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Speaker 2: You know, you could call twenty twenty five the year
Speaker 2: of the paradox for the stock market, right because despite
Speaker 2: all of it, the trade tensions, the inflation, the geopolitical
Speaker 2: surprises and shocks, you know, we're up double digits across
Speaker 2: the board here for the major indexes. What is twenty
Speaker 2: twenty six? Hold Semashaw here glee in our studios actually,
Speaker 2: which is very exciting. Chief global strategist at Principal Asset
Speaker 2: Management seem always good to see you, thanks for stopping
Speaker 2: by the studio, So good to be here.
Speaker 3: Thank you.
Speaker 2: Is twenty twenty six going to be your paradoxes as
Speaker 2: well for this market? Do you think?
Speaker 4: Yeah?
Speaker 5: I think it will be in a slightly different way,
Speaker 5: in that you have a fairly constructive economic backdrop. Consumers
Speaker 5: we think will be okay, not incredibly strong, but we
Speaker 5: think they'll be okay. They get help from the fiscal
Speaker 5: side they get help from the mounetry side, and yet
Speaker 5: despite that constructive backdrop, investors are still going to have
Speaker 5: that niggling fear about AI, which is likely to persist.
Speaker 3: I'm not sure if AI is going to continue to
Speaker 3: be the tailwind that it has been for the last
Speaker 3: several years.
Speaker 6: Now.
Speaker 3: It seems like conversations that we're hearing from folks say, well,
Speaker 3: I'm a little bit concerned that we've gotten too far
Speaker 3: of our skis or to run its course, or the
Speaker 3: best growth daser behind us. How do you guys think
Speaker 3: about that?
Speaker 5: Yeah, I think the narrative has definitely shifted in the
Speaker 5: last two or three months. That really has gained a
Speaker 5: lot of momentum in that people are saying, Okay, what
Speaker 5: else is there? They're not shying away from tech by
Speaker 5: any means, but they're not adding to exposure. They are
Speaker 5: trying to think where else to go, whether that's of
Speaker 5: the sectors, other regions. So there's definitely that dynamic which
Speaker 5: is starting to come through in a lot of conversations
Speaker 5: that we're having.
Speaker 2: So what are you hearing from clients? I mean, where
Speaker 2: are they looking outside of sort of the obvious tech plays.
Speaker 5: Yeah, so I think the key areas that are really
Speaker 5: we're speaking about is financials, which has already had a
Speaker 5: really good year, but with that constructive backdrop that continues
Speaker 5: to flow through into twenty twenty six. And also consumer discretionary.
Speaker 5: We're hearing more people talk about that, of course, but
Speaker 5: with the fiscal stimulus, the tax refunds that we're expecting
Speaker 5: to come through in Q on, that should give a
Speaker 5: bit of a boost, particularly after a period of some difficulty.
Speaker 5: And then beyond regions, sorry, beyond sectors. A lot of
Speaker 5: questions around regions, and that's been a really interesting discussion
Speaker 5: because Europe has been really kind of underperformers, fairly boring.
Speaker 5: This year is a good year, but what we're seeing
Speaker 5: next year is that nobody's expecting it to be an
Speaker 5: incredible ole performer because growth is still fairly fairly weak,
Speaker 5: but because it doesn't have as much as much exposure
Speaker 5: to technology, it's an opportunity for diversification with a fairly
Speaker 5: solid macro backdrop.
Speaker 3: Is emerging market something you guys think.
Speaker 5: About, Yeah, emerging markets. It's actually because I'm a real
Speaker 5: favorite over the last nine months, and that's something which
Speaker 5: is also carrying through. I give been very particular, you know,
Speaker 5: pick out which areas that you want to be in.
Speaker 5: But certainly the interest rate cycle is continuing in a
Speaker 5: lot of these nations. And interestingly, you know, if you
Speaker 5: still really do believe in the tech narrative when you
Speaker 5: want to stay very much exposed to it. The thing
Speaker 5: about Asia is it has tech but a slightly cheap evaluation.
Speaker 5: So I think there's lots of opportunities outside of the US.
Speaker 5: And because this year you did actually see the global
Speaker 5: diversification paid off, that theme is now following through into
Speaker 5: twenty twenty six.
Speaker 2: So when you talk are em doing well next year
Speaker 2: possibly and the financials continuing to do nicely, I think
Speaker 2: all that's predicated on a scenario where we're going to
Speaker 2: have lower rates for longer. What happens if we don't well.
Speaker 5: I mean, it's been interesting because the last week or so,
Speaker 5: just the fact that the market lifted because of expectations
Speaker 5: turning for the around the FED cut in December tells
Speaker 5: us how important it still is. So when we're thinking
Speaker 5: about twenty twenty six, we have this constructive backdrop. We
Speaker 5: think that markets will do okay, And to your point,
Speaker 5: it is predicated on the idea that policymakers are able
Speaker 5: to still step in and provide that help wherever it's necessary. Now,
Speaker 5: we don't think that the US requires a lot of
Speaker 5: rate cuts, but we do need to feel that the
Speaker 5: feders were still willing to step in.
Speaker 3: We had some very good earnings in third quarter, I
Speaker 3: think better than most people forecasted. Is the earnings out
Speaker 3: constructive for this market? Are there earnings growth? Is it
Speaker 3: enough to push this market higher?
Speaker 5: Yeah? Absolutely, we do think that without you know, for example,
Speaker 5: our economic growth forecast is for about two percent two
Speaker 5: point one percent growth next year. When you have that
Speaker 5: kind of backdrop, then really earnies can do well. Now,
Speaker 5: again it's not bangbusters, but it is something that you
Speaker 5: can see a bit of a broadening out and it
Speaker 5: can continue to drive the market higher. Again, we're not
Speaker 5: looking at twenty five percent gains, but we are thinking
Speaker 5: that this is still a fairly decent year for next
Speaker 5: twenty twenty six.
Speaker 2: Do tariffs trip up finally trip up Corporate America next year?
Speaker 2: Because I mean, if you look at earnings this past quarter,
Speaker 2: they really didn't.
Speaker 5: I don't think that tariffs are going to be that
Speaker 5: much of an issue, you know, we're expecting that the
Speaker 5: amount of uncertain that we have this year is going
Speaker 5: to continue to fade into next year, though of course
Speaker 5: there'll be pockets volatility and concerns, but ultimately we have
Speaker 5: also realized that businesses are able to adapt. We don't
Speaker 5: think that they are willing to pass on too many
Speaker 5: price increases, so you could see some margin compression, but
Speaker 5: we're not expecting it to be very very significant.
Speaker 3: But geopolitics, I mean, it just seems like, you know,
Speaker 3: we still have I don't know what's going on in
Speaker 3: the mid mid East, but does nothing seem to be
Speaker 3: resolved there. We've got ongoing negotiations between the ukin and Russia.
Speaker 3: We've got China. Who knows what's going to happen in
Speaker 3: that part of the world. The market seems to have
Speaker 3: discounted most of that throughout this year. Is that something
Speaker 3: we can expect to continue to think or is that
Speaker 3: a black swan out.
Speaker 5: There that is now I believe that the market should
Speaker 5: continue to discount it was right and ounting it this year. Historically,
Speaker 5: whenever there've been geopolitical events, unless it fundamentally changes the
Speaker 5: inflation story, it is not something which has a sustained
Speaker 5: market impact. So of course we keep an eye on it,
Speaker 5: but it's not something that we're willing to try and
Speaker 5: position portfolios around.
Speaker 2: And what about outside equities, I'm thinking, well, crypto, which
Speaker 2: we know volatility is sort of always the word of
Speaker 2: the day. But even things like private credit, where there
Speaker 2: have been some concerns and we've seen pockets of weakness,
Speaker 2: how do you look at that in twenty twenty six.
Speaker 5: Yeah, we still have a constructive view of private credit.
Speaker 5: Of course, I've been as you said, there's been pockets
Speaker 5: of weakness and it has created a lot of concerns.
Speaker 5: Are they something more sinister underlying it? But a lot
Speaker 5: of that has to us it's been idiosyncratic shocks. If
Speaker 5: we're looking at the consumer base, for example, and how
Speaker 5: this feeds through to private credit, we don't have that
Speaker 5: many concerns. We still think they strength in that underlying story.
Speaker 5: It is losing a little bit of shine, I would say,
Speaker 5: but that means that investors need to be really careful
Speaker 5: abou where they're looking at. So for us, the middle
Speaker 5: market direct lending is an area which you have a
Speaker 5: little bit more defensive nacio slightly more high quality within
Speaker 5: that space. So I think it's important that investor's position
Speaker 5: appropriately within private credit. But importantly, going forward, these returns
Speaker 5: are going to be more and more difficult to come
Speaker 5: about in the same way that we've had over the
Speaker 5: last few years. So dipping into private markets is going
Speaker 5: to be credit increasingly important.
Speaker 3: Not for nothing but the high temperature today in des
Speaker 3: Moines I was supposed to be thirteen degrees.
Speaker 2: We're looking forward to that.
Speaker 3: And dude, the low temperature in Wednesdays can be minus five.
Speaker 5: So the thing is is that in de Moines you
Speaker 5: don't need to step outside. You can go through the skywalks.
Speaker 3: Okay, because for those of who all know Principal Asset Management,
Speaker 3: great great asset management business. They've been into business forever.
Speaker 3: I've gone out there to Des Moines many times to
Speaker 3: see those folks. It's December and it's chili in Des Moines. Yeah,
Speaker 3: and so Seema being the leader of you know, one
Speaker 3: of the senior folks of Principal as the managers, he's
Speaker 3: got to go to des Moines and see the folks there.
Speaker 5: Black Friday thermal thermal sales.
Speaker 2: Yes, you're stocking up.
Speaker 3: This is not London because this is not the city
Speaker 3: of London. This is De Moines, Iowa in December.
Speaker 2: Makes it look like a heat wave here in New
Speaker 2: York City exactly.
Speaker 3: Semasha, thank you so much for joining us.
Speaker 4: We appreciate it.
Speaker 3: On our way from London to Des Moines, Iowa, make
Speaker 3: a little stopover in New York City here, Smashaw, chief
Speaker 3: global Strategist, principal Asset Management to stay with us. More
Speaker 3: from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
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Speaker 2: You know, Paul, we are going to have a new
Speaker 2: FED chair in in May. President Trump says he's decided
Speaker 2: on his pick. He hasn't announced too, but we know
Speaker 2: that Kevin Hassett, his chief Economic advisor, seems to be
Speaker 2: at the top of that list. Want to dig into
Speaker 2: how that may impact market decisions and take a look
Speaker 2: at sort of the more global political landscape, if you will.
Speaker 2: With Henrietta Trey's co founder of Veda Partners. Henrietta, thanks
Speaker 2: so much for being with us. Let's just start with
Speaker 2: the Federal Reserve, the changes that are to come in
Speaker 2: the months ahead. How are you looking at that when
Speaker 2: you think about markets overall in twenty twenty six.
Speaker 6: I think it's obviously the core question.
Speaker 7: And with so much uncertainty at the FED, what I
Speaker 7: like about having a new FED member, specifically if it's
Speaker 7: Kevin Hassett, is you know how that member is going
Speaker 7: to vote.
Speaker 6: There's not any confusion, and with such.
Speaker 7: A disparate FED, that's been something that's tricky for investors
Speaker 7: to really nail down. So you now will have two
Speaker 7: guaranteed locks on the voting basis of whether or not
Speaker 7: there should be cuts.
Speaker 6: The tricky part is the timing.
Speaker 7: As we get into May, the President is going to
Speaker 7: be staring down the twenty twenty six midterm elections coming
Speaker 7: up in November, and all four hundred and thirty five
Speaker 7: members except for the twenty two I think Republicans who
Speaker 7: are not running again, are going to be up for reelection.
Speaker 6: They're going to have to sell the United.
Speaker 7: States consumer on the idea that the economy is great
Speaker 7: and so we should be cutting interest rates if we
Speaker 7: need to, or the job market is where we should
Speaker 7: be prioritizing our time, but simultaneously that we need a
Speaker 7: two thousand dollars tax rebate to offset the cost of
Speaker 7: the tariff. So it's a really tricky dynamic to have
Speaker 7: that conversation at the same time.
Speaker 6: That's what I'd be worried about in terms of timing,
Speaker 6: but Kevin has it. I think we'd get through the set.
Speaker 7: Without too much of a problem on the confirmation front,
Speaker 7: unless there's some unknown quantity we haven't learned about the
Speaker 7: last decade of his time in the public space.
Speaker 3: Henrietta, I know you're going to tell us that Congress
Speaker 3: is either on break now or they're about to go
Speaker 3: on break, But what's the to do list for our
Speaker 3: Congress here?
Speaker 4: Looking forward?
Speaker 7: Yeah, the to do list is really going to be
Speaker 7: dominated by those ACA subsidies, which is where they actually
Speaker 7: have promised the Democratic Conference that they will hold a
Speaker 7: vote this year.
Speaker 6: So in the three week work session.
Speaker 7: Which equals out to about twelve days of legislative action
Speaker 7: for the whole month of December through the end of
Speaker 7: this year, they're going to have to.
Speaker 6: Hold some sort of vote on ACA subsidies.
Speaker 7: They also wanted to hold something that they were calling
Speaker 7: Russia week but as the President is negotiating deals with
Speaker 7: Brussia and Ukraine separately, they'll probably not hold those votes.
Speaker 7: So mostly ACA subsidies continued work on the appropriations bills
Speaker 7: to avoid a shutdown.
Speaker 6: As we come back in early twenty twenty six, and.
Speaker 2: You throw into the mixed Venezuela now Henrietta right, President
Speaker 2: Trump said that Airline should consider the airspace above and
Speaker 2: around Venezuela to be closed. As his administration continues to
Speaker 2: threaten more aggressive steps against President Maduro's government. We see
Speaker 2: Oil reacting to this news. Oil is hired today. No
Speaker 2: big surprise there, But how do you see that possibly
Speaker 2: playing out?
Speaker 7: Yeah, The thing about going into foreign policy issues is
Speaker 7: that members, especially on the Senate side on Armed Services
Speaker 7: and Foreign Affairs Committee, they take their.
Speaker 6: Jobs incredibly seriously. They're going to want to hold hearings.
Speaker 7: They're going to want to talk about the potential commands
Speaker 7: that HEXIT delivered to kill two remaining survivors.
Speaker 6: They take that incredibly seriously.
Speaker 7: You've seen it in the backlash that came out this
Speaker 7: weekend in public comments from Republican members as well. So
Speaker 7: that's going to eat up a lot of airtime for
Speaker 7: probably weeks, if not months, well into twenty.
Speaker 6: Twenty six, I would expect as well.
Speaker 7: And again, it just takes away those twelve legislative days
Speaker 7: of action that they actually have in the month of
Speaker 7: December to tackle government funding.
Speaker 6: And ACA subsidies. That's going to be.
Speaker 7: Where all their concentration and oxygen is and they love
Speaker 7: those moments.
Speaker 6: They really want to have hearings about it. Oversight. That's
Speaker 6: very serious for those members.
Speaker 3: I'm heading Tooruba next month and that's like right off
Speaker 3: the coast of Venezuela, so I'm paying attention to I mean,
Speaker 3: I'll be sitting on the beach watching navy ship. I
Speaker 3: don't know what's going on. Hey, Henrietta, can you tell
Speaker 3: me what an auto pen is? And do I need
Speaker 3: to care about this?
Speaker 6: I would. They're used all the time.
Speaker 7: The President signs a million different things today and the
Speaker 7: auto pen is a time test used in every single
Speaker 7: administration way to get signatures out the door from the president. Obviously,
Speaker 7: President Trump has a bone to pick with the auto pen,
Speaker 7: but I would be shocked if he hasn't also been
Speaker 7: a profligate user of it, particularly in his first term.
Speaker 2: But he actually made Biden's portrait in the White House
Speaker 2: a picture of the autopen his auto signature. Yes, so
Speaker 2: it's not Biden's face, it is his auto pen signature
Speaker 2: hanging in the White House.
Speaker 4: Estra.
Speaker 6: So the maturity is astounding.
Speaker 3: Henriette is. We had the governorships in Virginia and New
Speaker 3: Jersey several weeks ago, which were a positive for the Democrats,
Speaker 3: and that kind of caused the Trump administration too, I
Speaker 3: guess focus a little bit more on affordability. Is that
Speaker 3: still a theme for this White House or as it
Speaker 3: moved on?
Speaker 6: You know, it has to be.
Speaker 7: It has to be because the president is very closely
Speaker 7: watching the midterms. If the Democrats control the House, which
Speaker 7: is very likely to be the outcome of the next election,
Speaker 7: then he has a serious problem in terms of real oversight, subpoenas, etc.
Speaker 7: That will occupy the next the final two years of
Speaker 7: his term in office. So winning the twenty twenty six
Speaker 7: midterms has been a huge focus for the president, which
Speaker 7: is why there's been the redistricting efforts across Indiana and
Speaker 7: Texas and everywhere else. And the problem for the Trump
Speaker 7: administration is the top issues for the American voters are
Speaker 7: not the Russia, Ukraine, War, Israel, Gaza, Venezuela. None of
Speaker 7: the foreign policy stuff is of interest to US voters.
Speaker 7: They're famously not following international politics. What they do care
Speaker 7: about is inflation and prices. Those the top two issues
Speaker 7: facing consumers in all polls that are taken, along with
Speaker 7: the economy and the job market. So whether the President
Speaker 7: wants to focus on those issues or not, it's mandatory
Speaker 7: because that's what the voters are going to turn out
Speaker 7: to either support their Republican ideas or reject them in November.
Speaker 7: So those Governatario races where Democrats picked up twelve thirteen
Speaker 7: points in New Jersey and Virginia, where Republicans are really
Speaker 7: hoping to make gains and keep it to like five
Speaker 7: point wins, showed that that's not going to be an
Speaker 7: option as long as affordability remains the number one problem.
Speaker 7: So whether they want to or not, it has to
Speaker 7: be the core focus of the Republican conference and the
Speaker 7: administration AC subsidies player role, and that prices, inflation, all
Speaker 7: those pieces, tariffs are hugely important to the US consumer
Speaker 7: and voter.
Speaker 2: And of course the job market, which you mentioned just
Speaker 2: a second ago. So we know that this administration vows
Speaker 2: strict immigration curves, especially after that National Guard member or
Speaker 2: two of them dying after being ambushed near it near
Speaker 2: the White House last week. So how if they continue
Speaker 2: with that strategy, which it seems like they're going to
Speaker 2: throughout the Trump administration, how do you see that impacting
Speaker 2: the job market specifically?
Speaker 6: Yeah, the job.
Speaker 7: Market is hugely problematic, mostly because people don't feel comfortable.
Speaker 6: If you look at the University.
Speaker 7: Of Michigan consumer confidence data and whether they think they
Speaker 7: have an opportunity to go get a new job, if
Speaker 7: they're going to get a pay increase, everybody's sort of
Speaker 7: staying put. But on top of that, you're seeing major
Speaker 7: corporations fire folks. I think it's eighty six thousand jobs
Speaker 7: in the manufacturing job sector have been lost since Liberation Day.
Speaker 7: So there's this sense amongst the US consumer that there's
Speaker 7: not another job out there and they.
Speaker 6: Need to stay put.
Speaker 7: That creates the uncertainty and the lack of wage growth,
Speaker 7: and again that compounding issue of focused on prices and
Speaker 7: affordability that keeps all that front and center on the
Speaker 7: immigration front.
Speaker 6: From my seat, the response function.
Speaker 7: That you see in the voter polls is that they
Speaker 7: think the President has quote gone too far on immigration,
Speaker 7: and a lot of that is to do with the
Speaker 7: National Guards being sent to cities around America.
Speaker 6: They're coming to New Orleans this week.
Speaker 7: So that's an issue that the American voter sees and
Speaker 7: has decided that they don't like, even though they just.
Speaker 6: Voted for it in twenty twenty four.
Speaker 7: So that's going to be an area of overreach and
Speaker 7: that sort of pendulum swing that we're very used to
Speaker 7: in politics. So you elect one party to do sweeping
Speaker 7: change in one year, and then as soon as they
Speaker 7: start doing a sweeping change, you decide you don't like it.
Speaker 6: That's the phase that we're in right now.
Speaker 2: From the book base, Well, Henrietta, you provide investors with
Speaker 2: economic policy analysis. You've been doing it for years. You're
Speaker 2: gonna have a very busy twenty twenty six. How Manyetta Treys,
Speaker 2: co founder of Veda Partners.
Speaker 3: Stay with us. More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app or
Speaker 1: watch US live on YouTube.
Speaker 3: Brian Levitt, chief global market strategist for Investco, joins US
Speaker 3: here in our New York City studios. Brian, what is
Speaker 3: the twenty twenty sixth call for you guys?
Speaker 4: This year?
Speaker 8: The twenty twenty six call for us is that we
Speaker 8: will continue to see resilience in the global economy, actually
Speaker 8: even a pick up in global economic activity given some
Speaker 8: school support policy easing in the United States, and that
Speaker 8: should continue to drive markets higher. We're looking for some
Speaker 8: type of rebalancing, you know, sector rotation even within growth,
Speaker 8: but also to broadening out to other parts of the markets,
Speaker 8: specifically non US markets.
Speaker 4: As the Federal Reserve lowers interest rates.
Speaker 2: Okay, so what non US markets do you particularly like
Speaker 2: in twenty twenty six?
Speaker 8: Typically the developing markets of the world perform best in
Speaker 8: an environment when the FED is easing and when the
Speaker 8: dollar is either flat to weakening. And so you know,
Speaker 8: that's why so much of this is on the FED
Speaker 8: right now, and why the focus is so significant on
Speaker 8: the Fed, because a lot of these calls are predicated
Speaker 8: on the fact that we will get easier monetary policy,
Speaker 8: a steepening of the yield curve and no additional upward
Speaker 8: pressure on the US dollar, and so in that backdrop
Speaker 8: a number of developing economies, the central banks of developing
Speaker 8: economies can lower interest rates and produce better economic outcome.
Speaker 2: In the US.
Speaker 3: Here it's been twenty twenty five has been I guess
Speaker 3: the theme has been AI and what it means for everybody.
Speaker 3: Do we still play that in twenty twenty six. Do
Speaker 3: we have a different playbook for AI in twenty twenty six.
Speaker 8: Well, the nice thing about it, I think you continue
Speaker 8: to play it. But the nice thing is you can
Speaker 8: diversify some of your portfolio into other parts of the
Speaker 8: market if you get the policy easing and a pickup
Speaker 8: in activity. And so the challenge for the last couple
Speaker 8: of years has been it's really been an environment where
Speaker 8: economic activity has been basically flat. There's been no real
Speaker 8: catalyst to unlock value in the US markets, and so
Speaker 8: in a slow growth environment, you buy growth. I don't
Speaker 8: think we give up on that trade. But if you
Speaker 8: get to pick up an economic activity that we are expecting,
Speaker 8: you should be able to participate with a better valuation portfolio.
Speaker 8: That would mean moving into MidCap strategies, moving into more
Speaker 8: value oriented parts of the market.
Speaker 2: And what about private credit, which we know has been exploding.
Speaker 2: You see opportunity there in the new year.
Speaker 4: Yeah, we do.
Speaker 8: And I don't think that you know this the concerns
Speaker 8: that people have with a couple of high profile names,
Speaker 8: questions about whether that was systemic, and you know, I
Speaker 8: went on record saying idiosyncratics.
Speaker 4: So so far, so good.
Speaker 8: I don't think that the private markets are paired as
Speaker 8: impaired as many people believe. And you're still looking at
Speaker 8: yields of you know, seven eight percent, which is you know,
Speaker 8: probably a reasonable equity like return, maybe even better than
Speaker 8: equity like return over the next decade, and the fundamentals
Speaker 8: still appear to be sound.
Speaker 3: Twenty twenty eighty five. I mean, if you look across
Speaker 3: fix income, I do that with the I go function
Speaker 3: on the Bloomberg terminal, Like you could read about how
Speaker 3: fixing come is performing globally the US fix income market.
Speaker 3: I mean mid to high single digit returns this year.
Speaker 3: It's been a good year, and some of the best
Speaker 3: returns have been. If you've been taking credit risk, high
Speaker 3: yield leverage loans, how do you think about the credit
Speaker 3: profile out there?
Speaker 8: Well, the first thing I would say about just the
Speaker 8: returns in general and the aggregate. How many people were
Speaker 8: trying to warn us at some point this year about
Speaker 8: the sustainability of the US fiscal situation, and we heard
Speaker 8: things like rates are going to keep going well above
Speaker 8: five six percent.
Speaker 4: I never bought into that.
Speaker 8: In essence, what investors were trying to tell us was
Speaker 8: that the US Treasury was going to trade like a
Speaker 8: credit No, the US Treasury is going to trade based
Speaker 8: on the nominal growth potential of the country. That's precisely
Speaker 8: what it did, moving down from four to eighty and
Speaker 8: mid January to basically four percent today. Now the credit markets,
Speaker 8: what ends up happening mid cycle is that investors become
Speaker 8: very concerned about spreads. But spreads can remain very tight
Speaker 8: so long as the economy doesn't roll over or inflation
Speaker 8: expectations break out, and neither of those things happen. So yeah,
Speaker 8: you should expect coupon like returns in investment grade, in
Speaker 8: high yield, unless you leave we're heading towards a recession.
Speaker 8: And if we were heading towards a recession, I think
Speaker 8: it would look like a much different backdrop, not the
Speaker 8: least of which the FED would probably be looking at
Speaker 8: titan policy and the bankers would probably be tightening lending standards,
Speaker 8: neither of which is happening right now.
Speaker 2: Are you reading any tea leaves and what's happening in crypto?
Speaker 2: I mean, we've got bitcoin now below eighty six thousand.
Speaker 2: It was at one hundred and twenty six thousand just
Speaker 2: a couple months ago. Not even what do you do
Speaker 2: with bitcoin in particular in the new year.
Speaker 8: It seems to me that it's been very much predicated
Speaker 8: on expectations of the Fed, which makes today seem like
Speaker 8: a little bit of a surprise compared to where we
Speaker 8: have been. If you look at when Jerome Powell first
Speaker 8: indicated that there might be some differing of views at
Speaker 8: the FOMC, that's when you started to see things like
Speaker 8: crypto sell off. You started to see nonprofitable tech sell off,
Speaker 8: So that was all.
Speaker 4: Part of the same trade.
Speaker 8: I've got to be honest, I'm not the world's form
Speaker 8: most crypto expert, but I assumed as there was greater
Speaker 8: clarity from where we were going with the Federal Reserve
Speaker 8: as December got priced back in for a raykit, I
Speaker 8: didn't expect this morning's action.
Speaker 4: In crypto, so clearly there's still.
Speaker 2: Some is there just contagion selling? I mean there's some.
Speaker 8: Leverage in those markets, contagion selling. I mean it has
Speaker 8: moved pretty far below it's it's fifty day moving average
Speaker 8: right now, where the S and P five hundred does not.
Speaker 8: I don't view it necessarily as a harbinger of where
Speaker 8: the stock market is going, but certainly interesting to watch today, intriguing,
Speaker 8: not something I would have expected. I did not expect
Speaker 8: to wake up this morning and see crypto down five percent.
Speaker 3: Right, you're a Michigan man in good standing after four years,
Speaker 3: winning year in sale? Are you top universe? I expect
Speaker 3: this from Tom. What was your takeaway from this Saturday?
Speaker 3: The Ohio State University and you're Michigan.
Speaker 8: Michigan could not stop the run, and you know you
Speaker 8: had a twelve minute dry Ohio State just rolling them.
Speaker 8: I think sixteen of eighteen plays were running. Michigan couldn't
Speaker 8: stop the run, they couldn't get anything going on offense.
Speaker 4: They'll be back right.
Speaker 8: These things are These things have tended to be a
Speaker 8: little bit cyclical.
Speaker 4: Ohio State's got.
Speaker 8: A very good team this year. They've got a number
Speaker 8: of first round picks heading towards the NFL.
Speaker 4: We'll be back go blue.
Speaker 3: And it's crazy. If the Ohio State coach did not
Speaker 3: win this game and he won the national championship, he
Speaker 3: still would be at risk. Remarkable, right and believed because
Speaker 3: you can't Michigan, you can't get.
Speaker 4: As you should have been. Exactly exactly, That's how it works.
Speaker 3: Brian Levi at Chief Global Market Strategists for Investment. Stay
Speaker 3: with us. More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
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Speaker 3: It is time for newspapers and Lisa Manteoli, So what
Speaker 3: have fors?
Speaker 7: All?
Speaker 4: Right?
Speaker 9: So I want to talk about DNA test kits. Right,
Speaker 9: I'm not sure if you guys have done that. My
Speaker 9: sisters have tried it.
Speaker 2: You know the twenty three did it? You did the
Speaker 2: twenty three and meters you did see that's when they
Speaker 2: did too. It's really popular. But here's the thing.
Speaker 9: It's now causing issues for families that are handling the
Speaker 9: states because they have surprised heirs who are now looking
Speaker 9: for their cut of.
Speaker 2: The inheritors only under services way.
Speaker 9: Yes, yes, yes, yes, so the Wall Street Journal actually
Speaker 9: had this is an interesting take on it. States are
Speaker 9: now reconsidering laws because a will or a trust it
Speaker 9: doesn't necessarily prevent surprise.
Speaker 2: Relatives from making a claim.
Speaker 9: And there's phrases and will sometimes like to my descendants,
Speaker 9: So that can leave out room.
Speaker 2: For like the open Yes it does, it does.
Speaker 9: So that I mean the rules differ from state to states,
Speaker 9: so it depends on what state you are. But lawyers
Speaker 9: are saying what you need to do is you need
Speaker 9: to create a state plans that account for potential surprise
Speaker 9: heirs because it's.
Speaker 2: Happening more and more. I can't believe it. Can you
Speaker 2: believe they're now in yan need to add a line
Speaker 2: to your wills and trusts?
Speaker 3: Now, did you have me surprises in your twenty three
Speaker 3: and me experience?
Speaker 2: No surprises? It sort of just confirmed what I thought. Oh,
Speaker 2: it's kind of neat.
Speaker 4: Yeah, it's fun.
Speaker 2: Yes, okay, good good, No surprise anything out there. You're
Speaker 2: just putting that out there, nothing surprising. You're not going
Speaker 2: to claim anybody's art.
Speaker 9: Its Okay, did you guys go to the movies over
Speaker 9: the weekend?
Speaker 2: No, yes, I did. Okay, did you see the Utopia too?
Speaker 4: I did?
Speaker 2: I know, and I saw this story that I saw Wicked.
Speaker 2: Oh you did, okay, which I really enjoyed. Okay, good, good,
Speaker 2: And I'm surprised it was not number one because I
Speaker 2: know what you're going to tell us.
Speaker 9: Yes, Yancey's which I was surprised too, because I was like,
Speaker 9: Wicked is huge and it's been huge. But yeah, it's
Speaker 9: now Walt Disney. They are front and center Utopia too.
Speaker 9: It's a sequel to the film that was back in
Speaker 9: twenty sixteen, so it's been like a while since. This
Speaker 9: came out one hundred and fifty six million in North
Speaker 9: American box office over Thanksgiving, five hundred and fifty six
Speaker 9: million worldwide. Disney said it's the biggest animated opening for
Speaker 9: all of all time in China. That excludes like the
Speaker 9: local because that's huge, the biggest.
Speaker 2: Yeah, that's rarely.
Speaker 3: Global Hollywood, because China has been kind of closed off.
Speaker 3: After becoming the second biggest movie theater in the world
Speaker 3: after North America, it kind of slowed down over the
Speaker 3: last six seven, eight years. But you know, I think
Speaker 3: it's opening.
Speaker 4: Up a little bit more.
Speaker 3: So that's a good sign for Hollywood.
Speaker 9: Okay, good, good, good, And it's good news for theaters,
Speaker 9: right because it's been kind of slow before before Wicked
Speaker 9: came out. And it kind of sets the stage two
Speaker 9: for the next Disney movie, which is Avatar. It's coming
Speaker 9: December nineteenth, so they're kind of set in the stage
Speaker 9: for a little bit.
Speaker 2: But yeah, I hope to go see it. I like
Speaker 2: the first one.
Speaker 3: It was very cute movie, I mean cuteness, surprise. I
Speaker 3: think for Disney they thought it could be big bag.
Speaker 2: Yeah, but I see Wicked after just one weekend. That's
Speaker 2: that's what's surprising to me. But okay, those Utopia.
Speaker 9: Yes, yes, yes, okay, So this one, there was a
Speaker 9: big ultra marathon in DC over the weekend. But it
Speaker 9: might not be the one that you've heard of. It's
Speaker 9: the Taco Bell DC fifty k. Okay, So here's what you.
Speaker 4: Have to do.
Speaker 9: Thirty one miles of running, but you have to stop
Speaker 9: and eat at nine different taco bill the way. Okay,
Speaker 9: each location you have to purchase and eat an item.
Speaker 9: Drinks don't count as a purchase, and the race rules
Speaker 9: say that yes, vomiting is discouragement.
Speaker 2: Allowed, oh gosh, but.
Speaker 9: Also no pepto, bismal, no alcocy. You're not allowed to
Speaker 9: take any pepsid. You can't do anything like that before
Speaker 9: the race. And it gets tougher as you go on
Speaker 9: because they start add it on, like at this you know,
Speaker 9: by this time you hit this chain, you have to
Speaker 9: eat this many chilupus or something like that.
Speaker 2: So they really push it. You have to hand in
Speaker 2: a receipt when.
Speaker 9: You cross the finish line to show that you had
Speaker 9: you know, all the greasy event. Yes, you have to
Speaker 9: complete it in eleven hours at least that's the cutoff. Okay, okay,
Speaker 9: but people, it's something new. It's like ultra marathons is
Speaker 9: like this whole big you know, crazy They can.
Speaker 2: Eat any crazy stomach for something like that.
Speaker 4: I get.
Speaker 3: I would not want.
Speaker 2: Yeah, I would not even attempt, especially our clean eater
Speaker 2: Lisa Macheo. I cannot see you doing.
Speaker 9: I mean, granted you run off the calories, but still
Speaker 9: it can't be good.
Speaker 2: Now I'm going to pass on that running experience, all right.
Speaker 3: The newspapers, Lisa Matteo, there you go. The highlight of
Speaker 3: the day.
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