Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day
Speaker 2: for insight from the best in markets, economics, and geopolitics
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Speaker 2: Terminal and the Bloomberg Business app. We'll begin with our
Speaker 2: top story, investors positioning for a potential second Trump term,
Speaker 2: James Athey of Marlbaret Investment Management, writing, this isn't it
Speaker 2: a bit keen to be positioning for the Trump trade
Speaker 2: four months before the election, six months before inauguration, and
Speaker 2: based on the twenty seventeen timeline around eighteen months before
Speaker 2: the passing of legislation. James Jones is now for more so, James,
Speaker 2: do you think maybe this move is a little bit premature?
Speaker 3: Yeah?
Speaker 4: Either that, John, or really with sort of backward engineering
Speaker 4: and narrative to describe the move higher and treasury yields,
Speaker 4: I mean the timing with respect to this move higher
Speaker 4: in the odds of Trump being elected doesn't seem to
Speaker 4: tie up perfectly. It almost looked to me like maybe
Speaker 4: there was a bit of inventory overhang from dealers into
Speaker 4: and out of month end, and that's just precipitated and
Speaker 4: move higher and treasury yields led by the long end,
Speaker 4: and now we're starting to sort of engineer that into
Speaker 4: being related to an increased chance of Trump's elections. So
Speaker 4: either way, for me, now is not the time to
Speaker 4: push hard on trades investment ideas which rely on Trump
Speaker 4: passing legislation. I think there's a lot of wood to
Speaker 4: chop before we get there.
Speaker 5: So James, what should we rely on?
Speaker 2: You said it's too early to position for a Trump presidency.
Speaker 2: You say there's nothing clear on the macro front either,
Speaker 2: So what should I focus on and what should I do?
Speaker 4: No, exactly, And that's the difficult thing. I mean, the
Speaker 4: trade trend in the last six weeks or so has
Speaker 4: been a reversal of the trend which had preceded it,
Speaker 4: which is to say, we've had some upside surprises in
Speaker 4: economic data in Europe and the UK, and some downside
Speaker 4: surprises in the US, But broadly speaking, the US still
Speaker 4: feels like it's in a better place. You know, if
Speaker 4: you look traditionally at economic cycles, they don't turn on
Speaker 4: the consumer, they turn on business investment, and that then
Speaker 4: precipitates through into higher unemployment and the consumer. In Europe
Speaker 4: and the UK, we are seeing that deterioration in investment data.
Speaker 4: In the US. Actually, we've seen that picking up of
Speaker 4: late and so it still looks to us that you
Speaker 4: should be more comfortable taking duration positions from an economic perspective.
Speaker 4: In Europe and the UK, we've already had one cut
Speaker 4: from the ECB. Yes, they got buyers remorse, but I
Speaker 4: think the data is going to give them cover to
Speaker 4: continue cutting. Likewise, the bank when we get to August
Speaker 4: fed certainly more uncertain, but you're just getting paid that
Speaker 4: little bit more to take on that duration risk in
Speaker 4: the US, and so ultimately we still see that as
Speaker 4: being attractive because the direction of travel is cycle.
Speaker 1: This is fascinating to me, this whole idea of market
Speaker 1: move in search of a narrative, which is something that
Speaker 1: we've seen consistently and the part of the reason why
Speaker 1: we've been playing you know, market ping pong or table tennis.
Speaker 1: With the respect of different narratives. What narrative do you
Speaker 1: paint end of cycle rate cutting, go into duration, probably
Speaker 1: more heavily in Europe, less so maybe in the US,
Speaker 1: but still in the US, go into dollar assets. Is
Speaker 1: this basically the game plan that you've just been describing.
Speaker 4: Yeah, ultimately, Lisa, it is. I mean, obviously, you know,
Speaker 4: what we're not trying to do is make some bold
Speaker 4: prognostication on the macro outlook and then vet the farm.
Speaker 4: You know, we're trying to think about the world probabilistically.
Speaker 4: We're trying to understand the various outcomes of the various scenarios,
Speaker 4: the various themes that are affect in market pricing, deduce
Speaker 4: what we think the market is assuming, and position ourselves
Speaker 4: where it's most attractive, where the most asymmetry is. So
Speaker 4: the fact that you've got credit spreads as tight as
Speaker 4: they are and equities at the all time highs and
Speaker 4: equity multiples looking very rich. Meanwhile, you've got yields broadly
Speaker 4: and particularly sort of five to ten year yields looking
Speaker 4: pretty attractive relative to the dynamics which are being described
Speaker 4: broadly by the economic data that as a starting proposition
Speaker 4: as an asset allocator that to us informs the idea
Speaker 4: that bonds, and particularly high quality, safe defensive government bonds
Speaker 4: are the more attractive medium term investment proposition.
Speaker 1: Here, a lot of people are looking to the data
Speaker 1: that we get today, John just went through it, and
Speaker 1: then on Friday we get the non FORIGN payrolls report.
Speaker 1: A key question here has been how dependent is this market?
Speaker 1: How data dependent are people like yourself who don't know
Speaker 1: what macro compass to really use. What's the more important
Speaker 1: data to really be looking at in the slew of
Speaker 1: information that we get today and also on Friday.
Speaker 4: Yeah, and therein lies the problem, Lisa, because the data
Speaker 4: that matters the most in our opinion ultimately is unemployment,
Speaker 4: the labor market in general. That is the spine of
Speaker 4: the economic cycle. That's exactly how you know, these sort
Speaker 4: of positive and negative drivers feed through the economy in
Speaker 4: a cyclical fashion. You know, the same dollar being spent
Speaker 4: multiple times, that cyclicality that's both good in the upswing
Speaker 4: and then very negative in the downswing. And those changes
Speaker 4: largely happen because of changes to employment or changes to unemployment.
Speaker 4: But of course that's the most lagging of those major
Speaker 4: indicators and so it's difficult to make forecast based on that.
Speaker 4: So you have to use the forward looking data to
Speaker 4: try and inform a view and where the labor.
Speaker 5: Market is heading.
Speaker 4: And broadly speaking, this data has been telling us for
Speaker 4: a while and continues to tell us that things are softening,
Speaker 4: things are normalizing. And again, the nature of the economy
Speaker 4: means that that second derivative is incredibly important in trying
Speaker 4: to understand where a more medium trend is. So unless
Speaker 4: we see the jobs market picking up again, it still
Speaker 4: looks to us to be an economy which is losing speed.
Speaker 2: James, we started this conversation and you were playing down
Speaker 2: the importance of politics in the United States. I just
Speaker 2: wonder how important the politics are, how relevant the elections
Speaker 2: are in the UK and France over the next several days, James,
Speaker 2: given that this list trust shark seems to have become
Speaker 2: a south imposed debt break across the continent, just how
Speaker 2: relevant is the politics?
Speaker 4: Yeah, and I think that's a really important point.
Speaker 6: John.
Speaker 4: I would note the same that I think there's been
Speaker 4: a wake up moment for UK politicians in particular, and
Speaker 4: I think it's good politics from the labor Party to
Speaker 4: essentially shackle themselves to the kind of fiscal responsibility that
Speaker 4: the Tories were campaigning on from an electioneering perspective that
Speaker 4: new to the Tories. Their chances of winning became virtually
Speaker 4: zero at that point, and ultimately the lessons will live
Speaker 4: somewhat long in the memory, at least for the next
Speaker 4: year or so, I would have thought. In Europe, it's
Speaker 4: almost constitutional. You have fiscal rules still within the European Union,
Speaker 4: conveniently ignored during the pandemic, but they're starting to hove
Speaker 4: interview again. Excessive deficit procedures certainly are going to be
Speaker 4: part of the future. What that means for European politics, however,
Speaker 4: is less easy to say, because you have this right
Speaker 4: of the extremes who really are ultimately skeptical with respect
Speaker 4: to Europe and the power of the European Commission, and
Speaker 4: of course that could set some of these countries on
Speaker 4: a collision course with Brussels near term. Therefore, there is
Speaker 4: a lot of event risk. But actually in Europe medium term,
Speaker 4: I think there are more structural risks to bond market pricing.
Speaker 1: So, in other words, by the dear treasuries.
Speaker 5: In longer term, treasuries.
Speaker 1: And political risk maybe a little bit less so over
Speaker 1: in euroregion, just because of some of these structural issues.
Speaker 5: Is that right?
Speaker 4: Well, certainly in the non core you know that Germany
Speaker 4: is the safe haven, that's the core rates market. We
Speaker 4: do not favor owning a lot of the spread risk
Speaker 4: here because we think there are a preponderance of downside
Speaker 4: risks and the market is not handicapping pricing those effectively
Speaker 4: at the moment. We'd like to see more spread before
Speaker 4: we'd be comfortable taking on some of those risks.
Speaker 2: Hey, James, going to catch up, sir as always James
Speaker 2: Act of Marlborough Investment Management, Adam London, Thomas sim As,
Speaker 2: a Jeffries mart mccomack a tad Bank. With this amount
Speaker 2: of table, thomast I start with you. Lets talk about that,
Speaker 2: don't worry about that, okay, talk about jobless claims. What
Speaker 2: do you think is sort of normal and what's worthy
Speaker 2: of worry as we start to creep a little bit higher?
Speaker 7: So normal is really hard to define, right, I mean,
Speaker 7: we've had many different states of normal in the last
Speaker 7: four years, and I think that on an almost daily basis,
Speaker 7: there's a new sort of remark of where normal is right,
Speaker 7: last few months, it seems like two hundred and thirty
Speaker 7: K is more or less normal, two twenty something like that.
Speaker 7: I think that that's probably a decent enough benchmark for
Speaker 7: the next few weeks at least, But as you get
Speaker 7: into the end of the year, we'll probably continue to
Speaker 7: creep a little bit higher. Right. If you go from
Speaker 7: two thirty to two fifty or two sixty over the
Speaker 7: course of six months, that's actually exactly what the Fed wants, right.
Speaker 7: Like the whole thing with like the you know, the
Speaker 7: the some rule and these these inflection points and whatnot,
Speaker 7: is that this concept that economic data you know, goes
Speaker 7: down on an elevator up on an escalator, right, Like
Speaker 7: there's momentum that becomes self reinforced. Sing If we in
Speaker 7: fact actually get this very gradual decline in you know,
Speaker 7: labor market pressure, I think that's actually quite a good outcome.
Speaker 5: Okay, let's build on that a little bit more.
Speaker 2: Because City were with us earlier and they said two
Speaker 2: sixties the dangers on for job as claims, they've got
Speaker 2: a different view on this. They just don't think that
Speaker 2: you stabilize at this lower level. You don't platt ou
Speaker 2: here that once this journey starts, it continues, right.
Speaker 7: And I mean, you know, you look at eighty five
Speaker 7: plus years of labor market data and it supports that fact,
Speaker 7: right that when when things start to go wrong, they
Speaker 7: get wronger and wronger.
Speaker 6: Right.
Speaker 7: But the issue is, I think we have a very
Speaker 7: different set of demographics that you know, is not consistent
Speaker 7: with any other real, you know, labor market episode we've
Speaker 7: had in the economy before. Right, we have a shrinking
Speaker 7: prime age labor force as a percentage of the overall population.
Speaker 7: We're ten plus years into baby boomers retiring at a
Speaker 7: rate of about ten thousand people per day. We still
Speaker 7: have about six more years of that to go. So there,
Speaker 7: you know, the labor market shortage. The scarcity became extremely
Speaker 7: acute after the pendemic was over. But that's not a
Speaker 7: temporary factor. That's actually a secular trend that's going to
Speaker 7: continue for years.
Speaker 5: Malk Is it different this time?
Speaker 6: I think what's important is really kind of considering the
Speaker 6: supply side of the economy as well along with the
Speaker 6: growth side. Like everyone is very focused on growth for
Speaker 6: the FED, but it's like we kind of drop the
Speaker 6: ball that inflation is still kind of the key metric
Speaker 6: and it's like what we do is we run strategies
Speaker 6: and we're trying to figure out what teams are driving
Speaker 6: the markets. Like everyone's talking about this, but this factor
Speaker 6: is what makes money, and no one's talking about that
Speaker 6: anymore because it's not as interesting. But a key thing
Speaker 6: is is if you look at currencies, they are trading
Speaker 6: more on inflation than growth. And if you run back
Speaker 6: tests on data surprises, consensus revisions, data strength, those things
Speaker 6: aren't working. So while it's interesting to kind of work
Speaker 6: through the data and say this is important, this one's
Speaker 6: driving the FED, at the end of the day, what's
Speaker 6: going to drive the FED in the next three months
Speaker 6: to September is inflation. So if inflation's hot next week,
Speaker 6: or if it's hot in the next month, or if
Speaker 6: it's one hot inflation report could kill the entire narrative
Speaker 6: that they will cut this year. So I think that's
Speaker 6: one of the important things to think about is what
Speaker 6: we tend to do from a market strategy point is
Speaker 6: kind of aggregate all the data, scale it compared to
Speaker 6: different countries and which country looks better. Right now, it's
Speaker 6: still very clear that US is slowing, but it's slowing
Speaker 6: from a very hot level, but it's still good and
Speaker 6: it's still better than most of the rest of the world.
Speaker 6: So I still think that's a key consideration that while
Speaker 6: we could move into this inflection point where we go
Speaker 6: from linear to nonlinear, and that's kind of how complex
Speaker 6: systems work, but if it is a linear slow down,
Speaker 6: you're just moving in a direction that markets are already
Speaker 6: prepared for an absolutely price for this year.
Speaker 1: So you don't think that there's a point at which
Speaker 1: the labor market becomes a check on the ultimate read
Speaker 1: that you say is inflation.
Speaker 6: If it's non linear, Yes, But I think the thing
Speaker 6: on the inflation side, as the drivers are coming from
Speaker 6: the supply side, demographics, geopolitics, the changing nature of technology,
Speaker 6: the pricing around those technologies. I think when you think
Speaker 6: about war and some of the things that we've had
Speaker 6: on the energy side, all the things that are happening
Speaker 6: on the supply side have been accelerating through the pandemic.
Speaker 6: But these are things that start in twenty ten. You know,
Speaker 6: if we kind of look at all the you know,
Speaker 6: if we look at like what is happening with globalization
Speaker 6: and what is happening and how that impacts national sovereignty,
Speaker 6: and politics, those things are all moving in a direction.
Speaker 6: Even think about immigration trends. All these things are potential
Speaker 6: drags on the supply side that makes inflation stickier over time,
Speaker 6: which has nothing to do with demand or growth. So
Speaker 6: I think those are things that are happening behind the background.
Speaker 6: The FED has no control over that they have to
Speaker 6: be cognitive of. And also in the next couple of months,
Speaker 6: we're going to see base effects also just push inflation
Speaker 6: higher just naturally from you know, the math of things
Speaker 6: moving around. So those are considerations. I know the market
Speaker 6: is really focused on the growth story, but we're still
Speaker 6: like really focused on the inflation side for the dollar,
Speaker 6: for the market, and for the Fed.
Speaker 5: Tom, Do you agree, yeah, more or less.
Speaker 7: I mean, you know, I think that our views on
Speaker 7: the supply side are very similar.
Speaker 1: You know.
Speaker 7: I've kind of been trying to you know and again
Speaker 7: sort of assessing new normal, like looking at what consumption
Speaker 7: patterns are looking at like and kind of understanding this
Speaker 7: dichotomy of you know, has versus have nuts in the economy.
Speaker 7: You know, I think that there's probably some dynamic where
Speaker 7: you know, we focus all this consumption pattern recognition on
Speaker 7: you know, people traveling entertainment, all these things that are
Speaker 7: really you know, services that are enjoyed by hire income households.
Speaker 4: Right.
Speaker 7: A lot of that happens in the second half of
Speaker 7: the year, right, So like while we've seen growth slow down,
Speaker 7: we could just have all of that activity kind of
Speaker 7: concentrate in the second half, and then we'll see the
Speaker 7: kind of logjam of supply not really being able to
Speaker 7: meet demand in certain sectors.
Speaker 2: Right.
Speaker 7: I think that in the service sector that's going to
Speaker 7: be something that we see consistently over time again for
Speaker 7: many many years. Certainly you see it in the housing sector.
Speaker 7: I mean, like that's probably the best example. I think
Speaker 7: that a lot of folks who've been more sanguine on
Speaker 7: inflation have been expecting that we're going to get some
Speaker 7: delivered disinflation from rent and the or and whatnot. We
Speaker 7: may get that for a short period of time, but
Speaker 7: at the end of the day, we're still very undersupplied
Speaker 7: with shelter, and I don't think that we're you know,
Speaker 7: you can consistently expect that that's going to be something
Speaker 7: that's relatively soft over time.
Speaker 2: Less complicate things, and I mean really complicate things. The
Speaker 2: Anhansis of Goldman with this to say in Centro Portugal.
Speaker 2: I imagine this will get picked up everywhere on Wall
Speaker 2: Street and political circles.
Speaker 5: Maybe much more so. This is what he had to say.
Speaker 2: The Trump proposals coming from the Donald Trump campaign could
Speaker 2: raise the average US tariff rate by sixteen percentage points
Speaker 2: to nearly twenty percent, which would be the highest in
Speaker 2: the post war period. So that's sort of what their
Speaker 2: base case is, and this is what they think the
Speaker 2: implications are for monetary policy hawkish to the tune of
Speaker 2: one hundred and thirty basis points, because the large hawkish
Speaker 2: inflation effect clearly outweighs the smaller dubbish growth effect. At Goldman,
Speaker 2: jan Hatzius is sort of modeling out the potential for
Speaker 2: something like five hikes from the FED based on policy
Speaker 2: from the Trump admin.
Speaker 5: What's your reaction to that?
Speaker 7: So my view has been that if the Fed were
Speaker 7: to have to hike again, they would have to hike
Speaker 7: something like five or six more times. Like one more
Speaker 7: hike wouldn't really do too much, right, If we're pricing
Speaker 7: in one hike, we should price in substantially more. I
Speaker 7: don't necessarily share the view that tariffs should be you know,
Speaker 7: should generate that sort of reaction. Remember even in twenty sixteen,
Speaker 7: twenty seventeen, when Trump was initially putting on his big
Speaker 7: tariffs against China, you know, Yellen's reaction was like, hey, look,
Speaker 7: tariffs increase of price level once, but they don't create
Speaker 7: like an upward slope of prices, right, so it may
Speaker 7: be needed to kind of, you know, maybe offset one
Speaker 7: vector of inflation. But I would be a I would
Speaker 7: be very surprised that Trump actually did imply it, you know,
Speaker 7: put in policy a tariff that was that high. And
Speaker 7: I would be equally surprised if a chair Pale would
Speaker 7: react that way.
Speaker 2: Well, there's a lot of scenario analysis taking place right now,
Speaker 2: Mark work with us. Let's cite that is the assumption,
Speaker 2: and let's cite those policies that delivered.
Speaker 5: Do you think that would be the reaction.
Speaker 6: Well, yeah, that's a very spicy proposal. I think part
Speaker 6: of it is that it's again two sided, like you
Speaker 6: have lots of inflation and the other thing is is
Speaker 6: you are taking away growth. So we are in goldilocks
Speaker 6: right now. Our macro vall models are basically at the
Speaker 6: lowest levels we've seen through the cycle. Carry trade kind
Speaker 6: of incrementally blowing up here or there. But Carrie does
Speaker 6: struggle when you start.
Speaker 5: To see volatility.
Speaker 6: But a big piece of that is if you have
Speaker 6: like essentially growth being taken away from China and Europe
Speaker 6: and even parts of the US, and then you have
Speaker 6: higher inflation, you have the Fed responding to that. The
Speaker 6: initial move is a much stronger dollar. It is a
Speaker 6: complete decimation of goldilocks and a move into a higher
Speaker 6: all environment. So I think the markets are not prepared
Speaker 6: for this at all. And I think that's again you
Speaker 6: come back to like what happened in the debate, and
Speaker 6: then you kind of look at we had the French
Speaker 6: elections over the weekend, which are important, but as soon
Speaker 6: as we got the Supreme Court ruling kind of coming
Speaker 6: out on Bloomberg dollar rallies. So we are like right
Speaker 6: back into the kind of silly season here where every
Speaker 6: headline related to a poll or who's happening? Is Trump leading?
Speaker 6: All these things are going to drive markets now at least,
Speaker 6: if not through the summer September, it's on. So if
Speaker 6: we move into that direction, just the thought or the
Speaker 6: uncertainty of the Fed having to reverse course and actually
Speaker 6: start hiking again will be very bad for risk markets
Speaker 6: either way.
Speaker 1: Tom, And this is something that we keep talking about.
Speaker 1: What does this mean in terms of what the neutral
Speaker 1: rate could potentially be, not just rate hikes, but just
Speaker 1: how far the FED can cut We were talking to Sneldasa,
Speaker 1: She's talking about four to four and a quarter percent.
Speaker 1: So even as we talk about the idea of a
Speaker 1: label market that's normalizing, there is a floor to how
Speaker 1: far they can go.
Speaker 5: Do you agree with that?
Speaker 6: I do.
Speaker 7: Actually, it's more or less right around where I think
Speaker 7: the terminal rate is going to end up, probably sometime
Speaker 7: towards the end of twenty twenty six. I think that
Speaker 7: it's it's something that FED really needs to be very
Speaker 7: careful about. You know, we see more research coming out,
Speaker 7: for instance from John Williams at the New York FED
Speaker 7: just put out another paper this morning saying that, you know,
Speaker 7: he still doesn't think that our star has moved very much,
Speaker 7: you know, I mean, I have to give some difference
Speaker 7: to him. He's spent probably more time than I've been
Speaker 7: alive studying this, so I can't really, you know, say
Speaker 7: that I know more than him.
Speaker 5: But I.
Speaker 7: Well, I d age myself like I like focus on
Speaker 7: me a little bit more so the so fun Yeah, yeah,
Speaker 7: I don't. I think that it's that easy to dismiss
Speaker 7: that we're in the old normal that you know, our
Speaker 7: star is still around two and a half percent. You know,
Speaker 7: it wasn't that long ago that the Fed still thought
Speaker 7: it was, you know, quite a bit higher. So I
Speaker 7: think that if we do get, for instance, another wave
Speaker 7: of terariffs, it really lowers potential growth, and then I
Speaker 7: would be willing to entertain the fact that perhaps we
Speaker 7: are moving to a lower rate environment overall, because it's
Speaker 7: functionally like a tax, right, Like as much as it's
Speaker 7: oh it's you know, tariffs are on the exporting countries.
Speaker 7: At the end of the day, it's paid by the consumer,
Speaker 7: and it's just a dead weight loss for them, right
Speaker 7: so they'll have to take that consumption out of something else.
Speaker 7: That just lowers the sort of dynamism of the economy,
Speaker 7: and I would think probably lowers the potential interest rates.
Speaker 1: Mark Given all of this, why would anyone short the dollar?
Speaker 1: Why wouldn't everybody be as long as the dollars they
Speaker 1: possibly could?
Speaker 5: Right now, that's my view.
Speaker 6: I would agree. It's you have like just on the
Speaker 6: factors that we run. The dollar is ranked number one
Speaker 6: in our trading baskets on growth, on risk, correlations on
Speaker 6: inflation and carry, and so in this environment, like the
Speaker 6: one thing, if you look at correlations of the dollar
Speaker 6: to like risk models pre COVID, it wobbled, sometimes it
Speaker 6: was cyclical, sometimes it was a safe haven kind of
Speaker 6: moved around. Since the pandemic, that correlation has not gone
Speaker 6: below zero. So essentially, when we're risk off, the dollar
Speaker 6: is the only safe haven. The end is no longer
Speaker 6: safe haven, Swiss ranks no longer safe haven. They are
Speaker 6: cyclical currencies. So I think in this environment, especially if
Speaker 6: we are focused on inflation or if we are focused
Speaker 6: on growth, the fact the other interesting thing is the
Speaker 6: only other places that offered yield are the places where
Speaker 6: everyone's been positioned in FX for two years. So you
Speaker 6: bought the commodity terms of trade story, you bought the
Speaker 6: emerging markets that were the sellers of those, they were
Speaker 6: also the ones that offered the carry. But Latin America
Speaker 6: is no longer kind of immune from all of this,
Speaker 6: so I would say, yeah. The other thing is is
Speaker 6: the dollar represents at least sixty two percent more yield
Speaker 6: pickup than all the currencies that we track. So to me,
Speaker 6: this is a I wouldn't say a no brainer, because
Speaker 6: that's you know, kind of that's the last thing you
Speaker 6: should say. But I don't see the upside for the
Speaker 6: euro or G ten currencies in the second half of
Speaker 6: the year. But I feel like this is broad dollar.
Speaker 6: It's not our v markets anymore. You should just be
Speaker 6: long with the dollar into the second half of the year.
Speaker 2: Mar Ma Kilmacatini, Mark, good to see you, a longside
Speaker 2: Thomas Simon's of Jeffreesy major Biden donor Charles Myers of
Speaker 2: Signum Global Advisors writing this, I'm all in on Biden.
Speaker 2: His performance in the debate was weak, but his performance
Speaker 2: as president for three and a half years has been
Speaker 2: very strong. Charles and police to say, judge, just now
Speaker 2: for more. Child's great to catch up with you, sir.
Speaker 2: As you know, for many people after Thursday night, it's
Speaker 2: not about the last three and a half years, it's
Speaker 2: about the next four and a half years.
Speaker 5: And let's run with the Pelosi question.
Speaker 2: How do we know that was just a bad episode
Speaker 2: and not just a condition.
Speaker 3: Yeah, Look, I think the president and his team have
Speaker 3: a lot of work to do to get him out there,
Speaker 3: to show the American people that he is fit, that
Speaker 3: he is alert, and that he can not only run
Speaker 3: the rest of this campaign, but that he can govern
Speaker 3: the country for another four years. So you know, again,
Speaker 3: I think that they do have work to do. I
Speaker 3: think what Nancy said is absolutely accurate, and the things
Speaker 3: are moving a little faster than I expected. I thought
Speaker 3: they'd have at least truth we were telling our clients
Speaker 3: that have two or three weeks of polling before they
Speaker 3: would have to make a decision. I thought, this is
Speaker 3: a personal opinion. I think they've got probably another five
Speaker 3: to six days. I think that things are moving much
Speaker 3: faster against the president and we'll see. But they are
Speaker 3: getting him out this weekend into the swing States, and
Speaker 3: we'll see how he does. On the ABC interview with Stepanopolis.
Speaker 2: What do you think Chelsea needs to accomplish in those
Speaker 2: five days? What does he need to do?
Speaker 3: I think he needs to be unscripted and show people
Speaker 3: that he is fully there and can make decisions interact
Speaker 3: with people. I was with him on Friday night in
Speaker 3: New York one on one at a big event, but
Speaker 3: then had about a three, three or four minute interaction
Speaker 3: with him one on one, he was very together, very alert,
Speaker 3: you know. So he needs to show that to the
Speaker 3: American people instead of this perception that has been lingering
Speaker 3: of him host debate of someone that is, you know,
Speaker 3: really out of it Charles.
Speaker 1: Isn't the damage done given the fact that people are
Speaker 1: really questioning whether they're being told the truth, especially from
Speaker 1: some of his advisors. And you have a number of
Speaker 1: Democratic Congressmen, including one from Texas, now verbally saying that
Speaker 1: they hope he steps down. Does that mean that there
Speaker 1: already has been too much to shake his re election chances.
Speaker 5: Yeah.
Speaker 3: So I'd say a couple of things. One, the campaign
Speaker 3: expected polling, you know, to take a hit, and you
Speaker 3: know the puck stuff that was leaked. We you know,
Speaker 3: it was pretty damaging. But again, I think you need
Speaker 3: to see more than just one poll. You need to
Speaker 3: see a set of polls over a week or so
Speaker 3: and see if they can turn it around. But yes,
Speaker 3: I think a lot of damage was done. I'm fully
Speaker 3: on board with that, I understand it. So far, only
Speaker 3: one member of Congress, sitting member of Congress, has called
Speaker 3: for him to step down. I do think that could
Speaker 3: be the next shoe to fall, though, meaning I'm you know,
Speaker 3: there's reporting this morning that there's potentially forty additional elected
Speaker 3: Democrats that are going to come out and call for
Speaker 3: him to step down. That is probably the most serious
Speaker 3: issue that in addition to further deterioration in polling, because
Speaker 3: once you've got you know, elected members of your own
Speaker 3: party asking you to step aside, it's hard to recover
Speaker 3: from that.
Speaker 1: There's also a question of who potentially would take his place,
Speaker 1: and this has been one of the arguments from some
Speaker 1: people who are saying that, you know, he's the best shot,
Speaker 1: sort of to your point, because the other potential candidates,
Speaker 1: whether it's Kamala Harris, whether it's Gretchen Whitmore, whether it's
Speaker 1: Gavin Newsom, kind of pulls similarly in a head to
Speaker 1: head matchup with Donald Trump. Do you feel like there
Speaker 1: is sufficient polling to really make that decision, given the
Speaker 1: fact that some of it isn't that extensive.
Speaker 3: Pulling to make a decision on who should replace him
Speaker 3: or if anyone should replace him both, Okay, so yes,
Speaker 3: so on on you know, Plan B. Plan B is
Speaker 3: absolutely the vice president. I'm here to tell everybody that
Speaker 3: and that she may not be the favorite of every donor,
Speaker 3: you know most You know, a lot of donors come
Speaker 3: from financial services, and we tend to be a center
Speaker 3: right industry. But you know, any notion that the White House,
Speaker 3: the DNC, or the Democratic Congressional leadership is just going
Speaker 3: to overlook the vice president and go to some other
Speaker 3: candidate or have an open, contested convention, I think is
Speaker 3: a misread of the situation. The whole point of the
Speaker 3: vice president is to step in in the case of death, incapacitation, resignation,
Speaker 3: or in this case, the president stepping aside, And I
Speaker 3: can tell you they're going to try to do everything
Speaker 3: they can to avoid a contested convention. Given what happened
Speaker 3: in nineteen sixty eight, lbj's VP did ultimately win that nomination.
Speaker 3: He was so weakened they lost the White House to
Speaker 3: Richard Nixon. I think that if Biden steps aside, they
Speaker 3: will try to engineer it so the Kamala the vice
Speaker 3: president ultimately locks up the nomination.
Speaker 2: At ChEls, I think it's worth pointing out to our
Speaker 2: audience that you're wearing two hats in this conversation, as
Speaker 2: both a donor and an individual running a global advisory firm,
Speaker 2: And forgive me for saying this, and I hope you
Speaker 2: take this to the spirit in which it's intended. When
Speaker 2: you said you had a five minute exchange with him,
Speaker 2: when it's behind closed doors and you tell people that
Speaker 2: his sharp coj and these are things we've heard a
Speaker 2: million times. And then we all see him in public
Speaker 2: and not just Thursday night, for a length of time
Speaker 2: now and we see something else. And I just wonder
Speaker 2: how much tension there is between you as a donor
Speaker 2: and the opinion you offer on a program like this
Speaker 2: and the kind of advice that you've given too clients
Speaker 2: right now.
Speaker 3: Yeah, so I'm giving you the same advice. You know,
Speaker 3: we've had a base case that Biden would win. We
Speaker 3: haven't changed that yet because he's still in the race
Speaker 3: and you know, Thursday was less than a week ago.
Speaker 3: So you know, at the firm, we don't whip our
Speaker 3: calls around. We want to, you know, try to look
Speaker 3: at data and make a good assessment. The reason we
Speaker 3: thought he would the reason we believe you would win
Speaker 3: is he'd already beaten him once in twenty twenty. He's
Speaker 3: got powered the incumbency, and we think as a firm,
Speaker 3: we will see higher than average turnout by both women
Speaker 3: and the Democratic based women because of abortion rights and
Speaker 3: Democrats because Trump's on the ballot now. I think the
Speaker 3: race has changed fundamentally since Thursday night. Absolutely, we want
Speaker 3: to see if he's going to stay in the race
Speaker 3: before we make any additional call from here. So I'm
Speaker 3: sitting here both as a donor watching this very closely,
Speaker 3: but also as the head of a firm that advises
Speaker 3: clients on what to do. I think it's hard to
Speaker 3: make a decision till we know to we have a
Speaker 3: little more clarity on what the president intends to do.
Speaker 3: And I think, as I said, we were telling clients
Speaker 3: yesterday on a call that we thought there was three
Speaker 3: weeks for the White House or for the Biden hairs campaign.
Speaker 3: I think they got five or six days to make
Speaker 3: a decision.
Speaker 2: Let's lean on the last just a little bit. Your
Speaker 2: position as an advisor, can we just lean on that
Speaker 2: a little bit more. I want to understand from your perspective,
Speaker 2: Traditionally the accumbent would have some advantages. I just wonder
Speaker 2: if it's actually a disadvantage for Biden. If you think
Speaker 2: about how twenty twenty played out. He got to make
Speaker 2: this a referendum on the former president. This feels like
Speaker 2: a referendum on him, and not what he's delivered in
Speaker 2: three and a half years, but whether he can last
Speaker 2: four whether he can actually keep this job for that long.
Speaker 2: How do they change that?
Speaker 3: Yeah, I think that's going to be the hardest part
Speaker 3: of the narrative to change, because I think up until Thursday,
Speaker 3: this in fact, had been still partly a referendum on
Speaker 3: the former president, on Trump, you know, as opposed to
Speaker 3: the sitting president. Now I think it's really a referendum
Speaker 3: on can the sitting president not only you know, campaign
Speaker 3: for the next four months, but Kenny serve for four
Speaker 3: more years. And relatedly, you know what if people think
Speaker 3: of the vice president. So again, I think in politics
Speaker 3: everything is fair. The race changed fundamentally on Thursday night,
Speaker 3: And you know, as I said, I think we're going
Speaker 3: to find out in the next four to five days
Speaker 3: whether the president is still in this race. I don't
Speaker 3: think he's got three weeks.
Speaker 1: The dam is breaking, as John said, when it looked
Speaker 1: when it comes to different Democratic Congress members, when it
Speaker 1: comes to advisors, when it comes to people who are
Speaker 1: starting to leak their feelings to a number of different outlets.
Speaker 1: Is the dam breaking within the inner circle of Joe
Speaker 1: Biden that we keep hearing about that keep saying keep
Speaker 1: going run.
Speaker 3: So No, I'm not part of the inner circle, but
Speaker 3: I would from everything I'm seeing and picking up, is that. No,
Speaker 3: the inner circle, which is his family and his closest
Speaker 3: advisors and the campaign team who've been with him a
Speaker 3: very long time, still absolutely believe he should keep fighting.
Speaker 3: You know, again, this is a man who's dedicated his
Speaker 3: entire life to public service and reached the pinnacle of
Speaker 3: world power. To drop out after a really bad debate
Speaker 3: or a terrible stumble on the campaign trail, it would
Speaker 3: be highly unlikely. By the way, I wouldn't advise any
Speaker 3: politician to drop out after that. You know, there's always
Speaker 3: a chance to turn things around in a campaign, and
Speaker 3: they're trying very hard. It's just that, again, the pressure
Speaker 3: is building faster on him to drop out of the race,
Speaker 3: and I think that that's probably been a bit of
Speaker 3: a surprise of the campaign, and I think we will
Speaker 3: see more electeds coming out saying he needs to And
Speaker 3: the biggest risk in a way is his liability down
Speaker 3: ballot right with elected Democrats in vulnerable seats both in
Speaker 3: the House and the Senate, in really tough races. That's
Speaker 3: where we're hearing. And I'm hearing the most pressure and
Speaker 3: much much more panic actually than amongst the donors.
Speaker 2: I've got thirty seconds left on the clock, Childs, just
Speaker 2: to fit this in. Do you think people are underestimating
Speaker 2: Kamala Harris? It's almost becoming jesuit. Do you think she
Speaker 2: can win them?
Speaker 3: Oh? Absolutely, Look, you know, Kamala Harris has three advantages. One,
Speaker 3: she'll be totally underestimated in politics. Having low expectations is
Speaker 3: one of the greatest advantages you could have. Secondly, she
Speaker 3: gets all the Biden Harris money, which is not able
Speaker 3: to be transferred to any other candidate, so she gets
Speaker 3: the war chest. She'll be very well funded. Third, look
Speaker 3: at her approve we're writing with Democrats eighty four percent.
Speaker 3: She's much more popular within the president with young voters,
Speaker 3: She's very popular with black voters, and she'll help drive
Speaker 3: women turn out. By women, I think people will totally
Speaker 3: underestimate the Vice president. I put my money on her.
Speaker 2: Let's do this against Sir Childs. Thank you, Sir Chiles.
Speaker 2: Master Signum Global. This is the Bloomberg Sevenants podcast, bring
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