WEBVTT - Big Tech Earnings & Election Momentum 0:00:00.120 --> 0:00:13.200 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.240 --> 0:00:17.560 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:17.680 --> 0:00:21.280 on applecar Player, Android Auto with the Bloomberg Business App. 0:00:21.560 --> 0:00:24.800 Listen on demand wherever you get your podcasts, or watch 0:00:24.840 --> 0:00:26.160 us live on YouTube. 0:00:26.320 --> 0:00:28.440 We're gonna do an audible right now. This is a joy. 0:00:28.480 --> 0:00:32.640 This could be a three hour interview. Monica Guerra is 0:00:32.800 --> 0:00:36.320 at Morgan Stanley. She's looking at bigger Washington policy, the 0:00:36.400 --> 0:00:40.480 election and all that. She comes out of the trenches 0:00:40.680 --> 0:00:44.479 of Fitch ratings and had a tour of duty. And 0:00:44.560 --> 0:00:46.479 I mean this is like the Marines coming out of 0:00:46.479 --> 0:00:50.080 the trenches. For the City of New York. As Director 0:00:50.120 --> 0:00:54.200 of Capital, Budget and Economic Development, I gotta go to 0:00:54.240 --> 0:00:55.120 an audible here. 0:00:55.360 --> 0:00:57.840 I don't want you to comment on the political mess 0:00:58.360 --> 0:00:59.600 in the City of New York. 0:01:00.160 --> 0:01:02.800 I do want you is by far and away the 0:01:02.880 --> 0:01:07.360 number one expert we have on the future fiscal integrity 0:01:07.560 --> 0:01:08.760 of this great city. 0:01:09.000 --> 0:01:10.640 How does it look to Monica. 0:01:10.240 --> 0:01:13.600 Aguera, Well, to me, I think that it does ultimately 0:01:13.640 --> 0:01:16.440 look good. One of the things that the city does 0:01:16.480 --> 0:01:19.919 they have this midnight budgeting move where they never have money. 0:01:19.959 --> 0:01:23.080 There's all this fighting in fighting within the city council 0:01:23.520 --> 0:01:25.640 and then at the last minute they'll come through with 0:01:25.720 --> 0:01:29.119 the finalized budget. As far as you know, handling the 0:01:29.480 --> 0:01:31.600 you know, addressing the bigger you know, sort of elephant 0:01:31.600 --> 0:01:33.120 in the room, I don't want to name any names, 0:01:33.160 --> 0:01:35.920 et cetera, but you know, we are looking out of 0:01:36.000 --> 0:01:38.560 potential for change, right and so the thing you got 0:01:38.560 --> 0:01:42.600 to remember is that politics are cyclical. They change. 0:01:42.880 --> 0:01:43.640 People move on. 0:01:43.800 --> 0:01:47.400 Okay, LaGuardia dump of America. Can no excuse me, Newark 0:01:47.440 --> 0:01:47.960 is dump. 0:01:47.840 --> 0:01:50.360 Of America, Thank you very much, Number tians dump of America. 0:01:50.480 --> 0:01:54.000 LaGuardia just rated best airport in the country. It costs 0:01:54.000 --> 0:01:57.080 eight billion. Whatever to do do we have the big 0:01:57.200 --> 0:02:01.640 city vision to maintain the growth rate, the little g 0:02:02.560 --> 0:02:04.880 to take care of our fiscal proclivities. 0:02:04.920 --> 0:02:07.520 Here in New York City, there is you know, a 0:02:07.560 --> 0:02:09.760 pendulum that swings right. So we went from you know, 0:02:09.840 --> 0:02:11.960 I guess to name check Bloomberg since we're here, from 0:02:11.960 --> 0:02:15.040 a very you know, pro business environment, something that was 0:02:15.120 --> 0:02:17.400 more socially focused. And we see that at the federal 0:02:17.480 --> 0:02:20.320 level as well, right where there are changes and trends, 0:02:20.520 --> 0:02:22.400 and so I don't think that this is you know, 0:02:22.480 --> 0:02:25.840 a dead end right where we can definitely continue to 0:02:25.840 --> 0:02:28.080 capitalize on everything that makes itst I got to do. 0:02:28.080 --> 0:02:30.920 His disclaimer here, of course. Michael Bloomberg, of course, signing 0:02:30.919 --> 0:02:33.240 the checks for me and Paul, not Lisa's check that's 0:02:33.240 --> 0:02:36.480 signed by someone else. Mister Bloomberg, of course, a part 0:02:36.480 --> 0:02:36.840 of what. 0:02:36.760 --> 0:02:39.080 We do each and every day. The former mayor of 0:02:39.160 --> 0:02:41.240 New York and future owner of the New York Yan. 0:02:41.280 --> 0:02:44.760 Case Monica, what are you telling your client's Morgan Stanley 0:02:44.760 --> 0:02:47.160 Wealth managtrain. I'm sure you get it a thousand times 0:02:47.200 --> 0:02:50.400 a day over the last several months. How do you 0:02:50.440 --> 0:02:53.080 game out this election? How do you position your portfolio? 0:02:53.160 --> 0:02:55.160 What are you telling your clients here? Because we're going 0:02:55.200 --> 0:02:56.840 to have an election next Tuesday, whether we like it 0:02:56.919 --> 0:02:57.120 or not. 0:02:57.639 --> 0:03:00.919 Right well, one of the things that I emphasize over 0:03:01.040 --> 0:03:04.600 and over and over again is that Congress is ultimately 0:03:04.680 --> 0:03:07.960 more important in those sector and industry outlooks. The President 0:03:08.040 --> 0:03:11.440 sets the tone essentially, you know, is a big part 0:03:11.520 --> 0:03:14.240 in those final deal making measures. But we have to 0:03:14.240 --> 0:03:16.359 see what happens in the House and Senate, and right 0:03:16.400 --> 0:03:19.120 now as we stand, obviously I'm not calling the election. 0:03:19.280 --> 0:03:21.520 Things could change the Senate looks like it's going to 0:03:21.520 --> 0:03:23.520 go to the GOP. The House looks like it's going 0:03:23.560 --> 0:03:27.280 to go to the Democrats. Now, the best sort of 0:03:27.320 --> 0:03:31.280 news around that is that markets love gridlock, and they 0:03:31.320 --> 0:03:35.400 outperform under both a split government scenario in Congress, but 0:03:35.440 --> 0:03:37.600 also when you have a unify to Congress and an 0:03:37.600 --> 0:03:40.320 opposition president. And so I really like to emphasize that 0:03:40.320 --> 0:03:43.280 we have to watch what happens there, especially around taxes 0:03:43.440 --> 0:03:46.320 and if we're going to position to really focus on 0:03:46.360 --> 0:03:49.520 those tax mitigation strategies, if we're looking at any potential 0:03:49.600 --> 0:03:51.800 changes that could you know, increase that number. 0:03:52.120 --> 0:03:54.840 So how do you think this is if we do 0:03:54.920 --> 0:03:56.800 have that kind of split government? 0:03:56.880 --> 0:03:57.120 Here? 0:03:59.240 --> 0:04:01.120 We are you telling them we're in Stanley clients to 0:04:01.200 --> 0:04:03.160 do here? Is it just like, don't worry about it, 0:04:03.200 --> 0:04:06.400 stick with your if your long equities or long bonds 0:04:06.440 --> 0:04:09.040 or whatever. What are you telling the clients there? What 0:04:09.120 --> 0:04:10.880 do you What are the advisors asking you? 0:04:10.960 --> 0:04:12.920 I guess yeah, in the in the near term, it 0:04:13.040 --> 0:04:15.520 stick to that long term strategy because around election day 0:04:15.560 --> 0:04:18.719 you're going to have increased volatility. We could have rolling 0:04:18.760 --> 0:04:23.159 volatility until the election is decided. And even though we 0:04:23.360 --> 0:04:27.680 have created both Democratic and Republican long baskets, and the 0:04:27.720 --> 0:04:30.599 Republican long baskets have been out performing the Democratic baskets 0:04:31.200 --> 0:04:36.880 by thirteen percent. We don't say pilot the Republican yes. 0:04:36.960 --> 0:04:38.400 And what's a Republican basket? 0:04:38.480 --> 0:04:42.000 So the Republican basket includes twelve different ETFs that cover 0:04:42.080 --> 0:04:47.279 every central sectors and industries, sectors and industries that would 0:04:47.279 --> 0:04:50.120 benefit right from policy proposes that come out of the GOP. 0:04:50.839 --> 0:04:51.920 So those would be things. 0:04:51.960 --> 0:04:54.120 What's a democratic basket look like. 0:04:54.320 --> 0:04:55.440 A Democratic basket? 0:04:56.000 --> 0:05:00.320 It would be you know, your clean energy, no like 0:05:00.400 --> 0:05:05.440 lead energy, things like you know, Medicare, managed care, beneficiaries, 0:05:05.520 --> 0:05:06.000 et cetera. 0:05:06.120 --> 0:05:08.880 And on the GOP side, you're looking at traditional energy. 0:05:09.040 --> 0:05:10.040 Sort of a real justice. 0:05:10.279 --> 0:05:12.000 I'm just gonna go to the zeitgeist right now. I 0:05:12.000 --> 0:05:13.200 got eight ways to go here. 0:05:13.200 --> 0:05:17.280 But Obamacare supposedly under some threat I see in the 0:05:17.360 --> 0:05:21.400 zeitgt Exios and others. David Gera telling me the Republicans 0:05:21.440 --> 0:05:24.560 begging the Trump campaign to stay away from Obamacare? 0:05:24.800 --> 0:05:26.479 Is Obamacare a sacred cow? 0:05:27.880 --> 0:05:32.080 I think it's symbolic the you know, there's not much 0:05:32.120 --> 0:05:37.040 more that can be done to undercut Obamacare in the ACA. 0:05:37.120 --> 0:05:41.080 What does Obamacare cost Lisa Mateo on her ten to 0:05:41.160 --> 0:05:45.159 forty text form. The belief is I'm paying for Obamacare. 0:05:45.640 --> 0:05:48.360 Am I is Lisa Matteo paying for Obamacare. 0:05:48.480 --> 0:05:50.880 You can opt in right through these state exchanges, and 0:05:50.920 --> 0:05:53.040 so that's the that's the important thing. You can opt 0:05:53.040 --> 0:05:55.880 in and so it's a broader exchange that you can 0:05:55.960 --> 0:05:58.520 participate in. Now, the you know what we are all 0:05:58.600 --> 0:06:01.679 paying for is the is the me Care, medicaids or tax. 0:06:02.080 --> 0:06:05.840 So that's a set a set number. Now, one of 0:06:05.839 --> 0:06:07.960 the things that I do want to highlight as far 0:06:08.000 --> 0:06:12.159 as broader risk is, you know, folks are looking or 0:06:12.320 --> 0:06:15.920 sort of signaling that there might be tides moving towards 0:06:15.960 --> 0:06:19.120 a Trump win. We see that in the betting markets. 0:06:19.440 --> 0:06:21.920 You see that with you know again the baskets that 0:06:21.960 --> 0:06:24.640 I just highlighted our ETF baskets. But I really want 0:06:24.640 --> 0:06:27.200 to caution when we're thinking about risk that, because of 0:06:27.200 --> 0:06:30.200 how tight this race is, if you pile in on that, 0:06:30.200 --> 0:06:32.480 that could also be your biggest loss. So right now 0:06:32.480 --> 0:06:35.479 and we're giving guidance, it's hold off, Let's wait and 0:06:35.480 --> 0:06:37.760 see what happens with Congress, and then we can position. 0:06:38.279 --> 0:06:40.400 I mean, how are you thinking about the timing of this. 0:06:40.440 --> 0:06:44.040 I mean we might not know for days or even weeks. 0:06:44.040 --> 0:06:46.680 Some people are suggesting about how this is. So that's 0:06:46.720 --> 0:06:48.160 just another level of risk for. 0:06:48.120 --> 0:06:51.240 Investors to deal with, right heightened volatility. But again it's 0:06:51.320 --> 0:06:54.320 just emphasizing from especially from wealth perspective. When we're talking 0:06:54.320 --> 0:06:57.159 to retail, point in time, stay focused and disciplined. 0:06:58.200 --> 0:07:01.159 You're like, you can just tell to choose glass. I 0:07:01.160 --> 0:07:02.119 mean she's in a meeting. 0:07:02.360 --> 0:07:04.160 There's no there's no zoom. 0:07:03.880 --> 0:07:06.320 Meetings with Monica girl. What are you gonna do with 0:07:06.360 --> 0:07:08.000 the New York Yankees? I mean you go down to 0:07:08.080 --> 0:07:11.280 Tampa here in spring training? What is the Monica Guera 0:07:12.640 --> 0:07:14.240 prescription for the dreaded. 0:07:14.000 --> 0:07:16.240 New York Yankees? I don't have one. I don't I 0:07:16.280 --> 0:07:17.239 don't follow baseball. 0:07:17.400 --> 0:07:20.640 Sorry, good here, all sorry. 0:07:20.200 --> 0:07:20.440 All right. 0:07:20.520 --> 0:07:22.600 Let me ask you this guy for our John Tucker 0:07:22.760 --> 0:07:28.400 congestion U correspondent. What happened to our congestion text? I mean, 0:07:28.400 --> 0:07:30.360 get all these cameras up on election tonight. 0:07:30.440 --> 0:07:31.880 Okay, you can have a mimosa. 0:07:32.360 --> 0:07:34.600 Yeah yeah, I mean when I when I've been smoking, 0:07:34.640 --> 0:07:36.320 so it will we'll see. 0:07:36.560 --> 0:07:38.280 Very good, Monica Guarer, Thank you so much for your 0:07:39.400 --> 0:07:42.040 ahead of US policy of Morgan Stanley Wolf Management. 0:07:47.960 --> 0:07:51.840 You're listening to the Bloomberg Surveillance podcast. Catch us Live 0:07:51.920 --> 0:07:55.240 weekday afternoons from seven to ten am. Easter Listen on 0:07:55.280 --> 0:07:58.520 Apple car Play and Android Auto with a Bloomberg Business app, 0:07:58.640 --> 0:08:00.560 or watch US live on you Tube. 0:08:00.920 --> 0:08:03.760 Dannice joins us now as a report from Yankee Stadium. 0:08:03.840 --> 0:08:05.760 How was that fifth inning, mister Rives? 0:08:06.680 --> 0:08:09.520 Ah, that was That was a brutal fifth inning as 0:08:09.520 --> 0:08:11.480 a Yankee fan, but it was Look, it was wild 0:08:11.520 --> 0:08:15.920 to watch. Congrats a Dodgers, but just an exciting, exciting 0:08:16.000 --> 0:08:16.840 night at the stadium. 0:08:17.040 --> 0:08:19.680 Spin the wheel of fortune right now for Amazon and 0:08:19.720 --> 0:08:22.800 Apple this afternoon after what you've seen in mag seven. 0:08:23.120 --> 0:08:25.280 What's the wheel of fortune look like for those two 0:08:25.360 --> 0:08:26.640 stocks this afternoon? 0:08:27.440 --> 0:08:31.320 I think wheel fortune's bullsh specifically for Amazon on the 0:08:31.360 --> 0:08:34.240 cloud side. I think that's gonna be the upside there 0:08:34.240 --> 0:08:35.359 as well as advertising. 0:08:35.800 --> 0:08:37.800 And for Apple. You know, as we've. 0:08:37.600 --> 0:08:41.800 Talked about, this will be a better than expected iPhone number, 0:08:42.120 --> 0:08:45.040 and I think optimistic in terms of cook going into 0:08:45.120 --> 0:08:46.959 what I believe is just going to be a monster 0:08:47.080 --> 0:08:51.360 December holiday season for iPhone sixteen AI driving that. 0:08:52.120 --> 0:08:54.760 Yeah, I upgraded so I gotta figure everybody else's too. 0:08:54.840 --> 0:08:57.040 It took me five years upgrade. How about let's go 0:08:57.120 --> 0:08:59.520 back to Microsoft. Last night, I thought this was the 0:08:59.600 --> 0:09:02.240 number of solid across the board. I mean, and I 0:09:02.320 --> 0:09:04.760 know people a little bit concerned about maybe the cloud business. 0:09:04.840 --> 0:09:07.320 Give us your read on our friends from Microsoft. 0:09:08.160 --> 0:09:10.920 Oh, I mean, I'm more bullish today than I was 0:09:10.960 --> 0:09:12.840 twenty four hours ago. I think it's a pound the 0:09:12.880 --> 0:09:18.840 table because asure you're seeing growth accerating from an AI perspective. 0:09:18.960 --> 0:09:21.880 I think Street will kind of try to pick hairs here, 0:09:22.000 --> 0:09:25.200 split hairs in terms of the numbers. This is when 0:09:25.240 --> 0:09:27.920 you walk away more bullish. I would be shocked if 0:09:27.960 --> 0:09:30.240 this is a stock that's not up twenty four hours 0:09:30.240 --> 0:09:33.280 from now, given what we see in terms of core numbers. 0:09:34.000 --> 0:09:36.640 So how do you think about the Microsoft story and 0:09:36.960 --> 0:09:39.200 specifically in the cloud. Just give us a sense of 0:09:39.679 --> 0:09:43.599 their competitive positioning versus Amazon, versus Google and some of 0:09:43.640 --> 0:09:44.480 the other players there. 0:09:45.240 --> 0:09:46.760 Sure to get perspective. 0:09:47.120 --> 0:09:52.160 Let's say a year ago, no growth essentially from AI 0:09:52.440 --> 0:09:54.840 that that's attributed to Azure. 0:09:54.520 --> 0:09:55.400 Maybe one percent. 0:09:56.160 --> 0:10:00.719 Today twelve percent of the growth is AI driven. So 0:10:00.760 --> 0:10:04.839 in terms of their backyard on the enterprise, thirty four 0:10:04.920 --> 0:10:09.640 percent growth. AI's driving that now. Now others are getting 0:10:09.640 --> 0:10:10.520 in on that party. 0:10:10.640 --> 0:10:13.600 Google. I see what we'll see from Amazon tonight. But 0:10:13.640 --> 0:10:16.400 it just speaks to the AI revolution. It's only the 0:10:16.480 --> 0:10:18.199 second inning. As it all plays on. 0:10:18.360 --> 0:10:20.600 You can meta look at that cap back to I mean, 0:10:20.640 --> 0:10:23.040 they're spending money like a nineteen eight is rock Star. 0:10:23.640 --> 0:10:26.160 But that's great for Nvidia and great for AI. 0:10:26.520 --> 0:10:29.079 I mean, Dan, foreigners are loving the growth, and I 0:10:29.120 --> 0:10:31.960 think American Wall Street said, well, look we took the CFA, 0:10:32.080 --> 0:10:35.000 we did this course, we did this course. This isn't good. 0:10:35.080 --> 0:10:38.120 I got a pe on Microsoft to thirty five. I 0:10:38.160 --> 0:10:40.320 got a forward p tod June of next year of 0:10:40.400 --> 0:10:44.560 thirty three. Ish to me, the issue which you're good at, 0:10:44.559 --> 0:10:46.840 and even people less optimistic than you are. 0:10:46.760 --> 0:10:51.760 Good at, is the X axis. How do we treat 0:10:51.840 --> 0:10:55.680 the terminal value of our analysis of the mag seven? 0:10:56.600 --> 0:10:59.040 What would happen if Dodgers didn't spend the last two 0:10:59.160 --> 0:11:01.960 years they do, they have a chip right now. The 0:11:02.040 --> 0:11:05.160 point is you look at what's happening in terms of 0:11:05.200 --> 0:11:08.280 where this is all going. I mean, in my opinion, 0:11:09.120 --> 0:11:13.600 some of the parts the AI piece could ultimately add. 0:11:13.480 --> 0:11:15.200 Thirty to forty dollars per share. 0:11:16.040 --> 0:11:18.439 You know, when as is all plays out in terms 0:11:18.480 --> 0:11:21.880 of the story, because I think the street is underestimating 0:11:22.800 --> 0:11:27.000 the next two three four years of free cashwa growth 0:11:27.520 --> 0:11:29.800 and what AI ultimately is going to do the story. 0:11:30.400 --> 0:11:32.240 I mean, help me with Call of Duty. They just 0:11:32.280 --> 0:11:34.679 came out with it here, I saw sixty one percent 0:11:35.040 --> 0:11:37.360 for that. Nobody talks about this, and I just think 0:11:37.360 --> 0:11:39.240 it's an absolute sleeper. 0:11:39.280 --> 0:11:42.000 The new Call of Duty's killing it right black Op six. 0:11:42.120 --> 0:11:46.920 Oh boy, Yeah, look if you look look at Activision, 0:11:47.000 --> 0:11:48.439 I mean what they've done there. 0:11:48.640 --> 0:11:53.480 I mean there's so many growth levers in the Microsoft story, 0:11:53.960 --> 0:11:57.520 more than we've ever seen leading AI. You got Activision 0:11:57.520 --> 0:12:00.160 in the back pocket, and now what you really they're 0:12:00.160 --> 0:12:03.520 seeing just a massive upgrade across enterprise, which is bullish 0:12:03.600 --> 0:12:07.320 for Google, bullish for Amazon, and of course very bullish 0:12:07.400 --> 0:12:08.920 for godfather of Ai. 0:12:08.760 --> 0:12:09.600 Jens and a video. 0:12:09.720 --> 0:12:12.960 And the last piece of that puzzle is the consumer 0:12:13.040 --> 0:12:14.120 AI revolution. 0:12:14.240 --> 0:12:16.800 We hear from Cooper Tino tonight in Cook I. 0:12:16.760 --> 0:12:20.920 Mean Paul, the zombies, the Liberty Falls zombies and the 0:12:20.960 --> 0:12:21.760 New Call of Duty. 0:12:22.200 --> 0:12:23.960 I was on there for like two hours less. 0:12:23.960 --> 0:12:26.840 Oh I'm sure you when you're not on the Gram 0:12:27.000 --> 0:12:29.920 or on Facebook meta platforms. Let's switch scars there, Dan, 0:12:30.200 --> 0:12:32.520 that's been kind of the best performing you know, a 0:12:32.559 --> 0:12:36.000 big cap stock here, up sixty seven percent year to date. 0:12:37.120 --> 0:12:39.480 Digital advertising it's still a thing, isn't it. 0:12:40.760 --> 0:12:44.240 I mean that that's the hearts and lungs of the story. 0:12:44.400 --> 0:12:47.960 And I think now you could criticize them for what 0:12:48.000 --> 0:12:51.200 they're gonna spend capex in terms of AI, but that's 0:12:51.240 --> 0:12:53.319 the next level of the growth story. 0:12:53.679 --> 0:12:55.160 So when you get meta, I think. 0:12:55.040 --> 0:12:57.440 We're only sort of still in the early days of 0:12:57.480 --> 0:13:01.679 this growth transformation. And that's very important as this all 0:13:01.720 --> 0:13:03.880 plays out. We see from that, we see from them, 0:13:03.920 --> 0:13:07.120 we see from Google, and we see from Amazon as well. 0:13:07.760 --> 0:13:10.440 So you got a paragraph like, you know, see if 0:13:10.440 --> 0:13:13.199 a one oh one risk factors? 0:13:13.559 --> 0:13:16.000 What's dan? I mean, wicked, bullish? I get it. People 0:13:16.000 --> 0:13:17.520 making fun of your opinion out of Dan. 0:13:18.000 --> 0:13:20.360 I mean, were people coming up with you last night 0:13:20.480 --> 0:13:23.439 asking for price targets on Microsoft like this? 0:13:23.720 --> 0:13:25.680 I will tell you when I was. I will tell 0:13:25.679 --> 0:13:26.440 you when I was. 0:13:26.720 --> 0:13:29.920 I was going to get a beverage of the Yankees 0:13:30.000 --> 0:13:33.280 game and someone said, hey, should I be worried about Apple? 0:13:34.320 --> 0:13:39.439 So there is some nervousness, But again, that just creates 0:13:39.559 --> 0:13:40.800 the opportunity. 0:13:41.040 --> 0:13:43.000 This is a techbole market that's gonna go on. 0:13:43.040 --> 0:13:45.600 Okay, what's your lead So we gotta go what's your 0:13:45.679 --> 0:13:49.320 lead risk factor? Here on Apple or Amazon today there's 0:13:49.360 --> 0:13:52.600 a paragraph Dan Ice major risk factor. 0:13:52.480 --> 0:13:58.520 Is lead risk factor is just good, But maybe conservative 0:13:58.559 --> 0:14:02.240 guidance will kind of read into that knee jerk. 0:14:02.559 --> 0:14:06.120 That just creates the golden buying opportunity. Hit pound the table. 0:14:06.520 --> 0:14:08.440 How do the Mets look next year? Dan, gotta go, 0:14:08.559 --> 0:14:09.280 how do the Mets look? 0:14:09.400 --> 0:14:12.480 I'm optimistic on Mets. Hopefully Mets. You know they'll be 0:14:12.520 --> 0:14:12.840 in the world. 0:14:13.120 --> 0:14:17.559 Come on, Steve Cohen won Sodo Matchmade in Heaven exactly. 0:14:17.800 --> 0:14:18.839 Thank you, dear that it's good. 0:14:19.040 --> 0:14:23.720 Good websh This is the Bloomberg Surveillance Podcast. Listen live 0:14:23.800 --> 0:14:27.160 each weekday starting at seven am Eastern on applecar Play 0:14:27.200 --> 0:14:30.040 and Android Auto with a Bloomberg Business app. You can 0:14:30.040 --> 0:14:33.320 also listen live on Amazon Alexa from our flagship New 0:14:33.360 --> 0:14:37.000 York station Just Say Alexa playing Bloomberg eleven thirty. 0:14:37.480 --> 0:14:40.520 Brian Love It with Us Now, Chief market strategist in Vesco. 0:14:40.240 --> 0:14:44.120 Good morning to you. You walked in and you said 0:14:44.160 --> 0:14:47.480 you're really not focused on the election. Get us beyond 0:14:47.480 --> 0:14:51.680 the election, frankly, get us beyond the inauguration. What does 0:14:51.680 --> 0:14:54.320 that do to give you confidence to participate in the 0:14:54.360 --> 0:14:55.320 equity markets? 0:14:55.560 --> 0:14:55.760 Yeah. 0:14:55.800 --> 0:14:57.600 I always tell people that the things I like to 0:14:57.600 --> 0:14:59.600 focus on is the direction of the economy and what 0:14:59.640 --> 0:15:02.320 the Federal Reserve is going to do, and so I 0:15:02.440 --> 0:15:05.000 try to avoid a lot of the other noise that 0:15:05.160 --> 0:15:08.680 enters unless the outcomes to certain things meaningfully change the 0:15:08.720 --> 0:15:10.680 direction of the economy or what the Fed's going to do. 0:15:10.720 --> 0:15:13.600 And I think the latest reports, the numbers that were 0:15:13.680 --> 0:15:16.600 just read are very consistent with what we're seeing, which 0:15:16.680 --> 0:15:20.160 is a resilient economy and inflation and the comfort zone, 0:15:20.200 --> 0:15:24.520 and so that's a nice backdrop for risk assets and 0:15:24.880 --> 0:15:27.360 very little to suggest that this is an economy that's 0:15:27.440 --> 0:15:30.640 losing steam. So you know, it's a backdrop in which 0:15:30.680 --> 0:15:32.320 equities are still likely to be favored. 0:15:33.000 --> 0:15:35.600 Earnings matter. As a former equity analyst, I like to 0:15:35.600 --> 0:15:38.800 think earnings matter. It's not just the Fed. What have 0:15:38.880 --> 0:15:41.400 you seen so far from this earning cycle? What do 0:15:41.440 --> 0:15:42.720 you think the market needs to see? 0:15:42.920 --> 0:15:45.120 Well, there's been a lot of focus on the megacaps, 0:15:45.120 --> 0:15:48.680 and it's been a little bit mixed with the megacaps, 0:15:48.680 --> 0:15:50.640 and yet the irony of it is you're seeing the 0:15:50.720 --> 0:15:53.960 numbers come in with double digit growth, just perhaps slightly 0:15:54.040 --> 0:15:57.240 below what the expectation was, or maybe a little bit 0:15:57.240 --> 0:16:00.160 of weaker guidance. The reality is those names which been 0:16:00.240 --> 0:16:02.760 driving the markets right now, our multi year stories, it's 0:16:02.760 --> 0:16:05.640 hard to look at them as a quarter over quarter story. 0:16:05.680 --> 0:16:07.240 There we do? 0:16:07.400 --> 0:16:09.880 Why do we? Is it just the industry? Yeah, it's 0:16:09.920 --> 0:16:11.000 just the industry, you do? 0:16:11.320 --> 0:16:14.360 Yeah, I mean, because you know, it's a sentiment gets 0:16:14.400 --> 0:16:17.120 out ahead of itself and we you know, we we 0:16:17.440 --> 0:16:20.320 either rare it back in or you know, take it further. 0:16:20.400 --> 0:16:22.440 But but the reality is those are companies you should 0:16:22.480 --> 0:16:26.520 be looking at over multi year periods. But in terms 0:16:26.560 --> 0:16:29.840 of thinking about it tactically, yeah, good, good economic backdrop. 0:16:29.960 --> 0:16:31.600 Let's go to Paul Sweeney on this. I'm going to 0:16:31.640 --> 0:16:33.320 ask right now if I can do the math. I'm 0:16:33.320 --> 0:16:35.480 waiting for the durbim to move, and I got to 0:16:35.520 --> 0:16:38.400 pay the terminal. I know I'm behind it. 0:16:38.840 --> 0:16:44.360 There's sixty nine opinions on Microsoft, Paul Sweeney, do we 0:16:44.400 --> 0:16:47.000 need sixty nine opinions on any given stock? 0:16:47.200 --> 0:16:47.280 No? 0:16:47.400 --> 0:16:50.320 That just goes to the inefficiencies of Wall Street. Here, 0:16:50.360 --> 0:16:53.360 do we need sixty nine voices on Microsoft? Probably not. 0:16:54.120 --> 0:16:56.640 Maybe ten of them are getting paid probably, Brian, uh, 0:16:56.800 --> 0:16:58.480 talk to us about kind of something. 0:16:58.560 --> 0:17:00.920 Whoo wha. 0:17:01.480 --> 0:17:04.560 It was a little bit of folks inside baseball. Yeah, 0:17:04.640 --> 0:17:05.240 exactly right. 0:17:07.560 --> 0:17:09.000 What have you seen here? What are some of the 0:17:09.080 --> 0:17:12.080 sectors that screen well for you guys? If the economy 0:17:12.160 --> 0:17:15.720 is generally in a pretty good space, rates are coming down, 0:17:15.800 --> 0:17:17.160 what sector screen well for you guys? 0:17:17.320 --> 0:17:19.320 Yeah, if you believe that we're going to get through 0:17:19.320 --> 0:17:22.280 this environment, you know, the with the economy intact and 0:17:22.400 --> 0:17:24.639 rates coming down, you want to be more cyclical in 0:17:24.680 --> 0:17:28.040 your exposure. And so you know, we've had a period 0:17:28.119 --> 0:17:30.879 of here where our tactical indicator said, you know, be 0:17:30.960 --> 0:17:34.119 a little bit more defensive in here. Things are going 0:17:34.160 --> 0:17:35.760 to be a little bit challenging the short term. But 0:17:35.800 --> 0:17:39.160 I think that looking out into twenty twenty five, more 0:17:39.240 --> 0:17:42.719 of a pickup in activity with rates coming down, and 0:17:42.720 --> 0:17:45.760 that that should favor the more cyclical parts of the economy. 0:17:46.920 --> 0:17:49.440 Financials what's it call in financials? Just because I saw 0:17:49.480 --> 0:17:52.680 some Jamie Dimond Brian mollinhan putting up some big numbers, 0:17:52.800 --> 0:17:54.320 big numbers, and we. 0:17:54.240 --> 0:17:56.439 Would expect M and A activity to pick up some 0:17:56.520 --> 0:17:59.760 animal spirits. And you know this normalization of the Yelk curve, 0:17:59.760 --> 0:18:02.480 which certainly helps helps the banks. 0:18:02.800 --> 0:18:05.600 Is cash an asset? It's really what it comes down to. 0:18:05.880 --> 0:18:09.600 I mean, people's let's assume most people are behind SPX 0:18:09.680 --> 0:18:10.080 this year. 0:18:10.840 --> 0:18:12.639 What do you do with cash? How do you deploy 0:18:12.720 --> 0:18:13.040 right now? 0:18:13.480 --> 0:18:15.840 The funny thing, Tom is we've been telling people to 0:18:15.840 --> 0:18:17.600 get out of cash now for a year and a half. 0:18:17.720 --> 0:18:21.119 So I guess at some point the well, look, I 0:18:21.160 --> 0:18:23.119 mean the S and P five hundred up twenty something 0:18:23.240 --> 0:18:26.720 percent this year, the cash looks good. The problem you 0:18:26.800 --> 0:18:29.159 have with it, of course, is the reinvestment risk. And 0:18:29.200 --> 0:18:32.159 you know, every time yields come down, you think investors 0:18:32.240 --> 0:18:34.879 lost their chance to lock in the four or five percent. 0:18:34.960 --> 0:18:37.640 And I guess this is the third bite at that apple. 0:18:38.560 --> 0:18:42.879 I do think that rates are going to moderate. I 0:18:42.920 --> 0:18:45.320 think you know, rates are probably a bye here, and 0:18:45.600 --> 0:18:49.120 so investors sitting in cash, well, at some point fine 0:18:49.200 --> 0:18:52.800 yields coming down significantly below the short rate, and you'll 0:18:53.480 --> 0:18:55.040 below the long rate, and you'll want to have been 0:18:55.359 --> 0:18:59.480 exposed to things like credit or things like longer duration treasuries. 0:19:00.160 --> 0:19:01.919 How about credit risk here? How much credit risk going? 0:19:02.119 --> 0:19:03.920 Do I want to take use and fix some space there? 0:19:04.000 --> 0:19:05.800 Spreads still like records, super tight? 0:19:05.880 --> 0:19:09.920 Right yea, spreads are tight, but yields are reasonably attractive 0:19:10.359 --> 0:19:13.920 and the fundamentals look quite good. I mean, usually when 0:19:13.920 --> 0:19:18.480 you look at you're going into a worrisome credit backdrop. 0:19:18.640 --> 0:19:21.720 Usually see double digit borrowing growth. We're nowhere near that 0:19:21.880 --> 0:19:22.280 right now. 0:19:22.359 --> 0:19:24.800