1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:22,000 Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App. 4 00:00:22,360 --> 00:00:25,680 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:25,760 --> 00:00:27,040 Speaker 1: us live on YouTube. 6 00:00:27,280 --> 00:00:30,360 Speaker 2: Ren Mac or Renaissance Macro does as good a job 7 00:00:30,400 --> 00:00:35,240 Speaker 2: as anybody worldwide. It blending the two in the back 8 00:00:35,280 --> 00:00:41,839 Speaker 2: and forth daily grind of following markets and executing market economics. 9 00:00:41,920 --> 00:00:45,320 Speaker 2: Jeffrey DeGraf is chairman Neil Dudda ahead of economic research, 10 00:00:45,360 --> 00:00:47,120 Speaker 2: and to have both of them in our studio, Wow, 11 00:00:47,360 --> 00:00:51,239 Speaker 2: is it real? Treat? How has Renaissance Macro invented? That 12 00:00:51,360 --> 00:00:55,640 Speaker 2: famous picture of Lehman falling apart? Was Renmac invented right there? 13 00:00:56,160 --> 00:00:57,160 Speaker 2: It was not. Tom. 14 00:00:57,160 --> 00:01:00,840 Speaker 3: I had actually left Lehman Brothers buddy year prior to 15 00:01:00,960 --> 00:01:05,080 Speaker 3: the demise of Lehman, and I went over to ed 16 00:01:05,120 --> 00:01:09,600 Speaker 3: Heiman Shops sorry at Isi, because he was creating this 17 00:01:09,720 --> 00:01:11,960 Speaker 3: kind of Macro juggernaut, and I said I want to 18 00:01:12,000 --> 00:01:14,000 Speaker 3: be a part of that, and so I was there 19 00:01:14,040 --> 00:01:16,080 Speaker 3: for four years. He started building it out into more 20 00:01:16,080 --> 00:01:18,399 Speaker 3: fundamental research and just wasn't something that. 21 00:01:18,360 --> 00:01:19,120 Speaker 2: Really appealed to me. 22 00:01:19,200 --> 00:01:22,319 Speaker 3: So we pulled the ripcord and started Redmack and had 23 00:01:22,319 --> 00:01:24,200 Speaker 3: the good fortune of picking up my friend over here, 24 00:01:24,400 --> 00:01:25,120 Speaker 3: Neil Dutta. 25 00:01:25,040 --> 00:01:26,800 Speaker 2: I mean Neil Dunda with all of his work as 26 00:01:26,840 --> 00:01:29,360 Speaker 2: well full disclosure a couple of years ago, my Economist 27 00:01:29,760 --> 00:01:31,440 Speaker 2: of the year. We're not going to do like what's 28 00:01:31,440 --> 00:01:33,319 Speaker 2: a FED going to do? Here? I want to talk 29 00:01:33,400 --> 00:01:38,440 Speaker 2: for Global Wall Street about the synthesis of research. Jeff, 30 00:01:38,520 --> 00:01:41,480 Speaker 2: let me start with you, because Dunna is putting out 31 00:01:41,520 --> 00:01:45,520 Speaker 2: three charts an hour. You and I are technical animals. 32 00:01:45,600 --> 00:01:48,520 Speaker 2: I mean it goes back to John Maggie and aw 33 00:01:48,640 --> 00:01:51,800 Speaker 2: Cohen and that what is a trend of the market 34 00:01:51,920 --> 00:01:54,840 Speaker 2: right now? That overlays on Neil Dutta economics. 35 00:01:55,040 --> 00:01:58,000 Speaker 3: Well, I'd say the trend of the market's clearly positive. 36 00:01:58,000 --> 00:01:59,320 Speaker 3: And I think a lot of that has to do 37 00:01:59,400 --> 00:02:02,800 Speaker 3: with Neil's call on the FED right which is expecting 38 00:02:02,840 --> 00:02:04,440 Speaker 3: that the Fed's going to come to the rescue and 39 00:02:04,480 --> 00:02:06,840 Speaker 3: certainly start to ease. And I think the market's seeing that, 40 00:02:07,200 --> 00:02:10,160 Speaker 3: and you're seeing that in cyclicality versus a defensive still, 41 00:02:10,200 --> 00:02:12,520 Speaker 3: which I think is important. The real call for us 42 00:02:12,600 --> 00:02:14,880 Speaker 3: is going to be in this fourth quarter is do 43 00:02:14,919 --> 00:02:18,120 Speaker 3: we lose that cyclicality for defensives. If that's the case, 44 00:02:18,200 --> 00:02:20,640 Speaker 3: then I think the FED is behind, way behind. And 45 00:02:20,680 --> 00:02:23,160 Speaker 3: I think that's that's the issue. So far, that's not happening, 46 00:02:23,480 --> 00:02:25,960 Speaker 3: and we're keeping a bullish posture. But that's certainly on 47 00:02:26,000 --> 00:02:27,840 Speaker 3: the top of the radio. That is entourage to send 48 00:02:27,880 --> 00:02:30,080 Speaker 3: me a notes, ask Neil a question. Put a cork 49 00:02:30,120 --> 00:02:31,040 Speaker 3: into Graph's mouth. 50 00:02:31,280 --> 00:02:32,320 Speaker 4: Okay, let's go there. 51 00:02:32,680 --> 00:02:35,920 Speaker 2: Right now. You're a big one. You were a mister optimist, 52 00:02:36,280 --> 00:02:38,639 Speaker 2: and about twelve months ago, eighteen months ago, you said, 53 00:02:38,680 --> 00:02:40,960 Speaker 2: wait a minute, I'm looking at the tea leaves and 54 00:02:41,040 --> 00:02:46,040 Speaker 2: I'm cautious into Q four into twenty twenty six, which 55 00:02:46,080 --> 00:02:48,480 Speaker 2: way do you tilt with optimism or caution? 56 00:02:49,720 --> 00:02:50,040 Speaker 4: Caution? 57 00:02:50,280 --> 00:02:52,320 Speaker 5: I mean, for me, I think right now we have 58 00:02:52,440 --> 00:02:56,480 Speaker 5: sort of a housing centered view of the world out 59 00:02:56,600 --> 00:02:59,720 Speaker 5: and I think what's interesting is, you know, interest rates 60 00:02:59,720 --> 00:03:03,480 Speaker 5: have been coming down, but you haven't really seen housing 61 00:03:03,520 --> 00:03:08,160 Speaker 5: demand improve in any meaningful way. And to me, that's 62 00:03:08,919 --> 00:03:11,440 Speaker 5: that's sort of a yellow flag on the outlook. You know, 63 00:03:11,520 --> 00:03:13,880 Speaker 5: builders seem to have sort of hit their pivot point 64 00:03:13,919 --> 00:03:18,160 Speaker 5: on margins, and I think that's going to mean less 65 00:03:18,160 --> 00:03:21,880 Speaker 5: construction activity. And I think that's going to bleed into employment. 66 00:03:21,919 --> 00:03:24,400 Speaker 4: I do. And if you. 67 00:03:24,360 --> 00:03:28,800 Speaker 5: Start seeing construction workers, let go in an environment where 68 00:03:29,040 --> 00:03:31,840 Speaker 5: you're not really creating much jobs growth to begin with, 69 00:03:33,800 --> 00:03:36,680 Speaker 5: I think that's sort of another potential source of upward 70 00:03:36,680 --> 00:03:39,800 Speaker 5: pressure on the unemployment rate. So I would, I do 71 00:03:39,840 --> 00:03:43,360 Speaker 5: think the FED is a little bit behind here. You know, 72 00:03:43,440 --> 00:03:45,320 Speaker 5: the fact that they're kind of taking a meeting by 73 00:03:45,320 --> 00:03:48,440 Speaker 5: meeting approach as opposed to just giving guidance into the 74 00:03:48,480 --> 00:03:50,200 Speaker 5: first half of next year, I think is a little 75 00:03:51,400 --> 00:03:54,320 Speaker 5: you know, it's a bit of a mistake. But yeah, 76 00:03:54,440 --> 00:03:56,720 Speaker 5: I would just say that the housing market is softening, 77 00:03:57,400 --> 00:04:00,320 Speaker 5: that's going to bleed into the labor markets. That's going 78 00:04:00,400 --> 00:04:02,920 Speaker 5: to mean weaker real income growth, which kind of challenges 79 00:04:03,080 --> 00:04:03,800 Speaker 5: consumer spending. 80 00:04:04,280 --> 00:04:07,720 Speaker 6: So should the FED be more aggressive than maybe the 81 00:04:07,760 --> 00:04:10,680 Speaker 6: market's pricing in right now? Should they maybe be a 82 00:04:10,680 --> 00:04:12,040 Speaker 6: little bit more front end loaded? 83 00:04:12,440 --> 00:04:12,920 Speaker 2: I think so. 84 00:04:13,120 --> 00:04:15,840 Speaker 5: I mean, I think they, I mean they will go 85 00:04:15,920 --> 00:04:18,040 Speaker 5: more than the markets expect, I believe. I mean, that's 86 00:04:18,120 --> 00:04:19,880 Speaker 5: ultimately the whole point, right is like, what do you 87 00:04:19,880 --> 00:04:22,160 Speaker 5: think what is the market pricing in? That's what our 88 00:04:22,160 --> 00:04:23,960 Speaker 5: business is, right, what is the market pricing in? And 89 00:04:23,960 --> 00:04:25,479 Speaker 5: what do you think the likely outcome is going to 90 00:04:25,480 --> 00:04:27,599 Speaker 5: be right, and you know, the market I think is 91 00:04:27,640 --> 00:04:29,880 Speaker 5: probably on side for what's going to happen this year. 92 00:04:29,920 --> 00:04:33,000 Speaker 5: But if you look at twenty twenty six, it looks 93 00:04:33,040 --> 00:04:36,760 Speaker 5: like the markets are barely priced for two cuts on sides. 94 00:04:36,960 --> 00:04:40,520 Speaker 2: It's the word that data uses year to date, NaSTA 95 00:04:40,680 --> 00:04:45,240 Speaker 2: comp not the one hunderd eighteen percent. It's going to 96 00:04:45,279 --> 00:04:48,520 Speaker 2: be a tough year. We're single digit de Graphs pulling 97 00:04:48,640 --> 00:04:51,520 Speaker 2: his hair out, saying no, get on board. I mean 98 00:04:51,560 --> 00:04:52,880 Speaker 2: that's what we saw. Continue. 99 00:04:52,960 --> 00:04:55,719 Speaker 6: So Jeff, again, as Tom says, there's a lot of 100 00:04:56,560 --> 00:04:59,840 Speaker 6: crosswinds out there. Let's call it crosswinds, geopolitical issues. We've 101 00:04:59,839 --> 00:05:04,800 Speaker 6: got domestic issues with tariff policies, and just on and 102 00:05:04,839 --> 00:05:07,880 Speaker 6: on and on. If the markets are ripping other than 103 00:05:07,920 --> 00:05:10,680 Speaker 6: the dollar, she's still kind of cautious. What do you 104 00:05:10,720 --> 00:05:12,520 Speaker 6: make of just as you step back and look at 105 00:05:12,560 --> 00:05:13,080 Speaker 6: the markets. 106 00:05:13,279 --> 00:05:16,400 Speaker 3: Well, you hit a really important point which gets underappreciated, 107 00:05:16,400 --> 00:05:19,080 Speaker 3: which is there's a global bull market happening. Right, So 108 00:05:19,480 --> 00:05:21,880 Speaker 3: all the concern about tariffs and I get it, I mean, 109 00:05:22,120 --> 00:05:24,440 Speaker 3: you know we all know it that just is not 110 00:05:25,000 --> 00:05:27,640 Speaker 3: is not resonating with markets which are saying there's something 111 00:05:27,680 --> 00:05:30,479 Speaker 3: else here that's happening, right, and this isn't this isn't 112 00:05:30,560 --> 00:05:32,400 Speaker 3: just the G seven or even the G twenty. 113 00:05:32,480 --> 00:05:33,880 Speaker 2: Look at the frontier markets, they. 114 00:05:33,760 --> 00:05:37,880 Speaker 3: Look fabulous, right, right, So I think, you know, to 115 00:05:38,200 --> 00:05:40,000 Speaker 3: put the narrative on it, we try not to do. 116 00:05:40,240 --> 00:05:42,719 Speaker 3: We're trying to be purest and how we look at 117 00:05:42,839 --> 00:05:46,040 Speaker 3: things in the world. Now, I'm a little concerned about gold. 118 00:05:46,080 --> 00:05:48,400 Speaker 3: We entered bubble territory, but the rest of it looks 119 00:05:48,400 --> 00:05:51,280 Speaker 3: pretty good to us. So look, I'm in the camp 120 00:05:51,360 --> 00:05:55,200 Speaker 3: that we get a consolidation. But if Neil's world ends 121 00:05:55,279 --> 00:05:59,320 Speaker 3: up developing, I think that's extraordinarily bullish for equities because 122 00:05:59,600 --> 00:06:04,279 Speaker 3: we have not seen, you know, the markets fall apart 123 00:06:04,320 --> 00:06:07,039 Speaker 3: when we've got yields coming in. And I think that's 124 00:06:07,080 --> 00:06:09,200 Speaker 3: one thing when people are talking about bubbles, they miss 125 00:06:09,440 --> 00:06:11,920 Speaker 3: the idea that, yeah, look, housing bubble yields were going 126 00:06:12,000 --> 00:06:14,000 Speaker 3: up for a year, dot com yields were going up 127 00:06:14,040 --> 00:06:16,960 Speaker 3: for nine months. Twenty twenty one yields were going up. 128 00:06:17,080 --> 00:06:19,719 Speaker 3: Right here, we're actually on the cusp of the potential 129 00:06:19,760 --> 00:06:22,919 Speaker 3: of yields coming down in what is i'd say a 130 00:06:23,040 --> 00:06:25,719 Speaker 3: bit of a specuative market, But not nearly anything what 131 00:06:25,760 --> 00:06:26,520 Speaker 3: we've seen before. 132 00:06:26,680 --> 00:06:29,760 Speaker 2: Special treat for Bloomberg surveyans across the nation, around the 133 00:06:29,760 --> 00:06:33,520 Speaker 2: world on YouTube. Subscribe to Bloomberg Podcast. Jeffrey de Graph, 134 00:06:33,560 --> 00:06:37,280 Speaker 2: Neil Dudda of Renaissance Macro together in our studios with 135 00:06:37,400 --> 00:06:41,440 Speaker 2: their remits of economics and following the market. So I'm 136 00:06:41,480 --> 00:06:45,080 Speaker 2: interviewing Chris Waller in a speech accounts ont foreign relations. 137 00:06:46,040 --> 00:06:47,719 Speaker 2: I'm going to switch this here. I'm gonna go to 138 00:06:47,760 --> 00:06:51,040 Speaker 2: you on economics, Jeff ok to create some wonderful tension. 139 00:06:51,160 --> 00:06:54,960 Speaker 2: There's a single sentence which is Marty's YG one oh one, 140 00:06:55,640 --> 00:06:58,960 Speaker 2: don't fight the Fed. I mean, we're really right back 141 00:06:59,000 --> 00:07:01,880 Speaker 2: to that with a modeled four or five rate cuts 142 00:07:02,080 --> 00:07:04,839 Speaker 2: from Governor Waller. Yeah, I one hundred percent agree. 143 00:07:04,880 --> 00:07:06,920 Speaker 3: And I think you can distill that down to how 144 00:07:06,960 --> 00:07:09,960 Speaker 3: does discretionary act on a relative basis? And right now, 145 00:07:10,200 --> 00:07:12,720 Speaker 3: while it's not a lock, discretionary is still in an 146 00:07:12,800 --> 00:07:15,200 Speaker 3: up trend on a relative basis, and I think that's 147 00:07:15,240 --> 00:07:16,239 Speaker 3: good news, which. 148 00:07:16,040 --> 00:07:17,800 Speaker 2: It says continue to say. 149 00:07:17,800 --> 00:07:19,960 Speaker 3: It just says to us that the FED is still 150 00:07:19,960 --> 00:07:22,440 Speaker 3: playing this game, that they're not behind yet to the 151 00:07:22,440 --> 00:07:24,679 Speaker 3: point that it's affecting those consumer names. 152 00:07:24,680 --> 00:07:27,240 Speaker 2: We go to financial analyst Neil Duttar right now and 153 00:07:27,520 --> 00:07:30,480 Speaker 2: on the markets here come on nominal GDP, pops right 154 00:07:30,560 --> 00:07:33,320 Speaker 2: over to it. Somebody at a bartchchart and the zeitgeist 155 00:07:33,320 --> 00:07:37,320 Speaker 2: in the last two days of the complete misjudge on 156 00:07:37,360 --> 00:07:41,760 Speaker 2: what GDP and nominal GDP have done. Does that continue 157 00:07:42,120 --> 00:07:44,679 Speaker 2: to spur revenues and down the income statement? 158 00:07:44,720 --> 00:07:47,880 Speaker 5: Well, I don't think nominal GDP is really growing as 159 00:07:47,960 --> 00:07:50,720 Speaker 5: rapidly as the GDP tracking numbers are are kind of 160 00:07:50,760 --> 00:07:53,440 Speaker 5: telling us. I mean, I think one rule in business 161 00:07:53,480 --> 00:07:56,120 Speaker 5: economics is, you know, when there's a big disconnect between 162 00:07:56,160 --> 00:08:00,200 Speaker 5: GDP and employment, you tend to go at the employment data. Obviously, 163 00:08:00,280 --> 00:08:03,240 Speaker 5: the fact that you know, total hours worked are barely 164 00:08:03,320 --> 00:08:05,720 Speaker 5: positive over the last three months, I mean they may 165 00:08:05,720 --> 00:08:10,480 Speaker 5: in fact be negative. That would suggest that, you know, 166 00:08:10,560 --> 00:08:14,560 Speaker 5: GDP growth is probably overstated, and so you know, I 167 00:08:14,560 --> 00:08:17,240 Speaker 5: tend to put more weight on employment. So but I 168 00:08:17,240 --> 00:08:19,320 Speaker 5: do think that's an important question for the market, right 169 00:08:19,320 --> 00:08:21,440 Speaker 5: I mean, obviously the bond market is pricing in a 170 00:08:21,520 --> 00:08:24,960 Speaker 5: much different nominal growth outlook than equities, and you know, 171 00:08:25,000 --> 00:08:27,960 Speaker 5: how that reconciles I think will be an important question 172 00:08:28,000 --> 00:08:31,120 Speaker 5: for next year. And you know, I mean basically, what 173 00:08:31,200 --> 00:08:33,520 Speaker 5: square is the circle? I think is a productivity boom. 174 00:08:33,960 --> 00:08:35,160 Speaker 5: That's really what what? 175 00:08:35,160 --> 00:08:35,360 Speaker 2: What? 176 00:08:36,640 --> 00:08:36,880 Speaker 4: You know? 177 00:08:37,360 --> 00:08:40,120 Speaker 5: What kind of resolves all these tensions I think in 178 00:08:40,160 --> 00:08:44,120 Speaker 5: the market, because you know, if if let's say the 179 00:08:44,120 --> 00:08:47,520 Speaker 5: ten year yield is whatever below four percent, if that's 180 00:08:47,559 --> 00:08:50,200 Speaker 5: the nominal growth outlook, how do you justify the earnings 181 00:08:50,240 --> 00:08:54,200 Speaker 5: expectations that are embedded in current market pricing? Only productivity 182 00:08:54,200 --> 00:08:58,000 Speaker 5: makes that happen. And if productivity doesn't show up, then 183 00:08:58,120 --> 00:09:00,280 Speaker 5: you know, there may be there's some risk equities. 184 00:09:00,160 --> 00:09:02,640 Speaker 2: It's all AI. Maybe that's doing it for us. Jeff, 185 00:09:02,640 --> 00:09:03,720 Speaker 2: what do you make of the dollar here? 186 00:09:03,720 --> 00:09:07,160 Speaker 6: We've had it stabilized, but equities that bounce back to 187 00:09:07,160 --> 00:09:10,840 Speaker 6: all time highs, yields are coming in. The dollars just 188 00:09:10,880 --> 00:09:12,760 Speaker 6: kind of hanging down here. What does that tell you? Yeah, 189 00:09:12,800 --> 00:09:14,240 Speaker 6: it doesn't tell us a lot, honestly. 190 00:09:14,880 --> 00:09:17,160 Speaker 3: You know, I think there's there's flow data with tariffs 191 00:09:17,200 --> 00:09:20,040 Speaker 3: and the leverage points that as we still negotiate our 192 00:09:20,080 --> 00:09:22,960 Speaker 3: ways through this, I think it's important to realize that 193 00:09:23,000 --> 00:09:24,959 Speaker 3: gold got into a parabolic state, you know, over the 194 00:09:25,040 --> 00:09:28,000 Speaker 3: last called six weeks as the dollar actually strengthened and 195 00:09:28,080 --> 00:09:31,000 Speaker 3: certainly firmed right, So you know, there's more to the 196 00:09:31,040 --> 00:09:34,320 Speaker 3: gold story than it's just the week dollar story. And frankly, 197 00:09:34,320 --> 00:09:35,920 Speaker 3: one of the things that I like about Gold, I 198 00:09:35,920 --> 00:09:38,000 Speaker 3: do think that it's going to take a pretty significant 199 00:09:38,040 --> 00:09:40,280 Speaker 3: pause here. But I think one of the things that's 200 00:09:40,360 --> 00:09:43,680 Speaker 3: interesting is that there hasn't been a single narrative. Usually 201 00:09:43,679 --> 00:09:46,280 Speaker 3: when you get into these bubbles, it's everybody knows what 202 00:09:46,320 --> 00:09:49,160 Speaker 3: the single narrative is, right, and you can ask the 203 00:09:49,240 --> 00:09:52,160 Speaker 3: question and I think there's three or four probably correct answers, 204 00:09:52,160 --> 00:09:54,679 Speaker 3: but it's not the market hasn't decided on one, and 205 00:09:54,720 --> 00:09:57,160 Speaker 3: that's where you get into trouble usually. So I'm actually 206 00:09:57,160 --> 00:09:58,240 Speaker 3: still optimistic about that. 207 00:09:58,320 --> 00:10:00,480 Speaker 2: Okay, can we go on Narro O'Neil? Is it okay? 208 00:10:00,520 --> 00:10:04,040 Speaker 2: If I go like nuts to graph right now? You're talking, 209 00:10:04,160 --> 00:10:06,400 Speaker 2: I mean the micro analysis of his note get us 210 00:10:06,440 --> 00:10:11,280 Speaker 2: note from Renaissance macrofolks. And you mentioned Gilead silent science. 211 00:10:11,440 --> 00:10:14,199 Speaker 2: I mean the healthcare I mean healthcare has been an 212 00:10:14,240 --> 00:10:17,880 Speaker 2: absolute train wreck sector. Yes, How does someone like you, 213 00:10:18,480 --> 00:10:23,640 Speaker 2: combining fundamentals and particularly technical dynamics, know when to pull 214 00:10:23,720 --> 00:10:26,680 Speaker 2: the trigger and go long healthcare? How do you do that? 215 00:10:26,760 --> 00:10:28,800 Speaker 3: Well, it's a process and so The first thing that 216 00:10:28,840 --> 00:10:30,960 Speaker 3: we start with, Tom is we look at what we 217 00:10:31,000 --> 00:10:33,640 Speaker 3: call our SERM standardized excess return, and that's really just 218 00:10:33,640 --> 00:10:37,880 Speaker 3: a fancy way to say a longer term alpha generation model. 219 00:10:37,920 --> 00:10:38,320 Speaker 2: Right now, that word. 220 00:10:38,360 --> 00:10:40,080 Speaker 3: We're looking at how much ALPH has been generated for 221 00:10:40,160 --> 00:10:43,120 Speaker 3: the sector, in this case healthcare over the last three 222 00:10:43,120 --> 00:10:45,800 Speaker 3: to five years, and if we compare that to the 223 00:10:45,840 --> 00:10:49,560 Speaker 3: sector since the nineteen sixties, we've got singularly the worst 224 00:10:49,640 --> 00:10:51,959 Speaker 3: alpha generation we've ever seen, right, and that's I mean, 225 00:10:51,960 --> 00:10:54,719 Speaker 3: that's capital markets. It's going to result in bankruptcy, is 226 00:10:54,800 --> 00:10:56,560 Speaker 3: is going to result in M and A everything else. Okay, 227 00:10:56,640 --> 00:10:59,160 Speaker 3: So that's the contrarian that unless you believe that these 228 00:10:59,200 --> 00:11:00,880 Speaker 3: things are going to zero or as a sector which 229 00:11:00,880 --> 00:11:02,800 Speaker 3: doesn't happen, that's not going to happen. That we wait 230 00:11:02,840 --> 00:11:04,920 Speaker 3: for momentum. We wait for we wait for trends, we 231 00:11:04,960 --> 00:11:07,280 Speaker 3: wait for momentum to confirm that. And that's where we 232 00:11:07,360 --> 00:11:09,360 Speaker 3: lead into it. We did it with China about a 233 00:11:09,440 --> 00:11:11,560 Speaker 3: year ago. We're doing it with health care now. I mean, 234 00:11:12,200 --> 00:11:15,600 Speaker 3: this is so important, folks. This goes back to Adheim 235 00:11:15,640 --> 00:11:18,400 Speaker 3: and this goes back to John Murphy. The melding of 236 00:11:18,480 --> 00:11:22,079 Speaker 3: this of Neil Dudda's economics. Jeff deographs, I'm going to 237 00:11:22,160 --> 00:11:25,520 Speaker 3: call it technical bias, and then over to fundamental analysis. 238 00:11:25,920 --> 00:11:29,800 Speaker 2: Is the religion here? Okay, so you're there, but value 239 00:11:29,880 --> 00:11:35,760 Speaker 2: investing is basically cratered and only does well given down markets. 240 00:11:35,800 --> 00:11:38,320 Speaker 2: We haven't had a down market, are you? Is you 241 00:11:38,480 --> 00:11:43,480 Speaker 2: tone at the shop growthiness or is it a value search? No, no, 242 00:11:43,720 --> 00:11:44,120 Speaker 2: it is. 243 00:11:44,480 --> 00:11:46,760 Speaker 3: We will take what the market gives us. I mean 244 00:11:46,760 --> 00:11:48,720 Speaker 3: we will go with the cart giving you. Right now, 245 00:11:48,760 --> 00:11:51,600 Speaker 3: the market is giving you growth. It's giving you it's 246 00:11:51,640 --> 00:11:53,560 Speaker 3: not giving you it's not giving you value. It's giving 247 00:11:53,600 --> 00:11:56,280 Speaker 3: you beta. But we think beta's actually stretched, and we 248 00:11:56,280 --> 00:11:59,120 Speaker 3: we actually believe that the market is going to transition 249 00:11:59,280 --> 00:12:03,680 Speaker 3: from at any price and transition that into momentum. And 250 00:12:03,720 --> 00:12:06,280 Speaker 3: that'll be an interesting play because it's usually what happened, 251 00:12:06,320 --> 00:12:08,080 Speaker 3: and that's where you get into the final stages of 252 00:12:08,080 --> 00:12:09,840 Speaker 3: a ball market. And we're not there yet. 253 00:12:10,120 --> 00:12:12,840 Speaker 6: Neil, you've been talking a lot this morning about labor. 254 00:12:13,040 --> 00:12:17,439 Speaker 6: How does the change in immigration policy affect kind of 255 00:12:17,480 --> 00:12:20,559 Speaker 6: the the analysis of the labor market here, because that 256 00:12:20,679 --> 00:12:23,000 Speaker 6: was a lot of folks coming into this country taking 257 00:12:23,240 --> 00:12:25,920 Speaker 6: a lot of jobs, and they're not coming in anymore. 258 00:12:26,720 --> 00:12:29,280 Speaker 4: I mean, I personally think that's more of a red herring. Honestly. 259 00:12:29,440 --> 00:12:32,200 Speaker 5: I mean, to me, it's interesting because we're talking about 260 00:12:32,200 --> 00:12:34,840 Speaker 5: how break even rates unemployment have come down, meaning what 261 00:12:34,840 --> 00:12:37,559 Speaker 5: do you need to keep the unemployment rate flat precisely 262 00:12:37,600 --> 00:12:39,440 Speaker 5: at the time where the unemployment rate has been actually 263 00:12:39,520 --> 00:12:41,960 Speaker 5: rising a little bit more rapidly than it hasn't, you know, 264 00:12:42,040 --> 00:12:45,280 Speaker 5: over the last year or so. It's basically you know, 265 00:12:45,320 --> 00:12:47,480 Speaker 5: had the September data been released, it probably would have 266 00:12:47,480 --> 00:12:49,000 Speaker 5: been up three months in a row by a ten. 267 00:12:49,720 --> 00:12:52,440 Speaker 5: So yeah, I mean, the break even rate has come down, 268 00:12:52,559 --> 00:12:55,720 Speaker 5: but it hasn't come down enough to keep the unemployment 269 00:12:55,760 --> 00:12:58,280 Speaker 5: rate from going up in the first place. And you know, 270 00:12:58,320 --> 00:13:00,480 Speaker 5: that to me is what's important. And if you look 271 00:13:00,480 --> 00:13:03,600 Speaker 5: at you know, these areas of the economy that are 272 00:13:04,080 --> 00:13:07,520 Speaker 5: sensitive to immigration, you don't really see upward wage pressure 273 00:13:08,000 --> 00:13:12,800 Speaker 5: in construction employment and sort of you know, sanitation, these 274 00:13:12,840 --> 00:13:15,440 Speaker 5: sort of sectors where there's a lot of no scaled work. 275 00:13:16,520 --> 00:13:18,840 Speaker 5: So I don't know, I mean, I think it's to me, 276 00:13:18,840 --> 00:13:20,320 Speaker 5: it's a bit of a red herring. And of course, 277 00:13:21,640 --> 00:13:24,200 Speaker 5: look at what people are saying about like job finding rates. 278 00:13:24,920 --> 00:13:27,520 Speaker 5: They're telling you it's getting more difficult to find work. 279 00:13:27,760 --> 00:13:30,520 Speaker 5: And when when consumers tell you labor markets are getting worse, 280 00:13:30,559 --> 00:13:31,719 Speaker 5: I think it pays to believe them. 281 00:13:31,760 --> 00:13:33,679 Speaker 2: I mean here it is from listeners and viewers as well. 282 00:13:33,720 --> 00:13:35,720 Speaker 2: So Neil dot I ss At Waller, let me ask 283 00:13:36,520 --> 00:13:39,680 Speaker 2: of you. Are we so polarized in our John Edwards 284 00:13:39,760 --> 00:13:42,959 Speaker 2: two Americas that we literally have to operate with a 285 00:13:43,080 --> 00:13:47,000 Speaker 2: study of to our starts that have and they have nots. 286 00:13:47,040 --> 00:13:51,280 Speaker 2: Are we that separate now where aggregation of data doesn't work? 287 00:13:52,520 --> 00:13:52,720 Speaker 5: Well? 288 00:13:52,840 --> 00:13:54,440 Speaker 4: I don't believe so. 289 00:13:54,520 --> 00:13:58,000 Speaker 5: I mean I think ultimately, you know, all of these 290 00:13:58,000 --> 00:14:00,440 Speaker 5: things will kind of net out over time, you know, 291 00:14:01,080 --> 00:14:03,160 Speaker 5: I mean what you're talking about basically is this sort 292 00:14:03,200 --> 00:14:05,959 Speaker 5: of K shaped economy, right, like this idea that the 293 00:14:06,040 --> 00:14:08,199 Speaker 5: upper income I mean, and that's and that's a that's 294 00:14:08,240 --> 00:14:09,880 Speaker 5: a huge source of pushback that I get in our 295 00:14:09,880 --> 00:14:10,600 Speaker 5: own client meetings. 296 00:14:10,720 --> 00:14:15,960 Speaker 2: Right, throw a tape dispenser, Adam says, shaped. We usually 297 00:14:16,000 --> 00:14:21,120 Speaker 2: mud wrestle for the shape. Remember V shaped. We got 298 00:14:21,200 --> 00:14:23,280 Speaker 2: a real treat and it's too short of visit Jeff 299 00:14:23,240 --> 00:14:25,760 Speaker 2: to graph with this and Neil douta of Renmack. I'm 300 00:14:25,760 --> 00:14:28,080 Speaker 2: going to go to you, Jeff quickly neel you quickly 301 00:14:28,080 --> 00:14:30,720 Speaker 2: because Paul wants to get one in before the market opening. 302 00:14:31,040 --> 00:14:33,960 Speaker 2: Jeff to graph, what's the biggest mistake people make it, 303 00:14:34,000 --> 00:14:37,720 Speaker 2: particularly the young kid's day trading with technical analysis. 304 00:14:38,040 --> 00:14:41,720 Speaker 3: I think they have an illusion of control, selling high, 305 00:14:41,840 --> 00:14:45,120 Speaker 3: buying low, selling high buying low versus writing the trends. 306 00:14:45,280 --> 00:14:48,160 Speaker 2: Well, it's a technical riding the trend trends. What's a 307 00:14:48,240 --> 00:14:52,720 Speaker 2: technical stochastic failure of all this computer garbage today? 308 00:14:53,000 --> 00:14:55,400 Speaker 3: Well, again, it's that illusion of control that you think 309 00:14:55,400 --> 00:14:57,640 Speaker 3: that you can predict what's going to happen, versus just 310 00:14:57,760 --> 00:15:00,960 Speaker 3: riding the wave of earnings and everything else. 311 00:15:01,080 --> 00:15:04,760 Speaker 2: It's the biggest mistake in our nation's economic analysis right now. 312 00:15:05,480 --> 00:15:08,520 Speaker 5: Is that you assume that relationships are stable from one 313 00:15:08,520 --> 00:15:10,040 Speaker 5: cycle to the next. 314 00:15:09,880 --> 00:15:12,120 Speaker 2: One cycle to the next boom. I like that a lot. 315 00:15:12,240 --> 00:15:13,560 Speaker 2: That's true too, Jeff. 316 00:15:14,000 --> 00:15:16,080 Speaker 6: A lot of people have been talking about AI and 317 00:15:16,120 --> 00:15:19,240 Speaker 6: it's created a bubble in the market, and I don't 318 00:15:19,240 --> 00:15:20,840 Speaker 6: even know what a bubble is anymore. How do you 319 00:15:20,920 --> 00:15:23,880 Speaker 6: define a bubble? How do you try to identify a 320 00:15:23,960 --> 00:15:25,800 Speaker 6: bubble in whatever market you're looking at. 321 00:15:25,840 --> 00:15:27,920 Speaker 3: Yeah, it's a great question. It's a very hard thing 322 00:15:27,960 --> 00:15:30,680 Speaker 3: to quantify. One of the things that we've come up with. 323 00:15:30,800 --> 00:15:34,240 Speaker 3: It's very simple and it's been very very effective. And 324 00:15:34,520 --> 00:15:36,520 Speaker 3: I'll leave it for you and you can put it 325 00:15:36,560 --> 00:15:39,840 Speaker 3: in your back pocket. If an asset doubles in two years, 326 00:15:39,920 --> 00:15:42,280 Speaker 3: you're in bubble territory. That doesn't mean it's done, but 327 00:15:42,320 --> 00:15:44,120 Speaker 3: it means that you have to start talking about it 328 00:15:44,160 --> 00:15:44,720 Speaker 3: as a bubble. 329 00:15:46,760 --> 00:15:50,640 Speaker 2: YouTube love here, tom Key, please do a little more 330 00:15:50,680 --> 00:15:53,960 Speaker 2: often like this with the graph and Dutta, they're loving it. 331 00:15:54,200 --> 00:15:56,960 Speaker 7: I got tears to my eyes, they're loving it. A 332 00:15:57,080 --> 00:15:59,960 Speaker 7: question to Neil Dutta exactly so Nea wanted that they. 333 00:16:00,200 --> 00:16:03,720 Speaker 7: I think that our federal Reserve is looking at is inflation? 334 00:16:03,920 --> 00:16:06,160 Speaker 7: Obviously we haven't really seen it. 335 00:16:06,400 --> 00:16:07,840 Speaker 2: Are we missing something here? 336 00:16:07,960 --> 00:16:11,400 Speaker 6: Or are corporations bearing the brunt of whatever inflation? 337 00:16:11,760 --> 00:16:14,160 Speaker 4: The hawks are missing it? Okay, the hawks are missing it. 338 00:16:14,240 --> 00:16:18,760 Speaker 5: I mean ultimately, I think, what's you know, we're talking 339 00:16:18,760 --> 00:16:25,400 Speaker 5: about big budget deficits, tariffs, policy, risk premium, and yet 340 00:16:26,160 --> 00:16:28,400 Speaker 5: the ten year yield is below four percent? Yeah, so 341 00:16:28,560 --> 00:16:32,680 Speaker 5: I think that to me, it just basically demonstrates that, 342 00:16:34,000 --> 00:16:35,440 Speaker 5: you know, a lot of that bad stuff was in 343 00:16:35,440 --> 00:16:37,520 Speaker 5: the price. What's not And I mean, what the what 344 00:16:37,560 --> 00:16:39,640 Speaker 5: the bond market probably has yet to have, you know, 345 00:16:39,800 --> 00:16:42,640 Speaker 5: meaningfully contend with is some kind of material slow down 346 00:16:42,640 --> 00:16:46,800 Speaker 5: in the economy, because remember the consensus has been revising 347 00:16:46,840 --> 00:16:49,080 Speaker 5: up their GDP estimates for the last like five or 348 00:16:49,120 --> 00:16:52,560 Speaker 5: six months. So you know, to me, that's what's interesting. 349 00:16:52,920 --> 00:16:56,000 Speaker 5: I'm not concerned about inflation. I mean, ultimately, I think 350 00:16:56,320 --> 00:16:59,920 Speaker 5: nominal growth is sluggish, and if you put tariffs on 351 00:17:00,160 --> 00:17:03,320 Speaker 5: it'll just you know, I mean, force people to go 352 00:17:03,600 --> 00:17:05,119 Speaker 5: pay more for one thing and then they'll have to 353 00:17:05,119 --> 00:17:07,280 Speaker 5: cut back on something else to get in before. 354 00:17:07,000 --> 00:17:09,159 Speaker 2: The market open. And with Jeff de Graph, that's a 355 00:17:09,160 --> 00:17:13,920 Speaker 2: great proofot to have him in the studio today. Retail 356 00:17:14,280 --> 00:17:17,240 Speaker 2: right fear missing out to shut up and buy, and 357 00:17:17,359 --> 00:17:21,400 Speaker 2: institutions with all their sophistication maybe falling behind. How big 358 00:17:21,480 --> 00:17:25,280 Speaker 2: is that gap right now between retail success and CTA 359 00:17:25,440 --> 00:17:28,520 Speaker 2: and hedge funds. OMG, we're not getting it done well. 360 00:17:28,720 --> 00:17:32,800 Speaker 3: I think you hear the You hear the the successes 361 00:17:32,840 --> 00:17:35,679 Speaker 3: of the retail crowd, right, you don't hear the numerous failure. 362 00:17:36,359 --> 00:17:39,960 Speaker 3: So I think that's really important. Look, we are now 363 00:17:40,520 --> 00:17:42,600 Speaker 3: and with the help of AI, we are now distinguishing 364 00:17:42,640 --> 00:17:47,480 Speaker 3: between retail sentiment and the Reddit crowd and the ex 365 00:17:47,560 --> 00:17:48,440 Speaker 3: crowd and. 366 00:17:48,280 --> 00:17:50,440 Speaker 2: What the institutions are saying. Right, So that is a. 367 00:17:50,359 --> 00:17:53,119 Speaker 3: Part of our analysis now that we are using is 368 00:17:53,160 --> 00:17:56,720 Speaker 3: what's happening to the crowd sourcing versus what's happening to 369 00:17:56,720 --> 00:17:59,760 Speaker 3: the institutions. And that's that's important because that's got that 370 00:18:00,320 --> 00:18:02,840 Speaker 3: army is a you know, is is real. They've got 371 00:18:02,880 --> 00:18:05,480 Speaker 3: bayonets and pitchforks, and it's important. 372 00:18:05,200 --> 00:18:08,480 Speaker 2: To get twenty seconds. It's too important question. A listener 373 00:18:08,560 --> 00:18:13,479 Speaker 2: emails in Jeff to graph. Can AI replace Neil Dotta? No, 374 00:18:14,240 --> 00:18:20,680 Speaker 2: no is a cervict wines. Cervict is unreplaceable. I think 375 00:18:21,080 --> 00:18:22,960 Speaker 2: I like a tweet that was out there today that 376 00:18:23,080 --> 00:18:26,960 Speaker 2: said AI will replace bad science and will probably replace 377 00:18:27,040 --> 00:18:30,520 Speaker 2: bad economics. Neil Dutta. You know I'm snarky there. But 378 00:18:30,920 --> 00:18:35,040 Speaker 2: AI is it a productivity plus? And are we underestimating 379 00:18:35,200 --> 00:18:39,880 Speaker 2: America's productivity as we folded into business efficiency? 380 00:18:40,840 --> 00:18:41,480 Speaker 4: I don't think so. 381 00:18:41,600 --> 00:18:45,399 Speaker 5: I mean, I think right now, AI is probably a 382 00:18:45,520 --> 00:18:50,120 Speaker 5: productivity suck because because you're spending so much time trying 383 00:18:50,160 --> 00:18:52,480 Speaker 5: to figure out how to actually integrate it properly into 384 00:18:52,520 --> 00:18:55,520 Speaker 5: your workflow, and that process is time consuming and keeps 385 00:18:55,520 --> 00:18:58,440 Speaker 5: you maybe from doing more productive things. 386 00:18:59,040 --> 00:19:00,560 Speaker 4: You know, i'd really right right now. 387 00:19:00,600 --> 00:19:04,080 Speaker 5: So you know, typically in a productivity boom, you don't 388 00:19:04,119 --> 00:19:08,960 Speaker 5: tend to see productivity rising alongside the adoption of said technology. 389 00:19:09,200 --> 00:19:10,280 Speaker 4: It usually happens after. 390 00:19:10,359 --> 00:19:13,280 Speaker 5: So if you think about like the desktop computer that 391 00:19:13,400 --> 00:19:16,439 Speaker 5: was probably making its way in corporate America sometime in 392 00:19:16,480 --> 00:19:19,000 Speaker 5: the early nineties, it wasn't really until the late nineties 393 00:19:19,040 --> 00:19:23,160 Speaker 5: that productivity really took off. So, you know, I think 394 00:19:23,200 --> 00:19:27,040 Speaker 5: it's not you know, it's I don't think it's actually 395 00:19:27,160 --> 00:19:28,560 Speaker 5: driving productivity right now. 396 00:19:28,800 --> 00:19:31,280 Speaker 6: My first earnings models of pain Webber nineteen eighty six 397 00:19:31,320 --> 00:19:33,600 Speaker 6: were on pencil and page. 398 00:19:33,600 --> 00:19:37,280 Speaker 2: Did you use a slide roll paper? You want to 399 00:19:37,359 --> 00:19:39,000 Speaker 2: change your estimates? You had to do it? 400 00:19:39,119 --> 00:19:39,640 Speaker 4: Think long. 401 00:19:39,760 --> 00:19:42,600 Speaker 2: I am my father's koufl and Escer slide roll in 402 00:19:42,680 --> 00:19:46,400 Speaker 2: my desk at home nineteen forty seven's that's when men 403 00:19:46,440 --> 00:19:47,720 Speaker 2: were men. That's where men men. 404 00:19:47,840 --> 00:19:50,000 Speaker 3: Do you still have your original HP twelve set? I 405 00:19:50,000 --> 00:19:54,280 Speaker 3: have an Hue twelve C with an Aimer CFA institute. 406 00:19:54,520 --> 00:19:58,040 Speaker 3: Stick around you too, I have the original one. We're 407 00:19:58,080 --> 00:20:02,280 Speaker 3: back tonight. I'll be with the CFA. It's such a 408 00:20:02,320 --> 00:20:06,960 Speaker 3: nerd patrol here. Everyone in your uses in twelve. I'm sorry, sorry, 409 00:20:07,080 --> 00:20:09,480 Speaker 3: this is never gonna happen again. This level get one 410 00:20:09,480 --> 00:20:09,840 Speaker 3: more in. 411 00:20:09,800 --> 00:20:12,960 Speaker 6: Your from a technical perspective, is anything jumping out of 412 00:20:13,000 --> 00:20:15,760 Speaker 6: you right now as a screaming buy or maybe a 413 00:20:15,840 --> 00:20:16,720 Speaker 6: screaming short. 414 00:20:16,880 --> 00:20:19,000 Speaker 3: Well, we talked a little bit about healthcare, so I 415 00:20:19,000 --> 00:20:21,280 Speaker 3: think that's making a turn, right, So you still have 416 00:20:21,280 --> 00:20:26,360 Speaker 3: to be selective and looking at that without question. And look, 417 00:20:26,440 --> 00:20:29,200 Speaker 3: we talked about doubling in two years. Gold has done that, right, 418 00:20:29,280 --> 00:20:31,080 Speaker 3: So I think you have to be very very careful 419 00:20:31,080 --> 00:20:31,520 Speaker 3: with gold. 420 00:20:32,080 --> 00:20:32,280 Speaker 2: You know. 421 00:20:32,840 --> 00:20:34,520 Speaker 3: The reason that that's important is you have to you 422 00:20:34,560 --> 00:20:36,879 Speaker 3: have to start selling into strength. That's not something we 423 00:20:37,040 --> 00:20:39,800 Speaker 3: tend to do. So we sell into Strengthen we're in 424 00:20:39,840 --> 00:20:42,840 Speaker 3: a quote unquote gold environment or bubble environment, and that's 425 00:20:42,840 --> 00:20:43,239 Speaker 3: where we are. 426 00:20:43,359 --> 00:20:45,439 Speaker 2: Dennis Garman a note to me two days ago on 427 00:20:45,560 --> 00:20:48,040 Speaker 2: is golden yen called he is sliding out of gold. 428 00:20:48,080 --> 00:20:52,399 Speaker 2: He made real clear that enough is enough. Final question 429 00:20:52,480 --> 00:20:55,680 Speaker 2: to mister data, Neil Dutta, who's the next FED chairman? 430 00:20:57,280 --> 00:21:00,960 Speaker 5: This is a loaded one. Well, I don't think it's 431 00:21:01,080 --> 00:21:03,080 Speaker 5: any of the people that are being discussed right now. 432 00:21:04,160 --> 00:21:06,600 Speaker 5: And the reason is is because if it was going 433 00:21:06,680 --> 00:21:08,320 Speaker 5: to be one of those people. They would have already 434 00:21:08,400 --> 00:21:11,600 Speaker 5: named them by now, so you know, I mean, I 435 00:21:11,640 --> 00:21:15,240 Speaker 5: think the longer it goes on, the more likely it is, 436 00:21:15,240 --> 00:21:18,080 Speaker 5: frankly that Secretary Besson. I mean, what do we know 437 00:21:18,160 --> 00:21:22,120 Speaker 5: about Treasury Secretary Besson? We know that number one, which 438 00:21:22,160 --> 00:21:24,159 Speaker 5: is the most important, he has the confidence of the 439 00:21:24,200 --> 00:21:28,160 Speaker 5: President of the United States, and number two he has 440 00:21:28,200 --> 00:21:30,480 Speaker 5: the confidence of the financial markets, and those are two 441 00:21:30,560 --> 00:21:33,800 Speaker 5: pretty good. And number three he probably is interviewing all 442 00:21:33,840 --> 00:21:36,040 Speaker 5: these people in this thinking to himself like, I'm better 443 00:21:36,119 --> 00:21:41,720 Speaker 5: than all these guys, you know, I think, I mean, 444 00:21:41,720 --> 00:21:43,480 Speaker 5: to me, that's sort of my dark horse pick. 445 00:21:43,600 --> 00:21:47,000 Speaker 2: Has this been okay? If you guys had fun, it's great? Absolutely? 446 00:21:47,080 --> 00:21:48,760 Speaker 2: Can we do it again? Yeah? You tell us what 447 00:21:48,800 --> 00:21:52,920 Speaker 2: twenty seven Concumber, Neil Data, Jeff de Graf. They are 448 00:21:53,080 --> 00:21:56,520 Speaker 2: Renaissance Macro again. We protect the copyright of all of 449 00:21:56,560 --> 00:21:59,560 Speaker 2: our guests. You've got to go to rinmac to get 450 00:21:59,600 --> 00:22:01,880 Speaker 2: the picks. He does the Jeff de graph and the 451 00:22:02,040 --> 00:22:06,639 Speaker 2: detail of Neil data. Stay with us. More from Bloomberg 452 00:22:06,760 --> 00:22:08,800 Speaker 2: Surveillance coming up after this. 453 00:22:16,040 --> 00:22:19,639 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live 454 00:22:19,680 --> 00:22:22,879 Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on 455 00:22:22,920 --> 00:22:26,600 Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or 456 00:22:26,760 --> 00:22:28,119 Speaker 1: watch us live on YouTube. 457 00:22:28,200 --> 00:22:31,520 Speaker 2: Paulstrinian time King time now to get out to a 458 00:22:31,640 --> 00:22:35,159 Speaker 2: view from sixty thousand feet. David Lebowitz joins us. He 459 00:22:35,240 --> 00:22:37,760 Speaker 2: is with JP Morgan and just to some wonderful work 460 00:22:37,840 --> 00:22:42,359 Speaker 2: summarizing what the team does on equities, on alternatives, on 461 00:22:42,440 --> 00:22:46,280 Speaker 2: fixed income, but also almost what the zeitgeist is right now. 462 00:22:46,280 --> 00:22:48,440 Speaker 2: And what I love about your note goes this goes 463 00:22:48,480 --> 00:22:53,560 Speaker 2: back to Williams College, you know, undergraduate. There they handle productivity. 464 00:22:53,840 --> 00:22:58,199 Speaker 2: Williams Amherson three great rivalry. It is, I mean three ratios. 465 00:22:58,640 --> 00:23:02,159 Speaker 2: They are of capital dynam labor dynamics, and this strange 466 00:23:02,160 --> 00:23:06,640 Speaker 2: thing total factor productivity, which is the innovation that's out 467 00:23:06,640 --> 00:23:09,320 Speaker 2: there right now. I look at your note. It is 468 00:23:09,400 --> 00:23:12,479 Speaker 2: basically trying to figure out where the productivity matrix is 469 00:23:12,800 --> 00:23:19,440 Speaker 2: right now. When you summarize Casmin Frowley, Libovitz, David Kelly, 470 00:23:20,240 --> 00:23:23,760 Speaker 2: Gabriela Santos, all of JP Morgan people together, what's a 471 00:23:23,800 --> 00:23:25,600 Speaker 2: consensus somewhere productivity is. 472 00:23:26,119 --> 00:23:28,639 Speaker 4: So when we look at what's going on, we recognize 473 00:23:28,720 --> 00:23:31,520 Speaker 4: that there are some headwinds to growth from the labor 474 00:23:31,560 --> 00:23:33,520 Speaker 4: side of the equation, but we do think that the 475 00:23:33,560 --> 00:23:37,000 Speaker 4: response of corporations will be to invest more and boost 476 00:23:37,000 --> 00:23:39,400 Speaker 4: that productivity. And so one of the things that we've 477 00:23:39,440 --> 00:23:41,440 Speaker 4: done over the past couple of years in our long 478 00:23:41,520 --> 00:23:45,040 Speaker 4: term capital market assumptions is increase that TFP, that total 479 00:23:45,080 --> 00:23:49,520 Speaker 4: factor productivity estimate to reflect that investment in technology, that 480 00:23:49,600 --> 00:23:52,639 Speaker 4: adoption in technology that numbers up thirty basis points over 481 00:23:52,680 --> 00:23:53,080 Speaker 4: the past. 482 00:23:53,440 --> 00:23:55,280 Speaker 2: This is really critical, folks. That's what I wanted to 483 00:23:55,280 --> 00:23:57,000 Speaker 2: get out of the one about being rude and asking 484 00:23:57,040 --> 00:24:00,760 Speaker 2: point blank. But this is a huge over of what 485 00:24:01,080 --> 00:24:03,600 Speaker 2: we're all going. Lisa Mateo's going, what is going on? 486 00:24:04,000 --> 00:24:06,320 Speaker 2: Tom Keen is going what is going on? And the 487 00:24:06,440 --> 00:24:12,320 Speaker 2: answer is technology, almost in a nineteenth century sense, away 488 00:24:12,400 --> 00:24:18,040 Speaker 2: from AI. Do you see productivity driving investment exactly? 489 00:24:18,080 --> 00:24:19,480 Speaker 4: And so you know, there are a couple of things 490 00:24:19,480 --> 00:24:21,960 Speaker 4: that I would focus on. One, it's not just about 491 00:24:21,960 --> 00:24:24,639 Speaker 4: the AI itself, It's about how you apply the AI, 492 00:24:24,720 --> 00:24:26,800 Speaker 4: and I think that's where some of the headwinds are. 493 00:24:26,840 --> 00:24:28,680 Speaker 4: I think a lot of industries are still figuring out 494 00:24:28,720 --> 00:24:30,960 Speaker 4: how to use this technology, but it is going to 495 00:24:31,040 --> 00:24:33,360 Speaker 4: change the game. It is going to support growth over 496 00:24:33,400 --> 00:24:36,640 Speaker 4: the longer term, and importantly, it opens up this channel 497 00:24:36,920 --> 00:24:40,199 Speaker 4: for more investment, and it allows investors to benefit not 498 00:24:40,320 --> 00:24:42,240 Speaker 4: only in the big tech names they're doing a lot 499 00:24:42,280 --> 00:24:45,520 Speaker 4: of the creation of this technology, but also over time, 500 00:24:45,640 --> 00:24:48,120 Speaker 4: this should broaden out. It should support financials, it should 501 00:24:48,119 --> 00:24:50,840 Speaker 4: support materials, it should support utilities. This is going to 502 00:24:50,840 --> 00:24:52,440 Speaker 4: be a rising tide that lifts all ships. 503 00:24:52,480 --> 00:24:57,600 Speaker 6: So does this improved productivity outweigh any kind of economic 504 00:24:57,720 --> 00:25:01,480 Speaker 6: drag or inflationary pressures that might come from tariffs and 505 00:25:01,520 --> 00:25:06,240 Speaker 6: at just a tighter or lack of a geopolitical smoothness 506 00:25:06,240 --> 00:25:06,680 Speaker 6: out there. 507 00:25:06,800 --> 00:25:09,800 Speaker 4: So I think that there are two kind of counteracting forces, 508 00:25:09,880 --> 00:25:13,560 Speaker 4: one being economic nationalism, so focusing more on your own backyard. 509 00:25:13,640 --> 00:25:17,720 Speaker 4: The other being fiscal activism, so having more active government spending. 510 00:25:18,040 --> 00:25:20,600 Speaker 4: The government spending bit may support inflation, but if you 511 00:25:20,680 --> 00:25:23,200 Speaker 4: direct that spending in the right way, it could subsequently 512 00:25:23,200 --> 00:25:26,280 Speaker 4: boost productivity and actually help inflation come down over time. 513 00:25:26,640 --> 00:25:28,560 Speaker 4: For us, the big risk is what's going on with 514 00:25:28,640 --> 00:25:31,760 Speaker 4: respect to migration and the potential growth in the labor force. 515 00:25:32,040 --> 00:25:34,600 Speaker 4: That's where we think we'll see some inflationary pressure come from. 516 00:25:34,640 --> 00:25:36,560 Speaker 4: That's where we think we'll see some drag on growth, 517 00:25:36,680 --> 00:25:39,639 Speaker 4: but hopefully we get enough productivity to effectively offset that. 518 00:25:39,720 --> 00:25:41,000 Speaker 2: All right, so let's get right to it. 519 00:25:41,160 --> 00:25:45,360 Speaker 6: Where As a global market strategist at the biggest global 520 00:25:45,400 --> 00:25:47,640 Speaker 6: financial services company in the world, where do you guys 521 00:25:47,640 --> 00:25:49,040 Speaker 6: see the best opportunity these days? 522 00:25:49,359 --> 00:25:51,800 Speaker 4: So we continue to like the US tech story. We 523 00:25:51,840 --> 00:25:55,640 Speaker 4: think that although the pace of earnings growth is decelerating, 524 00:25:55,640 --> 00:25:58,160 Speaker 4: we're still looking at absolute numbers that are very attractive, 525 00:25:58,240 --> 00:26:00,480 Speaker 4: particularly compared to what you can get the rest of 526 00:26:00,520 --> 00:26:02,800 Speaker 4: the market. We're also thinking more about the rest of 527 00:26:02,840 --> 00:26:05,200 Speaker 4: the world. You know, something that happened during the pandemic 528 00:26:05,400 --> 00:26:09,160 Speaker 4: was we went from this environment of almost global austerity 529 00:26:09,160 --> 00:26:12,040 Speaker 4: in the aftermath of the GFC to an environment where 530 00:26:12,080 --> 00:26:16,160 Speaker 4: governments are spending much more aggressively, much more proactively. That's 531 00:26:16,200 --> 00:26:18,240 Speaker 4: going to help places like Europe. That's going to help 532 00:26:18,280 --> 00:26:21,480 Speaker 4: the emerging markets. And so we see opportunity in em today, 533 00:26:21,520 --> 00:26:23,879 Speaker 4: particularly given the strength of the US consumer and the 534 00:26:23,880 --> 00:26:25,440 Speaker 4: prospect for the FED to ease going forward. 535 00:26:25,480 --> 00:26:28,359 Speaker 2: David le moved to this global market strategy. JP Morgan. 536 00:26:28,400 --> 00:26:30,040 Speaker 2: Now we're sort of taking a high road here in 537 00:26:30,080 --> 00:26:33,800 Speaker 2: some of the theory wrapped around a many year a 538 00:26:33,880 --> 00:26:37,520 Speaker 2: multi year bull market as well. Okay, I love what 539 00:26:37,600 --> 00:26:40,919 Speaker 2: you say about all this, but the bottom line is 540 00:26:41,800 --> 00:26:45,840 Speaker 2: some of us older remember late ninety four ninety five, 541 00:26:45,920 --> 00:26:48,760 Speaker 2: this thing called the Internet showed up and everybody figured 542 00:26:48,760 --> 00:26:53,280 Speaker 2: out network effect in the investment that JP Morgan sees 543 00:26:53,359 --> 00:26:59,080 Speaker 2: in technology and in America. Is the network effect still 544 00:26:59,240 --> 00:27:06,000 Speaker 2: in place for technology companies versus conventional scale economics And 545 00:27:06,040 --> 00:27:09,000 Speaker 2: the answer is, I think people are way underplaying the 546 00:27:09,040 --> 00:27:11,320 Speaker 2: network benefits of AI. 547 00:27:12,359 --> 00:27:14,440 Speaker 4: I would very much agree. I mean, when I think 548 00:27:14,480 --> 00:27:16,560 Speaker 4: about the power of this tool, and you know, I've 549 00:27:16,560 --> 00:27:18,560 Speaker 4: been in this industry for fifteen years, and so when 550 00:27:18,600 --> 00:27:20,240 Speaker 4: I started, I used to go to the Bureau of 551 00:27:20,240 --> 00:27:24,040 Speaker 4: Economic Analysis website, download the spreadsheet, type the numbers in, 552 00:27:24,200 --> 00:27:26,760 Speaker 4: update the charts, update the model, so on, so forth. 553 00:27:27,160 --> 00:27:29,520 Speaker 4: You can now sit down with a large language model 554 00:27:29,560 --> 00:27:33,000 Speaker 4: and say, build me something to model distance to default 555 00:27:33,040 --> 00:27:36,240 Speaker 4: in accel. It'll spit it back in forty five seconds. 556 00:27:36,240 --> 00:27:38,240 Speaker 4: That's something that could take hours, and so it freeze 557 00:27:38,280 --> 00:27:38,640 Speaker 4: up time. 558 00:27:39,080 --> 00:27:43,320 Speaker 2: Didn't trip over a value line laying on the floor 559 00:27:43,920 --> 00:27:46,760 Speaker 2: eight inches thick, and you would wait for Thursday when 560 00:27:46,800 --> 00:27:50,600 Speaker 2: the next chapter of value line came out. They had 561 00:27:51,000 --> 00:27:52,440 Speaker 2: they had a logarythmic chart. 562 00:27:52,520 --> 00:27:59,240 Speaker 6: That's exactly so, David, you say diversification isn't optional, it's essential. 563 00:27:59,480 --> 00:28:01,080 Speaker 2: What's the cfcation for you guys? 564 00:28:01,520 --> 00:28:05,080 Speaker 4: So for us, diversification comes in a lot of different ways. 565 00:28:05,160 --> 00:28:07,680 Speaker 4: I think the biggest thing we've tried to impress upon 566 00:28:07,760 --> 00:28:11,840 Speaker 4: investors going forward is that diversification doesn't just mean balancing 567 00:28:11,880 --> 00:28:15,120 Speaker 4: your portfolio between stocks and bonds. It means looking more 568 00:28:15,160 --> 00:28:18,520 Speaker 4: broadly at things like real assets, things like infrastructure, things 569 00:28:18,600 --> 00:28:22,720 Speaker 4: like private credit, which can provide uncorrelated income streams relative 570 00:28:22,720 --> 00:28:26,000 Speaker 4: to what the sixty forty portfolio has historically provided. And 571 00:28:26,040 --> 00:28:27,960 Speaker 4: I think if we go back to twenty twenty two, 572 00:28:27,960 --> 00:28:30,000 Speaker 4: which I know nobody likes one talks about, it's a 573 00:28:30,080 --> 00:28:32,840 Speaker 4: terrible year for both stocks and bonds. The reason why 574 00:28:32,960 --> 00:28:36,120 Speaker 4: is that inflation was a problem in our long term 575 00:28:36,119 --> 00:28:39,640 Speaker 4: capital market assumptions. We're looking for higher inflation volatility. You 576 00:28:39,720 --> 00:28:42,720 Speaker 4: need assets in your portfolio that can diversify that positive 577 00:28:42,720 --> 00:28:45,040 Speaker 4: stock bond correlation. And that's going to be alternately. 578 00:28:45,200 --> 00:28:48,240 Speaker 2: Backs to Orzach on this Brookings then and always and 579 00:28:48,320 --> 00:28:51,240 Speaker 2: now Atlizard and Peter and his team said, look, the 580 00:28:51,280 --> 00:28:55,840 Speaker 2: supply lines are fractured within the pandemic. Don't you put 581 00:28:55,880 --> 00:28:59,920 Speaker 2: a big asterisk around twenty twenty one and say twenty 582 00:29:00,440 --> 00:29:02,880 Speaker 2: and just say we can't analyze it because it was 583 00:29:02,920 --> 00:29:03,680 Speaker 2: a health event. 584 00:29:04,240 --> 00:29:06,680 Speaker 4: Well, I mean I think that, yes, pandemics are are 585 00:29:06,760 --> 00:29:10,760 Speaker 4: in theory very unique and idiosyncratic events. But the follow 586 00:29:10,800 --> 00:29:13,479 Speaker 4: through from the pandemic, right, those things I talked about earlier, 587 00:29:13,520 --> 00:29:16,840 Speaker 4: of economic nationalism and physical activism, that is going to 588 00:29:16,920 --> 00:29:20,120 Speaker 4: drive more inflation volatility over time. And so even if 589 00:29:20,160 --> 00:29:24,080 Speaker 4: CPI doesn't go to nine, if CPI's gyrating between two 590 00:29:24,160 --> 00:29:26,400 Speaker 4: and four, that's still going to be more challenging than 591 00:29:26,400 --> 00:29:28,520 Speaker 4: the world we were in in the aftermath of the GFC. 592 00:29:28,760 --> 00:29:31,520 Speaker 2: That's not why you're here. I mean, David Kelly thinks 593 00:29:31,520 --> 00:29:34,280 Speaker 2: you're here because of JP Morgan. Blah blah blah. Did 594 00:29:34,320 --> 00:29:37,240 Speaker 2: you study with James McGregor Burns at Williams College? 595 00:29:37,640 --> 00:29:41,280 Speaker 4: I a leadership I studied with Professor McAllister, who was 596 00:29:41,320 --> 00:29:43,000 Speaker 4: one of his disciples, his disciples. 597 00:29:43,040 --> 00:29:46,280 Speaker 2: Yeah, well, I had a great relationship with Burns up 598 00:29:46,320 --> 00:29:49,320 Speaker 2: at Williams, and I've actually had the honor of attending 599 00:29:49,360 --> 00:29:54,120 Speaker 2: his gravesite. But tell us about the leadership structure of 600 00:29:55,000 --> 00:29:58,760 Speaker 2: politics and philosophy at Williams. It's absolutely best in class 601 00:29:59,160 --> 00:30:00,440 Speaker 2: the side of the Atlanta. 602 00:30:00,560 --> 00:30:03,680 Speaker 4: So when I think about what's going on from a 603 00:30:03,680 --> 00:30:07,680 Speaker 4: philosophical and a political science angle and try to overlay leadership, 604 00:30:07,920 --> 00:30:12,040 Speaker 4: you know, we always talked about kind of transformational leaders 605 00:30:12,160 --> 00:30:15,680 Speaker 4: people who rose to the occasion. They stepped up to 606 00:30:15,680 --> 00:30:18,240 Speaker 4: the plate and dealt with with what they were being presented, 607 00:30:18,560 --> 00:30:21,400 Speaker 4: rather than trying to shape the future based on their 608 00:30:21,440 --> 00:30:23,240 Speaker 4: own agenda. And I think what we need to see 609 00:30:23,320 --> 00:30:26,040 Speaker 4: frankly is going back to the former rather than the latter. 610 00:30:26,080 --> 00:30:29,160 Speaker 4: I think politics, regardless of where you look around the world, 611 00:30:29,360 --> 00:30:32,640 Speaker 4: is all about very narrow agendas that people are trying 612 00:30:32,640 --> 00:30:34,640 Speaker 4: to push forward. We need to take a look around 613 00:30:34,680 --> 00:30:36,400 Speaker 4: at the world, look at the investment, look at the 614 00:30:36,400 --> 00:30:39,320 Speaker 4: potential for productivity growth, and say how do we maximize this? 615 00:30:39,360 --> 00:30:41,880 Speaker 4: Because if we can have the rising tide lift all 616 00:30:41,920 --> 00:30:43,880 Speaker 4: boats at the end of the day, that makes everybody 617 00:30:43,880 --> 00:30:46,000 Speaker 4: better off. And that's the whole point of leadership. When 618 00:30:46,000 --> 00:30:46,880 Speaker 4: all of a sudden does. 619 00:30:46,800 --> 00:30:49,000 Speaker 2: I can't do better than that? No. David Leader rights 620 00:30:49,080 --> 00:30:52,680 Speaker 2: with this Williams College and of course JP Morgan investment 621 00:30:53,120 --> 00:30:56,080 Speaker 2: Management in a new building. He's in the new building. 622 00:30:56,120 --> 00:30:56,600 Speaker 4: Yes, he is. 623 00:30:57,160 --> 00:30:59,360 Speaker 2: My word is the food as good as they say, 624 00:30:59,760 --> 00:31:00,560 Speaker 2: A pretty awesome. 625 00:31:00,560 --> 00:31:02,240 Speaker 4: It's it's kind of like Hotel California. 626 00:31:02,280 --> 00:31:03,600 Speaker 2: You know you can do you go home? 627 00:31:03,760 --> 00:31:04,960 Speaker 4: No, you don't have to. It's great. 628 00:31:05,000 --> 00:31:07,440 Speaker 2: You can just bring your kids. It gives to work. 629 00:31:07,600 --> 00:31:09,000 Speaker 4: They're coming for Halloween next week. 630 00:31:09,280 --> 00:31:12,280 Speaker 2: So yeah, they all dresses James Diamond. 631 00:31:12,360 --> 00:31:16,440 Speaker 4: Yeah, we're not not this year. My older one is 632 00:31:16,480 --> 00:31:18,280 Speaker 4: going to be free to CALLO and my younger one 633 00:31:18,320 --> 00:31:19,200 Speaker 4: is going to be ursuless. 634 00:31:19,280 --> 00:31:23,960 Speaker 2: Jacky Mary. That would work. It's free to callos. 635 00:31:24,160 --> 00:31:25,480 Speaker 4: She came on her own. 636 00:31:25,760 --> 00:31:29,360 Speaker 2: That is so Williams College, Are you please? Who are 637 00:31:29,360 --> 00:31:32,960 Speaker 2: the girls going? As in the Lisa Mantalehouse el viral. 638 00:31:33,960 --> 00:31:36,160 Speaker 8: This is that the teen years they get those like 639 00:31:36,320 --> 00:31:40,120 Speaker 8: little two skimpy students has. 640 00:31:40,000 --> 00:31:43,760 Speaker 2: Been a heart attack. Yeah, that's how they were. David 641 00:31:43,880 --> 00:31:48,000 Speaker 2: do get a life, Taylor Swift, It goes David Liba. 642 00:31:48,080 --> 00:31:51,400 Speaker 2: Bit's with JP Morgan. Stay with us. More from Bloomberg 643 00:31:51,520 --> 00:31:53,560 Speaker 2: Surveillance coming up after this. 644 00:32:00,840 --> 00:32:04,400 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 645 00:32:04,480 --> 00:32:07,640 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 646 00:32:07,720 --> 00:32:11,400 Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app or 647 00:32:11,520 --> 00:32:12,960 Speaker 1: watch US Live on YouTube. 648 00:32:13,240 --> 00:32:16,000 Speaker 2: Joining us down Cameron Dawson of New Edge here. She 649 00:32:16,080 --> 00:32:20,640 Speaker 2: has been brilliant on participating in the equity market. You 650 00:32:20,720 --> 00:32:23,880 Speaker 2: say earnings the season we're into now and into next 651 00:32:23,880 --> 00:32:27,720 Speaker 2: week's tech extravaganza is the catalyst to break out of 652 00:32:27,760 --> 00:32:30,120 Speaker 2: a range. So many disagree with that. 653 00:32:30,320 --> 00:32:33,000 Speaker 9: Yeah, well, earnings have been the key reason why this 654 00:32:33,120 --> 00:32:36,479 Speaker 9: market has been so very resilient. If you're revising up 655 00:32:36,520 --> 00:32:39,920 Speaker 9: earnings estimates, it does something really powerful because not only 656 00:32:40,000 --> 00:32:43,360 Speaker 9: are you increasing your estimates for profits, but you're also 657 00:32:43,440 --> 00:32:47,320 Speaker 9: providing the environment to be able to expand multiples. Multiples 658 00:32:47,440 --> 00:32:50,120 Speaker 9: go up when you are revising estimates higher. 659 00:32:50,360 --> 00:32:51,720 Speaker 2: They tend to go down when you're. 660 00:32:51,640 --> 00:32:54,160 Speaker 9: Cutting estimates, which just means that as long as we're 661 00:32:54,160 --> 00:32:56,400 Speaker 9: in a world where people still need to ratchet up 662 00:32:56,440 --> 00:32:58,680 Speaker 9: their numbers, it means that you can be in this 663 00:32:58,840 --> 00:33:01,440 Speaker 9: world where valuation can levitate at high levels. 664 00:33:01,560 --> 00:33:04,840 Speaker 2: Oh, Walmart, it's gone from forty to forty two. It's 665 00:33:04,880 --> 00:33:09,360 Speaker 2: a multiple expand multiple expandi mark exactly forty two. So, Cameron, 666 00:33:09,360 --> 00:33:11,360 Speaker 2: what do you make of this earning season so far? 667 00:33:11,400 --> 00:33:13,560 Speaker 2: It seems like the numbers once again, just like the 668 00:33:13,600 --> 00:33:17,040 Speaker 2: second quarter coming in well above expectation. 669 00:33:17,280 --> 00:33:21,760 Speaker 9: Yeah, we've seen eighty six percent of companies beat earnings expectations. 670 00:33:21,800 --> 00:33:23,560 Speaker 9: That's pretty much in line with average. 671 00:33:23,560 --> 00:33:24,560 Speaker 2: That's very normal. 672 00:33:24,640 --> 00:33:27,040 Speaker 9: You have a lowered bar going into earning season, and 673 00:33:27,080 --> 00:33:30,480 Speaker 9: then you jump over that lowered bar. But we see 674 00:33:31,040 --> 00:33:33,280 Speaker 9: very strong results across the board, and that's not something 675 00:33:33,320 --> 00:33:36,280 Speaker 9: that surprises us. What is very interesting is some of 676 00:33:36,320 --> 00:33:39,360 Speaker 9: the reactions to strong results, which just means that you're 677 00:33:39,400 --> 00:33:44,120 Speaker 9: not necessarily seeing big upside moves even though you're seeing 678 00:33:44,120 --> 00:33:47,080 Speaker 9: beats and raises, which just suggests that maybe some of 679 00:33:47,080 --> 00:33:49,680 Speaker 9: those multiples did get to a point where they can't 680 00:33:49,680 --> 00:33:50,520 Speaker 9: push much higher. 681 00:33:51,200 --> 00:33:51,520 Speaker 2: Very good. 682 00:33:51,600 --> 00:33:54,000 Speaker 6: I mean, I'm looking at the bond market here. 683 00:33:54,000 --> 00:33:57,120 Speaker 2: We've got ten year treasury yields below four percent? Here, 684 00:33:57,200 --> 00:33:58,160 Speaker 2: what is the bond market. 685 00:33:58,000 --> 00:33:58,560 Speaker 6: Telling us here? 686 00:33:58,840 --> 00:34:01,920 Speaker 9: This is very pecure because given all of the strong 687 00:34:02,000 --> 00:34:04,520 Speaker 9: narratives that we have about US economic growth, look at 688 00:34:04,560 --> 00:34:07,560 Speaker 9: Lanta fed GDP now being at three point nine percent. 689 00:34:08,040 --> 00:34:11,160 Speaker 9: You have talked about all this AI capex and great earnings, 690 00:34:11,239 --> 00:34:14,760 Speaker 9: and yet and yet the tenure is below four percent. 691 00:34:15,120 --> 00:34:17,400 Speaker 9: So the big question we have is the tenure sending 692 00:34:17,440 --> 00:34:20,040 Speaker 9: as a signal that we should be more concerned about 693 00:34:20,080 --> 00:34:22,920 Speaker 9: equitying credit the tenure pricing and maybe a more dire 694 00:34:23,000 --> 00:34:27,040 Speaker 9: economic scenario. Or is the tenure falling because of things 695 00:34:27,040 --> 00:34:30,160 Speaker 9: that could actually be beneficial to equitying credits, such as 696 00:34:30,520 --> 00:34:34,840 Speaker 9: expectations for quantitative easing or expectations of inflation remaining contained 697 00:34:35,160 --> 00:34:35,720 Speaker 9: big question? 698 00:34:36,080 --> 00:34:39,320 Speaker 2: This is really brilliant. This is the word I use, folks, ambiguity, 699 00:34:39,760 --> 00:34:41,919 Speaker 2: where it can cut this way or that way. John 700 00:34:41,960 --> 00:34:44,799 Speaker 2: Writing is brilliant about this over at Brain in terms 701 00:34:44,840 --> 00:34:49,719 Speaker 2: of the economics. Explain the ten year yield ambiguity or 702 00:34:49,760 --> 00:34:53,080 Speaker 2: almost mystery and what it means for someone looking at 703 00:34:53,080 --> 00:34:55,760 Speaker 2: their four oh one case saying should I go further? 704 00:34:55,880 --> 00:34:59,440 Speaker 9: Cameron Dawson long Well, I believe it is a Bloomberg 705 00:34:59,480 --> 00:35:02,480 Speaker 9: tagline that says context changes everything. 706 00:35:04,160 --> 00:35:05,120 Speaker 2: I think you're back here. 707 00:35:06,320 --> 00:35:08,600 Speaker 9: I think that the context of why the tenure is 708 00:35:08,640 --> 00:35:11,120 Speaker 9: falling is so very important. If you have a tenure 709 00:35:11,200 --> 00:35:15,040 Speaker 9: falling because you're pricing in a bad economic scenario, that 710 00:35:15,160 --> 00:35:19,880 Speaker 9: implies lower earnings, lower valuations within risk assets, which implies 711 00:35:19,880 --> 00:35:22,480 Speaker 9: a risk off move. But if the tenure is falling 712 00:35:22,560 --> 00:35:25,360 Speaker 9: because you have a very aggressive FED, that's going to 713 00:35:25,400 --> 00:35:27,480 Speaker 9: be buying up a lot of bonds on the long end, 714 00:35:27,920 --> 00:35:30,120 Speaker 9: or you have this ability where the Treasury is not 715 00:35:30,160 --> 00:35:32,799 Speaker 9: having to issue as much, then that can actually be 716 00:35:32,840 --> 00:35:35,520 Speaker 9: an environment where lower yields is still good for risk 717 00:35:35,560 --> 00:35:36,520 Speaker 9: asset tursts. 718 00:35:36,239 --> 00:35:38,200 Speaker 2: And slack moments ago. It's like you wrote it for you. 719 00:35:38,320 --> 00:35:41,640 Speaker 2: Thank you listening for listening to Cameron Dawson towardston over 720 00:35:41,680 --> 00:35:45,160 Speaker 2: at Apollo. The US is truly anigue thirty percent of 721 00:35:45,200 --> 00:35:48,759 Speaker 2: the global stock market, almost fifty percent nownball yep. And 722 00:35:48,800 --> 00:35:51,200 Speaker 2: it's just amazing, And that kind of goes to where 723 00:35:51,200 --> 00:35:53,799 Speaker 2: I want to go. Concentration risk. 724 00:35:53,880 --> 00:35:56,640 Speaker 6: It's been something we've been talking about for more than 725 00:35:56,680 --> 00:35:58,600 Speaker 6: a year now, it seems like, but it doesn't seem 726 00:35:58,640 --> 00:36:01,840 Speaker 6: to be a problem for the market per se. But 727 00:36:02,360 --> 00:36:05,279 Speaker 6: we've been all raised and all educated that we need 728 00:36:05,320 --> 00:36:07,360 Speaker 6: to have a broadening breath at the market. 729 00:36:07,400 --> 00:36:10,240 Speaker 9: Well, if we go back in history, the two past 730 00:36:10,239 --> 00:36:12,920 Speaker 9: peaks of concentration were during the nifty to fifty time 731 00:36:12,960 --> 00:36:14,960 Speaker 9: at the end of the sixties as well as at 732 00:36:14,960 --> 00:36:18,200 Speaker 9: the peak of the tech bubble in the late nineties. 733 00:36:18,440 --> 00:36:21,319 Speaker 9: And what happened after both of those periods were effectively 734 00:36:21,400 --> 00:36:26,360 Speaker 9: lost decades of returns for equities and last decades do happen. However, 735 00:36:26,600 --> 00:36:29,080 Speaker 9: the challenge you have is it's the timing, because if 736 00:36:29,080 --> 00:36:32,279 Speaker 9: you try to bet against concentration, being early is the 737 00:36:32,280 --> 00:36:33,880 Speaker 9: equivalent of being wrong. 738 00:36:34,080 --> 00:36:35,680 Speaker 2: So what we think we need to have is a 739 00:36:35,680 --> 00:36:36,480 Speaker 2: catalyst as to. 740 00:36:36,520 --> 00:36:39,799 Speaker 9: Why that concentration unwinds, and for us, that catalyst is 741 00:36:39,800 --> 00:36:41,000 Speaker 9: Earning's growth of the MAC seven. 742 00:36:41,040 --> 00:36:44,280 Speaker 2: I'm going to go back middle of pandemic use of cash. 743 00:36:44,560 --> 00:36:48,120 Speaker 2: I've seen two surprises for me because I'm not informed. 744 00:36:48,560 --> 00:36:52,160 Speaker 2: I was shocked at the GM General Motors share buyback, 745 00:36:52,600 --> 00:36:55,640 Speaker 2: and I saw a chart of the American Express AXP 746 00:36:56,320 --> 00:36:59,720 Speaker 2: share buyback. Are we underplaying now? With all our worries 747 00:36:59,719 --> 00:37:04,600 Speaker 2: in the geopolitical copity, are we underplaying just simple dividend 748 00:37:04,600 --> 00:37:06,000 Speaker 2: growth and share buyback. 749 00:37:06,600 --> 00:37:09,000 Speaker 9: Share buybacks are at a record this year in twenty 750 00:37:09,040 --> 00:37:11,799 Speaker 9: twenty five, despite all of the uncertainty of believe, they're 751 00:37:11,840 --> 00:37:14,640 Speaker 9: up about sixteen percent on a year over year basis. 752 00:37:14,960 --> 00:37:18,320 Speaker 9: Companies are still having plenty of capital to put to work. 753 00:37:18,640 --> 00:37:21,600 Speaker 9: I think the one incremental change is that what happened 754 00:37:21,600 --> 00:37:23,600 Speaker 9: with these tech names is that they used to just 755 00:37:23,680 --> 00:37:26,239 Speaker 9: buy back their stock. Now they're investing a lot in 756 00:37:26,360 --> 00:37:27,400 Speaker 9: very heavy infrastructure. 757 00:37:27,440 --> 00:37:30,120 Speaker 2: One quick more question here. You're all over the country 758 00:37:30,719 --> 00:37:35,600 Speaker 2: talking to investors, retail and institutional. What's the mood out there? 759 00:37:35,640 --> 00:37:38,279 Speaker 2: Is there a Dawson exuberance? I mean, your people out 760 00:37:38,280 --> 00:37:38,800 Speaker 2: of control. 761 00:37:39,040 --> 00:37:41,960 Speaker 9: I just got back from Boston at an academic slash 762 00:37:41,960 --> 00:37:44,960 Speaker 9: institutional investor conference, and the takeaway from that is that 763 00:37:45,080 --> 00:37:48,399 Speaker 9: everybody seems to agree that the world is changing, but 764 00:37:48,600 --> 00:37:50,480 Speaker 9: nobody knows what to do about it. 765 00:37:50,880 --> 00:37:54,640 Speaker 2: Me and that camp, I mean, the answer is they're 766 00:37:54,640 --> 00:37:57,600 Speaker 2: going to adjust. I'm sorry You've been consistent about that time. 767 00:37:57,600 --> 00:37:58,480 Speaker 2: Even right on that one. 768 00:37:58,520 --> 00:38:02,040 Speaker 6: The smart guys at MIT our companals suggest companies and 769 00:38:02,080 --> 00:38:03,200 Speaker 6: consumers adjust. 770 00:38:03,800 --> 00:38:04,920 Speaker 2: You know, we have to work from home. 771 00:38:05,000 --> 00:38:05,200 Speaker 4: Okay? 772 00:38:05,280 --> 00:38:09,000 Speaker 2: Does Zaslov have a job? January first? He's got a 773 00:38:09,040 --> 00:38:12,160 Speaker 2: big payday, no matter what happens. That's the battle of mine. 774 00:38:12,239 --> 00:38:14,839 Speaker 2: That's the smartest thing I've hearded this morning is we'll 775 00:38:14,840 --> 00:38:17,839 Speaker 2: talk about media here in a big Kim Dawson, thank 776 00:38:17,840 --> 00:38:20,760 Speaker 2: you so much, greatly, appreciate it. A new edge this morning. 777 00:38:21,000 --> 00:38:25,200 Speaker 2: Stay with us. More from Bloomberg Surveillance coming up after this. 778 00:38:32,440 --> 00:38:36,040 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live 779 00:38:36,080 --> 00:38:39,239 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 780 00:38:39,320 --> 00:38:43,000 Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or 781 00:38:43,160 --> 00:38:44,600 Speaker 1: watch us live on YouTube. 782 00:38:44,800 --> 00:38:48,480 Speaker 2: Let's get right to it. Every second counts. The newspapers would. 783 00:38:48,239 --> 00:38:50,600 Speaker 8: List all right, let's start with this one. This was 784 00:38:50,640 --> 00:38:54,440 Speaker 8: in the Bloomberg terminal. Wall Street bonuses expected to hit 785 00:38:54,600 --> 00:38:57,320 Speaker 8: a high this year. Okay, we all know, right, big banks, 786 00:38:57,480 --> 00:38:59,879 Speaker 8: they've been pulling in the profits, storing stocks more deal, 787 00:39:00,600 --> 00:39:02,640 Speaker 8: how much are we talking. Well, you have this annual 788 00:39:02,680 --> 00:39:05,240 Speaker 8: report from New York State Control and Thomas and Napoli, 789 00:39:05,239 --> 00:39:07,680 Speaker 8: and it showed that profits at one hundred and thirty 790 00:39:07,719 --> 00:39:09,880 Speaker 8: firms that belong to the New York Soak Exchange will 791 00:39:09,880 --> 00:39:12,960 Speaker 8: they reached thirty point four billion dollars in the first 792 00:39:12,960 --> 00:39:15,440 Speaker 8: half of the year. It's going to hit the highest 793 00:39:15,480 --> 00:39:18,840 Speaker 8: level on record if that same pace continues, which means 794 00:39:19,080 --> 00:39:22,799 Speaker 8: higher bonuses. So you have compensation expenses. They increased by 795 00:39:22,800 --> 00:39:25,000 Speaker 8: almost ten percent in the first half of twenty twenty 796 00:39:25,040 --> 00:39:26,479 Speaker 8: five from the prior year. 797 00:39:26,640 --> 00:39:29,920 Speaker 2: And the tax take, Paul is extraordinary. Oh yeah, I 798 00:39:30,040 --> 00:39:33,400 Speaker 2: mean it really changes the fiscal. 799 00:39:33,520 --> 00:39:36,000 Speaker 6: Of the city, of the entire city, I mean global 800 00:39:36,040 --> 00:39:38,359 Speaker 6: on the Wall Street and particularly here in New York City, 801 00:39:38,560 --> 00:39:40,600 Speaker 6: such a big contributor to the tax. 802 00:39:40,440 --> 00:39:43,440 Speaker 2: Base of the city. So good news there, all right, 803 00:39:43,440 --> 00:39:44,200 Speaker 2: What else we got here? 804 00:39:44,280 --> 00:39:46,120 Speaker 8: Okay, so this is up here rally herereet, we got 805 00:39:46,160 --> 00:39:48,839 Speaker 8: Warner Brothers Discovery, right, all right, They're already mixed off 806 00:39:48,840 --> 00:39:52,920 Speaker 8: three offers from Paramount's Guide Dance, including one that its 807 00:39:53,040 --> 00:39:55,719 Speaker 8: chief executive David Zaslav, had a role in running the 808 00:39:55,719 --> 00:39:56,520 Speaker 8: combined company. 809 00:39:56,560 --> 00:39:57,239 Speaker 4: So this is in the. 810 00:39:57,160 --> 00:39:59,520 Speaker 8: Wall Street Journal. They say they actually gave them the 811 00:39:59,560 --> 00:40:03,120 Speaker 8: opportunit to serve with David Ellison as co chairman co 812 00:40:03,239 --> 00:40:06,520 Speaker 8: CEO of the combined companies. They turned it down again, 813 00:40:06,600 --> 00:40:08,920 Speaker 8: so that they turn it down three times already. They 814 00:40:08,960 --> 00:40:12,200 Speaker 8: tried to keep increasing the price has not worked yet, 815 00:40:12,239 --> 00:40:14,839 Speaker 8: Warner Brothers Discovery said they've gotten offer. 816 00:40:15,360 --> 00:40:18,120 Speaker 6: I think money, Tom, I think you're right in my opinion. 817 00:40:18,160 --> 00:40:19,759 Speaker 6: I think it's simply a bad share price. I don't 818 00:40:19,760 --> 00:40:22,840 Speaker 6: think David Zaslov really cares for whether he has a 819 00:40:22,880 --> 00:40:25,360 Speaker 6: role or not in the new company. But this is 820 00:40:26,040 --> 00:40:29,719 Speaker 6: to value these assets. It's it's not gonna start with 821 00:40:29,760 --> 00:40:30,719 Speaker 6: it too, let's put it that way. 822 00:40:30,760 --> 00:40:33,840 Speaker 2: Well, okay, but is the value that cop like I 823 00:40:33,880 --> 00:40:36,440 Speaker 2: think they have I Love Lucy? Is the value the 824 00:40:36,560 --> 00:40:39,080 Speaker 2: rights to I Love Lucy? Or is it value to 825 00:40:39,120 --> 00:40:42,560 Speaker 2: make the next Warner Brothers movie, which they've been on 826 00:40:42,640 --> 00:40:43,200 Speaker 2: a tearn. 827 00:40:43,480 --> 00:40:46,319 Speaker 6: It's all the above, plus it's cost synergies. The cost 828 00:40:46,320 --> 00:40:50,759 Speaker 6: synergies are going to be real or yes, it's gonna 829 00:40:50,760 --> 00:40:53,319 Speaker 6: be real. Unfortunately, it's gonna be jobs in Hollywood. But 830 00:40:53,800 --> 00:40:58,200 Speaker 6: that's one of the big reasons why Paramount could pay 831 00:40:58,400 --> 00:40:59,160 Speaker 6: a higher price. 832 00:40:59,280 --> 00:41:02,560 Speaker 8: Arguably, you say, is gonna get paid no matter what, 833 00:41:02,760 --> 00:41:03,520 Speaker 8: He's gonna get paid. 834 00:41:03,760 --> 00:41:06,000 Speaker 2: Just the romance that they want the studios. I mean, 835 00:41:06,040 --> 00:41:08,239 Speaker 2: you know, you know, this is survival mode. This is 836 00:41:08,280 --> 00:41:08,960 Speaker 2: survival mode. 837 00:41:08,960 --> 00:41:13,320 Speaker 6: Tom. If you're Paramount, you probably cannot survive, much less 838 00:41:13,360 --> 00:41:15,880 Speaker 6: thrive in this new world if you don't get bigger. 839 00:41:16,120 --> 00:41:18,320 Speaker 2: It has to do a deal. I remember the d 840 00:41:19,239 --> 00:41:21,719 Speaker 2: I remember the day Warner Brothers was taken out. 841 00:41:22,239 --> 00:41:24,600 Speaker 6: I mean, this is this asset's changed hands starting with 842 00:41:24,680 --> 00:41:27,440 Speaker 6: me back in two thousand when we advised AOL to 843 00:41:27,440 --> 00:41:30,799 Speaker 6: buy Time Warner. That assets changed hands, you know, half 844 00:41:30,840 --> 00:41:32,719 Speaker 6: a dozen times in the last twenty five years. 845 00:41:32,840 --> 00:41:35,759 Speaker 8: Next, okay, this next one. I don't know if you've 846 00:41:35,800 --> 00:41:38,040 Speaker 8: ever seen those scams. Sometimes you might get them on 847 00:41:38,040 --> 00:41:39,479 Speaker 8: your text. Sometimes you get them on your. 848 00:41:39,400 --> 00:41:40,960 Speaker 2: Email, and they seem to come more and more. 849 00:41:41,120 --> 00:41:43,279 Speaker 8: Right, Yeah, my mom called the other She's like, I 850 00:41:43,320 --> 00:41:46,839 Speaker 8: got a text that just says hello, don't respond, Like 851 00:41:47,080 --> 00:41:51,000 Speaker 8: I get those all the time. Shut you don't know 852 00:41:51,080 --> 00:41:53,920 Speaker 8: the number. So it's really become a thing. Americans have 853 00:41:54,000 --> 00:41:56,719 Speaker 8: lost billions of dollars city scams. So the New York 854 00:41:56,760 --> 00:41:59,840 Speaker 8: Times really has a good look into how this all happens. 855 00:42:00,080 --> 00:42:03,719 Speaker 8: Say they're led by groups in Southeast Asia. They really 856 00:42:03,760 --> 00:42:05,280 Speaker 8: dove into it. They say a lot of the scam 857 00:42:05,640 --> 00:42:08,719 Speaker 8: centers rely on forced labor, and they do a couple 858 00:42:08,880 --> 00:42:12,480 Speaker 8: things so they target victims. They basically win their trust 859 00:42:12,520 --> 00:42:16,880 Speaker 8: over on social media on places like let's say, Facebook, WhatsApp, Telegram, 860 00:42:16,920 --> 00:42:19,040 Speaker 8: so they start kind of winning them over. Sometimes they 861 00:42:19,080 --> 00:42:21,640 Speaker 8: pose as a financial advisor and then they ask people 862 00:42:21,640 --> 00:42:24,319 Speaker 8: to invest in this fake crypto you know fund. Or 863 00:42:24,360 --> 00:42:28,320 Speaker 8: they use romance scams and they target divorce sees and widows, 864 00:42:29,000 --> 00:42:31,400 Speaker 8: or maybe they they call people on the phone and 865 00:42:31,480 --> 00:42:33,560 Speaker 8: saying that their bank representatives and they ask for their 866 00:42:33,920 --> 00:42:36,239 Speaker 8: account or a pin number, social security mind. 867 00:42:36,640 --> 00:42:37,400 Speaker 2: It's crazy. 868 00:42:37,560 --> 00:42:39,560 Speaker 6: I am shocked whenever I'm out in public and I 869 00:42:39,600 --> 00:42:43,040 Speaker 6: hear somebody answer their cell phone by saying hello. Have 870 00:42:43,160 --> 00:42:45,920 Speaker 6: you ever answered your cell phone unless you don't know 871 00:42:45,920 --> 00:42:50,160 Speaker 6: who's calling you? I mean, I don't even acknowledge any 872 00:42:51,120 --> 00:42:51,719 Speaker 6: I don't know. 873 00:42:52,040 --> 00:42:54,880 Speaker 2: I miss a lot of calls. And to be perfectly honest, 874 00:42:54,880 --> 00:42:56,719 Speaker 2: when they need me at Bloomberg, they have to call 875 00:42:56,840 --> 00:42:59,800 Speaker 2: missus King. Yeah, I don't. That's why God made voicemail. 876 00:43:00,320 --> 00:43:02,759 Speaker 8: I don't pick up my So you're not just ignoring me. 877 00:43:06,960 --> 00:43:11,680 Speaker 2: About it, but be aware of that. We'll come back 878 00:43:11,719 --> 00:43:15,560 Speaker 2: to this. This is not going away, Lisa Manteo, the newspapers. 879 00:43:16,040 --> 00:43:20,920 Speaker 1: This is the Bloomberg Surveillance Podcast, available on Apple, Spotify, 880 00:43:21,000 --> 00:43:25,320 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 881 00:43:25,440 --> 00:43:28,880 Speaker 1: seven to ten am Eastern on Bloomberg dot com, the 882 00:43:29,000 --> 00:43:33,000 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You 883 00:43:33,040 --> 00:43:36,400 Speaker 1: can also watch us live every weekday on YouTube and 884 00:43:36,600 --> 00:43:38,360 Speaker 1: always on the Bloomberg terminal