WEBVTT - Nvidia and Trump Impact Markets 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business app. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.760 us live on YouTube, joining. 0:00:27.480 --> 0:00:31.240 Us, Savanda Schlitz and Paps Blue Ribbon. Jim Bianco, I 0:00:31.240 --> 0:00:33.239 believe is with us all right now? Rich, do we 0:00:33.280 --> 0:00:36.320 have mister Bianco? Okay, we do, Thank you Rich Truman 0:00:36.400 --> 0:00:40.919 for that. This morning, Jim Bianco is nailed the sticky 0:00:41.080 --> 0:00:45.479 inflation call. We get an update, Jim, like good news 0:00:45.479 --> 0:00:49.000 this morning. Futures up twenty five. We're getting knocked around 0:00:49.080 --> 0:00:54.000 here in immense emotional volatility. What does the Bianco view 0:00:54.160 --> 0:00:54.880 on inflation? 0:00:56.400 --> 0:00:59.520 That it's still sticky and that you're staring the sea 0:00:59.600 --> 0:01:02.800 signs that even people are starting to become nervous about it. 0:01:02.880 --> 0:01:07.520 The surveys like Michigan and the Conference Board are showing 0:01:07.520 --> 0:01:10.640 that people are expecting even higher levels of inflation. The 0:01:10.720 --> 0:01:13.840 FED might call that being a bit unanchored. And I 0:01:13.880 --> 0:01:15.959 think that it's going to, you know, stay with us 0:01:16.000 --> 0:01:18.120 and be a problem now now that they've said that 0:01:18.600 --> 0:01:21.440 it's a three percent three and a half percent problem. 0:01:21.480 --> 0:01:24.480 It is not an eight ten or Zimbabwe problem, but 0:01:24.600 --> 0:01:26.880 even still a three three and a half percent problem 0:01:27.000 --> 0:01:29.840 means that interest rates, even though the bond market is 0:01:29.920 --> 0:01:33.360 rallied down the four point three, you know, we don't 0:01:33.360 --> 0:01:35.600 have a whole lot more on the downside to go 0:01:35.680 --> 0:01:37.640 if we've got such that kind of sticky inflation. 0:01:37.959 --> 0:01:41.479 How will the FED adapt to our new I love 0:01:41.520 --> 0:01:46.720 this phrase fiscal space. How does the FED adapt to 0:01:47.160 --> 0:01:51.480 you know, forget about the legislation overnight and the ramifications 0:01:51.520 --> 0:01:54.240 of X numbers of zillions of dollars a debt added 0:01:54.280 --> 0:01:57.760 on where we are now, how do they adapt to 0:01:57.800 --> 0:01:59.720 our fiscal policy? 0:02:00.040 --> 0:02:02.400 Well, I'll answer the question by saying I hope they adapt, 0:02:02.480 --> 0:02:05.480 because their attitude right now has been what we have 0:02:05.560 --> 0:02:07.200 to wait and see, and we have to sit on 0:02:07.240 --> 0:02:09.880 our hands and see what happens with tariffs, and see 0:02:09.919 --> 0:02:13.520 what happens with the budget and then kind of assess 0:02:13.560 --> 0:02:16.120 it from there. And that's why the market doesn't expect 0:02:16.120 --> 0:02:19.839 the FED to move until June at the earliest. At 0:02:19.840 --> 0:02:22.560 this point, so I think the FED is going to 0:02:22.639 --> 0:02:26.160 have to learn to adjust that there is a plan 0:02:26.360 --> 0:02:29.480 out there. By this administration, And it isn't just a 0:02:29.520 --> 0:02:33.280 bunch of disconnected things like you know, tariffs or a 0:02:33.400 --> 0:02:37.080 sovereign wealth fund or demanding that Europe pay for it 0:02:37.200 --> 0:02:40.360 more security so that we could relieve our own defense budget. 0:02:40.919 --> 0:02:43.600 It's what I've been talking about for the last couple 0:02:43.639 --> 0:02:46.160 of weeks. It's the mar Alago Plan. That is the plan, 0:02:46.520 --> 0:02:49.960 and we're getting all the phases of that plan. And 0:02:50.000 --> 0:02:52.160 the idea is to lower the value of the dollar, 0:02:52.600 --> 0:02:55.000 is to bring the US into a more competitive position, 0:02:55.520 --> 0:02:57.680 is to relieve us of the debt burden and bring 0:02:57.720 --> 0:03:00.480 down interest rates. But right now the Fed seems to 0:03:00.480 --> 0:03:02.919 think like there's kind of three random things that are 0:03:02.919 --> 0:03:06.040 happening side by side and hasn't put that together. Once 0:03:06.080 --> 0:03:08.520 they do, hopefully they'll understand the plan. 0:03:09.760 --> 0:03:12.880 So it's interesting. Jim Torston slockover to Apollo's out with 0:03:12.880 --> 0:03:14.760 a note this morning and just kind of talking about 0:03:14.760 --> 0:03:21.040 the reverse of globalization. He calls it segmentations and talking 0:03:21.040 --> 0:03:25.560 about how that puts structural upper pressure on inflation, goods, 0:03:25.680 --> 0:03:29.400 inflation in labor, keeping interest rate structurally higher for longer. 0:03:30.760 --> 0:03:32.720 How do you think about that? Is that something that 0:03:32.720 --> 0:03:34.960 can be a real headwind for global economy. 0:03:36.000 --> 0:03:38.560 Oh, I think it is a headwind for the global economy, 0:03:38.600 --> 0:03:41.640 and it will be for both that and inflation. Torston's 0:03:41.680 --> 0:03:43.960 right about that. It will put upward pressure on inflation. 0:03:44.040 --> 0:03:46.960 And if you look at the global economy, especially if 0:03:46.960 --> 0:03:49.400 you look at the European economy, they're not doing very 0:03:49.440 --> 0:03:53.000 well right now. The Chinese economy is not doing well 0:03:53.040 --> 0:03:56.360 at all right now. Though the bright spot in the 0:03:56.400 --> 0:03:59.440 globe is United States, at least at the top line, 0:03:59.520 --> 0:04:02.120 the state's economy is stronger than most of the other 0:04:02.200 --> 0:04:06.440 developed countries and it continues to do well. But that segmentation, 0:04:06.640 --> 0:04:09.920 or that deglobalization as it was called before, that that's 0:04:09.960 --> 0:04:12.920 been underway now pretty much since the financial crisis and 0:04:13.000 --> 0:04:16.200 got accelerated post COVID, and I suspect we're going to 0:04:16.279 --> 0:04:20.400 continue to see that happen. That's the impetus behind tariffs. 0:04:20.440 --> 0:04:23.640 And why President Trump keeps talking about we have unfair 0:04:23.680 --> 0:04:26.080 deals is that he's trying to correct that. But that 0:04:26.120 --> 0:04:27.640 means we're going to see more segmentation. 0:04:27.880 --> 0:04:30.640 Jim Mianco, We've had a series of conversations. If you're 0:04:30.680 --> 0:04:33.200 just joining us, James Bianco with us from Chicago, threat 0:04:33.200 --> 0:04:36.479 he could be with Us with Jim Bianco Research. Jim, 0:04:36.480 --> 0:04:39.640 I I look at the last couple of days of 0:04:39.720 --> 0:04:42.720 conversations and a lot of people are yeah, yeah, but 0:04:43.080 --> 0:04:46.240 we're cautious and it's the politics and all that. A 0:04:46.279 --> 0:04:50.520 headline out three minutes ago Elon Musk will attend Trump 0:04:50.640 --> 0:04:55.120 Cabinet meeting today that according to Fox News Jim Bianco, 0:04:55.320 --> 0:04:58.400 how do you participate in the market, in the stock 0:04:58.520 --> 0:05:02.240 market given the slow we're all having right now? 0:05:03.640 --> 0:05:06.440 Well, that is the thing you want to definitely get yourself, 0:05:06.480 --> 0:05:10.160 you know, away from, is getting bogged down into all 0:05:10.200 --> 0:05:13.760 of these situations, whether you know there's this or that 0:05:13.760 --> 0:05:15.640 that's happening, or even the mar A Lago cord. I 0:05:15.680 --> 0:05:18.839 think you'd want to take a longer term perspective and 0:05:19.040 --> 0:05:21.800 to decide what you like what you don't like. Now, 0:05:22.000 --> 0:05:24.359 not that I've said that, I'll give a note of caution. 0:05:25.000 --> 0:05:27.480 The other problem that the stock market has, while I 0:05:27.520 --> 0:05:31.200 think it's having indigestion more than anything else, is we 0:05:31.279 --> 0:05:34.640 started the year with very high valuations in the market, 0:05:34.720 --> 0:05:38.880 and the Max seven stocks had extremely high valuations. They 0:05:38.920 --> 0:05:41.040 need everything to go right. When you have those kind 0:05:41.120 --> 0:05:44.200 of valuations, you know, to put it into you know, 0:05:44.360 --> 0:05:47.599 in baseball terms, you need to score eight runs, and 0:05:47.640 --> 0:05:50.680 if you score six runs, that's not enough, even though 0:05:50.720 --> 0:05:54.040 six runs sounds like a lot, because that's the problem when. 0:05:53.880 --> 0:05:54.919 You have high valuation. 0:05:55.480 --> 0:05:58.640 And that, I think is why we're starting to see 0:05:58.680 --> 0:06:01.800 people be more cautious more than anything else, is those 0:06:01.880 --> 0:06:04.800 type of issues, and it gets kind of wrapped up 0:06:04.839 --> 0:06:06.360 into you know, the news flow of the day. 0:06:06.960 --> 0:06:09.160 Jim, we're about ninety percent of the way through the 0:06:09.320 --> 0:06:12.640 SP five hundred reporting season here obviously, and Video big, big, 0:06:12.680 --> 0:06:14.760 big name after the close. What have you learned from 0:06:14.760 --> 0:06:15.239 the earnings? 0:06:16.320 --> 0:06:18.440 Yeah, and Video's the biggest name. But the earnings numbers 0:06:18.480 --> 0:06:21.880 have looked great so far. The year over year earnings 0:06:21.920 --> 0:06:23.760 numbers for the fourth quarter to fourth quarter for the 0:06:23.800 --> 0:06:25.520 S and P five hundred is running around twelve or 0:06:25.600 --> 0:06:29.800 thirteen percent. That's been a very good number. Even sales, 0:06:30.279 --> 0:06:33.719 which is kind of an analogous to nominal GDP because 0:06:33.720 --> 0:06:36.479 they're like trillions of dollars of sales is five and 0:06:36.520 --> 0:06:39.520 a half percent, and so these numbers have been looking 0:06:39.600 --> 0:06:42.440 very good. Now that I've said that, remember that those 0:06:42.480 --> 0:06:44.599 are the numbers they report it. They don't have much 0:06:44.880 --> 0:06:48.479 forward guidance. But even the companies are offering guidance that 0:06:48.600 --> 0:06:51.919 is somewhat positive right now, So that is that is 0:06:51.920 --> 0:06:54.159 a good thing, but that is also running into that 0:06:54.240 --> 0:06:57.200 high valuation thing. So even though those numbers might be good, 0:06:57.200 --> 0:06:58.320 they might not be good enough. 0:06:58.560 --> 0:07:02.040 Jim way too early from Simiaco. Thank you so much 0:07:02.520 --> 0:07:03.240 for joining us. 0:07:08.120 --> 0:07:11.680 You're listening to the Bloomberg Surveillance Podcast. Catch us live 0:07:11.760 --> 0:07:14.960 weekday afternoons from seven to ten am Eastern. Listen on 0:07:15.000 --> 0:07:18.680 Applecarplay and Android Otto with the Bloomberg Business app, or 0:07:18.800 --> 0:07:20.320 watch us live on YouTube. 0:07:20.680 --> 0:07:23.680 Shassuma Couladi out of New Mexico with all sorts of 0:07:23.760 --> 0:07:28.880 other attributes at I Capital, the woman who absolutely nailed 0:07:29.160 --> 0:07:32.240 the bolt market. We protect the copyright of our guests. 0:07:32.640 --> 0:07:35.920 Get anastasia amorrosis note from my Capital. You're not going 0:07:35.960 --> 0:07:39.200 to get it from us. And once again you mince 0:07:39.520 --> 0:07:44.120 no words. You just say this is transitory. Why is 0:07:44.160 --> 0:07:45.600 the gloom crew wrong? 0:07:46.400 --> 0:07:49.320 Well, I think the gloom crew has been looking for 0:07:49.360 --> 0:07:51.600 an excuse to do you risk and they've been hanging 0:07:51.600 --> 0:07:55.080 onto this narrative of a growth scare. But Tom, let's 0:07:55.160 --> 0:07:57.560 unpack the growth scare and the inflation scare that we 0:07:57.800 --> 0:08:00.600 had in the last couple of weeks, and growth scare 0:08:00.600 --> 0:08:04.000 has been due to soft data or surveys or consumer 0:08:04.080 --> 0:08:08.360 confidence slumping to you know, significantly lower levels. But guess what, 0:08:08.440 --> 0:08:11.320 Consumers have been gloomy for some time. In fact, for 0:08:11.360 --> 0:08:13.240 the last two or three years, we've been in this 0:08:13.360 --> 0:08:16.800 broad range of depressed consumer confidence. But has that actually 0:08:16.840 --> 0:08:20.080 stopped the US economy has spent. Has that stopped that 0:08:20.160 --> 0:08:23.280 same consumer from spending? Not really. And then the other 0:08:23.360 --> 0:08:28.000 thing that the gloom crew has worried about is inflation 0:08:28.120 --> 0:08:30.840 and the inflation expectations popping from five point two percent 0:08:30.880 --> 0:08:34.000 to six percent in the latest consumer confidence survey. Well, 0:08:34.280 --> 0:08:36.080 maybe it's the price of eggs, maybe it's the fear 0:08:36.120 --> 0:08:38.960 of tariffs, But we don't have six percent inflation. We're 0:08:39.080 --> 0:08:41.480 likely to have two point six percent year of year 0:08:41.600 --> 0:08:45.199 core PC inflation reported this Friday. So I think the 0:08:45.200 --> 0:08:48.439 softness of economic data is an excuse. What's really happening 0:08:48.480 --> 0:08:51.559 is the technicals, it's the sentiment, it's the retail trader 0:08:51.640 --> 0:08:54.760 is really stepping back. But that is a process time 0:08:54.760 --> 0:08:56.760 and that's why I say it's transtory. It doesn't last, 0:08:56.920 --> 0:08:59.880 it doesn't fundamentally change the outlook, it doesn't last forever. 0:09:00.200 --> 0:09:02.199 And I actually think we didn't just have a three 0:09:02.200 --> 0:09:04.840 percent pullback in the SMP. We had a median thirteen 0:09:04.880 --> 0:09:07.439 percent pullback in a stock in the SMP. So I 0:09:07.480 --> 0:09:10.760 think we're getting closer to the finish line of this 0:09:10.840 --> 0:09:12.640 pullback earnings. 0:09:12.640 --> 0:09:15.120 We're ninety percent away through the earning cycle here. What 0:09:15.200 --> 0:09:16.880 have you taken away? What have you learned from some 0:09:16.920 --> 0:09:19.160 of the guidance that we've heard from corporate America. 0:09:19.280 --> 0:09:22.760 Yeah, I think generally speaking, corporate America is still optimistic, 0:09:22.800 --> 0:09:25.840 but there's certainly some uncertainty and there's some reservations about 0:09:26.040 --> 0:09:28.559 what's going to happen with tariffs. And you know, look, 0:09:28.600 --> 0:09:31.640 if you look at earnings revisions, they have actually been 0:09:31.679 --> 0:09:34.199 trending lower in the United States, which by the way, 0:09:34.240 --> 0:09:36.440 is in contrast to Europe, it's in contrast to Japan. 0:09:36.920 --> 0:09:39.160 And the reason for that is, you know, we're expecting 0:09:39.160 --> 0:09:41.720 thirteen percent earnings growth this year, but now we have 0:09:41.800 --> 0:09:43.600 to shave off a little bit because we have a 0:09:43.640 --> 0:09:45.839 dollar strength. Then we have to maybe shave off a 0:09:45.880 --> 0:09:48.720 little bit more because we have tariffs and reciprocal tariffs. 0:09:48.920 --> 0:09:51.640 So you know, because of that, the sentiment perhaps was 0:09:51.720 --> 0:09:55.040 not as buoyant as it would have been otherwise, but 0:09:55.400 --> 0:09:58.520 it does not erase the thirteen percent earnings growth we expect. 0:09:58.720 --> 0:10:02.040 Are there sectors that screen well for you right now? 0:10:02.760 --> 0:10:05.080 Well, first of all, I actually think you have to 0:10:05.160 --> 0:10:07.600 stick with what's working right now, and the core core 0:10:07.640 --> 0:10:10.720 theme in the market is actually artificial intelligence. You know, 0:10:10.800 --> 0:10:14.160 I love the fact that in Vision videos today a 0:10:14.200 --> 0:10:16.480 little bit and a little bit along with the sixty 0:10:16.520 --> 0:10:19.280 other analysts that are covering the name. But but look, 0:10:19.320 --> 0:10:22.120 you know, in Vidia gets the last word on what's 0:10:22.160 --> 0:10:24.760 happening with the momentum and artificial intelligence, and I think 0:10:24.800 --> 0:10:28.200 what we've heard from others is already pretty constructive, whether 0:10:28.240 --> 0:10:30.360 it's Meta, whether it's Amazon, whether it's others that are 0:10:30.400 --> 0:10:33.120 continuing to spend on AI, cap BAX and you know, 0:10:33.240 --> 0:10:36.240 to me, the key takeaway from deep Seek actually is 0:10:36.720 --> 0:10:38.960 not that we're not going to need as many chips, 0:10:39.000 --> 0:10:42.040 but it's the fact that more people can skip the 0:10:42.120 --> 0:10:45.120 training phase and actually go to the inference phase. And 0:10:45.200 --> 0:10:47.200 so for that, guess what they're going to need a 0:10:47.200 --> 0:10:50.000 whole lot more semiconductor content. So I think you stick 0:10:50.080 --> 0:10:52.760 with that, and after the pullback that we've had, we've 0:10:52.800 --> 0:10:56.360 actually had, we're nearing some oversold conditions in some of 0:10:56.400 --> 0:11:00.560 the AI software stocks, specifically AI semiconductors. I'm looking at 0:11:00.559 --> 0:11:01.000 that thing still. 0:11:01.120 --> 0:11:03.200 If you're joining us right now on your commune across 0:11:03.200 --> 0:11:05.480 the nation, good morning on Apple CarPlay androd out a 0:11:05.559 --> 0:11:09.920 good morning ninety to nine FM in Boston. Thank you 0:11:09.960 --> 0:11:13.559 for being with us on YouTube. Subscribe to Bloomberg Podcast. 0:11:13.880 --> 0:11:17.560 This digital experiment growing each and every day, Tracy Alloway 0:11:17.559 --> 0:11:20.240 and Joe wis it Thal helping out there without lats? 0:11:20.320 --> 0:11:24.120 Look for that as well a Bloomberg Podcast. Anastasia amorroso 0:11:24.760 --> 0:11:29.320 with us. You bring prodigious mathematics to your research. Note 0:11:29.559 --> 0:11:33.600 you mentioned earlier. Let's discuss this. The SPX is down 0:11:33.679 --> 0:11:39.439 three percent, but when you take out the high flyers, 0:11:39.520 --> 0:11:45.880 the median the center tendency is down thirteen percent. So 0:11:45.960 --> 0:11:49.199 can we say we've had a median correction on our 0:11:49.200 --> 0:11:51.040 way to a median bear market. 0:11:51.720 --> 0:11:53.320 Well, I don't think we're on our way to a 0:11:53.360 --> 0:11:56.600 median bear market, but we have had a meaningful median 0:11:56.679 --> 0:11:59.040 correction of a thirteen and a half percent. And Tom, 0:11:59.040 --> 0:12:00.760 there's another way I like to look at it, which 0:12:00.800 --> 0:12:03.680 is in terms of oversold conditions. And the thing that 0:12:03.800 --> 0:12:05.599 really jumps out of you is the S and P 0:12:05.800 --> 0:12:08.480 did not quite yet hit the oversold level, and neither 0:12:08.559 --> 0:12:10.720 has the NASDAC. But if you look at the MAC 0:12:10.880 --> 0:12:15.120 seven stocks, they're very close to actually hitting that oversold level, 0:12:15.160 --> 0:12:17.120 the relative strength indicator of RSI. 0:12:17.240 --> 0:12:19.880 I want to translate this for you. You're in New Mexico. 0:12:20.320 --> 0:12:23.000 You figure you're going to get a solid bead. Maybe 0:12:23.000 --> 0:12:25.520 you'll sneak out with the bat plus. And in the 0:12:25.559 --> 0:12:30.240 front row is Anastasia Amoso who was eighteen years old 0:12:30.240 --> 0:12:33.720 and did nail box plot analysis. You know, where did 0:12:33.720 --> 0:12:34.800 this girl come from? 0:12:35.240 --> 0:12:37.680 I was always a front and center kind of student. 0:12:37.720 --> 0:12:40.200 I will say, did you have you're too young for 0:12:40.320 --> 0:12:43.280 slide roll twelve or something? 0:12:43.480 --> 0:12:46.000 Of course, of course they knew how to use it. 0:12:46.000 --> 0:12:49.079 Right, I actually knew how to use the calendar. What 0:12:49.520 --> 0:12:52.960 it's like with Lisa here in Anastasia, it's like nerd patrol. 0:12:53.040 --> 0:12:56.959 I know, it's great stag. How should we think about 0:12:57.559 --> 0:13:00.439 valuation because a lot of strategists will say, that's all 0:13:00.480 --> 0:13:02.160 my clients want to talk about is kind of the 0:13:02.240 --> 0:13:04.320 valuation of the market. How do you kind of frame 0:13:04.400 --> 0:13:05.160 that for your clients. 0:13:05.600 --> 0:13:07.800 I guess I'm a little surprised that's all the clients 0:13:07.840 --> 0:13:10.080 want to talk about, because we have had the multiple 0:13:10.200 --> 0:13:13.080 NSMP twenty one, twenty two times, and you know, there's 0:13:13.120 --> 0:13:16.080 a reason for why that multiple continues to be persistent. 0:13:16.320 --> 0:13:18.040 First of all, we have that two and a half 0:13:18.040 --> 0:13:20.360 two point three percent earnings growth or excuse me, as 0:13:20.400 --> 0:13:23.520 a GDP growth that's not going away, So that's supporting 0:13:23.559 --> 0:13:25.640 the multiple. The other thing, you know, back to the 0:13:25.640 --> 0:13:27.880 AI theme and back to the tech theme. If you 0:13:27.920 --> 0:13:29.439 look at the S and P five found a margin 0:13:29.480 --> 0:13:31.720 twelve and a half percent, it's not bad, but guess 0:13:31.760 --> 0:13:34.480 what it is double that in some of the tech shares. 0:13:34.760 --> 0:13:37.679 And so that's why the margin continues to be elevated. 0:13:37.760 --> 0:13:41.000 So I don't see that as a huge concern provided 0:13:41.080 --> 0:13:43.680 that that softness that we see in soft data doesn't 0:13:43.679 --> 0:13:45.560 actually turn it into a recesion and that's not my 0:13:45.600 --> 0:13:46.000 base case. 0:13:46.160 --> 0:13:49.160 Underpin it with GDP we had earlier Jimbianco linking and 0:13:49.240 --> 0:13:53.120 nominal GDP into revenue growth of companies. Do you have 0:13:53.160 --> 0:13:56.600 the same relationship here where you know we supprise once again, 0:13:56.640 --> 0:14:00.560 there's gloom on this and we surprised with OKGD, which 0:14:00.640 --> 0:14:02.400 leads to solid revenue growth. 0:14:03.040 --> 0:14:06.079 Yeah, I think revenue growth should remain solid. I mean, 0:14:06.080 --> 0:14:08.960 if you look across the pockets of the US economy, 0:14:09.200 --> 0:14:12.400 the unemployment rate is low, wage growth is actually outpacing 0:14:13.040 --> 0:14:16.160 inflation at this rate. So all of that does support consumption, 0:14:16.320 --> 0:14:19.880 which drives revenue growth. Now outside of the US, you know, 0:14:19.920 --> 0:14:22.160 for companies who rely on that revenue growth, outside of 0:14:22.160 --> 0:14:24.800 the US, things are looking up too. I mean Europe 0:14:24.840 --> 0:14:27.800 for example. First of all, they've avoided the Max seven 0:14:27.960 --> 0:14:31.680 exposure and the meltdown, but there's something fundamentally different about 0:14:31.720 --> 0:14:34.960 the European economy, which is they're actually cutting interest rates 0:14:35.120 --> 0:14:37.320 and they've been doing that ahead of the FED. And 0:14:37.360 --> 0:14:40.960 I think that cumulative benefit of rate cuts will start 0:14:41.000 --> 0:14:44.080 to accumulate for Europe. It should turn out turn around 0:14:44.080 --> 0:14:47.080 the housing market, it should turn around the commercial property market. 0:14:47.360 --> 0:14:50.520 So if you have European exposure and your revenues that's 0:14:50.600 --> 0:14:51.120 looking so. 0:14:51.960 --> 0:14:55.480 Global, would that do you get finally a weaker dollar qualth? 0:14:57.440 --> 0:14:57.720 No? 0:14:58.080 --> 0:15:01.040 I don't think so, because the interesting differential is really 0:15:01.080 --> 0:15:03.240 the most important thing that I think will be driving 0:15:03.240 --> 0:15:07.840 the dollar, and tariffs is in the second place to that, look, 0:15:07.880 --> 0:15:10.640 the way I look at it international oftentimes it ends 0:15:10.680 --> 0:15:13.520 up being a trade and I think Europe is a 0:15:13.560 --> 0:15:16.160 good trade right now, given the deal that we're seeing 0:15:16.160 --> 0:15:20.200 with Ukraine and Russia hopefully, you know, given the CB moves. 0:15:21.240 --> 0:15:24.880 But longer term to really invest in Europe or Japan 0:15:24.920 --> 0:15:27.000 or any other place is what I would focus on, tom, 0:15:27.120 --> 0:15:30.120 is what are the leading companies in Europe that are 0:15:30.160 --> 0:15:34.280 tied to artificial intelligence, that are tied to decarb. I 0:15:34.320 --> 0:15:40.160 can't to give us a thing, but I'll give you 0:15:40.200 --> 0:15:41.880 one other idea. And of course you know, the markets 0:15:41.920 --> 0:15:44.560 have already reacted to that, but clearly Europe does have 0:15:44.640 --> 0:15:47.680 to beef up the defense spending as a result of 0:15:47.720 --> 0:15:51.760 the negotiations, and so European defense stocks have have woken 0:15:51.840 --> 0:15:54.160 up and are doing quite well as a result of 0:15:54.200 --> 0:15:54.600 that as well. 0:15:55.040 --> 0:15:57.240 So what are the headwinds here? A lot of folks 0:15:57.280 --> 0:15:59.680 will say the noise coming out of Washington, DC is 0:15:59.760 --> 0:16:03.280 so broad and so consistent that it's hard to really 0:16:03.280 --> 0:16:05.800 look through it and maybe focus on fundamentals. What do 0:16:05.840 --> 0:16:07.600 you say to people like that that are saying, I'm 0:16:07.600 --> 0:16:10.760 just not sure how to play the discussion about tariffs 0:16:10.760 --> 0:16:13.000 and you know, all the other economic policies sit in 0:16:13.080 --> 0:16:13.880 coming out of Washington. 0:16:14.160 --> 0:16:16.720 Look, first of all, this is exactly in line with 0:16:16.800 --> 0:16:19.200 the expectation that we had going into the year. You know, 0:16:19.240 --> 0:16:21.760 the name of the outlook, as we titled it, it 0:16:21.800 --> 0:16:23.560 was the year of solid independings, which are all the 0:16:23.560 --> 0:16:27.040 economic fundamentals that we talked about, but with plenty of wildcars. 0:16:27.120 --> 0:16:29.480 And I called it wildcars because they're exactly that they 0:16:29.520 --> 0:16:31.440 can turn out to be positive, they can turn out 0:16:31.480 --> 0:16:34.120 to be negative. We don't know. But we have to 0:16:34.200 --> 0:16:36.600 focus on is what is the trajectory of the economy. 0:16:36.640 --> 0:16:39.080 What is it the trajectory of revenues and earths that 0:16:39.120 --> 0:16:43.440 you talked about, and position yourself around that. Now, from 0:16:43.800 --> 0:16:47.480 the asset allocation perspective, you know, I don't know if 0:16:47.520 --> 0:16:50.080 it's the time to go all in on small caps 0:16:50.120 --> 0:16:52.720 given the uncertainty, but I think it is the time 0:16:52.800 --> 0:16:57.040 to go all in on higher quality domestic companies that 0:16:57.400 --> 0:17:00.920 align with the America First agenda. I think it is 0:17:01.000 --> 0:17:04.920 time to continue with the AI trend. And the other 0:17:04.960 --> 0:17:08.040 thing I would say, private credit, for example, stands out 0:17:08.240 --> 0:17:11.040 has a great opportunity in this environment. 0:17:11.200 --> 0:17:13.920 When you came to America, did you speak English? I 0:17:14.040 --> 0:17:14.720 did you did. 0:17:14.720 --> 0:17:17.480 It wasn't well, it was all right, It was all right, Okay, 0:17:18.840 --> 0:17:20.120 is really not. 0:17:20.119 --> 0:17:22.480 Quite I want you to talk to Americans that have 0:17:22.600 --> 0:17:26.800 never left the country about American exceptionalism. You and I 0:17:26.920 --> 0:17:30.760 talked two days after Putin invaded Ukraine. Whatever, Let's forget 0:17:30.800 --> 0:17:32.800 about the politics right now. It's not fair to you, 0:17:33.119 --> 0:17:37.680 But I want you to talk about this phrase, American exceptionalism. 0:17:38.280 --> 0:17:42.160 Talk to Americans this morning across this nation. What does 0:17:42.200 --> 0:17:42.880 it mean to you? 0:17:43.400 --> 0:17:49.960 It is an exceptional and outstanding place that nowhere else 0:17:50.280 --> 0:17:53.479 can you replicate that. And I do travel globally, you know, 0:17:53.520 --> 0:17:56.399 I immigrate to the US when I was sixteen. But 0:17:56.880 --> 0:18:02.400 nowhere else can you get the same stability of government, 0:18:02.520 --> 0:18:06.040 believe it or not, as you get in the United States. 0:18:06.160 --> 0:18:11.320 Nowhere else can you get this pro business mentality, even 0:18:11.359 --> 0:18:15.200 though we argue about the deregulation here and there, and 0:18:15.600 --> 0:18:18.879 nowhere else, frankly, can you get the same opportunity set 0:18:19.119 --> 0:18:21.679 as you do here. So it is truly truly an 0:18:21.720 --> 0:18:24.919 exceptional place. And this is why when I think about investing, 0:18:25.359 --> 0:18:28.879 you know, yes, while it's tempting to go invest in 0:18:28.880 --> 0:18:32.160 emergent markets or maybe trade around in Europe, and Japan. 0:18:32.640 --> 0:18:34.720 You know, if you are a long term investor, you 0:18:34.800 --> 0:18:37.400 have to focus on the pillars that you know are 0:18:37.400 --> 0:18:39.119 going to be there, and I think the pillars of 0:18:39.160 --> 0:18:40.719 American exceptionalism will be here. 0:18:41.160 --> 0:18:44.560 Sasha, thank you so much. Anasta Amorros, I can't with 0:18:44.760 --> 0:18:48.520 us this morning here. She continues, It's transitory, these challenges 0:18:48.560 --> 0:18:51.480 we have, and she says, get on board in your 0:18:51.520 --> 0:18:54.800 own way, look for her research and I at capital. 0:18:55.200 --> 0:18:59.080 This is the Bloomberg Surveillance Podcast. Listen live each weekday 0:18:59.119 --> 0:19:02.639 starting at seven eight on Applecarplay and Android Auto with 0:19:02.720 --> 0:19:05.719 the Bloomberg Business app. You can also listen live on 0:19:05.800 --> 0:19:09.440 Amazon Alexa from our flagship New York station. Just say 0:19:09.600 --> 0:19:11.760 Alexa play Bloomberg eleven thirty. 0:19:12.040 --> 0:19:14.720 I've been fine, Seth joins us right now, just absolutely 0:19:14.720 --> 0:19:20.280 fabulous in securities analysis. Let how do you with Graham 0:19:20.320 --> 0:19:22.719 Dot and Cadalive And with both both you and I 0:19:22.720 --> 0:19:26.840 have read cover to cover model out revenue growth of 0:19:26.960 --> 0:19:31.280 seventy percent. I mean with Nvidia, you're not using any 0:19:31.320 --> 0:19:34.160 conventional template, are you? 0:19:34.200 --> 0:19:34.240 No? 0:19:34.440 --> 0:19:36.480 You really got to look at their return on capital, 0:19:36.520 --> 0:19:40.320 which is incredibly strong because they are an intellectual capital 0:19:40.400 --> 0:19:44.439 rather than a financial capital intensive company, and the growth 0:19:44.480 --> 0:19:47.399 is phenomenal, the return on capital is phenomenal. They have 0:19:47.520 --> 0:19:49.960 brought back so much dock that they've pretty much given 0:19:50.000 --> 0:19:52.280 back all of their equity capital, and they still just 0:19:52.720 --> 0:19:55.639 continue to grow in value because they continue to innovate. 0:19:55.800 --> 0:19:58.960 And they are on the cutting edge of AI, which 0:19:59.040 --> 0:20:04.600 is we are in a major multi decade investment cycle 0:20:04.640 --> 0:20:07.920 here that is going to change everything. And I continue 0:20:07.920 --> 0:20:10.440 to quote Tom Siebel, who I believe is the one 0:20:10.440 --> 0:20:12.479 who said that every company he's the founder of C 0:20:12.560 --> 0:20:15.760 three AHI, that every company will be an AI company, 0:20:15.840 --> 0:20:19.399 that every company will use a guy in various aspects 0:20:19.440 --> 0:20:25.359 to optimize their business, to improve productivity, to improve customer interaction. 0:20:26.680 --> 0:20:29.960 So and we are just in the beginning stages of this. 0:20:30.040 --> 0:20:33.600 Okay, the WACC screen, folks, which is my favorite value 0:20:33.640 --> 0:20:37.119 add from mister Bloomberg and mister Secnda. The debt cost 0:20:37.400 --> 0:20:40.280 is zero point three percent, is the weight of debt 0:20:40.680 --> 0:20:44.679 ninety nine point seven percent equity. The ROIC is one 0:20:44.760 --> 0:20:47.480 hundred and fourteen percent per year. This is through a 0:20:47.480 --> 0:20:52.600