Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: This is the Bloomberg Surveillance Podcast. Catch us live weekdays
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Speaker 3: Long Goodwin joints as chief market strategist and economists for
Speaker 3: New York Life. She braves, the rain comes into our
Speaker 3: New York studio, not mailing it in. Lauren, You've got
Speaker 3: a research piecee. You're looking at the earnings from this
Speaker 3: past season, and you kind of say, hey, we got
Speaker 3: two Americas out there.
Speaker 4: What do you mean by that?
Speaker 5: Well, it's really leveraging a Tom Keen sort of topic
Speaker 5: of the decade. But there is a very clear bifurcation
Speaker 5: in not just the consumer but also in corporate America.
Speaker 5: And what I mean by that is, if you have
Speaker 5: a little bit of investment money, a salary job, you
Speaker 5: are doing despite everything just fine. In this economy. You've
Speaker 5: been making money on your money, including your cash. Your
Speaker 5: salary's been keeping up with inflation. But for those that
Speaker 5: benefit in the early days of the pandemic from stimulus
Speaker 5: checks from strong wage growth, the lower income. Consumer is
Speaker 5: really really struggling with inflation with the cost of capital,
Speaker 5: and that exact same thing is happening for companies. And
Speaker 5: so what it means is a couple of things. First,
Speaker 5: the risk the biggest risk to the economy and this
Speaker 5: is a little bit backwards. The biggest risk to the
Speaker 5: economy I think in the next year is a twenty
Speaker 5: percent pull back in the S and P five hundred,
Speaker 5: because so much of this economy is driven by consumer spending,
Speaker 5: and so much of that wealth effect and confidence is
Speaker 5: sitting in the equity market.
Speaker 6: And especially because the last if you go back the
Speaker 6: down years for the S and P five hundred, I
Speaker 6: mean because I mean back to back gains for the
Speaker 6: past two years, I mean on pace for over twenty percent.
Speaker 6: We haven't seen that since the dot com bubble. But
Speaker 6: also the only down years twenty twenty two we had
Speaker 6: the bear market, and then twenty eighteen because there was
Speaker 6: that big sell off of that final quarter in that
Speaker 6: December was like the worst quarter since two thousand and eight.
Speaker 6: But I mean, other than that, I mean, what is
Speaker 6: the It seems kind of tricky because we're so early
Speaker 6: in into a bull run. The S and P five
Speaker 6: hundreds up like seventy percent since low in October of
Speaker 6: twenty twenty two. That's not even like half the average
Speaker 6: of a typical bull run. So I mean, what would
Speaker 6: really take to see a down year and not just
Speaker 6: have like an average type of gain of around nine
Speaker 6: or ten percent, you know.
Speaker 5: Any number of things. And it's not really even our
Speaker 5: base case that we would see that that draw down.
Speaker 5: It's a it's just a reflection that this economy, though
Speaker 5: incredibly robust, is starting to see its phrase on the edges.
Speaker 5: And I think what that means is that if you
Speaker 5: if you have our base case, which is a pretty
Speaker 5: good year we're expecting, you know, five to seven percent
Speaker 5: on the equity market might not feel so great after
Speaker 5: the last couple of years that we had, but it's.
Speaker 6: Wondering to five to seven percent, is that more because
Speaker 6: of the broadening out and so you'd see more equal weight,
Speaker 6: small caps, other things taking parts. So then the ones
Speaker 6: that have been the bigger waitings, like the mag seven,
Speaker 6: it's like still there strong gains, it's just you're seeing
Speaker 6: other parts of the index catching up. Is that the
Speaker 6: case for next year?
Speaker 1: Yeah?
Speaker 5: I think it is part of the case for next year.
Speaker 5: Really five to seven percent is a function of economic growth.
Speaker 5: Right now three and a half percent real. That's wild,
Speaker 5: and I expect growth to slow back to trend. That's
Speaker 5: still a good economic outcome. It's just also still slowing
Speaker 5: growth from where we are today, and that's an environment
Speaker 5: where you do need to see more of the S
Speaker 5: and P five hundred do the work. We're not enormously
Speaker 5: bullish on small caps or junkiear stocks because of this
Speaker 5: bifurcation we're seeing in the economic environment, but what it
Speaker 5: means is that you probably have leadership EBB and flow
Speaker 5: a bit more over the next couple of years, whereas
Speaker 5: there's been a pretty clear dominant leadership from the Magnificent
Speaker 5: Seven as a result of Ai Laaren.
Speaker 3: When we all woke up on Wednesday two weeks ago
Speaker 3: with a new president and now I decidedly Republican led Congress,
Speaker 3: did that change your outlook of the markets at all
Speaker 3: or how you think about opportunities.
Speaker 5: It's such an important question because I think over those
Speaker 5: same couple of weeks we've been sort of grappling with
Speaker 5: what are the Trump trades and now what are the
Speaker 5: Trump trade offs? Which which of those knee jerk reactions
Speaker 5: are going to sit with us, and there are a
Speaker 5: couple that I think will, and those are the ones
Speaker 5: that are accentuated by some of the things we already knew.
Speaker 5: First of all, that growth has been stickier, inflation been
Speaker 5: stickier than even year after year economists like myself have
Speaker 5: expected that. When you add uncertainty around how much government
Speaker 5: spending will have points to higher and more volatile interest rates.
Speaker 5: It means that even though credit quality is pretty strong,
Speaker 5: we need to stay short duration or focused on structured credit.
Speaker 5: From my perspective. Another one that I expect to stick
Speaker 5: with us for the same combination of reasons is the
Speaker 5: strength and the US dollar. When you see the US
Speaker 5: dollar weekend, it's because x US growth is outperforming and
Speaker 5: I just don't see any path to that in the
Speaker 5: next year. Doesn't mean we'll keep seeing gains in the
Speaker 5: dollar like we've seen in the past couple weeks consistently.
Speaker 5: It just means that we're likely to see that strength persist.
Speaker 6: That's interesting because the DXY, if you look at this
Speaker 6: right now and you kind of draw back to twenty
Speaker 6: twenty one, in that timeframe, it's bumping up that resistance
Speaker 6: that we would have seen back in about a year ago,
Speaker 6: in twenty twenty three, and then going back to twenty
Speaker 6: twenty one. But is that kind of the biggest risk
Speaker 6: to potentially more of a more robust gains in the
Speaker 6: equity market if you continue to see dollar strength.
Speaker 5: I think the biggest risk to the equity market is rates,
Speaker 5: but they are they're not driven by one hundred percent
Speaker 5: exactly the same things, but they have a lot of
Speaker 5: the same underlying underlying contributors. Namely that US growth has
Speaker 5: been outperforming, US inflation has been outperforming. That keeps rates sticky,
Speaker 5: like unlikely to see the volume of FED cuts that
Speaker 5: we'd expect, and that also of course keeps the dollar higher.
Speaker 3: What did you take away from this earning season that
Speaker 3: we're just kind of wrapping up here, What did it
Speaker 3: tell you?
Speaker 5: Well, it told me that this sort of bifurcation of
Speaker 5: the consumer bifurcation and quality that we're seeing as persisting.
Speaker 5: And though as I do expect that we'll see more
Speaker 5: winners not just from the AI trade as it broadens
Speaker 5: into energy and electrification, but also from the market in
Speaker 5: general as growth sort of stabilizes. But that is that
Speaker 5: demands an acid allocation shift over the course of the year.
Speaker 5: A new focus for investors really reflected in that data.
Speaker 6: Something else I've been keeping a close eye on, too,
Speaker 6: is looking at S and P five hundred earnings but
Speaker 6: excluding energy, because that was the one that saw kind
Speaker 6: of the biggest markdowns coming into third quarter earning season.
Speaker 6: Right now, I mean, the growth is still around ten
Speaker 6: eleven percent when you're excluding that sector going into next year,
Speaker 6: even those revisions look like it's more commodity driven. How
Speaker 6: do you view energy in particular, and do you still
Speaker 6: think the other parts of the index will still hold
Speaker 6: up for next year when it comes to earnings growth.
Speaker 5: I am relatively constructive on energy because I think that
Speaker 5: not only is it an important part of the administration
Speaker 5: and the sort of Trump trade dynamic just from a
Speaker 5: sentiment perspective, but increasingly it is the bottleneck for artificial intelligence.
Speaker 5: There's lots of really cool and interesting stats about how
Speaker 5: we as a global economy need to add Germany's size
Speaker 5: of electricity production over the next couple of years to
Speaker 5: keep up. Increasingly, chip makers have been able to keep
Speaker 5: up with Moore's law, but energy efficiency hasn't kept up.
Speaker 5: We need more energy per unit of compute now already
Speaker 5: than was the case a year ago, and so that
Speaker 5: constraint on the one of the most important trends in
Speaker 5: the economy I think, involves more capital intensive investment in
Speaker 5: support of that sector.
Speaker 3: Tom Keen and I and some others we were part
Speaker 3: of the AI panel that hosted by Bloomberg Intelligence a
Speaker 3: couple of days.
Speaker 4: Ago here in New York.
Speaker 7: AI.
Speaker 3: I mean, how do you think about it? Do you
Speaker 3: just how important is that to you as a strategist
Speaker 3: and the economist.
Speaker 5: Well, it's important in two ways, at least two ways.
Speaker 5: One is the broader economic trajectory we're on and the
Speaker 5: idea that this capital intensity of not just AI but reglobalization,
Speaker 5: it does give us a medium term constructive outlook when
Speaker 5: you think about the private capital markets or a long
Speaker 5: term view, you do see a lot to be constructive
Speaker 5: about in terms of just investment needs related to this trend.
Speaker 5: But the other thing that's important as a strategist is
Speaker 5: just the acknowledgment that though every move up in the
Speaker 5: Magnificent seven has been justified by earnings, we are beginning
Speaker 5: to see their constraints. We are beginning to see more
Speaker 5: competition I don't know that that plays out in the
Speaker 5: first half of twenty twenty five, but the broadening of
Speaker 5: the trend into infrastructure and then eventually into corporate use
Speaker 5: cases will mean a broadening in S and P five
Speaker 5: hundred earnings.
Speaker 4: Lauren, thank you so much for joining us. I really
Speaker 4: appreciate it.
Speaker 3: Lauren Goodwin, she's a chief market strategist and economists to
Speaker 3: add New York Life.
Speaker 2: You're listening to the Bloomberg Surveillance podcast. Catch US Live
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Speaker 4: Let's talk about the economics over in Europe.
Speaker 3: Some weaker pmis came out today, I think, surprising some
Speaker 3: people as to you know, kind of going back into
Speaker 3: a contraction across there.
Speaker 4: Doctor vania A.
Speaker 3: Stravakova, professor of economics that the London Business School joins us. Professor,
Speaker 3: talk to us about the economic activity we're seeing across
Speaker 3: Europe these days.
Speaker 4: I mean, the center banks are easy, but still some
Speaker 4: challenges out there. What are you seeing?
Speaker 1: So thank you so much for having me. Unfortunately we
Speaker 1: don't have many good news in Europe, both the Eurozone
Speaker 1: and the UK, and we have seen significant divergence also
Speaker 1: reflected in the stock market performance, as you're of course aware.
Speaker 1: So since the Trump elections, the you know, the eurostocks
Speaker 1: fifty has decreased substantially, while the smp it struck has increased.
Speaker 1: What's interesting is if you look at historical data, and
Speaker 1: let's go not go back that much in his readly,
Speaker 1: but post the global financial crisis, you find a very
Speaker 1: high correlation between augur good stock market price growth returns
Speaker 1: across the US and the Eurozone for example. So in
Speaker 1: the data the correlation is around eighty six percent. However
Speaker 1: we see sometimes divergence. So nowadays we definitely have the
Speaker 1: divergence since the election. And another period during which we
Speaker 1: had significant divergence was during the post twenty sixteen Trump elections.
Speaker 1: So if you look particularly during the period from June
Speaker 1: twenty sixteen until June twenty nineteen, you find that the
Speaker 1: correlation between the US and the Eurozone stock market drops
Speaker 1: to seventy percent, which is a drop of sixteen percent.
Speaker 1: Now what does this mean. Well, actually, I have recent
Speaker 1: work which allows me to decompose the movements of it
Speaker 1: U syncratic stock prices, but also our good stock market
Speaker 1: indices into easy to interpret components. So what do we
Speaker 1: do in a paper titled Elephants and Equity Markets. So
Speaker 1: we take let's say individual stock price growth rate or
Speaker 1: the augur good stock market, and we decompose that growth
Speaker 1: rate into the subcomponents of the growth rate of holdings.
Speaker 1: So what are those components. Well, the stock price could
Speaker 1: be moving because the portfolio managers are rebalancing their weights,
Speaker 1: the weights that they place on this stock or stock
Speaker 1: market in their portfolio. It could be moving because of
Speaker 1: what we called wealth effects. So let's say the native
Speaker 1: fit returns of the funds. They're good, so it is
Speaker 1: like an implification effect. They could be moving because of
Speaker 1: final inflos alsos into the funds and also exchange the
Speaker 1: evaluation effects which kepture for example that US do or
Speaker 1: investors called global stocks for examples.
Speaker 6: Also, we won't point up because Paul was talking about
Speaker 6: this earlier, looking at the euro in particular fall into
Speaker 6: its lowest level since twenty twenty two, walk us through
Speaker 6: kind of the dynamics when you're thinking about Germany and France,
Speaker 6: because that's obviously the Eurozone's two largest economies, and we
Speaker 6: were thinking about those increasing bets that the ECB is
Speaker 6: going to have to boost the economies' region by potentially
Speaker 6: a half point cut, whereas over here, if you're thinking
Speaker 6: about the Federal Reserve, that's getting dialed back to potentially
Speaker 6: maybe even a pause potentially in December. Walk us through
Speaker 6: the dynamics when you're thinking about what's happening in the
Speaker 6: Eurozone versus what's happening over here in the US. And
Speaker 6: then of course very different dynamics if you're thinking about
Speaker 6: the being Japan.
Speaker 1: Yeah, so in general, you know, using this the complition,
Speaker 1: it can trace you to Portfoy a way changes. So
Speaker 1: it's the same nowadays.
Speaker 7: So why are the.
Speaker 1: Investors rebalancing their portfolios differently with respect to Eurozone countries
Speaker 1: than the US, Which is kind of aligned with your question.
Speaker 1: Why now we see that we're pricing differently, let's say,
Speaker 1: French and German stocks relative to the US stocks. So
Speaker 1: what are the news potentially driving the divergency at the moment?
Speaker 1: So what they see happening is definitely there is a
Speaker 1: lot of concern of course, around tariffs and differential regulation
Speaker 1: across the industries in the US and Europe. Granted that
Speaker 1: the euro Zone is a much more open economy, tariffs
Speaker 1: are going to hurt much more the Eurozone than the US,
Speaker 1: So that's one of the factors. Another factor, which I
Speaker 1: believe is going to be first over the importance. Maybe
Speaker 1: not so much priced in at the moment, but it's
Speaker 1: going to be priced in soon enough and definitely in
Speaker 1: the medium run, is the different physical sustainability across the
Speaker 1: Eurozone and the US. So we already seen in the
Speaker 1: UK we saw the latest budget which implied significantly increased
Speaker 1: in terms of taxes the for essentially capital, you know,
Speaker 1: essentially forums. So this is definitely going to slow down growth.
Speaker 1: I do believe that the Eurozone is not different in
Speaker 1: the UK. Both the UK and the Eurozone have unsustainable
Speaker 1: welfare states given the current tax system. What do I
Speaker 1: mean by this? We're taxing labor as much as possible,
Speaker 1: meaning probably we have reached the maximum amount of taxation
Speaker 1: we can impose on middle income and higher income earners.
Speaker 1: So we need to start taxing capital. We're seeing that
Speaker 1: in the form of labor. This is not so easy
Speaker 1: to do. If you tax capital, also you decrease real
Speaker 1: down growth. What do you see in the US, it's
Speaker 1: exactly the opposite. Right, we got Trump, people anticipate lower
Speaker 1: taxes on farms. But moreover the fact that he appointed
Speaker 1: Ellen must do a newly formed essentially agency that is
Speaker 1: the only goal of which is to decrease the size
Speaker 1: of the government. We would inspect that the goal of
Speaker 1: the Troup administration is to decrease the amount of taxes
Speaker 1: you need to essentially get in the future in order
Speaker 1: to finance the government. This is very different for what's
Speaker 1: happening in Europe. So this is going to definitely hint
Speaker 1: the growth in Europe overall. How do we fund the
Speaker 1: welfare states? What do we tax? Who do we tax?
Speaker 1: Higher taxes definitely have going to translate with so in
Speaker 1: lower growth and of course worse performance in the stock markets.
Speaker 3: Is there any political appetite, professor, to lower some of
Speaker 3: the expenditures across Europe? You talk about the welfare state,
Speaker 3: is there any political you know, expectations that could be
Speaker 3: reduced over time?
Speaker 1: That is a very good question. Unfortunately, within an equilibrium
Speaker 1: ware a lot of I mean fortunately and unfortunately when
Speaker 1: you have big welfare states, you have usually a large
Speaker 1: fraction of the voting population benefiting from these big welfare states. Right,
Speaker 1: So the statistics shows that in the UK more than
Speaker 1: fifty percent of the population or net receives more benefits
Speaker 1: than pay in the form of taxes. If you have
Speaker 1: a big chunk of the population benefiting for the welfare state,
Speaker 1: it's highly unlikely for them to vote a party in
Speaker 1: power that is going to promote cutting the welfare state.
Speaker 1: So I do believe that the only way we can
Speaker 1: reduce if I mean, I'm not saying that's optimal or not,
Speaker 1: but this is from the perspective of growth and performance
Speaker 1: of European stock market. The only way to decrease the
Speaker 1: welfare state in Europe is over time to reach the
Speaker 1: limited physical sustainability, meaning you have very high level of
Speaker 1: the two GDP, you have reached the max level of
Speaker 1: taxation on labor income, right, you know, you are finding
Speaker 1: that increasing taxes is actually not increasing revenue. So once
Speaker 1: we reach that point, essentially any party in power is
Speaker 1: not going to have a choice and they'll have to
Speaker 1: do something about essentially the welfare state. But that is
Speaker 1: very costly. It's going to take time to get there,
Speaker 1: and it might mean at least a decade or even
Speaker 1: more of low broad in Europe.
Speaker 3: Professor, thank you so much for We appreciate that as always,
Speaker 3: Doctor Van yester Rakova. She is a professor of economics
Speaker 3: at the London Business World.
Speaker 2: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 3: What is going on with bitcoin approaching one hundred thousand?
Speaker 3: This might be the Matt who also forgot his token
Speaker 3: number and it's just asking for a friend here. But
Speaker 3: let's go to Mike mcgloonan senior macro strategist for Bloomberg Intelligence. Mike,
Speaker 3: you know you're the only one that's explained to me
Speaker 3: what's going on here with this bitcoin.
Speaker 4: So I guess it's just more buyers and sellers.
Speaker 7: Here, definitely, now, Paul, more buyers. You're looking at this
Speaker 7: month alone, ETF flows and in tf's are approaching six
Speaker 7: billion dollars. That's the biggest month ever. Total ETF's tracking
Speaker 7: bitcoin now around one hundred and twenty billion to put
Speaker 7: that in context, that's about half what do you see
Speaker 7: the total mount tracking goal, which is about two hundred
Speaker 7: and twenty billion, so it's catching up really fast. A
Speaker 7: year ago at this time, total ETF's tracking bitcoin was
Speaker 7: around ten billions, so mass of buying for good reason.
Speaker 7: We have a crypto president member Nozelt like a convert.
Speaker 7: When he was president, he thought cryptos were a scam
Speaker 7: and now he's realizing, oh boy, this basic space tracks
Speaker 7: the dollar. But all we've had some major dog double
Speaker 7: dog deer potential peak signs lately and I'm really concerned
Speaker 7: about it. I'd like to tell you about.
Speaker 6: Well talk more about that because it looks like it's
Speaker 6: up about forty percent just so far this month. So
Speaker 6: how much more gas is left in the tank here?
Speaker 6: And where you looking at for like resistance support levels?
Speaker 7: Well, there you go, Jess, the key level everybody's looking
Speaker 7: at round number one hundred thousand dollars. I first mentioned
Speaker 7: it almost I think it was four years ago. Yeah,
Speaker 7: kind of felt the horse for a little while, but
Speaker 7: you know, just the diminishing supply, increasing demand and adoption.
Speaker 7: But there's a key thing, is a key thing. So
Speaker 7: one hundred thousand, very good resistance. It's it's traded in futures,
Speaker 7: but that's a little different. The key thing I'm watching
Speaker 7: is bitcoin versus gold. Right now, that ratio it takes
Speaker 7: basically about thirty six sounds of gold for when bitcoin
Speaker 7: the all time high is still in place. That was
Speaker 7: thirty seven in twenty twenty one. But there's one key
Speaker 7: headline that really struck me yesterday. I was really concerned about.
Speaker 7: For it's a lesson. You're learning the trading pests and
Speaker 7: it's never messed with the market gods, particularly if you
Speaker 7: have profits, you kind of kind of should be modest
Speaker 7: about this. Here's a headline in Bloomberg term a Warren
Speaker 7: Buffett destroying three billion a month of Berkshire capital by
Speaker 7: not investing in bitcoin, says Micro Strategies Michael Saylor. I
Speaker 7: saw that, and I remember Michael Sarely, here's one of
Speaker 7: the persons that really kicked over my bullishness in twenty twenty.
Speaker 7: That was in the back of the Attorney General in New
Speaker 7: York coming down and tether in twenty nineteen. It all
Speaker 7: proved how bullish bitcoin is. But now when you double
Speaker 7: dog dear markets like that, I think I gotta be careful.
Speaker 3: So I don't know, michaed Man. Maybe I'm wrong on this,
Speaker 3: but I kind of think of this as a commodity.
Speaker 3: How do you can you put valuations on commodities or
Speaker 3: do I know in the past you've kind of talked
Speaker 3: about it in relation to other commodities in this case gold.
Speaker 7: Yeah, definitely, so I look at versus gold. So one
Speaker 7: thing I about point out today Bitcoin is actually dropping
Speaker 7: a little bit down at ninety eight just split a
Speaker 7: ninety eight hundred, and gold's up over a percent. Part
Speaker 7: of that is the re escalation of global tensions, most
Speaker 7: notably in Ukraine. But you don't it's the machine supply,
Speaker 7: increasing demand and adoption. We get that, and that's why
Speaker 7: I pointed out right away massive inflows and ETFs. But
Speaker 7: one thing about this space pall it's the most widely
Speaker 7: traded speculative digital asset on the planet ever. Twenty four
Speaker 7: to seven comes Saturday Sunday. Sometimes I can't stop watching
Speaker 7: it because it gives you indication what's going on, so
Speaker 7: everybody trades it. There's massive arm going on. A lot
Speaker 7: of people got a little bit too short micro strategy
Speaker 7: and got stopped out and now we have some bigger
Speaker 7: people doing that, so that got too expensive. But number
Speaker 7: one thing I think it's technicals and animal spirits.
Speaker 6: Right now, talk to us about doctor copper because we
Speaker 6: know how closely it ties into the economy, not just
Speaker 6: our economy, but the global economy as well.
Speaker 7: What do you seeing there, well, Jess, I appreciate you
Speaker 7: going there, because to me, that's the number one commodity
Speaker 7: that has to go up to prove we don't have
Speaker 7: deflationary dominos kicking over in the whole world. So doctor
Speaker 7: copper is broken below Keith support around nine thousand dollars
Speaker 7: a ton. In terms of dollars, it's pushing in that
Speaker 7: key support around four dollars a pound. It made a
Speaker 7: new high this year around five to twenty, but it
Speaker 7: was on the back of massive speculative accesses in in futures.
Speaker 7: Futures are just a lot of buyers who just got
Speaker 7: way over, way long. And the key way I like
Speaker 7: to point out with copper is on the month now
Speaker 7: coppers down about five percent and the Hang Singing Index
Speaker 7: is down about five percent. You see the connection there.
Speaker 7: It's all about China. And now I look at that
Speaker 7: ten you note yield in China two point zero eight
Speaker 7: on a CGB versus the US it's four point four percent.
Speaker 7: That's a significant sign of deflation, lack of demand, full
Speaker 7: forces in China, complete dependence on stimulus. And you know
Speaker 7: we've seen this before in Japan. Japan's GDP at four
Speaker 7: trillion dollars is the same it was thirty years ago.
Speaker 7: China is going that way. That's bad for copper. And
Speaker 7: the key thing I like to point about coppers if
Speaker 7: it breaks down, it adds legitimacy to declining crude oil,
Speaker 7: the crying iron ore, declining grains, and it means the
Speaker 7: commodity complex is clearly showing global deflationary recessionary trends. And
Speaker 7: gold's only when that's really still going up.
Speaker 3: What's the call and the energy front for you, Mike
Speaker 3: these days?
Speaker 7: It We'll start with what manison Americans three dollars a
Speaker 7: gallon as the average price of gasoline by this time
Speaker 7: next year, Paul, if you want someone to blame, I
Speaker 7: think it's going to be two. Average value price of
Speaker 7: eSeL inness country is just about three fifty. I think
Speaker 7: next is going to be two fifty. It's not profound
Speaker 7: to say that because the last twenty years we've got
Speaker 7: to those levels. And the big significance is we are
Speaker 7: a net massive increase in everyday exporter of liquid fuels
Speaker 7: crude oil, unleaded gas, diesel maybe less, and we have
Speaker 7: declining diminishing. We have the demand for diesel and US
Speaker 7: is declining. It's declining in China, in Europe and India,
Speaker 7: and we increasing supply. So we just get a little
Speaker 7: bit of a backup in say the stock market. It
Speaker 7: pushes those prices down. So those are I had in
Speaker 7: my headline recently. Those are potentially trump deflationary forces. And
Speaker 7: we do have this new leadership that's more drill. It
Speaker 7: will bring on the supply.
Speaker 6: What about natural gas, Yes.
Speaker 7: So this is peak season for natural gas. It's usually
Speaker 7: right before you get to January. Three bucks natural gas
Speaker 7: is near the peak. I think four hours is pretty high.
Speaker 7: The cost of production this country is two dours. That's
Speaker 7: been kind of the mean Menian mode. I think it
Speaker 7: gets back there once we get through January, and we
Speaker 7: have the normal trend in global warming happens in winter too,
Speaker 7: so basically right now you have to price in a
Speaker 7: bit of risk of a colder than normal winter. But
Speaker 7: what's spend. The trend warmer than normal winters, particularly in Europe,
Speaker 7: So that's the key things. The bottom line for natural
Speaker 7: gas is the will's becoming increasingly dependent on LNG exports
Speaker 7: from the US, but still only about twenty percent of
Speaker 7: our production. And we still have a pretty good excessive
Speaker 7: amount of liquid fuels natural gas, crude oil, ethanol, biofuels
Speaker 7: in this country dependent on exports, and if we ramp
Speaker 7: up a trade war, that means we're going to have
Speaker 7: kind of supply bottlenecked in US, which means lower prices.
Speaker 4: Mike mclohan, thanks so much for We appreciate it as always.
Speaker 3: Mike McLoone, senior macro strategist for Bloomberg Intelligence.
Speaker 2: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 3: Do your daily look at the front pictures from around
Speaker 3: the world A least going to tell you what do
Speaker 3: you have for us in the newspapers?
Speaker 8: All right, so we've been talking a lot about retail earnings. Right,
Speaker 8: you've heard Walmart, Target like Crust, like all these different companies.
Speaker 8: But now with the election behind, so this is interesting.
Speaker 8: From the Washington Post, they say that with the election,
Speaker 8: mining consumers are ready to spend because they say, normally
Speaker 8: what happens is that before election day they're a bit hesitant,
Speaker 8: so they hold off. But they say, now that that's over,
Speaker 8: it's going to open up more retailers, more shoppers are
Speaker 8: ready to do different things, but they're shopping differently. Okay,
Speaker 8: one thing they're going to do, they're going to look
Speaker 8: for deal. They're going to be selective on the splurges,
Speaker 8: and they're going to hit up discount and off price
Speaker 8: realtors like Walmart.
Speaker 7: Gap.
Speaker 8: They said they're drawing in like those six figure retailers,
Speaker 8: and next.
Speaker 3: Knew it sounds like yes, So I haven't heard them
Speaker 3: call that out before, you know, and I've heard it from.
Speaker 4: A couple of them. Correct, correct from Walmart.
Speaker 8: Yeah, and Targets saying like a lot of them, a
Speaker 8: lot of their consumers are shifting to like the cheaper brands.
Speaker 8: So you saw that Ross Stars, I mean they they
Speaker 8: reported well too, So that's like the discount retailers right.
Speaker 6: Lisa and I were talking about earlier. We don't do
Speaker 6: the Lulu limit. We find other things that gap.
Speaker 4: Why could the store brands at the supermarket more than
Speaker 4: they ever have? True, I do that too, but some
Speaker 4: things I'll go with the brand. But that's what it is.
Speaker 8: Yes, cheap, yes, okay, most interestingly so yeah, so we're spending,
Speaker 8: but we're just spending different.
Speaker 3: From I don't think my spending patterns have changed. But
Speaker 3: since the election, it just feels like a weight is lifted.
Speaker 3: You can just move forward, look forward everything else. It
Speaker 3: seems better just because the whole thing's behind you.
Speaker 4: Now we can to look forward, and now I know
Speaker 4: what to look forward to. Exactly what was? Okay?
Speaker 8: So this one was a right up your ally powamount executives.
Speaker 8: It turns out they're getting a nice bonus after the
Speaker 8: deal with Skydance closes. So this is according to a filing. Yeah,
Speaker 8: they're promising to pay its heads of government relations human
Speaker 8: resources a one million dollar retention bonus that's tied to
Speaker 8: the merger. But I guess this is the thing, Like
Speaker 8: retention bonuses are common.
Speaker 3: I mean when they're well, having worked on Wall Street,
Speaker 3: my whole career. When and I've been through a bunch
Speaker 3: of mergers. If when we're when company is buying company,
Speaker 3: be what you're really buying are the people. I mean,
Speaker 3: you go for an investment, you're buying the people. So
Speaker 3: you want to people to stay. So one of the
Speaker 3: ways you get them to stay is you pay them
Speaker 3: a retention bonus. Hey, here's X amount of dollars to
Speaker 3: be paid over the next three years.
Speaker 4: If you stay, you'll get this money. Inact that kind
Speaker 4: of thing.
Speaker 3: We did not do that when Credit Swiss spought don
Speaker 3: some left, connentried genret and literally the next day after
Speaker 3: the close, everybody walked out the door.
Speaker 7: It was true.
Speaker 4: So they don't work. They work.
Speaker 3: I don't know about before the entertainment business. But but
Speaker 3: this Paramount stock it's at nine dollars, is still down
Speaker 3: twenty five percent.
Speaker 4: Year to date. It that's a tough that's a tough
Speaker 4: story there.
Speaker 7: Yeah.
Speaker 8: And the reason why people are upsets because they just
Speaker 8: announced plans to cut two thousand jobs. Y So at
Speaker 8: the same time that this comes out, so ESPN is
Speaker 8: going into the late night chalk show scene. Former Philadelphia
Speaker 8: Eagles offensive lineman Jason Kelcey is going to be the
Speaker 8: host of it. Okay, so we announce it on Jimmy
Speaker 8: Cambole Live. It's going to be called they call it
Speaker 8: Late Night with Jason Kelce Original. So they're gonna tape
Speaker 8: on five straight Friday nights starting January third, and that
Speaker 8: actually falls in line with the NFL's regular season the playoffs,
Speaker 8: so you kind of see the tie in there. But
Speaker 8: I mean he's a personality.
Speaker 6: Yeah, I don't know, you know, it's great post career,
Speaker 6: he's doing well.
Speaker 8: And it's gonna tape in front of a live audience
Speaker 8: in Philadelphia, which is there you go, Philadelphia Eagles, but
Speaker 8: they have this Philadelphia based band, Snack Time. They're going
Speaker 8: to have the music. So it's a limited run, but
Speaker 8: he's doing it. He's going to the late night talk show.
Speaker 4: I mean the late night business.
Speaker 3: And that's always been a pretty profitable business for these
Speaker 3: companies because they get great guests, the ratings are okay,
Speaker 3: and advertisers kind of like that time.
Speaker 4: Period. So I don't know, it's always been pretty good.
Speaker 4: But I mean it's just a and he's got certainly name.
Speaker 8: Recognition does and he has this I mean it's in
Speaker 8: the first year, but he has a multi year agreement
Speaker 8: with the ESPN.
Speaker 6: So this is the brother of the Yes correct, correct, Yes,
Speaker 6: I knew that was going to come up.
Speaker 4: Correct, keep track. But he's of Travis Ks.
Speaker 8: He's the one who's retired, yes, very yes from the Eagles.
Speaker 8: Yes all right and this weekend, Yes, the big Wicked
Speaker 8: movie coming out. So this one in the Wall Street
Speaker 8: Journal say fans are going crazy, like they're renting out theaters.
Speaker 8: One woman, she has like one hundred guests coming. But
Speaker 8: they posed rules. There's certain rules.
Speaker 4: Movie theater etiquette.
Speaker 8: Okay, so costumes are a must, Loud chewing is unacceptle,
Speaker 8: bathroom breaks are no. No, you can't leave your seat,
Speaker 8: and no singing singing, and it's a singing movie, I know.
Speaker 8: But there's other movie theaters that are that are doing
Speaker 8: something different, like they have movie theater parties, movie theater
Speaker 8: parties for Wicked where you can sing, they give out goodies.
Speaker 8: And then wait until Christmas, guys, because there are sing
Speaker 8: along screenings of Wicked. A lot more than a thousand
Speaker 8: theaters are going to be doing this, so then there
Speaker 8: you are allowed to sing.
Speaker 6: So Paul, are you gonna be?
Speaker 3: I have my tickets yet for for for Wicked, but
Speaker 3: you do Lisa, right.
Speaker 8: So my daughter has the Wicked one of her friends,
Speaker 8: and then my husband and I.
Speaker 4: Are doing the Gladiator.
Speaker 8: Okay, and my son are doing the glass.
Speaker 3: I mean this Wicked thing and even Gladiator. But I
Speaker 3: mean this is got some real serious buzz, doesn't it.
Speaker 8: Yes, yes, no, it definitely does. And because it's it's
Speaker 8: two different audiences. So they're saying, this is what you know,
Speaker 8: It's like the Barberenheimer is about to bring up.
Speaker 6: It's like that again. You get Lizelle.
Speaker 3: A Legends Thanksgivings traditionally coming out on holiday weekends.
Speaker 1: Instead of traveling.
Speaker 4: Let's go to the movies, guys.
Speaker 3: That could I mean, I'll tell you the movie that
Speaker 3: the Hollywood business, the movie business could use a shot of,
Speaker 3: you know, good News and.
Speaker 8: Goody and Bloomberg intelligence. They're saying that the Boss is
Speaker 8: expected to take in two hundred and thirty million dollars
Speaker 8: with both.
Speaker 1: Of those movies.
Speaker 8: So that's that's pretty I mean, it's no Barbenheimer.
Speaker 4: But it's still that's Good'll take hollid numbers that they need.
Speaker 3: All right, that's the newspapers with listeyo, thank you so much,
Speaker 3: We appreciate that This.
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