1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:22,000 Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business app. 4 00:00:22,360 --> 00:00:25,680 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:25,760 --> 00:00:27,880 Speaker 1: us live on YouTube for the news. 6 00:00:27,880 --> 00:00:29,920 Speaker 2: Slow the way it is, We're going to try, try, 7 00:00:30,040 --> 00:00:32,400 Speaker 2: try for the next seven to eight minutes to actually 8 00:00:32,520 --> 00:00:36,960 Speaker 2: focus on a CPI report. Expert on this, Troyluk has 9 00:00:36,960 --> 00:00:39,639 Speaker 2: been writing up a storm and thrilled he could join 10 00:00:39,680 --> 00:00:43,960 Speaker 2: us here with the conference board. Excuse me with SMBC nico. 11 00:00:44,000 --> 00:00:45,919 Speaker 2: Excuse me, that's how busy it is here. 12 00:00:45,960 --> 00:00:46,640 Speaker 3: I just create it. 13 00:00:46,680 --> 00:00:50,720 Speaker 2: My eyes are failing me. Troll with SMBC NICO. Troy 14 00:00:50,800 --> 00:00:54,400 Speaker 2: Lutke joins us this morning. Do we care about this 15 00:00:54,640 --> 00:00:58,880 Speaker 2: CPI report? Is informative a week and a half into 16 00:00:58,920 --> 00:00:59,320 Speaker 2: a war. 17 00:01:00,200 --> 00:01:03,080 Speaker 4: Yeah, I think it definitely takes on reduced significance given 18 00:01:03,240 --> 00:01:06,679 Speaker 4: these geopolitical tensions that we're obviously seeing in the Middle East. 19 00:01:07,040 --> 00:01:09,480 Speaker 4: All eyes are on oil. I don't want to say 20 00:01:09,520 --> 00:01:11,440 Speaker 4: this is meaningless, but pretty closely okay, but. 21 00:01:11,400 --> 00:01:13,840 Speaker 2: Your model a year over year three percent, I mean, 22 00:01:13,959 --> 00:01:16,200 Speaker 2: I mean, if this sustains. 23 00:01:17,280 --> 00:01:19,199 Speaker 5: We're to a three ish level. 24 00:01:19,800 --> 00:01:25,240 Speaker 4: Correct, We're at three point three percent if oil stays 25 00:01:25,360 --> 00:01:27,720 Speaker 4: at or above one hundred dollars a barrel for the 26 00:01:27,760 --> 00:01:31,440 Speaker 4: next nine months. Wow, Obviously we're not there yet. We 27 00:01:31,480 --> 00:01:34,080 Speaker 4: could head there, but there's just so much uncertainty. It 28 00:01:34,120 --> 00:01:36,880 Speaker 4: basically come down comes down to who has the better 29 00:01:36,920 --> 00:01:38,280 Speaker 4: scenario analytics at this point. 30 00:01:38,319 --> 00:01:39,800 Speaker 6: Well, Tom, you know, we go at the two decimals 31 00:01:39,800 --> 00:01:41,520 Speaker 6: when we talk to Troy, right, So Troy is looking 32 00:01:41,520 --> 00:01:44,000 Speaker 6: for a month of a month CPI headlines rise zero 33 00:01:44,080 --> 00:01:46,200 Speaker 6: point three six percent, I believe the markets it's something 34 00:01:46,200 --> 00:01:48,080 Speaker 6: on the order of zero point two six So that's 35 00:01:48,080 --> 00:01:51,480 Speaker 6: pretty significantly above it. Just you know, last month before 36 00:01:51,520 --> 00:01:53,720 Speaker 6: any of this happened, so you know, to your point, 37 00:01:53,760 --> 00:01:56,440 Speaker 6: you know, it takes on less importance. But next month 38 00:01:56,520 --> 00:01:59,440 Speaker 6: print's gonna be probably you know, closely watched. So I'm 39 00:01:59,440 --> 00:02:03,200 Speaker 6: curious to hear. Thought, where can headline CPI go from here? 40 00:02:03,720 --> 00:02:04,080 Speaker 5: Yeah? 41 00:02:04,120 --> 00:02:06,760 Speaker 4: Well that's the thing is, if you're looking at too 42 00:02:06,880 --> 00:02:10,960 Speaker 4: bad CPI reports, it's going to put the Fed in 43 00:02:11,080 --> 00:02:16,680 Speaker 4: a much harder position. We are really looking at, potentially, 44 00:02:16,960 --> 00:02:19,000 Speaker 4: at least for the next few months, a bout of 45 00:02:19,040 --> 00:02:22,079 Speaker 4: stagflation here. Hard to see them cutting with that backdrop. 46 00:02:22,240 --> 00:02:24,880 Speaker 6: Well, we know overnight that the if you just look at, 47 00:02:24,919 --> 00:02:27,160 Speaker 6: you know, the glide path for FED expectations. You know, 48 00:02:27,160 --> 00:02:29,200 Speaker 6: I think we were talking about something on the order of, 49 00:02:29,280 --> 00:02:32,359 Speaker 6: you know, eighty percent probability of a second twenty five 50 00:02:32,400 --> 00:02:34,560 Speaker 6: bit you know cut by the end of this year, 51 00:02:34,600 --> 00:02:36,320 Speaker 6: and now we're down to fifty percent. Maybe it's a 52 00:02:36,440 --> 00:02:38,360 Speaker 6: coin to us talk to us a little bit about 53 00:02:38,400 --> 00:02:40,560 Speaker 6: you know, where you see FED expectations going. I mean, 54 00:02:40,600 --> 00:02:43,400 Speaker 6: can we start to price out these cuts and can 55 00:02:43,440 --> 00:02:46,280 Speaker 6: the markets start pricing in hikes hikes? 56 00:02:46,360 --> 00:02:49,600 Speaker 4: Not yet. We are expecting one cut at the July meeting. 57 00:02:49,600 --> 00:02:51,480 Speaker 4: We think that'll be a sort of housewarming gift to 58 00:02:51,480 --> 00:02:55,720 Speaker 4: the new FED chair. They are in a very difficult position. 59 00:02:55,760 --> 00:02:58,320 Speaker 4: The labor market, we think, is a much weaker than 60 00:02:58,360 --> 00:03:00,760 Speaker 4: headline data indicate at the same time that we're having 61 00:03:00,840 --> 00:03:03,120 Speaker 4: now this inflationary surge. It couldn't be happening at a 62 00:03:03,120 --> 00:03:03,880 Speaker 4: worse Do you have a. 63 00:03:03,840 --> 00:03:07,600 Speaker 2: Modeled unemployment rate around that much weaker labor market? 64 00:03:07,840 --> 00:03:10,120 Speaker 4: Correct? Yeah, we're looking for something like four point eight 65 00:03:10,160 --> 00:03:12,160 Speaker 4: percent by year end, and we think there is a 66 00:03:12,240 --> 00:03:16,519 Speaker 4: significant upset risk of that as well, largely surrounding AI 67 00:03:17,320 --> 00:03:22,520 Speaker 4: and we think that following COVID Corporation's massively over hired 68 00:03:22,520 --> 00:03:23,959 Speaker 4: and they're going to use this an excuse to Lakey. 69 00:03:24,200 --> 00:03:28,200 Speaker 2: But I believe it's Troy stagflation, Ludcouver this year, this morning. 70 00:03:28,280 --> 00:03:30,680 Speaker 2: What does a FED do give in stagflation? What's you're 71 00:03:30,720 --> 00:03:31,720 Speaker 2: reading a history on this? 72 00:03:32,919 --> 00:03:33,320 Speaker 5: For now? 73 00:03:33,360 --> 00:03:36,240 Speaker 4: They're just going to sit and wait. They need to 74 00:03:36,320 --> 00:03:39,280 Speaker 4: see oil prices come down. We do think that that's 75 00:03:39,280 --> 00:03:42,400 Speaker 4: where the incentives lie, at least in Washington to try 76 00:03:42,440 --> 00:03:44,800 Speaker 4: and wrap this up. But we'll see. You know, it 77 00:03:44,840 --> 00:03:45,840 Speaker 4: takes two to tango there. 78 00:03:45,880 --> 00:03:48,080 Speaker 2: We're going to continue with Troy lueddcot out of bard 79 00:03:48,800 --> 00:03:50,920 Speaker 2: a college here with a lot of math, a lot 80 00:03:50,920 --> 00:03:54,640 Speaker 2: of finance. Here, he's with SMBC Nico Security. He's running 81 00:03:54,640 --> 00:03:57,200 Speaker 2: greed In the screen the Vicks twenty four level now 82 00:03:57,240 --> 00:04:00,800 Speaker 2: twenty five, twenty five point zero eight. Whatest angks to 83 00:04:00,840 --> 00:04:02,839 Speaker 2: the screen as I look at the Bloomberg launch pad. 84 00:04:02,880 --> 00:04:06,400 Speaker 2: There's some tension out there, but oil has not really 85 00:04:06,600 --> 00:04:10,560 Speaker 2: moved in the last hour, given a fairly solid floor. Headlines, 86 00:04:10,680 --> 00:04:13,760 Speaker 2: Prime Minister of the United Kingdom speaking right now at 87 00:04:13,800 --> 00:04:17,760 Speaker 2: the House of Commons will monitor those headlines for you. 88 00:04:17,839 --> 00:04:20,320 Speaker 2: The ten year real you'll not giving me much information, 89 00:04:20,920 --> 00:04:23,800 Speaker 2: and dollar was a ninety nine level, Well it's about 90 00:04:23,839 --> 00:04:29,919 Speaker 2: there right now. But into an important inflation report, oddly dated, 91 00:04:29,960 --> 00:04:33,159 Speaker 2: I would call it here given all of the last 92 00:04:33,200 --> 00:04:37,400 Speaker 2: week that year over year CPI this survey two point 93 00:04:37,720 --> 00:04:41,479 Speaker 2: four percent. We welcome all of you across America out 94 00:04:41,520 --> 00:04:43,640 Speaker 2: of this key inflation. 95 00:04:43,440 --> 00:04:47,080 Speaker 7: Report, and we have numbers coming in on inflation at 96 00:04:47,080 --> 00:04:50,480 Speaker 7: the consumer level for the month of February, coming in 97 00:04:50,760 --> 00:04:54,200 Speaker 7: right in line with estimates. Consumer Price Index month over 98 00:04:54,279 --> 00:04:56,839 Speaker 7: month up three tenths of a percent, right in line 99 00:04:56,880 --> 00:04:59,120 Speaker 7: with estimates and a little bit hotter than the zero 100 00:04:59,120 --> 00:05:01,920 Speaker 7: point two percent the prior month. We also have year 101 00:05:01,960 --> 00:05:05,200 Speaker 7: over year CPI coming in at two point four percent, 102 00:05:05,320 --> 00:05:08,360 Speaker 7: again right in line with estimates and the prior month 103 00:05:08,400 --> 00:05:11,120 Speaker 7: as well. If you take out core food and energy, 104 00:05:11,240 --> 00:05:13,919 Speaker 7: core CPI month over month up two tenths of a 105 00:05:13,960 --> 00:05:17,080 Speaker 7: percent and year over year up two and a half percent. Again, 106 00:05:17,160 --> 00:05:19,760 Speaker 7: this report right in line with estimates. It comes ahead 107 00:05:19,760 --> 00:05:22,479 Speaker 7: of next week's Federal Reserve meeting, and taking a look 108 00:05:22,480 --> 00:05:25,520 Speaker 7: at how Wall Street is reacting pretty much yawning at 109 00:05:25,520 --> 00:05:28,679 Speaker 7: this report. Many considering it quite old and stale because 110 00:05:28,680 --> 00:05:30,800 Speaker 7: it does not reflect anything that has happened with the 111 00:05:30,839 --> 00:05:33,680 Speaker 7: war in Iran. Damien and Tom. 112 00:05:33,920 --> 00:05:36,919 Speaker 2: Thanks so much, Alexis for that pretty much on targeted. 113 00:05:37,000 --> 00:05:39,159 Speaker 2: You see in the screen a lot of activity going 114 00:05:39,279 --> 00:05:42,320 Speaker 2: nowhere is where i'd put it. Brent crude ninety one 115 00:05:42,360 --> 00:05:45,480 Speaker 2: dollars twenty six cents. Tory like, what does the FED do? 116 00:05:45,760 --> 00:05:48,840 Speaker 2: I mean, let me get the FOMC go. I can 117 00:05:48,880 --> 00:05:52,320 Speaker 2: do this, Damien taught because function March eighteenth, what do 118 00:05:52,440 --> 00:05:54,839 Speaker 2: they do April twenty ninth. 119 00:05:55,160 --> 00:05:59,080 Speaker 4: Yeah, they're not moving. They're not moving. The key dynamic 120 00:05:59,080 --> 00:06:02,040 Speaker 4: that we need to understand right now is basically two things. 121 00:06:02,080 --> 00:06:05,719 Speaker 4: Shelter inflation is coming down steadily and I would say sharply, 122 00:06:05,960 --> 00:06:08,320 Speaker 4: and that's because the housing market is very weak and 123 00:06:08,320 --> 00:06:10,240 Speaker 4: we think it's going to weaken even more. Wouldn't shock 124 00:06:10,320 --> 00:06:14,719 Speaker 4: us if we saw a nationwide price declines this year. However, 125 00:06:15,279 --> 00:06:22,400 Speaker 4: offsetting this is CPI basically excluding shelter, is accelerating, and 126 00:06:22,440 --> 00:06:28,119 Speaker 4: that moves basically one for one with oil, so easy 127 00:06:28,120 --> 00:06:31,600 Speaker 4: to see how inflation accelerates from here. FED can't move. 128 00:06:32,120 --> 00:06:34,520 Speaker 6: Troy at the beginning of our conversation you know, we 129 00:06:34,520 --> 00:06:36,880 Speaker 6: were talking about, you know, the FED guide path, and 130 00:06:36,920 --> 00:06:38,919 Speaker 6: you know, when you talked about July, you talked about 131 00:06:38,960 --> 00:06:41,160 Speaker 6: the politics of it all, and you know, I find 132 00:06:41,160 --> 00:06:43,520 Speaker 6: that so fascinating and so, you know, quite frankly, I 133 00:06:43,560 --> 00:06:45,360 Speaker 6: couldn't agree with you more. You know, the politics of 134 00:06:45,400 --> 00:06:48,080 Speaker 6: the FED is something that is very difficult for economists 135 00:06:48,080 --> 00:06:51,159 Speaker 6: and strategist to model, and you know, you know, I 136 00:06:51,240 --> 00:06:53,200 Speaker 6: just want to hear your thoughts about how that factors 137 00:06:53,200 --> 00:06:55,200 Speaker 6: into the equation here. I mean, like, you know, how 138 00:06:55,240 --> 00:06:57,600 Speaker 6: do you account for the fact that you're going to 139 00:06:57,680 --> 00:07:00,120 Speaker 6: have a different board, You're gonna have different players and 140 00:07:00,200 --> 00:07:03,000 Speaker 6: have different voters, and they have different beliefs and they 141 00:07:03,000 --> 00:07:04,520 Speaker 6: have a different agenda. I mean, how do you kind 142 00:07:04,520 --> 00:07:06,400 Speaker 6: of account for that when you and the guys at 143 00:07:06,400 --> 00:07:08,360 Speaker 6: SMBC are factoring things out. 144 00:07:08,640 --> 00:07:11,600 Speaker 4: Look, we want to take a very data centered approach. 145 00:07:12,440 --> 00:07:16,400 Speaker 4: I think the FED really wants to leave politics outside 146 00:07:16,440 --> 00:07:20,480 Speaker 4: of the decision making calculus. You don't think, Yeah, we 147 00:07:20,760 --> 00:07:22,920 Speaker 4: don't think that they're going to be making any sort 148 00:07:22,960 --> 00:07:25,280 Speaker 4: of significant moves around the election time, at least as 149 00:07:25,320 --> 00:07:28,840 Speaker 4: of now. But after the midterm elections, we think it's 150 00:07:29,040 --> 00:07:29,880 Speaker 4: those are hot meetings. 151 00:07:30,520 --> 00:07:31,200 Speaker 3: Yeah, and tomorrow. 152 00:07:31,280 --> 00:07:32,640 Speaker 6: You know, I mean, I hate to, you know, kind 153 00:07:32,680 --> 00:07:34,680 Speaker 6: of beat a dead horse here because we're looking at data. 154 00:07:34,680 --> 00:07:36,200 Speaker 3: But we have trade data coming out of the US. 155 00:07:36,240 --> 00:07:37,680 Speaker 6: And one of the things that I've been struggling to 156 00:07:37,760 --> 00:07:40,080 Speaker 6: wrap my brain around is the fact that the trade 157 00:07:40,120 --> 00:07:42,320 Speaker 6: data from China to the US, the official data that's 158 00:07:42,320 --> 00:07:44,680 Speaker 6: coming out of China, is far, far greater than the 159 00:07:44,760 --> 00:07:46,520 Speaker 6: data that we're picking up on our side in terms 160 00:07:46,560 --> 00:07:48,760 Speaker 6: of imports from China to the US. And you know, 161 00:07:48,880 --> 00:07:51,080 Speaker 6: a lot of people are talking about you know, terrifl 162 00:07:51,720 --> 00:07:54,280 Speaker 6: tariful voiters and things of that nature is driving that big, 163 00:07:54,480 --> 00:07:57,480 Speaker 6: multi billion dollar difference. What are your thoughts there, I mean, 164 00:07:57,480 --> 00:07:58,720 Speaker 6: how do you kind of reconcile that? 165 00:08:00,080 --> 00:08:04,040 Speaker 4: Well, it seems like, well, let's start with what we 166 00:08:04,040 --> 00:08:06,200 Speaker 4: do now. What we do know is Trump and Chiejenping 167 00:08:06,280 --> 00:08:08,240 Speaker 4: are coming to a big meeting in a few weeks. 168 00:08:09,320 --> 00:08:12,400 Speaker 4: China has a stranglehold on rarest and critical minerals. The 169 00:08:12,520 --> 00:08:15,440 Speaker 4: US needs them. As a result, we think the incentives 170 00:08:15,480 --> 00:08:18,240 Speaker 4: are in the direction of some sort of deal being struck, 171 00:08:18,440 --> 00:08:21,840 Speaker 4: and as a result, who's both parties to engage in trade? 172 00:08:22,000 --> 00:08:24,120 Speaker 5: Troy, thank you so much for coming in today. Troi Co. 173 00:08:24,320 --> 00:08:28,200 Speaker 5: Thanks you see Niko, stay with us. 174 00:08:28,440 --> 00:08:31,680 Speaker 2: More from Bloomberg Surveillance coming up after this. 175 00:08:38,920 --> 00:08:42,520 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 176 00:08:42,559 --> 00:08:45,720 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 177 00:08:45,800 --> 00:08:49,199 Speaker 1: Apple Karplay and Android Auto with the Bloomberg Business app, 178 00:08:49,400 --> 00:08:51,160 Speaker 1: or watch us live on YouTube. 179 00:08:51,240 --> 00:08:51,680 Speaker 5: Patiently. 180 00:08:51,760 --> 00:08:55,240 Speaker 2: Lindsey Roster is with this head of multisector investing in 181 00:08:55,320 --> 00:08:56,280 Speaker 2: Golden Sacks. 182 00:08:56,600 --> 00:08:58,079 Speaker 5: What are you writing today? 183 00:08:59,160 --> 00:09:02,520 Speaker 8: Yeah, so what we're focused on it will be something 184 00:09:02,520 --> 00:09:04,600 Speaker 8: that we need to look at, which is CPI coming up. 185 00:09:04,640 --> 00:09:06,679 Speaker 8: I think it's important for the listeners to know that 186 00:09:06,760 --> 00:09:10,080 Speaker 8: we had about two weeks of oil starting to drift 187 00:09:10,120 --> 00:09:13,120 Speaker 8: hire that factors into the CPI. So if you're expecting 188 00:09:13,520 --> 00:09:16,160 Speaker 8: a huge number based upon the war, it's not going 189 00:09:16,160 --> 00:09:17,720 Speaker 8: to be in this number, It'll be in the next. 190 00:09:18,120 --> 00:09:20,480 Speaker 8: But big picture, we're looking at how the market reacts 191 00:09:20,480 --> 00:09:23,560 Speaker 8: to Oracle earnings last night. Remember before the war, we 192 00:09:23,559 --> 00:09:27,000 Speaker 8: were actually concerned about AI, that was the tail risk 193 00:09:27,040 --> 00:09:29,400 Speaker 8: in the market. I think we heard from Oracle last 194 00:09:29,480 --> 00:09:32,480 Speaker 8: night really strong things. And as your prior guest said, 195 00:09:33,280 --> 00:09:36,240 Speaker 8: not all software is bad. There's there are some companies 196 00:09:36,240 --> 00:09:38,800 Speaker 8: that will survive AI and so that's the things we're 197 00:09:38,840 --> 00:09:41,280 Speaker 8: looking at. It just is the market calm, and it 198 00:09:41,280 --> 00:09:42,240 Speaker 8: seems to be calm. 199 00:09:42,640 --> 00:09:46,480 Speaker 6: Lindsay us too. Your inslation swaps came back a bit yesterday. 200 00:09:46,520 --> 00:09:48,280 Speaker 6: You know, they had blown out, you know, roughly twenty 201 00:09:48,280 --> 00:09:50,640 Speaker 6: percent or I'm sorry ten and a half percent the 202 00:09:50,679 --> 00:09:52,480 Speaker 6: following the week before. But you know, I just want 203 00:09:52,520 --> 00:09:54,120 Speaker 6: to kind of call your attention to, you know, inflation 204 00:09:54,200 --> 00:09:56,040 Speaker 6: expectations here in the US right now. It's kind of 205 00:09:56,040 --> 00:09:58,160 Speaker 6: concentrated at the front end. You sort of saw it 206 00:09:58,160 --> 00:10:00,360 Speaker 6: slipping into the five year break even point. By it's 207 00:10:00,440 --> 00:10:02,720 Speaker 6: kind of pulled back. Energy prices at the count for 208 00:10:02,800 --> 00:10:05,280 Speaker 6: roughly six percent of headline inflation here in the US. 209 00:10:05,400 --> 00:10:08,600 Speaker 6: What is the potential for markets to begin repricing the 210 00:10:08,679 --> 00:10:09,760 Speaker 6: fact God path. 211 00:10:10,120 --> 00:10:13,880 Speaker 8: So they have started repricing it. I think what's interesting 212 00:10:13,960 --> 00:10:15,840 Speaker 8: is not just what happens in the US. This oil 213 00:10:15,880 --> 00:10:18,320 Speaker 8: issue is a global issue, right and what's really how 214 00:10:18,400 --> 00:10:20,760 Speaker 8: the biggest move is actually Bank of England and the 215 00:10:20,800 --> 00:10:23,679 Speaker 8: thoughts there. So that went from cutting pricing in two 216 00:10:23,760 --> 00:10:27,360 Speaker 8: cuts to actually one hike. We're back to flat. So 217 00:10:27,640 --> 00:10:29,200 Speaker 8: you ask a little bit of noise in the front 218 00:10:29,240 --> 00:10:32,280 Speaker 8: end went from maybe confidence around two cuts to saying 219 00:10:32,920 --> 00:10:35,640 Speaker 8: maybe fifty to fifty on the second. It's really what's 220 00:10:35,640 --> 00:10:38,160 Speaker 8: happening elsewhere that we think is most interesting and we're 221 00:10:38,200 --> 00:10:39,800 Speaker 8: taking advantage of in our portfolio. 222 00:10:39,960 --> 00:10:42,640 Speaker 2: What are you doing with yon Hatzius's work right now? 223 00:10:43,080 --> 00:10:49,080 Speaker 2: If everyone, including Alexis, Christopherus and Damiensaer are recalibrating our lives. 224 00:10:49,559 --> 00:10:52,040 Speaker 2: Jay Hetfield saying the war's going to last days, weeks, 225 00:10:52,120 --> 00:10:57,080 Speaker 2: Others saying no, how do you move yon Hatzius's body 226 00:10:57,080 --> 00:10:58,040 Speaker 2: of research. 227 00:10:57,679 --> 00:10:58,360 Speaker 5: Into your thinking? 228 00:10:58,440 --> 00:11:02,080 Speaker 8: Well, you always listening on number one. I think what's 229 00:11:02,120 --> 00:11:04,480 Speaker 8: helpful is he's giving us a framework to think about this. 230 00:11:05,200 --> 00:11:08,160 Speaker 8: I don't think anyone right now has an answer for 231 00:11:08,320 --> 00:11:11,040 Speaker 8: the duration. I'm not going to go out on a 232 00:11:11,080 --> 00:11:13,640 Speaker 8: limb and say that I have one. But what's important 233 00:11:13,640 --> 00:11:16,400 Speaker 8: about Yan's work is giving us a framework. So, for example, 234 00:11:16,720 --> 00:11:19,960 Speaker 8: ten dollars a barrel of oil higher, that is equivalent 235 00:11:20,000 --> 00:11:22,679 Speaker 8: to a tenth of a percent of GDP lower. It's 236 00:11:22,720 --> 00:11:26,240 Speaker 8: actually only point oh four in terms of CPI higher. 237 00:11:26,520 --> 00:11:28,600 Speaker 8: So I think in times like this you got to 238 00:11:28,679 --> 00:11:32,240 Speaker 8: keep calm and think about what the real implications are 239 00:11:32,480 --> 00:11:35,160 Speaker 8: when oil is at one to twenty. Just do the math. 240 00:11:35,240 --> 00:11:37,640 Speaker 8: That's going to be a bigger drag on GDP. It's 241 00:11:37,679 --> 00:11:40,000 Speaker 8: going to be more in terms of impact on CPI, 242 00:11:40,280 --> 00:11:43,440 Speaker 8: certainly headline more than core. But I think that's what 243 00:11:43,480 --> 00:11:45,040 Speaker 8: you got to do. You have to have a framework. 244 00:11:45,080 --> 00:11:47,199 Speaker 8: And the biggest thing that I'm doing as a portfolio 245 00:11:47,240 --> 00:11:50,320 Speaker 8: manager with my team is looking at where their dislocations. 246 00:11:50,640 --> 00:11:54,199 Speaker 8: And again right now it is software all is considered 247 00:11:54,240 --> 00:11:56,440 Speaker 8: bad and that is just not the truth. So we're 248 00:11:56,440 --> 00:11:59,280 Speaker 8: looking for those dislocations in front end of Bank of 249 00:11:59,320 --> 00:12:01,000 Speaker 8: England curves and in the software market. 250 00:12:02,280 --> 00:12:04,959 Speaker 2: Okay, you look tanned and arrest Did you sneak out 251 00:12:05,000 --> 00:12:06,520 Speaker 2: on the golf course yesterday? Hell me? 252 00:12:06,880 --> 00:12:08,960 Speaker 3: You Now it's just warm in here. Okay, it's a 253 00:12:08,960 --> 00:12:10,920 Speaker 3: little warm in here from Sorry, sorry it. 254 00:12:10,840 --> 00:12:17,440 Speaker 8: Was not on the course, just in the office sale 255 00:12:17,520 --> 00:12:17,959 Speaker 8: over here. 256 00:12:18,400 --> 00:12:19,520 Speaker 5: Just pill Tom. 257 00:12:20,240 --> 00:12:22,400 Speaker 6: We're gonna have to send Tommy for compliance retraining. You're 258 00:12:22,400 --> 00:12:24,199 Speaker 6: not just supposed to talk about the way someone looks 259 00:12:24,200 --> 00:12:24,560 Speaker 6: on air. 260 00:12:24,640 --> 00:12:25,960 Speaker 3: Tom. We talked about this. 261 00:12:26,040 --> 00:12:28,120 Speaker 9: Lindsey, Yes, the pill one. 262 00:12:28,240 --> 00:12:32,640 Speaker 3: Please lindsay you know, I'm sorry, I'm just laughing in 263 00:12:32,640 --> 00:12:34,160 Speaker 3: to my you know, I. 264 00:12:34,120 --> 00:12:37,640 Speaker 6: Prompted this conversation by asking you about Iran, about geopolitical risk, 265 00:12:37,720 --> 00:12:39,640 Speaker 6: and you talked about Oracle earnings and tech, and you 266 00:12:39,640 --> 00:12:41,400 Speaker 6: talked about AI and you know, so I just have 267 00:12:41,480 --> 00:12:43,880 Speaker 6: to go there. I mean, if we're concerned about, you know, 268 00:12:44,120 --> 00:12:46,000 Speaker 6: the health of the financial markets here in the US, 269 00:12:46,080 --> 00:12:48,000 Speaker 6: why aren't we looking at credit spreads, like what is 270 00:12:48,000 --> 00:12:50,439 Speaker 6: going on with credit spreads? Why are they not reacting 271 00:12:50,640 --> 00:12:52,120 Speaker 6: to what's going on in the world, And what would 272 00:12:52,160 --> 00:12:53,040 Speaker 6: it take for them to react? 273 00:12:53,120 --> 00:12:53,240 Speaker 10: Right? 274 00:12:53,280 --> 00:12:55,920 Speaker 8: Well, I think it's about pulling the camera back and 275 00:12:56,000 --> 00:12:59,640 Speaker 8: thinking about quality of balance sheets, balance sheets of corporations, 276 00:12:59,679 --> 00:13:02,600 Speaker 8: balance treats of countries. I think we've got to get 277 00:13:02,600 --> 00:13:05,760 Speaker 8: into the point. Last year was not so much thinking 278 00:13:05,800 --> 00:13:08,760 Speaker 8: about dispersion. There wasn't a lot of it. Right this 279 00:13:08,920 --> 00:13:11,480 Speaker 8: year we are seeing dispersion. So maybe the headline on 280 00:13:11,520 --> 00:13:14,320 Speaker 8: an index hasn't changed much. Under the hood of the car, 281 00:13:14,559 --> 00:13:17,319 Speaker 8: there are a lot of changes. So we are absolutely 282 00:13:17,360 --> 00:13:21,960 Speaker 8: looking at it. But I think your point on Iran, AI, Oracle, CPI, 283 00:13:22,480 --> 00:13:24,240 Speaker 8: these are all things we have to still consider. They 284 00:13:24,280 --> 00:13:25,240 Speaker 8: didn't just go away. 285 00:13:25,360 --> 00:13:26,600 Speaker 5: Okay, you came out of Princeton. 286 00:13:26,600 --> 00:13:29,040 Speaker 2: You want through a number of banks you were teaching for, 287 00:13:29,440 --> 00:13:31,600 Speaker 2: you know, a good amount of time now running Golden 288 00:13:31,720 --> 00:13:32,959 Speaker 2: SAX multisector. 289 00:13:33,400 --> 00:13:33,720 Speaker 5: Great. 290 00:13:34,320 --> 00:13:39,160 Speaker 2: How do you interpret a fifty billion dollar six phone 291 00:13:39,200 --> 00:13:44,400 Speaker 2: call deal from Amazon that wasn't in my textbooks years ago? 292 00:13:44,920 --> 00:13:51,520 Speaker 2: What help our audience understand the psychology of those debt offerings? 293 00:13:51,800 --> 00:13:54,120 Speaker 8: Yeah, so, I think there's a lot of interest out 294 00:13:54,120 --> 00:13:57,200 Speaker 8: there in the hyperscaler world. And this is actually not 295 00:13:57,280 --> 00:14:00,600 Speaker 8: the first deal that we've seen with a couple key players. 296 00:14:00,920 --> 00:14:03,960 Speaker 8: We've seen others examples of that earlier this year. I 297 00:14:03,960 --> 00:14:06,840 Speaker 8: think it's just the evolution of deal making, right. The 298 00:14:06,880 --> 00:14:09,480 Speaker 8: way it used to always be done is not necessarily 299 00:14:09,480 --> 00:14:11,280 Speaker 8: the way of the future. Just like if you think 300 00:14:11,280 --> 00:14:14,000 Speaker 8: about vehicles. In the market for investing, we continue to evolve. 301 00:14:14,040 --> 00:14:16,600 Speaker 8: You just had a guest on talking about ETFs Holman 302 00:14:16,720 --> 00:14:20,760 Speaker 8: very much in the ETF market, things evolve, deal making evolves, 303 00:14:20,800 --> 00:14:23,440 Speaker 8: instruments evolve, and that's the neat thing about finance that 304 00:14:23,520 --> 00:14:26,360 Speaker 8: keeps you interested. It's constantly evolving and growing. 305 00:14:27,360 --> 00:14:27,600 Speaker 3: Yeah. 306 00:14:27,600 --> 00:14:30,280 Speaker 6: Well, I mean I love that, you know, I mean absolutely. 307 00:14:30,320 --> 00:14:32,320 Speaker 6: I mean, look in lieu of the past week's events, 308 00:14:32,400 --> 00:14:34,040 Speaker 6: you know we have CPI print coming on at eight 309 00:14:34,160 --> 00:14:36,120 Speaker 6: thirty here. I mean, should investors even care about it? 310 00:14:36,160 --> 00:14:38,360 Speaker 6: I mean, look, I get it. You know it still 311 00:14:38,400 --> 00:14:40,760 Speaker 6: has some relevance. You know, you want to get shelter costs. 312 00:14:40,760 --> 00:14:43,000 Speaker 6: You want to look at discretionary spend. Maybe, but I mean, 313 00:14:43,320 --> 00:14:45,400 Speaker 6: you know the market's looks right through that payroll print 314 00:14:45,440 --> 00:14:45,960 Speaker 6: last Friday. 315 00:14:45,960 --> 00:14:47,440 Speaker 3: I mean, are they going to do the same thing today. 316 00:14:48,040 --> 00:14:50,240 Speaker 8: They are going to look at it. Obviously the bigger 317 00:14:50,280 --> 00:14:54,440 Speaker 8: story it's not CPI, but remember we still care about 318 00:14:54,520 --> 00:14:56,800 Speaker 8: how the Central Bank is going to operate. Are they 319 00:14:56,840 --> 00:14:59,440 Speaker 8: going to cut rates? What that means for the economy 320 00:14:59,480 --> 00:15:02,680 Speaker 8: just only in the US, but abroad where rates are 321 00:15:03,000 --> 00:15:06,560 Speaker 8: matter for the health of everyone, every American and their 322 00:15:06,720 --> 00:15:09,800 Speaker 8: balance sheet. So it's not the top story, but it's 323 00:15:09,800 --> 00:15:11,000 Speaker 8: still something you got to look at. 324 00:15:11,200 --> 00:15:13,520 Speaker 5: Thank you so much for coming in, really really. 325 00:15:13,280 --> 00:15:14,840 Speaker 9: Thank you for having me. And I guess I need 326 00:15:14,840 --> 00:15:15,440 Speaker 9: a tam. 327 00:15:15,360 --> 00:15:18,160 Speaker 6: No no, no, you just maybe just a lower level of 328 00:15:18,720 --> 00:15:20,720 Speaker 6: SPD in the sunscreen, maybe like. 329 00:15:21,320 --> 00:15:25,040 Speaker 8: Fifteen fifteen, maybe maybe fifteen thanks. 330 00:15:24,880 --> 00:15:29,040 Speaker 2: To surveillances, we just hybrided. Damien's an outlier. 331 00:15:29,120 --> 00:15:32,120 Speaker 8: Okay, a tanning bed part. 332 00:15:31,920 --> 00:15:32,360 Speaker 4: Of the writer. 333 00:15:32,560 --> 00:15:36,720 Speaker 6: They intelligence for your eligence, part of it's part of 334 00:15:36,760 --> 00:15:37,480 Speaker 6: my contract. 335 00:15:37,840 --> 00:15:41,160 Speaker 2: I'll get my lawyers done that we'll just tanning beds 336 00:15:41,160 --> 00:15:44,360 Speaker 2: for team surveyance. Lenny Rosner, thank you so much. 337 00:15:46,240 --> 00:15:46,960 Speaker 5: Stay with us. 338 00:15:47,200 --> 00:15:50,440 Speaker 2: More from Bloomberg Surveillance coming up after this. 339 00:15:57,680 --> 00:16:01,240 Speaker 1: You're listening to the Bloomberg Surveillance podcas Catch us live 340 00:16:01,320 --> 00:16:04,360 Speaker 1: weekday afternoons from seven to ten am. He's durn Listen 341 00:16:04,400 --> 00:16:08,000 Speaker 1: on Applecarplay and Android Otto with the Bloomberg Business app, 342 00:16:08,160 --> 00:16:09,880 Speaker 1: or watch us live on YouTube. 343 00:16:10,040 --> 00:16:13,720 Speaker 2: Lisa Schllett has been around the Black fourteen fifteen times. 344 00:16:13,720 --> 00:16:16,440 Speaker 2: She was fourteen years old, she was at Alliance Bernstein 345 00:16:16,520 --> 00:16:19,480 Speaker 2: working for Sandy Bernstein years ago. Drives a ship at 346 00:16:19,520 --> 00:16:22,960 Speaker 2: Morgan Stanley. What I love about your note is you said, 347 00:16:23,000 --> 00:16:26,600 Speaker 2: get over it. It's a complex situation. How do you 348 00:16:27,600 --> 00:16:33,040 Speaker 2: sustain an investment plan given legitimate complexity? 349 00:16:34,840 --> 00:16:38,160 Speaker 11: I think you can't sustain one plan. You can't be anchored. 350 00:16:38,280 --> 00:16:41,800 Speaker 11: We're you know, our watchword right now is hyper vigilance. 351 00:16:42,640 --> 00:16:45,880 Speaker 11: One of the things that has been very interesting to 352 00:16:46,000 --> 00:16:49,800 Speaker 11: us that has differentiated twenty twenty six from you know, 353 00:16:49,840 --> 00:16:53,120 Speaker 11: really the first three years of this bull market has 354 00:16:53,160 --> 00:16:56,440 Speaker 11: been underneath the surface of the index. We've had extraordinary 355 00:16:56,480 --> 00:17:01,720 Speaker 11: dispersion of individual stock performance. So if you're a stock picker, 356 00:17:02,360 --> 00:17:05,560 Speaker 11: which I grew up being and haven't really been able 357 00:17:05,600 --> 00:17:09,399 Speaker 11: to do for the past fifteen seventeen years. This is 358 00:17:10,200 --> 00:17:13,960 Speaker 11: you know, Christmas, and there's lots and lots of things 359 00:17:14,040 --> 00:17:18,280 Speaker 11: to do below the surface, and so hypervigilance is one 360 00:17:18,320 --> 00:17:22,760 Speaker 11: way to plan. But I think the second element of this, 361 00:17:23,520 --> 00:17:27,520 Speaker 11: Tom is that you know, we're marveling at how little 362 00:17:27,880 --> 00:17:32,480 Speaker 11: risk premia is really being priced into this market given 363 00:17:32,560 --> 00:17:37,399 Speaker 11: the complexity. I mean not to you know, venture into hyperbole, 364 00:17:37,920 --> 00:17:41,520 Speaker 11: but you know, this is a situation that is currently 365 00:17:42,000 --> 00:17:47,280 Speaker 11: militarily involving thirteen fourteen different countries. 366 00:17:47,680 --> 00:17:50,040 Speaker 9: Now I don't want to say the words world war, 367 00:17:50,480 --> 00:17:54,640 Speaker 9: but you know this is this is the closest in 368 00:17:54,680 --> 00:17:55,920 Speaker 9: my lifetime. 369 00:17:56,080 --> 00:18:00,720 Speaker 11: And so to me, you know, you know, putting that 370 00:18:01,040 --> 00:18:04,919 Speaker 11: complexity together with the fact that we're now seeing, you know, 371 00:18:05,000 --> 00:18:08,240 Speaker 11: from the policy side, what feels to me like not 372 00:18:08,320 --> 00:18:12,080 Speaker 11: just a response, but almost a panic in terms of 373 00:18:12,160 --> 00:18:17,040 Speaker 11: the global desire to release energy reserves and the IEA 374 00:18:17,080 --> 00:18:19,959 Speaker 11: in particular, you know, going out after you know, twenty 375 00:18:19,960 --> 00:18:23,760 Speaker 11: five to thirty percent of reserves ten days in Yeah, 376 00:18:23,760 --> 00:18:25,879 Speaker 11: that means you only have two two thirds left. 377 00:18:25,960 --> 00:18:28,400 Speaker 2: The heritage of Morgan Stanley starts with a woman named 378 00:18:28,400 --> 00:18:31,240 Speaker 2: Mary who used to put out a deck eighty pages. 379 00:18:30,880 --> 00:18:33,280 Speaker 5: I hated or you had to read every page of it. 380 00:18:33,560 --> 00:18:37,280 Speaker 2: You people own the analysis of technology, particularly on the 381 00:18:37,359 --> 00:18:41,439 Speaker 2: left coast. Is this the mother of all opportunities in 382 00:18:41,480 --> 00:18:43,159 Speaker 2: a software AI scare? 383 00:18:44,440 --> 00:18:46,280 Speaker 11: I don't know that I'd call it the mother of 384 00:18:46,320 --> 00:18:49,040 Speaker 11: all opportunities. I mean, twenty twenty two, the sellof in 385 00:18:49,040 --> 00:18:52,560 Speaker 11: twenty twenty two is a pretty good opportunity because that 386 00:18:52,680 --> 00:18:56,400 Speaker 11: was so focused on technology. But there are a lot 387 00:18:56,440 --> 00:18:58,800 Speaker 11: of things to do, and we are, you know, picking 388 00:18:58,840 --> 00:19:01,240 Speaker 11: through the rubble. We're picking through, you know, some of 389 00:19:01,240 --> 00:19:05,520 Speaker 11: the software. We're funding it from some of the semiconductor makers. 390 00:19:05,560 --> 00:19:08,159 Speaker 11: In fact, you know, I'm trying to remind people that 391 00:19:08,240 --> 00:19:12,160 Speaker 11: semiconductors are actually cyclical and typically trade on normalized earnings, 392 00:19:12,160 --> 00:19:13,000 Speaker 11: not peak earnings. 393 00:19:13,040 --> 00:19:17,240 Speaker 6: People, Lisa, you are the CIO of Morgan's Stanley Wealth Management, 394 00:19:17,320 --> 00:19:19,720 Speaker 6: and you just wrote that US equity resilience in the 395 00:19:19,720 --> 00:19:22,960 Speaker 6: face of Warren oil shocks is largely unprecedented, such as 396 00:19:22,960 --> 00:19:25,000 Speaker 6: like we're seeing and you're going back at least eighty 397 00:19:25,080 --> 00:19:27,840 Speaker 6: years here. I mean, the investors you're talking to, you 398 00:19:27,840 --> 00:19:30,679 Speaker 6: do you find more of them interested in bargain hunting 399 00:19:30,680 --> 00:19:33,600 Speaker 6: in the current environment, or looking to put on protection 400 00:19:33,760 --> 00:19:36,439 Speaker 6: or looking for safe haven places to hide in the 401 00:19:36,440 --> 00:19:37,040 Speaker 6: current environment. 402 00:19:37,119 --> 00:19:38,639 Speaker 3: What have your conversations with client's been like. 403 00:19:38,960 --> 00:19:43,520 Speaker 11: So it really depends on where you sit. For much 404 00:19:43,520 --> 00:19:48,800 Speaker 11: of our private wealth, business family offices, ultrahigh net worth individuals, 405 00:19:49,040 --> 00:19:53,960 Speaker 11: they're much more defensive. They're much more concerned about about 406 00:19:54,080 --> 00:19:57,840 Speaker 11: you know, risk premium, about being defensive about having some cash. 407 00:19:57,560 --> 00:19:58,480 Speaker 9: On the sidelines. 408 00:19:59,280 --> 00:20:04,199 Speaker 11: But you know, the more institutional folks have still have 409 00:20:04,320 --> 00:20:07,960 Speaker 11: some animal spirit here and uh, you know, have have 410 00:20:08,119 --> 00:20:10,600 Speaker 11: kind of deep belief that this is going to be 411 00:20:10,680 --> 00:20:15,119 Speaker 11: over quickly and that the underlying fundamental story of profit 412 00:20:15,160 --> 00:20:18,760 Speaker 11: acceleration because of AI still lives. 413 00:20:19,000 --> 00:20:21,880 Speaker 6: So what about some of these I'm going to go there, 414 00:20:21,960 --> 00:20:26,000 Speaker 6: quantum computing, bitcoin mining, flying taxi companies, new energy, all 415 00:20:26,000 --> 00:20:29,040 Speaker 6: these kind of you know, small cap growth stocks, all 416 00:20:29,080 --> 00:20:30,200 Speaker 6: these meme themes. 417 00:20:30,720 --> 00:20:31,560 Speaker 3: What are your thoughts there? 418 00:20:31,600 --> 00:20:33,600 Speaker 6: I mean, do you still tell investors, hey, you know 419 00:20:33,680 --> 00:20:35,680 Speaker 6: you want to you know, you have to be exposed 420 00:20:35,680 --> 00:20:37,359 Speaker 6: in order to benefit from it, right, I mean, like, 421 00:20:37,520 --> 00:20:39,760 Speaker 6: is it is it a non non zero probability that 422 00:20:39,800 --> 00:20:42,280 Speaker 6: you're basically telling investors, hey, you know you can't just 423 00:20:42,400 --> 00:20:44,680 Speaker 6: run and hide from some of these some of these sectors. 424 00:20:45,359 --> 00:20:49,639 Speaker 11: So absolutely, we are fundamental believers in thematic investing. I know, 425 00:20:49,880 --> 00:20:53,720 Speaker 11: you know, Tom has my colleague Ellen Zentner on very 426 00:20:53,720 --> 00:20:57,920 Speaker 11: often and she's she's running thematic for us. But what 427 00:20:57,960 --> 00:21:02,040 Speaker 11: we're doing is we're trying to access those opportunities more 428 00:21:02,240 --> 00:21:06,080 Speaker 11: in venture capital today and in growth private equity than 429 00:21:06,119 --> 00:21:08,919 Speaker 11: we are in the public market. What we've said is 430 00:21:08,960 --> 00:21:14,720 Speaker 11: that public small cap, we believe is really experienced adverse selection. 431 00:21:15,520 --> 00:21:19,760 Speaker 11: That the level of the lack of profitability in the 432 00:21:19,840 --> 00:21:23,480 Speaker 11: Russell two thousand, for example, is just so uninspiring. 433 00:21:25,119 --> 00:21:28,960 Speaker 2: I'll say my book. Folks, Listen carefully to what Michelle 434 00:21:29,240 --> 00:21:32,440 Speaker 2: just said. There, profit is everything. Yeah, this is from 435 00:21:33,040 --> 00:21:35,919 Speaker 2: late magdal Lord to side at LC. 436 00:21:36,200 --> 00:21:37,679 Speaker 6: Well, I guess what we're saying is that in some 437 00:21:37,760 --> 00:21:40,280 Speaker 6: of the scepters, Tom, you know, the real companies, the 438 00:21:40,320 --> 00:21:43,000 Speaker 6: real profit orient the ones who are actually making money 439 00:21:43,000 --> 00:21:44,960 Speaker 6: and are going to benefit, they're not publicly traded. 440 00:21:45,160 --> 00:21:48,480 Speaker 2: Came up in Phoenix with Kim Dawson the other day. 441 00:21:48,640 --> 00:21:52,800 Speaker 2: Great panel. I'm sorry, profit matters, It's all there is 442 00:21:53,800 --> 00:21:55,679 Speaker 2: to it. So here's what I did, Lisa, I did 443 00:21:55,720 --> 00:21:58,040 Speaker 2: this just for you. I pulled up the Dow it's 444 00:21:58,080 --> 00:22:02,640 Speaker 2: a wins Award chart and Vogue okay, nineteen thirty nine, 445 00:22:02,800 --> 00:22:05,639 Speaker 2: all the way out to nineteen forty six. I lectured 446 00:22:05,680 --> 00:22:10,160 Speaker 2: about the Guadalcanal low of nineteen forty two, the absolute 447 00:22:10,520 --> 00:22:14,960 Speaker 2: bottom of a perfect war, and then a moonshot for 448 00:22:15,080 --> 00:22:19,680 Speaker 2: equities off of nineteen forty two. Do stocks go up 449 00:22:19,760 --> 00:22:20,200 Speaker 2: in war? 450 00:22:22,000 --> 00:22:28,679 Speaker 11: It depends, But I think, look, fundamentally, yes, you know, fundamentally, 451 00:22:28,960 --> 00:22:33,280 Speaker 11: wars are reflationary, right, whether we're talking about you know, 452 00:22:33,400 --> 00:22:35,760 Speaker 11: just a world based on the inflation and the nominals, 453 00:22:35,840 --> 00:22:38,639 Speaker 11: or we're talking about defense spending and quote unquote the 454 00:22:38,640 --> 00:22:44,520 Speaker 11: military industrial complex. Wars get economies moving and doing things well. 455 00:22:44,640 --> 00:22:45,199 Speaker 3: For audience. 456 00:22:45,200 --> 00:22:48,320 Speaker 6: If you ever have the benefit of reading Lisa Shallatt's work, 457 00:22:48,359 --> 00:22:49,840 Speaker 6: you know you're going to see that she knows everything 458 00:22:49,880 --> 00:22:52,000 Speaker 6: from equities to fixed incomes, to commodities, you name it. 459 00:22:52,040 --> 00:22:54,080 Speaker 6: But hidden within her note is a little bit on 460 00:22:54,160 --> 00:22:57,639 Speaker 6: emerging markets, Tom and she is suggesting that investors focus 461 00:22:57,680 --> 00:22:59,920 Speaker 6: on Latin America as opposed to Asia. And I'm curious, 462 00:23:00,359 --> 00:23:02,040 Speaker 6: is that more driven by what's going on in the 463 00:23:02,119 --> 00:23:04,480 Speaker 6: energy markets? The fact that Asian economies tend to be 464 00:23:04,600 --> 00:23:06,560 Speaker 6: oil importers or is there something else there? 465 00:23:06,800 --> 00:23:08,199 Speaker 9: So there's something else going on. 466 00:23:08,359 --> 00:23:13,080 Speaker 11: Certainly the oil and energy dynamics have reinforced that dichotomy 467 00:23:13,119 --> 00:23:15,480 Speaker 11: between Latin and and Asia. 468 00:23:15,560 --> 00:23:19,160 Speaker 9: But what had gotten our attention really. 469 00:23:18,840 --> 00:23:23,239 Speaker 11: Is, you know, the the change in US policy to 470 00:23:23,400 --> 00:23:27,000 Speaker 11: the extent that that uh, you know, the new Monroe 471 00:23:27,200 --> 00:23:32,159 Speaker 11: doctrine or or new implementation of it, that that creates 472 00:23:32,840 --> 00:23:38,119 Speaker 11: backing for a more business centric or or business oriented 473 00:23:38,160 --> 00:23:43,040 Speaker 11: and less progressive governments down there that are stable, that 474 00:23:43,119 --> 00:23:48,879 Speaker 11: are are attracting investment that is sponsored by US, development 475 00:23:48,880 --> 00:23:49,760 Speaker 11: of supply chains. 476 00:23:49,840 --> 00:23:52,480 Speaker 9: That's a good thing, and you know. 477 00:23:52,800 --> 00:23:54,920 Speaker 11: That's part of our thesis of of why you should 478 00:23:54,920 --> 00:23:55,680 Speaker 11: be looking down there. 479 00:23:55,800 --> 00:23:57,120 Speaker 5: Lisa, thank you so much for coming. 480 00:23:57,200 --> 00:24:00,720 Speaker 9: I really appreciate the stay my pleasure kind of. 481 00:24:00,880 --> 00:24:05,080 Speaker 2: Morgan Stanley, Lisa Shallatt driving all of their wealth management. 482 00:24:06,320 --> 00:24:07,040 Speaker 5: Stay with us. 483 00:24:07,280 --> 00:24:10,520 Speaker 2: More from Bloomberg Surveillance coming up after this. 484 00:24:17,720 --> 00:24:21,320 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 485 00:24:21,400 --> 00:24:24,520 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 486 00:24:24,640 --> 00:24:28,280 Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or 487 00:24:28,440 --> 00:24:29,880 Speaker 1: watch us live on YouTube. 488 00:24:30,080 --> 00:24:33,320 Speaker 2: Angela Cacaffus joins us from Edward Jones here. What are 489 00:24:33,359 --> 00:24:35,760 Speaker 2: you hearing from the clients of Edward Jones? You people 490 00:24:35,840 --> 00:24:37,960 Speaker 2: have you know, you think, folks of your ear to 491 00:24:38,040 --> 00:24:41,320 Speaker 2: the rail on a railroad. You guys have it across 492 00:24:41,359 --> 00:24:44,879 Speaker 2: this nation like nobody. What do you hear from your clients? 493 00:24:45,200 --> 00:24:48,640 Speaker 2: Are they persevering through eleven till twelve days of war? 494 00:24:49,400 --> 00:24:52,760 Speaker 10: Yeah, we're privileged to have clients all across the US 495 00:24:53,359 --> 00:24:55,880 Speaker 10: wide reads as you say. The good news is that 496 00:24:55,920 --> 00:24:58,240 Speaker 10: the clients are so far as sticking to the plan. 497 00:24:58,400 --> 00:25:01,680 Speaker 10: There's no panic, and that's our advice to lean into 498 00:25:01,680 --> 00:25:05,800 Speaker 10: that volatility and a discipline and diversified way. We're still 499 00:25:05,800 --> 00:25:08,960 Speaker 10: operating on certain environment, no doubt. But at the same time, 500 00:25:09,560 --> 00:25:11,760 Speaker 10: history can be a friend in the sense that we 501 00:25:11,880 --> 00:25:14,920 Speaker 10: know that historically the last fifteen years, these have been 502 00:25:15,080 --> 00:25:18,680 Speaker 10: short term impacts to the markets that have not left 503 00:25:18,680 --> 00:25:19,440 Speaker 10: the lasting market. 504 00:25:19,560 --> 00:25:22,800 Speaker 2: Edward Jones clients at Big mag seven gains, maybe they 505 00:25:22,880 --> 00:25:25,480 Speaker 2: pulled back a little bit. Maybe somebody's even at loss 506 00:25:25,920 --> 00:25:28,000 Speaker 2: is an attack opportunity right now. 507 00:25:28,520 --> 00:25:31,000 Speaker 10: I think we have seen over the last twelve months 508 00:25:31,080 --> 00:25:35,600 Speaker 10: some rerating happened, no doubt. Software stocks and positioning has 509 00:25:36,080 --> 00:25:38,520 Speaker 10: really turned a corner, and now we have seen a 510 00:25:38,560 --> 00:25:40,760 Speaker 10: little more and more strength. I think the earning story 511 00:25:40,920 --> 00:25:44,679 Speaker 10: remains intact, but I believe we are transitioning from the 512 00:25:44,760 --> 00:25:47,400 Speaker 10: first phase of AI, where it's all about the development 513 00:25:47,520 --> 00:25:51,119 Speaker 10: those people, those companies that facilitate the build out, towards 514 00:25:51,200 --> 00:25:55,119 Speaker 10: the dissemination and adoption. So I think that burdens the opportunity, 515 00:25:55,160 --> 00:25:56,520 Speaker 10: said Damien, I've just. 516 00:25:56,480 --> 00:25:58,800 Speaker 2: Got to continue with the headlines the Middle East. I'm 517 00:25:58,800 --> 00:26:03,439 Speaker 2: sorry to interrupt Connors's threat level high as people to 518 00:26:03,560 --> 00:26:06,719 Speaker 2: stay home. This is Doha, and of course there's six 519 00:26:06,800 --> 00:26:08,400 Speaker 2: seven hours ahead of us right now. 520 00:26:08,640 --> 00:26:11,560 Speaker 5: Call it early afternoon, Damien Sassour Angela. 521 00:26:11,600 --> 00:26:13,919 Speaker 6: We had Lisa Charlotte of Morgan Stanley on earlier and 522 00:26:13,960 --> 00:26:16,800 Speaker 6: she talked about how Warnedy's toil shocks have never been 523 00:26:16,880 --> 00:26:19,280 Speaker 6: kind to equities. Of the last eighty years, almost every 524 00:26:19,359 --> 00:26:22,080 Speaker 6: episode has resulted in an economic recession here in the US. 525 00:26:22,119 --> 00:26:24,720 Speaker 6: And yet, you know, I'm hearing that from you, that 526 00:26:24,800 --> 00:26:26,680 Speaker 6: this might just be short lived, and you know, I'm 527 00:26:26,720 --> 00:26:29,240 Speaker 6: just curious to hear your thoughts. I mean, what makes 528 00:26:29,280 --> 00:26:32,200 Speaker 6: you believe that this time is different. 529 00:26:32,680 --> 00:26:34,880 Speaker 10: Well, if we look at the last fifteen years. How 530 00:26:34,960 --> 00:26:38,640 Speaker 10: markets tend to perform is oil prices riley into these 531 00:26:38,640 --> 00:26:41,680 Speaker 10: events and pick shortly thereafter. When we look at the 532 00:26:41,720 --> 00:26:45,600 Speaker 10: Iran Israel conflict last summer, ten days after that was 533 00:26:45,600 --> 00:26:49,400 Speaker 10: when crude picked. Looking at the Ostia Ukraine invasion back 534 00:26:49,400 --> 00:26:52,520 Speaker 10: in twenty twenty two, that was three months that oil 535 00:26:52,520 --> 00:26:55,800 Speaker 10: price is picked, and twelve months in all of these cases, 536 00:26:55,800 --> 00:26:58,800 Speaker 10: the last fifteen years oil prices were lower, So no 537 00:26:58,880 --> 00:27:01,120 Speaker 10: doubt there's going to be a short impact. But at 538 00:27:01,119 --> 00:27:04,120 Speaker 10: the same time, the use economy is less energy intensive 539 00:27:04,320 --> 00:27:07,680 Speaker 10: than it used to be. And also we know that 540 00:27:07,760 --> 00:27:10,400 Speaker 10: it is all about the flow. There is ample reserves 541 00:27:10,400 --> 00:27:14,080 Speaker 10: and oil. Once this situation normalizes, nobody knows the timing 542 00:27:14,080 --> 00:27:17,560 Speaker 10: and the duration. But at the same time, it's always 543 00:27:17,600 --> 00:27:21,840 Speaker 10: have been the wrong move to make reactionary decisions based 544 00:27:21,880 --> 00:27:22,520 Speaker 10: on these headlines. 545 00:27:22,600 --> 00:27:24,479 Speaker 6: Yeah, no, I don't disagree with that, but I mean, 546 00:27:24,520 --> 00:27:26,639 Speaker 6: my goodness, you know, you are seeing Germany in Japan, 547 00:27:26,720 --> 00:27:29,359 Speaker 6: you know, hitting their strategic reserves, and you know it 548 00:27:29,520 --> 00:27:31,440 Speaker 6: just things seem to be getting a little bit lost 549 00:27:31,440 --> 00:27:33,199 Speaker 6: in the mix here, and so you know, I'm just 550 00:27:33,520 --> 00:27:36,000 Speaker 6: you know, in terms of investor positioning, what are you 551 00:27:36,040 --> 00:27:38,399 Speaker 6: advising are you advising to take advantage of the current 552 00:27:39,080 --> 00:27:42,320 Speaker 6: conditions to maybe lean in and maybe you know, buy 553 00:27:42,359 --> 00:27:43,639 Speaker 6: some of these beaten down equities and. 554 00:27:43,640 --> 00:27:45,680 Speaker 3: Maybe large tap attack or whatever. 555 00:27:45,760 --> 00:27:48,560 Speaker 6: Or suggesting that people kind of hide out, go defensive, 556 00:27:48,680 --> 00:27:49,720 Speaker 6: maybe look at safe havens. 557 00:27:49,720 --> 00:27:50,920 Speaker 3: I mean, what are you telling clients. 558 00:27:51,280 --> 00:27:54,000 Speaker 10: I think a broad mix of investments can help prepare 559 00:27:54,000 --> 00:27:57,520 Speaker 10: for different scenarios. We've earn a stady for those investors 560 00:27:57,520 --> 00:28:00,360 Speaker 10: that wanted to move to the sidelines every time these 561 00:28:00,359 --> 00:28:03,199 Speaker 10: big events happened for three months, that would have been 562 00:28:03,200 --> 00:28:06,280 Speaker 10: the wrong move, the way to lock in some either 563 00:28:06,359 --> 00:28:08,920 Speaker 10: losses or really miss out on some of these long 564 00:28:09,000 --> 00:28:12,840 Speaker 10: term returns. Thinking about the first month and a half 565 00:28:12,880 --> 00:28:16,159 Speaker 10: of the year, we saw that through broadening midcaps, small cups, international, 566 00:28:16,320 --> 00:28:19,240 Speaker 10: these investments have got pulled back. That pulled back the 567 00:28:19,280 --> 00:28:22,520 Speaker 10: most since this conflict started. So if this proves a 568 00:28:22,520 --> 00:28:25,200 Speaker 10: bit femeral, that's probably where the opportunity lies. 569 00:28:25,280 --> 00:28:26,440 Speaker 5: Is cash and ass. 570 00:28:28,080 --> 00:28:28,639 Speaker 3: Yes, it is. 571 00:28:29,320 --> 00:28:31,560 Speaker 10: But at the same time, when we look at investment 572 00:28:31,560 --> 00:28:34,800 Speaker 10: grade bonds, high quality bonds that offer an extra yield 573 00:28:34,840 --> 00:28:37,080 Speaker 10: that you can lock in for longer, probably that's the 574 00:28:37,119 --> 00:28:39,560 Speaker 10: way we would you advise to move some of that 575 00:28:39,640 --> 00:28:41,960 Speaker 10: excess cash if it is too much for some clients. 576 00:28:42,000 --> 00:28:43,800 Speaker 6: I'm sorry, three you a curveball here, But we've been 577 00:28:43,840 --> 00:28:47,239 Speaker 6: seeing all these headlines about JP Morgan, about Apollo now 578 00:28:47,240 --> 00:28:49,240 Speaker 6: they're going to value their private credit funds on a 579 00:28:49,280 --> 00:28:51,400 Speaker 6: daily basis and things like that. I mean, what are 580 00:28:51,400 --> 00:28:53,959 Speaker 6: your thoughts on private credit? Do you see that as 581 00:28:53,960 --> 00:28:55,400 Speaker 6: a risky US financial stability? 582 00:28:56,120 --> 00:28:58,760 Speaker 10: Potentially a risk, but not a systemic risk. At some 583 00:28:58,880 --> 00:29:01,800 Speaker 10: point we're going to have a credit cycle. But I thought, 584 00:29:01,880 --> 00:29:04,200 Speaker 10: I don't think that point is now. The Fed still 585 00:29:04,320 --> 00:29:06,840 Speaker 10: has a bias to cut interest rates, that used economy 586 00:29:06,880 --> 00:29:10,000 Speaker 10: is dragging along. Some of the fears around software might 587 00:29:10,040 --> 00:29:12,840 Speaker 10: be overblown, but no doubt it is an area that 588 00:29:12,880 --> 00:29:14,040 Speaker 10: we are monitoring closely. 589 00:29:14,880 --> 00:29:17,080 Speaker 5: I look, it's one final question. 590 00:29:17,160 --> 00:29:19,000 Speaker 2: We've got to run into all the news flow that 591 00:29:19,000 --> 00:29:21,880 Speaker 2: we've got this morning as well. What are you going 592 00:29:21,920 --> 00:29:24,400 Speaker 2: to write about this weekend if we get to the weekend. 593 00:29:24,440 --> 00:29:27,800 Speaker 2: I got a CPI report in twenty minutes as well. 594 00:29:28,320 --> 00:29:31,200 Speaker 2: Do you have like a script or just day to 595 00:29:31,280 --> 00:29:32,960 Speaker 2: day as you go as a strategist. 596 00:29:33,120 --> 00:29:35,280 Speaker 10: I think in this market we get very flexible. We 597 00:29:35,320 --> 00:29:38,440 Speaker 10: know that headlines cantaigns in an instant but I think 598 00:29:38,600 --> 00:29:40,960 Speaker 10: if we take a step back, really it is still 599 00:29:41,040 --> 00:29:44,720 Speaker 10: all about AI. That investment boom continues. Ora cale was 600 00:29:44,720 --> 00:29:48,080 Speaker 10: a good indication that demand remains high, and then of 601 00:29:48,080 --> 00:29:50,920 Speaker 10: course the geopolitical developments. It's hard to avoid that. We 602 00:29:51,200 --> 00:29:53,680 Speaker 10: don't want to dismiss any near term risks, no doubt. 603 00:29:53,840 --> 00:29:56,600 Speaker 2: Angela, thank you so much, thank you're joining us, really 604 00:29:56,640 --> 00:29:59,680 Speaker 2: appreciate it. ANGELA quickfas with Edward Jones. 605 00:30:00,000 --> 00:30:04,719 Speaker 1: This is the Bloomberg Surveillance podcast, available on Apples, Spotify, 606 00:30:04,800 --> 00:30:09,120 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 607 00:30:09,240 --> 00:30:12,680 Speaker 1: seven to ten am Eastern on Bloomberg dot com, the 608 00:30:12,760 --> 00:30:16,800 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You 609 00:30:16,840 --> 00:30:20,200 Speaker 1: can also watch us live every weekday on YouTube and 610 00:30:20,400 --> 00:30:22,160 Speaker 1: always on the Bloomberg terminal