WEBVTT - Stocks Drop & Bitcoin Slides in Weak December Start 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:21.240 on Apple car Play or Android Auto with the Bloomberg 0:00:21.320 --> 0:00:24.840 Business App. Listen on demand wherever you get your podcasts, 0:00:25.280 --> 0:00:27.080 or watch us live on YouTube. 0:00:27.120 --> 0:00:29.520 You know, you could call twenty twenty five the year 0:00:29.680 --> 0:00:33.400 of the paradox for the stock market, right because despite 0:00:33.600 --> 0:00:37.240 all of it, the trade tensions, the inflation, the geopolitical 0:00:37.320 --> 0:00:40.760 surprises and shocks, you know, we're up double digits across 0:00:40.800 --> 0:00:43.240 the board here for the major indexes. What is twenty 0:00:43.280 --> 0:00:46.840 twenty six? Hold Semashaw here glee in our studios actually, 0:00:46.840 --> 0:00:49.520 which is very exciting. Chief global strategist at Principal Asset 0:00:49.560 --> 0:00:52.400 Management seem always good to see you, thanks for stopping 0:00:52.440 --> 0:00:54.880 by the studio, So good to be here. 0:00:54.920 --> 0:00:55.200 Thank you. 0:00:55.680 --> 0:00:58.360 Is twenty twenty six going to be your paradoxes as 0:00:58.360 --> 0:00:59.520 well for this market? Do you think? 0:00:59.680 --> 0:00:59.880 Yeah? 0:00:59.880 --> 0:01:01.640 I think it will be in a slightly different way, 0:01:01.840 --> 0:01:06.800 in that you have a fairly constructive economic backdrop. Consumers 0:01:06.840 --> 0:01:09.720 we think will be okay, not incredibly strong, but we 0:01:09.800 --> 0:01:11.639 think they'll be okay. They get help from the fiscal 0:01:11.680 --> 0:01:14.039 side they get help from the mounetry side, and yet 0:01:14.040 --> 0:01:17.000 despite that constructive backdrop, investors are still going to have 0:01:17.000 --> 0:01:19.759 that niggling fear about AI, which is likely to persist. 0:01:20.480 --> 0:01:22.280 I'm not sure if AI is going to continue to 0:01:22.280 --> 0:01:24.600 be the tailwind that it has been for the last 0:01:24.600 --> 0:01:25.080 several years. 0:01:25.120 --> 0:01:25.200 Now. 0:01:25.240 --> 0:01:28.840 It seems like conversations that we're hearing from folks say, well, 0:01:28.840 --> 0:01:30.679 I'm a little bit concerned that we've gotten too far 0:01:30.720 --> 0:01:33.560 of our skis or to run its course, or the 0:01:33.600 --> 0:01:35.679 best growth daser behind us. How do you guys think 0:01:35.680 --> 0:01:36.119 about that? 0:01:36.280 --> 0:01:38.280 Yeah, I think the narrative has definitely shifted in the 0:01:38.319 --> 0:01:40.800 last two or three months. That really has gained a 0:01:40.840 --> 0:01:43.000 lot of momentum in that people are saying, Okay, what 0:01:43.080 --> 0:01:46.399 else is there? They're not shying away from tech by 0:01:46.400 --> 0:01:48.440 any means, but they're not adding to exposure. They are 0:01:48.440 --> 0:01:50.680 trying to think where else to go, whether that's of 0:01:50.800 --> 0:01:54.640 the sectors, other regions. So there's definitely that dynamic which 0:01:54.680 --> 0:01:56.400 is starting to come through in a lot of conversations 0:01:56.400 --> 0:01:56.960 that we're having. 0:01:57.240 --> 0:01:59.720 So what are you hearing from clients? I mean, where 0:01:59.720 --> 0:02:03.520 are they looking outside of sort of the obvious tech plays. 0:02:03.800 --> 0:02:05.920 Yeah, so I think the key areas that are really 0:02:06.000 --> 0:02:08.720 we're speaking about is financials, which has already had a 0:02:08.720 --> 0:02:12.440 really good year, but with that constructive backdrop that continues 0:02:12.480 --> 0:02:15.600 to flow through into twenty twenty six. And also consumer discretionary. 0:02:16.480 --> 0:02:18.440 We're hearing more people talk about that, of course, but 0:02:18.520 --> 0:02:22.760 with the fiscal stimulus, the tax refunds that we're expecting 0:02:22.800 --> 0:02:24.560 to come through in Q on, that should give a 0:02:24.560 --> 0:02:28.000 bit of a boost, particularly after a period of some difficulty. 0:02:28.040 --> 0:02:30.959 And then beyond regions, sorry, beyond sectors. A lot of 0:02:31.000 --> 0:02:33.720 questions around regions, and that's been a really interesting discussion 0:02:33.760 --> 0:02:38.040 because Europe has been really kind of underperformers, fairly boring. 0:02:38.080 --> 0:02:40.200 This year is a good year, but what we're seeing 0:02:40.240 --> 0:02:42.000 next year is that nobody's expecting it to be an 0:02:42.000 --> 0:02:45.760 incredible ole performer because growth is still fairly fairly weak, 0:02:46.120 --> 0:02:48.720 but because it doesn't have as much as much exposure 0:02:48.800 --> 0:02:53.160 to technology, it's an opportunity for diversification with a fairly 0:02:53.200 --> 0:02:54.440 solid macro backdrop. 0:02:54.760 --> 0:02:56.960 Is emerging market something you guys think. 0:02:56.760 --> 0:03:00.360 About, Yeah, emerging markets. It's actually because I'm a real 0:03:00.400 --> 0:03:02.760 favorite over the last nine months, and that's something which 0:03:02.800 --> 0:03:05.800 is also carrying through. I give been very particular, you know, 0:03:05.800 --> 0:03:07.360 pick out which areas that you want to be in. 0:03:08.000 --> 0:03:10.840 But certainly the interest rate cycle is continuing in a 0:03:10.840 --> 0:03:13.080 lot of these nations. And interestingly, you know, if you 0:03:13.120 --> 0:03:15.320 still really do believe in the tech narrative when you 0:03:15.400 --> 0:03:18.079 want to stay very much exposed to it. The thing 0:03:18.080 --> 0:03:21.200 about Asia is it has tech but a slightly cheap evaluation. 0:03:21.600 --> 0:03:23.760 So I think there's lots of opportunities outside of the US. 0:03:23.760 --> 0:03:26.360 And because this year you did actually see the global 0:03:26.400 --> 0:03:30.079 diversification paid off, that theme is now following through into 0:03:30.080 --> 0:03:30.839 twenty twenty six. 0:03:31.000 --> 0:03:33.240 So when you talk are em doing well next year 0:03:33.280 --> 0:03:35.800 possibly and the financials continuing to do nicely, I think 0:03:35.800 --> 0:03:38.880 all that's predicated on a scenario where we're going to 0:03:38.880 --> 0:03:44.600 have lower rates for longer. What happens if we don't well. 0:03:44.640 --> 0:03:46.800 I mean, it's been interesting because the last week or so, 0:03:46.920 --> 0:03:49.560 just the fact that the market lifted because of expectations 0:03:49.640 --> 0:03:53.440 turning for the around the FED cut in December tells 0:03:53.520 --> 0:03:56.400 us how important it still is. So when we're thinking 0:03:56.440 --> 0:03:58.760 about twenty twenty six, we have this constructive backdrop. We 0:03:58.800 --> 0:04:01.480 think that markets will do okay, And to your point, 0:04:01.600 --> 0:04:04.080 it is predicated on the idea that policymakers are able 0:04:04.120 --> 0:04:07.400 to still step in and provide that help wherever it's necessary. Now, 0:04:07.400 --> 0:04:10.920 we don't think that the US requires a lot of 0:04:10.960 --> 0:04:13.440 rate cuts, but we do need to feel that the 0:04:13.440 --> 0:04:15.000 feders were still willing to step in. 0:04:15.760 --> 0:04:19.159 We had some very good earnings in third quarter, I 0:04:19.160 --> 0:04:23.000 think better than most people forecasted. Is the earnings out 0:04:23.960 --> 0:04:26.240 constructive for this market? Are there earnings growth? Is it 0:04:26.360 --> 0:04:28.279 enough to push this market higher? 0:04:28.680 --> 0:04:32.960 Yeah? Absolutely, we do think that without you know, for example, 0:04:33.120 --> 0:04:36.360 our economic growth forecast is for about two percent two 0:04:36.400 --> 0:04:39.000 point one percent growth next year. When you have that 0:04:39.120 --> 0:04:41.760 kind of backdrop, then really earnies can do well. Now, 0:04:41.920 --> 0:04:45.479 again it's not bangbusters, but it is something that you 0:04:45.520 --> 0:04:48.040 can see a bit of a broadening out and it 0:04:48.120 --> 0:04:51.280 can continue to drive the market higher. Again, we're not 0:04:51.320 --> 0:04:54.839 looking at twenty five percent gains, but we are thinking 0:04:54.839 --> 0:04:57.800 that this is still a fairly decent year for next 0:04:58.040 --> 0:04:58.719 twenty twenty six. 0:04:58.800 --> 0:05:03.120 Do tariffs trip up finally trip up Corporate America next year? 0:05:03.160 --> 0:05:05.240 Because I mean, if you look at earnings this past quarter, 0:05:05.360 --> 0:05:06.080 they really didn't. 0:05:07.120 --> 0:05:08.760 I don't think that tariffs are going to be that 0:05:08.839 --> 0:05:11.120 much of an issue, you know, we're expecting that the 0:05:11.600 --> 0:05:13.560 amount of uncertain that we have this year is going 0:05:13.600 --> 0:05:15.960 to continue to fade into next year, though of course 0:05:16.000 --> 0:05:19.039 there'll be pockets volatility and concerns, but ultimately we have 0:05:19.120 --> 0:05:22.720 also realized that businesses are able to adapt. We don't 0:05:22.720 --> 0:05:24.800 think that they are willing to pass on too many 0:05:24.839 --> 0:05:27.680 price increases, so you could see some margin compression, but 0:05:27.720 --> 0:05:30.000 we're not expecting it to be very very significant. 0:05:30.720 --> 0:05:34.039 But geopolitics, I mean, it just seems like, you know, 0:05:34.080 --> 0:05:35.680 we still have I don't know what's going on in 0:05:35.720 --> 0:05:37.520 the mid mid East, but does nothing seem to be 0:05:37.600 --> 0:05:42.679 resolved there. We've got ongoing negotiations between the ukin and Russia. 0:05:42.720 --> 0:05:45.120 We've got China. Who knows what's going to happen in 0:05:45.120 --> 0:05:47.279 that part of the world. The market seems to have 0:05:47.640 --> 0:05:51.400 discounted most of that throughout this year. Is that something 0:05:51.400 --> 0:05:53.919 we can expect to continue to think or is that 0:05:54.000 --> 0:05:55.120 a black swan out. 0:05:54.960 --> 0:05:58.400 There that is now I believe that the market should 0:05:58.400 --> 0:06:01.480 continue to discount it was right and ounting it this year. Historically, 0:06:01.520 --> 0:06:05.680 whenever there've been geopolitical events, unless it fundamentally changes the 0:06:05.720 --> 0:06:08.440 inflation story, it is not something which has a sustained 0:06:08.440 --> 0:06:10.640 market impact. So of course we keep an eye on it, 0:06:10.680 --> 0:06:13.000 but it's not something that we're willing to try and 0:06:13.400 --> 0:06:14.760 position portfolios around. 0:06:15.400 --> 0:06:18.600 And what about outside equities, I'm thinking, well, crypto, which 0:06:18.600 --> 0:06:21.279 we know volatility is sort of always the word of 0:06:21.320 --> 0:06:23.480 the day. But even things like private credit, where there 0:06:23.480 --> 0:06:26.120 have been some concerns and we've seen pockets of weakness, 0:06:26.279 --> 0:06:27.760 how do you look at that in twenty twenty six. 0:06:27.839 --> 0:06:29.880 Yeah, we still have a constructive view of private credit. 0:06:29.920 --> 0:06:31.640 Of course, I've been as you said, there's been pockets 0:06:31.680 --> 0:06:33.760 of weakness and it has created a lot of concerns. 0:06:33.800 --> 0:06:36.440 Are they something more sinister underlying it? But a lot 0:06:36.480 --> 0:06:39.400 of that has to us it's been idiosyncratic shocks. If 0:06:39.400 --> 0:06:41.479 we're looking at the consumer base, for example, and how 0:06:41.560 --> 0:06:43.800 this feeds through to private credit, we don't have that 0:06:43.839 --> 0:06:48.160 many concerns. We still think they strength in that underlying story. 0:06:48.240 --> 0:06:50.120 It is losing a little bit of shine, I would say, 0:06:50.120 --> 0:06:51.880 but that means that investors need to be really careful 0:06:51.880 --> 0:06:54.279 abou where they're looking at. So for us, the middle 0:06:54.279 --> 0:06:56.279 market direct lending is an area which you have a 0:06:56.279 --> 0:06:59.120 little bit more defensive nacio slightly more high quality within 0:06:59.160 --> 0:07:02.520 that space. So I think it's important that investor's position 0:07:02.760 --> 0:07:06.520 appropriately within private credit. But importantly, going forward, these returns 0:07:06.560 --> 0:07:07.920 are going to be more and more difficult to come 0:07:07.960 --> 0:07:09.400 about in the same way that we've had over the 0:07:09.440 --> 0:07:11.960 last few years. So dipping into private markets is going 0:07:12.000 --> 0:07:13.480 to be credit increasingly important. 0:07:13.880 --> 0:07:15.680 Not for nothing but the high temperature today in des 0:07:15.760 --> 0:07:17.400 Moines I was supposed to be thirteen degrees. 0:07:17.960 --> 0:07:18.920 We're looking forward to that. 0:07:20.520 --> 0:07:25.000 And dude, the low temperature in Wednesdays can be minus five. 0:07:26.080 --> 0:07:28.200 So the thing is is that in de Moines you 0:07:28.240 --> 0:07:31.000 don't need to step outside. You can go through the skywalks. 0:07:31.040 --> 0:07:34.680 Okay, because for those of who all know Principal Asset Management, 0:07:35.000 --> 0:07:38.040 great great asset management business. They've been into business forever. 0:07:38.080 --> 0:07:40.080 I've gone out there to Des Moines many times to 0:07:40.120 --> 0:07:45.080 see those folks. It's December and it's chili in Des Moines. Yeah, 0:07:45.120 --> 0:07:48.480 and so Seema being the leader of you know, one 0:07:48.520 --> 0:07:50.200 of the senior folks of Principal as the managers, he's 0:07:50.240 --> 0:07:52.440 got to go to des Moines and see the folks there. 0:07:53.120 --> 0:07:55.040 Black Friday thermal thermal sales. 0:07:55.200 --> 0:07:57.760 Yes, you're stocking up. 0:07:58.520 --> 0:08:01.040 This is not London because this is not the city 0:08:01.040 --> 0:08:03.520 of London. This is De Moines, Iowa in December. 0:08:03.640 --> 0:08:05.440 Makes it look like a heat wave here in New 0:08:05.520 --> 0:08:06.480 York City exactly. 0:08:06.560 --> 0:08:08.160 Semasha, thank you so much for joining us. 0:08:08.160 --> 0:08:08.840 We appreciate it. 0:08:08.840 --> 0:08:11.320 On our way from London to Des Moines, Iowa, make 0:08:11.360 --> 0:08:14.040 a little stopover in New York City here, Smashaw, chief 0:08:14.040 --> 0:08:17.320 global Strategist, principal Asset Management to stay with us. More 0:08:17.320 --> 0:08:19.680 from Bloomberg Surveillance coming up after this. 0:08:29.040 --> 0:08:32.640 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:08:32.720 --> 0:08:35.720 weekday afternoons from seven to ten am. He's durn Listen 0:08:35.800 --> 0:08:39.360 on Apple Karplay and Android Otto with the Bloomberg Business app, 0:08:39.520 --> 0:08:41.319 or watch us live on YouTube. 0:08:41.360 --> 0:08:43.640 You know, Paul, we are going to have a new 0:08:43.640 --> 0:08:48.280 FED chair in in May. President Trump says he's decided 0:08:48.360 --> 0:08:50.720 on his pick. He hasn't announced too, but we know 0:08:50.760 --> 0:08:53.720 that Kevin Hassett, his chief Economic advisor, seems to be 0:08:53.720 --> 0:08:56.560 at the top of that list. Want to dig into 0:08:56.600 --> 0:09:00.520 how that may impact market decisions and take a look 0:09:00.559 --> 0:09:05.439 at sort of the more global political landscape, if you will. 0:09:05.440 --> 0:09:09.000 With Henrietta Trey's co founder of Veda Partners. Henrietta, thanks 0:09:09.040 --> 0:09:10.880 so much for being with us. Let's just start with 0:09:11.160 --> 0:09:13.960 the Federal Reserve, the changes that are to come in 0:09:14.000 --> 0:09:15.880 the months ahead. How are you looking at that when 0:09:15.920 --> 0:09:19.080 you think about markets overall in twenty twenty six. 0:09:20.200 --> 0:09:21.840 I think it's obviously the core question. 0:09:22.080 --> 0:09:24.760 And with so much uncertainty at the FED, what I 0:09:25.000 --> 0:09:29.319 like about having a new FED member, specifically if it's 0:09:29.400 --> 0:09:32.160 Kevin Hassett, is you know how that member is going 0:09:32.200 --> 0:09:32.520 to vote. 0:09:32.520 --> 0:09:34.319 There's not any confusion, and with such. 0:09:34.120 --> 0:09:37.120 A disparate FED, that's been something that's tricky for investors 0:09:37.120 --> 0:09:39.120 to really nail down. So you now will have two 0:09:39.200 --> 0:09:42.760 guaranteed locks on the voting basis of whether or not 0:09:42.760 --> 0:09:43.640 there should be cuts. 0:09:43.960 --> 0:09:45.480 The tricky part is the timing. 0:09:45.800 --> 0:09:48.280 As we get into May, the President is going to 0:09:48.320 --> 0:09:51.880 be staring down the twenty twenty six midterm elections coming 0:09:51.960 --> 0:09:54.000 up in November, and all four hundred and thirty five 0:09:54.040 --> 0:09:57.320 members except for the twenty two I think Republicans who 0:09:57.360 --> 0:09:59.760 are not running again, are going to be up for reelection. 0:10:00.000 --> 0:10:01.560 They're going to have to sell the United. 0:10:01.360 --> 0:10:04.360 States consumer on the idea that the economy is great 0:10:04.400 --> 0:10:06.400 and so we should be cutting interest rates if we 0:10:06.520 --> 0:10:09.360 need to, or the job market is where we should 0:10:09.360 --> 0:10:12.360 be prioritizing our time, but simultaneously that we need a 0:10:12.360 --> 0:10:15.400 two thousand dollars tax rebate to offset the cost of 0:10:15.440 --> 0:10:18.320 the tariff. So it's a really tricky dynamic to have 0:10:18.360 --> 0:10:19.840 that conversation at the same time. 0:10:20.000 --> 0:10:21.960 That's what I'd be worried about in terms of timing, 0:10:22.040 --> 0:10:24.720 but Kevin has it. I think we'd get through the set. 0:10:24.640 --> 0:10:26.680 Without too much of a problem on the confirmation front, 0:10:26.800 --> 0:10:29.000 unless there's some unknown quantity we haven't learned about the 0:10:29.080 --> 0:10:31.400 last decade of his time in the public space. 0:10:31.600 --> 0:10:33.720 Henrietta, I know you're going to tell us that Congress 0:10:33.800 --> 0:10:36.160 is either on break now or they're about to go 0:10:36.240 --> 0:10:39.400 on break, But what's the to do list for our 0:10:39.440 --> 0:10:40.040 Congress here? 0:10:40.080 --> 0:10:40.600 Looking forward? 0:10:41.600 --> 0:10:43.600 Yeah, the to do list is really going to be 0:10:43.640 --> 0:10:47.200 dominated by those ACA subsidies, which is where they actually 0:10:47.240 --> 0:10:50.120 have promised the Democratic Conference that they will hold a 0:10:50.200 --> 0:10:51.160 vote this year. 0:10:51.600 --> 0:10:54.280 So in the three week work session. 0:10:53.920 --> 0:10:56.600 Which equals out to about twelve days of legislative action 0:10:57.320 --> 0:10:59.079 for the whole month of December through the end of 0:10:59.120 --> 0:11:00.240 this year, they're going to have to. 0:11:00.240 --> 0:11:02.320 Hold some sort of vote on ACA subsidies. 0:11:02.720 --> 0:11:04.800 They also wanted to hold something that they were calling 0:11:04.920 --> 0:11:09.040 Russia week but as the President is negotiating deals with 0:11:09.160 --> 0:11:12.679 Brussia and Ukraine separately, they'll probably not hold those votes. 0:11:12.720 --> 0:11:16.800 So mostly ACA subsidies continued work on the appropriations bills 0:11:16.800 --> 0:11:17.720 to avoid a shutdown. 0:11:17.920 --> 0:11:21.160 As we come back in early twenty twenty six, and. 0:11:21.160 --> 0:11:24.520 You throw into the mixed Venezuela now Henrietta right, President 0:11:24.559 --> 0:11:27.960 Trump said that Airline should consider the airspace above and 0:11:28.040 --> 0:11:32.160 around Venezuela to be closed. As his administration continues to 0:11:32.200 --> 0:11:37.000 threaten more aggressive steps against President Maduro's government. We see 0:11:37.000 --> 0:11:40.080 Oil reacting to this news. Oil is hired today. No 0:11:40.240 --> 0:11:42.800 big surprise there, But how do you see that possibly 0:11:43.040 --> 0:11:43.640 playing out? 0:11:44.679 --> 0:11:47.800 Yeah, The thing about going into foreign policy issues is 0:11:47.840 --> 0:11:51.160 that members, especially on the Senate side on Armed Services 0:11:51.160 --> 0:11:53.040 and Foreign Affairs Committee, they take their. 0:11:53.000 --> 0:11:56.120 Jobs incredibly seriously. They're going to want to hold hearings. 0:11:56.160 --> 0:11:59.280 They're going to want to talk about the potential commands 0:11:59.320 --> 0:12:02.479 that HEXIT delivered to kill two remaining survivors. 0:12:02.720 --> 0:12:04.880 They take that incredibly seriously. 0:12:04.920 --> 0:12:07.200 You've seen it in the backlash that came out this 0:12:07.280 --> 0:12:10.839 weekend in public comments from Republican members as well. So 0:12:10.880 --> 0:12:13.480 that's going to eat up a lot of airtime for 0:12:13.520 --> 0:12:16.360 probably weeks, if not months, well into twenty. 0:12:16.160 --> 0:12:17.760 Twenty six, I would expect as well. 0:12:17.840 --> 0:12:20.640 And again, it just takes away those twelve legislative days 0:12:20.640 --> 0:12:22.360 of action that they actually have in the month of 0:12:22.400 --> 0:12:25.000 December to tackle government funding. 0:12:24.679 --> 0:12:26.760 And ACA subsidies. That's going to be. 0:12:26.679 --> 0:12:29.320 Where all their concentration and oxygen is and they love 0:12:29.400 --> 0:12:30.079 those moments. 0:12:30.080 --> 0:12:34.360 They really want to have hearings about it. Oversight. That's 0:12:34.480 --> 0:12:35.679 very serious for those members. 0:12:36.280 --> 0:12:38.920 I'm heading Tooruba next month and that's like right off 0:12:38.920 --> 0:12:42.200 the coast of Venezuela, so I'm paying attention to I mean, 0:12:42.200 --> 0:12:44.599 I'll be sitting on the beach watching navy ship. I 0:12:44.640 --> 0:12:47.400 don't know what's going on. Hey, Henrietta, can you tell 0:12:47.440 --> 0:12:50.480 me what an auto pen is? And do I need 0:12:50.520 --> 0:12:51.240 to care about this? 0:12:52.480 --> 0:12:54.360 I would. They're used all the time. 0:12:54.840 --> 0:12:57.960 The President signs a million different things today and the 0:12:57.960 --> 0:13:02.559 auto pen is a time test used in every single 0:13:02.559 --> 0:13:06.280 administration way to get signatures out the door from the president. Obviously, 0:13:06.360 --> 0:13:09.600 President Trump has a bone to pick with the auto pen, 0:13:09.840 --> 0:13:12.840 but I would be shocked if he hasn't also been 0:13:12.880 --> 0:13:15.040 a profligate user of it, particularly in his first term. 0:13:15.400 --> 0:13:18.600 But he actually made Biden's portrait in the White House 0:13:18.640 --> 0:13:23.000 a picture of the autopen his auto signature. Yes, so 0:13:23.040 --> 0:13:26.080 it's not Biden's face, it is his auto pen signature 0:13:26.120 --> 0:13:27.000 hanging in the White House. 0:13:27.120 --> 0:13:27.320 Estra. 0:13:27.920 --> 0:13:29.800 So the maturity is astounding. 0:13:30.400 --> 0:13:36.240 Henriette is. We had the governorships in Virginia and New 0:13:36.320 --> 0:13:39.280 Jersey several weeks ago, which were a positive for the Democrats, 0:13:39.280 --> 0:13:42.240 and that kind of caused the Trump administration too, I 0:13:42.240 --> 0:13:46.440 guess focus a little bit more on affordability. Is that 0:13:46.520 --> 0:13:49.320 still a theme for this White House or as it 0:13:49.360 --> 0:13:49.720 moved on? 0:13:50.720 --> 0:13:51.720 You know, it has to be. 0:13:52.080 --> 0:13:54.600 It has to be because the president is very closely 0:13:54.640 --> 0:13:58.200 watching the midterms. If the Democrats control the House, which 0:13:58.240 --> 0:14:00.920 is very likely to be the outcome of the next election, 0:14:01.040 --> 0:14:05.000 then he has a serious problem in terms of real oversight, subpoenas, etc. 0:14:05.360 --> 0:14:07.880 That will occupy the next the final two years of 0:14:07.920 --> 0:14:10.760 his term in office. So winning the twenty twenty six 0:14:10.840 --> 0:14:13.960 midterms has been a huge focus for the president, which 0:14:13.960 --> 0:14:16.680 is why there's been the redistricting efforts across Indiana and 0:14:16.720 --> 0:14:19.480 Texas and everywhere else. And the problem for the Trump 0:14:19.480 --> 0:14:22.920 administration is the top issues for the American voters are 0:14:22.920 --> 0:14:27.400 not the Russia, Ukraine, War, Israel, Gaza, Venezuela. None of 0:14:27.400 --> 0:14:30.280 the foreign policy stuff is of interest to US voters. 0:14:30.320 --> 0:14:34.200 They're famously not following international politics. What they do care 0:14:34.280 --> 0:14:37.720 about is inflation and prices. Those the top two issues 0:14:37.960 --> 0:14:41.480 facing consumers in all polls that are taken, along with 0:14:41.560 --> 0:14:44.600 the economy and the job market. So whether the President 0:14:44.640 --> 0:14:47.040 wants to focus on those issues or not, it's mandatory 0:14:47.080 --> 0:14:48.880 because that's what the voters are going to turn out 0:14:49.000 --> 0:14:52.520 to either support their Republican ideas or reject them in November. 0:14:52.640 --> 0:14:56.560 So those Governatario races where Democrats picked up twelve thirteen 0:14:56.640 --> 0:14:59.800 points in New Jersey and Virginia, where Republicans are really 0:15:00.000 --> 0:15:02.200 hoping to make gains and keep it to like five 0:15:02.240 --> 0:15:04.280 point wins, showed that that's not going to be an 0:15:04.280 --> 0:15:07.280 option as long as affordability remains the number one problem. 0:15:07.320 --> 0:15:09.000 So whether they want to or not, it has to 0:15:09.040 --> 0:15:11.600 be the core focus of the Republican conference and the 0:15:11.600 --> 0:15:15.960 administration AC subsidies player role, and that prices, inflation, all 0:15:16.000 --> 0:15:19.360 those pieces, tariffs are hugely important to the US consumer 0:15:19.400 --> 0:15:19.960 and voter. 0:15:20.400 --> 0:15:22.280 And of course the job market, which you mentioned just 0:15:22.320 --> 0:15:26.120 a second ago. So we know that this administration vows 0:15:26.160 --> 0:15:31.320 strict immigration curves, especially after that National Guard member or 0:15:31.320 --> 0:15:33.520 two of them dying after being ambushed near it near 0:15:33.520 --> 0:15:36.760 the White House last week. So how if they continue 0:15:36.800 --> 0:15:39.640 with that strategy, which it seems like they're going to 0:15:40.440 --> 0:15:44.520 throughout the Trump administration, how do you see that impacting 0:15:44.960 --> 0:15:46.600 the job market specifically? 0:15:47.560 --> 0:15:48.480 Yeah, the job. 0:15:48.280 --> 0:15:52.200 Market is hugely problematic, mostly because people don't feel comfortable. 0:15:52.200 --> 0:15:53.520 If you look at the University. 0:15:53.200 --> 0:15:56.080 Of Michigan consumer confidence data and whether they think they 0:15:56.120 --> 0:15:58.360 have an opportunity to go get a new job, if 0:15:58.360 --> 0:16:00.800 they're going to get a pay increase, everybody's sort of 0:16:00.800 --> 0:16:04.000 staying put. But on top of that, you're seeing major 0:16:04.080 --> 0:16:08.080 corporations fire folks. I think it's eighty six thousand jobs 0:16:08.080 --> 0:16:11.960 in the manufacturing job sector have been lost since Liberation Day. 0:16:12.200 --> 0:16:14.800 So there's this sense amongst the US consumer that there's 0:16:14.880 --> 0:16:16.800 not another job out there and they. 0:16:16.640 --> 0:16:17.640 Need to stay put. 0:16:18.320 --> 0:16:21.280 That creates the uncertainty and the lack of wage growth, 0:16:21.280 --> 0:16:24.360 and again that compounding issue of focused on prices and 0:16:24.440 --> 0:16:27.760 affordability that keeps all that front and center on the 0:16:27.800 --> 0:16:28.880 immigration front. 0:16:29.400 --> 0:16:32.760 From my seat, the response function. 0:16:32.520 --> 0:16:34.400 That you see in the voter polls is that they 0:16:34.480 --> 0:16:37.600 think the President has quote gone too far on immigration, 0:16:37.760 --> 0:16:39.440 and a lot of that is to do with the 0:16:39.520 --> 0:16:42.280 National Guards being sent to cities around America. 0:16:42.320 --> 0:16:44.120 They're coming to New Orleans this week. 0:16:44.440 --> 0:16:47.840 So that's an issue that the American voter sees and 0:16:47.920 --> 0:16:50.120 has decided that they don't like, even though they just. 0:16:50.200 --> 0:16:51.880 Voted for it in twenty twenty four. 0:16:51.960 --> 0:16:54.160 So that's going to be an area of overreach and 0:16:54.200 --> 0:16:56.920 that sort of pendulum swing that we're very used to 0:16:57.040 --> 0:16:59.960 in politics. So you elect one party to do sweeping 0:17:00.120 --> 0:17:01.920 change in one year, and then as soon as they 0:17:01.920 --> 0:17:04.320 start doing a sweeping change, you decide you don't like it. 0:17:04.920 --> 0:17:06.120 That's the phase that we're in right now. 0:17:06.359 --> 0:17:09.560 From the book base, Well, Henrietta, you provide investors with 0:17:09.640 --> 0:17:12.840 economic policy analysis. You've been doing it for years. You're 0:17:12.840 --> 0:17:16.000 gonna have a very busy twenty twenty six. How Manyetta Treys, 0:17:16.040 --> 0:17:17.800 co founder of Veda Partners. 0:17:17.560 --> 0:17:20.679 Stay with us. More from Bloomberg Surveillance coming up after this. 0:17:30.119 --> 0:17:33.680 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:17:33.760 --> 0:17:36.919 weekday afternoons from seven to ten am Eastern Listen on 0:17:37.000 --> 0:17:40.679 Applecarplay and Android Auto with the Bloomberg Business app or 0:17:40.800 --> 0:17:42.320 watch US live on YouTube. 0:17:42.440 --> 0:17:45.520 Brian Levitt, chief global market strategist for Investco, joins US 0:17:45.520 --> 0:17:48.359 here in our New York City studios. Brian, what is 0:17:48.400 --> 0:17:50.760 the twenty twenty sixth call for you guys? 0:17:50.840 --> 0:17:51.280 This year? 0:17:51.520 --> 0:17:53.399 The twenty twenty six call for us is that we 0:17:53.440 --> 0:17:56.639 will continue to see resilience in the global economy, actually 0:17:56.720 --> 0:17:59.840 even a pick up in global economic activity given some 0:18:00.119 --> 0:18:04.199 school support policy easing in the United States, and that 0:18:04.240 --> 0:18:08.520 should continue to drive markets higher. We're looking for some 0:18:08.680 --> 0:18:13.400 type of rebalancing, you know, sector rotation even within growth, 0:18:13.480 --> 0:18:16.359 but also to broadening out to other parts of the markets, 0:18:16.840 --> 0:18:19.760 specifically non US markets. 0:18:19.359 --> 0:18:21.320 As the Federal Reserve lowers interest rates. 0:18:21.400 --> 0:18:24.359 Okay, so what non US markets do you particularly like 0:18:24.400 --> 0:18:25.320 in twenty twenty six? 0:18:25.400 --> 0:18:28.560 Typically the developing markets of the world perform best in 0:18:28.600 --> 0:18:30.760 an environment when the FED is easing and when the 0:18:30.880 --> 0:18:35.280 dollar is either flat to weakening. And so you know, 0:18:35.320 --> 0:18:37.440 that's why so much of this is on the FED 0:18:37.560 --> 0:18:39.760 right now, and why the focus is so significant on 0:18:39.760 --> 0:18:42.440 the Fed, because a lot of these calls are predicated 0:18:42.480 --> 0:18:45.760 on the fact that we will get easier monetary policy, 0:18:45.800 --> 0:18:48.760 a steepening of the yield curve and no additional upward 0:18:48.800 --> 0:18:52.520