1 00:00:02,400 --> 00:00:06,720 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:11,920 --> 00:00:16,320 Speaker 2: This is the Bloomberg Surveillance Podcast. Catch us live weekdays 3 00:00:16,320 --> 00:00:19,600 Speaker 2: at seven am Eastern on Apple car Player, Android Auto 4 00:00:19,720 --> 00:00:23,080 Speaker 2: with the Bloomberg Business App. Listen on demand wherever you 5 00:00:23,120 --> 00:00:26,360 Speaker 2: get your podcasts, or watch us live on YouTube. 6 00:00:26,640 --> 00:00:28,640 Speaker 3: I think one of the big changes for twenty twenty 7 00:00:28,680 --> 00:00:32,440 Speaker 3: five for investors is we're gonna have a new administration here, 8 00:00:33,080 --> 00:00:35,479 Speaker 3: We're gonna have public in Congress, and what does that 9 00:00:35,520 --> 00:00:39,000 Speaker 3: mean for policy? What does that mean for markets? Our 10 00:00:39,040 --> 00:00:40,560 Speaker 3: next guest maybe can help us think about that a 11 00:00:40,600 --> 00:00:42,320 Speaker 3: little bit, amongst other topics. 12 00:00:42,360 --> 00:00:42,920 Speaker 4: Sarah Hunt. 13 00:00:43,040 --> 00:00:46,720 Speaker 3: She's a partner chief market strategist at Alpine Saxon Woods. Sarah, 14 00:00:46,760 --> 00:00:48,720 Speaker 3: thanks so much for joining us here in our studio. 15 00:00:49,159 --> 00:00:51,280 Speaker 3: When you and your team woke up the day after 16 00:00:51,440 --> 00:00:54,840 Speaker 3: the election in November, did you change your outlook or 17 00:00:54,920 --> 00:00:57,400 Speaker 3: think differently about twenty twenty five at all? 18 00:00:57,960 --> 00:01:00,400 Speaker 5: I think we definitely got a lot of incoming from 19 00:01:00,480 --> 00:01:02,240 Speaker 5: clients about what that was going to mean and what 20 00:01:02,280 --> 00:01:04,360 Speaker 5: was that going to mean for markets and their portfolios. 21 00:01:04,440 --> 00:01:06,959 Speaker 6: I think clearly the equity. 22 00:01:06,520 --> 00:01:09,720 Speaker 5: Markets took that as a positive signal and in terms 23 00:01:09,800 --> 00:01:11,720 Speaker 5: of what they think they might get out of a 24 00:01:11,720 --> 00:01:14,360 Speaker 5: new administration. I think what's happened in the last month 25 00:01:14,440 --> 00:01:16,039 Speaker 5: is that started to temper a little bit. I think 26 00:01:16,040 --> 00:01:18,720 Speaker 5: you saw, with both the Fed becoming more hawkish and 27 00:01:18,720 --> 00:01:21,160 Speaker 5: the fight over the cr that it might not be 28 00:01:21,240 --> 00:01:23,480 Speaker 5: so easy to get as much done as people thought 29 00:01:23,560 --> 00:01:24,959 Speaker 5: they could get done out of the gate. 30 00:01:25,240 --> 00:01:26,199 Speaker 6: So the question then. 31 00:01:26,200 --> 00:01:28,520 Speaker 5: Becomes, how is that going to play out and to 32 00:01:28,560 --> 00:01:30,840 Speaker 5: what extent do we have to think about that in 33 00:01:30,840 --> 00:01:32,800 Speaker 5: the way of positioning. But it wasn't like a major 34 00:01:32,840 --> 00:01:34,919 Speaker 5: positioning shift that happened right after the election. 35 00:01:35,080 --> 00:01:36,959 Speaker 7: I know we'll talk about the Federal Reserve a little 36 00:01:36,959 --> 00:01:38,920 Speaker 7: bit in a minute, but I want to pick up 37 00:01:38,920 --> 00:01:41,039 Speaker 7: on something you said there, which is what happened with 38 00:01:41,080 --> 00:01:44,200 Speaker 7: the Continuing Resolution And there were so many odd dynamics 39 00:01:44,200 --> 00:01:46,319 Speaker 7: that play there. Chief among them, perhaps you have a 40 00:01:46,360 --> 00:01:49,080 Speaker 7: president elect who was kind of very actively involved in 41 00:01:49,120 --> 00:01:52,360 Speaker 7: that debate. In that conversation, what did that tell you 42 00:01:52,400 --> 00:01:54,880 Speaker 7: about what these next four years are likely to be? 43 00:01:55,000 --> 00:01:55,080 Speaker 5: Like? 44 00:01:55,120 --> 00:01:57,160 Speaker 7: Are you are you expecting kind of a redux of 45 00:01:57,200 --> 00:02:00,080 Speaker 7: his first term in office or do you feel like 46 00:02:00,120 --> 00:02:01,800 Speaker 7: you have a playbook from that that's going to make 47 00:02:02,080 --> 00:02:04,080 Speaker 7: navigating those next four years a little easier. 48 00:02:04,320 --> 00:02:06,560 Speaker 5: I'm not sure that there's a true playbook from the 49 00:02:06,640 --> 00:02:09,040 Speaker 5: first administration, just because there was a lot of chaos 50 00:02:09,080 --> 00:02:11,400 Speaker 5: going on then too, except maybe the chaos is part 51 00:02:11,440 --> 00:02:13,919 Speaker 5: of that. But I would say that what that cr 52 00:02:14,040 --> 00:02:18,440 Speaker 5: fight taught showed us with clarity was you don't have 53 00:02:18,600 --> 00:02:21,720 Speaker 5: a unified party on a lot of despite the majority, 54 00:02:22,000 --> 00:02:24,079 Speaker 5: despite the majority in Congress, which is there was some 55 00:02:24,120 --> 00:02:26,480 Speaker 5: concern that a majority, right, but it's a very slight majority, 56 00:02:26,600 --> 00:02:28,800 Speaker 5: especially in the House, and it doesn't seem to be 57 00:02:28,840 --> 00:02:31,480 Speaker 5: particularly unified. And this seems to be a theme on 58 00:02:31,560 --> 00:02:34,400 Speaker 5: the Republican side that the Democrats have a better ability 59 00:02:34,400 --> 00:02:38,000 Speaker 5: to unify than the Republicans do, and they votes well, 60 00:02:38,520 --> 00:02:40,560 Speaker 5: they can count votes, and they can get those votes together, 61 00:02:40,600 --> 00:02:42,560 Speaker 5: and they can and they can get people to stay 62 00:02:42,600 --> 00:02:45,680 Speaker 5: in one place, whereas it's sort of like hurting cats 63 00:02:45,680 --> 00:02:47,520 Speaker 5: in the Republican side, and that doesn't seem to be 64 00:02:47,840 --> 00:02:49,519 Speaker 5: It seems to be an issue if what you're hoping 65 00:02:49,520 --> 00:02:51,760 Speaker 5: for is an immediate policy response right out of the gate. 66 00:02:52,160 --> 00:02:54,960 Speaker 3: I guess we don't know a whole lot about the 67 00:02:55,000 --> 00:02:57,760 Speaker 3: incoming Trump administration in their economic policies. I guess what 68 00:02:57,800 --> 00:03:03,320 Speaker 3: we do know is tariffs, some of their immigration policies, 69 00:03:03,800 --> 00:03:08,840 Speaker 3: and a lot of folks are concerned that. 70 00:03:06,040 --> 00:03:09,239 Speaker 4: That we do know could be inflationary. Is that something 71 00:03:09,280 --> 00:03:09,880 Speaker 4: that concerns you. 72 00:03:10,120 --> 00:03:12,560 Speaker 5: I think it's definitely part of the questions that need 73 00:03:12,600 --> 00:03:14,320 Speaker 5: to be answered in twenty twenty five, and it's going 74 00:03:14,360 --> 00:03:15,840 Speaker 5: to be part of the playbook. And the question is 75 00:03:15,880 --> 00:03:18,200 Speaker 5: going to be do these things get enacted to the 76 00:03:18,240 --> 00:03:20,680 Speaker 5: extent that they're being discussed right now? Can things move 77 00:03:20,720 --> 00:03:23,240 Speaker 5: again as quickly as people thought they would? And do 78 00:03:23,280 --> 00:03:26,799 Speaker 5: we have if we change the immigration policy from a 79 00:03:26,840 --> 00:03:28,920 Speaker 5: basically an open door to a less open door and 80 00:03:28,960 --> 00:03:31,960 Speaker 5: we start deporting people, does that push wages up? And 81 00:03:32,000 --> 00:03:33,600 Speaker 5: I don't think we know the answer to that yet. 82 00:03:33,600 --> 00:03:35,880 Speaker 5: But we also are seeing a big strain on resources 83 00:03:36,160 --> 00:03:38,160 Speaker 5: because of people that are here, So does that balance 84 00:03:38,200 --> 00:03:38,920 Speaker 5: itself out at all? 85 00:03:38,960 --> 00:03:40,240 Speaker 6: I think it's unclear at the moment. 86 00:03:40,400 --> 00:03:42,400 Speaker 7: You mentioned the calls you got from clients after the election. 87 00:03:42,400 --> 00:03:44,800 Speaker 7: Imagine there's some calls just on this point sort of 88 00:03:44,840 --> 00:03:47,960 Speaker 7: what those potential policy changes might mean. And we heard 89 00:03:48,000 --> 00:03:49,800 Speaker 7: from the Fed char to room Powell that he and 90 00:03:49,880 --> 00:03:53,840 Speaker 7: his colleagues are now beginning to entertain various counterfactuals. What 91 00:03:53,960 --> 00:03:55,840 Speaker 7: might happen if this trade policy comes through or that, 92 00:03:55,960 --> 00:03:59,920 Speaker 7: or if the immigration policy is implemented. Dovetail that with 93 00:04:00,040 --> 00:04:02,240 Speaker 7: analysis that you're doing, how do you think through all 94 00:04:02,280 --> 00:04:05,360 Speaker 7: of those potential eventualities. How much is that preoccupying you? 95 00:04:05,400 --> 00:04:07,880 Speaker 7: And Paul bring up the fact that some of these 96 00:04:07,920 --> 00:04:10,920 Speaker 7: things are inherently inflationary, how do you sort of think 97 00:04:10,960 --> 00:04:12,920 Speaker 7: through what that might mean for portfolios? 98 00:04:13,120 --> 00:04:16,240 Speaker 5: So from an equity market perspective, the biggest issue is 99 00:04:16,279 --> 00:04:18,760 Speaker 5: going to be earnings growth and margins, and to the 100 00:04:18,800 --> 00:04:21,080 Speaker 5: extent that any of those things are impacting that in 101 00:04:21,120 --> 00:04:25,720 Speaker 5: a negative way, that pulls some of the positive expectations 102 00:04:25,760 --> 00:04:28,839 Speaker 5: that people have going into earnings for this year, it 103 00:04:28,880 --> 00:04:30,640 Speaker 5: can take some of that away. We don't know what 104 00:04:30,680 --> 00:04:33,120 Speaker 5: those puts in takes are entirely yet, but I think 105 00:04:33,200 --> 00:04:35,919 Speaker 5: that to the extent that there are some concerns that 106 00:04:35,960 --> 00:04:37,640 Speaker 5: those things will happen, you have to look at your 107 00:04:37,640 --> 00:04:40,560 Speaker 5: earnings forecast more carefully, and you have to be very 108 00:04:40,600 --> 00:04:43,440 Speaker 5: careful about your balance sheets and where I'm looking at 109 00:04:43,520 --> 00:04:45,920 Speaker 5: multiples because I think that you've got a market that's 110 00:04:45,960 --> 00:04:48,720 Speaker 5: also at quite elevated levels relatively speaking to history. 111 00:04:48,960 --> 00:04:52,039 Speaker 3: And you talk about the elevated aspect are the levels 112 00:04:52,080 --> 00:04:54,800 Speaker 3: of these markets. It really puts a lot of pressure, 113 00:04:54,800 --> 00:04:57,200 Speaker 3: I guess on earnings, and I think the earnings outlook 114 00:04:57,240 --> 00:05:00,560 Speaker 3: for twenty twenty five is, you know, pretty aggressive. I 115 00:05:00,600 --> 00:05:03,800 Speaker 3: would argue, Man, I'm hearing twelve thirteen percent type of 116 00:05:03,880 --> 00:05:04,720 Speaker 3: earnings growth. 117 00:05:05,600 --> 00:05:07,760 Speaker 4: Is that a material risk? Do you think to this 118 00:05:07,839 --> 00:05:09,640 Speaker 4: market or do you feel comfortable with those kinds of orders. 119 00:05:09,800 --> 00:05:11,800 Speaker 5: So I would have argued that the expectations for this 120 00:05:11,920 --> 00:05:14,040 Speaker 5: year were somewhat aggressive last year, and yet we. 121 00:05:14,080 --> 00:05:15,839 Speaker 6: Managed to get through that fairly well. 122 00:05:15,839 --> 00:05:19,160 Speaker 5: And I think this is where having those big themes 123 00:05:19,279 --> 00:05:22,560 Speaker 5: like both AI and now quantum computing help you, because. 124 00:05:22,240 --> 00:05:24,120 Speaker 6: The AI came through this year. 125 00:05:24,360 --> 00:05:26,479 Speaker 5: If you hadn't seen that come through in earnings, and 126 00:05:26,520 --> 00:05:28,320 Speaker 5: you hadn't seen the growth, and you hadn't seen non 127 00:05:28,400 --> 00:05:31,679 Speaker 5: tech companies start picking up AI and using it, that says, okay, 128 00:05:31,720 --> 00:05:33,200 Speaker 5: we've got more spending in that area. 129 00:05:33,320 --> 00:05:35,760 Speaker 6: So if you've got a driver like that, it's very helpful. 130 00:05:35,960 --> 00:05:38,440 Speaker 5: Whether or not that is taken apart by some of 131 00:05:38,440 --> 00:05:40,440 Speaker 5: the other things we were just talking about remains to 132 00:05:40,440 --> 00:05:40,840 Speaker 5: be seen. 133 00:05:40,839 --> 00:05:42,679 Speaker 6: But the thematic goal is there. 134 00:05:43,480 --> 00:05:44,279 Speaker 4: Does that continue? 135 00:05:44,320 --> 00:05:46,520 Speaker 7: I mean, we have focused so much on AI and 136 00:05:46,560 --> 00:05:48,800 Speaker 7: its prospects, not just this last year, but the year 137 00:05:48,839 --> 00:05:51,720 Speaker 7: before that as well, and what it might do, how 138 00:05:51,720 --> 00:05:53,680 Speaker 7: it could be implemented by companies. You say some have 139 00:05:53,960 --> 00:05:56,279 Speaker 7: been using it so far. Where do you see that 140 00:05:56,360 --> 00:05:58,560 Speaker 7: story going as we enter into the new year. Is 141 00:05:58,600 --> 00:06:00,640 Speaker 7: that still the overarching narrative when we look a kind 142 00:06:00,640 --> 00:06:04,000 Speaker 7: of thematic stories for the market, or is it tapering 143 00:06:04,080 --> 00:06:05,760 Speaker 7: off a little bit or is it changing? How do 144 00:06:05,800 --> 00:06:07,880 Speaker 7: you see it progressing here in the new year. 145 00:06:08,000 --> 00:06:10,400 Speaker 5: I think it's changing in terms of where that spend 146 00:06:10,480 --> 00:06:12,800 Speaker 5: is coming from. Right, So the semiconductor industry, which was 147 00:06:12,880 --> 00:06:14,840 Speaker 5: driving a lot of that because the spend was coming 148 00:06:14,839 --> 00:06:17,240 Speaker 5: from chips, has had a rougher time in the second 149 00:06:17,279 --> 00:06:19,400 Speaker 5: half of the year, but the software industries have started 150 00:06:19,440 --> 00:06:23,040 Speaker 5: to do better. So the implementation now and how companies 151 00:06:23,080 --> 00:06:25,400 Speaker 5: can use it is becoming as important as building the 152 00:06:25,400 --> 00:06:27,680 Speaker 5: backbone in the infrastructure. And the backbone and the infrastructure, 153 00:06:27,680 --> 00:06:29,920 Speaker 5: we're on the semiconductor side, so if you look at 154 00:06:29,920 --> 00:06:32,400 Speaker 5: where that's it's spreading out in technology, which is a 155 00:06:32,440 --> 00:06:34,040 Speaker 5: benefit because again, where am I going to get my 156 00:06:34,040 --> 00:06:35,800 Speaker 5: earnings growth? It better be coming from more than just 157 00:06:35,800 --> 00:06:37,880 Speaker 5: in VideA and I think you're starting to see that, 158 00:06:38,000 --> 00:06:40,279 Speaker 5: and the fact that companies can use it to help 159 00:06:40,320 --> 00:06:43,640 Speaker 5: their own margins is something that is an important part 160 00:06:43,640 --> 00:06:46,400 Speaker 5: of that spend going forward fixed income. 161 00:06:47,600 --> 00:06:49,839 Speaker 3: I'm sitting on my tiear treasury four point three five percent. 162 00:06:49,839 --> 00:06:51,159 Speaker 3: I don't feel like I need to be a hero 163 00:06:51,240 --> 00:06:52,080 Speaker 3: and take credit risk. 164 00:06:52,400 --> 00:06:52,920 Speaker 4: What do you think? 165 00:06:53,360 --> 00:06:56,480 Speaker 5: I think the fact that you've got spreads compressed so much, 166 00:06:56,640 --> 00:06:58,360 Speaker 5: I don't necessarily think you want to take a bunch 167 00:06:58,360 --> 00:07:00,159 Speaker 5: of credit risk here either. And I think that the 168 00:07:00,560 --> 00:07:02,800 Speaker 5: discussion now about what's going to happen with the FED 169 00:07:02,839 --> 00:07:05,680 Speaker 5: and how and how much rates are going to come 170 00:07:05,720 --> 00:07:07,599 Speaker 5: down again this year is now up in the air 171 00:07:07,640 --> 00:07:09,960 Speaker 5: post that last meeting, which was much more hawkish. So 172 00:07:10,160 --> 00:07:12,000 Speaker 5: whether or not, I mean, the market has been absolutely 173 00:07:12,040 --> 00:07:15,200 Speaker 5: wrong about their forecasts in terms of warp how many 174 00:07:15,280 --> 00:07:16,520 Speaker 5: rates cuts we were going to get. 175 00:07:16,920 --> 00:07:19,520 Speaker 6: That's been shifting around, But yeah, looking at. 176 00:07:19,360 --> 00:07:22,000 Speaker 5: That on a two year there's that's a reasonable outcome 177 00:07:22,120 --> 00:07:24,120 Speaker 5: at the moment, given that we don't know where fixed 178 00:07:24,120 --> 00:07:24,840 Speaker 5: thing come is going to go. 179 00:07:25,480 --> 00:07:28,960 Speaker 3: Sarah, unlike Tom Keen who owns the mag seven, I 180 00:07:29,120 --> 00:07:31,280 Speaker 3: missed that trade. 181 00:07:32,040 --> 00:07:34,440 Speaker 4: Do I chase that trade here? In twenty twenty five. 182 00:07:34,560 --> 00:07:36,880 Speaker 3: Or do I try to find some value, whether it's 183 00:07:37,360 --> 00:07:40,080 Speaker 3: financials or consumer or energy. 184 00:07:40,640 --> 00:07:42,720 Speaker 4: How are you talking to your clients about twenty twenty five? 185 00:07:43,200 --> 00:07:45,320 Speaker 5: So I would say that that's one of those questions, 186 00:07:45,400 --> 00:07:47,520 Speaker 5: the answer to which is yes, which is yes, I 187 00:07:47,560 --> 00:07:49,240 Speaker 5: have to have some tech. Yes, I'm going to look 188 00:07:49,240 --> 00:07:51,880 Speaker 5: for some value in other places. It's difficult with the 189 00:07:51,880 --> 00:07:54,920 Speaker 5: tax docs specifically, because every time you say, oh, they 190 00:07:55,000 --> 00:07:57,360 Speaker 5: look expensive, I want to wait for a pullback. Sometimes 191 00:07:57,440 --> 00:07:59,560 Speaker 5: you get a small pullback, sometimes you don't, but it's 192 00:07:59,560 --> 00:08:02,320 Speaker 5: really hard to jump on it when you do psychologically, 193 00:08:02,360 --> 00:08:04,640 Speaker 5: just because it's the concern is if it's going down, 194 00:08:04,760 --> 00:08:05,640 Speaker 5: is going to keep going down? 195 00:08:05,720 --> 00:08:05,920 Speaker 8: Right? 196 00:08:06,160 --> 00:08:08,720 Speaker 5: So I think that if you are tempered in that 197 00:08:08,880 --> 00:08:10,600 Speaker 5: and you say, okay, I need to start with some 198 00:08:10,720 --> 00:08:12,800 Speaker 5: you can start positions. If you're going from zero, right, 199 00:08:12,840 --> 00:08:14,600 Speaker 5: you start positions and you sort of see how things 200 00:08:14,640 --> 00:08:16,400 Speaker 5: go and you give it a couple of months. But 201 00:08:16,440 --> 00:08:17,840 Speaker 5: I think you have to look at both sides of 202 00:08:17,840 --> 00:08:19,920 Speaker 5: the equation, because I don't think that tech is going 203 00:08:20,000 --> 00:08:21,960 Speaker 5: to be one of those areas that people are willing 204 00:08:22,000 --> 00:08:24,120 Speaker 5: to rotate out of anytime that we can see in 205 00:08:24,120 --> 00:08:24,800 Speaker 5: the near future. 206 00:08:25,160 --> 00:08:26,640 Speaker 7: We talked a bit about this at the top. That 207 00:08:26,800 --> 00:08:30,640 Speaker 7: is the way that markets reacted to the election, the 208 00:08:30,800 --> 00:08:33,000 Speaker 7: enthusiasm exuberance we saw there at the beginning, and how 209 00:08:33,040 --> 00:08:34,679 Speaker 7: that's sort of becoming tempered, I think was the word 210 00:08:34,720 --> 00:08:38,360 Speaker 7: that you used. Has that process finished its course or 211 00:08:38,400 --> 00:08:42,400 Speaker 7: are people still sort of trying to understand where the 212 00:08:42,440 --> 00:08:44,960 Speaker 7: prospects are going to be higher than otherwise going forward here? 213 00:08:45,040 --> 00:08:47,040 Speaker 5: Well, I think that the hard thing you have is 214 00:08:47,040 --> 00:08:49,760 Speaker 5: that November was such a strong month, and I think 215 00:08:49,800 --> 00:08:51,960 Speaker 5: that people are always looking for things to be a 216 00:08:51,960 --> 00:08:53,880 Speaker 5: little bit less expensive, and all it did was get 217 00:08:53,880 --> 00:08:56,600 Speaker 5: more expensive. And December has come down a bit in 218 00:08:56,640 --> 00:08:58,320 Speaker 5: certain areas, but it hasn't really come. 219 00:08:58,280 --> 00:09:00,120 Speaker 6: Down a whole lot. And I don't I'm not saying 220 00:09:00,160 --> 00:09:01,000 Speaker 6: that because I want it to. 221 00:09:01,280 --> 00:09:03,240 Speaker 5: I'm just saying that because that's where we are, and 222 00:09:03,280 --> 00:09:06,200 Speaker 5: I think going into next year, it's going to depend 223 00:09:06,280 --> 00:09:08,000 Speaker 5: on a lot of different things that, like I said, 224 00:09:08,040 --> 00:09:10,000 Speaker 5: we still don't know yet. But I think that the 225 00:09:10,120 --> 00:09:13,000 Speaker 5: enthusiasm for equities is still there, and especially enthusiasm for 226 00:09:13,120 --> 00:09:15,640 Speaker 5: US equities versus other parts of the world. 227 00:09:15,880 --> 00:09:17,959 Speaker 3: Yeah, that's one of the things I've heard just in 228 00:09:17,960 --> 00:09:22,920 Speaker 3: the last several months. International money increasingly coming to the 229 00:09:23,040 --> 00:09:25,800 Speaker 3: US market, and that is maybe one of the drivers 230 00:09:25,840 --> 00:09:29,240 Speaker 3: of twenty twenty four performance in the US markets. 231 00:09:29,840 --> 00:09:30,800 Speaker 4: Are you seeing that? 232 00:09:30,640 --> 00:09:31,480 Speaker 6: Is that a thing? 233 00:09:31,559 --> 00:09:34,240 Speaker 4: I mean, is people just putting more and more of 234 00:09:34,280 --> 00:09:36,480 Speaker 4: their allocation global allocation into the US. 235 00:09:36,880 --> 00:09:39,240 Speaker 5: Well, I think that there's I mean, there's an expanded 236 00:09:39,240 --> 00:09:41,160 Speaker 5: pool of money to be invested right because there's still 237 00:09:41,160 --> 00:09:42,720 Speaker 5: a lot of money scrolling around in the system. 238 00:09:42,800 --> 00:09:43,360 Speaker 6: I think that the. 239 00:09:43,320 --> 00:09:46,120 Speaker 5: Concerns what's going on in Europe and the concerns of 240 00:09:46,160 --> 00:09:48,720 Speaker 5: how that plays out over the next year so does 241 00:09:48,800 --> 00:09:50,960 Speaker 5: make the US look more attractive. And I think that's 242 00:09:51,000 --> 00:09:52,920 Speaker 5: been the case for quite some time, but we keep 243 00:09:52,920 --> 00:09:55,160 Speaker 5: getting these enthusiasms and it's going to be better for 244 00:09:55,440 --> 00:09:58,040 Speaker 5: markets outside. The stronger dollar makes emerging markets a little 245 00:09:58,080 --> 00:09:59,600 Speaker 5: bit more challenging here, and. 246 00:09:59,520 --> 00:09:59,880 Speaker 6: I think that. 247 00:10:00,000 --> 00:10:01,880 Speaker 5: But there's just some structural issues that are going on 248 00:10:01,920 --> 00:10:04,120 Speaker 5: in Europe that are very difficult to fix, and with 249 00:10:04,160 --> 00:10:06,520 Speaker 5: what's going on in China, the automobile industry is under. 250 00:10:06,360 --> 00:10:08,080 Speaker 6: A lot of pressure. That's a big driver for parts 251 00:10:08,080 --> 00:10:08,520 Speaker 6: of Europe. 252 00:10:08,559 --> 00:10:10,839 Speaker 5: So I think that there are some reasons that are 253 00:10:10,880 --> 00:10:14,040 Speaker 5: not wrong for people to be concerned about other markets 254 00:10:14,040 --> 00:10:14,760 Speaker 5: outside of the US. 255 00:10:14,960 --> 00:10:16,959 Speaker 7: I promise we'd come back to the FED, and I'm 256 00:10:16,960 --> 00:10:19,280 Speaker 7: eager to get your sense of sort of where things 257 00:10:19,320 --> 00:10:21,120 Speaker 7: are headed. I'm curious if you were one of the 258 00:10:21,120 --> 00:10:23,600 Speaker 7: many you had your head in your hands as that 259 00:10:23,640 --> 00:10:24,800 Speaker 7: press conference happened. 260 00:10:24,600 --> 00:10:26,320 Speaker 4: With j Aublet a couple of days ago. 261 00:10:27,280 --> 00:10:29,320 Speaker 7: What did you take away from what he had to say? 262 00:10:29,320 --> 00:10:31,880 Speaker 7: What was in that statement, was in that plot about 263 00:10:31,880 --> 00:10:34,440 Speaker 7: the path forward here? And maybe you can dovetail that 264 00:10:34,440 --> 00:10:36,400 Speaker 7: with kind of your outlook for the US economy in 265 00:10:36,400 --> 00:10:36,880 Speaker 7: the your head. 266 00:10:37,280 --> 00:10:39,720 Speaker 5: Well, Interestingly, I don't think it was a shock that 267 00:10:39,720 --> 00:10:42,240 Speaker 5: they took the number of cuts down into this year. 268 00:10:42,640 --> 00:10:45,920 Speaker 5: I think what surprised people the most, including ourselves, was 269 00:10:45,960 --> 00:10:48,960 Speaker 5: that they took up the inflation forecasts while they were 270 00:10:48,960 --> 00:10:52,200 Speaker 5: cutting rates, which is not necessarily something that you would expect. 271 00:10:52,200 --> 00:10:54,040 Speaker 5: But I think that you had such I mean, I 272 00:10:54,120 --> 00:10:55,800 Speaker 5: say that the market's been wrong about what they've got 273 00:10:55,840 --> 00:10:56,319 Speaker 5: baked in. 274 00:10:56,320 --> 00:10:58,040 Speaker 6: But no one likes a very quick surprise. 275 00:10:58,120 --> 00:10:59,800 Speaker 5: So the fact that the December cut was sort of 276 00:11:00,280 --> 00:11:04,160 Speaker 5: really very much expected. I think that potentially market reaction 277 00:11:04,240 --> 00:11:06,240 Speaker 5: could have been worse if they had not cut in 278 00:11:06,280 --> 00:11:08,240 Speaker 5: December and said everything that they did. But they were 279 00:11:08,240 --> 00:11:11,320 Speaker 5: hawkish enough that the market reacted pretty negatively. So, yes, 280 00:11:11,320 --> 00:11:12,760 Speaker 5: my head was in my hands because no one likes 281 00:11:12,800 --> 00:11:14,400 Speaker 5: to see the market do that on any day. 282 00:11:14,880 --> 00:11:18,120 Speaker 3: So how much of our twenty twenty five outlook is 283 00:11:18,120 --> 00:11:22,360 Speaker 3: predicated upon the fediing versus earnings, like kind of the 284 00:11:22,360 --> 00:11:24,000 Speaker 3: basics of the fundamentals here? 285 00:11:24,000 --> 00:11:24,319 Speaker 4: How much? 286 00:11:24,440 --> 00:11:24,480 Speaker 1: So? 287 00:11:24,880 --> 00:11:26,560 Speaker 5: I think that there's a lot of noise right now 288 00:11:26,600 --> 00:11:29,000 Speaker 5: about the politics, but I think ultimately it's going to 289 00:11:29,040 --> 00:11:31,199 Speaker 5: come down to earnings and it's going to come down. 290 00:11:31,000 --> 00:11:31,800 Speaker 6: To the economy. 291 00:11:31,960 --> 00:11:34,200 Speaker 5: So where do how do those two things play out? 292 00:11:34,240 --> 00:11:36,320 Speaker 5: I think that there was a huge concern when rates 293 00:11:36,320 --> 00:11:38,480 Speaker 5: went up so fast that higher rates were going to 294 00:11:38,480 --> 00:11:40,720 Speaker 5: be super detrimental. It hasn't been as bad as people 295 00:11:40,720 --> 00:11:41,199 Speaker 5: thought it was. 296 00:11:41,160 --> 00:11:41,560 Speaker 6: Going to be. 297 00:11:41,600 --> 00:11:44,760 Speaker 5: Those lags long and variable lags are still lagging, and 298 00:11:44,840 --> 00:11:46,520 Speaker 5: so now do we need to cut as much as 299 00:11:46,520 --> 00:11:48,640 Speaker 5: people were baking in? I don't know what the answer is. 300 00:11:48,720 --> 00:11:51,000 Speaker 5: I think that there was a period of time posted 301 00:11:51,000 --> 00:11:55,280 Speaker 5: those financial global financial crisis with unusual monetary policy. I 302 00:11:55,280 --> 00:11:57,240 Speaker 5: don't think we're going back there. So people are going 303 00:11:57,280 --> 00:11:58,880 Speaker 5: to have to learn to live with some kind of rates. 304 00:11:58,920 --> 00:12:01,000 Speaker 5: I think it's really going to depy and on just 305 00:12:01,120 --> 00:12:04,600 Speaker 5: general levels of economic activity, and there's some influence from politics, 306 00:12:04,600 --> 00:12:06,880 Speaker 5: but it's not entirely politically influenced. 307 00:12:06,920 --> 00:12:08,440 Speaker 7: You've came in here and Paul and I were grousing 308 00:12:08,440 --> 00:12:10,920 Speaker 7: about the housing market, and you talk about the reaction 309 00:12:11,040 --> 00:12:13,800 Speaker 7: to rates. We've been monitoring, of course what's been happening 310 00:12:13,800 --> 00:12:15,920 Speaker 7: with savings and credit card use as well. When you 311 00:12:15,920 --> 00:12:17,520 Speaker 7: look at that, just sort of generalate the health of 312 00:12:17,760 --> 00:12:20,520 Speaker 7: the consumer. What's your takeaway? How does that shape what 313 00:12:20,640 --> 00:12:21,959 Speaker 7: you may or may not be interested in here in 314 00:12:22,000 --> 00:12:22,720 Speaker 7: the end of your head. 315 00:12:22,840 --> 00:12:24,840 Speaker 6: Well, I think that that's a big part. 316 00:12:24,720 --> 00:12:26,840 Speaker 5: Of why the economy is still doing so well, because 317 00:12:26,880 --> 00:12:29,040 Speaker 5: without that you would see a much slower economy. And 318 00:12:29,080 --> 00:12:31,400 Speaker 5: I think that that's where that tension between the FED 319 00:12:31,400 --> 00:12:33,520 Speaker 5: and wanting to cut rates but looking out at some 320 00:12:33,559 --> 00:12:36,360 Speaker 5: of the things that they're concerned about is also a problem. 321 00:12:36,400 --> 00:12:38,280 Speaker 5: I think that we got some good numbers on inflation 322 00:12:38,320 --> 00:12:40,520 Speaker 5: post that FED meeting, and that helped a lot, because 323 00:12:40,559 --> 00:12:43,200 Speaker 5: without that fall in the PCE, I think that markets 324 00:12:43,240 --> 00:12:45,960 Speaker 5: would have started to be continually concerned that no more 325 00:12:46,000 --> 00:12:48,240 Speaker 5: rate cuts were coming. But I think that there is 326 00:12:48,520 --> 00:12:51,280 Speaker 5: some room for that to look okay next year. It's 327 00:12:51,320 --> 00:12:52,800 Speaker 5: really going to depend on a lot of other things. 328 00:12:52,840 --> 00:12:54,320 Speaker 5: But yes, the fact that people are spending is a 329 00:12:54,400 --> 00:12:55,080 Speaker 5: huge benefit. 330 00:12:55,800 --> 00:12:57,960 Speaker 3: What's kind of your theme for twenty twenty five and 331 00:12:58,000 --> 00:13:00,400 Speaker 3: you talk to your clients these days, is there a theme? 332 00:13:00,640 --> 00:13:03,280 Speaker 4: Is it just stay the stay steady here, stay in 333 00:13:03,320 --> 00:13:03,760 Speaker 4: the market. 334 00:13:04,240 --> 00:13:06,520 Speaker 5: I think that after two years of strong gains, what 335 00:13:06,559 --> 00:13:09,000 Speaker 5: we are telling people and what we talk about internally 336 00:13:09,160 --> 00:13:11,839 Speaker 5: is we don't think that there's some giant tragedy on 337 00:13:11,880 --> 00:13:14,520 Speaker 5: the horizon, but the volatility should be a bit higher, 338 00:13:14,880 --> 00:13:16,520 Speaker 5: given the fact that we have had less so in 339 00:13:16,559 --> 00:13:18,600 Speaker 5: the last year or so, and because we're coming from 340 00:13:18,920 --> 00:13:21,000 Speaker 5: a definite cycle where we're going to be cutting to 341 00:13:21,040 --> 00:13:23,440 Speaker 5: maybe a cycle where we're slowing those cuts and or 342 00:13:23,480 --> 00:13:25,880 Speaker 5: we might move into a more neutral phase that could 343 00:13:25,920 --> 00:13:28,640 Speaker 5: possibly have some volatility on the equity side as well. 344 00:13:28,800 --> 00:13:30,959 Speaker 5: But as long as the economy stays, it's like it's 345 00:13:31,000 --> 00:13:32,760 Speaker 5: in pretty good shape. And to the extent that again 346 00:13:32,800 --> 00:13:34,640 Speaker 5: this is the US is benefiting from a lot of 347 00:13:34,679 --> 00:13:37,800 Speaker 5: the spending patterns. We're not overly concerned that it's going 348 00:13:37,880 --> 00:13:39,960 Speaker 5: to be terrible. It's just don't get don't get used 349 00:13:39,960 --> 00:13:42,280 Speaker 5: to twenty percent plus twenty percent returns on a year 350 00:13:42,320 --> 00:13:43,600 Speaker 5: of a year basis, Oh my kids, that. 351 00:13:44,600 --> 00:13:47,800 Speaker 7: Four one, dude, it's not like sweet as advice exactly. 352 00:13:48,120 --> 00:13:49,719 Speaker 7: In the minute we have left here, what do you 353 00:13:49,720 --> 00:13:52,640 Speaker 7: say to your more conservative clients who maybe have a 354 00:13:52,640 --> 00:13:54,760 Speaker 7: lot of cash still aren't in the market. What's the 355 00:13:55,160 --> 00:13:57,040 Speaker 7: what's the case you're making to them to get into 356 00:13:57,040 --> 00:13:59,480 Speaker 7: this market and to allay some of the nervousness that 357 00:13:59,480 --> 00:13:59,920 Speaker 7: they might have. 358 00:14:00,440 --> 00:14:02,880 Speaker 5: Well, I think that to some of the For the 359 00:14:02,960 --> 00:14:05,280 Speaker 5: more conservative people, you're also looking at some more fixed 360 00:14:05,320 --> 00:14:07,800 Speaker 5: incoming because rates haven't dropped as much. That gives you 361 00:14:07,880 --> 00:14:10,120 Speaker 5: some room to be more balanced. So we're looking for 362 00:14:10,160 --> 00:14:12,400 Speaker 5: folks like that to look at balanced accounts because you 363 00:14:12,400 --> 00:14:14,760 Speaker 5: don't want to not participate in the equity markets. But 364 00:14:14,800 --> 00:14:16,120 Speaker 5: at the same time, if we're a little bit worried 365 00:14:16,160 --> 00:14:18,080 Speaker 5: about volatility, then you probably want to temper that a 366 00:14:18,120 --> 00:14:18,920 Speaker 5: bit with some bonds. 367 00:14:18,960 --> 00:14:20,360 Speaker 6: And I think you can do that here. 368 00:14:20,560 --> 00:14:22,080 Speaker 5: And I think that was a big question where to 369 00:14:22,120 --> 00:14:24,480 Speaker 5: bond sit in your portfolio given what's going on, And 370 00:14:24,520 --> 00:14:26,560 Speaker 5: I think that that's a place where people are finding 371 00:14:26,600 --> 00:14:29,320 Speaker 5: a little bit more comfort from a stability standpoint. But 372 00:14:29,360 --> 00:14:31,120 Speaker 5: I still think that the equity markets are not a 373 00:14:31,120 --> 00:14:33,520 Speaker 5: bad place to be ultimately Yeah, I agree. 374 00:14:33,360 --> 00:14:35,000 Speaker 3: Sarah Hunt, thank you so much for joining us. Really 375 00:14:35,000 --> 00:14:36,880 Speaker 3: appreciate you coming into our studio today. 376 00:14:37,000 --> 00:14:38,840 Speaker 7: Good to see a real person here at the studio. 377 00:14:38,960 --> 00:14:41,280 Speaker 3: She did some double duty on Bloomberg Television and now radio. 378 00:14:41,280 --> 00:14:43,720 Speaker 3: We appreciate it, Sarah Hunt. She's a partner and a 379 00:14:43,800 --> 00:14:50,640 Speaker 3: chief market strategist at Alpine Saxon Woodsone. 380 00:14:51,760 --> 00:14:55,600 Speaker 2: You're listening to the Bloomberg Surveillance podcast. Catch us Live 381 00:14:55,720 --> 00:14:59,040 Speaker 2: weekday afternoons from seven to ten am. Easter Listen on 382 00:14:59,080 --> 00:15:02,280 Speaker 2: Apple car Play and Android Otto with a Bloomberg business app, 383 00:15:02,440 --> 00:15:04,160 Speaker 2: or want just live on YouTube. 384 00:15:04,440 --> 00:15:07,360 Speaker 3: Talk about that discussion of all things coming out of Washington, DC. 385 00:15:07,440 --> 00:15:10,400 Speaker 3: We head up to Providence, Rhode Island. Wendy Schiller, professor 386 00:15:10,440 --> 00:15:12,080 Speaker 3: at Brown University. 387 00:15:12,080 --> 00:15:12,600 Speaker 4: Joins us. 388 00:15:13,040 --> 00:15:15,880 Speaker 3: Wendy, I guess there's a million ways we can go here, 389 00:15:15,880 --> 00:15:19,160 Speaker 3: but I just want to start about I'm wondering how 390 00:15:19,200 --> 00:15:23,360 Speaker 3: this When we initially had the election, the news flow 391 00:15:23,480 --> 00:15:26,680 Speaker 3: is really about the nominations for cabinet positions for President 392 00:15:26,760 --> 00:15:29,360 Speaker 3: elect Trump. And now I'm kind of wondering, as these 393 00:15:29,600 --> 00:15:32,240 Speaker 3: things have kind of stewed for several weeks, we're going 394 00:15:32,320 --> 00:15:37,200 Speaker 3: to be getting towards confirmation hearings later on in January. 395 00:15:37,920 --> 00:15:39,160 Speaker 4: Is there a feel how. 396 00:15:39,280 --> 00:15:40,840 Speaker 3: These things are going to go because there are some 397 00:15:41,480 --> 00:15:43,760 Speaker 3: nominations for cabinet positions that are a little bit more 398 00:15:44,160 --> 00:15:46,400 Speaker 3: more controversial than others. 399 00:15:47,280 --> 00:15:49,280 Speaker 8: Well, I'm more in bog Miran David. 400 00:15:49,920 --> 00:15:53,600 Speaker 9: I think that in general, I don't think we know 401 00:15:53,680 --> 00:15:57,760 Speaker 9: from history that presidential nominations for cabinet positions generally go through. 402 00:15:58,120 --> 00:16:00,360 Speaker 9: There are a couple of really well known examps bulls 403 00:16:00,400 --> 00:16:02,840 Speaker 9: where they went down, so John Tower many years ago. 404 00:16:03,000 --> 00:16:05,640 Speaker 9: Bill Clinton had a very difficult time getting Attorney General 405 00:16:05,680 --> 00:16:09,240 Speaker 9: nominee through through some vetting mistakes I think early on. 406 00:16:09,640 --> 00:16:12,320 Speaker 9: But in general you don't lose too many of them 407 00:16:12,400 --> 00:16:15,200 Speaker 9: as you go through. You know, there are still vulnerabilities 408 00:16:15,240 --> 00:16:18,080 Speaker 9: associated with the Hexeth nomination at Defense in the Armed 409 00:16:18,120 --> 00:16:20,240 Speaker 9: Services Committee and Telsea Gabbard. 410 00:16:20,240 --> 00:16:22,560 Speaker 8: I think those are the two that I'm watching. 411 00:16:23,160 --> 00:16:25,680 Speaker 9: I'm not sure Trump gets both of them, and if 412 00:16:25,680 --> 00:16:28,000 Speaker 9: you had to put money down, I think Hegseth seems 413 00:16:28,040 --> 00:16:31,800 Speaker 9: to be getting enough votes to get fifty one get 414 00:16:31,840 --> 00:16:34,280 Speaker 9: through the Senate. I'm not sure about Gabbard, but some 415 00:16:34,320 --> 00:16:36,200 Speaker 9: of the other ones are quite standard sort of what 416 00:16:36,240 --> 00:16:38,760 Speaker 9: you'd expect from a Republican president, and I don't think 417 00:16:38,800 --> 00:16:41,240 Speaker 9: they're going to have any problems. And Trump wants these 418 00:16:41,280 --> 00:16:44,840 Speaker 9: people in place as soon as possible. He's already dictating 419 00:16:44,920 --> 00:16:49,120 Speaker 9: policy for particular departments. You can see this in Foreign 420 00:16:49,160 --> 00:16:53,040 Speaker 9: Affairs and other areas border security, So you know he 421 00:16:53,080 --> 00:16:55,720 Speaker 9: wants them in, but it's difficult to move the bureaucracy 422 00:16:55,760 --> 00:16:58,000 Speaker 9: even when they do get in in a timely fashion. 423 00:16:58,800 --> 00:17:01,840 Speaker 7: Were I a senior demo crowd on, say, the Senate 424 00:17:02,680 --> 00:17:07,240 Speaker 7: Foreign Affairs Committee or the Armed Services Committee? Were I 425 00:17:07,320 --> 00:17:10,359 Speaker 7: Elizabeth Warren on the Financial Services Committee? I've got Scott 426 00:17:10,359 --> 00:17:13,760 Speaker 7: Bestont coming before me. What is the job of a 427 00:17:13,880 --> 00:17:16,919 Speaker 7: senior Democratic senator in these hearings? Recognizing the fact that, 428 00:17:16,960 --> 00:17:18,919 Speaker 7: as you point out, most of these nominees are going 429 00:17:18,960 --> 00:17:22,480 Speaker 7: to get through. How much hay should I, again, Senior 430 00:17:22,480 --> 00:17:24,920 Speaker 7: Democratic Senator, how much hay should I be making here 431 00:17:25,280 --> 00:17:27,920 Speaker 7: about those particular nominees and their problems, just to sort 432 00:17:27,920 --> 00:17:29,720 Speaker 7: of make it into a spectacle and to sort of 433 00:17:29,800 --> 00:17:32,399 Speaker 7: raise alarm or concern about some of the folks that 434 00:17:32,480 --> 00:17:33,800 Speaker 7: President LEC. Trump has put forward. 435 00:17:34,880 --> 00:17:37,520 Speaker 9: Well, David, I think the messaging coming out of the 436 00:17:37,520 --> 00:17:40,879 Speaker 9: twenty four elections whe the Democratic Party is losing or 437 00:17:40,920 --> 00:17:45,119 Speaker 9: has lost a portion of working class Americans or middle 438 00:17:45,119 --> 00:17:46,120 Speaker 9: class Americans. 439 00:17:46,520 --> 00:17:48,520 Speaker 8: So the messaging should. 440 00:17:48,240 --> 00:17:51,080 Speaker 9: Be continuous across all of these committees is what will 441 00:17:51,080 --> 00:17:55,280 Speaker 9: you do to protect the average American, the consumer, the employee, 442 00:17:55,400 --> 00:17:58,800 Speaker 9: and also for personal security and safety in a humane way. 443 00:17:59,160 --> 00:18:01,440 Speaker 9: And I think that's the thing where Democrats had the 444 00:18:01,520 --> 00:18:03,520 Speaker 9: upper hand, and now they don't seem to have that 445 00:18:03,600 --> 00:18:05,800 Speaker 9: upper hand, at least at the presidential level. But the 446 00:18:05,800 --> 00:18:09,080 Speaker 9: congressional elections, probably the House elections show the Democrats they 447 00:18:09,119 --> 00:18:12,360 Speaker 9: do have traction on sort of the worst of what 448 00:18:12,440 --> 00:18:15,960 Speaker 9: government can be under an administration that doesn't show sort 449 00:18:15,960 --> 00:18:19,480 Speaker 9: of compassion for people or isn't concerned about working Americans, 450 00:18:19,520 --> 00:18:22,080 Speaker 9: everything from your right to unionize to whether you have 451 00:18:22,119 --> 00:18:26,080 Speaker 9: workplace safety, to how you treat people who come here undocumented. 452 00:18:26,359 --> 00:18:28,000 Speaker 9: So I think there's a lot of ground to be 453 00:18:28,119 --> 00:18:32,080 Speaker 9: gained by Democrats focusing on those aspects of these really 454 00:18:32,119 --> 00:18:34,560 Speaker 9: important issues that Trump has brought to the fore, but 455 00:18:34,640 --> 00:18:36,760 Speaker 9: of course has run into trouble in his first administration 456 00:18:36,840 --> 00:18:38,720 Speaker 9: in the way that he executed his policies. 457 00:18:40,040 --> 00:18:43,000 Speaker 3: Wendy, what do you expect from the first one hundred 458 00:18:43,080 --> 00:18:44,480 Speaker 3: days of the Trump administration. 459 00:18:45,840 --> 00:18:48,000 Speaker 9: Well, we've talked about whether, you know, we should think 460 00:18:48,000 --> 00:18:50,040 Speaker 9: about these and twenty days, fifty. 461 00:18:49,800 --> 00:18:50,879 Speaker 8: Days, one hundred days. 462 00:18:51,080 --> 00:18:53,200 Speaker 9: You know, it's interesting to have a president who was 463 00:18:53,280 --> 00:18:54,840 Speaker 9: president lost and come back. 464 00:18:54,880 --> 00:18:56,680 Speaker 8: We haven't seen that in more than one hundred years. 465 00:18:57,160 --> 00:18:59,480 Speaker 9: And so the question is what will be a continuation, 466 00:19:00,440 --> 00:19:04,119 Speaker 9: what will be the sort of Trump personal vengeance actions, 467 00:19:04,440 --> 00:19:07,040 Speaker 9: and what will be new in Trump too? 468 00:19:07,200 --> 00:19:09,040 Speaker 8: And I think that's the thing that's a little bit uncertain. 469 00:19:09,280 --> 00:19:11,399 Speaker 9: He seems to want to do what other presidents like 470 00:19:11,480 --> 00:19:13,760 Speaker 9: to do bypass Congress, even if you have. 471 00:19:13,720 --> 00:19:15,600 Speaker 8: A trifecta, even if you control Congress. 472 00:19:15,640 --> 00:19:18,720 Speaker 9: We saw from last week's budget negotiations that it doesn't 473 00:19:18,760 --> 00:19:20,439 Speaker 9: mean you're going to get what you want. So I 474 00:19:20,440 --> 00:19:22,480 Speaker 9: think the Trump inistration will focus on doing as much 475 00:19:22,560 --> 00:19:26,520 Speaker 9: as they can through executive power and not relying on Congress. 476 00:19:26,520 --> 00:19:28,800 Speaker 9: With the exception, of course, of the Trump tax cuts, 477 00:19:28,920 --> 00:19:31,600 Speaker 9: which I think Trump would rather see passed sooner rather 478 00:19:31,640 --> 00:19:34,280 Speaker 9: than later. There's a disagree between the House and the 479 00:19:34,320 --> 00:19:37,080 Speaker 9: Senate Republican leadership on how fast that can go. 480 00:19:38,000 --> 00:19:41,080 Speaker 7: We saw all the dysfunctions surrounding the Continuing Resolution. Then 481 00:19:41,240 --> 00:19:43,600 Speaker 7: earlier this week we got That report from the House 482 00:19:43,600 --> 00:19:46,160 Speaker 7: Ethics Committee on Matt Gates, the person that President elect 483 00:19:46,160 --> 00:19:48,160 Speaker 7: Trump had put forward to be the Attorney general first 484 00:19:48,480 --> 00:19:51,840 Speaker 7: through the nomination, a pretty damning report by all accounts, 485 00:19:51,880 --> 00:19:54,359 Speaker 7: and I think one that in past administration's past eras 486 00:19:54,359 --> 00:19:56,920 Speaker 7: would have created a lot of story. Again, Matt Gates 487 00:19:56,920 --> 00:20:00,560 Speaker 7: no longer in the Congress, How did you read that report? 488 00:20:00,600 --> 00:20:03,880 Speaker 7: How do you think about the investigation that took place, 489 00:20:03,920 --> 00:20:05,600 Speaker 7: the report that came out of it, What it says 490 00:20:05,720 --> 00:20:11,040 Speaker 7: about Congress's attitude towards transgressions, to put it mildly by 491 00:20:11,160 --> 00:20:12,879 Speaker 7: by a member of the House, former member of the House, 492 00:20:13,080 --> 00:20:16,800 Speaker 7: What does it say about the state of Congress today? 493 00:20:16,920 --> 00:20:19,280 Speaker 9: Well, I mean, you know, Matt Gates wasn't the most 494 00:20:19,320 --> 00:20:24,080 Speaker 9: popular member of Congress enough fair enough here, So when 495 00:20:24,080 --> 00:20:27,000 Speaker 9: you try to interpret what happened here, it's hard to 496 00:20:27,200 --> 00:20:30,680 Speaker 9: make generalizations. But I think in general, those two actions 497 00:20:30,720 --> 00:20:34,760 Speaker 9: coupled together, says the House Republican Party, there's a line 498 00:20:34,800 --> 00:20:36,960 Speaker 9: you can't cross. In other words, they're going to stand 499 00:20:37,040 --> 00:20:39,639 Speaker 9: up for some of their constitutional power. And they are 500 00:20:39,680 --> 00:20:42,320 Speaker 9: of course looking immediately to twenty twenty six, and they 501 00:20:42,320 --> 00:20:43,720 Speaker 9: know what happened in twenty eighteen. 502 00:20:44,000 --> 00:20:46,320 Speaker 8: They just loose power, They lost a lot of seats. 503 00:20:46,520 --> 00:20:50,679 Speaker 9: They understand that Trump has you know, some really good cotails, 504 00:20:50,920 --> 00:20:54,399 Speaker 9: but some very dangerous coattails for them looking ahead. So 505 00:20:54,440 --> 00:20:57,639 Speaker 9: they want to assert their power and stay you know, 506 00:20:57,680 --> 00:20:58,639 Speaker 9: on their platform. 507 00:20:58,720 --> 00:20:59,960 Speaker 8: And that's what the budget deal was. 508 00:21:00,400 --> 00:21:02,040 Speaker 9: It was saying, we're not going to just give you 509 00:21:02,040 --> 00:21:04,920 Speaker 9: the debt ceiling for two more years. We actually promised 510 00:21:04,960 --> 00:21:07,640 Speaker 9: we'd cut the budget. So I think that's the signaling 511 00:21:07,640 --> 00:21:10,520 Speaker 9: that the Trump administration should be taking. And we're seeing 512 00:21:10,560 --> 00:21:13,720 Speaker 9: that Trump is starting to talk more unilaterally because he 513 00:21:13,840 --> 00:21:16,280 Speaker 9: sees that this road will not be so smooth for him, 514 00:21:16,560 --> 00:21:19,440 Speaker 9: even in a Republican House with you know, some very 515 00:21:19,560 --> 00:21:22,760 Speaker 9: very small margins, and with Gates. I think a lot 516 00:21:22,760 --> 00:21:25,520 Speaker 9: of people are looking to open the door, you know, 517 00:21:25,600 --> 00:21:28,359 Speaker 9: for exiting for Matt Gates. And I think they all 518 00:21:28,480 --> 00:21:29,480 Speaker 9: joined forces to. 519 00:21:29,440 --> 00:21:30,200 Speaker 8: Make that happen. 520 00:21:31,440 --> 00:21:35,399 Speaker 3: Elon musk En doge, is that really going to be 521 00:21:35,400 --> 00:21:36,160 Speaker 3: a thing going forward? 522 00:21:36,160 --> 00:21:36,679 Speaker 4: Do you believe? 523 00:21:37,400 --> 00:21:39,840 Speaker 9: Well, Cabinet departments have to be created by Congress. You know, 524 00:21:39,920 --> 00:21:42,560 Speaker 9: under George W. Bush created the Department of Homeland Security, 525 00:21:42,560 --> 00:21:45,200 Speaker 9: and response to a lot of the failings that led 526 00:21:45,240 --> 00:21:47,439 Speaker 9: to nine to eleven, So you know, there's a reason 527 00:21:47,480 --> 00:21:50,320 Speaker 9: to create a cabinet department in Congress? Does that without 528 00:21:50,359 --> 00:21:53,560 Speaker 9: that infrastructure, It's just unclear to me how they implement 529 00:21:53,640 --> 00:21:55,760 Speaker 9: what they're talking about, you know. And if you want 530 00:21:55,800 --> 00:21:59,280 Speaker 9: to fire a civil servant with legal protections, that's going 531 00:21:59,359 --> 00:22:01,960 Speaker 9: to take some time and some court battles. So it's 532 00:22:02,000 --> 00:22:04,560 Speaker 9: just unclear how quickly they can do what they want 533 00:22:04,600 --> 00:22:07,240 Speaker 9: to do and what kind of author are your legitimacy 534 00:22:07,240 --> 00:22:10,160 Speaker 9: to have. And let's all watch the relationship between Musk 535 00:22:10,200 --> 00:22:13,639 Speaker 9: and President elect Trump. The Democrats are already calling him 536 00:22:13,680 --> 00:22:16,920 Speaker 9: co president or President Musk. It's bothering Donald Trump already. 537 00:22:17,200 --> 00:22:19,800 Speaker 9: Let's just see how long they last as a partnership. 538 00:22:20,320 --> 00:22:24,160 Speaker 9: And then those two things combine institutional sort of sluggishness 539 00:22:24,359 --> 00:22:26,560 Speaker 9: and also sort of interpersonal relations. 540 00:22:27,320 --> 00:22:29,320 Speaker 8: I think that's going to really have a lot. 541 00:22:29,160 --> 00:22:30,919 Speaker 9: Of impact on what kind of influence they can have 542 00:22:30,960 --> 00:22:33,439 Speaker 9: and reducing the size and scope of the federal government. 543 00:22:33,680 --> 00:22:35,560 Speaker 4: All right, Wendy, thank you so much. We appreciate that. 544 00:22:35,600 --> 00:22:42,080 Speaker 3: Wendy Schiller, she's a professor at Brown University. 545 00:22:43,840 --> 00:22:48,120 Speaker 2: This is the Bloomberg Surveillance Podcast. Listen live each weekday 546 00:22:48,200 --> 00:22:51,400 Speaker 2: starting at seven am. Eastern on applecar Play and Android 547 00:22:51,440 --> 00:22:54,280 Speaker 2: Auto with the Bloomberg Business app. You can also listen 548 00:22:54,400 --> 00:22:57,520 Speaker 2: live on Amazon Alexa from our flagship New York station 549 00:22:57,880 --> 00:22:59,800 Speaker 2: just say Alexa playing Bloomberg. 550 00:23:01,240 --> 00:23:03,920 Speaker 4: I am proud to say I don't think I went 551 00:23:03,960 --> 00:23:06,240 Speaker 4: to a store. This is that right. I did a 552 00:23:06,240 --> 00:23:08,040 Speaker 4: couple of clicks, you know, buying stuff. 553 00:23:08,720 --> 00:23:11,240 Speaker 3: But a couple of days ago, I drove past the 554 00:23:11,280 --> 00:23:12,719 Speaker 3: Short Hills Mall in New Jersey. 555 00:23:13,600 --> 00:23:16,359 Speaker 4: Line of cars you couldn't even get into the parking. 556 00:23:16,440 --> 00:23:18,000 Speaker 7: Still a mecca for consumerism. 557 00:23:19,240 --> 00:23:22,120 Speaker 3: Still, So, if I had to say, I would think 558 00:23:22,119 --> 00:23:24,480 Speaker 3: retail sales would be pretty solid during this holiday season. 559 00:23:24,480 --> 00:23:26,480 Speaker 4: I don't know. Let's check in with Nicole Larson. She 560 00:23:26,520 --> 00:23:27,520 Speaker 4: does this stuff for a living. 561 00:23:27,560 --> 00:23:32,200 Speaker 3: She's a national research manager retail services as a Colliers Nicole. Again, 562 00:23:32,280 --> 00:23:33,800 Speaker 3: I kind of take it as a badge of honor 563 00:23:33,840 --> 00:23:36,960 Speaker 3: that I did not go to a store this holiday season, 564 00:23:37,000 --> 00:23:38,720 Speaker 3: but I know a lot of people did. 565 00:23:39,040 --> 00:23:41,639 Speaker 4: How are retail sales looking for the holiday season? 566 00:23:42,640 --> 00:23:44,560 Speaker 1: Well, I will say you are probably one of the 567 00:23:44,600 --> 00:23:47,359 Speaker 1: few that did not get a store. I don't know 568 00:23:47,400 --> 00:23:50,399 Speaker 1: how you managed to do that, but honestly, I was 569 00:23:50,520 --> 00:23:54,879 Speaker 1: very impressed. We were pretty conservative with our holiday spend forecast. 570 00:23:55,200 --> 00:23:58,160 Speaker 1: What we saw and this was as of Tuesday, Visa's 571 00:23:58,200 --> 00:24:01,240 Speaker 1: spend monitors said that holidays sales are a four point 572 00:24:01,240 --> 00:24:04,199 Speaker 1: eight percent and that doesn't include Christmas Eve sales. So 573 00:24:04,200 --> 00:24:06,960 Speaker 1: I'm actually really interested to see the final number come 574 00:24:06,960 --> 00:24:09,639 Speaker 1: out once everything is you know, tabulated. I'm sure the 575 00:24:09,720 --> 00:24:11,879 Speaker 1: returns are going to be factored in there as well. 576 00:24:12,080 --> 00:24:14,679 Speaker 1: But what we saw was that in source spending for 577 00:24:14,800 --> 00:24:18,480 Speaker 1: holiday accounted for seventy seven percent, while the twenty three 578 00:24:18,520 --> 00:24:19,800 Speaker 1: percent was for online. 579 00:24:19,840 --> 00:24:21,760 Speaker 10: So, like I said, I don't know how you managed 580 00:24:21,760 --> 00:24:22,159 Speaker 10: to do it. 581 00:24:22,200 --> 00:24:26,240 Speaker 1: But we also did see a pretty big increase during 582 00:24:26,240 --> 00:24:27,560 Speaker 1: the Thanksgiving. 583 00:24:27,000 --> 00:24:29,439 Speaker 10: Shopping weekend as well for mobile shopping. 584 00:24:29,640 --> 00:24:32,320 Speaker 1: So it said about sixty three percent of shoppers use 585 00:24:32,400 --> 00:24:35,320 Speaker 1: their phone to shop during the Thanksgiving weekend, and that 586 00:24:35,480 --> 00:24:37,520 Speaker 1: was up from fifty five percent last year. 587 00:24:38,160 --> 00:24:39,720 Speaker 7: You're going right where I want to go, which is 588 00:24:39,760 --> 00:24:43,880 Speaker 7: I see this blurring now between Black Friday and Cyber Monday, 589 00:24:44,040 --> 00:24:46,480 Speaker 7: and I was getting inundated with these push alerts to 590 00:24:46,520 --> 00:24:49,280 Speaker 7: buy all kinds of stuff on my mobile phone. I 591 00:24:49,280 --> 00:24:52,199 Speaker 7: mean that started before Thanksgiving, certainly continued into Friday, and 592 00:24:52,240 --> 00:24:54,640 Speaker 7: there were you know, more entreaties on Monday as well. 593 00:24:55,000 --> 00:24:57,560 Speaker 7: We had these kind of discrete days. Friday was for 594 00:24:57,640 --> 00:24:59,719 Speaker 7: going to stores. Maybe that's not the case as much 595 00:24:59,720 --> 00:25:02,159 Speaker 7: as it was. It does seem like we're kind of 596 00:25:02,200 --> 00:25:05,000 Speaker 7: moving to this more morphous, kind of long weekend of 597 00:25:05,040 --> 00:25:08,360 Speaker 7: online shopping. Is that a fair read of how things proceeded. 598 00:25:09,400 --> 00:25:11,439 Speaker 1: Yeah, I mean, and you have to remember too, this 599 00:25:11,520 --> 00:25:14,520 Speaker 1: Thanksgiving fell a lot later than it usually does, so 600 00:25:14,560 --> 00:25:16,720 Speaker 1: I think retailers are really trying to push. I mean, 601 00:25:16,720 --> 00:25:19,199 Speaker 1: we saw so many sales that were already happening in 602 00:25:19,240 --> 00:25:22,600 Speaker 1: September and October, so the spend, the holiday spend was 603 00:25:22,640 --> 00:25:25,480 Speaker 1: really spread out for a longer period, I would say 604 00:25:25,480 --> 00:25:28,080 Speaker 1: this year. Yes, I know a lot of people were 605 00:25:28,119 --> 00:25:30,400 Speaker 1: not a fan of all the crazy texts and emails 606 00:25:30,400 --> 00:25:33,119 Speaker 1: that we were receiving. I still am receiving them even today. 607 00:25:33,960 --> 00:25:35,639 Speaker 10: But it's really interesting. 608 00:25:35,800 --> 00:25:38,320 Speaker 1: I think, you know, retailers are really trying to push, 609 00:25:38,720 --> 00:25:42,120 Speaker 1: really trying to stress consumers to make sure that they 610 00:25:42,160 --> 00:25:44,760 Speaker 1: get their purchases in because I don't think a lot 611 00:25:44,800 --> 00:25:47,440 Speaker 1: of people realize until Thanksgiving came that we had such 612 00:25:47,480 --> 00:25:48,600 Speaker 1: a short holiday window. 613 00:25:49,160 --> 00:25:52,200 Speaker 3: Nicole talk to us about kind of the relationship between 614 00:25:52,240 --> 00:25:56,280 Speaker 3: bricks and mortar and e commerce. What's the It seems like, 615 00:25:56,320 --> 00:25:58,359 Speaker 3: you know, during the pandemic, it seems like we brought 616 00:25:58,440 --> 00:26:01,399 Speaker 3: forward by maybe three, four or five years the amount 617 00:26:01,440 --> 00:26:04,880 Speaker 3: of e commerce shift. Where are we today with bricks 618 00:26:04,880 --> 00:26:06,480 Speaker 3: and order versus e commerce? 619 00:26:07,560 --> 00:26:11,000 Speaker 1: Yeah, so obviously in twenty twenty we saw huge you know, 620 00:26:11,040 --> 00:26:15,400 Speaker 1: we really saw the peak of the online sales as 621 00:26:15,440 --> 00:26:18,719 Speaker 1: a share of total retail sales. We're actually at that 622 00:26:18,880 --> 00:26:21,920 Speaker 1: same point right now. We're about at sixteen point two 623 00:26:21,920 --> 00:26:24,040 Speaker 1: percent is what I think the total share of e 624 00:26:24,040 --> 00:26:26,800 Speaker 1: commerce sales is right now for the US. I only 625 00:26:26,800 --> 00:26:30,240 Speaker 1: see that continuing to grow. But in store is still 626 00:26:30,320 --> 00:26:33,359 Speaker 1: super vital to consumers. I mean, we're even talking about 627 00:26:33,359 --> 00:26:36,240 Speaker 1: this now with returns. I'll give you guys a new 628 00:26:36,240 --> 00:26:39,960 Speaker 1: little phrase. It's called boris, which is by online return 629 00:26:40,080 --> 00:26:43,880 Speaker 1: in store. So many consumers feel a lot more comfortable 630 00:26:44,359 --> 00:26:47,720 Speaker 1: when a retailer actually has a physical store because they 631 00:26:47,760 --> 00:26:50,439 Speaker 1: know that even though they may be shopping online, that 632 00:26:50,480 --> 00:26:52,679 Speaker 1: they can go back into the store and you know, 633 00:26:52,920 --> 00:26:55,639 Speaker 1: just feel more safe and more secure when they're able 634 00:26:55,680 --> 00:26:56,760 Speaker 1: to return that product. 635 00:26:57,520 --> 00:27:00,080 Speaker 7: You've mentioned returns a couple of times. I've got a 636 00:27:00,080 --> 00:27:02,239 Speaker 7: pair of shoes, we got for my daughter. They're too 637 00:27:02,240 --> 00:27:04,160 Speaker 7: small for I got to take care of that today 638 00:27:04,240 --> 00:27:06,359 Speaker 7: or tomorrow. I'm going to go to the store to 639 00:27:06,359 --> 00:27:09,280 Speaker 7: do that. It's it's help us understand how the process 640 00:27:09,320 --> 00:27:10,800 Speaker 7: of returning has changed. 641 00:27:10,840 --> 00:27:11,119 Speaker 2: Here. 642 00:27:11,600 --> 00:27:13,439 Speaker 7: You mentioned folks going back to stores to do it. 643 00:27:13,480 --> 00:27:15,879 Speaker 7: I was at Whole Foods a few days ago and 644 00:27:15,960 --> 00:27:18,280 Speaker 7: I had to return something from Zappo's and I walked 645 00:27:18,359 --> 00:27:20,920 Speaker 7: upstairs and it was like a shipping center in its 646 00:27:20,920 --> 00:27:23,320 Speaker 7: own right where the cafe used to be in that store. 647 00:27:23,359 --> 00:27:25,919 Speaker 7: But talk a bit just about how that's changed, that 648 00:27:26,000 --> 00:27:28,400 Speaker 7: process of returning has changed, and the way that companies, 649 00:27:28,760 --> 00:27:30,439 Speaker 7: the way that the stores are trying to make that 650 00:27:30,480 --> 00:27:31,560 Speaker 7: go a little more seamlessly. 651 00:27:32,560 --> 00:27:35,760 Speaker 1: I mean, yeah, retailers lost one hundred billion dollars last 652 00:27:35,800 --> 00:27:39,479 Speaker 1: year in return fraud, so I think retailers are starting 653 00:27:39,520 --> 00:27:44,440 Speaker 1: to restrategize their return policies. I would not be surprised 654 00:27:44,480 --> 00:27:46,399 Speaker 1: if a lot of consumers are maybe a little bit 655 00:27:46,440 --> 00:27:49,040 Speaker 1: upset by some of the retailer return policies that they'll 656 00:27:49,040 --> 00:27:52,120 Speaker 1: be seeing this holiday season. I think it's really important. Hopefully, 657 00:27:52,119 --> 00:27:54,639 Speaker 1: when the consumers were buying their their Christmas gifts, they 658 00:27:54,640 --> 00:27:57,199 Speaker 1: were aware of the return policy but I think the 659 00:27:57,240 --> 00:27:59,840 Speaker 1: return windows are going to be a lot shorter. I 660 00:28:00,040 --> 00:28:02,640 Speaker 1: think these brands are also going to start becoming more 661 00:28:02,720 --> 00:28:05,680 Speaker 1: strict and start looking at those consumers who may be 662 00:28:06,000 --> 00:28:08,760 Speaker 1: you know, doing return fraud or things like that. It's 663 00:28:08,800 --> 00:28:11,199 Speaker 1: a very small percentage compared to the rest of the 664 00:28:11,240 --> 00:28:14,040 Speaker 1: country who is just you know, returning products that maybe 665 00:28:14,080 --> 00:28:16,800 Speaker 1: don't fit them or maybe they can't use it any longer. 666 00:28:17,040 --> 00:28:18,639 Speaker 10: So the percentage is very small. 667 00:28:18,680 --> 00:28:21,439 Speaker 1: But I do think retailers already starting to you know, 668 00:28:21,520 --> 00:28:24,040 Speaker 1: sort of look out for that in their internal systems 669 00:28:24,080 --> 00:28:26,160 Speaker 1: and make sure that nobody's abusing the system. 670 00:28:26,920 --> 00:28:30,440 Speaker 4: In New York City, talk to us about neighborhood retail. 671 00:28:30,680 --> 00:28:33,000 Speaker 4: Where are we today versus pre pandemic. 672 00:28:34,160 --> 00:28:37,680 Speaker 1: Oh yeah, I mean the local retail has really rebounded 673 00:28:37,760 --> 00:28:41,320 Speaker 1: to pre COVID levels, and we've even seen some retail 674 00:28:41,360 --> 00:28:45,640 Speaker 1: rents surpassing twenty nineteen. One area that I found really 675 00:28:45,720 --> 00:28:49,360 Speaker 1: interesting was Flat Iron is actually you know, commanding about 676 00:28:49,400 --> 00:28:51,960 Speaker 1: three hundred to five hundred per square foot. So I 677 00:28:51,960 --> 00:28:54,520 Speaker 1: thought that was absolutely amazing and it just really shows 678 00:28:54,560 --> 00:28:57,080 Speaker 1: like the resurgence of the area. 679 00:28:57,160 --> 00:29:00,680 Speaker 7: Paul just a moment ago mentioning that that giant mall 680 00:29:00,760 --> 00:29:04,400 Speaker 7: in Millburn, New Jersey. How well are malls doing and 681 00:29:04,400 --> 00:29:06,240 Speaker 7: what is the as we look ahead here to twenty 682 00:29:06,280 --> 00:29:08,640 Speaker 7: twenty five and beyond. What does the future of the 683 00:29:09,240 --> 00:29:11,560 Speaker 7: American shopping mall look like today? 684 00:29:12,560 --> 00:29:14,960 Speaker 1: I mean, you know, honestly, whether it's mall or even 685 00:29:15,000 --> 00:29:18,840 Speaker 1: if it's you know, neighborhood shopping center, lifestyle centers, what 686 00:29:18,880 --> 00:29:21,960 Speaker 1: I'm really noticing is that consumers want to be wowed 687 00:29:22,120 --> 00:29:25,920 Speaker 1: at every sense of their shopping journey. So whether that's 688 00:29:25,920 --> 00:29:28,400 Speaker 1: even going to a fast food joint, whether that's even 689 00:29:28,440 --> 00:29:31,719 Speaker 1: going to a grocery store. Now, consumers are really looking for, 690 00:29:31,800 --> 00:29:35,080 Speaker 1: you know, that next Instagrammable moment, or they want to 691 00:29:35,120 --> 00:29:37,920 Speaker 1: see some cool technology, or they want to be really 692 00:29:38,000 --> 00:29:40,880 Speaker 1: wowed by the product mix. So I think that's going 693 00:29:40,920 --> 00:29:43,400 Speaker 1: to be a really big trend going into the new year, 694 00:29:43,560 --> 00:29:45,280 Speaker 1: is that retailers are going to have to stay on 695 00:29:45,320 --> 00:29:48,200 Speaker 1: their toes just like they did during twenty twenty and 696 00:29:48,520 --> 00:29:52,600 Speaker 1: moving forward to continue to you know, just really match 697 00:29:52,680 --> 00:29:53,760 Speaker 1: the consumer's energy. 698 00:29:54,720 --> 00:29:58,000 Speaker 4: What is return fraud? Is that a big number. 699 00:30:00,000 --> 00:30:03,040 Speaker 1: It was the one hundred billion that I mentioned and 700 00:30:03,080 --> 00:30:05,360 Speaker 1: that was just for twenty twenty three, So yeah, I mean. 701 00:30:05,600 --> 00:30:06,440 Speaker 10: It is large. 702 00:30:06,800 --> 00:30:09,160 Speaker 1: Like I said, it is a really small percentage of 703 00:30:09,400 --> 00:30:12,200 Speaker 1: a group of people that are doing it, but unfortunately 704 00:30:12,200 --> 00:30:15,000 Speaker 1: this is pushing some of the costs back to consumers. 705 00:30:15,880 --> 00:30:17,560 Speaker 7: We've talked a lot over the course of the last 706 00:30:17,680 --> 00:30:19,640 Speaker 7: year about where people are spending their moneys, if it's 707 00:30:19,680 --> 00:30:23,200 Speaker 7: on experiences or goods themselves. Have we noticed any kind 708 00:30:23,200 --> 00:30:25,200 Speaker 7: of shift and that have you noticed any kind of 709 00:30:25,240 --> 00:30:28,120 Speaker 7: shift away from experiences back to traditional goods, be they 710 00:30:28,160 --> 00:30:30,360 Speaker 7: luxury goods or just you know, other kinds of goods 711 00:30:30,400 --> 00:30:31,000 Speaker 7: people are buying. 712 00:30:32,000 --> 00:30:35,960 Speaker 1: We definitely saw during this holiday season that experiential was 713 00:30:36,080 --> 00:30:38,600 Speaker 1: top of mind for consumers, whether that was you know, 714 00:30:38,640 --> 00:30:41,160 Speaker 1: going to concerts or plays, even if it was going 715 00:30:41,160 --> 00:30:41,680 Speaker 1: out to eat. 716 00:30:41,760 --> 00:30:45,160 Speaker 10: We actually were expecting foot traffic to boost about six 717 00:30:45,200 --> 00:30:47,280 Speaker 10: percent during the holiday season. 718 00:30:47,320 --> 00:30:49,840 Speaker 1: So again still kind of waiting for those final numbers 719 00:30:49,920 --> 00:30:52,480 Speaker 1: to come out, but I just find that really interesting that, 720 00:30:52,560 --> 00:30:53,960 Speaker 1: you know, people just want. 721 00:30:53,800 --> 00:30:56,000 Speaker 10: To gather again, people want to get together. 722 00:30:56,360 --> 00:30:59,440 Speaker 1: They're not so focused on revenge spend anymore like we 723 00:30:59,440 --> 00:31:03,280 Speaker 1: were just a few years ago. So I find that 724 00:31:03,360 --> 00:31:06,080 Speaker 1: really exciting, and again I think we're going to see 725 00:31:06,080 --> 00:31:08,800 Speaker 1: that going into the new year. Also, another category we 726 00:31:08,840 --> 00:31:12,200 Speaker 1: saw that did really well during the holidays was appliances 727 00:31:12,240 --> 00:31:13,120 Speaker 1: and electronics. 728 00:31:13,480 --> 00:31:14,760 Speaker 10: And that goes again with. 729 00:31:14,840 --> 00:31:18,640 Speaker 1: The trend that people are buying now to prepare for later, 730 00:31:18,800 --> 00:31:22,160 Speaker 1: especially with the unknown with these expected tariffs to come. 731 00:31:22,240 --> 00:31:24,440 Speaker 1: Maybe within the next few weeks, maybe within the next 732 00:31:24,480 --> 00:31:25,120 Speaker 1: few months. 733 00:31:25,160 --> 00:31:26,880 Speaker 10: So we'll see how that goes. 734 00:31:26,920 --> 00:31:29,920 Speaker 1: But consumers definitely did stock up on those items during 735 00:31:29,920 --> 00:31:31,640 Speaker 1: the holiday season under. 736 00:31:31,520 --> 00:31:34,040 Speaker 4: Spending, Yes, exactly exactly. 737 00:31:34,120 --> 00:31:39,000 Speaker 3: Nicole LARTs and National Research Manager Retail Services for Colliers. 738 00:31:43,440 --> 00:31:47,720 Speaker 2: This is the Bloomberg Surveillance Podcast. Listen live each weekday 739 00:31:47,800 --> 00:31:51,000 Speaker 2: starting at seven am Eastern on applecar Play and Android 740 00:31:51,040 --> 00:31:53,960 Speaker 2: Auto with the Bloomberg Business app. You can also watch 741 00:31:54,040 --> 00:31:57,320 Speaker 2: us live every weekday on YouTube and always on the 742 00:31:57,320 --> 00:31:58,320 Speaker 2: Bloomberg terminal. 743 00:31:58,600 --> 00:32:00,200 Speaker 3: All right, what are we doing in these markets here? 744 00:32:00,240 --> 00:32:03,280 Speaker 3: Don't stocks, bonds, commodities, alternatives, no idea? 745 00:32:03,400 --> 00:32:05,320 Speaker 4: Tally leisure? He might have an idea. 746 00:32:05,360 --> 00:32:09,520 Speaker 3: He's a chief market strategist for the Wealth consulting group, Tally. 747 00:32:09,560 --> 00:32:11,840 Speaker 4: What are you telling your clients here? As you think 748 00:32:11,840 --> 00:32:14,240 Speaker 4: about twenty twenty five? What are you telling your clients? 749 00:32:16,160 --> 00:32:19,040 Speaker 11: So look, I think, Paul, in the very near term, 750 00:32:19,600 --> 00:32:24,480 Speaker 11: the US is still looking like the best house in 751 00:32:25,240 --> 00:32:28,440 Speaker 11: a bad neighborhood, you know, just looking at what's going 752 00:32:28,520 --> 00:32:31,160 Speaker 11: on in the rest of the world. Given the political 753 00:32:31,160 --> 00:32:36,400 Speaker 11: and economic problems in Europe as well as some challenges 754 00:32:36,800 --> 00:32:41,440 Speaker 11: in Russia in Syria, I think we could benefit, talking 755 00:32:41,480 --> 00:32:45,800 Speaker 11: about US dollar denominated assets from some flight to safety 756 00:32:46,120 --> 00:32:49,400 Speaker 11: and quality flows in the near term, which should help 757 00:32:49,480 --> 00:32:50,320 Speaker 11: keep US buoyant. 758 00:32:51,400 --> 00:32:53,960 Speaker 7: You rattled off a couple of those geopolitical risks. What 759 00:32:54,000 --> 00:32:56,200 Speaker 7: are you most worried about or what are you paying 760 00:32:56,200 --> 00:32:58,600 Speaker 7: the closest attention to. Obviously there has been this promise 761 00:32:58,640 --> 00:33:02,320 Speaker 7: from the incoming president that on day one, maybe day two, 762 00:33:02,640 --> 00:33:04,479 Speaker 7: we'll see a lot it takes, you know, it can 763 00:33:04,520 --> 00:33:06,440 Speaker 7: resolve these wars that are taking place in the Middle 764 00:33:06,480 --> 00:33:09,920 Speaker 7: East and in Ukraine. What are you sort of watching 765 00:33:09,960 --> 00:33:12,360 Speaker 7: most closely as you think about what the market impact 766 00:33:12,440 --> 00:33:14,000 Speaker 7: might be into the new year. 767 00:33:16,240 --> 00:33:19,920 Speaker 11: So, I mean, I'm not really a geopolitical strategist, but 768 00:33:20,240 --> 00:33:25,200 Speaker 11: as we know as practitioners, these events can create bouts 769 00:33:25,240 --> 00:33:30,760 Speaker 11: of near term volatility that I'm personally trained to look past. 770 00:33:30,960 --> 00:33:35,160 Speaker 11: So look, this year twenty twenty four has been devoid 771 00:33:35,200 --> 00:33:38,400 Speaker 11: of any meaningful correction in stocks. So I think if 772 00:33:38,440 --> 00:33:40,560 Speaker 11: we do get some kind of flare up in those 773 00:33:40,600 --> 00:33:45,760 Speaker 11: geopolitical events or even more importantly, a growth or jobs 774 00:33:46,040 --> 00:33:49,280 Speaker 11: related scare here at home, I'd be looking to buy 775 00:33:49,400 --> 00:33:52,800 Speaker 11: some of those cyclicals that could bear the brunt of 776 00:33:52,840 --> 00:33:53,600 Speaker 11: such a pullback. 777 00:33:54,480 --> 00:33:56,080 Speaker 4: Tally, how do you think about evaluation here? 778 00:33:56,480 --> 00:33:58,720 Speaker 3: I mean, we've had just big, big moves higher in 779 00:33:58,760 --> 00:34:01,320 Speaker 3: the markets, We've had some good earnings growth, and I'm 780 00:34:01,360 --> 00:34:03,560 Speaker 3: not sure the ernest growth has been commensurate with the 781 00:34:03,600 --> 00:34:05,880 Speaker 3: moves in the stocks, which I know for a lot 782 00:34:05,920 --> 00:34:08,480 Speaker 3: of folks that raises some valuation concerns. 783 00:34:08,640 --> 00:34:10,200 Speaker 4: How do you deal with that with your clients? 784 00:34:11,560 --> 00:34:16,120 Speaker 11: Well, I think, Paul, the point is well taken, and valuations, 785 00:34:16,360 --> 00:34:21,840 Speaker 11: especially in the larger growthier techy areas of the market, 786 00:34:22,280 --> 00:34:26,560 Speaker 11: have been expanding for good reasons. So I think there's 787 00:34:26,640 --> 00:34:28,600 Speaker 11: a couple of ways to answer that. We're at a 788 00:34:28,640 --> 00:34:32,680 Speaker 11: stage in the market cycle where earnings are picking up here, 789 00:34:32,800 --> 00:34:35,600 Speaker 11: so I think we can grow into some of those 790 00:34:35,640 --> 00:34:39,359 Speaker 11: loftier valuations. But you really don't have to look very 791 00:34:39,400 --> 00:34:44,080 Speaker 11: far just beyond the biggest, most magnificent companies of the 792 00:34:44,120 --> 00:34:49,319 Speaker 11: market to find immediately better relative value opportunities. So in 793 00:34:49,360 --> 00:34:53,799 Speaker 11: the five hundred that could be equal weighted concepts or 794 00:34:53,880 --> 00:34:57,400 Speaker 11: coming down the size curve to mid and small caps 795 00:34:57,480 --> 00:34:59,640 Speaker 11: and even back to the international points that we were 796 00:34:59,640 --> 00:35:00,400 Speaker 11: making earlier. 797 00:35:01,239 --> 00:35:03,799 Speaker 7: Let's talk a bit about sort of where AI is headed. 798 00:35:03,800 --> 00:35:05,880 Speaker 7: Of course, this has been big story in twenty twenty four, 799 00:35:05,920 --> 00:35:07,640 Speaker 7: as it wasn't in twenty twenty three. You bring up 800 00:35:07,719 --> 00:35:10,400 Speaker 7: Magnificent seven. We've talked a little bit this morning just 801 00:35:10,440 --> 00:35:13,080 Speaker 7: about the extent to which the market has broadened out 802 00:35:13,120 --> 00:35:16,919 Speaker 7: so much as it has focusing on AI, that part 803 00:35:16,960 --> 00:35:19,920 Speaker 7: of technology and inspecific Are there facets of it that 804 00:35:19,960 --> 00:35:23,520 Speaker 7: you're watching for in the new year, wherein that enthusiasm 805 00:35:23,640 --> 00:35:26,399 Speaker 7: might lead to other companies doing well on the heels 806 00:35:26,440 --> 00:35:28,120 Speaker 7: of those names that we've mentioned so many times here 807 00:35:28,120 --> 00:35:28,919 Speaker 7: in twenty twenty four. 808 00:35:30,239 --> 00:35:34,040 Speaker 11: Yeah, well, I think some listeners might be surprised to 809 00:35:34,200 --> 00:35:40,040 Speaker 11: know that Semiconductors as a group actually witnessed a bear 810 00:35:40,160 --> 00:35:43,279 Speaker 11: market decline from July into August. I think they fell 811 00:35:43,400 --> 00:35:47,560 Speaker 11: something like twenty three percent just looking at the socks 812 00:35:47,239 --> 00:35:51,600 Speaker 11: for example, And we're still in corrective territory there, even 813 00:35:51,640 --> 00:35:57,560 Speaker 11: though we've balanced somewhat. But I think conceptually technology including 814 00:35:57,760 --> 00:36:00,920 Speaker 11: this AI theme or may yeah, that's what it's kind 815 00:36:00,960 --> 00:36:04,160 Speaker 11: of building up to. Be I think itself could help 816 00:36:04,239 --> 00:36:08,160 Speaker 11: the rest of the market to catch up. So with 817 00:36:08,239 --> 00:36:10,800 Speaker 11: a little bit of patience, we need to allow the 818 00:36:11,320 --> 00:36:14,760 Speaker 11: other companies of the market that are making these AI 819 00:36:14,880 --> 00:36:17,800 Speaker 11: investments time for them to pay off. 820 00:36:19,280 --> 00:36:22,279 Speaker 3: So I mean, let's assume that you know, we're not 821 00:36:22,360 --> 00:36:24,520 Speaker 3: all like Tom Keen and we've been long the Magnificent 822 00:36:24,600 --> 00:36:27,840 Speaker 3: seven and we're just clipping coupons here. If we haven't 823 00:36:27,880 --> 00:36:30,839 Speaker 3: been there, where do we go now for value here? 824 00:36:30,880 --> 00:36:32,719 Speaker 3: If it's wethink about twenty twenty five, are there some 825 00:36:32,719 --> 00:36:34,440 Speaker 3: sectors that screen well for you guys? 826 00:36:36,280 --> 00:36:39,640 Speaker 11: Yeah, So again I might sound like a bit of 827 00:36:39,800 --> 00:36:42,960 Speaker 11: a broken clock here, but I still like the domestic 828 00:36:43,080 --> 00:36:48,400 Speaker 11: cyclicals like financials and consumer discretionary, So those would be 829 00:36:48,480 --> 00:36:53,080 Speaker 11: the third and fourth best performing sectors. Again, might be 830 00:36:53,200 --> 00:36:55,960 Speaker 11: a bit of a surprise to some listeners year today, 831 00:36:56,480 --> 00:37:00,560 Speaker 11: So I'm sticking with those views. But my biggest surprise 832 00:37:00,800 --> 00:37:05,239 Speaker 11: looking ahead to twenty twenty five is probably the most contrariant. 833 00:37:05,320 --> 00:37:08,959 Speaker 11: It's the sector that performed the worst, and that would 834 00:37:09,040 --> 00:37:13,279 Speaker 11: be some of the global cyclical materials names. And as 835 00:37:13,320 --> 00:37:16,000 Speaker 11: a contrarian, I think the starting point for that sector 836 00:37:16,160 --> 00:37:17,000 Speaker 11: is looking pretty good. 837 00:37:17,320 --> 00:37:19,200 Speaker 7: Talk a bit more about that. I'm intrigued by what 838 00:37:19,200 --> 00:37:21,040 Speaker 7: you're saying that what do you see in that sector 839 00:37:21,040 --> 00:37:24,239 Speaker 7: that other investors, other market participants maybe haven't seen over 840 00:37:24,280 --> 00:37:24,799 Speaker 7: the last year. 841 00:37:26,200 --> 00:37:30,040 Speaker 11: So if there's one thing that I do know, it's 842 00:37:30,320 --> 00:37:33,960 Speaker 11: whatever the market themes and narratives are at present, they're 843 00:37:34,000 --> 00:37:37,440 Speaker 11: probably going to look very different one year. Hence, so 844 00:37:37,520 --> 00:37:39,960 Speaker 11: again I like the setup as a contrarian. It's the 845 00:37:39,960 --> 00:37:44,200 Speaker 11: worst performing sector. But again another nice surprise heading into 846 00:37:44,239 --> 00:37:48,400 Speaker 11: twenty twenty five here Lo and Behold, we've got a 847 00:37:48,520 --> 00:37:54,359 Speaker 11: Chinese manufacturing sector that is now expanding once again. Why well, 848 00:37:54,400 --> 00:37:57,520 Speaker 11: I think it's getting some help from near one hundred 849 00:37:57,520 --> 00:38:01,040 Speaker 11: percent of global central banks that have been cutting rates. 850 00:38:01,040 --> 00:38:05,440 Speaker 11: I think the two exceptions are maybe Brazil and Russia 851 00:38:05,480 --> 00:38:08,920 Speaker 11: they've been raising rates. But by and large, I think 852 00:38:08,920 --> 00:38:12,520 Speaker 11: the policy stimulus is starting to show some grassroots there 853 00:38:12,560 --> 00:38:15,480 Speaker 11: and that's helping, I think, lay the foundation for a 854 00:38:15,480 --> 00:38:17,440 Speaker 11: better year ahead for that particular sector. 855 00:38:17,920 --> 00:38:20,080 Speaker 3: Hey, Tylly, let's switch gears. Talk a little bit about 856 00:38:20,239 --> 00:38:22,719 Speaker 3: the fixed income space here to your treasury. I mean, 857 00:38:22,760 --> 00:38:24,960 Speaker 3: I could just park myself into two your treasury four 858 00:38:25,000 --> 00:38:27,440 Speaker 3: point three five percent, clip that coupon. 859 00:38:27,840 --> 00:38:29,759 Speaker 4: I'll sleep well at night. Do I do that or 860 00:38:29,800 --> 00:38:30,839 Speaker 4: do I take some credit risk? 861 00:38:33,400 --> 00:38:36,920 Speaker 11: So I think it is probably an environment where you 862 00:38:37,080 --> 00:38:41,960 Speaker 11: are clipping coupons here, Paul, the credit spreads, I'm not 863 00:38:42,040 --> 00:38:45,839 Speaker 11: seeing any signs of turbulence there. That's another reason why 864 00:38:45,840 --> 00:38:49,040 Speaker 11: I think that the cycle can continue for the equity market. 865 00:38:49,480 --> 00:38:52,280 Speaker 11: But the valuations there are looking a little bit stretched. 866 00:38:52,280 --> 00:38:55,920 Speaker 11: We were talking about that across the cap spectrum earlier. 867 00:38:56,719 --> 00:39:00,839 Speaker 11: But I would be pretty selective in the credits when 868 00:39:00,880 --> 00:39:03,960 Speaker 11: I think about government bonds though, Paul, and this is 869 00:39:04,000 --> 00:39:08,400 Speaker 11: interesting cutting you clipping coupons, as you say, Look, we're 870 00:39:08,440 --> 00:39:12,319 Speaker 11: coming off a couple of really challenging years for treasuries. 871 00:39:12,960 --> 00:39:16,719 Speaker 11: The starting point for yields is higher, better, and the 872 00:39:16,800 --> 00:39:21,799 Speaker 11: relative valuations compared to stocks, I think are much more attractive. 873 00:39:21,920 --> 00:39:26,480 Speaker 11: So if we keep getting this disinflationary trend and the 874 00:39:26,520 --> 00:39:31,360 Speaker 11: housing market softens, helps continue that decline and overall prices 875 00:39:31,360 --> 00:39:34,640 Speaker 11: in the economy, I think yields could soften, and by 876 00:39:34,680 --> 00:39:37,840 Speaker 11: the way, that supports the bottom of the capital structure 877 00:39:37,880 --> 00:39:38,879 Speaker 11: that stocks as well. 878 00:39:40,120 --> 00:39:44,600 Speaker 4: Tally. Are you based in Vegas, No, that's. 879 00:39:44,440 --> 00:39:48,160 Speaker 11: Where HQ is. I live here in Central New Jersey. 880 00:39:48,239 --> 00:39:51,439 Speaker 4: Keyboard to see Jersey. That's where it's all comes back 881 00:39:51,480 --> 00:39:52,040 Speaker 4: to keyboard. 882 00:39:52,120 --> 00:39:54,359 Speaker 3: I mean, I'm sinking that I see my notes here 883 00:39:54,360 --> 00:39:55,800 Speaker 3: says it's Vegas, but he's in keyboard. 884 00:39:55,800 --> 00:39:56,879 Speaker 8: I mean earl of the base. 885 00:39:57,200 --> 00:39:59,239 Speaker 4: I will be on. 886 00:39:58,880 --> 00:40:01,000 Speaker 7: Fox you when it comes to I would be going to. 887 00:40:01,040 --> 00:40:03,479 Speaker 3: Cast keyboard on my train down to the Jersey shore. 888 00:40:03,520 --> 00:40:07,719 Speaker 3: Here today, Tally Leisure, chief market strategist, the Wealth Consulting Group, 889 00:40:07,840 --> 00:40:10,320 Speaker 3: joining us here from the Swamp Happy Leader. 890 00:40:10,400 --> 00:40:11,359 Speaker 4: We appreciate that. 891 00:40:12,080 --> 00:40:16,520 Speaker 2: This is the Bloomberg Surveillance podcast, available on Apple, Spotify, 892 00:40:16,680 --> 00:40:20,800 Speaker 2: and anywhere else you get your podcasts. Listen live each weekday, 893 00:40:20,920 --> 00:40:24,000 Speaker 2: seven to ten am Eastern on Bloomberg dot com, the 894 00:40:24,080 --> 00:40:27,880 Speaker 2: iHeartRadio app, tune In, and the Bloomberg Business app. You 895 00:40:27,920 --> 00:40:31,200 Speaker 2: can also watch us live every weekday on YouTube and 896 00:40:31,360 --> 00:40:32,960 Speaker 2: always on the Bloomberg terminal.