WEBVTT - Equity Bullishness and US Election Analysis 0:00:02.440 --> 0:00:06.800 Bloomberg Audio Studios, podcasts, radio news. 0:00:11.960 --> 0:00:16.360 This is the Bloomberg Surveillance Podcast. Catch us live weekdays 0:00:16.360 --> 0:00:19.840 at seven am Eastern on applecar Player, Android Auto with 0:00:19.880 --> 0:00:23.360 the Bloomberg Business App. Listen on demand wherever you get 0:00:23.360 --> 0:00:26.480 your podcasts, or watch us live on YouTube. 0:00:26.840 --> 0:00:29.600 Let's talk a little economically. Let's set the plate. Let's 0:00:29.600 --> 0:00:32.560 set the scene for the week ahead. Kathy Bost John 0:00:32.640 --> 0:00:36.120 Chick joins a She's a chief economist at Nationwide. Kathy, 0:00:36.120 --> 0:00:38.920 thanks so much for joining us here, layout for us. 0:00:39.000 --> 0:00:41.960 Kind of your view of this US economy here, I've 0:00:42.000 --> 0:00:44.559 got a Federal Reserve that's cutting rates. I'm not sure 0:00:44.560 --> 0:00:47.120 how aggressive they're going to be. I got some pretty 0:00:47.120 --> 0:00:49.800 decent retail sales last week, so I think the consumer 0:00:49.880 --> 0:00:52.199 is a good place. I think the consumers got a 0:00:52.280 --> 0:00:54.440 job if he or she wants one. What's your view 0:00:54.440 --> 0:00:55.680 of this US economy right here? 0:00:56.640 --> 0:01:00.200 Good morning, Paul. Well, the economy is quite resilient. That's 0:01:00.240 --> 0:01:03.680 what you're seeing in the consumer spending data and and 0:01:03.480 --> 0:01:07.640 and the labor market data and and it's I think 0:01:07.640 --> 0:01:12.800 it's surprising, surprising to the Fed Reserve, surprising to many investors. Uh, 0:01:12.880 --> 0:01:15.960 the strength, you know, continued strength. It's it's obviously welcomed. 0:01:16.000 --> 0:01:19.680 You know, the economic expansion can continue. And I guess 0:01:19.840 --> 0:01:22.800 gives a fit a good problem, uh to try to 0:01:23.000 --> 0:01:26.080 think about, you know, how quickly they need to continue 0:01:26.120 --> 0:01:30.399 to recalibrate interest rates as they say, inflation was a 0:01:30.400 --> 0:01:33.720 little bit sticky though, uh, and that that there's a 0:01:33.760 --> 0:01:37.200 little bit of a wrinkle in the plans. What they 0:01:37.200 --> 0:01:39.280 want to make sure is that, you know, as they're 0:01:39.319 --> 0:01:46.040 recalibrating interest rates lower, they don't stop the disinflationary trend. Uh, 0:01:46.160 --> 0:01:48.720 in inflation that has been in place. Right, that's the 0:01:48.800 --> 0:01:52.600 reason they can cut rates. We've you know, always arguing 0:01:52.720 --> 0:01:55.840 it's really the pace of employment gains that will dictate, 0:01:56.280 --> 0:01:58.680 you know, how how fast they can cut rates. 0:01:59.240 --> 0:02:02.720 Kathy, what about the uncertainty around the so called neutral rate, 0:02:02.760 --> 0:02:07.080 the long run equilibrium interest rate are star? What's your 0:02:07.160 --> 0:02:09.960 sense of sort of what the Fed's thinking on that is, 0:02:10.040 --> 0:02:12.520 is they as they undertake this recalibration as you call it. 0:02:13.880 --> 0:02:17.160 Great question, because that you know is the guiding star, 0:02:17.320 --> 0:02:20.400 that's the north star. And the problem is, you know, 0:02:20.520 --> 0:02:24.160 as you know, the New York Fed President John Williams 0:02:24.200 --> 0:02:26.640 has said many times and he's the foremost expert in 0:02:26.680 --> 0:02:29.520 the area. As you get closer than the star gets 0:02:29.520 --> 0:02:31.800 a bit fuzzier, so you don't really know is it 0:02:32.120 --> 0:02:34.440 two seventy five two point eight, is it three and 0:02:34.480 --> 0:02:36.360 a quarter on the FED funds rate or is it 0:02:36.400 --> 0:02:39.880 three and abcent. It's unsure at this point, so they're 0:02:39.919 --> 0:02:43.880 going to use the data as guidance to tell them, 0:02:44.200 --> 0:02:47.880 you know, how close you're getting to neutral. But I 0:02:47.919 --> 0:02:50.920 think there's another there's a long run neutral, and then 0:02:50.919 --> 0:02:54.840 there's a current neutral and based on current economic data, 0:02:55.320 --> 0:02:58.079 you know, that's where the debate I think is ensuring. 0:02:58.200 --> 0:03:01.239 You know, there's some signs really that monetary policy is 0:03:01.360 --> 0:03:05.520 very restrictive with the housing market. Look at the auto sector, 0:03:05.600 --> 0:03:10.440 they're really being weighed down by high interest rates. Middle 0:03:11.600 --> 0:03:15.200 income households, low income households are struggling under the weight 0:03:15.280 --> 0:03:18.360 of high utriss rates. But on the other hand, retail 0:03:18.360 --> 0:03:21.679 sales continue to show a consumer that is going to 0:03:21.680 --> 0:03:24.440 carry economic growth, not just you know, capping off a 0:03:24.480 --> 0:03:27.440 strong third quarter, but momentum into the fourth quarter. So 0:03:27.480 --> 0:03:30.440 that really is the debate for the Fed. We think 0:03:30.480 --> 0:03:33.359 they'll continue to cut interest rates. We still have in 0:03:33.400 --> 0:03:36.240 our baseline and a twenty five base point rate cut 0:03:36.360 --> 0:03:39.520 in November. We have another one in December, but both 0:03:39.520 --> 0:03:43.200 of those odds, you know, have diminished. There is more doubt, 0:03:43.760 --> 0:03:46.160 I think among FED officials do do we really need 0:03:46.200 --> 0:03:49.000 to keep cutting rates, especially since they cut rates fifty 0:03:49.000 --> 0:03:50.840 basis points in September? 0:03:51.600 --> 0:03:53.520 Kathy, how about the labor market here? We got a 0:03:53.600 --> 0:03:58.040 you know, top line unemployment rate four point one percent 0:03:58.280 --> 0:04:00.600 or so. That seems pretty darn solid to me, but 0:04:00.680 --> 0:04:03.120 some folks tell us some of the recent trends has 0:04:03.120 --> 0:04:04.760 been a little troubling. How should we think about this 0:04:05.120 --> 0:04:06.680 US labor economy? 0:04:08.640 --> 0:04:12.560 It is an interesting picture. So on one hand, there's 0:04:12.600 --> 0:04:16.640 still pretty good demand overall for workers, and the unemployment 0:04:16.720 --> 0:04:20.560 rate reflects that very low four point one percent. On 0:04:20.560 --> 0:04:22.120 the other hand, where you look at the jobs that 0:04:22.160 --> 0:04:26.719 are created from the Establishment survey, they're very concentrated in 0:04:26.880 --> 0:04:33.880 health and education and also leisure and hospitality. Now that's 0:04:34.000 --> 0:04:36.840 not unusual for economic cycles. You could continue to see 0:04:36.880 --> 0:04:39.800 the economy do well with this high concentration, but it 0:04:39.839 --> 0:04:42.760 also tells you again it's a sign that high interest 0:04:42.839 --> 0:04:46.800 rates are hurting the cyclical sectors of the economy. So 0:04:46.880 --> 0:04:51.440 you'd much have much rather have a broad based employee games. 0:04:51.480 --> 0:04:53.240 Right now, it's really highly concentrated. 0:04:54.080 --> 0:04:56.040 You talked just a moment ago, Kathy, just about following 0:04:56.080 --> 0:04:58.320 the data. How much of this is data driven? We 0:04:58.400 --> 0:05:01.240 have a cacophony of fedspeak this week today, four of 0:05:01.279 --> 0:05:03.520 them as I count them, Mary Daily speaking, Lori Logan 0:05:03.520 --> 0:05:06.359 of the Dallas Fed, Neil Kashgari, Jeffrey Schmid of Kansas City. 0:05:07.520 --> 0:05:10.799 What are you listening for in all of those speeches? Again, 0:05:12.080 --> 0:05:14.599 it seems like there's such monumental uncertainty just a couple 0:05:14.640 --> 0:05:16.599 of weeks away, fifteen days away till this election, we 0:05:16.680 --> 0:05:18.080 might not have a result by the time the FED 0:05:18.120 --> 0:05:21.120 meets Once again, how valuable are the insights from these 0:05:21.120 --> 0:05:23.880 FED officials, just bearing in mind that uncertainty that looms 0:05:23.920 --> 0:05:24.480 so large. 0:05:26.320 --> 0:05:31.400 I think it's very valuable because they are that's the 0:05:31.440 --> 0:05:34.000 fuller guidance, right, and that's one of the tools that 0:05:34.040 --> 0:05:36.599 they can offer the markets, is this verbal guidance. 0:05:36.960 --> 0:05:38.440 You know, there's six. 0:05:38.240 --> 0:05:41.320 Weeks in between meetings, so this is our time to 0:05:41.920 --> 0:05:44.320 give you know, their thoughts. On the other hand, they're 0:05:44.320 --> 0:05:47.839 all individuals, so you're not getting a consensus view, but 0:05:48.040 --> 0:05:52.479 you can pick up Where are the doubts increasing, Like, 0:05:52.520 --> 0:05:55.200 are they leaning forwards saying you know what, we know 0:05:55.320 --> 0:05:58.919 economic data have come in stronger, but we're still really 0:05:59.000 --> 0:06:01.799 restrictive and I think we can continue to lower rates 0:06:02.080 --> 0:06:03.040 and we have room. 0:06:02.839 --> 0:06:03.280 To do that. 0:06:03.640 --> 0:06:07.000 Or is there some concern that maybe, hey, maybe we 0:06:07.040 --> 0:06:09.000 need to go a little slower, even slower than the 0:06:09.040 --> 0:06:11.719 markets thing because we don't want to revive inflation. 0:06:13.240 --> 0:06:15.799 Kathy, thanks so much for joining us. Really appreciate getting 0:06:15.800 --> 0:06:18.600 a few minutes of your time. Kathy Bastoncik. She is 0:06:18.640 --> 0:06:25.200 the chief economist at Nationwide. 0:06:26.200 --> 0:06:30.039 You're listening to the Bloomberg Surveillance Podcast. Catch us live 0:06:30.160 --> 0:06:33.440 weekday afternoons from seven to ten am Easter Listen on 0:06:33.520 --> 0:06:36.760 Apple car Play and Android Auto with a Bloomberg Business app, 0:06:36.880 --> 0:06:38.599 or watch us live on YouTube. 0:06:39.120 --> 0:06:42.760 My question simply is do we trust any of the 0:06:42.800 --> 0:06:45.040 polls here? I can't, you know, I don't know. Sometimes 0:06:45.040 --> 0:06:47.200 they tell us the last election they were pretty accurate 0:06:47.200 --> 0:06:49.080 as it relates to the popular vote, but I don't know. 0:06:49.279 --> 0:06:51.159 I just think back to all the other elections. I 0:06:51.160 --> 0:06:54.159 think about Brexit, how bad they were on that one. 0:06:54.240 --> 0:06:56.840 Henrietta Tres she does this kind of stuff for a 0:06:56.880 --> 0:06:59.680 Living Change the manager partner in Vada Partners, Henrietta, Are 0:06:59.680 --> 0:07:02.559 there any polls that you look at that you feel 0:07:02.560 --> 0:07:06.520 like are maybe more representative and than others and kind 0:07:06.520 --> 0:07:07.719 of what are they telling you these days? 0:07:08.680 --> 0:07:10.080 Great question, Thanks. 0:07:10.200 --> 0:07:13.280 I actually really enjoy the fact that we are in 0:07:13.320 --> 0:07:16.360 the early voting process already, so now we can start 0:07:16.400 --> 0:07:18.400 to move or at least add on to our data 0:07:18.440 --> 0:07:21.240 sets by incorporating the early voting data as opposed to 0:07:21.400 --> 0:07:24.640 just the polling. So that's informative and helpful. It's not 0:07:24.680 --> 0:07:27.000 for the faint of heart. It is worse than day trading. 0:07:27.640 --> 0:07:30.720 You get these huge baskets of data that swing the 0:07:30.800 --> 0:07:33.800 vote totals by these massive margins every single night. 0:07:34.120 --> 0:07:36.560 But nonetheless, if you're really digging into. 0:07:36.400 --> 0:07:39.200 The weeds, you can start to watch early polling data, 0:07:39.240 --> 0:07:42.680 which is very exciting and right now. Effectively, what I 0:07:42.720 --> 0:07:44.920 would say is pay attention to the really great poles 0:07:45.240 --> 0:07:48.120 that are done by you know, tried and tested pollsters. 0:07:48.160 --> 0:07:51.240 So the New York Times swing state poles are particularly valuable, 0:07:51.840 --> 0:07:54.680 and then all the Bloomberg Morning Console pole, which is 0:07:54.720 --> 0:07:56.120 more frequent, is very valuable. 0:07:57.040 --> 0:07:58.120 Stick to the big ones. 0:07:58.160 --> 0:08:00.840 There is a flood of poll right now that is 0:08:00.880 --> 0:08:04.080 coming from the campaigns themselves, and those tend to have 0:08:04.160 --> 0:08:06.800 pretty stark biases three or four points in favor of. 0:08:06.720 --> 0:08:08.800 Whichever candidate right now. 0:08:08.840 --> 0:08:11.680 A number of those like Atlas, Rescues and Trafalgar are 0:08:11.720 --> 0:08:13.760 coming from Republican outlets, So you're going to see a 0:08:13.840 --> 0:08:15.720 republic event, which is what the pools are showing you 0:08:15.800 --> 0:08:16.120 right now. 0:08:16.240 --> 0:08:18.280 Well, speaking of bias, the audience knows I bring my 0:08:18.320 --> 0:08:20.440 North Carolina bias to the show when I fill in. 0:08:20.600 --> 0:08:22.440 And here's a number that stood out to me. One million, 0:08:22.480 --> 0:08:24.920 eighty one hundred and twenty three. That's the number of 0:08:25.080 --> 0:08:27.360 early votes we've seen cast in just four days, and 0:08:27.400 --> 0:08:30.200 this is a state of about ten point five million. 0:08:30.240 --> 0:08:30.600 People. 0:08:31.360 --> 0:08:34.640 Talk a bit about early voting and if this seems 0:08:34.679 --> 0:08:37.439 like an outsize level of enthusiasm so far, sort of 0:08:37.520 --> 0:08:40.079 what we know just a few days in for how 0:08:40.080 --> 0:08:42.439 many people are voting early, and what that says perhaps 0:08:42.480 --> 0:08:44.600 about the trajector here going to election day on the fifth. 0:08:45.240 --> 0:08:48.400 It's really exciting, and congratulations on having North Carolina on 0:08:48.440 --> 0:08:51.000 your radar. And I'm sure you have friends and family 0:08:51.040 --> 0:08:53.440 that are in the area that you're getting feedback from 0:08:53.440 --> 0:08:53.959 in real time. 0:08:54.000 --> 0:08:54.960 And anecdotal stuff. 0:08:55.400 --> 0:08:58.120 North Carolina and Georgia are breaking records for turnout. I 0:08:58.120 --> 0:09:00.760 would say probably the main takeaway for me now is 0:09:00.760 --> 0:09:04.640 that Republican voters are voting early in much greater frequency 0:09:04.679 --> 0:09:06.520 than they have in the past, and about double the 0:09:06.600 --> 0:09:10.240 rate of Democrats. So that's the case in Nevada, for example, 0:09:10.280 --> 0:09:12.160 which I was just spending some time with this morning, 0:09:12.960 --> 0:09:18.080 and effectively what's happening is Republican voters have been very 0:09:18.120 --> 0:09:19.920 exposed to this idea of an. 0:09:20.440 --> 0:09:22.480 Election that may be stolen and what have you. 0:09:22.840 --> 0:09:27.760 The Republican governors in those states and Republican operatives like 0:09:27.880 --> 0:09:30.640 North Carolina and Georgia in Nevada have been spending millions 0:09:30.679 --> 0:09:33.080 of dollars trying to encourage their voters to come to 0:09:33.120 --> 0:09:34.480 the polls early, and that is. 0:09:34.440 --> 0:09:35.320 Really panning out. 0:09:35.600 --> 0:09:39.520 So you're seeing these substantial increases in Republican voters who 0:09:39.600 --> 0:09:42.720 usually vote on election day coming to vote early, and 0:09:42.760 --> 0:09:45.120 that's I think a main driver of that record turnout number. 0:09:45.720 --> 0:09:48.520 Henry Henrietta, what do we know about I guess the 0:09:48.880 --> 0:09:52.800 down ballot situation for some of these key states, key seats. 0:09:52.840 --> 0:09:55.280 What are we hearing and how do you expect that 0:09:55.320 --> 0:09:55.800 to play. 0:09:55.600 --> 0:10:01.959 Out down ballot's really still moving very substantially for the 0:10:02.120 --> 0:10:05.560 entire year. As we've discussed in the past, Democratic candidates 0:10:05.600 --> 0:10:11.120 in the Senate seats like Ohio, Pennsylvania, Nevada, Arizona, Michigan, Wisconsin, 0:10:11.200 --> 0:10:13.760 et cetera, they've all been leading the top of the 0:10:13.800 --> 0:10:16.680 Democratic ticket, whether that's Kamala Harris or Joe Biden. Throughout 0:10:16.720 --> 0:10:19.840 the year, they've been pulling ahead five, six, ten points. 0:10:20.320 --> 0:10:24.240 As the final voters decide which direction they're going to go, 0:10:24.800 --> 0:10:28.720 the delta between Democratic senators and Republican Senate candidates has 0:10:28.960 --> 0:10:32.360 dropped substantially, and now voters are going to the direction 0:10:32.480 --> 0:10:35.240 that they have since twenty sixteen, which is they're going 0:10:35.320 --> 0:10:38.120 to vote party line down the ballot. So what we're 0:10:38.160 --> 0:10:42.120 starting to see is material tightness for the Democratic candidates 0:10:42.160 --> 0:10:45.560 in Pennsylvania. We're starting to see that tighten up in 0:10:45.640 --> 0:10:49.080 a state like Arizona and Nevada where the Democrat is 0:10:49.080 --> 0:10:53.280 still comfortably ahead, but the Republican under or challenger is 0:10:53.320 --> 0:10:55.200 starting to move a little bit further up in the 0:10:55.200 --> 0:10:58.520 polls as voters decide which direction they're going to go. 0:10:58.559 --> 0:11:00.600 At the top of the ticket, Kamala Harris Donald Trump. 0:11:01.080 --> 0:11:04.240 So we're seeing that the races are really tight. My expectation, 0:11:04.280 --> 0:11:06.160 with ninety percent odds is that Republicans are going to 0:11:06.160 --> 0:11:09.320 control the Senate next year, and that's mostly a virtue 0:11:09.360 --> 0:11:13.240 and a factor of Montana. In Montana, Donald Trump is 0:11:13.280 --> 0:11:16.360 on track to win by twenty one points, and that's 0:11:16.520 --> 0:11:20.280 a bridge too far for any Democratic incumbent to supersed 0:11:20.760 --> 0:11:24.400 Usually a down ballot senator can outrun the top of 0:11:24.440 --> 0:11:27.280 the ticket by about four or five points. But for 0:11:27.440 --> 0:11:32.040 John Tester, the Senator from Montana, he's underwater now already 0:11:32.080 --> 0:11:35.640 against his Republican challenger, and then he's underwater by about 0:11:36.120 --> 0:11:39.920 fifteen to seventeen points against Donald Trump at the Republican 0:11:39.920 --> 0:11:42.959 top of the ticket versus the Democratic ticket. So my expectation, 0:11:43.200 --> 0:11:46.040 almost regardless of how the swing states go, is that 0:11:46.080 --> 0:11:47.800 Republicans will control the Senate next year. 0:11:48.360 --> 0:11:50.920 Henria, let's talk a bit about Elon Musk. He spent 0:11:51.000 --> 0:11:55.280 his college days in Pennsylvania. He's back in the state 0:11:55.400 --> 0:11:57.120 spending a lot of money, and the thing that's getting 0:11:57.160 --> 0:12:00.600 a lot of attention this morning is his that's almost 0:12:00.600 --> 0:12:04.280 like a sweepstakes. If you sign his pledge here to 0:12:04.360 --> 0:12:07.079 support the First Amendment and the Second Amendment. You're in 0:12:07.120 --> 0:12:10.160 the running to win a million dollars a day. My 0:12:10.280 --> 0:12:12.760 eyebrow is raised as a result of seeing that, wondering 0:12:12.760 --> 0:12:15.839 if that's legal. I gather there's some interest on the 0:12:15.840 --> 0:12:18.000 Democratic side and getting law enforcement to look into what 0:12:18.280 --> 0:12:19.040 he's pledging to do. 0:12:19.080 --> 0:12:19.320 There. 0:12:19.920 --> 0:12:21.920 Talk a bit about that scheme, if you would, what 0:12:21.960 --> 0:12:23.640 you make of it, but then more broadly, sort of 0:12:23.640 --> 0:12:26.199 how he's changing or trying to change the ground game 0:12:26.200 --> 0:12:27.199 in Pennsylvania. 0:12:27.880 --> 0:12:29.520 Yeah, a couple of really good points here. 0:12:30.280 --> 0:12:33.120 First, it's illegal to buy votes, and so what Elon 0:12:33.200 --> 0:12:35.960 Musk is doing is he's buying signatures. He's trying to 0:12:35.960 --> 0:12:38.080 get you to sign up to support the First and 0:12:38.120 --> 0:12:38.680 second Amendment. 0:12:38.720 --> 0:12:40.079 He's also trying to get you to sign up to 0:12:40.120 --> 0:12:41.000 register to vote. 0:12:41.120 --> 0:12:44.760 That is a technicality that is different than actually buying 0:12:44.800 --> 0:12:48.400 your vote on election day, So he's circumventing that part 0:12:48.440 --> 0:12:49.120 of election law. 0:12:49.160 --> 0:12:51.360 Democrats are of course screaming. 0:12:50.960 --> 0:12:54.800 About it because it's designed with a monetary value behind 0:12:54.800 --> 0:12:57.640 it and it's about voting, so they're trying to get 0:12:57.640 --> 0:13:00.800 the Elections Commission involved. But that is the way that 0:13:00.840 --> 0:13:03.600 he asides stepping that issue. I think you're seeing as 0:13:03.640 --> 0:13:07.240 a general strategy from the Republican camp from Donald Trump 0:13:07.679 --> 0:13:10.480 is to farm out a lot of the campaign to 0:13:10.559 --> 0:13:14.520 third parties. So whether that's trying to have a third 0:13:14.520 --> 0:13:18.280 party boots on the ground program that will get you 0:13:18.480 --> 0:13:21.440 volunteers and door knockers in an individual state, or in 0:13:21.480 --> 0:13:24.160 the case of Elon Musk here with trying to buy 0:13:24.280 --> 0:13:28.040 signatures to get registered to vote, or in the case 0:13:28.120 --> 0:13:31.040 of even the predictive markets you've seen that on poly Market, 0:13:31.040 --> 0:13:34.600 for example, with this sharp uptick from an estimated four 0:13:34.720 --> 0:13:37.920 accounts driving the odds up to sixty one percent as 0:13:37.920 --> 0:13:40.319 of this morning that Trump will win. This is all 0:13:40.360 --> 0:13:44.840 sort of third party designed to influence voter perception in 0:13:44.880 --> 0:13:47.360 the final days of the campaign, and you still have 0:13:47.360 --> 0:13:51.040 about twenty four percent of the individual voter base who's 0:13:51.160 --> 0:13:54.240 undecided about which direction they want to go. What they're 0:13:54.280 --> 0:13:56.720 trying to do is influence the idea of where momentum 0:13:56.800 --> 0:14:00.240 is because voters like to vote for the winner. Trying 0:14:00.240 --> 0:14:02.440 to give this projection in this image of winning, and 0:14:02.480 --> 0:14:04.520 I think that's a big part of what the Elon 0:14:04.600 --> 0:14:06.120 Musk campaign is all about. 0:14:07.040 --> 0:14:10.240 So Elon Musk for former President Trump, maybe a mark 0:14:10.280 --> 0:14:13.800 Cuban for Vice President Harris to these types of celebrity 0:14:13.880 --> 0:14:16.560 supporters that they mean anything at the end of the day. 0:14:17.679 --> 0:14:20.920 I think what Republicans are trying to do specifically is 0:14:21.000 --> 0:14:26.920 turn out very keyed in media, attentive audiences and the 0:14:26.960 --> 0:14:30.040 young male demographics. So for this cohort, it very much 0:14:30.080 --> 0:14:33.320 could take hold that unfortunately has yet to be proven. 0:14:33.720 --> 0:14:36.480 I mentioned earlier that a lot of the voters who 0:14:36.520 --> 0:14:39.120 are coming out for the Republican Party right now used 0:14:39.120 --> 0:14:42.000 to vote on election day, and now they're voting early. 0:14:42.320 --> 0:14:45.120 What's happening is you're actually not seeing new voter turnout. 0:14:45.160 --> 0:14:47.880 You're cannibalizing your election day vote. So there's a big 0:14:47.920 --> 0:14:50.960 to do about a blue wall going into election day 0:14:51.000 --> 0:14:54.520 that's overwhelmed by a red wave on election Day. 0:14:54.560 --> 0:14:57.080 That was the trajectory we saw in twenty twenty. 0:14:57.280 --> 0:14:59.160 Donald Trump has talked a lot about that in the past, 0:14:59.200 --> 0:15:02.560 sort of thisocratic blue firewall. What Republicans are trying to 0:15:02.600 --> 0:15:05.160 do with this media strategy and this outreach to young, 0:15:05.680 --> 0:15:08.720 very online mail voters is get them to come out 0:15:08.760 --> 0:15:10.840 and vote for Donald Trump. What we're seeing so far 0:15:11.240 --> 0:15:14.080 is that very enthusiastic repeat Republican voters. 0:15:14.080 --> 0:15:16.360 Trump supporters are very galvanized this year. 0:15:16.520 --> 0:15:19.880 They're extraordinarily enthusiastic about voting for Trump, and they're. 0:15:19.680 --> 0:15:20.600 Turning out early. 0:15:20.680 --> 0:15:23.480 So it's not that we're seeing a new influx of 0:15:23.560 --> 0:15:26.600 voters thus far. There has been strong voter registration from 0:15:26.640 --> 0:15:29.040 Republicans in the last four years, but that's not what 0:15:29.080 --> 0:15:32.040 we're seeing in the early returns thus far. Again, as 0:15:32.040 --> 0:15:34.280 I said in the beginning, this data swings a lot, 0:15:34.360 --> 0:15:37.360 but right now it's all election day voters that are 0:15:37.360 --> 0:15:40.240 pulling forward, not new voters coming into the Republican poult. 0:15:40.120 --> 0:15:41.800 All right, Henrietta Trez nobody better. 0:15:41.800 --> 0:15:42.840 Always great to speak with you. 0:15:43.160 --> 0:15:45.320 Always good on that one, Henrietta Trice, Thank you so 0:15:45.400 --> 0:15:47.960 much again for your time. Henrietta is a managing partner 0:15:48.000 --> 0:15:51.200 at Veda Partners. Given us the latest breakdown of a 0:15:51.280 --> 0:15:54.520 fluid situation, again fifteen days away from election day. 0:15:55.080 --> 0:15:59.360 This is the Bloomberg Surveillance Podcast. Listen live each weekday 0:15:59.440 --> 0:16:02.680 starting its an am Eastern on applecar Play and Android 0:16:02.720 --> 0:16:05.560 Auto with the Bloomberg Business app. You can also listen 0:16:05.680 --> 0:16:08.760 live on Amazon Alexa from our flagship New York station 0:16:09.160 --> 0:16:11.920 Just Say Alexa, playing Bloomberg eleven thirty. 0:16:12.200 --> 0:16:15.000 I'm sandwich between two Carolina people. David Gerr, who grew 0:16:15.080 --> 0:16:17.880 up at North Carolina Chapel Hill and at Chapel Hill, 0:16:17.920 --> 0:16:22.600 she's also the chief market strategist at Ridolt's Wealth Management. So, Kelly, 0:16:22.640 --> 0:16:25.000 I mean, I've got a stock market. I'm not jumping 0:16:25.000 --> 0:16:26.760 off yet. I mean should I be jumping off here? 0:16:27.040 --> 0:16:27.960 I'm sticking with it. 0:16:28.320 --> 0:16:30.840 Well, the economy looks okay, so I don't think you 0:16:30.880 --> 0:16:33.800 should be jumping off and better yet, expectations are so 0:16:34.080 --> 0:16:36.360 low that I think it could lead to more of 0:16:36.400 --> 0:16:40.120 a rally in the future. Of course, everybody's nervous about election, 0:16:40.480 --> 0:16:43.040 the election coming up, and you know we're seeing some 0:16:43.120 --> 0:16:45.320 premium in the Vics and in the ten year because 0:16:45.320 --> 0:16:47.720 of that. But at the same time, I mean, what 0:16:47.960 --> 0:16:51.160 post election rallies are quite typical. We're heading into an 0:16:51.160 --> 0:16:54.000 earning season where you know, estimates have been cut way 0:16:54.040 --> 0:16:56.960 too much, and up until a few weeks ago, everybody 0:16:56.960 --> 0:16:58.800 thought we were heading for a recession, and it turns 0:16:58.800 --> 0:17:01.360 out maybe we're not. So it's all about. 0:17:01.160 --> 0:17:02.640 Expectations early days. 0:17:02.720 --> 0:17:04.280 Yet in this earning season, I GUS one hundred and 0:17:04.280 --> 0:17:07.120 thirteen companies reporting this week what have you been able 0:17:07.160 --> 0:17:09.080 to divine from what we've gotten thus far from the 0:17:09.080 --> 0:17:10.800 financials and others, and sort of what are you looking 0:17:10.800 --> 0:17:13.199 for as we get kind of more fully underway in 0:17:13.240 --> 0:17:13.960 the reporting period. 0:17:14.280 --> 0:17:18.040 Well, obviously, earning estimates are way too low on the 0:17:18.040 --> 0:17:20.800 revenue side, on the earning side as well. That's why 0:17:20.840 --> 0:17:22.840 you're seeing about an eighty percent beat rate and why 0:17:22.840 --> 0:17:26.480 you're seeing stocks react really well when you know companies 0:17:26.520 --> 0:17:30.359 come out with these, you know, not impressive results, but 0:17:30.359 --> 0:17:32.359 at least they kind of hurdle the low bar. I 0:17:32.480 --> 0:17:34.600 really like the management commentary that we've heard so far. 0:17:34.640 --> 0:17:38.280 I feel encouraged by the bank commentary around the economy, 0:17:38.280 --> 0:17:41.560 around the consumer that we've heard. You know, I'm more macro, 0:17:42.080 --> 0:17:44.439 so I don't look as much at individual companies, But 0:17:44.520 --> 0:17:46.840 so far, so good. I mean, that beat rate is strong. 0:17:47.600 --> 0:17:50.880 Valuation. What are the concerns, if any here for you 0:17:50.960 --> 0:17:52.399 for valuation for this market? 0:17:52.480 --> 0:17:54.879 Yeah, well, I think valuation is a distraction for people. 0:17:54.920 --> 0:17:57.960 So obviously the S and P valuation is quite high, 0:17:58.040 --> 0:18:01.320 but when you take out tech, the smp sits around 0:18:01.320 --> 0:18:04.760 like a nineteen forward pe and that's actually quite low. 0:18:04.800 --> 0:18:06.359 I mean, if you think about the average for that 0:18:06.440 --> 0:18:09.200 is around seventeen historically. So what I'm trying to say 0:18:09.280 --> 0:18:10.879 is that there are a lot of opportunities in this 0:18:10.960 --> 0:18:13.480 market if you're willing to look for them. Valuation isn't 0:18:13.480 --> 0:18:16.400 a concern for most stocks. You just have that influence 0:18:16.440 --> 0:18:20.600 from big tech just kind of clouding the valuation picture 0:18:20.600 --> 0:18:21.960 that you're seeing for the overall SMP. 0:18:22.320 --> 0:18:25.000 So if I'm looking for them, where would you guide 0:18:25.000 --> 0:18:26.840 me or where would you recommend that I go? Maybe 0:18:26.960 --> 0:18:29.720 kind of unloved places that might be overlooked. 0:18:30.119 --> 0:18:31.600 Well, we've been talking about the S and P. I'm 0:18:31.600 --> 0:18:33.840 going to look outside the SMP now, I think you 0:18:33.880 --> 0:18:36.680 have to look at small and mid caps, especially if 0:18:36.720 --> 0:18:40.119 we think the economy can survive these high interest rates. 0:18:40.240 --> 0:18:42.760 I mean, small caps were a rate story, but they 0:18:42.880 --> 0:18:46.760 need a strong or even an okay economy to really 0:18:46.840 --> 0:18:49.320 thrive in this environment. I mean, normally we see small 0:18:49.320 --> 0:18:51.919 caps outperform in the first legs of able market. We 0:18:52.000 --> 0:18:54.080 haven't seen it this time around. It's because the FED 0:18:54.320 --> 0:18:56.760 has been restricting the bowl, you know, kind of depriving 0:18:56.760 --> 0:19:00.920 it of oxygen through higher interest rates. So small apps, midcaps, 0:19:00.960 --> 0:19:03.240 I think great sensitive sectors are dealing with the same 0:19:03.280 --> 0:19:06.520 fate right now. You know, I think cyclicals look interesting, 0:19:06.520 --> 0:19:08.520 but I'm not as excited to jump into them because 0:19:08.560 --> 0:19:13.280 we've only seen one month of relatively okay jobs data sectors. 0:19:13.320 --> 0:19:17.600 Are there sectors that screen well for you guys these days? 0:19:18.080 --> 0:19:20.320 Well, we like looking at value over at rid hoolets. 0:19:20.320 --> 0:19:22.400 I mean you have to remember long term clients, trying 0:19:22.400 --> 0:19:24.399 to get them from point A to point B. I 0:19:24.400 --> 0:19:27.040 think value in general is really interesting right now. I 0:19:27.040 --> 0:19:30.080 think we see some value in real estate and consumer 0:19:30.160 --> 0:19:34.520 staples again in those rate sensitive sectors. See a lot 0:19:34.560 --> 0:19:36.560 of value in small caps. Like I mentioned to David, 0:19:36.680 --> 0:19:39.040 I mean overall, just look at the unloved sectors in 0:19:39.080 --> 0:19:41.440 this bowl market. What hasn't performed well? Rotate there. 0:19:42.640 --> 0:19:44.840 I'm very cleo asking everybody about this, just sort of 0:19:44.840 --> 0:19:46.960 how the role of the FED is sort of dovetailing 0:19:47.000 --> 0:19:49.199 with what you're doing. And so it just strikes me 0:19:49.200 --> 0:19:50.679