:46,280 --> 00:25:52,600
Speaker 11: ensure that workers survive and thrive in a rapidly changing economy,

525
00:25:52,600 --> 00:25:55,760
Speaker 11: whether that change comes from technology think about AI, or

526
00:25:55,800 --> 00:25:58,440
Speaker 11: from trade or from immigration. And we have not had

527
00:25:58,480 --> 00:26:02,800
Speaker 11: a domestic policy agenda. They're either democratic or republican administrations

528
00:26:02,800 --> 00:26:04,560
Speaker 11: that have successfully dealt with that.

529
00:26:05,680 --> 00:26:10,840
Speaker 6: So is globalization dead? I mean, there's probably a couple

530
00:26:10,840 --> 00:26:12,720
Speaker 6: of generations of us that have grown up with the

531
00:26:12,760 --> 00:26:14,720
Speaker 6: whole concept of globalization.

532
00:26:15,160 --> 00:26:15,639
Speaker 5: Where are we?

533
00:26:15,720 --> 00:26:17,800
Speaker 6: Is this a bump on the roads and something more fundamental?

534
00:26:19,520 --> 00:26:22,760
Speaker 11: Well, first of all, it's certainly not dead. The trade

535
00:26:22,840 --> 00:26:25,639
Speaker 11: is as at an all time high. It's not growing

536
00:26:25,680 --> 00:26:28,840
Speaker 11: as much as it was before, used to outstrip global growth.

537
00:26:28,880 --> 00:26:31,280
Speaker 11: Now it's somewhat behind global growth, but it is still growing.

538
00:26:31,720 --> 00:26:34,040
Speaker 11: And what we're seeing are changing patterns of trade. And

539
00:26:34,080 --> 00:26:38,159
Speaker 11: so rather than being overly dependent on China, we're seeing

540
00:26:38,240 --> 00:26:41,840
Speaker 11: supply chains beginning to move. Not necessarily people pulling out

541
00:26:41,840 --> 00:26:44,240
Speaker 11: of China, although there's been some of that, but more

542
00:26:44,359 --> 00:26:46,760
Speaker 11: as companies think about where to put their next factory,

543
00:26:47,119 --> 00:26:49,480
Speaker 11: they're either thinking about bringing it in the United States

544
00:26:49,640 --> 00:26:54,440
Speaker 11: or in some other market Vietnam, Mexico, Malaysia, Thailand, elsewhere.

545
00:26:54,880 --> 00:26:58,800
Speaker 11: And so that is still globalization, but it's reflecting that

546
00:26:58,920 --> 00:27:02,440
Speaker 11: it's not just by efficiency anymore. You don't necessarily go

547
00:27:02,520 --> 00:27:05,080
Speaker 11: to the most efficient place to produce because there are

548
00:27:05,080 --> 00:27:11,200
Speaker 11: other issues that are important too, other values like redundancy, resilience, diversification,

549
00:27:11,560 --> 00:27:15,920
Speaker 11: and national security. And we're now balancing efficiency against those

550
00:27:15,960 --> 00:27:18,840
Speaker 11: other values. And that's another trade off again that I

551
00:27:18,840 --> 00:27:20,800
Speaker 11: think the next administration is going to really have to

552
00:27:20,840 --> 00:27:23,680
Speaker 11: wrestle with if we're going to have an enduring consensus.

553
00:27:24,480 --> 00:27:28,200
Speaker 6: Uh terrifs. Boy, they're not just one party talking terrorists.

554
00:27:28,200 --> 00:27:31,440
Speaker 6: It seems like everybody's talking tariffs these days, to varying degrees.

555
00:27:32,160 --> 00:27:33,840
Speaker 6: How do you view tariffs?

556
00:27:35,600 --> 00:27:38,399
Speaker 11: Well, Teriffs, first of all, are ultimately.

557
00:27:38,119 --> 00:27:44,720
Speaker 10: Paid that whether it's the consumer consumer product, or whether

558
00:27:44,800 --> 00:27:48,080
Speaker 10: it's the importer, perhaps a manufacturer in the US, who's

559
00:27:48,080 --> 00:27:51,040
Speaker 10: paying a tariff on an input they.

560
00:27:51,000 --> 00:27:55,120
Speaker 11: Need for their for their production, for their production process.

561
00:27:55,119 --> 00:27:58,120
Speaker 11: So it makes things more expensive. And when it comes

562
00:27:58,160 --> 00:28:03,520
Speaker 11: to the consumer income, consumers spend the disproportionate amount of

563
00:28:03,560 --> 00:28:06,359
Speaker 11: their income on tradable goods like clothing and flipwear and

564
00:28:06,359 --> 00:28:09,200
Speaker 11: things of that sort, and so it's really a regressive

565
00:28:09,280 --> 00:28:10,760
Speaker 11: tax on them.

566
00:28:11,359 --> 00:28:14,879
Speaker 3: Mike, I got time for one more question. Nick Burns

567
00:28:15,200 --> 00:28:19,320
Speaker 3: is nailing diplomacy in China. His Twitter feed is a

568
00:28:19,400 --> 00:28:22,280
Speaker 3: State Department mandate read. He's on the train.

569
00:28:22,800 --> 00:28:25,439
Speaker 2: He's driving all over China on the train, going to

570
00:28:25,520 --> 00:28:28,840
Speaker 2: see things, moving it forward. Is Nick Burns on.

571
00:28:28,840 --> 00:28:31,800
Speaker 3: Your short list if we do get a President Harris

572
00:28:32,040 --> 00:28:33,280
Speaker 3: as Secretary of State.

573
00:28:38,000 --> 00:28:40,360
Speaker 11: Nobody's asking me for my list, but Nick Burns is

574
00:28:40,400 --> 00:28:43,680
Speaker 11: an incredible diplomat, incredible public servant. So doing a fantastic

575
00:28:43,760 --> 00:28:46,200
Speaker 11: job there as he's done in his previous jobs, and

576
00:28:46,200 --> 00:28:48,080
Speaker 11: he would be a great asset to any administration.

577
00:28:48,360 --> 00:28:52,200
Speaker 3: Is Michael Frohman on your short list for secreturs State?

578
00:28:52,400 --> 00:28:55,240
Speaker 8: I'm busting. I'm very happy at the Council.

579
00:28:55,760 --> 00:28:58,960
Speaker 11: I'm very happy at the Council on Formulations, and I'm

580
00:28:59,000 --> 00:29:02,160
Speaker 11: honored to have served and governments and I'm alighted to

581
00:29:02,240 --> 00:29:02,800
Speaker 11: be at the Council.

582
00:29:02,920 --> 00:29:07,080
Speaker 3: Whoever, returning again to Bloomberg Surveillance, Michel froman with the

583
00:29:07,160 --> 00:29:09,840
Speaker 3: Council on FORID Relations, I can't say enough about the

584
00:29:10,440 --> 00:29:13,560
Speaker 3: essays and foreign affairs. Whatever your politics, folks, it's just

585
00:29:14,240 --> 00:29:15,320
Speaker 3: absolutely fabulous.

586
00:29:15,760 --> 00:29:20,240
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,

587
00:29:20,400 --> 00:29:24,520
Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,

588
00:29:24,600 --> 00:29:27,680
Speaker 1: seven to ten am Eastern on Bloomberg dot com, the

589
00:29:27,760 --> 00:29:31,560
Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You

590
00:29:31,600 --> 00:29:34,920
Speaker 1: can also watch us live every weekday on YouTube and

591
00:29:35,040 --> 00:29:36,640
Speaker 1: always on the Bloomberg terminal