Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern
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Speaker 2: Carosh Life is chief market strategist BEMO Private Wealth, and
Speaker 2: I can't say enough about the elegance of her. Note
Speaker 2: she's got decades of experience just thinking through where we are.
Speaker 2: You have a lovely phrase, Carol, that just captures the
Speaker 2: moment investors remain anxious? Do we have to be anxious
Speaker 2: to go higher?
Speaker 3: Well?
Speaker 4: I think definitely. That wall of worry is typically what
Speaker 4: we've seen through this whole bull market that we've been,
Speaker 4: whether you peggett the shorter term one from April on
Speaker 4: A or the longer term one that really you can
Speaker 4: date it back to almost the pandemic on A or
Speaker 4: especially after the twenty twenty two pullback in there more rightfully,
Speaker 4: but still that grinding higher where investors are always have
Speaker 4: this long list of things they worry about, and when
Speaker 4: you get markets like we have the last few days,
Speaker 4: they take all those things dump them out on the
Speaker 4: floor and obsess about all of them.
Speaker 3: In the short run, you're lucky.
Speaker 2: You get to live with Ian Lingoln, who's really, really
Speaker 2: better than good.
Speaker 3: At the Bank of Montreal.
Speaker 2: And I look this morning at the inflation adjusted interest
Speaker 2: rate trend, real interest rates, bank credit analyst again out
Speaker 2: of Montreal.
Speaker 3: What is it about Montanel health? They're pretty good? Maybe
Speaker 3: MEE can solve the Canadians problems, Carol.
Speaker 2: I look at the real interest rate and bank credit
Speaker 2: analyst says this is a critical driver, and they're optimistic
Speaker 2: because they see real rates coming in.
Speaker 4: Do you agree, Well, I'm not sure if real rates
Speaker 4: come in or not. There's a lot of things to
Speaker 4: sort through, and granted we'll get a lot. We're already
Speaker 4: starting to see some of the trickle of those government statistics. Noll.
Speaker 4: That'll help us see that. And I think the big
Speaker 4: lynch pin here is everyone's trying to figure out will
Speaker 4: tearf impacts come through? What does that do? As it inflationary?
Speaker 4: Is it deflationary? I having all sorts of conversations around that,
Speaker 4: but it really is important to see where that levels out.
Speaker 4: But I think the important thing also is to realize
Speaker 4: that we're not we need to resist the urge to
Speaker 4: anchor to the last ten or twenty years where those
Speaker 4: real rates were, and anchor instead to that pre zero
Speaker 4: or zero interest rate negative interest rate environment that we
Speaker 4: were in that we all got so.
Speaker 3: Used to, Carol.
Speaker 5: We're going to hear from Nvidia their results after the
Speaker 5: close tonight, once again bringing into focus kind of this
Speaker 5: AI trade and its impact on the overall market here, Carol,
Speaker 5: are you concerned as some people are, that there's an
Speaker 5: AI bubble that may be kind of inflating this market
Speaker 5: or over inflating this market.
Speaker 4: I think there's a concentration definitely in the industries and
Speaker 4: in representation, and probably in some of the contributions to GDP,
Speaker 4: But we think you're in the really ear early innings.
Speaker 4: And it's also really important to understand that the vast
Speaker 4: majority of this has been funded out of cash flow
Speaker 4: for big, legitimate companies. And when you actually think back,
Speaker 4: the names that we're still talking about that are able
Speaker 4: to grow revenues and earnings double digits and with double
Speaker 4: digit marge and some of those names are the ones
Speaker 4: that were around during the ninety five to two thousand
Speaker 4: run up, which is pretty unheard of in this industry,
Speaker 4: and so we think you're early on yet where there's
Speaker 4: a long list of things we're watching as everyone else
Speaker 4: is in terms of the financing and that. But overall,
Speaker 4: the leverage the valuations are lower than the street reception
Speaker 4: is because of how the earnings.
Speaker 6: It been along.
Speaker 3: Carol, I won't found a question. I'm confused. Where are
Speaker 3: we on cash?
Speaker 2: Like Bank of America had some noe doubt saying investors'
Speaker 2: institutional investors are low cash or fully engaged in the market.
Speaker 2: Sweeney tells me here there's trillions of dollars of cash
Speaker 2: on the sidelines. Where are we in cash? Is there
Speaker 2: a lot of cash out there?
Speaker 4: I think there's cash, there's liquidity, and there's also it's
Speaker 4: not necessarily an over amount of cash, but this is
Speaker 4: the time of the year people start bringing bonuses in
Speaker 4: and things like that for our individual investors, which is
Speaker 4: where the bulk of my focus is. And there's been
Speaker 4: cash that got sidelined. Every time you've had to pull back,
Speaker 4: you for some people that have rearranged and asset allocated
Speaker 4: out of it, looking for an opportunity to get back in,
Speaker 4: which is where you've got some support underneath it all
Speaker 4: thank you.
Speaker 2: Are we less anxious after talking to counsel? I think
Speaker 2: so cashally, thank you so much. With BEMO Private Wealth
Speaker 2: Bank of Montreal Private. Well, stay with us. More from
Speaker 2: Bloomberg Surveillance coming up after this.
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Speaker 2: The way we roll here is we do audibles when
Speaker 2: they are appropriate and within with doctor Thinwat darkens the door.
Speaker 3: Win Thin, chief economist.
Speaker 2: Bank in NASA, just iconic on the street with his
Speaker 2: academics out of Colombia. And we have the Prime Minister
Speaker 2: of Singapore, the Republic of Singapore where this earlier you
Speaker 2: gotta do an audible. Win Thin is from will Always
Speaker 2: for me be Burma. It's twelve thirteen hundred miles directly
Speaker 2: north of Singapore up through Malaysia, up the west coast
Speaker 2: of Thailand. Win Thin to you're me and Mahr as well.
Speaker 2: How alone does Singapore feel in Southeast Asia?
Speaker 3: I mean, do they feel discreet and separate? Or is
Speaker 3: there a true alliance?
Speaker 7: You know, I believe they are are really part of
Speaker 7: that that asy On alliance. He talked a lot about
Speaker 7: this absolutely, and you know, as the US steps back,
Speaker 7: you know that these sort of regional agreements and organizations
Speaker 7: really become more important. And so I think of anything
Speaker 7: this is you know, I think the US, by pulling back,
Speaker 7: is sort of sort of strengthen these institutional frameworks that
Speaker 7: already in place.
Speaker 2: One question, then we have projected four military bases in
Speaker 2: the Philippines. When we project military basis to the Philippines,
Speaker 2: I think Paul John Mickletoy's first question was on Taiwan
Speaker 2: to Prime Minister one, are we projecting four military bases
Speaker 2: to Singapore as well? When we plant them in the Philippines.
Speaker 7: I would say that Singapore I think prize itself on
Speaker 7: being somewhat neutral. You know, it's competed in the US.
Speaker 7: I love this, is it the Switzerland. That's a great
Speaker 7: that's a great analogy.
Speaker 8: You know.
Speaker 7: As and as Hong Kong has sort of fallen more
Speaker 7: and more under the sort of the mainland oversight, I
Speaker 7: think Singapore has really had an opportunity to really stand
Speaker 7: out as sort of this a bastion of free free capitalism,
Speaker 7: free speech, et cetera.
Speaker 3: Thank you? Was that a good, honesto?
Speaker 6: Very good?
Speaker 3: We'll do it again sometypes. All right, Paul would save
Speaker 3: the interviews.
Speaker 5: You economists have to go back work tomorrow. I remember
Speaker 5: we had a lot of data coming out tomorrow. How
Speaker 5: are you going to approach it in terms of prioritizing
Speaker 5: what's the most important, the quality of the data. How
Speaker 5: are you going to think about it?
Speaker 7: Absolutely well, the theme most reports are going to be
Speaker 7: the jobs, jobs and jobs. So the Fed has could
Speaker 7: potentially I think like we have three job supports in
Speaker 7: hand before the December ninth, tenth f YC. We've got
Speaker 7: the September, and we look at my calend here, we
Speaker 7: have the September tomorrow, and I think the November will
Speaker 7: come out on time on December fifth, and I'm just
Speaker 7: assuming that the October would come somewhere come in between.
Speaker 6: The foll goes. Well, so what am I looking for?
Speaker 3: Well?
Speaker 7: Look it really all the ends hiliary signs alternative data.
Speaker 7: There are cracks in the labor market. We may get
Speaker 7: one or two outliers, but I think the trend is there.
Speaker 7: You know, ADP NFP don't always line up but ADP
Speaker 7: does get the trend, and the trend is really one
Speaker 7: of weakness. So that's why, you know, I've been kind
Speaker 7: of being this drum for a while. I think one
Speaker 7: of the things that markets have been happy about this
Speaker 7: last few weeks is like no news is good news,
Speaker 7: and people were claiming for data, and it's kind of like,
Speaker 7: careful what you ask for, because I think we're gonna
Speaker 7: get some weak data coming down the pipeline.
Speaker 5: So on the inflation front, you know, we haven't really
Speaker 5: seen it, at least to the extent that some pessimists
Speaker 5: out there. I thought we'd see it teriff induced inflation.
Speaker 5: We haven't seen that per se.
Speaker 6: Is it just a question of.
Speaker 5: Timing or in fact, have as Corporate America kind of
Speaker 5: ingested all that into their margins.
Speaker 6: I was at pause all above.
Speaker 7: We know that a lot of the companies were eating
Speaker 7: it until the uncertainty clear it up.
Speaker 6: So there's been some creeping into the numbers.
Speaker 7: If you look at the year to date, the three
Speaker 7: biggest I believe gainers and sort of goods prices are autos, apparel,
Speaker 7: and alcohol. So these are you know, three big that
Speaker 7: we import a lot of and you know in the
Speaker 7: sense are.
Speaker 6: All quite to me quite necessities.
Speaker 3: Yep.
Speaker 6: So given that backdrop, here is it.
Speaker 5: I guess the FED and you look at the work function,
Speaker 5: it's the market has only put about a forty five
Speaker 5: percent probability that they cut rates here in December, and
Speaker 5: that's down from nearly one hundred percent. You know several
Speaker 5: weeks ago.
Speaker 7: How do you think that the FED will go, Paul,
Speaker 7: I think that's in reaction to we had a slew
Speaker 7: of hawkish fit comments out in the last week and
Speaker 7: a half.
Speaker 6: I think we get one or two.
Speaker 7: I'd say we get one bad job from and that
Speaker 7: those odds go right back to one hundred percent. You know,
Speaker 7: despite all the talk of the hawks, I think that
Speaker 7: the focus is really on the jobs on.
Speaker 6: The labor market, not the inflation.
Speaker 2: Wrinthin with this Chief Econorements of Bank of DA. So
Speaker 2: always say good morning to all of you across the
Speaker 2: nation the way you listen to us as you awake,
Speaker 2: thank you for your commitment in the early mornings on YouTube,
Speaker 2: subscribe to Bloomberg Podcast.
Speaker 3: I got eight ways to go here, but you know
Speaker 3: I'm going to get on Tom No. I got like
Speaker 3: you know, I get there's like with you, doctor Sinn.
Speaker 3: There's like always just eight ways to go.
Speaker 2: Daval Josie over at Bank Credit Analysts has an absolute
Speaker 2: brilliant note doubt this morning, and he basically says, what
Speaker 2: you just said, we're going to get some economic data.
Speaker 2: We're going to see a pivot on the December call.
Speaker 2: What will the markets do if we see that. He's
Speaker 2: looking at the short term real interest rate and he says,
Speaker 2: we're ready for a huge pop in the markets if
Speaker 2: we get the confidence of a December rake.
Speaker 3: Do you buy that? Yeah?
Speaker 7: I do think the market is just salvating for some
Speaker 7: further signs of easy again, you know, some hawkish comments
Speaker 7: all of a sudden, The market's kind of you know,
Speaker 7: up in arms. But you know it's a good news bagage. Yes,
Speaker 7: we're getting some bad news on the economic front. I
Speaker 7: don't look for a recession. I think we're just getting
Speaker 7: some cracks that are growing, nothing that some fetties and
Speaker 7: can't fix. So to me, a FED easing would be
Speaker 7: a win win for the for the equity markets. Uh,
Speaker 7: this question we're seeing now is I think healthy. You
Speaker 7: know it's been you know, obviously on a tear, those
Speaker 7: healthy skepticism is I think good for the markets, but
Speaker 7: the fundament.
Speaker 6: Us stories it main solid.
Speaker 7: I do think the FED is will he well, sorry,
Speaker 7: we'll cut more than market expecting. But you know it's
Speaker 7: all been found on the data, and you know we've
Speaker 7: been flying blind for the last you know, five six weeks.
Speaker 2: This is too much, Paul. I mean they have Wind
Speaker 2: Thin and Man Deep singing the same studios. The academics
Speaker 2: here have you ever met no, I guess pleasure too
Speaker 2: wonderful to have Man Deep sing of Bloomberg intelligence.
Speaker 6: And I've never mentioned let's do a flip flip on this.
Speaker 3: How do you digest Man Deep Sing's world of AI?
Speaker 6: I will say this is from a top down macro stampoint.
Speaker 7: I think the investment in AI is certainly sort of
Speaker 7: I think papering over sort of what I think of
Speaker 7: cracks in the consumer in the labor market.
Speaker 6: So we're getting very unbalanced.
Speaker 7: If you look at the headline, we're going somewhere two
Speaker 7: and a half fe percent in GDP, but it's very unbalanced.
Speaker 6: I think mix. I'd like to see the consumer feeling
Speaker 6: a little bit better.
Speaker 7: You know, we've seen all Consteamer sentiment numbers and all
Speaker 7: that but you know, I think I'm really not a question.
Speaker 7: I think you always get asked us, well where AI really,
Speaker 7: how do you monetize it?
Speaker 2: Is?
Speaker 6: It really is also investment going to pay off?
Speaker 2: That's my biggest question when the interview, Now, how some
Speaker 2: of here the economics when it fed GDP now is
Speaker 2: four percent. There's no one listening or watching this program
Speaker 2: who thinks it's a four percent economy?
Speaker 3: Is your world screwing.
Speaker 2: Up our data? Where we have a boob American economy?
Speaker 2: But it's a fiction.
Speaker 3: Well, all this.
Speaker 8: Capex is adding to the GDP. I mean, when you
Speaker 8: think about what the hyperscalers are doing in terms of
Speaker 8: putting their free cash flow in the form of CAPEX investments.
Speaker 3: Can you get closer to the mic? Is this your
Speaker 3: first time in radio?
Speaker 8: I mean, so, I don't think you know there is
Speaker 8: a reason to question the GDP number because it's driven
Speaker 8: by capex, simply because everyone sees the potential when it
Speaker 8: comes to these AI investments they are making and the
Speaker 8: use cases are showing up. So do my mind, Yes,
Speaker 8: there's a big up front investment, but actually that's helping
Speaker 8: the DDP print does well.
Speaker 3: To your point, look is Paul, you got to get
Speaker 3: us back on the rails. Paul, help us out here.
Speaker 2: Retail sales September November twenty five, Oh good, two days before.
Speaker 3: Things come ounces.
Speaker 5: Okay, I'm just going to see the retail sales will
Speaker 5: come out to September.
Speaker 6: They'll come out in November twenty fifth.
Speaker 5: So when one of the things about AI that's just
Speaker 5: starting to creep into the discussion is particular to we
Speaker 5: see some layoffs, is will AI be a net negative
Speaker 5: for employment. I'm of the opinion, totally uneducated opinion, that yes,
Speaker 5: it will, that.
Speaker 6: AI will either take jobs or reduce job growth. How
Speaker 6: do you get Yeah, I know.
Speaker 7: I'm with you, Paul. It will sortainly make people more productive.
Speaker 7: But I can't see how. You just see all these
Speaker 7: stories about college. We've seen college graduates from top notch
Speaker 7: schools unable to find jobs. It's hard for me to
Speaker 7: believe that that a I will be a net job creator.
Speaker 7: I'm with you, and I'm usually not very pessimistic, but
Speaker 7: I just look around and just just see the story
Speaker 7: and the Times about the tech tech majors who can't
Speaker 7: fine job. I mean, it's all the entry level jobs
Speaker 7: being taken by AI. Believe that's that's the story.
Speaker 6: Anyway, I got ducky bumps.
Speaker 2: This is great ladies and gentlemen worldwide and across America,
Speaker 2: men deep sing and win thin with this year before
Speaker 2: this in Nvidia report today, mandep it's just so important.
Speaker 2: The theme that Paul and I have is like clothing
Speaker 2: in the Carolina as a generation ago, we didn't do
Speaker 2: the bargain of retraining people. If we have a man
Speaker 2: deep sing AI world, in Vidia, in Vidia, in Vidia,
Speaker 2: do we have to retrain people? We broke that bargain
Speaker 2: forty years ago. Are we going to break that bargain
Speaker 2: in your technology again? I mean in the worldolph tech.
Speaker 8: I would argue, you know, you have been constantly retraining people.
Speaker 8: If you think of a knowledge worker, you know, using software,
Speaker 8: whether it's Excel or any other type of productivity software.
Speaker 8: The number of features that keep coming which you have
Speaker 8: to train yourself on to be more productive. That's been
Speaker 8: the constant theme over the last thirty forty years. What's
Speaker 8: changed now is some of this productivity software is going
Speaker 8: to change, and the tools are going to change in
Speaker 8: a profound way in terms of AI agents or some
Speaker 8: of the things that get thrown around, but essentially it's
Speaker 8: aimed at using more data. That's what the tools do,
Speaker 8: and you know, doing probably deeper work in terms of
Speaker 8: if there is a pattern in terms of how the
Speaker 8: work can be done, then AI can probably do it
Speaker 8: more efficiently. So it's more creative work, more you know,
Speaker 8: use of tools. But and I think moving up the
Speaker 8: curve in terms of a knowledge worker. That's the kind
Speaker 8: of the new norm.
Speaker 5: I just think of the first couple of years of
Speaker 5: my investment banking career.
Speaker 6: Can entirely be done by it.
Speaker 5: Yeah, doing spreadsheets, pitchbooks, you know, editory is that statement?
Speaker 2: Young id types they're like outmoaded right now.
Speaker 8: I would echo that centem as well. You don't need
Speaker 8: as many people in terms of creating a pitch book
Speaker 8: or you know, an IPO document and how you were
Speaker 8: capturing the data. That's where you know, you can do
Speaker 8: things a lot more efficiently.
Speaker 7: But you'll cost every industry though, accounting, coding, all it's across.
Speaker 7: That's why it's so I think the old time is likely.
Speaker 7: It's so disconcerting you're an nobile that oh many many
Speaker 7: years ago I came an old time.
Speaker 5: Sorry, how about the other side at that point, do
Speaker 5: you think it over the longer term, AI can make
Speaker 5: this economy more productive?
Speaker 7: That's that's that's what That's the carrot that's dangling out there.
Speaker 6: We got a bunch of sticks to deal with first, right,
Speaker 6: John from.
Speaker 2: Singapore calls it and says, talk to man deep about
Speaker 2: in video.
Speaker 3: Doctorson sit on your hands for all. We got to
Speaker 3: get some business selling.
Speaker 6: You gotta go with the demand out on LinkedIn.
Speaker 2: James Manka x mackenzie now over at Google launches Gemini three.
Speaker 2: What does Gemini three mean to in video? What does
Speaker 2: Gemini three mean in your world?
Speaker 8: Actually, Gemini three is quite negative for Nvidia in the
Speaker 8: sense that the model was entirely trained on Google's own chips.
Speaker 8: So so far Nvidia has had a virtual monopoly for
Speaker 8: training these large an mid models. So there it's open
Speaker 8: AI anthropic meta any of the frontier llms. Now Google
Speaker 8: has shown they did not have to use any Nvidia
Speaker 8: chips for the latest version of their Gemini, So from
Speaker 8: that perspective, I do think it's a negative. But we're
Speaker 8: still in that supply demand mismatch when it comes to
Speaker 8: these accelerator chips that Nvidia still has a lot of
Speaker 8: customers that it can sell to.
Speaker 3: Is there an.
Speaker 2: Income statement line item or a ratio at four thirty
Speaker 2: this afternoon, whatever that you're focused on.
Speaker 8: Oh, absolutely, the guidance for next quarter. I mean, we
Speaker 8: know China has been a factor in terms of the
Speaker 8: incremental revenue, and you know the fact that they haven't
Speaker 8: been able to sell in that market. So what are
Speaker 8: they going to guide to, you know, assuming no China
Speaker 8: revenue and just the Gigawat data center build out. That's
Speaker 8: the big metric that everyone is focused on. How many
Speaker 8: gigawat data centers? How many can we build next year
Speaker 8: through twenty thirty That's the key metric.
Speaker 9: John wants one more question on videos from Singapore, So
Speaker 9: talk to us about just this is gonna be a
Speaker 9: clean quarter visa via China guides, Right, So this number
Speaker 9: they really.
Speaker 6: Do have to beate and raised, don't they.
Speaker 3: And which they probably will.
Speaker 8: The key metric for me is gross margins because nvidious
Speaker 8: gross margins actually went down over the past two quarters,
Speaker 8: and they guide it to gross margins going back up
Speaker 8: to mid seventy percent. That is predicated on their newest
Speaker 8: architecture Blackwell and then going forward, Rubin so what they're
Speaker 8: saying is they will command a premium pricing for the
Speaker 8: latest architecture, which will drive up the gross margins. So
Speaker 8: to me, they're able to keep that guide. I think
Speaker 8: that will be positive for this.
Speaker 2: The former vice chairman of the FED, thank you Richard
Speaker 2: Claiter for listening this morning.
Speaker 3: He says, get back to Columbia economics. That's what we're
Speaker 3: going to do right now.
Speaker 2: Doctor Finn, I look at this, and folks, I can't
Speaker 2: say this enough. After the Prime Minister of Singapore, all
Speaker 2: the internet, Jeff you today out of the LSC and
Speaker 2: all I just want the question I'm going to ask,
Speaker 2: is so critically important? This goes back to Mundell. Keed
Speaker 2: Rogoff would say, this goes back to Mundell. Jacob Frankel
Speaker 2: would say, this goes back to mundal. How do you
Speaker 2: use currency now to judge this modern system in including
Speaker 2: man deep system. How do you use foreign exchange that
Speaker 2: you learned at Columbia?
Speaker 6: Sure? Well, first of all, you know, doctor Clared is
Speaker 6: very very well respected.
Speaker 7: We sort of just overlapped, never took a class with him,
Speaker 7: but he's very well respected and nice to know that
Speaker 7: he nice to hear that he listens to the show.
Speaker 6: I said, goody audience to have.
Speaker 7: So, you know, currency me act as to me, is
Speaker 7: really sort of the arbiter of what's good and bad.
Speaker 7: It's sort of the shock absorber. It's the the asset
Speaker 7: class that really I think speaks to you know, what
Speaker 7: the country is.
Speaker 6: Doing right or doing wrong. We've moved away.
Speaker 7: From a system of fixed exchange rates under which uh
Speaker 7: doctor Mandel Mandel lived, to a freely floating one. I'm
Speaker 7: not a fan or page. I think we are in
Speaker 7: this uh a obviously growing period of growing capital flows
Speaker 7: where exchange rates really become really the most important asset
Speaker 7: classes in my mind, because we.
Speaker 2: Got to go here man Deep Singh's world of American
Speaker 2: exceptionalism and technology.
Speaker 3: Do you bring that right over to a resilient US dollar.
Speaker 6: Sure, that's part of it.
Speaker 7: You know, for a while it was the buy America
Speaker 7: right it was, and that's back at the beginning of
Speaker 7: this year. The problem that we ran into is that
Speaker 7: we have an administration that has especially once a weeker
Speaker 7: dollar and we've talked about this week of dollar is
Speaker 7: part of this whole scheme to onshore manufacturing, uh, you know,
Speaker 7: make export manufactured exports competitor.
Speaker 6: But you know, it's a game change. We haven't seen
Speaker 6: this week.
Speaker 7: We haven't seen a call for a weaker currency since
Speaker 7: Lloyd Benson was Treasury Secretary, so we're going back decades.
Speaker 6: So it's sort of it's definitely a.
Speaker 7: Clash of Pross Yes and the markets.
Speaker 6: It's me.
Speaker 7: The market's always right. The market will decide who's right
Speaker 7: on this. I think the dollars probably in the weekend.
Speaker 7: Ten seconds many in vidio today, thumb up, thumb down?
Speaker 3: What do you think?
Speaker 8: Oh, it has to be thumb up because the capex
Speaker 8: numbers have gone up for next year and every hyperscaler
Speaker 8: is guiding to more investments for twenty twenty six, so
Speaker 8: a lot of that will trickle down to in radio.
Speaker 2: When we invented this show, Paul, this is what it's about.
Speaker 2: Shot out of the Blue, Mandy's.
Speaker 3: Singing, Win thing Together. Stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after this.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen each weekday starting
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Speaker 2: She's out of the University of John bon Jovi, with
Speaker 2: partsment from Rutgers and Seaton Hall University. Scott Diamond is
Speaker 2: a grizzled pro at Golden Sachs Golben Sachs Asset Management.
Speaker 3: It's a muni bond fixed income team.
Speaker 2: And what I love Scott about what you do is
Speaker 2: you've got trader experience. It's not some sixty thousand foot
Speaker 2: you know, well, LaGuardia has these cash flows, forget about it.
Speaker 2: It's about not losing money on the trading desk. What's
Speaker 2: the number one mistake individuals make in buying and selling munis?
Speaker 10: They tend to sell at the wrong time, don't they.
Speaker 10: But that's okay. As a portfolio manager, as a trader,
Speaker 10: keep those roles combined. It allows you to stay in
Speaker 10: touch with the market. It's an over the phone markets
Speaker 10: and over the Bloomberg chat market. A lot of things
Speaker 10: going on, and I think the way you framed it
Speaker 10: is right, Tom. I can't be sitting in an office
Speaker 10: and afraid I'm missing some of that back and forth,
Speaker 10: sit on the trading desk in the trenches. Combine the
Speaker 10: portfolio manager with the trader role, and that allows you
Speaker 10: to respond as the market changes.
Speaker 2: What is the most efficient package given total return to
Speaker 2: acquire municipal bonds? Don't tell me it's individual paper. There's
Speaker 2: got to be a more efficient way.
Speaker 3: To do this.
Speaker 10: Well, a lot of our clients they like the individual bonds.
Speaker 10: That's fine, it works for them. But historically you've had
Speaker 10: mutual funds. More recently, I just heard the prior segment ETFs.
Speaker 10: Who would have thought ETFs come to the municipal bond market, right?
Speaker 10: I feel like this is Fred Flintstone meeting the Jetsons.
Speaker 10: We have a market that has tens of thousands of issuers.
Speaker 10: It's difficult to think of that in an active exchange
Speaker 10: traded fund, but we're there. If you look at the
Speaker 10: flows into the industry so far year to date, plenty
Speaker 10: of demand, a lot of it's going to ETFs, and importantly,
Speaker 10: a lot of it's going to active ETFs, and I
Speaker 10: think that's a reflection of just how fragmented our market
Speaker 10: is and where the opportunities lie.
Speaker 5: I'm just looking at the GO function on the Bloomberg
Speaker 5: terminal across the board, municipal bonds have done, putting in
Speaker 5: some solid return so far for investors. Talk about how
Speaker 5: the market's performed this year.
Speaker 10: It's had a lot to deal with. As you all know,
Speaker 10: markets have had a lot to deal with. I don't
Speaker 10: know how many times I've heard the phrase it's been
Speaker 10: a long year. Last month, we have a new administration,
Speaker 10: we have tariffs, we have one big beautiful bill to
Speaker 10: lead up to, and now a shutdown, and the municipal
Speaker 10: bond market has had to deal with all of that.
Speaker 10: But I think the story we're going to talk most
Speaker 10: about for muni's in twenty twenty five has been supply.
Speaker 10: Supply is, for lack of a better phrase, raining down
Speaker 10: on the market. Our market is used to something the
Speaker 10: context of a four hundred billion new issue calendar in
Speaker 10: any given year. Last year we hit five hundred. This
Speaker 10: year we're going to come in somewhere around five hundred
Speaker 10: and fifty to five hundred and sixty billion, heavy heavy supply.
Speaker 10: The results, let's see, we've got a yield curve that
Speaker 10: is much steeper than the US Treasury curve. If the
Speaker 10: twos to thirties and treasuries is around one hundred and
Speaker 10: ten one hundred and twenty basis points. The two to
Speaker 10: thirty year spread in UNIS is about one hundred and
Speaker 10: sixty one hundred and seventy basis points. So we've absorbed
Speaker 10: a lot of that supply, but not without some implications.
Speaker 10: We've seen credit spreads widen as a lot of that
Speaker 10: paper comes down. So I think that's probably going to
Speaker 10: be the real story, and believe it or not, is
Speaker 10: probably going to roll into twenty twenty six.
Speaker 5: I guess when I learned about new issuance in the
Speaker 5: missip bond market. They don't issue when they can, i e.
Speaker 5: When rates are low. Miss pound is issue when they
Speaker 5: need the money to build the bridge or the road
Speaker 5: or something like that. So they're not as interest rate
Speaker 5: sensitive as say a corporate bar would be. So when
Speaker 5: you and all I hear about is infrastructure here, infrastructure there.
Speaker 5: My gateway project is cruising along outside the other side
Speaker 5: of the river. So should you not expect should we
Speaker 5: not expect more issuance even next year?
Speaker 10: Absolutely expect heavy issuance for next year. You are spot
Speaker 10: on in that once a government gets through all of
Speaker 10: the voter approvals the engineering work, they're going to come
Speaker 10: to market and push this project forward. They'll set that
Speaker 10: structure so that hopefully they can refinance should rates go lower,
Speaker 10: But odds are that's going to happen. So your questions
Speaker 10: a good one, and that what's going to happen for
Speaker 10: twenty twenty six. When we sort of scan the street,
Speaker 10: what is the street looking for? They're looking for us
Speaker 10: to do exactly this. Again, five hundred and twenty to
Speaker 10: even six hundred, six hundred and twenty billion in new
Speaker 10: issuance is the range.
Speaker 3: It makes sense.
Speaker 10: We had a lot of issuers rush to the market
Speaker 10: ahead of the one big beautiful bill just for concerns
Speaker 10: there might be some change to tax exemption. There wasn't
Speaker 10: a lot of projects that are passed due and now
Speaker 10: we know what inflation those projects costs a lot more.
Speaker 10: So expect to replay events next year.
Speaker 2: Give us a snapshot of what you do, Scott Diamond
Speaker 2: with Golden Sacks with all of their different investments in
Speaker 2: municipal bond. So I've got the Massachusetts State Development Beth Israel.
Speaker 3: Lahy health issue.
Speaker 2: It's in one of your portfolios out I think fifteen years.
Speaker 2: If my math is right, it's a five percent coupon.
Speaker 2: Can the little guy get access to that piece? I
Speaker 2: mean that world? Is that only an institutional world?
Speaker 10: Well, yes, an individual could, But I think where the
Speaker 10: individual is not going to be able to stay on
Speaker 10: top of that is are they going to check the
Speaker 10: quarterlies that lahe needs to come out with every quarter?
Speaker 10: How are they doing? One big beautiful bill has a
Speaker 10: lot of things in it, right, There's going to be
Speaker 10: some changes to Medicaid. There's going to be fewer reimbursements
Speaker 10: phased in, thankfully over time, but that's going to be
Speaker 10: a trend that if you own that bond, you want
Speaker 10: to watch and see how that impacts the financials of
Speaker 10: that institution. So do you, as an individual have that
Speaker 10: capability or perhaps more importantly, the desire to stay on
Speaker 10: top of your individual municipal bonds. If you go into
Speaker 10: a Commingle vehicle, you're essentially hiring us and our impressive
Speaker 10: ten person research team to stay on top of that
Speaker 10: spot if there's an issue coming up, and maybe we
Speaker 10: exit that and get into something else.
Speaker 2: Oh, you should see their next tickets, right, I'll ten
Speaker 2: of them go at once to see the next plug.
Speaker 5: Tom, I've got the laddered Muni of New Jersey municipal bonds.
Speaker 6: It's a ladder. You're very laddered.
Speaker 3: Yeah, I'm like the largest creditor to camer Is that
Speaker 3: for real? Like everybody should ladder or you know.
Speaker 2: The phrases that retail uses, barbelluy immunities of that.
Speaker 3: There is there a validity to a laddered approach.
Speaker 10: I think so, I think so Tom Again, It's going
Speaker 10: to come down to you as an investor, what are
Speaker 10: you trying to achieve? And a lot of our clients
Speaker 10: like that consistency of a ladder portfolio. I know that
Speaker 10: I can expect a certain amount maturing each year for
Speaker 10: the next handful of years. The bond comes to you
Speaker 10: at maturity, just redeployed at the top of the ladder.
Speaker 10: There's a simplicity to it. I've done unis for a
Speaker 10: long time. I love this market, infrastructure, the whole concept
Speaker 10: you're building something. I love that we have fifty states,
Speaker 10: we have US territories, we have short bonds, long bonds.
Speaker 10: I think of this market as just ripe for opportunity. Right,
Speaker 10: you have passive options. You can do a ladder, you
Speaker 10: could do a passive ETF. But but if I've got
Speaker 10: tens of thousands of issuers bonds across the go ahead.
Speaker 2: I got to get this in there. You get forty
Speaker 2: seconds left. Are you guys in the AI space? Like
Speaker 2: all the energy needs and funding, is that going to
Speaker 2: be a muni bond opportunity.
Speaker 10: I think it's got the potential to increase some supply, right,
Speaker 10: A lot of that has to get built, So we're
Speaker 10: going to need new generations. We're going to need new
Speaker 10: transmission and some of that could come. I think some
Speaker 10: of it will go private, but some of that's going
Speaker 10: to land on the public.
Speaker 3: I can see you, Paul Immuni bound in New Jersey.
Speaker 3: Short within you know, AI.
Speaker 6: I call up the governor picks up the first ring
Speaker 6: you yep, Governor Christy exactly.
Speaker 3: Thank you.
Speaker 2: Scott's brilliant don't be a stranger, Scott Diamond with gold
Speaker 2: and sacks here and the efficacy of taking advantage of
Speaker 2: texts free bum stay with us. More from Bloomberg Surveillance
Speaker 2: coming up after this.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 3: Lise I m tell you the newspapers.
Speaker 11: All right, you mentioned Paramount will pull us. You know
Speaker 11: that's the paramoun plus let's start with Paramount.
Speaker 6: Okay.
Speaker 11: We know they had a number of efforts right to
Speaker 11: try and buy Warner Brothers Discovery. Has it worked out yet,
Speaker 11: but sources telling the Financial Times that David Ellison actually
Speaker 11: met with Saudi Arabia's Public Investment Fund other officials from
Speaker 11: the region because they expressed interest in taking part of
Speaker 11: that bid. So no agreement has been reached. Conversations are
Speaker 11: quote active. But it just shows the scale of financing
Speaker 11: that like the linin.
Speaker 2: Bedroom or the green room at the White House for
Speaker 2: the you know, MBS is here where like let's have
Speaker 2: a meeting here.
Speaker 3: You know.
Speaker 5: Well, the problem is or that the math has very simple.
Speaker 5: Paramounts got an enterprise value of about thirty billion dollars.
Speaker 5: Warner Brothers Discovery, who they want to buy, has an
Speaker 5: enterprise value about ninety billion dollars. Three time you bring
Speaker 5: in external equity. So you get that from mister Ellison himself.
Speaker 5: You get that from private equity. You get that from
Speaker 5: sovereign wealth funds. Anybody who has a big can write
Speaker 5: a big check. Come on in, we'll take your equity.
Speaker 2: And John, I guess we're in over The New York
Speaker 2: Post is talking on mister robertson Comcast YEP.
Speaker 3: I don't know the details, but this is active. Yeah,
Speaker 3: what's your thought does it? How does this end up?
Speaker 8: A lot?
Speaker 5: I think if I'm Warner Brothers discus, I want to
Speaker 5: sell to Paramount because they want to buy the whole thing,
Speaker 5: and that would be the easiest, smoothest, cleanest.
Speaker 6: But they're prepared to go the other way too, which
Speaker 6: is also.
Speaker 5: In my studio and my HBO.
Speaker 6: And I'll just spin out the rest.
Speaker 11: Twenty four next and then Saudi Rape actually wants to
Speaker 11: get more into this exactly here they're expanding into this
Speaker 11: why not space?
Speaker 6: Okay, so let's go back.
Speaker 11: You remember the auction house that sold that more than
Speaker 11: twelve million dollars gold toilet. Okay, of course there's a
Speaker 11: new It's a story that keeps giving guys.
Speaker 6: I'm telling you whole it holds a new record.
Speaker 11: Okay, So this is a Gustav climped painting it for
Speaker 11: hang tight two hundred and thirty six point four million
Speaker 11: dollars last night at Southerb's. It was actually the first
Speaker 11: auction in that new home they have New York Saborrial building,
Speaker 11: so it was the first auction there. But it makes
Speaker 11: it the world's most expensive modern artwork at auction, the
Speaker 11: second pressiest work of art auctioned overall. So the piece
Speaker 11: is called Portrait of Elizabeth Letterer. Okay, it has, you know,
Speaker 11: the picture of a woman setting in a white gown
Speaker 11: against this backdrop.
Speaker 6: I got like six people bidding for it.
Speaker 11: But it's just a good sign because it shows that
Speaker 11: the art market, which is really kind of sluggish lately,
Speaker 11: it's been turning around. And you're seeing this turnaround in
Speaker 11: the art market.
Speaker 2: And it's part of the New York City fabric. This
Speaker 2: is mister Lauder who was of his estate and it's
Speaker 2: a huge number, but he goes to the commitment we've
Speaker 2: seen from the Jewish Museum in New York City to
Speaker 2: good stuff Clint, and there's a whole series of paintings
Speaker 2: he's done. This one is spectacular, you know, mi amateur
Speaker 2: take is it's just a whole league above of a
Speaker 2: lot of the others. Like you know, the numbers seems
Speaker 2: a quarter of a trillion dollars a billion.
Speaker 6: Who bought it anyway, we don't know. We don't know who.
Speaker 3: We don't know who bought it.
Speaker 6: It's not Mets owner who bought the first name. Okay.
Speaker 11: We've heard a lot of stories about a lot of
Speaker 11: people going California sober. Okay, this is when they use
Speaker 11: marijuana and other drugs but not alcohol because they say
Speaker 11: it's healthier. It's become this trendy thing. So there's a
Speaker 11: new study that suggests people drink considerably less after they
Speaker 11: smoke cannabis, so it kind of linked it. It's a
Speaker 11: new published study. So they took about one hundred and
Speaker 11: fifty people who regularly use marijuana and alcohol. They put
Speaker 11: them into this makeshift bar on campus at Brown University,
Speaker 11: and they tested because they want to know how much
Speaker 11: people drink after they smoke cannabis. And it turns out
Speaker 11: they did drink less after they smoked cannabis. I don't
Speaker 11: know what the gummy situation the gummies edible, but they
Speaker 11: were strictly smoking cannabis. This was strictly smoking like they
Speaker 11: had to like inhale at the same time, like it
Speaker 11: was this whole procedure behind it, troll test.
Speaker 6: But that's what exactly did you show them?
Speaker 11: They are were less likely to drink after doing that.
Speaker 6: That's where I hear from folks that are in the
Speaker 6: gummy space. All right, okay, stuff.
Speaker 2: There, Thank you, Lisa, thank you so much. It is
Speaker 2: the Newspapers with Lisa Matteo.
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
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