1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,680 --> 00:00:15,480 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,520 --> 00:00:18,720 Speaker 2: with Lisa Bromwitz and Amerie Hordernt. Join us each day 4 00:00:18,760 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,440 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,960 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,319 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,960 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:35,840 Speaker 2: Terminal and the Bloomberg Business app. 10 00:00:35,840 --> 00:00:36,120 Speaker 3: BMP. 11 00:00:36,240 --> 00:00:39,280 Speaker 2: Parabart, a trading unit taking a third quarter hit from 12 00:00:39,280 --> 00:00:43,200 Speaker 2: sering dead. Adding to recent concerns about private credit, Depak 13 00:00:43,240 --> 00:00:45,919 Speaker 2: Puri of Deutsche Bank Private Bank joins us now for more. 14 00:00:45,960 --> 00:00:47,400 Speaker 1: Deepak, Good morning, sir Morny. 15 00:00:47,520 --> 00:00:49,320 Speaker 2: Look, I think David Solomon did a decent job of 16 00:00:49,400 --> 00:00:52,879 Speaker 2: joining a very very big line between systemic risk and 17 00:00:52,920 --> 00:00:55,520 Speaker 2: credit concerns. They're still concerns I think about a turn 18 00:00:55,520 --> 00:00:59,400 Speaker 2: in the credit cycle. Do you share them? Maybe epithodically? 19 00:00:59,480 --> 00:01:02,600 Speaker 4: Right, So seen one of these, you know, inducing credit 20 00:01:02,720 --> 00:01:05,840 Speaker 4: risk every now and then come out for me, Jonathan. 21 00:01:05,920 --> 00:01:08,520 Speaker 4: The biggest risk is this year we've seen two really 22 00:01:08,520 --> 00:01:11,920 Speaker 4: big supply sharks, and we still don't know the full 23 00:01:12,000 --> 00:01:13,160 Speaker 4: term ramifications. 24 00:01:13,319 --> 00:01:15,280 Speaker 1: I'm talking about tariffs and labor supply. 25 00:01:15,720 --> 00:01:18,000 Speaker 4: So once you have those two, you know, I think 26 00:01:18,000 --> 00:01:21,080 Speaker 4: twenty twenty six might be a better test case for 27 00:01:21,480 --> 00:01:25,080 Speaker 4: these kind of supply sharks and their unintended consequences. As 28 00:01:25,120 --> 00:01:28,800 Speaker 4: for now, I think, you know, episodic news with regards 29 00:01:28,880 --> 00:01:32,240 Speaker 4: to credit, I'll take it really episodically. 30 00:01:32,319 --> 00:01:34,039 Speaker 2: Well, at least one of them might be lulling this 31 00:01:34,120 --> 00:01:37,119 Speaker 2: federal reserve into early interest rate reductions. The feed seems 32 00:01:37,120 --> 00:01:39,000 Speaker 2: confused at the moment. We know we've seen it in 33 00:01:39,040 --> 00:01:42,160 Speaker 2: the data, massive step down and pay ross growth. Got that? 34 00:01:42,480 --> 00:01:46,040 Speaker 2: What's behind it? Demand or supply? Which one is it? 35 00:01:46,560 --> 00:01:49,160 Speaker 4: I think labor market is one of those conditions where 36 00:01:49,440 --> 00:01:52,400 Speaker 4: demand adjust to supply in a way. So if the 37 00:01:52,440 --> 00:01:57,200 Speaker 4: supply of you know, workers is reducing, I think demand 38 00:01:57,280 --> 00:01:59,360 Speaker 4: is going to start adjusting to it. And what we're 39 00:01:59,400 --> 00:02:03,760 Speaker 4: seeing is this automation drive from companies that is hurting, 40 00:02:03,960 --> 00:02:04,240 Speaker 4: you know. 41 00:02:04,160 --> 00:02:06,920 Speaker 1: The oral supply. What is also a little bit disturbing 42 00:02:07,000 --> 00:02:07,200 Speaker 1: is the. 43 00:02:07,200 --> 00:02:10,720 Speaker 4: Government shutdown, because I think it sort of exacerbates the 44 00:02:11,440 --> 00:02:12,239 Speaker 4: labor market. 45 00:02:12,040 --> 00:02:14,560 Speaker 2: Can typically depack as you know, and Amory Slaffa, because 46 00:02:14,560 --> 00:02:17,120 Speaker 2: typically we look right through this. It doesn't matter. It's 47 00:02:17,120 --> 00:02:19,760 Speaker 2: a bump in the road, growth comes back. Basically, it's 48 00:02:19,760 --> 00:02:22,560 Speaker 2: growth delayed and not derailed. Sure, the longer it goes on, 49 00:02:22,680 --> 00:02:23,919 Speaker 2: you start to change your thoughts on that. 50 00:02:24,360 --> 00:02:28,079 Speaker 4: I think, yes, primarily because it's after a while it 51 00:02:28,160 --> 00:02:32,480 Speaker 4: becomes exponential in terms of the output activity. So the 52 00:02:32,520 --> 00:02:35,440 Speaker 4: first few weeks, i mean, the consensus is ten basis 53 00:02:35,480 --> 00:02:39,880 Speaker 4: points of economic output gets reduced. But after a certain point, 54 00:02:39,960 --> 00:02:42,720 Speaker 4: let's say this ends up being mid November, you're going 55 00:02:42,720 --> 00:02:46,200 Speaker 4: to start seeing more concerns with regards to the you know, 56 00:02:46,240 --> 00:02:49,560 Speaker 4: the impact it's having on broader economy, and then obviously 57 00:02:49,600 --> 00:02:51,519 Speaker 4: they'll have an impact on the labor market. 58 00:02:51,560 --> 00:02:53,880 Speaker 1: So I would not be completely you. 59 00:02:53,760 --> 00:02:56,480 Speaker 4: Know, negating the fact that, yes, over the years, whenever 60 00:02:56,520 --> 00:02:59,080 Speaker 4: we have a government shutdown, it tends to be you know, 61 00:02:59,160 --> 00:03:00,640 Speaker 4: short lived and painless. 62 00:03:01,160 --> 00:03:02,440 Speaker 1: This time it might be different. 63 00:03:02,760 --> 00:03:05,440 Speaker 5: I'm only laughing because you say the word disturbing, which 64 00:03:05,480 --> 00:03:08,399 Speaker 5: I also find disturbing. The market is creating fresh all 65 00:03:08,440 --> 00:03:12,040 Speaker 5: time high. It's clearly ignoring it. Besides the impacting on 66 00:03:12,080 --> 00:03:15,200 Speaker 5: the economy, how long could this federal reserver investors go 67 00:03:15,320 --> 00:03:16,560 Speaker 5: without economic data. 68 00:03:17,600 --> 00:03:21,880 Speaker 4: Well, they have shown tremendous resilience students to drive their 69 00:03:21,919 --> 00:03:26,639 Speaker 4: policy without much but because they're using anecdotal evidence as 70 00:03:26,680 --> 00:03:29,600 Speaker 4: to get a grasp on where the economy is. And 71 00:03:29,639 --> 00:03:33,440 Speaker 4: I think even there is a gunment shutdown crisis, let's say, 72 00:03:33,480 --> 00:03:36,440 Speaker 4: quote unquote, there's so many other positives that are happening 73 00:03:36,480 --> 00:03:39,080 Speaker 4: in the markets, Henry that I think takes too much 74 00:03:39,120 --> 00:03:42,360 Speaker 4: precedence over gument shutdown. I think the fact that you 75 00:03:42,400 --> 00:03:47,040 Speaker 4: are looking at an AI hyperscale capex spending guidance, which 76 00:03:47,120 --> 00:03:50,360 Speaker 4: might come again a lot better than expected. You have 77 00:03:50,520 --> 00:03:52,840 Speaker 4: a little bit of a framework between the US and 78 00:03:52,880 --> 00:03:56,400 Speaker 4: the Chinese with regards to the trade and tariff. That 79 00:03:56,480 --> 00:04:00,360 Speaker 4: could be potentially a game breaker because within that trade 80 00:04:00,400 --> 00:04:03,960 Speaker 4: and tariff, one of the uncertainties has been the Chinese one, 81 00:04:04,040 --> 00:04:06,640 Speaker 4: you know, because that's really where the bone of contention 82 00:04:06,840 --> 00:04:09,640 Speaker 4: has been. And then, last, but not the least, the Fed. 83 00:04:10,040 --> 00:04:13,360 Speaker 4: There is this expectation maybe the end of QT. You 84 00:04:13,400 --> 00:04:16,559 Speaker 4: look at the SOFA, you know, twenty basis points over 85 00:04:16,640 --> 00:04:19,320 Speaker 4: the FED funds overnight rate, you can argue that there 86 00:04:19,360 --> 00:04:22,560 Speaker 4: is some liquidity tightness where the Fed would be, you know, 87 00:04:22,760 --> 00:04:24,400 Speaker 4: want to. 88 00:04:23,760 --> 00:04:24,520 Speaker 1: Ease some of that. 89 00:04:24,800 --> 00:04:27,480 Speaker 4: So all these three things I think are taking much 90 00:04:27,720 --> 00:04:30,560 Speaker 4: greater presidents over the government shutdown. 91 00:04:30,600 --> 00:04:32,680 Speaker 5: But these three things, it sounds like we have a 92 00:04:32,720 --> 00:04:36,360 Speaker 5: tremendous amount of certainty on the trade story, seems more optimistic. 93 00:04:36,400 --> 00:04:38,560 Speaker 5: With China, we know the Fed is going to cut 94 00:04:38,640 --> 00:04:40,599 Speaker 5: ninety eight percent chance if it's going to be cutting 95 00:04:40,600 --> 00:04:44,560 Speaker 5: interest rates, So what gives the market potentially, well, where 96 00:04:44,600 --> 00:04:46,920 Speaker 5: do you see the market potentially having a little bit 97 00:04:47,000 --> 00:04:49,440 Speaker 5: more of a cautious tone in regards to. 98 00:04:49,480 --> 00:04:51,920 Speaker 4: What Yeah, I think from now to the year end, 99 00:04:52,080 --> 00:04:55,200 Speaker 4: once these three things are not disappointed, right, there's no 100 00:04:55,320 --> 00:04:58,560 Speaker 4: disappointment with these three things. I think the seasonality will 101 00:04:58,600 --> 00:05:00,960 Speaker 4: take over. So from now of the year end, I 102 00:05:01,000 --> 00:05:03,000 Speaker 4: would not be surprised if you see a little bit 103 00:05:03,080 --> 00:05:05,960 Speaker 4: more of this risk taking and then you know investors 104 00:05:06,040 --> 00:05:09,720 Speaker 4: chasing a very high rally market, which is usually the case. 105 00:05:10,080 --> 00:05:12,760 Speaker 4: I think the biggest concern for me is really what 106 00:05:13,160 --> 00:05:16,120 Speaker 4: transpires in the first half of twenty twenty six, where 107 00:05:16,200 --> 00:05:18,479 Speaker 4: you are going to be going through a cyclical sort 108 00:05:18,480 --> 00:05:21,560 Speaker 4: of softness in the markets. And now we'll get to 109 00:05:21,680 --> 00:05:24,200 Speaker 4: know what is the worst outcome with regards to the 110 00:05:24,320 --> 00:05:24,960 Speaker 4: labor markets. 111 00:05:24,960 --> 00:05:25,800 Speaker 1: Because we didn't have the. 112 00:05:25,880 --> 00:05:29,120 Speaker 4: Data for the last two three months in totality, so 113 00:05:29,240 --> 00:05:32,640 Speaker 4: what could potentially happen? And I think if this labor 114 00:05:32,680 --> 00:05:34,880 Speaker 4: market statistics are similar to what we have seen in 115 00:05:34,920 --> 00:05:38,920 Speaker 4: the privacy previous years, where June July was the weakness 116 00:05:38,960 --> 00:05:42,640 Speaker 4: and then it started getting better, then it will be okay. However, 117 00:05:42,839 --> 00:05:44,840 Speaker 4: there is a likelihood that it might not be the 118 00:05:44,960 --> 00:05:47,560 Speaker 4: case that way, And in that particular instance, I think 119 00:05:47,600 --> 00:05:51,120 Speaker 4: the markets are neat to recalibrate to a much starker 120 00:05:52,240 --> 00:05:56,080 Speaker 4: economic reality that the economy is slowing more than expected. 121 00:05:56,120 --> 00:05:57,960 Speaker 2: But what do you think the source of that slowdown 122 00:05:58,040 --> 00:05:59,960 Speaker 2: or that selfness as you'd call it for the first time, 123 00:06:00,320 --> 00:06:02,280 Speaker 2: actually is And to what extent will it be offset 124 00:06:02,360 --> 00:06:05,240 Speaker 2: by the massive tax refunds that I keep hearing about 125 00:06:05,240 --> 00:06:07,920 Speaker 2: that are going to kick in in early next year, right. 126 00:06:07,880 --> 00:06:09,400 Speaker 1: I mean it depends. 127 00:06:09,440 --> 00:06:11,040 Speaker 4: I mean we are thinking it's going to be with 128 00:06:11,160 --> 00:06:14,080 Speaker 4: a zero point six to zero point you know, one percent? 129 00:06:14,440 --> 00:06:16,600 Speaker 4: You know right now you look at GDP now then 130 00:06:16,960 --> 00:06:20,400 Speaker 4: now cast from New York FED everything is showing with 131 00:06:20,520 --> 00:06:21,440 Speaker 4: a three handle. 132 00:06:21,320 --> 00:06:22,440 Speaker 1: So it's much better. 133 00:06:22,880 --> 00:06:25,440 Speaker 4: But these things can change quite quickly, so I would 134 00:06:25,480 --> 00:06:28,440 Speaker 4: not be surprised if you start seeing a below potential 135 00:06:28,920 --> 00:06:31,720 Speaker 4: GDP number for the first half of the year, and 136 00:06:32,200 --> 00:06:34,160 Speaker 4: on top of that, you know, there might be some 137 00:06:34,320 --> 00:06:38,640 Speaker 4: concerns about these credit conditions, these credit stresses that are developing, 138 00:06:39,000 --> 00:06:41,560 Speaker 4: becoming a little bit more broader, default rates going up. 139 00:06:41,600 --> 00:06:45,200 Speaker 4: So I think primarily that's one area of concern. And 140 00:06:45,279 --> 00:06:47,240 Speaker 4: then last, but not the least, I would not be 141 00:06:47,800 --> 00:06:50,440 Speaker 4: you know, the lagged and varying effect of the tariff. 142 00:06:50,800 --> 00:06:54,040 Speaker 4: I think the fact that we are having these bilateral 143 00:06:55,080 --> 00:06:59,200 Speaker 4: you know, MOUs does not necessarily mean that the lagged 144 00:06:59,200 --> 00:07:02,440 Speaker 4: effect of for the tariff rate, which is five times 145 00:07:02,480 --> 00:07:05,120 Speaker 4: what you know the world is used to, is not 146 00:07:05,200 --> 00:07:06,040 Speaker 4: going to have an impact. 147 00:07:06,160 --> 00:07:08,120 Speaker 2: Final question from me, in the forty seconds, we've got 148 00:07:08,200 --> 00:07:12,000 Speaker 2: less greater potential for higher stocks or lower bond yards 149 00:07:12,160 --> 00:07:13,360 Speaker 2: in the first half of next year. 150 00:07:14,880 --> 00:07:15,640 Speaker 1: How about neither? 151 00:07:16,000 --> 00:07:18,280 Speaker 4: I think you said, because last time I came in, 152 00:07:18,520 --> 00:07:21,360 Speaker 4: I said, you don't want to be overly bearish, and 153 00:07:21,600 --> 00:07:23,720 Speaker 4: the question was that the markets can go up and 154 00:07:24,000 --> 00:07:27,560 Speaker 4: bonds could rally, and that was in early September. I 155 00:07:27,640 --> 00:07:29,720 Speaker 4: would not be surprised if you see a little bit 156 00:07:29,760 --> 00:07:31,840 Speaker 4: of a bond weakness going up. 157 00:07:32,120 --> 00:07:33,560 Speaker 1: You know, so the yields going well. 158 00:07:33,680 --> 00:07:36,280 Speaker 4: And stock markets having a little bit of a recalibration 159 00:07:36,880 --> 00:07:38,880 Speaker 4: come twenty early parts of twenty twenty. 160 00:07:38,680 --> 00:07:43,120 Speaker 1: Six stay with US multile IMPERC surveillance coming up. 161 00:07:43,520 --> 00:07:54,640 Speaker 2: After this, stock sent kaya as investors gear up for 162 00:07:54,680 --> 00:07:57,640 Speaker 2: a crucial week of earnings. Ustin quanav whilst Fargo racing 163 00:07:57,680 --> 00:07:59,440 Speaker 2: his year und price target on the S and P 164 00:08:00,040 --> 00:08:03,440 Speaker 2: from sixty six fifty to seventy one hundred and writing 165 00:08:03,480 --> 00:08:05,880 Speaker 2: the following with a big code this morning calling for 166 00:08:05,920 --> 00:08:08,880 Speaker 2: an everything rally into year end. Coal is the bylow 167 00:08:08,960 --> 00:08:12,440 Speaker 2: quality junk, high beta and small and mid AI capex 168 00:08:12,560 --> 00:08:16,640 Speaker 2: beneficiaries a full risk on trade some joints is now 169 00:08:16,720 --> 00:08:18,680 Speaker 2: for more US and good morning, good morning. I mean 170 00:08:18,680 --> 00:08:20,320 Speaker 2: that's quite a cool So let's get into it. What's 171 00:08:20,320 --> 00:08:21,400 Speaker 2: the source of that's changed for you? 172 00:08:21,720 --> 00:08:24,600 Speaker 6: Yeah, So we see about five potential care lists in 173 00:08:24,680 --> 00:08:25,200 Speaker 6: two year end. 174 00:08:25,240 --> 00:08:28,240 Speaker 3: We're bullish. So those five are seasonality. 175 00:08:28,320 --> 00:08:31,240 Speaker 6: Obviously, November December has been the best two months for 176 00:08:31,400 --> 00:08:33,560 Speaker 6: the SMP, but not just for the SMP, but especially 177 00:08:33,640 --> 00:08:34,319 Speaker 6: for the laggers. 178 00:08:34,360 --> 00:08:36,520 Speaker 3: After texts harvesting in oppo war. 179 00:08:36,640 --> 00:08:40,000 Speaker 6: We typically see laggers rallying in November through January. 180 00:08:40,640 --> 00:08:41,840 Speaker 3: Number two AI cappecks. 181 00:08:41,880 --> 00:08:44,839 Speaker 6: I think we're going to see another upper surprise in 182 00:08:45,040 --> 00:08:48,840 Speaker 6: AI cappacks when Hyperscalars report this week. Number three potential 183 00:08:49,000 --> 00:08:52,640 Speaker 6: Terriffy fund so IBA hearing is going to be next week. 184 00:08:52,679 --> 00:08:54,839 Speaker 6: The ruling is probably going to be in January, and 185 00:08:55,280 --> 00:08:58,920 Speaker 6: there's about sixty percent chance according to betting markets, that 186 00:08:59,320 --> 00:09:01,640 Speaker 6: it gets repealed. And if that happens, we're talking about 187 00:09:01,640 --> 00:09:04,760 Speaker 6: one hundred and sixty billion dollars of terraces collected being 188 00:09:04,840 --> 00:09:06,880 Speaker 6: distributed to the economy, which is going to be a 189 00:09:06,920 --> 00:09:11,559 Speaker 6: huge reflationary. Number four, the OBBB tax return. We estimate 190 00:09:11,640 --> 00:09:16,040 Speaker 6: about eight hundred dollars incremental tax return per filer. This 191 00:09:16,200 --> 00:09:19,079 Speaker 6: upcoming textra thurn season which is going to be ballished 192 00:09:19,080 --> 00:09:22,280 Speaker 6: for the consumer as well. And lastly, potential government reopening 193 00:09:22,760 --> 00:09:23,880 Speaker 6: that's going to be bullished as well. 194 00:09:24,000 --> 00:09:25,920 Speaker 2: Okay, so let's break down some of this. I'm going 195 00:09:25,960 --> 00:09:28,640 Speaker 2: to let Amrie handle everything to do with Washington d C. 196 00:09:28,920 --> 00:09:31,360 Speaker 2: I want to ask you about tech spending, So the 197 00:09:31,480 --> 00:09:33,599 Speaker 2: Capex story and what we're going to hear from the 198 00:09:33,640 --> 00:09:36,040 Speaker 2: major tech plans on Wednesday and Thursday. 199 00:09:36,520 --> 00:09:37,520 Speaker 1: They're spending lots. 200 00:09:37,760 --> 00:09:39,960 Speaker 2: Do they need to report some really robust revenue growth 201 00:09:39,960 --> 00:09:42,360 Speaker 2: alongside that for investors to continue tolerating this. 202 00:09:43,320 --> 00:09:47,319 Speaker 6: I think for Hyperscalers as a group, we're not that 203 00:09:47,600 --> 00:09:50,360 Speaker 6: bolish because they are the capex spenders. They're free cash 204 00:09:50,360 --> 00:09:53,240 Speaker 6: flowers coming down there. Historically, you want to avoid companies 205 00:09:53,280 --> 00:09:55,680 Speaker 6: that are invest that are in an investment cycle, which 206 00:09:55,720 --> 00:09:59,199 Speaker 6: is basically Hyperscalers today. The areas there were more bolish 207 00:09:59,360 --> 00:10:02,920 Speaker 6: is really thex takers, especially the smaller cap companies that 208 00:10:02,960 --> 00:10:08,360 Speaker 6: are really starting to benefit from this Hyperscaler's capex increasing. 209 00:10:08,960 --> 00:10:11,760 Speaker 6: The major players right now, even the capex takers, they're 210 00:10:11,840 --> 00:10:14,360 Speaker 6: at full capacity. There are a lot of crumbles that 211 00:10:14,400 --> 00:10:16,680 Speaker 6: are falling off the table, and those crumbles are huge 212 00:10:16,760 --> 00:10:17,720 Speaker 6: for those smaller guys. 213 00:10:17,960 --> 00:10:19,599 Speaker 3: So that's really the group that we like. 214 00:10:19,760 --> 00:10:22,040 Speaker 6: We have a basket of about twenty five smaller cap 215 00:10:22,120 --> 00:10:23,880 Speaker 6: AI capex manificiaries that we like. 216 00:10:24,920 --> 00:10:27,240 Speaker 5: Let's go to tariffs because I think theepest story is 217 00:10:27,320 --> 00:10:29,240 Speaker 5: underappreciated right now in the market and the fact that 218 00:10:29,320 --> 00:10:33,240 Speaker 5: you can have morth of ninety billion dollars having to 219 00:10:33,320 --> 00:10:35,040 Speaker 5: be repaid back. 220 00:10:34,920 --> 00:10:35,760 Speaker 3: To these businesses. 221 00:10:36,000 --> 00:10:38,880 Speaker 5: But the Trump administration basically has other ways to get 222 00:10:38,920 --> 00:10:42,840 Speaker 5: around tariff. So doesn't that get rid of that reimbursement 223 00:10:42,920 --> 00:10:44,480 Speaker 5: because companies are going to have to pay it, just 224 00:10:44,559 --> 00:10:46,040 Speaker 5: it's going to have a different title to it. 225 00:10:46,559 --> 00:10:46,760 Speaker 3: Yeah. 226 00:10:46,960 --> 00:10:50,240 Speaker 6: Well, I think into that event, potential event, that binary event, 227 00:10:50,559 --> 00:10:54,120 Speaker 6: we're going to see some reflation industry because investors will 228 00:10:54,160 --> 00:10:58,760 Speaker 6: want to position for that potential repeal of tariffs. I 229 00:10:58,800 --> 00:11:01,440 Speaker 6: think the New York is obviously be varya bullies for equities, 230 00:11:01,720 --> 00:11:05,679 Speaker 6: rates probably higher and goal higher on physical concerns. But 231 00:11:05,960 --> 00:11:08,240 Speaker 6: in the medium to longer term this could potentially create 232 00:11:08,280 --> 00:11:09,079 Speaker 6: more uncertainty. 233 00:11:09,400 --> 00:11:11,559 Speaker 5: Then there's a shutdown. If the market is struggling off, 234 00:11:11,640 --> 00:11:13,480 Speaker 5: now why would they carryhen it reopens. 235 00:11:13,679 --> 00:11:17,760 Speaker 6: Yeah, I mean government shutdowns historically have been non events basically, 236 00:11:18,520 --> 00:11:21,240 Speaker 6: but coming out of shutdowns we typically see the SMP 237 00:11:21,520 --> 00:11:25,480 Speaker 6: valuing even harder. No news actually has been good news 238 00:11:25,559 --> 00:11:28,160 Speaker 6: for the market because there's no data coming out and 239 00:11:28,320 --> 00:11:30,360 Speaker 6: there's no negative catalysts for the market. 240 00:11:31,160 --> 00:11:31,640 Speaker 3: Even if the. 241 00:11:31,720 --> 00:11:34,560 Speaker 6: Government reopens, there's probably going to be about at least 242 00:11:34,559 --> 00:11:37,480 Speaker 6: two week period where we still don't see much data. 243 00:11:37,600 --> 00:11:39,559 Speaker 6: It's more going to be what computer is saying and 244 00:11:39,800 --> 00:11:42,640 Speaker 6: how the third party data is suggesting. So I think 245 00:11:42,840 --> 00:11:45,479 Speaker 6: that's still a pretty bullish setup for equities. 246 00:11:45,240 --> 00:11:48,560 Speaker 1: Low quality and junk. What is low quality and junk? 247 00:11:49,800 --> 00:11:55,800 Speaker 6: Yeah, so unprofitable tech, so more speculative stocks, some laggers 248 00:11:55,880 --> 00:11:59,600 Speaker 6: that have underperformed, that are really struggling. So we're essentially 249 00:12:00,080 --> 00:12:03,760 Speaker 6: pitching a catchup trade into year end because I think 250 00:12:03,800 --> 00:12:05,520 Speaker 6: it's going to be full risk one into year end. 251 00:12:05,679 --> 00:12:07,120 Speaker 2: You need the FEDER receive to come along for the 252 00:12:07,240 --> 00:12:10,240 Speaker 2: ride and keep signaling more account Yeah, I mean, I think. 253 00:12:10,240 --> 00:12:12,719 Speaker 6: FAT is basically a done deal. They're probably gonna go 254 00:12:13,679 --> 00:12:16,160 Speaker 6: on Wednesday. And if that's the case, I think FAT 255 00:12:16,320 --> 00:12:19,320 Speaker 6: is probably we are in a real easing cycle. 256 00:12:19,480 --> 00:12:20,720 Speaker 3: So the FAED is done. 257 00:12:20,960 --> 00:12:23,800 Speaker 6: It's more fundamentals now, and you know, some of the 258 00:12:23,920 --> 00:12:26,599 Speaker 6: risks that we are seeing that have been proven to 259 00:12:26,679 --> 00:12:29,640 Speaker 6: be less of a risk than what we had expected initially. 260 00:12:29,880 --> 00:12:32,680 Speaker 5: This picture you're painting, I feel like, is the meme 261 00:12:32,760 --> 00:12:35,839 Speaker 5: stock frenzy we saw? Are you expecting almost something like that? 262 00:12:36,559 --> 00:12:39,439 Speaker 6: We could see a little bit of that too, you know, 263 00:12:39,559 --> 00:12:42,880 Speaker 6: we until last week we were seeing some of that 264 00:12:43,000 --> 00:12:45,600 Speaker 6: happening in some of the meme stocks and the retail 265 00:12:45,679 --> 00:12:50,200 Speaker 6: driven names. I think last week was a little weird 266 00:12:50,640 --> 00:12:54,680 Speaker 6: that the setup itself was pretty unfavorable because last week, 267 00:12:54,720 --> 00:12:56,480 Speaker 6: if you think about all the earnings that came out, 268 00:12:56,520 --> 00:12:59,960 Speaker 6: it was mostly regionals and industrials, which were obviously facing 269 00:13:00,080 --> 00:13:02,840 Speaker 6: more headwinds. There was no AI earnings, and we had 270 00:13:02,880 --> 00:13:07,200 Speaker 6: the CPI overhang on Friday, So I think that set up. 271 00:13:07,280 --> 00:13:10,559 Speaker 6: The calendar setup itself was a little shaky. CPI was 272 00:13:10,760 --> 00:13:14,480 Speaker 6: obviously very positive and into this weege where we when 273 00:13:14,520 --> 00:13:16,800 Speaker 6: we were going to hear from all the AI companies, 274 00:13:16,880 --> 00:13:17,600 Speaker 6: We have the FED. 275 00:13:17,880 --> 00:13:20,560 Speaker 3: We also have US China on Friday, So I. 276 00:13:20,559 --> 00:13:22,800 Speaker 6: Think the setup is pretty favorable for us of the 277 00:13:22,960 --> 00:13:24,000 Speaker 6: lower quality stocks. 278 00:13:24,040 --> 00:13:25,920 Speaker 5: If you have seventy one hundred for this year, what 279 00:13:26,000 --> 00:13:28,439 Speaker 5: does that mean for your seventy two hundred target next year? 280 00:13:28,640 --> 00:13:31,880 Speaker 6: Yeah, we're thinking about that. We're going to revisit our 281 00:13:31,920 --> 00:13:33,400 Speaker 6: twenty twenty six numbers. 282 00:13:34,320 --> 00:13:39,319 Speaker 3: I still see sounds like a world spire. Yeah, I 283 00:13:39,360 --> 00:13:40,920 Speaker 3: still seeing more offside to that number. 284 00:13:41,120 --> 00:13:43,280 Speaker 2: We had a guest on the program that said maybe 285 00:13:43,320 --> 00:13:45,679 Speaker 2: we could see a self patch in their staff of 286 00:13:45,800 --> 00:13:46,280 Speaker 2: twenty six. 287 00:13:46,320 --> 00:13:46,920 Speaker 3: You must have had it. 288 00:13:46,960 --> 00:13:49,559 Speaker 2: Maybe I'm right before you. What gives you hope that 289 00:13:49,640 --> 00:13:51,520 Speaker 2: this can continue through twenty six? I'm not going to 290 00:13:51,559 --> 00:13:53,040 Speaker 2: pin you down for a new price target. We'll wait 291 00:13:53,040 --> 00:13:55,400 Speaker 2: for the annual outload. But what gives you hope that's 292 00:13:55,440 --> 00:13:55,800 Speaker 2: the case? 293 00:13:56,080 --> 00:13:58,480 Speaker 3: Yeah, I mean it's really going to be driven by earnings. 294 00:13:59,160 --> 00:14:01,680 Speaker 3: We still see a pretty healthy backdropt for earnings. 295 00:14:01,720 --> 00:14:05,000 Speaker 6: We're forecasting eleven percent growth for twenty six followed by 296 00:14:05,040 --> 00:14:07,760 Speaker 6: another twelve percent in twenty twenty seven. So if that's 297 00:14:07,800 --> 00:14:10,440 Speaker 6: the case, even in multiple staateses thing we're talking about, 298 00:14:10,679 --> 00:14:13,840 Speaker 6: you know, little teens return inequity. 299 00:14:13,880 --> 00:14:15,559 Speaker 2: I'm not going to question the nix because every time 300 00:14:15,600 --> 00:14:18,079 Speaker 2: I do that Wednesday Thursday hits in earning season, the 301 00:14:18,160 --> 00:14:19,840 Speaker 2: tank plans come out and they knock out the park. 302 00:14:19,880 --> 00:14:22,000 Speaker 2: So I won't question the NIX. I do wonder how 303 00:14:22,040 --> 00:14:24,400 Speaker 2: you think about the rest of the world. The international 304 00:14:24,480 --> 00:14:27,120 Speaker 2: stock story had its moment in the sun the first 305 00:14:27,240 --> 00:14:29,560 Speaker 2: quarter of the year. Everything kind of ripped and things 306 00:14:29,600 --> 00:14:31,760 Speaker 2: have settled down. Since where aren't you in the US 307 00:14:31,880 --> 00:14:32,800 Speaker 2: versus the rest of the world. 308 00:14:33,120 --> 00:14:36,120 Speaker 6: Yeah, I think ye still looks more favorable in terms 309 00:14:36,120 --> 00:14:37,000 Speaker 6: of the AI story. 310 00:14:37,280 --> 00:14:38,320 Speaker 3: I mean the rest of the world. 311 00:14:38,400 --> 00:14:41,400 Speaker 6: We could potentially see a catchup trade there too, if 312 00:14:41,480 --> 00:14:44,840 Speaker 6: we start to see the manufacturing cycle really turn. But 313 00:14:44,960 --> 00:14:48,040 Speaker 6: the areas that we are more bullish are really around? 314 00:14:48,120 --> 00:14:51,040 Speaker 2: AI is the one thing that makes you nervous given 315 00:14:51,080 --> 00:14:52,600 Speaker 2: how bully she said, I mean, we've been through all 316 00:14:52,600 --> 00:14:54,680 Speaker 2: the bill case. Is the one thing that just sort 317 00:14:54,720 --> 00:14:55,840 Speaker 2: of nickels at you a little bit? 318 00:14:56,080 --> 00:14:58,960 Speaker 6: Yeah, I mean I think Hyperscalers probably because their free 319 00:14:59,000 --> 00:15:04,440 Speaker 6: cashwow is coming down and they are the biggest companies 320 00:15:04,560 --> 00:15:06,840 Speaker 6: in the SMB five hundreds. So if you start to 321 00:15:06,920 --> 00:15:10,080 Speaker 6: see more of a rotation type of true redlant broadening 322 00:15:10,160 --> 00:15:12,680 Speaker 6: out with everything rallying, then that's not going to be 323 00:15:12,800 --> 00:15:14,960 Speaker 6: good for the SMP at the index level. 324 00:15:15,320 --> 00:15:18,720 Speaker 2: Stay with us more Bloomberg surveillance coming up after this. 325 00:15:27,640 --> 00:15:30,960 Speaker 2: Katie Kaminski of Oupha Simplex Group writing the rally inequities 326 00:15:30,960 --> 00:15:34,920 Speaker 2: has been relatively broad based, with big tech slightly outperforming. 327 00:15:35,000 --> 00:15:37,320 Speaker 2: Katie joins us now for more Katie, Welcome to the program. 328 00:15:37,480 --> 00:15:39,800 Speaker 2: Jan Caffrey of JP Morgan kicked off the program with 329 00:15:39,960 --> 00:15:42,280 Speaker 2: us and said, you don't want to find this ball market? 330 00:15:42,560 --> 00:15:43,120 Speaker 1: Do you agree? 331 00:15:44,400 --> 00:15:46,960 Speaker 7: I have to agree, And actually you have to start 332 00:15:47,000 --> 00:15:49,920 Speaker 7: asking yourself the question, what are the things that could. 333 00:15:49,880 --> 00:15:52,760 Speaker 1: Be a sort of a stop for this big. 334 00:15:52,760 --> 00:15:55,720 Speaker 7: Rally that we've seen, And there isn't anything that's obvious. 335 00:15:55,840 --> 00:15:59,480 Speaker 7: I think I am watching though what FED commentary will 336 00:15:59,520 --> 00:16:01,760 Speaker 7: be this week, just given the fact that we don't 337 00:16:01,840 --> 00:16:05,080 Speaker 7: have data for future meetings. So I think that is 338 00:16:05,240 --> 00:16:08,440 Speaker 7: one potential curve ball. But in general, earnings are good, 339 00:16:08,600 --> 00:16:11,400 Speaker 7: growth is good, and the trend has been very strong. 340 00:16:11,800 --> 00:16:13,680 Speaker 1: From a technical perspective. 341 00:16:13,520 --> 00:16:15,840 Speaker 2: Kedy, that's the equity market. The equity market is pricing 342 00:16:15,880 --> 00:16:18,480 Speaker 2: at a rebound in economic growth. I wonder what you 343 00:16:18,600 --> 00:16:21,760 Speaker 2: think the bond market is pricing. Because this rally, particularly 344 00:16:21,880 --> 00:16:24,280 Speaker 2: long end, coming out of the summer of surprise many 345 00:16:24,360 --> 00:16:26,760 Speaker 2: what do you think explains it well? 346 00:16:26,800 --> 00:16:29,440 Speaker 7: I think you know, bonds have really been focused on 347 00:16:29,960 --> 00:16:34,640 Speaker 7: sort of potential rate cuts and seeing more creative inflation 348 00:16:34,840 --> 00:16:37,400 Speaker 7: data is also very positive for bonds, especially on the 349 00:16:37,440 --> 00:16:40,440 Speaker 7: long end. I think an interesting point is we haven't 350 00:16:40,520 --> 00:16:43,560 Speaker 7: seen a steepener. We've seen sort of a pause in 351 00:16:43,680 --> 00:16:47,440 Speaker 7: that particular move in bond movements, which which means basically 352 00:16:47,560 --> 00:16:51,120 Speaker 7: that you're seeing a flatter yield curve. So I think 353 00:16:51,520 --> 00:16:54,920 Speaker 7: bonds are very focused on rate cuts and that has 354 00:16:54,960 --> 00:16:59,080 Speaker 7: been pretty consistent, but trend signals have not been very 355 00:16:59,120 --> 00:17:02,160 Speaker 7: good at timing those moves in bonds, and there haven't 356 00:17:02,240 --> 00:17:05,920 Speaker 7: been sort of very strong themes to follow, except for 357 00:17:06,000 --> 00:17:08,199 Speaker 7: that bonds have been slightly up, so I'd say it's 358 00:17:08,200 --> 00:17:10,200 Speaker 7: still a little tricky to trade bonds. 359 00:17:09,960 --> 00:17:12,600 Speaker 2: This year, Katy has been tricky to track the correlations. 360 00:17:12,720 --> 00:17:15,280 Speaker 2: Everything seems to be rallying and give the same time stalks, 361 00:17:15,320 --> 00:17:19,400 Speaker 2: bonds and predcious metals too, until very very recently, when 362 00:17:19,440 --> 00:17:21,240 Speaker 2: the gold trades down it to one whap. Do you 363 00:17:21,320 --> 00:17:23,680 Speaker 2: see that as an isolated story in its own asset 364 00:17:23,720 --> 00:17:26,000 Speaker 2: class or does it speak to something else happening somewhere. 365 00:17:27,240 --> 00:17:29,720 Speaker 7: Well, I think gold is something we really should watch 366 00:17:29,760 --> 00:17:32,440 Speaker 7: because it's the only thing that's telling us something interesting 367 00:17:32,600 --> 00:17:35,160 Speaker 7: right now. I think you know, you've seen this very 368 00:17:35,320 --> 00:17:37,960 Speaker 7: strong gold theme for the past couple of months, and 369 00:17:38,040 --> 00:17:40,119 Speaker 7: you have to start asking yourself how much of this 370 00:17:40,359 --> 00:17:44,200 Speaker 7: is an over extended rally and you know, deleveraging out 371 00:17:44,280 --> 00:17:46,480 Speaker 7: of sort of what has been a very profitable trade, 372 00:17:46,840 --> 00:17:49,119 Speaker 7: and how much of it is a shift in sentiment 373 00:17:49,280 --> 00:17:52,520 Speaker 7: about concerns because I often see gold as something that 374 00:17:52,600 --> 00:17:55,880 Speaker 7: people use to hedge their concern for things like inflation, 375 00:17:56,520 --> 00:17:58,960 Speaker 7: and you know, the recent moves in gold could give 376 00:17:59,000 --> 00:18:02,000 Speaker 7: you pause that something might be changing that we haven't 377 00:18:02,040 --> 00:18:03,320 Speaker 7: really understood yet, Well. 378 00:18:03,240 --> 00:18:05,600 Speaker 5: What could be changing Is the market just feeling better 379 00:18:05,640 --> 00:18:08,760 Speaker 5: about the geopolitical situation and the trade narrative coming from 380 00:18:08,760 --> 00:18:09,639 Speaker 5: the Trump administration. 381 00:18:11,040 --> 00:18:13,600 Speaker 7: I think that's the case, So maybe it's a change 382 00:18:13,640 --> 00:18:16,040 Speaker 7: in sentiment, but it also could be And this is 383 00:18:16,160 --> 00:18:19,640 Speaker 7: the one kind of wild card question is like, let's 384 00:18:19,680 --> 00:18:22,320 Speaker 7: say that we have a little bit of a pause 385 00:18:22,400 --> 00:18:24,800 Speaker 7: from the FED. That would affect real rates, which also 386 00:18:24,840 --> 00:18:27,879 Speaker 7: affects gold prices. So I think, you know, gold is 387 00:18:27,920 --> 00:18:30,000 Speaker 7: an interesting one. It's the only thing that's kind of 388 00:18:30,119 --> 00:18:32,920 Speaker 7: moving in a different direction right now. So some of 389 00:18:32,960 --> 00:18:36,320 Speaker 7: it could be sentiment drifting more positive. That means everything 390 00:18:36,440 --> 00:18:39,560 Speaker 7: is kind of in the same direction, but you know, 391 00:18:39,680 --> 00:18:40,440 Speaker 7: we'll have to see. 392 00:18:40,600 --> 00:18:41,920 Speaker 1: It is something to pay attention to. 393 00:18:42,119 --> 00:18:44,119 Speaker 5: Okay, there's a lot of catalysts just this in this 394 00:18:44,400 --> 00:18:47,040 Speaker 5: In this week alone, we have tech earnings, the FED meeting, 395 00:18:47,119 --> 00:18:49,520 Speaker 5: and of course the President sitting down with Shijipang. 396 00:18:49,560 --> 00:18:51,040 Speaker 1: What are you most acutely focused on? 397 00:18:52,160 --> 00:18:55,080 Speaker 7: I would say I think the rhetoric around China has 398 00:18:55,160 --> 00:18:58,520 Speaker 7: been very important. I mean, you saw those moves. It 399 00:18:58,760 --> 00:19:01,560 Speaker 7: has the ability to move the market, and it is 400 00:19:01,640 --> 00:19:04,240 Speaker 7: a theme that the market has been concerned and focused 401 00:19:04,280 --> 00:19:07,120 Speaker 7: on I mean, obviously earnings are important, but I think, 402 00:19:07,400 --> 00:19:10,480 Speaker 7: you know, some resolution of some of the volatility we've 403 00:19:10,520 --> 00:19:13,960 Speaker 7: seen around that has been received very positively by the market, 404 00:19:14,080 --> 00:19:17,040 Speaker 7: So I think that's something we're watching. We're also seeing 405 00:19:17,119 --> 00:19:20,480 Speaker 7: in commodities take a look at soybean prices, for example, 406 00:19:20,560 --> 00:19:22,760 Speaker 7: and so you could see, you know, other moves as 407 00:19:22,760 --> 00:19:25,360 Speaker 7: a result of that particular discussion. 408 00:19:25,480 --> 00:19:27,840 Speaker 2: The casey dangerous territory for me to ask this question 409 00:19:28,040 --> 00:19:30,399 Speaker 2: and to wrap up this conversation with it, is there 410 00:19:30,440 --> 00:19:33,720 Speaker 2: a credible bear case going into twenty twenty six and if. 411 00:19:33,640 --> 00:19:34,320 Speaker 3: There is, what is it? 412 00:19:35,800 --> 00:19:37,760 Speaker 7: I think this is a really hard one. And you know, 413 00:19:37,840 --> 00:19:40,760 Speaker 7: I love to be a bear, but you know, you're 414 00:19:40,840 --> 00:19:42,720 Speaker 7: not seeing it in the data right now. And I 415 00:19:42,800 --> 00:19:45,359 Speaker 7: think gold was one of the themes that was a 416 00:19:45,440 --> 00:19:48,960 Speaker 7: little bit of a hedge position, I'd say, so, I'd say, 417 00:19:49,080 --> 00:19:52,680 Speaker 7: right now, there's really very little signals that suggest a 418 00:19:52,760 --> 00:19:56,480 Speaker 7: bear move. I do think the FED potentially pausing due 419 00:19:56,520 --> 00:19:59,800 Speaker 7: to lack of data, could you know, kind of cause 420 00:19:59,840 --> 00:20:01,200 Speaker 7: some stress for the markets. 421 00:20:01,320 --> 00:20:02,880 Speaker 1: Is it a bear case? I'm not sure. 422 00:20:03,600 --> 00:20:05,960 Speaker 7: We'll just have to see, but you're right, there's not 423 00:20:06,080 --> 00:20:07,600 Speaker 7: a lot of bear signals out there. 424 00:20:07,800 --> 00:20:11,200 Speaker 2: Stay with US mult Bloomberg surveillance coming up. After this, 425 00:20:19,920 --> 00:20:22,760 Speaker 2: it's the President prising new Japanese Prime Minister at Takaichi 426 00:20:23,000 --> 00:20:26,920 Speaker 2: and offering her, quote, anything you want to strengthen diplomatic ties, 427 00:20:26,960 --> 00:20:29,720 Speaker 2: the leadst signing trade and critical mineral stales. But the 428 00:20:29,800 --> 00:20:32,119 Speaker 2: details remained vague. Still, this could not. 429 00:20:32,280 --> 00:20:33,679 Speaker 1: Have gone better for Japan. 430 00:20:33,840 --> 00:20:36,680 Speaker 5: I know we're still waiting for some details when it 431 00:20:36,800 --> 00:20:40,720 Speaker 5: comes to some of these specifics on trade and on 432 00:20:40,960 --> 00:20:43,560 Speaker 5: business investment. But you have to thank you are a 433 00:20:43,720 --> 00:20:45,000 Speaker 5: brand new prime minister. 434 00:20:45,160 --> 00:20:46,040 Speaker 1: The President of the United. 435 00:20:45,920 --> 00:20:49,960 Speaker 5: States coming over after dealing with incredibly at times difficult 436 00:20:50,040 --> 00:20:52,320 Speaker 5: rhetoric when it comes to trade. He's saying, I will 437 00:20:52,359 --> 00:20:55,280 Speaker 5: go above and beyond for you, especially when it comes 438 00:20:55,320 --> 00:20:58,000 Speaker 5: to defense. So as Kelly and Shaw was saying she 439 00:20:58,200 --> 00:21:00,200 Speaker 5: just got back from Japan when she was hearing from 440 00:21:00,240 --> 00:21:04,040 Speaker 5: executives and some individuals close to the government a little 441 00:21:04,040 --> 00:21:06,399 Speaker 5: bit of nervousness to the president coming over for Japan, 442 00:21:06,520 --> 00:21:07,479 Speaker 5: this couldn't have gone any better. 443 00:21:07,600 --> 00:21:09,080 Speaker 1: It's a pretty interesting sequence, isn't it. 444 00:21:09,320 --> 00:21:11,560 Speaker 2: SiGe up things with your allies in the region in 445 00:21:11,720 --> 00:21:14,320 Speaker 2: Asia and then move on to South Korea and sit 446 00:21:14,400 --> 00:21:16,680 Speaker 2: down with a Chinese leader. Just how much leverage has 447 00:21:16,720 --> 00:21:18,920 Speaker 2: the president got, how much to what extent is this 448 00:21:19,040 --> 00:21:20,399 Speaker 2: deal already signed down? 449 00:21:21,040 --> 00:21:21,639 Speaker 1: This deal it. 450 00:21:21,720 --> 00:21:23,800 Speaker 5: Sounds like from what Kelly and Shaw was saying, who 451 00:21:23,920 --> 00:21:27,320 Speaker 5: was there at the table during Trump one, is almost done. 452 00:21:27,600 --> 00:21:30,359 Speaker 5: There is a framework. Will that framework be made public? 453 00:21:30,480 --> 00:21:32,720 Speaker 5: This does feel like a work in progress, And as 454 00:21:32,800 --> 00:21:36,560 Speaker 5: Kelly Ann said, it's really about managing this relationship from 455 00:21:36,600 --> 00:21:39,240 Speaker 5: this point on, potentially not this grand bargain that a 456 00:21:39,280 --> 00:21:41,080 Speaker 5: lot of people thought we would maybe get with Beijing 457 00:21:41,200 --> 00:21:42,480 Speaker 5: going into Trump's second term. 458 00:21:42,720 --> 00:21:44,480 Speaker 1: That's the latest on Trient. Let's turn to tag. 459 00:21:44,560 --> 00:21:47,320 Speaker 2: Quollcom shares up slightly after hitting a fifteen month high 460 00:21:47,640 --> 00:21:50,200 Speaker 2: on Monday, the jump following the unveiling of new chips 461 00:21:50,280 --> 00:21:52,920 Speaker 2: and computers for the AI data center market as the 462 00:21:52,960 --> 00:21:55,280 Speaker 2: company tries to challenge in video. That stock is down 463 00:21:55,320 --> 00:21:58,200 Speaker 2: this morning by one point four percent, and finally, GOMT 464 00:21:58,320 --> 00:22:01,360 Speaker 2: SAX CEO David Solomon saying he doesn't see any systemic 465 00:22:01,440 --> 00:22:04,320 Speaker 2: risk looming in the credit market. Solomon describing recent losses 466 00:22:04,400 --> 00:22:08,120 Speaker 2: at regional banks as idiosyncratic events. The servers are remind 467 00:22:08,200 --> 00:22:12,280 Speaker 2: us to stay vigilant about underwriting standards. David Solomon catching 468 00:22:12,320 --> 00:22:15,719 Speaker 2: gut wi Chamana Pissecci over in Riad, Saudi Arabia. We're 469 00:22:15,720 --> 00:22:17,280 Speaker 2: going to hear from Jamana a little bit later this 470 00:22:17,400 --> 00:22:20,600 Speaker 2: morning when she sits down with a JP Morgan executive 471 00:22:20,800 --> 00:22:23,960 Speaker 2: Mary Urdos. Let's turn to the shutdown. Democrats now facing 472 00:22:24,000 --> 00:22:26,320 Speaker 2: pressure from the largest federal workers union to put an 473 00:22:26,400 --> 00:22:29,439 Speaker 2: end to the week's long stalemate in Washington. Joining us 474 00:22:29,520 --> 00:22:33,040 Speaker 2: now as the Republican Congressman French Shill of Arkansas, Congressman, 475 00:22:33,280 --> 00:22:35,440 Speaker 2: Welcome back to the program, sir. We've had a couple 476 00:22:35,480 --> 00:22:38,159 Speaker 2: of guest talk up, maybe this ending at the end 477 00:22:38,200 --> 00:22:41,200 Speaker 2: of November. What are your constituents saying to you, sir. 478 00:22:42,960 --> 00:22:44,800 Speaker 8: Well, John, it's nice to be with you. Well, this 479 00:22:45,280 --> 00:22:48,639 Speaker 8: Schumer shutdown has been a disaster. Well, they try to 480 00:22:48,680 --> 00:22:52,399 Speaker 8: get one point five trillion in new spending, undo all 481 00:22:52,480 --> 00:22:56,080 Speaker 8: the reforms to the Medicaid program, just to name two items. 482 00:22:56,520 --> 00:22:58,920 Speaker 8: We're putting farmers at risk in my state. I met 483 00:22:58,960 --> 00:23:02,320 Speaker 8: with farmers last week. They're desperate for the Congress to 484 00:23:02,400 --> 00:23:06,399 Speaker 8: come back into session work with Secretary Brooke Rawlins on 485 00:23:06,520 --> 00:23:10,920 Speaker 8: a particular effort to have a stopgap measure to help 486 00:23:11,000 --> 00:23:13,720 Speaker 8: them between now and the benefits in the great, big, 487 00:23:13,800 --> 00:23:16,239 Speaker 8: beautiful bill in the next fiscal year to help our 488 00:23:16,320 --> 00:23:18,679 Speaker 8: farm economy, which is in desperate shafe. We have record 489 00:23:19,440 --> 00:23:23,400 Speaker 8: Chapter twelve bankruptcies in Arkansas. I've got four hundred National 490 00:23:23,480 --> 00:23:27,080 Speaker 8: Guardsmen that are on furload and on unemployment this week. 491 00:23:26,920 --> 00:23:27,600 Speaker 3: In my district. 492 00:23:28,080 --> 00:23:31,320 Speaker 8: So my best advice is that if Schumer would release 493 00:23:32,400 --> 00:23:36,840 Speaker 8: these Democratic senators, let'st the government back open and continue 494 00:23:36,880 --> 00:23:39,159 Speaker 8: our negotiations on appropriations. 495 00:23:39,600 --> 00:23:43,000 Speaker 5: Congressman, do you think that Republicans should all be back 496 00:23:43,480 --> 00:23:48,159 Speaker 5: on the hill to potentially await maybe a single funding 497 00:23:48,240 --> 00:23:51,400 Speaker 5: measure to either pay those individuals like you're talking about 498 00:23:51,400 --> 00:23:53,880 Speaker 5: in your district that are not getting paid or federal workers. 499 00:23:55,680 --> 00:23:58,240 Speaker 8: Well, the Senate has put those bills on the floor 500 00:23:58,400 --> 00:24:01,879 Speaker 8: with the senators right there. Chuck Schumer has blocked the 501 00:24:01,960 --> 00:24:05,760 Speaker 8: motion to proceed to pay federal workers, to take other 502 00:24:06,000 --> 00:24:10,040 Speaker 8: targeted actions to pay military employees. I mean, this is 503 00:24:10,119 --> 00:24:13,320 Speaker 8: the kind of shameful rhetoric and approach that Chuck Schumer 504 00:24:13,440 --> 00:24:17,639 Speaker 8: has taken. He's holding federal employees and state employees that 505 00:24:17,680 --> 00:24:20,399 Speaker 8: are funded by federal grant programs hostage. And that's why 506 00:24:20,520 --> 00:24:24,280 Speaker 8: the employee union of the federal government spoke out yesterday. 507 00:24:24,640 --> 00:24:27,560 Speaker 8: But that's what I hear from folks in my district 508 00:24:27,880 --> 00:24:30,280 Speaker 8: every day. The House is at call. We did our 509 00:24:30,320 --> 00:24:31,360 Speaker 8: work five weeks ago. 510 00:24:31,840 --> 00:24:32,600 Speaker 1: We're on call. 511 00:24:32,800 --> 00:24:35,840 Speaker 8: We can be back here in minutes if the Senate 512 00:24:35,960 --> 00:24:38,720 Speaker 8: moves to open the government. And as this drags on, 513 00:24:38,920 --> 00:24:41,800 Speaker 8: we're just going to be confronted with another vote on 514 00:24:41,880 --> 00:24:45,160 Speaker 8: the Continuing Resolution in just a few days. So we've 515 00:24:45,280 --> 00:24:49,040 Speaker 8: missed all this time of important work on agriculture, on banking, 516 00:24:49,200 --> 00:24:54,160 Speaker 8: on reviewing housing policy, all because Schumer wants to spend 517 00:24:54,200 --> 00:24:57,119 Speaker 8: one point five trillion more and do away with all 518 00:24:57,160 --> 00:24:59,320 Speaker 8: the reforms that we made in the Medicaid program. 519 00:25:00,040 --> 00:25:03,040 Speaker 5: Rshan is is Speaker Johnson, and you and your colleagues 520 00:25:03,160 --> 00:25:05,320 Speaker 5: willing to vote for some of these one off spending 521 00:25:05,359 --> 00:25:07,520 Speaker 5: bills if the Senate was able to pass it. 522 00:25:09,160 --> 00:25:12,400 Speaker 8: Well, look, the Senate. What needs to happen is Chuck 523 00:25:12,400 --> 00:25:16,560 Speaker 8: Schumer needs to open the government. That's what needs to happen, Emory, 524 00:25:16,720 --> 00:25:19,760 Speaker 8: that's the easiest thing to do. Five weeks ago, we 525 00:25:20,000 --> 00:25:23,320 Speaker 8: offered a clean cr that had democratic support. You have 526 00:25:23,440 --> 00:25:26,639 Speaker 8: Democratic senators saying that Chuck Schumer is wrong. You have 527 00:25:26,800 --> 00:25:30,119 Speaker 8: Democratic House members saying that Chuck Schumer is wrong. So 528 00:25:30,280 --> 00:25:33,760 Speaker 8: he just needs to get with reality and recognize that 529 00:25:33,800 --> 00:25:35,760 Speaker 8: we should be opening the government and then we can 530 00:25:35,800 --> 00:25:38,160 Speaker 8: continue the work on FY twenty six spending. 531 00:25:38,760 --> 00:25:41,639 Speaker 5: You mentioned agricultural and some of the farmers that are 532 00:25:41,640 --> 00:25:43,520 Speaker 5: suffering right now. A lot of that is the fact 533 00:25:43,600 --> 00:25:48,879 Speaker 5: that in retaliation to the Trump administration's tariffs, China is 534 00:25:48,960 --> 00:25:52,080 Speaker 5: no longer buying soybeans. Well, that we're expected to change 535 00:25:52,119 --> 00:25:56,080 Speaker 5: today or this week. How is your district reacting to 536 00:25:56,200 --> 00:25:59,119 Speaker 5: what is going on in terms of trade relationships this 537 00:25:59,200 --> 00:26:00,920 Speaker 5: administration is having with China. 538 00:26:02,440 --> 00:26:05,680 Speaker 8: Well, the principal challenge to our row crop farmers in 539 00:26:05,880 --> 00:26:09,879 Speaker 8: Arkansas is that we're potentially entering the fourth year of 540 00:26:10,040 --> 00:26:14,240 Speaker 8: bad finances. One point five billion in losses is forecast 541 00:26:14,359 --> 00:26:17,040 Speaker 8: for this farm year. That's the three years, and we're 542 00:26:17,080 --> 00:26:20,119 Speaker 8: getting ready to enter a fourth year brought about by 543 00:26:20,240 --> 00:26:23,280 Speaker 8: higher cost due to the inflation during the Biden administration 544 00:26:24,000 --> 00:26:27,680 Speaker 8: and the inflationary effects of the Russia's invasion of Ukraine. 545 00:26:28,040 --> 00:26:31,359 Speaker 8: These have crushed the cost side of producing a crop, 546 00:26:31,600 --> 00:26:35,560 Speaker 8: and then prices have stayed fairly reasonable all during this period, 547 00:26:35,680 --> 00:26:38,880 Speaker 8: but we've had surplus crops around the world. You're right 548 00:26:39,200 --> 00:26:44,120 Speaker 8: that Joe Biden did not enforce Trump's agricultural products deal 549 00:26:44,240 --> 00:26:47,840 Speaker 8: in his term, and that only about sixty percent of 550 00:26:47,960 --> 00:26:51,160 Speaker 8: the soybeans that China promised to pay, and Trump won 551 00:26:52,000 --> 00:26:55,000 Speaker 8: where those purchases were made. So I hope that President 552 00:26:55,000 --> 00:26:58,640 Speaker 8: Trump can get that market back open for American growers. 553 00:26:59,080 --> 00:27:02,359 Speaker 8: But we also have to recognize that four bad years 554 00:27:02,400 --> 00:27:04,760 Speaker 8: in a row is going to put the banks in 555 00:27:04,840 --> 00:27:08,399 Speaker 8: trouble and the farmers in trouble. Before I was in Congress, 556 00:27:08,440 --> 00:27:11,520 Speaker 8: I was an agricultural lender. I know about how challenging 557 00:27:11,560 --> 00:27:14,200 Speaker 8: it is with two back to back losses, But you 558 00:27:14,320 --> 00:27:17,040 Speaker 8: do a third or start a fourth, you're going to 559 00:27:17,080 --> 00:27:18,560 Speaker 8: put a lot of farmers out of business. 560 00:27:18,680 --> 00:27:21,680 Speaker 2: A Congressman, this is a slightly uncomfortable question. I understand 561 00:27:21,760 --> 00:27:24,040 Speaker 2: that because of what this business means to the people 562 00:27:24,119 --> 00:27:27,840 Speaker 2: of your state. But at the moment, the US is making, 563 00:27:28,320 --> 00:27:30,920 Speaker 2: I think a well articulated decision to de risk from 564 00:27:31,040 --> 00:27:35,000 Speaker 2: China that would therefore in some ways make it difficult 565 00:27:35,040 --> 00:27:37,560 Speaker 2: to alarm China being a buyer of anything for the 566 00:27:37,640 --> 00:27:39,960 Speaker 2: foreseeable future. Do you think that's something we have to 567 00:27:40,040 --> 00:27:42,840 Speaker 2: reconcile with farm production in this country that we can 568 00:27:42,880 --> 00:27:44,800 Speaker 2: no longer rely on the Chinese buy even if we 569 00:27:44,840 --> 00:27:47,440 Speaker 2: get some temporary relief and a soybean stale this week. 570 00:27:48,600 --> 00:27:51,159 Speaker 8: Well, I think that's why you see Secretary Vestment and 571 00:27:51,280 --> 00:27:57,639 Speaker 8: Secretary Lutniqu emphasizing soybean markets all around the world besides China. 572 00:27:57,760 --> 00:27:59,840 Speaker 8: We don't want to ever in business put all your 573 00:28:00,000 --> 00:28:02,520 Speaker 8: eggs in one basket, and we've been very dependent on 574 00:28:03,320 --> 00:28:06,400 Speaker 8: the Chinese market, as you know, for the past three decades. 575 00:28:06,960 --> 00:28:08,879 Speaker 8: But we have to recognize we've got to open up 576 00:28:08,960 --> 00:28:12,760 Speaker 8: other markets around the world. We've produced the best soybeans 577 00:28:12,800 --> 00:28:14,960 Speaker 8: in the world at the best price, and we have 578 00:28:15,040 --> 00:28:16,760 Speaker 8: the best farmers, and so we just need to make 579 00:28:16,800 --> 00:28:19,840 Speaker 8: sure that we diversify that market because you're right, our 580 00:28:19,920 --> 00:28:22,560 Speaker 8: farmers at risk as long as we're in the middle 581 00:28:22,680 --> 00:28:27,280 Speaker 8: of a de risking strategy from China. But that's not 582 00:28:27,480 --> 00:28:29,359 Speaker 8: just a nag products, but across the board. 583 00:28:29,400 --> 00:28:29,800 Speaker 3: Obviously. 584 00:28:31,119 --> 00:28:34,640 Speaker 2: This is the Bloomberg Survendans podcast, bringing you the best 585 00:28:34,720 --> 00:28:38,000 Speaker 2: in markets, economics, antient politics. 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