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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: This is the Bloomberg Surveillance Podcast. Catch us live weekdays

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Speaker 2: at seven am Eastern on Apple car Player, Android Auto

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Speaker 2: with the Bloomberg Business App. Listen on demand wherever you

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Speaker 2: get your podcasts, or watch us live on YouTube.

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Speaker 3: Long Goodwin joints as chief market strategist and economists for

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Speaker 3: New York Life. She braves, the rain comes into our

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Speaker 3: New York studio, not mailing it in. Lauren, You've got

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Speaker 3: a research piecee. You're looking at the earnings from this

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Speaker 3: past season, and you kind of say, hey, we got

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Speaker 3: two Americas out there.

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Speaker 4: What do you mean by that?

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Speaker 5: Well, it's really leveraging a Tom Keen sort of topic

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Speaker 5: of the decade. But there is a very clear bifurcation

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Speaker 5: in not just the consumer but also in corporate America.

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Speaker 5: And what I mean by that is, if you have

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Speaker 5: a little bit of investment money, a salary job, you

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Speaker 5: are doing despite everything just fine. In this economy. You've

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Speaker 5: been making money on your money, including your cash. Your

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Speaker 5: salary's been keeping up with inflation. But for those that

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Speaker 5: benefit in the early days of the pandemic from stimulus

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Speaker 5: checks from strong wage growth, the lower income. Consumer is

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Speaker 5: really really struggling with inflation with the cost of capital,

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Speaker 5: and that exact same thing is happening for companies. And

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Speaker 5: so what it means is a couple of things. First,

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Speaker 5: the risk the biggest risk to the economy and this

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Speaker 5: is a little bit backwards. The biggest risk to the

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Speaker 5: economy I think in the next year is a twenty

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Speaker 5: percent pull back in the S and P five hundred,

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Speaker 5: because so much of this economy is driven by consumer spending,

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Speaker 5: and so much of that wealth effect and confidence is

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Speaker 5: sitting in the equity market.

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Speaker 6: And especially because the last if you go back the

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Speaker 6: down years for the S and P five hundred, I

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Speaker 6: mean because I mean back to back gains for the

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Speaker 6: past two years, I mean on pace for over twenty percent.

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Speaker 6: We haven't seen that since the dot com bubble. But

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Speaker 6: also the only down years twenty twenty two we had

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Speaker 6: the bear market, and then twenty eighteen because there was

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Speaker 6: that big sell off of that final quarter in that

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Speaker 6: December was like the worst quarter since two thousand and eight.

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Speaker 6: But I mean, other than that, I mean, what is

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Speaker 6: the It seems kind of tricky because we're so early

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Speaker 6: in into a bull run. The S and P five

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Speaker 6: hundreds up like seventy percent since low in October of

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Speaker 6: twenty twenty two. That's not even like half the average

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Speaker 6: of a typical bull run. So I mean, what would

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Speaker 6: really take to see a down year and not just

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Speaker 6: have like an average type of gain of around nine

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Speaker 6: or ten percent, you know.

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Speaker 5: Any number of things. And it's not really even our

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Speaker 5: base case that we would see that that draw down.

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Speaker 5: It's a it's just a reflection that this economy, though

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Speaker 5: incredibly robust, is starting to see its phrase on the edges.

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Speaker 5: And I think what that means is that if you

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Speaker 5: if you have our base case, which is a pretty

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Speaker 5: good year we're expecting, you know, five to seven percent

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Speaker 5: on the equity market might not feel so great after

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Speaker 5: the last couple of years that we had, but it's.

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Speaker 6: Wondering to five to seven percent, is that more because

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Speaker 6: of the broadening out and so you'd see more equal weight,

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Speaker 6: small caps, other things taking parts. So then the ones

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Speaker 6: that have been the bigger waitings, like the mag seven,

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Speaker 6: it's like still there strong gains, it's just you're seeing

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Speaker 6: other parts of the index catching up. Is that the

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Speaker 6: case for next year?

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Speaker 1: Yeah?

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Speaker 5: I think it is part of the case for next year.

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Speaker 5: Really five to seven percent is a function of economic growth.

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Speaker 5: Right now three and a half percent real. That's wild,

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Speaker 5: and I expect growth to slow back to trend. That's

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Speaker 5: still a good economic outcome. It's just also still slowing

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Speaker 5: growth from where we are today, and that's an environment

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Speaker 5: where you do need to see more of the S

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Speaker 5: and P five hundred do the work. We're not enormously

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Speaker 5: bullish on small caps or junkiear stocks because of this

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Speaker 5: bifurcation we're seeing in the economic environment, but what it

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Speaker 5: means is that you probably have leadership EBB and flow

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Speaker 5: a bit more over the next couple of years, whereas

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Speaker 5: there's been a pretty clear dominant leadership from the Magnificent

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Speaker 5: Seven as a result of Ai Laaren.

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Speaker 3: When we all woke up on Wednesday two weeks ago

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Speaker 3: with a new president and now I decidedly Republican led Congress,

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Speaker 3: did that change your outlook of the markets at all

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Speaker 3: or how you think about opportunities.

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Speaker 5: It's such an important question because I think over those

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Speaker 5: same couple of weeks we've been sort of grappling with

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Speaker 5: what are the Trump trades and now what are the

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Speaker 5: Trump trade offs? Which which of those knee jerk reactions

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Speaker 5: are going to sit with us, and there are a

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Speaker 5: couple that I think will, and those are the ones

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Speaker 5: that are accentuated by some of the things we already knew.

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Speaker 5: First of all, that growth has been stickier, inflation been

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Speaker 5: stickier than even year after year economists like myself have

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Speaker 5: expected that. When you add uncertainty around how much government

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Speaker 5: spending will have points to higher and more volatile interest rates.

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Speaker 5: It means that even though credit quality is pretty strong,

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Speaker 5: we need to stay short duration or focused on structured credit.

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Speaker 5: From my perspective. Another one that I expect to stick

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Speaker 5: with us for the same combination of reasons is the

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Speaker 5: strength and the US dollar. When you see the US

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Speaker 5: dollar weekend, it's because x US growth is outperforming and

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Speaker 5: I just don't see any path to that in the

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Speaker 5: next year. Doesn't mean we'll keep seeing gains in the

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Speaker 5: dollar like we've seen in the past couple weeks consistently.

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Speaker 5: It just means that we're likely to see that strength persist.

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Speaker 6: That's interesting because the DXY, if you look at this

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Speaker 6: right now and you kind of draw back to twenty

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Speaker 6: twenty one, in that timeframe, it's bumping up that resistance

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Speaker 6: that we would have seen back in about a year ago,

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Speaker 6: in twenty twenty three, and then going back to twenty

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Speaker 6: twenty one. But is that kind of the biggest risk

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Speaker 6: to potentially more of a more robust gains in the

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Speaker 6: equity market if you continue to see dollar strength.

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Speaker 5: I think the biggest risk to the equity market is rates,

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Speaker 5: but they are they're not driven by one hundred percent

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Speaker 5: exactly the same things, but they have a lot of

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Speaker 5: the same underlying underlying contributors. Namely that US growth has

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Speaker 5: been outperforming, US inflation has been outperforming. That keeps rates sticky,

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Speaker 5: like unlikely to see the volume of FED cuts that

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Speaker 5: we'd expect, and that also of course keeps the dollar higher.

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Speaker 3: What did you take away from this earning season that

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Speaker 3: we're just kind of wrapping up here, What did it

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Speaker 3: tell you?

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Speaker 5: Well, it told me that this sort of bifurcation of

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Speaker 5: the consumer bifurcation and quality that we're seeing as persisting.

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Speaker 5: And though as I do expect that we'll see more

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Speaker 5: winners not just from the AI trade as it broadens

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Speaker 5: into energy and electrification, but also from the market in

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Speaker 5: general as growth sort of stabilizes. But that is that

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Speaker 5: demands an acid allocation shift over the course of the year.

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Speaker 5: A new focus for investors really reflected in that data.

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Speaker 6: Something else I've been keeping a close eye on, too,

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Speaker 6: is looking at S and P five hundred earnings but

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Speaker 6: excluding energy, because that was the one that saw kind

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Speaker 6: of the biggest markdowns coming into third quarter earning season.

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Speaker 6: Right now, I mean, the growth is still around ten

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Speaker 6: eleven percent when you're excluding that sector going into next year,

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Speaker 6: even those revisions look like it's more commodity driven. How

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Speaker 6: do you view energy in particular, and do you still

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Speaker 6: think the other parts of the index will still hold

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Speaker 6: up for next year when it comes to earnings growth.

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Speaker 5: I am relatively constructive on energy because I think that

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Speaker 5: not only is it an important part of the administration

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Speaker 5: and the sort of Trump trade dynamic just from a

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Speaker 5: sentiment perspective, but increasingly it is the bottleneck for artificial intelligence.

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Speaker 5: There's lots of really cool and interesting stats about how

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Speaker 5: we as a global economy need to add Germany's size

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Speaker 5: of electricity production over the next couple of years to

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Speaker 5: keep up. Increasingly, chip makers have been able to keep

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Speaker 5: up with Moore's law, but energy efficiency hasn't kept up.

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Speaker 5: We need more energy per unit of compute now already

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Speaker 5: than was the case a year ago, and so that

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Speaker 5: constraint on the one of the most important trends in

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Speaker 5: the economy I think, involves more capital intensive investment in

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Speaker 5: support of that sector.

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Speaker 3: Tom Keen and I and some others we were part

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Speaker 3: of the AI panel that hosted by Bloomberg Intelligence a

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Speaker 3: couple of days.

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Speaker 4: Ago here in New York.

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Speaker 7: AI.

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Speaker 3: I mean, how do you think about it? Do you

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Speaker 3: just how important is that to you as a strategist

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Speaker 3: and the economist.

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Speaker 5: Well, it's important in two ways, at least two ways.

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Speaker 5: One is the broader economic trajectory we're on and the

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Speaker 5: idea that this capital intensity of not just AI but reglobalization,

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Speaker 5: it does give us a medium term constructive outlook when

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Speaker 5: you think about the private capital markets or a long

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Speaker 5: term view, you do see a lot to be constructive

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Speaker 5: about in terms of just investment needs related to this trend.

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Speaker 5: But the other thing that's important as a strategist is

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Speaker 5: just the acknowledgment that though every move up in the

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Speaker 5: Magnificent seven has been justified by earnings, we are beginning

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Speaker 5: to see their constraints. We are beginning to see more

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Speaker 5: competition I don't know that that plays out in the

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Speaker 5: first half of twenty twenty five, but the broadening of

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Speaker 5: the trend into infrastructure and then eventually into corporate use

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Speaker 5: cases will mean a broadening in S and P five

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Speaker 5: hundred earnings.

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Speaker 4: Lauren, thank you so much for joining us. I really

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Speaker 4: appreciate it.

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Speaker 3: Lauren Goodwin, she's a chief market strategist and economists to

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Speaker 3: add New York Life.

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Speaker 2: You're listening to the Bloomberg Surveillance podcast. Catch US Live

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Speaker 2: weekday afternoons from seven to ten am. Easter Listen on

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Speaker 2: Apple car Play and Android Otto with a Bloomberg Business app,

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Speaker 2: or watch US live on YouTube.

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Speaker 4: Let's talk about the economics over in Europe.

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Speaker 3: Some weaker pmis came out today, I think, surprising some

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Speaker 3: people as to you know, kind of going back into

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Speaker 3: a contraction across there.

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Speaker 4: Doctor vania A.

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Speaker 3: Stravakova, professor of economics that the London Business School joins us. Professor,

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Speaker 3: talk to us about the economic activity we're seeing across

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Speaker 3: Europe these days.

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Speaker 4: I mean, the center banks are easy, but still some

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Speaker 4: challenges out there. What are you seeing?

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Speaker 1: So thank you so much for having me. Unfortunately we

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Speaker 1: don't have many good news in Europe, both the Eurozone

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Speaker 1: and the UK, and we have seen significant divergence also

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Speaker 1: reflected in the stock market performance, as you're of course aware.

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Speaker 1: So since the Trump elections, the you know, the eurostocks

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Speaker 1: fifty has decreased substantially, while the smp it struck has increased.

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Speaker 1: What's interesting is if you look at historical data, and

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Speaker 1: let's go not go back that much in his readly,

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Speaker 1: but post the global financial crisis, you find a very

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Speaker 1: high correlation between augur good stock market price growth returns

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Speaker 1: across the US and the Eurozone for example. So in

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Speaker 1: the data the correlation is around eighty six percent. However

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Speaker 1: we see sometimes divergence. So nowadays we definitely have the

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Speaker 1: divergence since the election. And another period during which we

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Speaker 1: had significant divergence was during the post twenty sixteen Trump elections.

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Speaker 1: So if you look particularly during the period from June

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Speaker 1: twenty sixteen until June twenty nineteen, you find that the

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Speaker 1: correlation between the US and the Eurozone stock market drops

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Speaker 1: to seventy percent, which is a drop of sixteen percent.

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Speaker 1: Now what does this mean. Well, actually, I have recent

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Speaker 1: work which allows me to decompose the movements of it

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Speaker 1: U syncratic stock prices, but also our good stock market

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Speaker 1: indices into easy to interpret components. So what do we

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Speaker 1: do in a paper titled Elephants and Equity Markets. So

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Speaker 1: we take let's say individual stock price growth rate or

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Speaker 1: the augur good stock market, and we decompose that growth

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Speaker 1: rate into the subcomponents of the growth rate of holdings.

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Speaker 1: So what are those components. Well, the stock price could

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Speaker 1: be moving because the portfolio managers are rebalancing their weights,

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Speaker 1: the weights that they place on this stock or stock

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Speaker 1: market in their portfolio. It could be moving because of

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Speaker 1: what we called wealth effects. So let's say the native

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Speaker 1: fit returns of the funds. They're good, so it is

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Speaker 1: like an implification effect. They could be moving because of

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Speaker 1: final inflos alsos into the funds and also exchange the

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Speaker 1: evaluation effects which kepture for example that US do or

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Speaker 1: investors called global stocks for examples.

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Speaker 6: Also, we won't point up because Paul was talking about

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Speaker 6: this earlier, looking at the euro in particular fall into

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Speaker 6: its lowest level since twenty twenty two, walk us through

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Speaker 6: kind of the dynamics when you're thinking about Germany and France,

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Speaker 6: because that's obviously the Eurozone's two largest economies, and we

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Speaker 6: were thinking about those increasing bets that the ECB is

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Speaker 6: going to have to boost the economies' region by potentially

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Speaker 6: a half point cut, whereas over here, if you're thinking

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Speaker 6: about the Federal Reserve, that's getting dialed back to potentially

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Speaker 6: maybe even a pause potentially in December. Walk us through

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Speaker 6: the dynamics when you're thinking about what's happening in the

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Speaker 6: Eurozone versus what's happening over here in the US. And

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Speaker 6: then of course very different dynamics if you're thinking about

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Speaker 6: the being Japan.

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Speaker 1: Yeah, so in general, you know, using this the complition,

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Speaker 1: it can trace you to Portfoy a way changes. So

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Speaker 1: it's the same nowadays.

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Speaker 7: So why are the.

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Speaker 1: Investors rebalancing their portfolios differently with respect to Eurozone countries

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Speaker 1: than the US, Which is kind of aligned with your question.

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Speaker 1: Why now we see that we're pricing differently, let's say,

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Speaker 1: French and German stocks relative to the US stocks. So

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Speaker 1: what are the news potentially driving the divergency at the moment?

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Speaker 1: So what they see happening is definitely there is a

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Speaker 1: lot of concern of course, around tariffs and differential regulation

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Speaker 1: across the industries in the US and Europe. Granted that

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Speaker 1: the euro Zone is a much more open economy, tariffs

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Speaker 1: are going to hurt much more the Eurozone than the US,

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Speaker 1: So that's one of the factors. Another factor, which I

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Speaker 1: believe is going to be first over the importance. Maybe

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Speaker 1: not so much priced in at the moment, but it's

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Speaker 1: going to be priced in soon enough and definitely in

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Speaker 1: the medium run, is the different physical sustainability across the

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Speaker 1: Eurozone and the US. So we already seen in the

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Speaker 1: UK we saw the latest budget which implied significantly increased

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Speaker 1: in terms of taxes the for essentially capital, you know,

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Speaker 1: essentially forums. So this is definitely going to slow down growth.

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Speaker 1: I do believe that the Eurozone is not different in

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Speaker 1: the UK. Both the UK and the Eurozone have unsustainable

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Speaker 1: welfare states given the current tax system. What do I

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Speaker 1: mean by this? We're taxing labor as much as possible,

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Speaker 1: meaning probably we have reached the maximum amount of taxation

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Speaker 1: we can impose on middle income and higher income earners.

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Speaker 1: So we need to start taxing capital. We're seeing that

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Speaker 1: in the form of labor. This is not so easy

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Speaker 1: to do. If you tax capital, also you decrease real

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Speaker 1: down growth. What do you see in the US, it's

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Speaker 1: exactly the opposite. Right, we got Trump, people anticipate lower

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Speaker 1: taxes on farms. But moreover the fact that he appointed

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Speaker 1: Ellen must do a newly formed essentially agency that is

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Speaker 1: the only goal of which is to decrease the size

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Speaker 1: of the government. We would inspect that the goal of

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Speaker 1: the Troup administration is to decrease the amount of taxes

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Speaker 1: you need to essentially get in the future in order

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Speaker 1: to finance the government. This is very different for what's

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Speaker 1: happening in Europe. So this is going to definitely hint

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Speaker 1: the growth in Europe overall. How do we fund the

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Speaker 1: welfare states? What do we tax? Who do we tax?

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Speaker 1: Higher taxes definitely have going to translate with so in

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Speaker 1: lower growth and of course worse performance in the stock markets.

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Speaker 3: Is there any political appetite, professor, to lower some of

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Speaker 3: the expenditures across Europe? You talk about the welfare state,

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Speaker 3: is there any political you know, expectations that could be

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Speaker 3: reduced over time?

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Speaker 1: That is a very good question. Unfortunately, within an equilibrium

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Speaker 1: ware a lot of I mean fortunately and unfortunately when

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Speaker 1: you have big welfare states, you have usually a large

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Speaker 1: fraction of the voting population benefiting from these big welfare states. Right,

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Speaker 1: So the statistics shows that in the UK more than

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Speaker 1: fifty percent of the population or net receives more benefits

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Speaker 1: than pay in the form of taxes. If you have

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Speaker 1: a big chunk of the population benefiting for the welfare state,

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Speaker 1: it's highly unlikely for them to vote a party in

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Speaker 1: power that is going to promote cutting the welfare state.

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Speaker 1: So I do believe that the only way we can

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Speaker 1: reduce if I mean, I'm not saying that's optimal or not,

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Speaker 1: but this is from the perspective of growth and performance

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Speaker 1: of European stock market. The only way to decrease the

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Speaker 1: welfare state in Europe is over time to reach the

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Speaker 1: limited physical sustainability, meaning you have very high level of

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Speaker 1: the two GDP, you have reached the max level of

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Speaker 1: taxation on labor income, right, you know, you are finding

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Speaker 1: that increasing taxes is actually not increasing revenue. So once

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Speaker 1: we reach that point, essentially any party in power is

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Speaker 1: not going to have a choice and they'll have to

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Speaker 1: do something about essentially the welfare state. But that is

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Speaker 1: very costly. It's going to take time to get there,

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Speaker 1: and it might mean at least a decade or even

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Speaker 1: more of low broad in Europe.

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Speaker 3: Professor, thank you so much for We appreciate that as always,

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Speaker 3: Doctor Van yester Rakova. She is a professor of economics

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Speaker 3: at the London Business World.

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Speaker 2: This is the Bloomberg Surveillance Podcast. Listen live each weekday

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Speaker 2: starting at seven am Eastern on applecar Play and Android

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Speaker 2: Auto with a Bloomberg Business app. You can also listen

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Speaker 2: live on Amazon Alexa from our flagship New York station,

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Speaker 2: just say Alexa playing Bloomberg eleven thirty.

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Speaker 3: What is going on with bitcoin approaching one hundred thousand?

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Speaker 3: This might be the Matt who also forgot his token

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Speaker 3: number and it's just asking for a friend here. But

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Speaker 3: let's go to Mike mcgloonan senior macro strategist for Bloomberg Intelligence. Mike,

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Speaker 3: you know you're the only one that's explained to me

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Speaker 3: what's going on here with this bitcoin.

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Speaker 4: So I guess it's just more buyers and sellers.

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Speaker 7: Here, definitely, now, Paul, more buyers. You're looking at this

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Speaker 7: month alone, ETF flows and in tf's are approaching six

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Speaker 7: billion dollars. That's the biggest month ever. Total ETF's tracking

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Speaker 7: bitcoin now around one hundred and twenty billion to put

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Speaker 7: that in context, that's about half what do you see

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Speaker 7: the total mount tracking goal, which is about two hundred

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Speaker 7: and twenty billion, so it's catching up really fast. A

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Speaker 7: year ago at this time, total ETF's tracking bitcoin was

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Speaker 7: around ten billions, so mass of buying for good reason.

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Speaker 7: We have a crypto president member Nozelt like a convert.

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Speaker 7: When he was president, he thought cryptos were a scam

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Speaker 7: and now he's realizing, oh boy, this basic space tracks

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Speaker 7: the dollar. But all we've had some major dog double

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Speaker 7: dog deer potential peak signs lately and I'm really concerned

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Speaker 7: about it. I'd like to tell you about.

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Speaker 6: Well talk more about that because it looks like it's

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Speaker 6: up about forty percent just so far this month. So

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Speaker 6: how much more gas is left in the tank here?

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Speaker 6: And where you looking at for like resistance support levels?

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Speaker 7: Well, there you go, Jess, the key level everybody's looking

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Speaker 7: at round number one hundred thousand dollars. I first mentioned

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Speaker 7: it almost I think it was four years ago. Yeah,

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Speaker 7: kind of felt the horse for a little while, but

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Speaker 7: you know, just the diminishing supply, increasing demand and adoption.

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Speaker 7: But there's a key thing, is a key thing. So

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Speaker 7: one hundred thousand, very good resistance. It's it's traded in futures,

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Speaker 7: but that's a little different. The key thing I'm watching

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Speaker 7: is bitcoin versus gold. Right now, that ratio it takes

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Speaker 7: basically about thirty six sounds of gold for when bitcoin

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Speaker 7: the all time high is still in place. That was

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Speaker 7: thirty seven in twenty twenty one. But there's one key

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Speaker 7: headline that really struck me yesterday. I was really concerned about.

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Speaker 7: For it's a lesson. You're learning the trading pests and

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Speaker 7: it's never messed with the market gods, particularly if you

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Speaker 7: have profits, you kind of kind of should be modest

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Speaker 7: about this. Here's a headline in Bloomberg term a Warren

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Speaker 7: Buffett destroying three billion a month of Berkshire capital by

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Speaker 7: not investing in bitcoin, says Micro Strategies Michael Saylor. I

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Speaker 7: saw that, and I remember Michael Sarely, here's one of

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Speaker 7: the persons that really kicked over my bullishness in twenty twenty.

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Speaker 7: That was in the back of the Attorney General in New

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Speaker 7: York coming down and tether in twenty nineteen. It all

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Speaker 7: proved how bullish bitcoin is. But now when you double

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Speaker 7: dog dear markets like that, I think I gotta be careful.

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Speaker 3: So I don't know, michaed Man. Maybe I'm wrong on this,

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Speaker 3: but I kind of think of this as a commodity.

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Speaker 3: How do you can you put valuations on commodities or

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Speaker 3: do I know in the past you've kind of talked

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Speaker 3: about it in relation to other commodities in this case gold.

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Speaker 7: Yeah, definitely, so I look at versus gold. So one

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Speaker 7: thing I about point out today Bitcoin is actually dropping

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Speaker 7: a little bit down at ninety eight just split a

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Speaker 7: ninety eight hundred, and gold's up over a percent. Part

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Speaker 7: of that is the re escalation of global tensions, most

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Speaker 7: notably in Ukraine. But you don't it's the machine supply,

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Speaker 7: increasing demand and adoption. We get that, and that's why

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Speaker 7: I pointed out right away massive inflows and ETFs. But

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Speaker 7: one thing about this space pall it's the most widely

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Speaker 7: traded speculative digital asset on the planet ever. Twenty four

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Speaker 7: to seven comes Saturday Sunday. Sometimes I can't stop watching

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Speaker 7: it because it gives you indication what's going on, so

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Speaker 7: everybody trades it. There's massive arm going on. A lot

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Speaker 7: of people got a little bit too short micro strategy

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Speaker 7: and got stopped out and now we have some bigger

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Speaker 7: people doing that, so that got too expensive. But number

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Speaker 7: one thing I think it's technicals and animal spirits.

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Speaker 6: Right now, talk to us about doctor copper because we

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Speaker 6: know how closely it ties into the economy, not just

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Speaker 6: our economy, but the global economy as well.

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Speaker 7: What do you seeing there, well, Jess, I appreciate you

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Speaker 7: going there, because to me, that's the number one commodity

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Speaker 7: that has to go up to prove we don't have

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Speaker 7: deflationary dominos kicking over in the whole world. So doctor

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Speaker 7: copper is broken below Keith support around nine thousand dollars

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Speaker 7: a ton. In terms of dollars, it's pushing in that

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Speaker 7: key support around four dollars a pound. It made a

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Speaker 7: new high this year around five to twenty, but it

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Speaker 7: was on the back of massive speculative accesses in in futures.

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Speaker 7: Futures are just a lot of buyers who just got

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Speaker 7: way over, way long. And the key way I like

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Speaker 7: to point out with copper is on the month now

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Speaker 7: coppers down about five percent and the Hang Singing Index

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Speaker 7: is down about five percent. You see the connection there.

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Speaker 7: It's all about China. And now I look at that

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Speaker 7: ten you note yield in China two point zero eight

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Speaker 7: on a CGB versus the US it's four point four percent.

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Speaker 7: That's a significant sign of deflation, lack of demand, full

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Speaker 7: forces in China, complete dependence on stimulus. And you know

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Speaker 7: we've seen this before in Japan. Japan's GDP at four

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Speaker 7: trillion dollars is the same it was thirty years ago.

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Speaker 7: China is going that way. That's bad for copper. And

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Speaker 7: the key thing I like to point about coppers if

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Speaker 7: it breaks down, it adds legitimacy to declining crude oil,

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Speaker 7: the crying iron ore, declining grains, and it means the

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Speaker 7: commodity complex is clearly showing global deflationary recessionary trends. And

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Speaker 7: gold's only when that's really still going up.

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Speaker 3: What's the call and the energy front for you, Mike

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Speaker 3: these days?

438
00:21:14,600 --> 00:21:17,040
Speaker 7: It We'll start with what manison Americans three dollars a

439
00:21:17,119 --> 00:21:19,400
Speaker 7: gallon as the average price of gasoline by this time

440
00:21:19,440 --> 00:21:21,080
Speaker 7: next year, Paul, if you want someone to blame, I

441
00:21:21,080 --> 00:21:24,119
Speaker 7: think it's going to be two. Average value price of

442
00:21:24,560 --> 00:21:26,800
Speaker 7: eSeL inness country is just about three fifty. I think

443
00:21:26,800 --> 00:21:28,720
Speaker 7: next is going to be two fifty. It's not profound

444
00:21:28,720 --> 00:21:30,880
Speaker 7: to say that because the last twenty years we've got

445
00:21:30,920 --> 00:21:33,240
Speaker 7: to those levels. And the big significance is we are

446
00:21:33,280 --> 00:21:38,880
Speaker 7: a net massive increase in everyday exporter of liquid fuels

447
00:21:38,920 --> 00:21:42,639
Speaker 7: crude oil, unleaded gas, diesel maybe less, and we have

448
00:21:42,760 --> 00:21:46,400
Speaker 7: declining diminishing. We have the demand for diesel and US

449
00:21:46,480 --> 00:21:49,440
Speaker 7: is declining. It's declining in China, in Europe and India,

450
00:21:49,760 --> 00:21:52,680
Speaker 7: and we increasing supply. So we just get a little

451
00:21:52,680 --> 00:21:54,840
Speaker 7: bit of a backup in say the stock market. It

452
00:21:54,880 --> 00:21:57,080
Speaker 7: pushes those prices down. So those are I had in

453
00:21:57,119 --> 00:22:01,399
Speaker 7: my headline recently. Those are potentially trump deflationary forces. And

454
00:22:01,520 --> 00:22:04,240
Speaker 7: we do have this new leadership that's more drill. It

455
00:22:04,240 --> 00:22:05,280
Speaker 7: will bring on the supply.

456
00:22:06,000 --> 00:22:09,560
Speaker 6: What about natural gas, Yes.

457
00:22:09,440 --> 00:22:12,000
Speaker 7: So this is peak season for natural gas. It's usually

458
00:22:12,119 --> 00:22:15,160
Speaker 7: right before you get to January. Three bucks natural gas

459
00:22:15,240 --> 00:22:17,879
Speaker 7: is near the peak. I think four hours is pretty high.

460
00:22:18,200 --> 00:22:21,440
Speaker 7: The cost of production this country is two dours. That's

461
00:22:21,520 --> 00:22:23,520
Speaker 7: been kind of the mean Menian mode. I think it

462
00:22:23,560 --> 00:22:25,720
Speaker 7: gets back there once we get through January, and we

463
00:22:25,800 --> 00:22:29,680
Speaker 7: have the normal trend in global warming happens in winter too,

464
00:22:29,760 --> 00:22:31,760
Speaker 7: so basically right now you have to price in a

465
00:22:31,760 --> 00:22:34,080
Speaker 7: bit of risk of a colder than normal winter. But

466
00:22:34,160 --> 00:22:37,919
Speaker 7: what's spend. The trend warmer than normal winters, particularly in Europe,

467
00:22:38,119 --> 00:22:40,119
Speaker 7: So that's the key things. The bottom line for natural

468
00:22:40,160 --> 00:22:43,400
Speaker 7: gas is the will's becoming increasingly dependent on LNG exports

469
00:22:43,440 --> 00:22:45,600
Speaker 7: from the US, but still only about twenty percent of

470
00:22:45,600 --> 00:22:48,119
Speaker 7: our production. And we still have a pretty good excessive

471
00:22:48,160 --> 00:22:53,159
Speaker 7: amount of liquid fuels natural gas, crude oil, ethanol, biofuels

472
00:22:53,160 --> 00:22:56,000
Speaker 7: in this country dependent on exports, and if we ramp

473
00:22:56,080 --> 00:22:58,119
Speaker 7: up a trade war, that means we're going to have

474
00:22:58,200 --> 00:23:01,200
Speaker 7: kind of supply bottlenecked in US, which means lower prices.

475
00:23:02,040 --> 00:23:04,320
Speaker 4: Mike mclohan, thanks so much for We appreciate it as always.

476
00:23:04,320 --> 00:23:07,760
Speaker 3: Mike McLoone, senior macro strategist for Bloomberg Intelligence.

477
00:23:13,680 --> 00:23:17,960
Speaker 2: This is the Bloomberg Surveillance Podcast. Listen live each weekday

478
00:23:18,040 --> 00:23:21,560
Speaker 2: starting at seven am Eastern on Applecarplay and Android Auto

479
00:23:21,640 --> 00:23:24,440
Speaker 2: with the Bloomberg Business app. You can also watch us

480
00:23:24,560 --> 00:23:28,560
Speaker 2: live every weekday on YouTube and always on the Bloomberg terminal.

481
00:23:28,960 --> 00:23:31,000
Speaker 3: Do your daily look at the front pictures from around

482
00:23:31,000 --> 00:23:32,119
Speaker 3: the world A least going to tell you what do

483
00:23:32,119 --> 00:23:33,080
Speaker 3: you have for us in the newspapers?

484
00:23:33,119 --> 00:23:35,280
Speaker 8: All right, so we've been talking a lot about retail earnings. Right,

485
00:23:35,280 --> 00:23:38,600
Speaker 8: you've heard Walmart, Target like Crust, like all these different companies.

486
00:23:39,359 --> 00:23:41,719
Speaker 8: But now with the election behind, so this is interesting.

487
00:23:41,720 --> 00:23:44,200
Speaker 8: From the Washington Post, they say that with the election,

488
00:23:44,280 --> 00:23:46,879
Speaker 8: mining consumers are ready to spend because they say, normally

489
00:23:46,960 --> 00:23:50,000
Speaker 8: what happens is that before election day they're a bit hesitant,

490
00:23:50,160 --> 00:23:52,240
Speaker 8: so they hold off. But they say, now that that's over,

491
00:23:52,480 --> 00:23:55,640
Speaker 8: it's going to open up more retailers, more shoppers are

492
00:23:55,800 --> 00:23:58,440
Speaker 8: ready to do different things, but they're shopping differently. Okay,

493
00:23:58,440 --> 00:23:59,720
Speaker 8: one thing they're going to do, they're going to look

494
00:23:59,720 --> 00:24:02,160
Speaker 8: for deal. They're going to be selective on the splurges,

495
00:24:02,800 --> 00:24:05,000
Speaker 8: and they're going to hit up discount and off price

496
00:24:05,200 --> 00:24:07,080
Speaker 8: realtors like Walmart.

497
00:24:07,080 --> 00:24:07,240
Speaker 7: Gap.

498
00:24:07,280 --> 00:24:10,320
Speaker 8: They said they're drawing in like those six figure retailers,

499
00:24:10,640 --> 00:24:11,280
Speaker 8: and next.

500
00:24:11,200 --> 00:24:14,080
Speaker 3: Knew it sounds like yes, So I haven't heard them

501
00:24:14,119 --> 00:24:16,720
Speaker 3: call that out before, you know, and I've heard it from.

502
00:24:16,600 --> 00:24:19,160
Speaker 4: A couple of them. Correct, correct from Walmart.

503
00:24:18,840 --> 00:24:20,399
Speaker 8: Yeah, and Targets saying like a lot of them, a

504
00:24:20,440 --> 00:24:23,000
Speaker 8: lot of their consumers are shifting to like the cheaper brands.

505
00:24:23,760 --> 00:24:25,760
Speaker 8: So you saw that Ross Stars, I mean they they

506
00:24:26,119 --> 00:24:29,200
Speaker 8: reported well too, So that's like the discount retailers right.

507
00:24:29,160 --> 00:24:30,720
Speaker 6: Lisa and I were talking about earlier. We don't do

508
00:24:30,760 --> 00:24:32,560
Speaker 6: the Lulu limit. We find other things that gap.

509
00:24:32,760 --> 00:24:34,800
Speaker 4: Why could the store brands at the supermarket more than

510
00:24:34,840 --> 00:24:37,280
Speaker 4: they ever have? True, I do that too, but some

511
00:24:37,359 --> 00:24:42,320
Speaker 4: things I'll go with the brand. But that's what it is.

512
00:24:43,320 --> 00:24:47,520
Speaker 8: Yes, cheap, yes, okay, most interestingly so yeah, so we're spending,

513
00:24:47,560 --> 00:24:49,560
Speaker 8: but we're just spending different.

514
00:24:49,800 --> 00:24:52,199
Speaker 3: From I don't think my spending patterns have changed. But

515
00:24:52,240 --> 00:24:54,840
Speaker 3: since the election, it just feels like a weight is lifted.

516
00:24:55,000 --> 00:24:57,679
Speaker 3: You can just move forward, look forward everything else. It

517
00:24:57,720 --> 00:25:01,439
Speaker 3: seems better just because the whole thing's behind you.

518
00:25:01,520 --> 00:25:03,040
Speaker 4: Now we can to look forward, and now I know

519
00:25:03,080 --> 00:25:05,240
Speaker 4: what to look forward to. Exactly what was? Okay?

520
00:25:05,280 --> 00:25:07,639
Speaker 8: So this one was a right up your ally powamount executives.

521
00:25:07,640 --> 00:25:09,960
Speaker 8: It turns out they're getting a nice bonus after the

522
00:25:10,000 --> 00:25:13,520
Speaker 8: deal with Skydance closes. So this is according to a filing. Yeah,

523
00:25:13,520 --> 00:25:16,800
Speaker 8: they're promising to pay its heads of government relations human

524
00:25:16,840 --> 00:25:21,320
Speaker 8: resources a one million dollar retention bonus that's tied to

525
00:25:21,359 --> 00:25:23,320
Speaker 8: the merger. But I guess this is the thing, Like

526
00:25:23,640 --> 00:25:25,199
Speaker 8: retention bonuses are common.

527
00:25:25,359 --> 00:25:28,160
Speaker 3: I mean when they're well, having worked on Wall Street,

528
00:25:28,200 --> 00:25:29,960
Speaker 3: my whole career. When and I've been through a bunch

529
00:25:29,960 --> 00:25:33,080
Speaker 3: of mergers. If when we're when company is buying company,

530
00:25:33,119 --> 00:25:35,439
Speaker 3: be what you're really buying are the people. I mean,

531
00:25:35,640 --> 00:25:38,000
Speaker 3: you go for an investment, you're buying the people. So

532
00:25:38,080 --> 00:25:39,680
Speaker 3: you want to people to stay. So one of the

533
00:25:39,720 --> 00:25:41,159
Speaker 3: ways you get them to stay is you pay them

534
00:25:41,200 --> 00:25:43,560
Speaker 3: a retention bonus. Hey, here's X amount of dollars to

535
00:25:43,600 --> 00:25:45,359
Speaker 3: be paid over the next three years.

536
00:25:46,000 --> 00:25:48,320
Speaker 4: If you stay, you'll get this money. Inact that kind

537
00:25:48,359 --> 00:25:48,560
Speaker 4: of thing.

538
00:25:48,880 --> 00:25:51,280
Speaker 3: We did not do that when Credit Swiss spought don

539
00:25:51,280 --> 00:25:55,120
Speaker 3: some left, connentried genret and literally the next day after

540
00:25:55,160 --> 00:25:56,840
Speaker 3: the close, everybody walked out the door.

541
00:25:56,920 --> 00:25:58,080
Speaker 7: It was true.

542
00:26:00,320 --> 00:26:01,920
Speaker 4: So they don't work. They work.

543
00:26:02,000 --> 00:26:04,600
Speaker 3: I don't know about before the entertainment business. But but

544
00:26:04,640 --> 00:26:06,920
Speaker 3: this Paramount stock it's at nine dollars, is still down

545
00:26:06,960 --> 00:26:07,919
Speaker 3: twenty five percent.

546
00:26:07,720 --> 00:26:09,880
Speaker 4: Year to date. It that's a tough that's a tough

547
00:26:09,920 --> 00:26:10,400
Speaker 4: story there.

548
00:26:10,480 --> 00:26:10,680
Speaker 7: Yeah.

549
00:26:10,720 --> 00:26:12,520
Speaker 8: And the reason why people are upsets because they just

550
00:26:12,520 --> 00:26:14,840
Speaker 8: announced plans to cut two thousand jobs. Y So at

551
00:26:14,840 --> 00:26:18,280
Speaker 8: the same time that this comes out, so ESPN is

552
00:26:18,320 --> 00:26:22,000
Speaker 8: going into the late night chalk show scene. Former Philadelphia

553
00:26:22,040 --> 00:26:24,960
Speaker 8: Eagles offensive lineman Jason Kelcey is going to be the

554
00:26:25,000 --> 00:26:26,639
Speaker 8: host of it. Okay, so we announce it on Jimmy

555
00:26:26,680 --> 00:26:29,080
Speaker 8: Cambole Live. It's going to be called they call it

556
00:26:29,280 --> 00:26:33,040
Speaker 8: Late Night with Jason Kelce Original. So they're gonna tape

557
00:26:33,080 --> 00:26:37,040
Speaker 8: on five straight Friday nights starting January third, and that

558
00:26:37,080 --> 00:26:39,640
Speaker 8: actually falls in line with the NFL's regular season the playoffs,

559
00:26:39,640 --> 00:26:41,480
Speaker 8: so you kind of see the tie in there. But

560
00:26:41,600 --> 00:26:43,120
Speaker 8: I mean he's a personality.

561
00:26:43,200 --> 00:26:45,600
Speaker 6: Yeah, I don't know, you know, it's great post career,

562
00:26:45,680 --> 00:26:46,760
Speaker 6: he's doing well.

563
00:26:46,640 --> 00:26:49,760
Speaker 8: And it's gonna tape in front of a live audience

564
00:26:49,840 --> 00:26:53,639
Speaker 8: in Philadelphia, which is there you go, Philadelphia Eagles, but

565
00:26:53,760 --> 00:26:56,600
Speaker 8: they have this Philadelphia based band, Snack Time. They're going

566
00:26:56,640 --> 00:26:59,080
Speaker 8: to have the music. So it's a limited run, but

567
00:26:59,240 --> 00:27:02,080
Speaker 8: he's doing it. He's going to the late night talk show.

568
00:27:02,200 --> 00:27:04,200
Speaker 4: I mean the late night business.

569
00:27:04,240 --> 00:27:07,520
Speaker 3: And that's always been a pretty profitable business for these

570
00:27:08,080 --> 00:27:13,200
Speaker 3: companies because they get great guests, the ratings are okay,

571
00:27:13,720 --> 00:27:16,000
Speaker 3: and advertisers kind of like that time.

572
00:27:17,280 --> 00:27:19,720
Speaker 4: Period. So I don't know, it's always been pretty good.

573
00:27:19,720 --> 00:27:23,080
Speaker 4: But I mean it's just a and he's got certainly name.

574
00:27:22,920 --> 00:27:25,199
Speaker 8: Recognition does and he has this I mean it's in

575
00:27:25,240 --> 00:27:26,720
Speaker 8: the first year, but he has a multi year agreement

576
00:27:26,720 --> 00:27:27,280
Speaker 8: with the ESPN.

577
00:27:27,359 --> 00:27:31,560
Speaker 6: So this is the brother of the Yes correct, correct, Yes,

578
00:27:31,680 --> 00:27:32,719
Speaker 6: I knew that was going to come up.

579
00:27:33,040 --> 00:27:35,520
Speaker 4: Correct, keep track. But he's of Travis Ks.

580
00:27:36,000 --> 00:27:40,000
Speaker 8: He's the one who's retired, yes, very yes from the Eagles.

581
00:27:40,080 --> 00:27:43,200
Speaker 8: Yes all right and this weekend, Yes, the big Wicked

582
00:27:43,600 --> 00:27:46,280
Speaker 8: movie coming out. So this one in the Wall Street

583
00:27:46,359 --> 00:27:49,240
Speaker 8: Journal say fans are going crazy, like they're renting out theaters.

584
00:27:49,560 --> 00:27:52,159
Speaker 8: One woman, she has like one hundred guests coming. But

585
00:27:52,200 --> 00:27:55,080
Speaker 8: they posed rules. There's certain rules.

586
00:27:55,000 --> 00:27:56,040
Speaker 4: Movie theater etiquette.

587
00:27:56,080 --> 00:28:00,399
Speaker 8: Okay, so costumes are a must, Loud chewing is unacceptle,

588
00:28:00,720 --> 00:28:03,320
Speaker 8: bathroom breaks are no. No, you can't leave your seat,

589
00:28:03,440 --> 00:28:08,040
Speaker 8: and no singing singing, and it's a singing movie, I know.

590
00:28:08,400 --> 00:28:10,640
Speaker 8: But there's other movie theaters that are that are doing

591
00:28:10,680 --> 00:28:14,120
Speaker 8: something different, like they have movie theater parties, movie theater

592
00:28:14,160 --> 00:28:17,399
Speaker 8: parties for Wicked where you can sing, they give out goodies.

593
00:28:17,760 --> 00:28:20,440
Speaker 8: And then wait until Christmas, guys, because there are sing

594
00:28:20,480 --> 00:28:24,879
Speaker 8: along screenings of Wicked. A lot more than a thousand

595
00:28:24,960 --> 00:28:26,680
Speaker 8: theaters are going to be doing this, so then there

596
00:28:26,720 --> 00:28:27,400
Speaker 8: you are allowed to sing.

597
00:28:27,520 --> 00:28:29,680
Speaker 6: So Paul, are you gonna be?

598
00:28:30,000 --> 00:28:32,679
Speaker 3: I have my tickets yet for for for Wicked, but

599
00:28:32,800 --> 00:28:33,760
Speaker 3: you do Lisa, right.

600
00:28:34,320 --> 00:28:37,480
Speaker 8: So my daughter has the Wicked one of her friends,

601
00:28:37,520 --> 00:28:38,440
Speaker 8: and then my husband and I.

602
00:28:38,360 --> 00:28:39,360
Speaker 4: Are doing the Gladiator.

603
00:28:39,840 --> 00:28:41,800
Speaker 8: Okay, and my son are doing the glass.

604
00:28:42,080 --> 00:28:45,000
Speaker 3: I mean this Wicked thing and even Gladiator. But I

605
00:28:45,000 --> 00:28:48,000
Speaker 3: mean this is got some real serious buzz, doesn't it.

606
00:28:48,120 --> 00:28:51,480
Speaker 8: Yes, yes, no, it definitely does. And because it's it's

607
00:28:51,480 --> 00:28:53,720
Speaker 8: two different audiences. So they're saying, this is what you know,

608
00:28:53,760 --> 00:28:56,160
Speaker 8: It's like the Barberenheimer is about to bring up.

609
00:28:56,160 --> 00:28:58,520
Speaker 6: It's like that again. You get Lizelle.

610
00:29:00,160 --> 00:29:05,560
Speaker 3: A Legends Thanksgivings traditionally coming out on holiday weekends.

611
00:29:05,200 --> 00:29:05,960
Speaker 1: Instead of traveling.

612
00:29:06,000 --> 00:29:07,240
Speaker 4: Let's go to the movies, guys.

613
00:29:07,400 --> 00:29:09,600
Speaker 3: That could I mean, I'll tell you the movie that

614
00:29:09,600 --> 00:29:13,120
Speaker 3: the Hollywood business, the movie business could use a shot of,

615
00:29:13,440 --> 00:29:14,640
Speaker 3: you know, good News and.

616
00:29:14,800 --> 00:29:17,680
Speaker 8: Goody and Bloomberg intelligence. They're saying that the Boss is

617
00:29:17,840 --> 00:29:20,480
Speaker 8: expected to take in two hundred and thirty million dollars

618
00:29:20,760 --> 00:29:21,400
Speaker 8: with both.

619
00:29:21,160 --> 00:29:21,880
Speaker 1: Of those movies.

620
00:29:21,920 --> 00:29:24,479
Speaker 8: So that's that's pretty I mean, it's no Barbenheimer.

621
00:29:23,960 --> 00:29:26,600
Speaker 4: But it's still that's Good'll take hollid numbers that they need.

622
00:29:26,640 --> 00:29:29,320
Speaker 3: All right, that's the newspapers with listeyo, thank you so much,

623
00:29:29,360 --> 00:29:30,640
Speaker 3: We appreciate that This.

624
00:29:30,840 --> 00:29:35,080
Speaker 2: Is the Bloomberg Surveillance podcast, available on Apple, Spotify, and

625
00:29:35,240 --> 00:29:39,120
Speaker 2: anywhere else you get your podcasts. Listen live each weekday,

626
00:29:39,240 --> 00:29:42,280
Speaker 2: seven to ten am Eastern on Bloomberg dot com, the

627
00:29:42,400 --> 00:29:46,160
Speaker 2: iHeartRadio app, tune In, and the Bloomberg Business app. You

628
00:29:46,200 --> 00:29:49,520
Speaker 2: can also watch us live every weekday on YouTube and

629
00:29:49,680 --> 00:29:51,240
Speaker 2: always on the Bloomberg terminal