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Speaker 2: Right now, we're gonna get right to it. We've got
Speaker 2: a wonderful conversation here. What Oliver Wyman has done as
Speaker 2: part of marsh Broc Clennan and Mercer and all the
Speaker 2: rest is it gone out to people that have shown
Speaker 2: stunning expertise in different fields, pooled them in together and
Speaker 2: it's like a legit global consultancy. So to explain, you know,
Speaker 2: it's like Butch Cassidy, who are the nice Scott Dan
Speaker 2: tannebon Is sanctions. He's the one that knows who's cheating
Speaker 2: and why they're cheating and what's going to take the will,
Speaker 2: if you will, for in the case of Russia, for
Speaker 2: Europe to get its act together. Hu Van Steinis was
Speaker 2: iconic at Morgan Stanley, Ages, Ago and Finance in banking worldwide.
Speaker 2: Huvanstinius's partner vice chair at Oliver Wyman. Daniel Tannemum partner
Speaker 2: global anti financial crime practice leader at Oliver Wyman. Here,
Speaker 2: let me start with you the year end, and you
Speaker 2: know it's not like thirty pages, the one hundred and
Speaker 2: twenty page Oliver Wyman, this is twenty twenty six. Do
Speaker 2: you have a theme yet? It's a great question.
Speaker 3: We'll look.
Speaker 4: So.
Speaker 5: I was just chatting with one of my friends about
Speaker 5: their their outlook yesterday and they said the biggest question
Speaker 5: for them was has the flurry of defaults? Is that
Speaker 5: going to be a snowstorm or is it going to
Speaker 5: be That was just a little flurry which came past us.
Speaker 5: So this, I think the credit markets spreads are historically tight,
Speaker 5: riskwards a little bit tighter than it was. Where does that?
Speaker 5: Where did credit markets go from here? And is much
Speaker 5: of a slow down? I think that's one of the
Speaker 5: big questions on our plant's mind. Obviously the whole AI
Speaker 5: data center growth or that off with that impetus offset,
Speaker 5: that's clearly a baked in and a big debate too.
Speaker 3: But lots around credit markets.
Speaker 2: But when you're dark in the door at Oxford, did
Speaker 2: you take cockroach four oh two?
Speaker 6: I mean, you know the cockroaches out there?
Speaker 5: Yeah, we don't get so many cockroaches in the UK
Speaker 5: Chilli there private credit.
Speaker 2: I mean, this isn't your main question for banking and
Speaker 2: for everybody out there?
Speaker 6: Are they going to do you sense us as cockroaches.
Speaker 5: Look the way I take it is this feels like
Speaker 5: a bit late cycle behavior. So you know, you imagine
Speaker 5: we're we're a long way through a cycle. Some of
Speaker 5: the some of what we see and you've seen on
Speaker 5: Bloomberg this morning is fraud, some is uh, difficulties around
Speaker 5: a K shaped economy. What the real dissonance, Tom, is
Speaker 5: that the banks CFOs we engage with are not sensing
Speaker 5: a big pickup in credit. They're saying it's really benign.
Speaker 5: But obviously what the debate in the market is much
Speaker 5: more concerned. So I think there's a real tension there
Speaker 5: at the moment. I don't see. Look, this late cycle,
Speaker 5: there will be more folks. The key question is are
Speaker 5: they well spread and are they amplified? Dan, what's the
Speaker 5: latest here on I don't know. I guess just our
Speaker 5: tariff policy here in the US. The Supreme Court heard
Speaker 5: some arguments last week. I guess we'll hear from them
Speaker 5: later this year here. But what's the policy these days
Speaker 5: on tariff's is there one?
Speaker 4: Well, I mean, the policy is the Trump administration is
Speaker 4: treating that hearing like it's a speed bump, if at
Speaker 4: all okay, and really trying to come out saying we
Speaker 4: have other authorities we can use, whether it's Section two
Speaker 4: thirty two or three ZHO one, which are much more
Speaker 4: limited than what the president attempted under AEPA, which is
Speaker 4: a reminder, AEPA was created to limit the president's authorities.
Speaker 4: So all of the rhetoric that Trump had set around
Speaker 4: tariffs and the run up to and aftermath of Liberation
Speaker 4: Day kind of shot the whole argument in the foot,
Speaker 4: and it's why even the conservative justices were pretty skeptical
Speaker 4: of the arguments made. So I think the administration is
Speaker 4: trying to show confidence that their strategy will move forward.
Speaker 6: Do you believe in that?
Speaker 2: I mean, investment's over it with Morning Joe right now
Speaker 2: talking it up. I mean, the basic gist Paul's talking
Speaker 2: about is we've moved on from tariffs.
Speaker 6: So I don't buy it for a minute.
Speaker 4: We've definitely not moved on from tariffs, because if we do,
Speaker 4: that's a key part of this administration strategy for hammering
Speaker 4: out trade deals. So it literally kicks the stool out
Speaker 4: from under a bunch of them. And you look at
Speaker 4: what's happening between the US and China where there's this
Speaker 4: detent for the moment, does that go away? Does China
Speaker 4: begin to turn the screws again and turn off this
Speaker 4: spigot for the five rare earths they began allowing movement of.
Speaker 7: So part of the just the talk of this administration
Speaker 7: has been really impacting your industry, the financial services industry
Speaker 7: in terms of deregulation. Is that a thing or they've
Speaker 7: been focusing so much on tariffs they haven't looked at
Speaker 7: the banking system.
Speaker 6: Oh.
Speaker 5: I think that the simplification of bank rules is one
Speaker 5: of the four big priorities for the administration. I think that,
Speaker 5: you know, funding the data center, build out, the energy security,
Speaker 5: the rare earth supply chains. Think about the JP Morgan
Speaker 5: announcement about national security, huge numbers for the next decade.
Speaker 5: So now I think that financial deregulation, financial simplifications. I mean,
Speaker 5: as I think the industry is calling it is a
Speaker 5: huge part of this, and I think what we're seeing it.
Speaker 5: Think about the data center, it's all hands on deck.
Speaker 5: The banks alone and can't do it. A private markets
Speaker 5: alone clearly can't do it, so you need both working together.
Speaker 5: I think that does mean that the banks are feeling,
Speaker 5: you know, a bit of a spring and their step,
Speaker 5: certainly the larger ones because of the And the key
Speaker 5: question will be how much of it comes back in
Speaker 5: buybacks and dividends versus actually really reinvested. And that's the
Speaker 5: bet Here.
Speaker 2: Special momenting this morning, Daniel Tanna bound Hu Vanstein is
Speaker 2: there with Oliver Wyman, together with us in the studio.
Speaker 2: I want to go a holistic cany I mentioned yesterday
Speaker 2: Apple TV down Cemetery Road. It's like a travelogue for Oxford.
Speaker 2: Basically it's centered in Oxford, and they use the Bloomberg terminal.
Speaker 2: Great within a nice I mean, I was looking for
Speaker 2: your pod, didn't see yeah there, but you know, you
Speaker 2: know down Cemetery Roads doing the Bloomberg thing. You saw
Speaker 2: Hugh von steinas and slow horses like season three they
Speaker 2: made an appearance. I want you guys to talk about
Speaker 2: great Britain and is a general sense Dan yours the
Speaker 2: ugly American foreigner here you're living at your service to
Speaker 2: the to the to the public of the United Kingdom.
Speaker 2: From where we sit. It's turned upside down. Kit Jukes
Speaker 2: at Sacchen this morning with a blistering Noe Jordan Rochester
Speaker 2: models one south of one thirty. Here Von steinas where
Speaker 2: is your nation in twelve months?
Speaker 5: Look, it's a great question when we would have these debates,
Speaker 5: Say fifteen years ago, the UK was mid atlantic. We did,
Speaker 5: We had the growth rate which was mid atlantic. We
Speaker 5: had the deregulation which was edging between the two continents.
Speaker 5: And I think post the financial crisis and particularly Brexit,
Speaker 5: the moment we voted to leave, the more European became.
Speaker 5: And I think that's the challenge and that's the problem here,
Speaker 5: that the politics has become more unstable in Itali's the
Speaker 5: finances have become a little bit more unstable. And I
Speaker 5: think the debate here is like will we get a
Speaker 5: little will the pressure from the bomb market's edges back
Speaker 5: to that mid atlanticism or we just got stuck in
Speaker 5: a bit of a rut. And I think, look, politically
Speaker 5: it's painful, but like everything in life, it's not all
Speaker 5: about politics.
Speaker 8: Stuff on the economy expert and Heathrow, in the tram
Speaker 8: and in sanctions and all that you said on the
Speaker 8: truck lines that the port of Dover is the relationship with.
Speaker 2: The United Kingdom and the continent of Europe. Is it
Speaker 2: basically shattered because of Brexit?
Speaker 6: I don't.
Speaker 4: I'm not sure I would agree with that. I mean,
Speaker 4: Hugh is certainly the expert on this, but is it
Speaker 4: shattered because of Brexit? I mean, interestingly in my world
Speaker 4: and I was I've been in Brussels and London in
Speaker 4: the last few weeks.
Speaker 6: If you take the issue.
Speaker 4: Of Russia, I think there's general alignment between the European Commission,
Speaker 4: the British, the US, which is nice to see for
Speaker 4: a chain. So, I mean, I think it may be
Speaker 4: on an episodic basis, but shattered seems like a stretch.
Speaker 6: So they're getting they're getting on, they're getting a lot,
Speaker 6: I think.
Speaker 5: So we'll just get back to such to finance, it's interesting,
Speaker 5: I think the it's interesting how two big private market
Speaker 5: films of both both bought in the UK recently, so
Speaker 5: there's actually there's there's there's money to be made in
Speaker 5: terms of financing. The economy may not be leaping ahead,
Speaker 5: but there's business to be done.
Speaker 2: Can I poss got okay? Questions here? I Vantstein is
Speaker 2: dantan about with us. All my radar is up and
Speaker 2: I'm biased saying go along United Kingdom. It's so gloomy, like,
Speaker 2: what's the royal family going to do? What in God's
Speaker 2: name is tatany I'm gonna do? Time? May you late
Speaker 2: in the game? I mean my gut feeling is this
Speaker 2: is the time to go long breckxit long UK? Is
Speaker 2: that in the Oliver Wyman zeitgeist.
Speaker 3: Look, I know, I think it's an interesting call.
Speaker 5: I mean, the moment where you get this, the pessimism
Speaker 5: about the UK, particularly my trip here to the US,
Speaker 5: is profound. So I think you're right that I think
Speaker 5: it is kind of darkest before dawn. I think the
Speaker 5: pressure from the bomb market is going to challenge the
Speaker 5: government to make better fiscal decisions. Look, there's a little
Speaker 5: bit of caution, but I see a lot of interest around.
Speaker 5: You talked about Oxford, around the universities as a huge
Speaker 5: science parks being built. You know, the Ellison Institute is
Speaker 5: just poured in over one hundred million into Oxford. I
Speaker 5: think there's a lot of excitement around US science and energy.
Speaker 5: But you know, I think it's most important to invest
Speaker 5: through the politics, not because of.
Speaker 7: So, Daniel tos As you mentioned some of the sanctions
Speaker 7: on Russia and so on. We're talk to us about sanctions,
Speaker 7: do they work at all here? Because it just seems
Speaker 7: we have wave after wave after wave of sanctions and
Speaker 7: these people I think they just it doesn't seem to
Speaker 7: have an impact that well.
Speaker 4: No, so we there was a moment a few weeks
Speaker 4: ago when the US decided to rejoin the Global Coalition
Speaker 4: and sanction Luke Oil and Rasneft. Those were literally the
Speaker 4: first sanctions that the Trump administration has put on Russia's
Speaker 4: since they took office in January. They have made a
Speaker 4: difference because they, in doing so, put India and China
Speaker 4: on notice that if you continue to buy, you may
Speaker 4: have issues. Now, follow through is not necessarily a strength
Speaker 4: of this administration on this issue, but you have seen
Speaker 4: a reduction in barrels per day being sold. It is
Speaker 4: beginning to hit the Russian economy. But when you look
Speaker 4: at things like you know, Orbon coming to the White
Speaker 4: House asking for an exemption, depending on who you ask,
Speaker 4: indefinite or a year like that kind of doesn't help
Speaker 4: the argument necessarily, But they are moving the needle. The
Speaker 4: Biden administration was very reluctant to touch energy, probably too reluctant.
Speaker 4: The Trump administration has waited way too long to re engage.
Speaker 4: But now that they have, they have to follow through
Speaker 4: and actually enforce the existing sanctions.
Speaker 2: I've got a project right now John McCrae, the iconic
Speaker 2: British author. I'm reading each of his books, trying to
Speaker 2: go back and get a first edition evident all of
Speaker 2: a good time. I'm on the looking glass war right now,
Speaker 2: right after Spio came in from the cold, what's the
Speaker 2: Russian relationship with the continent? Not so much in terms
Speaker 2: of MI five and spying, but what's the Russian relationship
Speaker 2: commercially with Europe right now that we don't see.
Speaker 4: There's still trade. There's trade for nuclear fuel things like uranium.
Speaker 4: There's still lng that they're weaning off. I think January one,
Speaker 4: twenty seven was the date they pushed forward in the
Speaker 4: last round of sanctions that the European Commission passed. There
Speaker 4: is still trade like it is not dead. And the
Speaker 4: challenge is there's still a lot of goods that are
Speaker 4: transshipped over land borders into Russia. We have an automotive
Speaker 4: client that will go nameless that saw like a two
Speaker 4: hundred percent increase in cars being sold to a country
Speaker 4: bordering Russia and said that without irony, it's like you
Speaker 4: see what has happened here, Like the cars are being
Speaker 4: shipped across the border. Countries like Lafia have actually stepped
Speaker 4: up their efforts to literally block physical movement of goods
Speaker 4: from Europe and too Russia. But there is still trade.
Speaker 4: It is not down to nothing like that. That much
Speaker 4: is clear.
Speaker 2: Two great skill sets at Oliver Wyman, Hugh von stein
Speaker 2: Is with his vice chair and Daniel Tannema'm partner here
Speaker 2: that today on sanctions and here's just great financial expertise
Speaker 2: as well, Passueny Worldwide with Hugh von Steiners and.
Speaker 7: C with some hindsight here, how does the average Britain
Speaker 7: view Brexit these days? And is it still a talking point?
Speaker 7: Does it come up in a pub on a Friday evening?
Speaker 5: So so okay, So there's two answers this. If you
Speaker 5: look at the polls, there is some bars remorse, so
Speaker 5: the majority of the population now have have regrets. But
Speaker 5: I think this is more like thinking a head to
Speaker 5: Thanksgiving about what are the topics which shouldn't come around.
Speaker 3: The dining table.
Speaker 5: So still that's still one of these topics which wow,
Speaker 5: people put below the table iff until the fourth class
Speaker 5: of wine.
Speaker 2: You're usually qualified on this, Hugh von Steiners, should the
Speaker 2: Fed enjoy the descent of the Bank of England Bank
Speaker 2: of England recently five to four unheard of at the Fed,
Speaker 2: we would never see that. And you know, I'm working
Speaker 2: with Governor Kearney now running a small nation to the north.
Speaker 2: My draw Canadians in first place. I believe q von
Speaker 2: stein is just as simple as I can. The descent
Speaker 2: that we've learned at the Bank of England is at
Speaker 2: a constructive exercise.
Speaker 3: That's a really good question.
Speaker 5: I think it speaks to just how difficult the setup
Speaker 5: is because you've got sluggish growth, as you've just said, Thomas,
Speaker 5: you want low rates, but inflation keeps picking up ahead
Speaker 5: and that's partly actually a function of breaks it, but
Speaker 5: it's a partly function of other import markets as well.
Speaker 5: So I can see why the committee is really stuck
Speaker 5: and challenged. I don't think you'll get quite the same
Speaker 5: degree of dissent over here because you don't have the
Speaker 5: same difference and fundamentals. But I think it's it's sort
Speaker 5: of healthy, but you know it probably speaks to the
Speaker 5: problem rather than the committee.
Speaker 2: People are really begging for that to a great except
Speaker 2: one final question, Dan Tannembaham Hardwire in to the bonus
Speaker 2: joy of Autumnal twenty twenty five Global Wall Street.
Speaker 6: It's nuts out there.
Speaker 2: I mean, it's a boom Wall Street economy. Exactly how
Speaker 2: much is you know, the real estate of Greater New
Speaker 2: York to explode a higher here with all that money
Speaker 2: coming in to New York Wall Street.
Speaker 6: I don't know where you're going with this one.
Speaker 2: I mean, I do thought Hampton's gonna go up springing
Speaker 2: into Samptons has seen record pricing.
Speaker 6: We want to hear it.
Speaker 4: So I don't know if that means people are migrating
Speaker 4: east on a permanent basis or if people have just
Speaker 4: rediscovered the beauty of the Hampton's and the off season.
Speaker 2: With your experience, it's a boom Wall Street economy, right,
Speaker 2: it does seem that, But I mean, what does it
Speaker 2: take to flip it the other way?
Speaker 4: Like if the Supreme Court rules against the tariffs, for instance,
Speaker 4: how does the market react to that. They've been pretty
Speaker 4: muted to some of these broader events and what that.
Speaker 6: Call and to Supreme Court's gonna do.
Speaker 4: I'm not on Cawshier poly market, but I feel pretty reasonable,
Speaker 4: reasonably comfortable that they're going to overturn the and uphold
Speaker 4: the prior decisions that the IPA tariffs are shot.
Speaker 2: Last word is is the city enjoying the Wall Street
Speaker 2: bomb that we see in New York.
Speaker 3: Nowhere near as much?
Speaker 9: No?
Speaker 5: And I think actually there's because there's We've alwaysly got
Speaker 5: concerns about housing taxes about to come through in two
Speaker 5: weeks time.
Speaker 3: So I know the housing market, you get a bargain.
Speaker 5: In fact, the number of Americans Tom when you're coming
Speaker 5: over to buy your John McCarey's give a house at
Speaker 5: the same time.
Speaker 6: It's just, it's just, it's.
Speaker 2: Just I read the Telegraph, I read the Times. It's
Speaker 2: I read an article on the BBC yesterday and the
Speaker 2: Times of London. It was incomp I couldn't understand it.
Speaker 2: I literally tried to understand what's going on there. It's
Speaker 2: nuts over there is everybody gonna.
Speaker 6: Leave if they put through this tax regime.
Speaker 5: So we've already seen a significant wave of nondoms. In
Speaker 5: other words, non Brea too had a special tax status
Speaker 5: and you know, if I go to events in Milan
Speaker 5: or Middle East, I mean, there's plenty of folk hoop
Speaker 5: who've departed, and it looks it's a bit like the
Speaker 5: debate you've had recently in New York. The tax base
Speaker 5: is very geared towards the top one percent, so we've
Speaker 5: already seen a stream of people leave. I don't I
Speaker 5: think though now these taxes are more for middle classes
Speaker 5: and that's going to be tougher. But you're you're also
Speaker 5: seeing some of the young, the you know, the under
Speaker 5: twenty five's move too, So I don't think this is
Speaker 5: nineteen seventies. There's no any like that, you know, but
Speaker 5: you know, but that's the parable. But it's it's definitely
Speaker 5: getting It's a This is the topic of the dinner tables.
Speaker 2: Dan.
Speaker 6: One final question, Are you moving to Milan?
Speaker 4: No, No, I'm staying. We just finished a long overdue renovation.
Speaker 4: I am long in New York regardless of what's happened
Speaker 4: in the last week.
Speaker 6: So anyway, Tannemum, thank you so much.
Speaker 2: With Oliver Wyman von Steinas, thank you for visiting from
Speaker 2: the United Kingdom. Venstinas and tann Obama of Oliver Wyman together.
Speaker 6: I love doing that here.
Speaker 2: The conversation is what we try to do with these
Speaker 2: two gentlemen of great expertise and sanctions and of course
Speaker 2: in European and global finance.
Speaker 6: Stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
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Speaker 6: Govery shutdown.
Speaker 2: Let's do economics, Blorena or Rich joins us on Chief
Speaker 2: you us economists the Tiro prices, we get the market
Speaker 2: open today, Blurina, How blind are you at Tiro price
Speaker 2: when you go to a meeting with Sebastian Page and
Speaker 2: the other beasts? Where are you getting your information from
Speaker 2: your belief, your conviction?
Speaker 9: Lucky for me, Bloomberg published this alternative data charts and
Speaker 9: tables and so on, so I'm not flying so blind anymore. Also,
Speaker 9: lucky for me, we are a big fundamentals house with
Speaker 9: bottoms up analysis from our credit and equity analysts, so
Speaker 9: we're getting a lot of live information. It's just the
Speaker 9: job has become harder because we're not relying on the
Speaker 9: same things that we used to feed the.
Speaker 10: Models in the past.
Speaker 9: But what your question is, what are the private sector
Speaker 9: data telling us. We had seen some encouraging news from
Speaker 9: ADP that weakness in labor demand was stabilizing in October
Speaker 9: and that we could hope for improvements going forward. The
Speaker 9: ism employment in this is we're pointing in the same direction.
Speaker 9: So I think I'm still leaning on that as my thesis.
Speaker 9: But today's weekly data on ADP, which showed a decline
Speaker 9: for the week of October twenty five, was a bit
Speaker 9: of a setback. Now when I'm talking to investors and
Speaker 9: Sebastian Page, what I'm emphasizing is that October will be
Speaker 9: really noisy. It will be actively vity spending. Employment numbers
Speaker 9: will be affected by the government shutdown. We might not
Speaker 9: even have its ability into price data because it's too
Speaker 9: late to collect CPI data anymore. But we'll look at November,
Speaker 9: we'll look at December to gauge the trend of the economy.
Speaker 9: I remain still optimistic about the path going forward, and
Speaker 9: we can discuss together why.
Speaker 11: That is so.
Speaker 7: Blarena, do you have a sense of if the government
Speaker 7: that does open in the next few days, how it
Speaker 7: will release the data to the marketplaces or do you
Speaker 7: have any sense of when that will occur, how that
Speaker 7: will occur right.
Speaker 9: This is a very important question right now because essentially
Speaker 9: what we want to know is how much information will
Speaker 9: the FED have before it's December tenth meeting. So let's
Speaker 9: see the government. If the government opens later this week.
Speaker 9: I expect that both BLSS, Census BA, they will all
Speaker 9: release a new data schedule once they have gauged how
Speaker 9: much time it will take them to play catch up.
Speaker 9: I think we should get pretty quickly the September Employment
Speaker 9: report because that would have been already prepared before the
Speaker 9: government shut down. It was a matter of formality to
Speaker 9: approve it. Now the BLS could go down the root
Speaker 9: of collecting October and November employment data and that could
Speaker 9: delay the release of the next employment report, or if
Speaker 9: they just focus on November. It's a collection data collection
Speaker 9: week this week and next week, so we could see
Speaker 9: that before the FOMC meeting, and I think that would
Speaker 9: be quite important for the fact because they won't have
Speaker 9: the CPI report, but at least they would look at
Speaker 9: the full employment side of their mandate before the next meeting.
Speaker 6: Unbelievable.
Speaker 2: I have no idea how we get to the December meeting.
Speaker 2: We're going to continue with the Lorena her reach, she
Speaker 2: f Us economist a Tiro price. Give us a moment
Speaker 2: here to get the market open again. The bond market
Speaker 2: is close today. There's a little bit of you know,
Speaker 2: spread information in that, but it's data and frozen here in.
Speaker 6: The bond market. The equity market not frozen.
Speaker 2: With ready green on the screen to keep score at home,
Speaker 2: going into the market, opening futures are negative fifteen to.
Speaker 6: See where we end up here, but with ready green
Speaker 6: on a screen.
Speaker 2: An interesting veterans day.
Speaker 6: The dollar resilient. Here's Lisa MINTEO.
Speaker 11: You got it.
Speaker 10: And let's start right now with the SMP five hundred.
Speaker 10: Right now, I'm sitting some rud on the screen, down
Speaker 10: about two tens of percent, fourteen points the level six thousand,
Speaker 10: eight hundred and seventeen. We go to the Dow, it's
Speaker 10: up about a ten percent seventy points forty seven four
Speaker 10: hundred and forty four, and the Nasdaq right now down
Speaker 10: about half a percent one hundred eighteen points at twenty
Speaker 10: three thousand, four hundred and seven. The yield space, well
Speaker 10: we have at the bond market closed today, so we're
Speaker 10: not going to get that well that it'll be back
Speaker 10: open tomorrow. Over to commodities, we have COMX gold up
Speaker 10: about three tens percent, four thousand, one hundred and thirty
Speaker 10: seven dollars an ounce, Brent crude up more than one percent,
Speaker 10: sixty four dollars a barrel, WTI crewed sixty dollars a barrow.
Speaker 10: All the Bloomberg Dollar Spot Index down about a tenth
Speaker 10: of a percent. Checking you with chairs of a video
Speaker 10: at the open there down about two percent. That is
Speaker 10: your Bloomberg opening Bellerpoort, Paul and Tom.
Speaker 2: Lisa, thank you so much. First quote here on the
Speaker 2: develop one hundred and eight points. But it's sort of
Speaker 2: a mess out there. We'll see as we go forward
Speaker 2: with us. Plerina, you're reaching chief youis economist a t
Speaker 2: rowe price? Blerina, I mean it's what is It's November eleventh? Right, yeah,
Speaker 2: we know that date. Okay, so one week got two
Speaker 2: weeks out, three weeks out? How do you prosecute a
Speaker 2: FED meeting? I mean, I just I get it. It's
Speaker 2: original territory, but how original will it be in December.
Speaker 9: I think it will be pretty tough this meeting. We
Speaker 9: know the committee is already quite divided between cut in
Speaker 9: December and staying put because they're worried about employment on
Speaker 9: the one side and inflationary pressures on the other side.
Speaker 9: And I feel like because we don't have new data
Speaker 9: and information, it will take that much more to shift
Speaker 9: either hawks or doves from their position. So it could
Speaker 9: be quite a hot and contested meeting. What do they
Speaker 9: need to see? The thing is October, first month of
Speaker 9: the quarter. We know that the spending data and activity
Speaker 9: data will be affected by the government shut down. The
Speaker 9: CBO estimates seven hundred and fifty thousand furloughed workers from
Speaker 9: federal government. That's four tenths of a percentage point effect
Speaker 9: on the unemployment rate. That could show up in the
Speaker 9: unemployment numbers. Now the FMC needs to figure out wherether
Speaker 9: that's noise or whether it's continued weakness from the summer months.
Speaker 9: So it's going to be pretty tough. And on top
Speaker 9: of that, they won't have the information they need on
Speaker 9: the price side to say, Okay, there is some softness
Speaker 9: in the labor market, but we have some uptick in inflation,
Speaker 9: So those two things might cancel themselves out. So it's
Speaker 9: going to be a pretty difficult meeting. I think to navigate.
Speaker 2: They're blind down price. All that got does the price
Speaker 2: of the market, which yield?
Speaker 4: Ye?
Speaker 6: Do they make a FED decision of the two year? Sweeny? You,
Speaker 6: I don't know.
Speaker 7: I don't know, so, Lourina, what do you think is
Speaker 7: the focus of this FED here coming up on their
Speaker 7: February sorry, December tenth meeting here?
Speaker 11: Inflation? Employment? What's taking center stage? Do you believe?
Speaker 9: I feel that we're still on the tail end of
Speaker 9: the full employment concerns. It feels a bit like twenty
Speaker 9: twenty four when they were worried about the labor market
Speaker 9: rolling over quickly and they were worried about activity. I
Speaker 9: get a taste of that situation right now too, So
Speaker 9: we are at the tail end of them focusing on
Speaker 9: full employment. I think next year, and perhaps even as
Speaker 9: soon as after the December of MC meeting, the shift
Speaker 9: will be towards inflation, because I do expect that we
Speaker 9: see those effects of the tariffs picking up in Q four.
Speaker 9: I also think the dollar weakness since the beginning of
Speaker 9: the year will push import prices. Also in January, we're
Speaker 9: going to get that price reset that we've seen since
Speaker 9: the pandemic. A lot of companies will reset prices at
Speaker 9: the beginning of the year, and so I do think
Speaker 9: the focus will shift to inflation, but we're not there yet.
Speaker 2: Brilliana, Thank you so much. Great brief here at a
Speaker 2: tough time for economists. Bleirino, Richie's with.
Speaker 6: Tea row Price. Stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after this.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Apple, Cocklay and Android
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Speaker 1: Just say Alexa play Bloomberg eleven thirty.
Speaker 2: John Stolphus gives us clinic here he's with Oppenheimer and
Speaker 2: a company the chief investment officer. The greatest thing about
Speaker 2: your notes, John, is you address the fear is this
Speaker 2: a repeat of the late nineties the dot com bubble?
Speaker 2: We do not believe, so discuss well. Tom, great to
Speaker 2: be here with you today.
Speaker 12: I've got to say that we do not think that
Speaker 12: this is the tech bubble at all, and it's a
Speaker 12: very different The structure is decidedly different in the I
Speaker 12: remember exactly where I was during the tech bubble. I
Speaker 12: was fortunate that that time I was a manager of
Speaker 12: international equity marketing, so I was working with privatized telephonies,
Speaker 12: all kinds of things around in Europe and Latin America,
Speaker 12: and I was pretty clear of the tech bubble, but
Speaker 12: I watched it happen because I was very much in
Speaker 12: close proximity at that time. It was tech was rather
Speaker 12: primitive if we look back on it. I mean we
Speaker 12: had the modems that we'd pluck into the wall, yeah,
Speaker 12: and the frozen screens that would occur even at the
Speaker 12: well known firms around town. Your best friend was the
Speaker 12: tech person all the time. Against we call it peace Sweeny.
Speaker 12: And today what we have is file lunch in nine
Speaker 12: never please kill Yeah, right.
Speaker 6: The marvels.
Speaker 12: When you'd hear the cart come down the hallway, I'd
Speaker 12: start barking, you know, and to make sure I have
Speaker 12: the cheesecake with the caramel frosting on it. But sec
Speaker 12: where we are today I think is structurally you have
Speaker 12: technology is deeply embedded in the lives of both the
Speaker 12: consumer as well as business. We all rely, we're all
Speaker 12: on the upgrade cycle, whether we like it or not.
Speaker 12: And these big companies are highly profitable, you know, the
Speaker 12: world of positive cash flow and developments. If anything, probably
Speaker 12: the biggest risk is that governments around the world might
Speaker 12: want to break them up. And at this point even
Speaker 12: that probably wouldn't be so bad because probably the individual
Speaker 12: pieces are worth more than the sum of the parts.
Speaker 12: So I think it's a different world, John. We just
Speaker 12: got pretty much through earning season. I seem to be
Speaker 12: pretty solid earnings. Is it enough to support this marketplace?
Speaker 2: Do you think?
Speaker 6: Let me tell you that.
Speaker 12: I've got to say, Paul, the earnings are just marvelous
Speaker 12: this time around. When you consider that nine, let's say
Speaker 12: nine sectors are positive. Of those five or double digit growth,
Speaker 12: and it's a mix of what you would.
Speaker 11: Call a value as well as growth.
Speaker 12: So you've got tech right in there, but you've also
Speaker 12: got good representation. Even materials is doing fairly well right now.
Speaker 12: With the earnings growth, you've got positive there. So when
Speaker 12: we look at it, if anything, we think the rally
Speaker 12: has broadened, but it's still driven by technology because technology
Speaker 12: drive technology like credit makes the world.
Speaker 11: Go around when it comes to finance and the market.
Speaker 12: I really believe no matter what the turbulence is in
Speaker 12: Washington or Beijing or Moscow, the ultimately what they're really
Speaker 12: carrying about is revenue growth and profit growth.
Speaker 11: We've got it.
Speaker 6: We start strong.
Speaker 2: This morning, Jen Sofis Oppenheimer in company with this Good
Speaker 2: Morning in New York down to Washington ninety nine and
Speaker 2: one FM Good Morning, a serious extension of.
Speaker 6: One twenty one. I have no idea how large that
Speaker 6: audience is. Well, it's like old technology. Sure it's still rocketed. Yeah,
Speaker 6: you know across Canada as well. Paul suite with John stolfhis.
Speaker 7: Hey John, So you know, one of the concerns in
Speaker 7: this marketplace is AI. It's been such a big, big
Speaker 7: theme in this marketplace really for the last two plus years,
Speaker 7: not just in the technology sect, but just kind of across.
Speaker 11: The market in general.
Speaker 7: Are you concerned that, I don't know, we're in an
Speaker 7: AI bubble.
Speaker 12: Maybe for so many sectors, you know, Paul, I really
Speaker 12: think where the bubbles may be found or probably in
Speaker 12: the areas of meme stocks and cryptos. But when it
Speaker 12: comes to AI, when we talk to people, whether it
Speaker 12: is private investors, just general consumers looking for things. Civilians
Speaker 12: are using AI more and more all the time.
Speaker 11: And within business, you know.
Speaker 12: I can remember a few months ago I attended the
Speaker 12: Institutional Audience conference here at Bloomberg, and it was a.
Speaker 11: Mix of people.
Speaker 12: It wasn't just people from finance, but it was healthcare
Speaker 12: and different different sectors and everybody people normally, and they
Speaker 12: were I've met a person from healthcare who said, oh,
Speaker 12: how she loves doing research with AI because it makes
Speaker 12: her so much more efficient. And then at one point
Speaker 12: she said, sometimes I think it's better than me, And
Speaker 12: I said, don't say that, because I think the other
Speaker 12: thing is I don't think AI is going to replace
Speaker 12: humanity because it has no uh, it has no sympathy
Speaker 12: or empathy, and it's apart from here.
Speaker 6: Were you seven thousand, seventy one hundreds?
Speaker 11: Just kill them?
Speaker 6: Can we make some newsier? Lisa? Give them? Give them, Tito,
Speaker 6: can you get the seventy two hundred?
Speaker 12: You know, I think that seventy one hundred could be surpassed,
Speaker 12: but I'm sticking with the seventy one.
Speaker 11: At this point is pretty late in the year. The
Speaker 11: gloom Crew.
Speaker 2: The foundational discussion is the earnings juggernaut, the cash flow
Speaker 2: juggernaut will end. Do you see it ending for the
Speaker 2: chosen few? Or does it continue to disperse to a
Speaker 2: better earning season for all the other stocks?
Speaker 12: I think, you know, at this point, I think we
Speaker 12: begin to see I mean, this earning season looks. What
Speaker 12: We've got earnings growth up eleven point seven percent on
Speaker 12: back of eight point one percent revenue growth. You've got
Speaker 12: tech twenty four percent growth year over year financial Q
Speaker 12: three or year over year twenty three point nine, so
Speaker 12: that's another twenty four piece. You've got materials double digit growth,
Speaker 12: industrials double digit growth. This is looking pretty good, and
Speaker 12: the single digits aren't bad. And you've only got two
Speaker 12: sectors with negative growth. That's energy negative two point two
Speaker 12: six percent on the screen and communication services eight point
Speaker 12: one nine percent, and that some of that may be
Speaker 12: the result of just incredible investment, a watershed period related
Speaker 12: to AI technology.
Speaker 11: So where do we go from here?
Speaker 7: John? I mean, we've had a crazy year, excellent return
Speaker 7: so far after that volatility in the beginning of the year.
Speaker 7: How are you positioning twenty twenty six?
Speaker 12: Well, right now, you know, we won't make our official
Speaker 12: calls until mid December when we usually do because we're
Speaker 12: not we don't have X ray vision.
Speaker 6: Yes, we'll go to seventy two hundred. I like that.
Speaker 11: I'm trying to clouds the situation there.
Speaker 12: But what we what we would say is we probably
Speaker 12: where we're standing, not in terms of the index itself,
Speaker 12: but for years now we have been cyclicals over defensives.
Speaker 12: So emphasis on cyclicals and primarily large caps, but with
Speaker 12: a smattering of always hope for the mids and the smalls.
Speaker 11: But I think until the FED really cuts rates, I
Speaker 11: don't think they got to get much love point.
Speaker 2: I'll take the juggernaut and Dan I says Microsoft is
Speaker 2: a founder of this dialogue. Is Microsoft a cyclical in nature? Well,
Speaker 2: I mean it's a really philosophical question. We're in buffet,
Speaker 2: he's ninety five, he's going quiet. Yes, sofas won't shut up.
Speaker 2: That's the opposite of buffet. I mean the bottom the
Speaker 2: bottom line is some of these tech stacks have.
Speaker 6: Almost cyclical characteristics.
Speaker 11: Oh, we most certainly think so. And in fact, in
Speaker 11: the old days, you.
Speaker 12: Know, back when we used to call consumers staples a
Speaker 12: defensive sector coke, smokes and soaps, technology was regarded as
Speaker 12: a cyclical, and we regard it as a cyclical because
Speaker 12: the while the investment appears to be a secular issue
Speaker 12: and the developments are the actual investment is there's sentiment
Speaker 12: behind that, even at.
Speaker 11: The institutional level in terms of Palo Alto.
Speaker 7: John, how much does this market need the FED to
Speaker 7: continue to cut races here question?
Speaker 12: You know, we we have been for the last few years,
Speaker 12: you know, the last two years when a lot of
Speaker 12: people were expecting a lot more cuts, expecting that Jerome
Speaker 12: Powell would be very careful with cutting rates. We were
Speaker 12: looking for this year maximum of three cuts, and then
Speaker 12: it looked for a while it was only going to
Speaker 12: be two cuts. But I think we're going to do
Speaker 12: I think he will do it another cut of twenty five.
Speaker 11: Bibs in December, okay.
Speaker 12: And the big thing is the FED is very very
Speaker 12: sensitive as to how it practices. It's dual mandate, and
Speaker 12: the dual mandate being supporting a Curlian question.
Speaker 2: I mean, Paul, you're too young to remember this, Sulphus
Speaker 2: and I remember Arthur Burns and you have a pipe
Speaker 2: and you go, he's making circles with his pipe.
Speaker 6: What's it mean? What's that?
Speaker 2: What do you think of the modern complete fixation on
Speaker 2: the FED. I mean we've gone from Marty's wide don't
Speaker 2: fight the FED to a twenty four to seven fixation
Speaker 2: on the FED.
Speaker 6: And your glory.
Speaker 2: You look at Ernie's cashlow, you look at revenue growth.
Speaker 6: Do we do too much Fed?
Speaker 4: No?
Speaker 12: You know, I think it's important to look at the FED.
Speaker 12: If anything in our research which is fundamentally driven, it's
Speaker 12: revenue and earnings growth, but very much an eye to
Speaker 12: FED policy. And we think we are living with the
Speaker 12: benefit of what I called the ben Bernanke legacy because
Speaker 12: Arthur Burns was a disaster. Then as a result of
Speaker 12: that you had Paul Walker had to come in and
Speaker 12: take draconian measures. Remember just about what I came in
Speaker 12: in eighty three, just about a year and a half,
Speaker 12: two years before I got in, the yield on the
Speaker 12: ten year almost reached sixteen percent. That was real wild
Speaker 12: inflation with you know, the current generation thinks that nine
Speaker 12: point seven was a lot in March of twenty two.
Speaker 12: But that Ben Bernanke legacy, high transparency, communications, it carries
Speaker 12: on through Jerome Powell and that balance where you want
Speaker 12: to see the FED a nurture a sustainable growth in
Speaker 12: economic growth, but at the same time not overthrow the
Speaker 12: apple cart in terms of employment in jobs and avoid
Speaker 12: a recession, which they have done notwithstanding all the predictions
Speaker 12: of inflight of recession since twenty twenty two, so far
Speaker 12: no recession, which I think is extraordinary.
Speaker 7: John o'b we don't talk about these days is tariffs
Speaker 7: and the impact on economy is that kind of in
Speaker 7: our rearview?
Speaker 6: Do you think you know?
Speaker 12: I belonged to the camp the g I wish they
Speaker 12: hadn't gone on that tariff route, though when I look
Speaker 12: at it as a strategist, I think as a tactical maneuver,
Speaker 12: it sure got the attention of all the countries around
Speaker 12: the world because, in essence, over the course of the
Speaker 12: last eighty years since World War.
Speaker 11: Two, the US had a policy.
Speaker 12: Where we exported our manufacturing just so fas, thank you
Speaker 12: so much.
Speaker 2: Just a brilliant, brilliant dissertation there on SPX A path
Speaker 2: to seventy one hundred.
Speaker 6: Stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after this.
Speaker 1: This is the Bloomberg Surveillance podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto
Speaker 1: with the Bloomberg Business app. You can also listen live
Speaker 1: on Amazon Alexa from our flagship New York station. Just
Speaker 1: say Alexa, play Bloomberg eleven thirty time.
Speaker 2: For the newspapers, here are we a guana free?
Speaker 6: In the news site?
Speaker 10: We are a guana free?
Speaker 2: All right.
Speaker 10: I'm starting with the Wall Street Journal. I'm not sure
Speaker 10: if you noticed, but luxury hotels they're charging this record
Speaker 10: high premium, okay, more than usual, but it's not stopping
Speaker 10: those affluent travelers from splurging. Okay. So they had some
Speaker 10: data to show that the average daily room rate at
Speaker 10: US luxury hotel a record high three hundred and ninety
Speaker 10: four dollars this year. That's the average, okay, But when
Speaker 10: you look at let's say Paris, where a luxury room
Speaker 10: will run about one thousand dollars away, the average price
Speaker 10: of most expensive ones about twenty six hundred a night.
Speaker 10: New York have ultra luxury hotels at about fifteen hundred
Speaker 10: some two thousand a night, but still bookings for those
Speaker 10: properties were up two and a half percent this year
Speaker 10: through September. A lot of those luxury hotels are expanding too,
Speaker 10: So the prices are going up, but people are still splurging.
Speaker 2: Anthony Capiono Marriott I said this repeatedly.
Speaker 11: Yes, they completely.
Speaker 2: Misunderestimated the luxury hotel drive. I mean there is I
Speaker 2: know in Paris, We've got offspring over there. And basically
Speaker 2: I have a secret literally, I have a secret hotel
Speaker 2: that's within this you know, the circle of tourism and
Speaker 2: all that. But I have a secret hotel that I
Speaker 2: tell no one about. I'm so afraid exactly people.
Speaker 11: That's a shafey economy. Okay, shafed economy, yep.
Speaker 10: Crazy, not good, not good, Okay, this one I want.
Speaker 10: I want to stick with the ultra rich.
Speaker 11: Okay, there you go.
Speaker 10: There they go. They are scooping up penthouses in Dubai.
Speaker 10: It's one of the world's hottest property markets right now.
Speaker 10: They're paying top dollars for places that are not even
Speaker 10: built yet.
Speaker 11: Okay, this is bidding.
Speaker 10: Wars at Brookfield Properties. New luxury project in Dubai prices Okay,
Speaker 10: here it is for waterfront apartments pushing above twenty four
Speaker 10: million dollars. They have water the waterfront, yes they do.
Speaker 10: They do it so house hunters they have to prove
Speaker 10: they have the cash, all right, I got it now. Yes,
Speaker 10: in order to express interest, you have to hand over
Speaker 10: a cash for check for two hundred and seventy two
Speaker 10: thousand dollars just.
Speaker 11: To say that you're interested.
Speaker 10: Wow, because they have, you know, so many people lined up,
Speaker 10: so they want to make sure that you have the
Speaker 10: cash and you're not wasting their time by checking these out.
Speaker 10: But more luxury hotels sold in Dubai and Race Quarters
Speaker 10: than any other city that includes New York, and that
Speaker 10: includes London too, So it is the.
Speaker 11: Hot it is. I hear about this as much as
Speaker 11: I hear about Miami or even more.
Speaker 7: Now it seems like Dubai is just kind of like
Speaker 7: the hot Yeah, certainly the pictures are beautiful, but.
Speaker 10: If you have twenty four million, then that's used to.
Speaker 6: Go all the time.
Speaker 2: Major shout out to Peter Grower, our chairman, who really
Speaker 2: forcefully led the build.
Speaker 6: Out of Dubai.
Speaker 2: And I was there right at the beginning of it,
Speaker 2: and you know, they had a slope period and look up,
Speaker 2: I'm like, look at all the cranes on the buildings,
Speaker 2: And our economic leader in Dubai said time, the cranes
Speaker 2: are there because it's so slow they have no place
Speaker 2: to put the cranes.
Speaker 6: So it's boom and bust. And right now it's a
Speaker 6: huge boom.
Speaker 2: I mean it's just huge, huge boom, say an Abu
Speaker 2: Dhabi is Well, let's go next podcast.
Speaker 11: Okay, this one.
Speaker 10: If you're looking to live a bit longer, you might
Speaker 10: want to extend your daily walk. Okay, this was in
Speaker 10: the Washington Post.
Speaker 11: Okay, it's years long.
Speaker 10: See see I knew it.
Speaker 11: I knew it.
Speaker 10: So you have to walk for at least ten to
Speaker 10: fifteen minutes straight. That's better for you than doing five
Speaker 10: minutes here, five minutes there, walk to the you know,
Speaker 10: the store across the street. That doesn't count. You got
Speaker 10: to do ten to fifteen minutes one.
Speaker 7: Time in office. This sounds like verbati. Walk to penn station.
Speaker 7: That's that'll get it done.
Speaker 2: Time ten to fifteen minutes equivalent.
Speaker 3: Oh yeah, big time.
Speaker 10: You can tell it. I'm not going to go into
Speaker 10: the weight invest because we've been there.
Speaker 6: Donait?
Speaker 2: Do you do? How many steps do you need to
Speaker 2: do to be Lisa Matteo.
Speaker 11: Us that's time?
Speaker 6: How many do you need?
Speaker 2: I don't knows.
Speaker 10: Everything about ten to fifteen thousand you know, I catch
Speaker 10: it on the weekend. You know, that's how it works.
Speaker 10: But yeah, they usually say ten.
Speaker 11: This is a weight person.
Speaker 7: She's like pumping irons.
Speaker 6: Thank you so much, Lisa, go back to your breakfast.
Speaker 6: Lisa Mateo, Thank you so much for the newspapers.
Speaker 1: This is the Bloomberg Surveillance Podcast, available on Apple, Spotify,
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