1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,880 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:21,960 Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business app. 4 00:00:22,360 --> 00:00:25,680 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:25,760 --> 00:00:27,080 Speaker 1: us live on YouTube. 6 00:00:27,400 --> 00:00:31,080 Speaker 2: This is a really timely conversation Nisha Poultel. We get 7 00:00:31,080 --> 00:00:34,800 Speaker 2: a huge response when she's on with Parametric. I'm thrilled 8 00:00:34,840 --> 00:00:37,080 Speaker 2: that she could join us here on taking advantage of 9 00:00:37,120 --> 00:00:37,920 Speaker 2: text rebounds. 10 00:00:38,280 --> 00:00:43,560 Speaker 3: Not one, but two people in the last week have pounded. 11 00:00:43,120 --> 00:00:46,800 Speaker 2: The table on your world. They're saying, basically, it's never 12 00:00:46,840 --> 00:00:49,440 Speaker 2: been like this. Yeah, has it never been like this 13 00:00:49,640 --> 00:00:50,640 Speaker 2: in the muni bond. 14 00:00:50,520 --> 00:00:53,239 Speaker 4: World in the long end of the curve. So if 15 00:00:53,240 --> 00:00:57,160 Speaker 4: you look at twenty year high quality triple A bond yields, 16 00:00:57,840 --> 00:01:02,240 Speaker 4: we have not seen these yields system atinably this high 17 00:01:02,880 --> 00:01:06,480 Speaker 4: in the past, I would say fifteen fifteen years or so. So, 18 00:01:06,959 --> 00:01:09,600 Speaker 4: and here's the thing. As we talk about New York City, 19 00:01:10,640 --> 00:01:14,600 Speaker 4: you do see, you know, headline stories around New York City, 20 00:01:14,600 --> 00:01:17,800 Speaker 4: possibly credit. We can certainly discuss the budget bill and 21 00:01:18,880 --> 00:01:22,280 Speaker 4: federal funding cuts to issuers, but my main line here 22 00:01:22,319 --> 00:01:25,520 Speaker 4: is not much has changed from a credit quality perspective, right, 23 00:01:25,520 --> 00:01:27,360 Speaker 4: so you're still looking at a very high quality acid 24 00:01:27,360 --> 00:01:31,399 Speaker 4: class that purely based on technicals. A lot of issuance 25 00:01:31,400 --> 00:01:33,840 Speaker 4: in a short period of time, not as much demand 26 00:01:34,240 --> 00:01:38,480 Speaker 4: has really created this imbalance, and long ENDMUNI yields are 27 00:01:38,560 --> 00:01:43,479 Speaker 4: up anywhere from eighty to ninety basis points year to date. 28 00:01:43,560 --> 00:01:46,559 Speaker 4: So you're looking at tax equivalent yields for New York, 29 00:01:47,360 --> 00:01:51,280 Speaker 4: you know, for New York residents anywhere around eight and 30 00:01:51,360 --> 00:01:54,360 Speaker 4: a half to nine percent north of that in that 31 00:01:54,440 --> 00:01:57,040 Speaker 4: long end of the curve. Right, these are bonds finite maturity. 32 00:01:57,880 --> 00:02:00,000 Speaker 3: Give us an example of one of those bonds. 33 00:02:00,160 --> 00:02:02,800 Speaker 2: Is it the New York Mets bond of two thousand 34 00:02:03,240 --> 00:02:03,720 Speaker 2: fifty ten. 35 00:02:03,840 --> 00:02:06,840 Speaker 4: No, I mean you're looking at New York City waters, right, 36 00:02:07,200 --> 00:02:10,040 Speaker 4: very high quality issuer, New York City geos, New York 37 00:02:10,080 --> 00:02:16,680 Speaker 4: City TFAs. These are just your large issuers that you're 38 00:02:16,760 --> 00:02:19,360 Speaker 4: getting these types of yields for. And this is on 39 00:02:19,400 --> 00:02:22,000 Speaker 4: a national basis as well. So again what we've seen 40 00:02:22,400 --> 00:02:25,600 Speaker 4: is as you've had this big, beautiful bill proposal. Do 41 00:02:25,639 --> 00:02:28,080 Speaker 4: you remember earlier this year a lot of talk around 42 00:02:28,600 --> 00:02:31,960 Speaker 4: possibly removing the tax exemption or selective young mini bonds. 43 00:02:32,000 --> 00:02:34,280 Speaker 4: I mean everything was on the table. So if you're 44 00:02:34,320 --> 00:02:36,560 Speaker 4: an issuer and you're looking to issue death this year 45 00:02:36,560 --> 00:02:38,320 Speaker 4: in the municipal bond market, a lot of that was 46 00:02:38,320 --> 00:02:40,800 Speaker 4: pulled forward, right, you're like, let me just issue in 47 00:02:40,800 --> 00:02:43,920 Speaker 4: the market now. Now, from a demand perspective, you really 48 00:02:43,919 --> 00:02:47,200 Speaker 4: haven't seen a lot of inflows into the market. And 49 00:02:47,520 --> 00:02:50,880 Speaker 4: that's really been the case for fixed income. It's been 50 00:02:51,000 --> 00:02:53,320 Speaker 4: a little bit of a tough year, right, Choppy yields 51 00:02:53,880 --> 00:02:56,919 Speaker 4: and investors don't want to take on a lot of durations. 52 00:02:56,919 --> 00:02:58,880 Speaker 4: So if you see the ten year maturity and in 53 00:02:59,520 --> 00:03:01,520 Speaker 4: that part of the curve has been very well supported. 54 00:03:02,000 --> 00:03:06,519 Speaker 4: But most high tax market individuals, that say retail investors, 55 00:03:07,320 --> 00:03:09,880 Speaker 4: are a little fearful of investing further out. So when 56 00:03:09,919 --> 00:03:12,440 Speaker 4: you don't have that natural support and you have so 57 00:03:12,560 --> 00:03:15,959 Speaker 4: much demand, this is what's created that imbalance. So we're 58 00:03:16,000 --> 00:03:19,360 Speaker 4: seeing this as just a tremendous opportunity. And when you 59 00:03:19,440 --> 00:03:22,280 Speaker 4: talk about those types of yields, right, I mean, compare 60 00:03:22,320 --> 00:03:24,440 Speaker 4: this to any other asset class that you're looking at 61 00:03:24,440 --> 00:03:28,280 Speaker 4: out there with this credit quality, it's you know, it's 62 00:03:28,360 --> 00:03:30,919 Speaker 4: time to like in simply put, exactly, yes. 63 00:03:30,960 --> 00:03:33,440 Speaker 5: The best performance I'm looking at my go function on 64 00:03:33,440 --> 00:03:36,600 Speaker 5: the Bloomberg terminal. The best performance in fixed income has 65 00:03:36,640 --> 00:03:40,119 Speaker 5: been US corporate high yield. Yes, that kind of surprised 66 00:03:40,160 --> 00:03:42,200 Speaker 5: me a little bit. Yeah, what do you see in 67 00:03:42,240 --> 00:03:43,120 Speaker 5: a high yield market? 68 00:03:43,320 --> 00:03:47,000 Speaker 4: Yeah, I mean, look, spreads have remained incredibly tight, and 69 00:03:47,080 --> 00:03:48,800 Speaker 4: a lot of this is based upon the fact that 70 00:03:48,880 --> 00:03:51,160 Speaker 4: and I think a lot of your guests here have 71 00:03:51,240 --> 00:03:53,680 Speaker 4: spoken about the resiliency of the economy, right, I mean, 72 00:03:53,680 --> 00:03:56,360 Speaker 4: we just haven't seen any cracks in the economic data. 73 00:03:56,480 --> 00:03:59,320 Speaker 4: Yet we're expecting the FED to stay on hold. And 74 00:03:59,400 --> 00:04:02,480 Speaker 4: so you seen again a technical story there as well. 75 00:04:02,560 --> 00:04:06,000 Speaker 4: You know, just an an incredible amount of demand which 76 00:04:06,000 --> 00:04:09,080 Speaker 4: has caused spreads to remain tight. And now if you're 77 00:04:09,120 --> 00:04:11,480 Speaker 4: on I in you look at what your broad union 78 00:04:11,520 --> 00:04:15,120 Speaker 4: next has done. Yep, I mean it's underperformed everything else. 79 00:04:15,560 --> 00:04:18,240 Speaker 2: If we have a debt and a deficit, we're debating 80 00:04:18,240 --> 00:04:20,640 Speaker 2: whether mister Besson's going to give us more t bills 81 00:04:20,680 --> 00:04:23,280 Speaker 2: and imaginable like back to biblical times. 82 00:04:23,040 --> 00:04:27,599 Speaker 3: Yes or whatever. The phrase I use as an amateur. 83 00:04:27,240 --> 00:04:31,599 Speaker 2: Is crowding out. Is the federal government full faith and credit. 84 00:04:32,320 --> 00:04:34,560 Speaker 2: There's so much stuff because of the debt and the 85 00:04:34,600 --> 00:04:37,880 Speaker 2: deficit that they're crowding out Niche Patel's world. 86 00:04:39,600 --> 00:04:41,919 Speaker 4: Look, this is going to have an impact on yields, 87 00:04:41,960 --> 00:04:43,680 Speaker 4: There's no doubt about it. So you know, I'm not 88 00:04:43,720 --> 00:04:46,080 Speaker 4: here to say that we're going to have your long 89 00:04:46,200 --> 00:04:49,120 Speaker 4: end yields, you know, fall tremendously here. I think the 90 00:04:49,160 --> 00:04:52,320 Speaker 4: debts and deficit story is going to keep yels relatively 91 00:04:52,320 --> 00:04:56,920 Speaker 4: elevated have a seper yel curve. But I think in short, 92 00:04:56,960 --> 00:05:00,719 Speaker 4: when you talk about additional debt issuance that happens on 93 00:05:00,760 --> 00:05:03,200 Speaker 4: the curve is a big part of this story. Right, 94 00:05:03,240 --> 00:05:06,080 Speaker 4: We're talking about a lot of t bill issuance. So 95 00:05:06,120 --> 00:05:08,560 Speaker 4: if you take a look at that in terms of 96 00:05:08,600 --> 00:05:10,760 Speaker 4: the impact of the market, and you take a look 97 00:05:10,760 --> 00:05:12,760 Speaker 4: at the assets that are seeing in money market funds, 98 00:05:12,800 --> 00:05:14,760 Speaker 4: I mean, this is a story where you could see 99 00:05:14,760 --> 00:05:16,960 Speaker 4: that easily being absorbed in the market. So does it 100 00:05:17,040 --> 00:05:21,400 Speaker 4: relates to Munis? You know, you're seeing certainly some impact 101 00:05:21,400 --> 00:05:23,440 Speaker 4: in terms of what treasure yields have done on Muni's 102 00:05:24,200 --> 00:05:27,560 Speaker 4: but even more to a wider effect in the long 103 00:05:27,640 --> 00:05:29,440 Speaker 4: and which is what's presenting this opportunity. 104 00:05:29,640 --> 00:05:31,840 Speaker 5: What do you expect are fed to do for the 105 00:05:31,880 --> 00:05:33,520 Speaker 5: remainder of the year. I mean, I guess if I 106 00:05:33,560 --> 00:05:35,159 Speaker 5: look at the WRP function on. 107 00:05:35,160 --> 00:05:37,440 Speaker 6: The bloomer, maybe two two cuts. 108 00:05:37,520 --> 00:05:38,960 Speaker 5: Yeah, is that kind of where you think it's going 109 00:05:39,000 --> 00:05:39,159 Speaker 5: to be. 110 00:05:39,240 --> 00:05:40,599 Speaker 6: Is that where they should be? 111 00:05:41,240 --> 00:05:41,480 Speaker 7: Yeah? 112 00:05:41,520 --> 00:05:44,200 Speaker 4: I mean, look, I think I think two cuts are 113 00:05:44,200 --> 00:05:48,039 Speaker 4: still plausible. And I I'm thinking, look, we can be 114 00:05:48,080 --> 00:05:50,720 Speaker 4: in a scenario of where we were end of twenty three. 115 00:05:51,400 --> 00:05:53,640 Speaker 4: So end of twenty three we had a sharp rally, 116 00:05:53,800 --> 00:05:57,520 Speaker 4: at the end of the year, we had softening economic data, 117 00:05:57,600 --> 00:06:00,400 Speaker 4: we had a FED pivot, and so look, no one's 118 00:06:00,440 --> 00:06:04,520 Speaker 4: expecting the FED to do anything tomorrow, but the main 119 00:06:04,560 --> 00:06:07,599 Speaker 4: story being we haven't given it enough time, right, we 120 00:06:07,720 --> 00:06:09,919 Speaker 4: haven't maybe given it enough time for any of the 121 00:06:09,960 --> 00:06:13,080 Speaker 4: cracks that possibly show up. So if you do start 122 00:06:13,080 --> 00:06:16,320 Speaker 4: seeing any softening in the labor market Friday, I will 123 00:06:16,320 --> 00:06:18,760 Speaker 4: say it again as you've been saying today, big day, 124 00:06:18,960 --> 00:06:22,920 Speaker 4: big big jobs number, but solo the one the month after, 125 00:06:22,960 --> 00:06:25,880 Speaker 4: and so the one a month after that. So I 126 00:06:25,920 --> 00:06:28,360 Speaker 4: think the FED could be in a place by fall, 127 00:06:28,600 --> 00:06:32,160 Speaker 4: late fall to start cutting. And I think that narrative 128 00:06:32,480 --> 00:06:35,719 Speaker 4: could be you know, one cut talking about it could 129 00:06:35,720 --> 00:06:39,279 Speaker 4: be that pivot that could possibly send send yels you know, 130 00:06:39,320 --> 00:06:41,159 Speaker 4: certainly a little bit lower than where we are today, 131 00:06:41,160 --> 00:06:41,920 Speaker 4: no doubt about it. 132 00:06:42,560 --> 00:06:43,400 Speaker 3: Is there a demand? 133 00:06:43,480 --> 00:06:46,280 Speaker 2: I mean, if I got a seven percent netclean, eight 134 00:06:46,320 --> 00:06:49,360 Speaker 2: percent clean, nine percent triple, is it. 135 00:06:49,320 --> 00:06:50,920 Speaker 3: Four poll tax free in New York? 136 00:06:51,160 --> 00:06:51,480 Speaker 8: I don't know. 137 00:06:51,600 --> 00:06:54,560 Speaker 3: I don't even know. But is there a demand you 138 00:06:54,560 --> 00:06:56,920 Speaker 3: know within the street? Is it retailed demand? 139 00:06:57,000 --> 00:06:59,720 Speaker 4: There is? There is, So we have started to see 140 00:06:59,720 --> 00:07:02,640 Speaker 4: demand and pick up. I would say, I don't want 141 00:07:02,680 --> 00:07:06,560 Speaker 4: to say very substantially, but we're starting to see you know, 142 00:07:06,600 --> 00:07:09,760 Speaker 4: certainly investors picking their heads up and thinking, look, I 143 00:07:09,760 --> 00:07:12,880 Speaker 4: can lock in this type of yield. You know, you 144 00:07:12,920 --> 00:07:15,480 Speaker 4: can hold it to maturity, right, you can let it 145 00:07:15,600 --> 00:07:19,280 Speaker 4: roll down again. Beautiful, beautiful thing about bonds. There's a 146 00:07:19,280 --> 00:07:22,560 Speaker 4: finite maturity outside of credit issue, which is what a 147 00:07:22,560 --> 00:07:27,160 Speaker 4: professional manager is paid to do. This is a tremendous opportunity. 148 00:07:27,240 --> 00:07:30,760 Speaker 4: So I think, as we again go into the fall, 149 00:07:30,880 --> 00:07:33,600 Speaker 4: possibly with the narrative that look, the FED could start cutting, 150 00:07:34,040 --> 00:07:35,440 Speaker 4: how do I lock in yields? 151 00:07:35,680 --> 00:07:35,880 Speaker 6: Right? 152 00:07:36,280 --> 00:07:38,440 Speaker 4: And the last thing I'll kind of say here is 153 00:07:38,480 --> 00:07:41,400 Speaker 4: like for fixing come investors, it's been a frustrating few years. 154 00:07:41,440 --> 00:07:44,240 Speaker 4: I mean, as you all know, we are now sitting 155 00:07:44,240 --> 00:07:46,680 Speaker 4: at yields where if you have a starting yield a 156 00:07:46,800 --> 00:07:49,080 Speaker 4: four or five percent, this is going to be a 157 00:07:49,120 --> 00:07:53,320 Speaker 4: big driver forward performance, right, So that's also the that's 158 00:07:53,360 --> 00:07:56,440 Speaker 4: also the huge catalyst here on top of that, you 159 00:07:56,520 --> 00:08:00,600 Speaker 4: have a pretty high cushion. Should rates move even further 160 00:08:00,720 --> 00:08:04,800 Speaker 4: from here, so you can you know whether one hundred 161 00:08:04,880 --> 00:08:10,600 Speaker 4: basis point move in many cases before you're even flash exactly. 162 00:08:11,200 --> 00:08:13,520 Speaker 3: Thank you so much, Parametric. 163 00:08:20,600 --> 00:08:24,160 Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live 164 00:08:24,240 --> 00:08:27,239 Speaker 1: weekday afternoons from seven to ten a m. Eastern Listen 165 00:08:27,320 --> 00:08:30,880 Speaker 1: on Applecarplay and Android Auto with the Bloomberg Business app, 166 00:08:31,040 --> 00:08:32,800 Speaker 1: or watch us live on YouTube. 167 00:08:33,160 --> 00:08:36,400 Speaker 2: Neil Dota is an optimist and maybe on this day, 168 00:08:36,440 --> 00:08:38,839 Speaker 2: this is the best day in history to speak to 169 00:08:38,920 --> 00:08:44,120 Speaker 2: Neil Doda of Renaissance Macro about the optimism of this nation. 170 00:08:44,280 --> 00:08:44,960 Speaker 3: Neil, you've been. 171 00:08:44,880 --> 00:08:49,120 Speaker 2: Writing on the tariff dynamic and how they are changeable 172 00:08:49,240 --> 00:08:49,880 Speaker 2: as well. 173 00:08:50,240 --> 00:08:54,000 Speaker 3: How will tariffs change our listeners our viewers? 174 00:08:56,120 --> 00:08:59,040 Speaker 7: Well, Hi, Tom, how are you you know to me? 175 00:08:59,400 --> 00:09:02,360 Speaker 7: The way I'm looking at tariffs as really it's it's 176 00:09:02,360 --> 00:09:06,720 Speaker 7: a rotation of growth, right, I mean, over time we 177 00:09:06,760 --> 00:09:13,320 Speaker 7: should see more activity going into our manufacturing sector, but 178 00:09:13,400 --> 00:09:15,400 Speaker 7: that will come at the expense of other sectors of 179 00:09:15,440 --> 00:09:18,679 Speaker 7: the economy. So you know, to me, it's it's not 180 00:09:18,840 --> 00:09:21,760 Speaker 7: so much good or bad. I'm just looking at it, 181 00:09:21,960 --> 00:09:23,920 Speaker 7: you know from the you know from my seat, which 182 00:09:23,960 --> 00:09:27,400 Speaker 7: is it's rotating growth into some industries and away from 183 00:09:27,400 --> 00:09:31,040 Speaker 7: other industries. So as an investor you should probably proceed accordingly. 184 00:09:31,120 --> 00:09:33,480 Speaker 7: But you know, tariffs are going to be meant to 185 00:09:33,600 --> 00:09:37,400 Speaker 7: are meant at some level to boost manufacturing activity. I 186 00:09:37,440 --> 00:09:40,479 Speaker 7: think you know that will show up for for producers, 187 00:09:40,520 --> 00:09:42,200 Speaker 7: and that will and then that will come at the 188 00:09:42,280 --> 00:09:46,760 Speaker 7: expense of consumption. You remember, tariffs are a consumption tax 189 00:09:47,480 --> 00:09:50,559 Speaker 7: and inefficient consumption tax, but a consumption tax. 190 00:09:50,760 --> 00:09:55,400 Speaker 2: And Paul and Neal's note he talked to it's a 191 00:09:55,480 --> 00:09:58,480 Speaker 2: VAT I mean basically it's you know him VAT tax 192 00:09:58,520 --> 00:09:59,960 Speaker 2: as well that they use in Europe. 193 00:10:00,160 --> 00:10:03,400 Speaker 5: So Neil, I mean, is this net net Can we 194 00:10:03,480 --> 00:10:07,120 Speaker 5: at this stage meets too early say whether this is 195 00:10:07,160 --> 00:10:09,800 Speaker 5: going to be a net positive a net negative for 196 00:10:09,840 --> 00:10:12,920 Speaker 5: this economy because this is an economy that's based upon 197 00:10:13,000 --> 00:10:14,720 Speaker 5: seventy percent consumption. 198 00:10:17,120 --> 00:10:19,800 Speaker 7: Well, I mean, I think, I mean, most if you 199 00:10:19,840 --> 00:10:22,800 Speaker 7: look at most models of the economy sort of workhorse 200 00:10:22,880 --> 00:10:26,000 Speaker 7: macro models. They'll say that it's net negative that there's 201 00:10:26,040 --> 00:10:30,840 Speaker 7: a persistent loss of output over a longer term period. 202 00:10:32,520 --> 00:10:34,640 Speaker 7: But this is all I mean. But this is also 203 00:10:34,800 --> 00:10:37,800 Speaker 7: sort of I guess, to some extent what people voted for. 204 00:10:37,880 --> 00:10:41,360 Speaker 7: I mean, you know, they want more growth source domestically, 205 00:10:41,360 --> 00:10:45,160 Speaker 7: and tariffs are one way to achieve that goal. But 206 00:10:45,280 --> 00:10:47,160 Speaker 7: what I was trying to get at with what I 207 00:10:47,200 --> 00:10:49,560 Speaker 7: wrote is, you know, all I'm saying is this. If 208 00:10:49,880 --> 00:10:52,480 Speaker 7: you had told me that the effective tariff raid based 209 00:10:52,480 --> 00:10:56,240 Speaker 7: on how much customs was collecting would be close to 210 00:10:56,520 --> 00:10:59,040 Speaker 7: you know, let's say, ten to fifteen percent by the summer, 211 00:11:00,080 --> 00:11:03,840 Speaker 7: you wouldn't really see other nations retaliate, stocks would be 212 00:11:03,880 --> 00:11:09,040 Speaker 7: at records, and inflation would generally be coming in better 213 00:11:09,080 --> 00:11:14,200 Speaker 7: than expected. I probably wouldn't have believed you, but that's 214 00:11:14,559 --> 00:11:17,080 Speaker 7: that's kind of what's happened now. That doesn't mean that 215 00:11:17,080 --> 00:11:19,000 Speaker 7: we're out of the woods. I mean, you know, as 216 00:11:19,040 --> 00:11:22,320 Speaker 7: you know, I'm still cautious on the economic outlook, but 217 00:11:23,520 --> 00:11:25,960 Speaker 7: I mean that it is what it is, right. I mean, 218 00:11:26,000 --> 00:11:29,480 Speaker 7: if you had told someone that even though the effective 219 00:11:29,520 --> 00:11:34,560 Speaker 7: tariff right has gone up over ten percentage points, that 220 00:11:34,600 --> 00:11:37,880 Speaker 7: stocks would still be at records. I don't think most 221 00:11:37,920 --> 00:11:40,440 Speaker 7: people would have believed you, but that's exactly what's happened. 222 00:11:40,480 --> 00:11:45,160 Speaker 7: It's almost as if the uncertainty around the tariffs going 223 00:11:45,200 --> 00:11:49,679 Speaker 7: away is more important than the tariffs themselves. 224 00:11:49,400 --> 00:11:52,160 Speaker 2: Right, Neil dunna with us here with Ren McNeil, I'm 225 00:11:52,160 --> 00:11:54,960 Speaker 2: gonna throw the eight thirty data. You know, I know 226 00:11:55,040 --> 00:11:56,920 Speaker 2: you haven't had time to digest it. I'm just going 227 00:11:56,960 --> 00:12:01,120 Speaker 2: to give broad strokes here, folks. The advance goods trade 228 00:12:01,120 --> 00:12:06,120 Speaker 2: balance was not worser. The survey was negative ninety eight 229 00:12:06,720 --> 00:12:10,160 Speaker 2: and it came into a much better negative eighty six. 230 00:12:11,120 --> 00:12:15,439 Speaker 3: The advanced goods imports cratered. 231 00:12:15,640 --> 00:12:20,439 Speaker 2: That's the economic word that Neil Dudda would use. We 232 00:12:20,520 --> 00:12:25,880 Speaker 2: saw month over months plunge of I guess stuff coming 233 00:12:25,960 --> 00:12:27,720 Speaker 2: into the country. 234 00:12:27,840 --> 00:12:31,560 Speaker 3: Neil, in a general statement, help us with that. Do 235 00:12:31,600 --> 00:12:34,760 Speaker 3: you have a clue what the three months moving averages 236 00:12:34,840 --> 00:12:36,760 Speaker 3: of our trade dynamics? 237 00:12:38,120 --> 00:12:39,560 Speaker 7: I mean, I haven't looked at that yet. 238 00:12:39,559 --> 00:12:39,839 Speaker 6: Tom. 239 00:12:39,880 --> 00:12:43,000 Speaker 7: I mean, it's interesting you just gave me some eight 240 00:12:43,000 --> 00:12:45,079 Speaker 7: thirty numbers. But what I will say is, look, I mean, 241 00:12:45,080 --> 00:12:48,840 Speaker 7: in business economic economics, I tend to tune out what 242 00:12:48,960 --> 00:12:51,200 Speaker 7: goes on with the trade deficit and inventories. I know 243 00:12:51,240 --> 00:12:53,720 Speaker 7: that's kind of surprising to hear, but ultimately what you 244 00:12:53,760 --> 00:12:58,880 Speaker 7: want to look at is domestic demand. Obviously, the fact 245 00:12:58,920 --> 00:13:01,599 Speaker 7: that in ports or decline, I mean, that's going to 246 00:13:01,640 --> 00:13:05,440 Speaker 7: show up somewhere else. You know, maybe it means less 247 00:13:05,440 --> 00:13:10,240 Speaker 7: inventory stocking, maybe it means less consumption. But ultimately the 248 00:13:10,280 --> 00:13:14,000 Speaker 7: decline in imports, right, you know, we'll show up in 249 00:13:14,040 --> 00:13:17,120 Speaker 7: some other area of GDP. You know, the fact that 250 00:13:17,200 --> 00:13:22,280 Speaker 7: exports continue to weaken, you know, suggest that you know, 251 00:13:22,320 --> 00:13:25,760 Speaker 7: the trade war might be having consequences for our you know, 252 00:13:25,840 --> 00:13:31,440 Speaker 7: major trading partners, uh And is sapping growth over there, 253 00:13:31,559 --> 00:13:34,000 Speaker 7: which means that if they're not growing as robustly as 254 00:13:34,000 --> 00:13:35,920 Speaker 7: they had been, we can't export as much to them. 255 00:13:36,640 --> 00:13:41,160 Speaker 2: So is a general statement, let's pick on Europe, we 256 00:13:41,160 --> 00:13:42,600 Speaker 2: could pick on any other region. 257 00:13:43,280 --> 00:13:47,559 Speaker 3: If Europe is slower, do we become slower. 258 00:13:49,800 --> 00:13:51,320 Speaker 7: All else equal? Probably? 259 00:13:51,400 --> 00:13:53,199 Speaker 6: Yes, Neil. 260 00:13:53,600 --> 00:13:56,400 Speaker 5: When you think about these tariffs, is it a one 261 00:13:56,640 --> 00:13:59,959 Speaker 5: time kind of jolt to prices or is it something 262 00:14:00,360 --> 00:14:02,360 Speaker 5: and that we can lap and it won't we can 263 00:14:02,400 --> 00:14:04,760 Speaker 5: put in our rear view mirrors. It's something different, something 264 00:14:04,800 --> 00:14:08,559 Speaker 5: more longer term. 265 00:14:08,840 --> 00:14:11,360 Speaker 7: Well, I mean i think it's I think it's a 266 00:14:11,360 --> 00:14:14,600 Speaker 7: one time shock to the price level. I don't think 267 00:14:14,640 --> 00:14:18,560 Speaker 7: it necessarily increases inflation, which is a general increase in 268 00:14:18,600 --> 00:14:21,080 Speaker 7: the level of prices across the economy. I mean, what 269 00:14:21,120 --> 00:14:25,800 Speaker 7: we've seen so far with tariffs is goods prices have 270 00:14:25,880 --> 00:14:29,080 Speaker 7: gone up, as you'd expect for things like, you know, furniture, 271 00:14:29,600 --> 00:14:34,400 Speaker 7: household furnishings, tools, you know, garden equipment, things like that, 272 00:14:35,080 --> 00:14:37,960 Speaker 7: But prices for services have kept going down because the 273 00:14:38,000 --> 00:14:41,640 Speaker 7: nominal anchor hasn't changed. I mean, John Cochrane University of 274 00:14:41,680 --> 00:14:45,400 Speaker 7: Chicago has talked about this really well. I mean, basically, 275 00:14:45,440 --> 00:14:48,200 Speaker 7: if you don't change the nominal anchor, tariffs represent a 276 00:14:48,280 --> 00:14:50,920 Speaker 7: relative shifting of prices, it doesn't increase. 277 00:14:50,560 --> 00:14:51,960 Speaker 3: The general level of prices. 278 00:14:52,000 --> 00:14:54,240 Speaker 7: And that's what we're seeing right Like, so the fact 279 00:14:54,240 --> 00:14:57,960 Speaker 7: that nominal income has generally been slow in households don't 280 00:14:57,960 --> 00:15:02,040 Speaker 7: have the capacity to absorb higher rices across the economy. 281 00:15:02,080 --> 00:15:05,560 Speaker 7: So if if goods producers are absorbing some of the 282 00:15:05,600 --> 00:15:07,840 Speaker 7: cost which they are and passing on some of the 283 00:15:07,880 --> 00:15:10,960 Speaker 7: cost of the consumer, people start paying more for goods, 284 00:15:11,440 --> 00:15:14,480 Speaker 7: that means they have less money to spend elsewhere, and 285 00:15:14,520 --> 00:15:18,880 Speaker 7: that ultimately forces the prices for those other areas down. 286 00:15:19,000 --> 00:15:21,320 Speaker 7: It doesn't mean that it's good. It doesn't mean that 287 00:15:21,320 --> 00:15:24,040 Speaker 7: it's a good thing. But that's kind of where I'm 288 00:15:24,080 --> 00:15:27,160 Speaker 7: at right now. It's ultimately about the nominal and the 289 00:15:27,240 --> 00:15:29,560 Speaker 7: fact that you know, Governor Waller, as you know, has 290 00:15:29,600 --> 00:15:32,960 Speaker 7: been talking about this quite a bit, and that's why 291 00:15:33,000 --> 00:15:36,840 Speaker 7: you're not seeing overall inflation rates celerate despite teriffs. 292 00:15:36,920 --> 00:15:39,680 Speaker 2: Neil, thank you the brilliant note. Brilliant note. I can't 293 00:15:39,720 --> 00:15:41,520 Speaker 2: say enough about what he says. They're folks of a 294 00:15:41,560 --> 00:15:48,320 Speaker 2: disinflationary tendency of China, of Europe, and potentially of America. 295 00:15:48,720 --> 00:15:52,640 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 296 00:15:52,640 --> 00:15:55,680 Speaker 1: starting at seven am Eastern on Apple Corplay and Android 297 00:15:55,680 --> 00:15:58,720 Speaker 1: Auto with the Bloomberg Business App. You can also listen 298 00:15:58,800 --> 00:16:02,080 Speaker 1: live on Amazon Alec from our flagship New York station, 299 00:16:02,640 --> 00:16:05,280 Speaker 1: Just say Alexa Play Bloomberg eleven thirty. 300 00:16:05,520 --> 00:16:09,200 Speaker 2: We have the absolute perfect guests this morning to give 301 00:16:09,200 --> 00:16:12,920 Speaker 2: you perspective across the nation on the geography of this 302 00:16:12,960 --> 00:16:16,320 Speaker 2: horrific event. We all talk to Peter Scheer here about 303 00:16:16,360 --> 00:16:19,200 Speaker 2: the market, about all the news flow, and of course 304 00:16:19,240 --> 00:16:22,240 Speaker 2: a bull market with futures. Frankly, this morning up eighteen 305 00:16:22,640 --> 00:16:25,000 Speaker 2: the vis Paul Under fifteen, I didn't notice that. 306 00:16:25,240 --> 00:16:28,000 Speaker 3: Yeah, I think it's a bull market and part of that. 307 00:16:28,120 --> 00:16:28,840 Speaker 3: Peter Sheer. 308 00:16:28,960 --> 00:16:31,480 Speaker 2: I was with someone from the Midwest this week and 309 00:16:31,520 --> 00:16:34,440 Speaker 2: a family member, and I was trying to explain the 310 00:16:34,480 --> 00:16:38,720 Speaker 2: resurgent New York and I was standing outside the glory 311 00:16:39,000 --> 00:16:42,080 Speaker 2: of the new Waldorf Astoria. As you look from the 312 00:16:42,120 --> 00:16:47,440 Speaker 2: Waldorf up Park Avenue to Blackstone, the Rudent Building and 313 00:16:47,720 --> 00:16:52,359 Speaker 2: north up to fifty ninth Street, it is Finance America, 314 00:16:52,400 --> 00:16:52,800 Speaker 2: isn't it. 315 00:16:53,400 --> 00:16:55,600 Speaker 9: Yeah, And it's a little bit scary what happened. I 316 00:16:55,680 --> 00:16:57,640 Speaker 9: was very scary, and I think we're all going to 317 00:16:57,680 --> 00:17:00,000 Speaker 9: wind up trying to rethink how security should be working. 318 00:17:00,120 --> 00:17:03,320 Speaker 6: What we do. It's you know, tragic and offer. 319 00:17:03,120 --> 00:17:06,520 Speaker 2: This commitment that we've seen to these blocks. Citadel is there. 320 00:17:07,200 --> 00:17:11,720 Speaker 2: We have Blackstone with their long term lease commitment across 321 00:17:11,760 --> 00:17:15,200 Speaker 2: the street, the absolute miracle of what Jamie Diamond did 322 00:17:15,200 --> 00:17:18,960 Speaker 2: at JP Morgan explain to our national audience why Wall 323 00:17:19,000 --> 00:17:24,639 Speaker 2: Street's choosing to be midtown versus the stereotype of downtown. 324 00:17:24,920 --> 00:17:26,159 Speaker 6: You know, I think it probably comes down to the 325 00:17:26,200 --> 00:17:27,600 Speaker 6: commute for many people whether. 326 00:17:27,400 --> 00:17:30,040 Speaker 3: You're coming in central stations there and. 327 00:17:30,000 --> 00:17:32,440 Speaker 9: It's getting easier and easier to come into Penn station. 328 00:17:32,640 --> 00:17:34,200 Speaker 9: So I think you want to be in this area. 329 00:17:34,240 --> 00:17:36,720 Speaker 3: We'll have more coverage. Miles Miller will be with us here. 330 00:17:36,800 --> 00:17:41,560 Speaker 3: He is on Park Avenue this morning. Peter, this bull 331 00:17:41,640 --> 00:17:43,000 Speaker 3: market on Friday. 332 00:17:43,080 --> 00:17:46,879 Speaker 2: We're distant from Friday after earnings reports coming out, we 333 00:17:46,960 --> 00:17:50,919 Speaker 2: get a rationalization by the Bears. How did the bears 334 00:17:50,960 --> 00:17:51,960 Speaker 2: get this market wrong? 335 00:17:52,560 --> 00:17:53,760 Speaker 6: You know, I think there's been a few things. 336 00:17:53,800 --> 00:17:56,120 Speaker 9: One is, I do think people have been missing how 337 00:17:56,160 --> 00:17:58,400 Speaker 9: powerful this you know, national production. 338 00:17:58,119 --> 00:17:59,640 Speaker 6: For national security element is. 339 00:17:59,840 --> 00:18:01,680 Speaker 9: We've been talking about it for a while, and it 340 00:18:01,760 --> 00:18:04,840 Speaker 9: started I think when the Department Defense invested four hundred 341 00:18:04,840 --> 00:18:09,400 Speaker 9: million in MP two weeks ago and got billion dollars 342 00:18:09,440 --> 00:18:12,800 Speaker 9: of debt for them. When Treasury Secretary Besant was on 343 00:18:12,920 --> 00:18:15,600 Speaker 9: with Anne Marie last Tuesday, he almost said those exactly 344 00:18:15,600 --> 00:18:18,240 Speaker 9: where it's national production for national security. And then President 345 00:18:18,240 --> 00:18:20,439 Speaker 9: Trump later in the week went on talking about the 346 00:18:20,480 --> 00:18:23,000 Speaker 9: importance of AI and data centers and that we are 347 00:18:23,040 --> 00:18:25,560 Speaker 9: going to get defeat regulations to make sure that we 348 00:18:25,640 --> 00:18:28,880 Speaker 9: get enough electricity to those data centers. So I think 349 00:18:28,960 --> 00:18:31,160 Speaker 9: that's been an uplift to this. I think the trade 350 00:18:31,240 --> 00:18:33,840 Speaker 9: deal noise is more just noise. I think it's actually 351 00:18:33,840 --> 00:18:35,560 Speaker 9: weighing on the market. I think people are a little 352 00:18:35,600 --> 00:18:37,800 Speaker 9: bit nervous, and I think the tariff impacts will be 353 00:18:37,840 --> 00:18:39,920 Speaker 9: felt over the time. But for me, it's really been 354 00:18:39,960 --> 00:18:43,600 Speaker 9: this resurgence of let's build things, let's build the infrastructure. 355 00:18:43,760 --> 00:18:44,640 Speaker 6: And it does tie in. 356 00:18:44,680 --> 00:18:47,720 Speaker 9: Very nicely with the big beautiful bill, with the accelerated depreciation. 357 00:18:47,800 --> 00:18:49,600 Speaker 9: I think if we can just jumpstart some of these 358 00:18:49,680 --> 00:18:53,080 Speaker 9: national production for national security, whether it's in chips, AI, 359 00:18:53,320 --> 00:18:57,359 Speaker 9: data centers, rarest, critical minerals, pharma. 360 00:18:57,440 --> 00:18:58,600 Speaker 6: That gets the economy going. 361 00:18:58,600 --> 00:19:00,640 Speaker 9: I think that's why you've seen Also, it's and very 362 00:19:00,640 --> 00:19:03,159 Speaker 9: few sectors that have really been driving this market, and 363 00:19:03,200 --> 00:19:05,040 Speaker 9: the small capsits are still kind of lagging. 364 00:19:05,119 --> 00:19:07,040 Speaker 5: Yeah, exactly. So I mean, I mean we're right smack 365 00:19:07,040 --> 00:19:09,320 Speaker 5: in the middle of earnings. Peter, what have you learned 366 00:19:09,320 --> 00:19:11,400 Speaker 5: so far in earnings? What do you expect to hear 367 00:19:11,760 --> 00:19:12,840 Speaker 5: from the earning seriesce? 368 00:19:12,840 --> 00:19:15,159 Speaker 9: You know, I think the biggest thing I've learned so 369 00:19:15,200 --> 00:19:16,800 Speaker 9: far is if you say you're spending a lot of 370 00:19:16,800 --> 00:19:18,160 Speaker 9: money on AI and chips, your. 371 00:19:18,040 --> 00:19:18,760 Speaker 6: Stock goes up. 372 00:19:18,840 --> 00:19:21,760 Speaker 9: So I think We're still in that mode that everyone 373 00:19:21,800 --> 00:19:24,280 Speaker 9: is still very focused on the growth in AI, the 374 00:19:24,320 --> 00:19:26,840 Speaker 9: growth and data centers and companies that are spending on 375 00:19:26,880 --> 00:19:28,360 Speaker 9: it and helping grow that benefit. 376 00:19:28,440 --> 00:19:30,480 Speaker 6: So that's not going to stop. I don't think anytime soon, 377 00:19:31,040 --> 00:19:31,280 Speaker 6: is there. 378 00:19:32,359 --> 00:19:34,680 Speaker 5: I mean, we're sitting here twenty two times earnings. I 379 00:19:34,720 --> 00:19:35,280 Speaker 5: mean when do we? 380 00:19:36,640 --> 00:19:38,880 Speaker 6: I guess valuations have not been. 381 00:19:38,800 --> 00:19:41,439 Speaker 5: A problem for this market for the longest time. Is 382 00:19:41,440 --> 00:19:42,200 Speaker 5: that still the case? 383 00:19:42,240 --> 00:19:42,399 Speaker 1: Do we? 384 00:19:42,800 --> 00:19:44,400 Speaker 6: How do we think about valuation this market? 385 00:19:44,480 --> 00:19:47,480 Speaker 5: I'm not comfortable paying twenty two times twenty three times earnings. 386 00:19:47,560 --> 00:19:48,720 Speaker 9: You know, I'm with you, And that's why I've been 387 00:19:48,800 --> 00:19:51,200 Speaker 9: looking at the things that I think really have the upside. 388 00:19:51,240 --> 00:19:53,280 Speaker 9: Are things that are still trading a little bit cheap 389 00:19:53,320 --> 00:19:57,000 Speaker 9: that can benefit from this real you know, logistics, the 390 00:19:57,040 --> 00:19:59,640 Speaker 9: industrial base kind of growing that I feel there's still 391 00:19:59,720 --> 00:20:00,679 Speaker 9: value there. 392 00:20:01,359 --> 00:20:01,679 Speaker 6: Got it? 393 00:20:01,760 --> 00:20:04,959 Speaker 5: And so I guess the question is what do we 394 00:20:05,000 --> 00:20:07,760 Speaker 5: need to see from earnings here? Do we need earnings 395 00:20:07,920 --> 00:20:09,399 Speaker 5: growth to accelerate from here to. 396 00:20:09,400 --> 00:20:10,320 Speaker 3: Support this market? 397 00:20:10,560 --> 00:20:12,120 Speaker 5: Or if earning stay right where we are, we don't 398 00:20:12,160 --> 00:20:14,320 Speaker 5: have any disappointments, that's good enough. 399 00:20:14,400 --> 00:20:14,600 Speaker 6: You know. 400 00:20:15,000 --> 00:20:16,520 Speaker 9: I think again, it's going to come down to those 401 00:20:16,560 --> 00:20:18,159 Speaker 9: handful of companies. I keep looking at the rust of 402 00:20:18,200 --> 00:20:19,520 Speaker 9: two thousand. What I want to say is I would 403 00:20:19,520 --> 00:20:21,439 Speaker 9: love to be able to say, let's buy small caps. 404 00:20:21,600 --> 00:20:23,600 Speaker 9: And the problem I hear and we're out there talking 405 00:20:23,600 --> 00:20:25,960 Speaker 9: to companies, I think it's small and mid sized companies 406 00:20:26,000 --> 00:20:28,400 Speaker 9: are still much more affected by tariffs than the large cap. 407 00:20:28,640 --> 00:20:31,000 Speaker 9: They've had the ability to front run things, they've had 408 00:20:31,040 --> 00:20:33,320 Speaker 9: the ability to buy up. You know, they've got the 409 00:20:33,359 --> 00:20:35,600 Speaker 9: working capital, and the flip side of it has been 410 00:20:35,880 --> 00:20:38,760 Speaker 9: you know, the President wants company countries to buy things 411 00:20:38,760 --> 00:20:40,840 Speaker 9: from the US. But the three things they can buy 412 00:20:40,880 --> 00:20:44,359 Speaker 9: us energy, airplanes, and chips. So that's going to continue 413 00:20:44,359 --> 00:20:44,720 Speaker 9: to do well. 414 00:20:44,760 --> 00:20:45,000 Speaker 6: I think. 415 00:20:45,400 --> 00:20:48,600 Speaker 2: This morning, Peter Sure, this with Academy here as we 416 00:20:48,600 --> 00:20:50,280 Speaker 2: welcome all of you acrasstination. 417 00:20:50,480 --> 00:20:52,560 Speaker 3: It is a shaken in New York City. 418 00:20:52,600 --> 00:20:56,480 Speaker 2: We'll have continuing coverage of the tragedy on Park Avenue. 419 00:20:56,640 --> 00:20:59,320 Speaker 2: Last night, John Tucker leading our coverage with Michael Barr, 420 00:20:59,600 --> 00:21:02,720 Speaker 2: Miles Miller with this on the scene with a wonderful 421 00:21:02,800 --> 00:21:06,760 Speaker 2: article in Bloomberg a complete story of this, or Miles 422 00:21:06,760 --> 00:21:10,680 Speaker 2: Miller with this later. Peters Sheer, one of the feelings 423 00:21:10,680 --> 00:21:12,840 Speaker 2: I'm getting and it's percolating, and maybe we need to 424 00:21:12,840 --> 00:21:15,399 Speaker 2: get to the weekend to get it. 425 00:21:15,440 --> 00:21:15,520 Speaker 8: Is. 426 00:21:15,560 --> 00:21:20,080 Speaker 2: What we've got is all American Trumpians stimulus, and there's 427 00:21:20,119 --> 00:21:24,840 Speaker 2: a horizon out past the stimulus where the stimulus ends, 428 00:21:25,160 --> 00:21:26,480 Speaker 2: somewhat like the pandemic. 429 00:21:26,840 --> 00:21:30,920 Speaker 3: Do you worry that there's a point where Trumpian stimulus, 430 00:21:31,320 --> 00:21:33,720 Speaker 3: Trumpian deregulation ends. 431 00:21:34,119 --> 00:21:34,320 Speaker 6: Yeah. 432 00:21:34,359 --> 00:21:36,800 Speaker 9: And I think on the tariffs right now, everyone there's 433 00:21:36,840 --> 00:21:38,920 Speaker 9: a lot of people doing a victory lap. Oh, tariff's okay, 434 00:21:38,920 --> 00:21:41,960 Speaker 9: fifteen percent's fine, And I think the reality is we 435 00:21:42,000 --> 00:21:44,199 Speaker 9: get the benefits from the tariff revenue right away, so 436 00:21:44,200 --> 00:21:46,119 Speaker 9: we're seeing that hitting the deficit. I think it's just 437 00:21:46,160 --> 00:21:48,240 Speaker 9: going to take time for the tariff impact. I've always 438 00:21:48,240 --> 00:21:49,760 Speaker 9: thought it's going to take time. Let's say you turn 439 00:21:49,800 --> 00:21:52,240 Speaker 9: your inventory over twice a year, you're probably five to 440 00:21:52,280 --> 00:21:55,320 Speaker 9: six months before your full inventory has been tarriffed. So 441 00:21:55,640 --> 00:21:58,040 Speaker 9: I think it's going to be a slow decline in 442 00:21:58,119 --> 00:22:00,479 Speaker 9: either corporate earnings or we're going to see a bit 443 00:22:00,480 --> 00:22:02,800 Speaker 9: of inflation pressure. So I think there is damage being 444 00:22:02,800 --> 00:22:05,240 Speaker 9: done to the economy through teriff that's just taking longer, 445 00:22:05,240 --> 00:22:07,560 Speaker 9: and I think that's all going to tumble, not tumble, 446 00:22:07,560 --> 00:22:09,920 Speaker 9: but it's going to start impacting things. And I don't 447 00:22:09,920 --> 00:22:11,520 Speaker 9: think the job market is that healthy. And again I 448 00:22:11,600 --> 00:22:14,040 Speaker 9: keep coming back to small and midsized companies. Is the 449 00:22:14,080 --> 00:22:17,119 Speaker 9: engine of growth? Are they benefiting or being hurt by 450 00:22:17,119 --> 00:22:18,480 Speaker 9: Tariff's I think their net being hurt. 451 00:22:18,640 --> 00:22:21,520 Speaker 2: In the wall of economic data today, what matters to 452 00:22:21,520 --> 00:22:22,840 Speaker 2: get to Friday and. 453 00:22:22,920 --> 00:22:25,080 Speaker 3: Friday at eight thirty five, where are we going to 454 00:22:25,119 --> 00:22:25,520 Speaker 3: meet Peter? 455 00:22:25,920 --> 00:22:27,240 Speaker 6: I want to look at the quits rate. 456 00:22:27,359 --> 00:22:28,960 Speaker 9: I think that the Jolts quit rate, to me is 457 00:22:29,000 --> 00:22:30,920 Speaker 9: still one of the more useful pieces of information because 458 00:22:30,920 --> 00:22:33,440 Speaker 9: it's almost crowdsource, right. People can tell how good their 459 00:22:33,520 --> 00:22:35,920 Speaker 9: job situation is. Are not That quits rate has been 460 00:22:35,960 --> 00:22:38,159 Speaker 9: fairly low, and if that continues low, it tells me 461 00:22:38,440 --> 00:22:39,840 Speaker 9: there's still a lot of uncertainty. 462 00:22:39,960 --> 00:22:41,399 Speaker 3: Let's go to Peter's Sheer world. 463 00:22:41,400 --> 00:22:43,240 Speaker 2: I mean, we can just what you don't know, folks, 464 00:22:43,280 --> 00:22:46,600 Speaker 2: is Peter Sheheer is this whole sidecar industry of looking 465 00:22:46,720 --> 00:22:51,120 Speaker 2: at the technology of America? Is our jobs report, our 466 00:22:51,240 --> 00:22:53,600 Speaker 2: quits rate, all this other fancy pants stuff. 467 00:22:54,160 --> 00:22:59,240 Speaker 3: Is it AI affected? Now? All those gloomy articles. AI 468 00:22:59,359 --> 00:23:01,280 Speaker 3: is going to take way John Tucker's job. 469 00:23:01,680 --> 00:23:03,640 Speaker 9: Yeah, And I'd say I see that, and I think 470 00:23:03,640 --> 00:23:07,200 Speaker 9: three different ways. One is the birth death model. 471 00:23:07,080 --> 00:23:07,879 Speaker 6: Kind of to get wonky. 472 00:23:07,960 --> 00:23:10,919 Speaker 9: Unfortunately, it's saying that new companies are being formed. 473 00:23:11,200 --> 00:23:12,560 Speaker 6: I think that occurs now when. 474 00:23:12,400 --> 00:23:14,560 Speaker 9: People get worried about their jobs and start thinking about 475 00:23:14,560 --> 00:23:16,720 Speaker 9: a gig economy and apply to get an EI N 476 00:23:16,800 --> 00:23:20,640 Speaker 9: or employment identification number. You're seeing law school applications skyrocket, 477 00:23:20,680 --> 00:23:24,040 Speaker 9: which means to do right. And what's really starting to 478 00:23:24,040 --> 00:23:27,240 Speaker 9: get nervous is the youth. The unemployment rate for recent 479 00:23:27,240 --> 00:23:30,480 Speaker 9: college grads is creeping higher, and to me that seems 480 00:23:30,560 --> 00:23:33,320 Speaker 9: the most likely area to be affected by this AI is, well, 481 00:23:33,359 --> 00:23:35,360 Speaker 9: maybe we don't need four people doing decks, we just. 482 00:23:35,280 --> 00:23:35,920 Speaker 6: Need one or two. 483 00:23:36,320 --> 00:23:39,679 Speaker 9: You're not going to hand AI real decision making, but 484 00:23:39,800 --> 00:23:41,159 Speaker 9: you might try and see if you can get rid 485 00:23:41,160 --> 00:23:42,800 Speaker 9: of some of the junior employees. And I think that 486 00:23:42,800 --> 00:23:45,639 Speaker 9: could be really detrimental to the economy over time if 487 00:23:45,680 --> 00:23:48,119 Speaker 9: you lose that group of people and they're starting, you know, 488 00:23:48,240 --> 00:23:49,160 Speaker 9: past to careers. 489 00:23:49,880 --> 00:23:53,640 Speaker 5: Given all that background, peer, what's our Federal Reserve thinking 490 00:23:53,680 --> 00:23:54,080 Speaker 5: these days? 491 00:23:54,080 --> 00:23:54,480 Speaker 3: Do you think? 492 00:23:54,840 --> 00:23:55,040 Speaker 6: You know? 493 00:23:55,200 --> 00:23:58,240 Speaker 9: I think they're still very focused on inflation. I think 494 00:23:58,320 --> 00:24:02,480 Speaker 9: they take the job data, the non farm payroll establishment 495 00:24:02,480 --> 00:24:05,080 Speaker 9: headline is having been good. To look at the unemployment rate. 496 00:24:05,440 --> 00:24:07,760 Speaker 9: I think they're you know, on hold. I think they 497 00:24:07,800 --> 00:24:10,040 Speaker 9: should be cutting more. I think they should be start. 498 00:24:10,160 --> 00:24:11,880 Speaker 9: I think honestly, they should have cut now. I think 499 00:24:11,880 --> 00:24:14,080 Speaker 9: it's probably hard because they're getting so much pressure. I'm 500 00:24:14,080 --> 00:24:16,440 Speaker 9: still looking for three cuts this year. I think the 501 00:24:16,480 --> 00:24:17,679 Speaker 9: economy is going to be just. 502 00:24:17,720 --> 00:24:19,760 Speaker 6: Weak enough on the jobs front that they have to cut. 503 00:24:19,960 --> 00:24:24,719 Speaker 2: Bloomberg Surveillance folks with US railroad analyst Peter Sheer, remember 504 00:24:24,800 --> 00:24:27,640 Speaker 2: did you read early Graham Dodd Coddle, Folks. Graham Dodd 505 00:24:27,680 --> 00:24:30,760 Speaker 2: Coddle's a bio and they've rewritten it. But remember the 506 00:24:30,800 --> 00:24:33,919 Speaker 2: first to two editions. We're all about railroad stocks, you know, 507 00:24:33,960 --> 00:24:35,080 Speaker 2: because that was America. 508 00:24:35,320 --> 00:24:38,359 Speaker 9: I spent some misguided, you know, teenage years playing railroad 509 00:24:38,400 --> 00:24:39,040 Speaker 9: tycoon on. 510 00:24:39,000 --> 00:24:40,160 Speaker 6: The computer back in the day. 511 00:24:40,200 --> 00:24:42,879 Speaker 9: So I think it's just always a fascinating industry. And 512 00:24:42,920 --> 00:24:44,160 Speaker 9: I do have to say one thing that I don't 513 00:24:44,160 --> 00:24:47,760 Speaker 9: think i've ever said here before. In your fixed income portfolio, 514 00:24:47,800 --> 00:24:49,760 Speaker 9: I think you're supposed to be heavily weighted munis. One 515 00:24:49,760 --> 00:24:51,680 Speaker 9: of the little lost stories that we're talking all about 516 00:24:51,680 --> 00:24:54,720 Speaker 9: this is Muni's are trading almost on top of taxables. 517 00:24:55,040 --> 00:24:56,720 Speaker 9: So if you can afford, you know, if you have 518 00:24:56,800 --> 00:24:58,960 Speaker 9: some money, I would put I take money out of 519 00:24:58,960 --> 00:25:01,000 Speaker 9: money markets, put it in law dated muni's. I think 520 00:25:01,000 --> 00:25:03,639 Speaker 9: that trade will actually be really good for income and 521 00:25:03,680 --> 00:25:04,200 Speaker 9: total return. 522 00:25:04,359 --> 00:25:06,640 Speaker 2: Niche Patel with this later on in the show. She's 523 00:25:06,840 --> 00:25:10,600 Speaker 2: expert on MUNI bonds. So I got Norfolk Southern Paul, 524 00:25:10,640 --> 00:25:13,960 Speaker 2: what is it? Two billion plus trade? The determination fee 525 00:25:14,320 --> 00:25:15,520 Speaker 2: just billions of dollars. 526 00:25:15,520 --> 00:25:17,720 Speaker 5: I mean a regulatory this is gonna shock. 527 00:25:18,119 --> 00:25:19,720 Speaker 3: Well, that's where I want to go. But let me 528 00:25:19,760 --> 00:25:20,800 Speaker 3: frame it out. Folks. 529 00:25:21,200 --> 00:25:24,440 Speaker 2: No revenue growth, I mean they just they haven't had it. 530 00:25:24,440 --> 00:25:29,480 Speaker 2: It's not happening since twenty twenty two. There is some profit, I'll. 531 00:25:29,320 --> 00:25:32,919 Speaker 3: Give him that, and cash flows not all that moldy. 532 00:25:33,000 --> 00:25:36,320 Speaker 2: I guess it's old line trading at a pretty rich multiple. 533 00:25:36,359 --> 00:25:38,680 Speaker 2: It's not trading like Ford or GM. 534 00:25:39,400 --> 00:25:43,320 Speaker 3: They couldn't do this in a Biden administration. 535 00:25:43,480 --> 00:25:45,320 Speaker 6: Peter, I think that's spot on. 536 00:25:45,359 --> 00:25:46,639 Speaker 9: I think this will be a good test for the 537 00:25:46,680 --> 00:25:49,840 Speaker 9: Trump administration what we've been hoping for, right deregulation. This 538 00:25:49,920 --> 00:25:52,560 Speaker 9: is something Trump is so expert at and is dealing 539 00:25:52,560 --> 00:25:55,280 Speaker 9: with real estate and stuff. He likes deregulation. This gives 540 00:25:55,320 --> 00:25:57,439 Speaker 9: him an opportunity, and there's so much that could be 541 00:25:57,440 --> 00:25:59,560 Speaker 9: done in the railroad industry in and around New York City, 542 00:25:59,640 --> 00:26:01,760 Speaker 9: let alone where you have all these different things. So 543 00:26:01,920 --> 00:26:04,480 Speaker 9: I think this is really an interesting task. If you 544 00:26:04,480 --> 00:26:06,719 Speaker 9: can push it through, that's exciting for the economy as 545 00:26:06,720 --> 00:26:07,040 Speaker 9: a whole. 546 00:26:07,200 --> 00:26:09,720 Speaker 3: Peter, thank you so much, and particularly thank you so 547 00:26:09,840 --> 00:26:12,680 Speaker 3: much for your comments. I'm Park Avenue in Manhattan. 548 00:26:12,680 --> 00:26:17,080 Speaker 2: Here at the beginning, mister sheer is with Academy Securities. 549 00:26:22,720 --> 00:26:26,600 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 550 00:26:26,640 --> 00:26:29,639 Speaker 1: starting at seven am Eastern on Apple Corplay and Android 551 00:26:29,680 --> 00:26:32,720 Speaker 1: Auto with the Bloomberg Business app. You can also watch 552 00:26:32,760 --> 00:26:35,720 Speaker 1: us live every weekday on YouTube and always on the 553 00:26:35,720 --> 00:26:36,800 Speaker 1: Bloomberg Terminal. 554 00:26:36,960 --> 00:26:40,480 Speaker 2: Christian Coolian rather saint with Blackrock, as we had to 555 00:26:40,520 --> 00:26:42,919 Speaker 2: talk railroads there for a minute, and she's had an 556 00:26:42,960 --> 00:26:46,960 Speaker 2: Ice shares investment strategy, but what it amounts to is 557 00:26:47,160 --> 00:26:55,560 Speaker 2: tackling the ETF event for Blackrock to institutional clients. Christy More, 558 00:26:55,720 --> 00:26:59,440 Speaker 2: I think you're maybe more qualified in the trenches than 559 00:26:59,520 --> 00:27:04,600 Speaker 2: anyone I know. Where are ETFs in five years? Did 560 00:27:04,600 --> 00:27:05,879 Speaker 2: they take over the world? 561 00:27:07,960 --> 00:27:09,760 Speaker 8: Thanks for having me. It's nice to be here this morning. 562 00:27:10,480 --> 00:27:12,520 Speaker 8: I heard some of the comments earlier from Verry as 563 00:27:12,520 --> 00:27:15,760 Speaker 8: well upend of the the etfsation of the world. You know, 564 00:27:15,840 --> 00:27:19,000 Speaker 8: I think that you know, we are certainly seeing ETFs 565 00:27:19,080 --> 00:27:23,040 Speaker 8: continue to grow. I think there's some very notable changes 566 00:27:23,080 --> 00:27:25,639 Speaker 8: though in what we've seen in just the last few years. 567 00:27:25,400 --> 00:27:28,080 Speaker 3: Is give us the big change, give us a big change. 568 00:27:28,119 --> 00:27:31,040 Speaker 8: Yeah, yeah, So, so you know, one of the biggest 569 00:27:31,080 --> 00:27:33,560 Speaker 8: ones that we see is really just the adoption of 570 00:27:33,720 --> 00:27:37,920 Speaker 8: active management inside the ETF wrapper. So for the first 571 00:27:37,920 --> 00:27:41,800 Speaker 8: time ever, there's actually more active ETFs listed in the 572 00:27:41,920 --> 00:27:45,920 Speaker 8: US than there are index ones. There's certainly still more 573 00:27:45,920 --> 00:27:48,399 Speaker 8: assets in the index ones, but really we've seen this 574 00:27:48,560 --> 00:27:52,000 Speaker 8: this c change in terms of launches being much more 575 00:27:52,080 --> 00:27:54,760 Speaker 8: gravitating towards the active side. So, you know, we think 576 00:27:54,760 --> 00:27:58,160 Speaker 8: that there's a huge amount of advantage, especially in something 577 00:27:58,200 --> 00:28:01,040 Speaker 8: like some of these rotational strategies that you'll see from 578 00:28:01,119 --> 00:28:04,840 Speaker 8: US too. So the ability to put even high turnover 579 00:28:04,920 --> 00:28:09,479 Speaker 8: strategies active management inside an ETF can give you that 580 00:28:09,600 --> 00:28:12,159 Speaker 8: tax benefit of the ETF while still being able to 581 00:28:12,200 --> 00:28:15,240 Speaker 8: stay really nimble in an environment like this. So something 582 00:28:15,320 --> 00:28:18,240 Speaker 8: like d y On F. That's our our Blackrock Factor 583 00:28:18,320 --> 00:28:22,400 Speaker 8: Rotation ETF. It is our largest active ETF at Blackrock, 584 00:28:22,920 --> 00:28:23,879 Speaker 8: and it does just that. 585 00:28:24,760 --> 00:28:28,760 Speaker 5: Christy, my first knowledge and understanding of ETFs was lower 586 00:28:28,840 --> 00:28:32,240 Speaker 5: cost visa VI the alternative being a mutual fund because 587 00:28:32,280 --> 00:28:34,159 Speaker 5: in large part it was passive. I didn't have to 588 00:28:34,160 --> 00:28:36,960 Speaker 5: pay for research, channalysts and all this kind of stuff. Now, 589 00:28:37,000 --> 00:28:39,440 Speaker 5: the active, as you were just mentioning, is a real 590 00:28:39,520 --> 00:28:44,280 Speaker 5: big source of growth. How does an active ETF from 591 00:28:44,320 --> 00:28:46,640 Speaker 5: a cost perspective sack up to a mutual fund. 592 00:28:48,120 --> 00:28:51,880 Speaker 8: Yeah, so we're still seeing that the the lower cost 593 00:28:51,960 --> 00:28:55,520 Speaker 8: preference for ETFs is still true. So typically if you 594 00:28:55,600 --> 00:28:58,880 Speaker 8: look at the cost profile of an active ETF versus 595 00:28:58,960 --> 00:29:01,560 Speaker 8: an active mutual fund, you're still going to get quite 596 00:29:01,600 --> 00:29:04,440 Speaker 8: a bit of cost savings. So it's somewhere in between 597 00:29:04,800 --> 00:29:08,400 Speaker 8: the index average in the active average with the mutual funds. 598 00:29:08,440 --> 00:29:12,640 Speaker 8: So lower cost also really importantly again for those active strategies, 599 00:29:12,720 --> 00:29:15,120 Speaker 8: it's the you know, the tax benefits. I think that 600 00:29:15,240 --> 00:29:17,560 Speaker 8: matter just as much and maybe even more for the 601 00:29:17,560 --> 00:29:20,840 Speaker 8: ETF structure than the mutual fund one. But I certainly 602 00:29:20,840 --> 00:29:22,560 Speaker 8: don't want to suggest that you know all of the 603 00:29:22,600 --> 00:29:25,400 Speaker 8: growth and ETFs is coming from active management. You know, 604 00:29:25,440 --> 00:29:28,440 Speaker 8: if you look at the portfolio of twenty twenty five, 605 00:29:28,480 --> 00:29:30,960 Speaker 8: if you look at flows so far and where investors 606 00:29:30,960 --> 00:29:34,600 Speaker 8: are choosing to allocate, there's a really big difference between 607 00:29:34,640 --> 00:29:37,520 Speaker 8: this year and what we've seen in previous years. The 608 00:29:37,560 --> 00:29:40,840 Speaker 8: first biggest change is we're seeing a tremendous amount of 609 00:29:40,840 --> 00:29:44,720 Speaker 8: flows to alternative categories. So about eight percent of total 610 00:29:44,760 --> 00:29:48,280 Speaker 8: ETF flows this year have gone to alternative categories. If 611 00:29:48,280 --> 00:29:51,200 Speaker 8: you're worried about death and debt and deficits, you're probably 612 00:29:51,240 --> 00:29:54,160 Speaker 8: thinking about gold and bitcoin. And if you are, you're 613 00:29:54,160 --> 00:29:57,680 Speaker 8: probably thinking about IAU and IBIT, which are our funds 614 00:29:57,720 --> 00:29:58,000 Speaker 8: and les. 615 00:30:00,120 --> 00:30:02,120 Speaker 3: Listen to her working in Nice job, Christy. 616 00:30:02,200 --> 00:30:04,400 Speaker 2: You got to go after that, you're in the timeout 617 00:30:04,480 --> 00:30:08,760 Speaker 2: chair or at Survannahs Christie. One final question, how much 618 00:30:08,760 --> 00:30:13,280 Speaker 2: are people losing in the triple leverage name the stock 619 00:30:13,360 --> 00:30:18,520 Speaker 2: funt I mean, what's the damage? Come on, it's log normal, 620 00:30:18,960 --> 00:30:22,200 Speaker 2: you know this from CFA. What's the damage to triple 621 00:30:22,280 --> 00:30:24,320 Speaker 2: leverage that black Rock is seen? 622 00:30:25,600 --> 00:30:28,360 Speaker 8: Certainly, I mean it's not a space that we play in, 623 00:30:29,240 --> 00:30:32,560 Speaker 8: but certainly we see investors, you know, who are maybe 624 00:30:32,560 --> 00:30:35,240 Speaker 8: thinking of that more as a long term play certainly 625 00:30:35,440 --> 00:30:37,760 Speaker 8: pay the price in terms of much higher phase and 626 00:30:37,880 --> 00:30:40,600 Speaker 8: daily reset. So it's not something that you should think 627 00:30:40,600 --> 00:30:43,840 Speaker 8: of as a perennial position in your portfolio. I think 628 00:30:43,840 --> 00:30:45,160 Speaker 8: sometimes they're using it tactically. 629 00:30:45,440 --> 00:30:47,760 Speaker 3: Great, Christy, thank you so much. Next time, keep it 630 00:30:47,840 --> 00:30:50,160 Speaker 3: under eighteen symbols from Blackrock. 631 00:30:50,840 --> 00:30:53,959 Speaker 2: She said everything she's she's genuinous for so, I mean, 632 00:30:54,040 --> 00:30:54,840 Speaker 2: Christi Aculin. 633 00:30:55,640 --> 00:30:59,120 Speaker 3: This is all Coolian. This is all about like, actually, 634 00:30:59,360 --> 00:31:03,600 Speaker 3: what do you you do? The wall? The blinding wall. 635 00:31:03,760 --> 00:31:04,560 Speaker 6: That's unbelievable. 636 00:31:04,600 --> 00:31:06,440 Speaker 5: I mean. Over the last twenty years has been one 637 00:31:06,480 --> 00:31:09,560 Speaker 5: of the most amazing developments to me in global Wall Street. 638 00:31:09,560 --> 00:31:10,880 Speaker 6: This has been the growth of etaps. 639 00:31:11,040 --> 00:31:15,840 Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify, 640 00:31:15,960 --> 00:31:20,240 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 641 00:31:20,360 --> 00:31:23,800 Speaker 1: seven to ten am Eastern on Bloomberg dot Com, the 642 00:31:23,920 --> 00:31:27,920 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You 643 00:31:27,960 --> 00:31:31,320 Speaker 1: can also watch us live every weekday on YouTube and 644 00:31:31,520 --> 00:31:33,280 Speaker 1: always on the Bloomberg terminal