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Speaker 1: YouTube search Bloomberg glovel News. FED officials weighing shrieking the
Speaker 1: balance sheet by billion a month, UH, signaling it will
Speaker 1: reduce those massive bond holdings and further tightening credit across
Speaker 1: the economy. Also has Charlie mentioned many FED officials saying
Speaker 1: what or more fifty basis point hikes may be warranted.
Speaker 1: You know, it feels like the bond market knew this
Speaker 1: was coming, but it feels like the equity market did
Speaker 1: not not at all. If you look at the SMP
Speaker 1: five right now, sharply pairing losses still negative on the day,
Speaker 1: but direction travel definitely higher. Alright, so let's get to
Speaker 1: it with our team. We've got Kathleen Hayes, Global Economic
Speaker 1: and Policy Editor, Bloomberg News. She's in our Interactive Brokers studio,
Speaker 1: so too is Creedy Gupta, Markets Correspondent APT Bloomberg. Kathleen,
Speaker 1: let's get to you what jumps out? Well, first of all,
Speaker 1: let's start with the not so obvious but important line
Speaker 1: that FEDE officials say one or more fifty basis point
Speaker 1: hikes may be warranted. Are Bloomberg ride Up suggests that
Speaker 1: at the last meeting there were many, now many, I
Speaker 1: don't know if that's half, but that's a lot of
Speaker 1: mean Well, look, a few, you would mean honestly, a
Speaker 1: few would mean just a couple, maybe three, that's my guess.
Speaker 1: I think many and several several maybe more than half,
Speaker 1: but many is a substantial number. So there are people saying, no,
Speaker 1: I'm ready for fifty basis points. That really shouldn't excide
Speaker 1: to me a little because I know subsequently everyone's kind
Speaker 1: of freaking out about inflation. But that's important. So that means, okay,
Speaker 1: the May fifty basis point high, Beau's gotta be a
Speaker 1: done deal. Besides that, though the rolloff cap phase is
Speaker 1: going to take, is gonna phase in three months or
Speaker 1: modestly lower, modestly fewer. They want to get to nine
Speaker 1: five billion dollars a month pretty quickly at the past.
Speaker 1: Was that more aggressive than when everybody was expecting, Well,
Speaker 1: it's more aggresive than I expected. People were figuring they'd
Speaker 1: ultimately get to a hundred a month or a hundred
Speaker 1: and twenty a month. But to get there in three
Speaker 1: months or less, I think it's pretty aggressive. One more
Speaker 1: thing that Layo brainer the feddvice chair touched on yesterday
Speaker 1: in her prepared re marks not just an off the
Speaker 1: cuff answer to something Esther George's exclusive interview on bloe
Speaker 1: Brick Television touched on, once you start reducing the balance
Speaker 1: sheet and you're you're reducing stimulus, right, it's the opposite
Speaker 1: of buying bonds. And when you're raising rates and even
Speaker 1: you to fifty basis point us, you're moving fairly aggressively
Speaker 1: on rates. So how are you going to calibrate that?
Speaker 1: How much is a month's worth or three months worth
Speaker 1: of about three hundred that was about three hundred billion
Speaker 1: of that how how does that equate to rate hikes.
Speaker 1: That's the question they're going to have to work on,
Speaker 1: and that's what markets, Katie, have to figure out absolutely.
Speaker 1: And I mean, creaty come in here. How do you
Speaker 1: explain the market reaction that we're seeing, because it is
Speaker 1: you can see the SMP five hundred jumping right now.
Speaker 1: The Nastact too, that had been the big underperformer on
Speaker 1: the day, pairing losses quite significantly. Yeah. Well back up
Speaker 1: for just a second, and I want to follow what
Speaker 1: Kathleen said here on the billion, because we talked about
Speaker 1: what the expectation was. You said one twenty on the
Speaker 1: higher end. The lower end of that was eighty billion
Speaker 1: per month. So it's interesting that it came out at
Speaker 1: ninety five. From what I'm seeing here, the range was
Speaker 1: eight two hundred billion. People were thinking a hundred billion
Speaker 1: a month, as much as a hundred and twenty, like
Speaker 1: you said. So on the surface, it kind of seems
Speaker 1: like because it's less than perhaps that a hundred billion,
Speaker 1: not by much, but still um that perhaps could be
Speaker 1: a reason the stocks are moving higher. But still look,
Speaker 1: we're down um over one pent on the SMP five hundred,
Speaker 1: still still almost two percent on the nastack. So this
Speaker 1: does seem like a knee jerk reaction. Even as we're
Speaker 1: did we dip down for a second then bounce back.
Speaker 1: Even as we're speaking, we are now back to exactly
Speaker 1: where we were before the minutes came out, So you're
Speaker 1: once again see knee jerk reactions. It doesn't look like
Speaker 1: a ton has changed when it comes to exactly what
Speaker 1: people are thinking. One of the headlines that struck out
Speaker 1: to me though, was the fact that they said, head
Speaker 1: and I'm just gonna find this really quickly that if
Speaker 1: if it weren't for the war, more officials would talk
Speaker 1: about a fifty basis point march hike, And they made
Speaker 1: it very clear if not for the war. What's interesting
Speaker 1: here is that the conversation has very often been that
Speaker 1: perhaps the war would accelerate the rate hikes or make
Speaker 1: them bigger. So to see them say, well, actually, maybe
Speaker 1: this is kind of something that we should be a
Speaker 1: little bit cautious and maybe a little bit more dubs
Speaker 1: on instead of because of the war, that's that's new. Well,
Speaker 1: we know that it's going to hit everyone says it
Speaker 1: will hit Europe. Artist those economies they are a big,
Speaker 1: a big purchaser of certainly exports from China. China is
Speaker 1: droppling with these lockdowns that are spreading so quickly in Shanghai.
Speaker 1: The global forces that the FED has to watch are
Speaker 1: are something potentially that could temper. But it get the feeling.
Speaker 1: It's like Bill Dudley hit his piece today saying the
Speaker 1: FED is going to have to actually shock the stock market.
Speaker 1: They're really going to have to show an aggressive move
Speaker 1: to start changing expectations so they can get financial conditions
Speaker 1: to tighten. And that's that's part of the balancing act
Speaker 1: is well and also likely is that though that the
Speaker 1: Fed's appetite would be to actually cause that to happen,
Speaker 1: because you have seen calls for it. But among current
Speaker 1: I would say this, Jim Bullard, who is frequently a
Speaker 1: leader a thought leader the FED, said what two months
Speaker 1: ago he wanted to see a hundred basis points in rainhikes,
Speaker 1: but July one, okay, that would mean uh, in the
Speaker 1: next three meetings you get at least one fifty basis
Speaker 1: point hike. And then he said, let's pause and see
Speaker 1: what's happening. I wonder if that kind of thinking is
Speaker 1: what's going to come out of this maybeing. Okay, let's
Speaker 1: hit a target, you guys, we're gonna do fifty. We'll
Speaker 1: see if we know they're fifty, We'll see how the
Speaker 1: markets react. We'll see what happens to inflation. We'll see
Speaker 1: what the war is doing to the rest of you know,
Speaker 1: how that is all playing out, what it does to
Speaker 1: oil prices, et cetera, and then move forward. I'm so
Speaker 1: glad you mentioned Sorry if I can just jump in here,
Speaker 1: I'm so glad you mentioned that, the aggression of it,
Speaker 1: because we're also getting numbers on the bouncy once again,
Speaker 1: the other part of the equation like you were talking
Speaker 1: about and the llion, which we already talked about. It
Speaker 1: is a little more dubish than the market was expecting anyway,
Speaker 1: so that could explain the Knegric react. But if you
Speaker 1: compare this to the last time you have this kind
Speaker 1: of quantitative tightening, it took a year to ratchet it
Speaker 1: up to fifty billion dollars, this is completely different, and
Speaker 1: that seems like the push to get that and kind
Speaker 1: of shrink the balance sheet is faster, it's more aggressive.
Speaker 1: It's kind of this approach that you were mentioned with
Speaker 1: the rate hikes as well, does this support what Brainard
Speaker 1: said yesterday about will continue you tightening monetary policy methodically,
Speaker 1: like we've all been kind of obsessing over that word. Well, methodically,
Speaker 1: I would say means we're going to watch the data,
Speaker 1: We're going to respond to the data. Look, the Fed
Speaker 1: knows it waited too long. J. Powell has admitted that
Speaker 1: as much as admitted it publicly. We thought one thing.
Speaker 1: Look that their board, the staff board economist in Washington,
Speaker 1: figured it was going to get she was gonna move
Speaker 1: pretty back down pretty quickly. It didn't. So now they
Speaker 1: know they have to make up ground. Now they know
Speaker 1: they have to get worried about inflation expectations getting more embedded.
Speaker 1: So methodically I would take we're gonna move and we're
Speaker 1: going to We're made it pretty clear doors open to
Speaker 1: more aggressive hikes, faster balance sheet tighten. But one more
Speaker 1: thing to remember, this is not at all like the
Speaker 1: financial crisis. We had a huge falling off a cliff
Speaker 1: because we got hit by a pend. There's chaos and
Speaker 1: catastroph drawing back huge fiscal stimulus. You've got lots that
Speaker 1: you can remove. The question is, though I'm sure they're
Speaker 1: very sensitive, though they don't want to see this stock market.
Speaker 1: What's tricky is there's just so many variables out there
Speaker 1: for the Fed right now to deal with, including, as
Speaker 1: you pointed out, the war right that is out there,
Speaker 1: just like everybody kept saying that the pandemic, you know,
Speaker 1: like these are just factors they have to continue to
Speaker 1: deal with. Thank you both so much. Kathleen Hayes, Global
Speaker 1: Economics and Policy at a Bloomberg News and Pretty Group
Speaker 1: to Markets correspon Bloomberg. You're listening to Bloomberg Business Week
Speaker 1: with Carol Masser and Bloomberg Quick Takes Tim Stinovic on
Speaker 1: Bloomberg Radio, Carol master in Low Katie Gray felt, Tim
Speaker 1: is off today. So among our most read stories on
Speaker 1: the Bloomberg on this Wednesday is what about the x
Speaker 1: Russian oligarch who says President Putin sees the war with
Speaker 1: the West already underway. So let's get into it. Let's
Speaker 1: bring in Bloomberg TV Washington correspondent Amory Horton. She's with
Speaker 1: us from our Washington d C Bureau. So, Amory, who
Speaker 1: are we talking about? So we shut down with me
Speaker 1: Kronkowski And as you say, he's an exiled oligarch he
Speaker 1: ran Ukos Oil, which a lot of those assets now
Speaker 1: our present day roy Snaff, which is run by a
Speaker 1: very close confidant of President Putin, Igor set him and
Speaker 1: he kind of took Putin on. He crossed the line
Speaker 1: of um talking about politics, getting involved in politics, and
Speaker 1: then he was faced with charges on fraud and tax evasion.
Speaker 1: He was thrown in jail for a decade and he
Speaker 1: was able to leave Russia. But he's never been back
Speaker 1: and he basically lives in exile now. And so what
Speaker 1: what is his view of Putin's view of the response
Speaker 1: that the US has staged thus far, Because you talk
Speaker 1: about how in the story, how there there's a nuance
Speaker 1: there that, uh, it's probably not one that Putin is
Speaker 1: paying attention to. So Putin will not pay attention to
Speaker 1: the nuance of the war spreading into NATO territory members
Speaker 1: the way maybe the United States Wilks. You hear the
Speaker 1: US say and other U your western officials say, not
Speaker 1: a single inch of NATO territory will defend it. All.
Speaker 1: The issue is is that the way Putin perceives the war.
Speaker 1: According to Kodakovski, who has really studied the man and
Speaker 1: obviously has met and known him in his former life.
Speaker 1: Is that the US is failing to see that. From
Speaker 1: Putin's perspective, the war is already happening between the United
Speaker 1: States and Moscow, and between Western European capitals and Moscow,
Speaker 1: so they already view what is going on as an
Speaker 1: outright war just on Ukrainian soil. But Putin has said this,
Speaker 1: He said, sanctions, the training of Ukrainian military, the shipping
Speaker 1: of of US weapons and other weapons to Ukraine, he
Speaker 1: views all of that as a war. I would say,
Speaker 1: and Marina that many people would agree with Putin that
Speaker 1: we're kind of splitting hairs because there is a lot
Speaker 1: of support going to Ukraine right from the NATO lies um.
Speaker 1: But but it is important to kind of understand. We've
Speaker 1: all been trying to work on understanding Vladimir Putin's mindset,
Speaker 1: why he has done this and what his intentions are. So,
Speaker 1: if he perceives that he's already at war with the
Speaker 1: westmore broadly, what are the implications of that. Well, if
Speaker 1: he thinks he's already at war with the West, the
Speaker 1: implications are and what you get a sense of if
Speaker 1: you're traveling. I was recently in Poland, and Warsaw, and
Speaker 1: you get a sense of that anxiety and nervousness in
Speaker 1: these countries. A border Ukraine and the Baltic countries is
Speaker 1: that it could be them next. And that's really the
Speaker 1: concern on Eastern Europe. And you already hear some of
Speaker 1: the rhetoric of divisions between these countries, between say France
Speaker 1: and Germanys and the Baltic nations. They want much tougher
Speaker 1: sanctions on Russia immediately, but it's also because they're incredibly
Speaker 1: worried because their backyard. And what's interesting, I mean, obviously
Speaker 1: the US has unleashed many sanctions against Russia, really on
Speaker 1: Russian billionaires, but you go into this article that you
Speaker 1: know he doesn't think that is necessarily going to be
Speaker 1: effective at all when it comes to Putin. So the
Speaker 1: way Dakowski sees it, and he was an oligarch from
Speaker 1: the Yeltsin era, is one if Putin is not afraid
Speaker 1: of sanctions, sanctions do not scare him. And that too,
Speaker 1: While the idea of going after oligarchs is correct, the
Speaker 1: presumption that it would change Putin's calculus is wrong because
Speaker 1: when Karakosti talks about the fact that Russia is a
Speaker 1: full dictatorship, so he would know Oligarch is going to
Speaker 1: be able to go up to Putin and say you
Speaker 1: need to end this war. We saw none of them
Speaker 1: say they call for peace and they're against the war,
Speaker 1: but no one has criticized Putin directly. If so, they'll
Speaker 1: be incredibly scary for them as individuals. You know, it's
Speaker 1: interesting too, and I do think about a time like
Speaker 1: this U S official, State Department officials, National Secure officials
Speaker 1: and even European officials who they lean on to really
Speaker 1: kind of get inside Vladimir Putin's mind. I mean, it
Speaker 1: sounds like he has maybe talked to the government before
Speaker 1: and is doing it again. Is that fair to say? Yeah, Well,
Speaker 1: he's in Washington this week and a State Department official
Speaker 1: told Bloomberg that he met with US Under Secretary of
Speaker 1: State Victoria Newland last week on Friday, and then he
Speaker 1: met with officials at the National Security Council on Tuesday.
Speaker 1: So on top of speaking to you know, sink tankers
Speaker 1: and foreign policy experts of the Atlantic Council places like that,
Speaker 1: he's also briefing officials. And let me just ask you,
Speaker 1: because you're on the ground, as you said in Poland
Speaker 1: and surrounded you know by world leaders and just you know,
Speaker 1: could feel probably the mood, the tone, if you will.
Speaker 1: And I do wonder if how much conflict there is
Speaker 1: right now about you know, the fear of this becoming
Speaker 1: even bigger than it already is. There is a lot
Speaker 1: of fear in places like Poland and Eastern Europe. Um.
Speaker 1: And I think part of that fear is one because
Speaker 1: you have you know, any given day, UM missiles hitting Levie,
Speaker 1: which is very close to the Polish border. But then
Speaker 1: also you just look at Putin's rhetoric of late and
Speaker 1: his actions of the past, and his actions of the past,
Speaker 1: is that um, he has changed the map of Soviet
Speaker 1: the fall of the Soviet Union. He's changed that map
Speaker 1: four times. In Georgia, there's incursions in Moldova. He's been
Speaker 1: fighting Russian back forces have been fighting in eastern Ukraine
Speaker 1: for eight years, right, So someone even viewed this as
Speaker 1: an ongoing of that war, the annexed Crimean. So it
Speaker 1: is a concern for those that are close by. Yeah, unfortunately,
Speaker 1: we've seen certainly some of Putin's play playbook before. Hey
Speaker 1: and Marie, thank you so much. Emory Hordon She's part
Speaker 1: of a team who put out this story about this
Speaker 1: ex oligarch. She of course is watching correspondent at Bloomberg Television.
Speaker 1: This is Bloomberg Business Week with Carol Masser and Bloomberg
Speaker 1: takes Tim Stinovic on Bloomberg Radio. You know, we often
Speaker 1: talk about Miami a great place to go for fun
Speaker 1: in the sun. There's a lot going on, a lot
Speaker 1: of financial types are going on and moving there. And
Speaker 1: then there's what Bitcoino. What is that Bitcoino. It is
Speaker 1: a huge conference. It's sort of the industry one of
Speaker 1: the industry's marquee events. Crosshouse and reporter Vildonna hi Rich
Speaker 1: is there on the ground. She joins us. Now, vill Donna,
Speaker 1: I want to hear about the conference and what's going
Speaker 1: to happen, But first I want to hear about the
Speaker 1: Miami Bowl. Tell me about this statue. Why have I
Speaker 1: heard so much about it? They have a bullet to Yeah,
Speaker 1: that's that was a big reveal this morning. We had
Speaker 1: the Mayor of Miami, Francis fuire Is, unveiling this bull
Speaker 1: statue this morning and it drew quite a crowd and
Speaker 1: a lot of media attention as well, and it really
Speaker 1: resembles the Wall Streets charging bull statue that we see
Speaker 1: down in southern Manhattan, but it looks a little bit
Speaker 1: more like a transformer. It sort of has this like
Speaker 1: digital feel to it, and of course it has laser eyes,
Speaker 1: which in the crypto world connotates that somebody's really into
Speaker 1: cryptocurrencies and that you're a crypto fan. And the bull
Speaker 1: does have these blue laser eyes. I just walked by
Speaker 1: it a couple of minutes ago again and it's it's
Speaker 1: quite striking. And that was the big reveal this morning
Speaker 1: at the conference. For those watching on YouTube right now,
Speaker 1: sorry radio folks, you're just gonna to use your imagination.
Speaker 1: But if you're watching on YouTube, yeah, that's exactly. It
Speaker 1: does look like a very high tech you know Avenger's
Speaker 1: type with blue eyes, right, yes, yeah, So it has
Speaker 1: a sort of digital feel. It's almost like it's made
Speaker 1: up of tiny little like a black little chips or something.
Speaker 1: It has a shiny feel to it. Do people like
Speaker 1: the bull, I mean looking at it like, I don't know,
Speaker 1: I'm fighting the temptation to roll my eyes. But what
Speaker 1: is the reaction on the ground of this big reveal? Well,
Speaker 1: that was the interesting thing. Because it did draw a crowd,
Speaker 1: and we had the Mayor of Miami there, and we
Speaker 1: had a couple of other mayors from surrounding cities from
Speaker 1: Miami Dade over here also attending. And we had Trade Station,
Speaker 1: the CEO of Trade Station, which is the trading platform,
Speaker 1: also attending because they're doing the bull reveal in partnership
Speaker 1: with the City of Miami. And so the crowd was
Speaker 1: really excited. And that's the mood that's been prevalent sort
Speaker 1: of all day here where everybody's been really really excited
Speaker 1: to be here, been really happy to be together, and too,
Speaker 1: it sort of feels like it's the first big event
Speaker 1: post you know, the past couple of years. I mean,
Speaker 1: we had the conference here last year, but it wasn't
Speaker 1: as big, it wasn't as sort of open in the
Speaker 1: post COVID world as it is this year. And just
Speaker 1: to give you a sense of how a bulliant the
Speaker 1: mood has been, I did overhear somebody say that she
Speaker 1: was so excited about the bull that she was ready
Speaker 1: to cry. So that's my little tidbit. It's just to
Speaker 1: give you a send what the mood is like on
Speaker 1: the ground. Just got a couple of minutes here, so
Speaker 1: we know Florida long uh, you know, looking to be
Speaker 1: the Wall Street of the South, right, and that's why
Speaker 1: the bull is sign it again right like the bull
Speaker 1: that we have in downtown uh Manhattan. Here. What's interesting
Speaker 1: is what are you going to be looking for? Because
Speaker 1: we've talked a lot about Miami the financial aspect of it,
Speaker 1: but looking to really you know, put a flag down,
Speaker 1: if you will, when it comes to crypto. What's gonna
Speaker 1: be key? What are you gonna be looking at for
Speaker 1: at this event? I mean we've already heard from what
Speaker 1: Mike Novograds, Yeah, we did. We heard we heard from
Speaker 1: Mike Novograts. He was sort of giving his take on
Speaker 1: where he sees bitcoin and cryptocurrencies going right now. You know,
Speaker 1: you guys were just talking about the Federal Reserve and
Speaker 1: their tightening plants, and he was saying that as soon
Speaker 1: as the as soon as the economy slows done in
Speaker 1: the set actually stops hiking race, that he can see
Speaker 1: bitcoin taking off after that. So that was one of
Speaker 1: the bigger comments that we heard this morning, just in
Speaker 1: terms of projections for crypto prices, but then in terms
Speaker 1: of you know, Southern Florida. In the city of Miami,
Speaker 1: the mayor really has been very gung ho about creating
Speaker 1: a sort of crypto haven here and he was talking
Speaker 1: this morning. He gave a speech after the reveal of
Speaker 1: the bull statue where he was saying that he he
Speaker 1: called this plan Bitcoin America four and he was saying
Speaker 1: the country really needs to elect more pro bitcoin politicians
Speaker 1: and people to lead different cities across America where you
Speaker 1: know there he is hoping that more of them will
Speaker 1: be more pro crypto. So, uh, that's sort of the
Speaker 1: mood in in Miami, and especially from this mayor who
Speaker 1: has been so so into crypto and he takes his
Speaker 1: paychecks in crypto as well in bitcoin. Still, hey, Bil,
Speaker 1: Donna just got about twenty seconds. Is there any big
Speaker 1: voice that you're looking forward to hearing from very quickly?
Speaker 1: Oh my gosh, there's so many really big voices. Although
Speaker 1: the one big big news is that the President of
Speaker 1: Solvador is no longer coming. We heard that, uh just
Speaker 1: a little bit ago. I think he was announced via Twitter.
Speaker 1: And Salvator has been out there in front right yea
Speaker 1: for their bitcoin bond, their Volcano bonds. That's really fascinating.
Speaker 1: That he won't be there. All right, we'll listen. We'll
Speaker 1: definitely be leaning on you and getting updates on the
Speaker 1: Bloomberg in and on air. Um vill Donna, thank you
Speaker 1: so much. Vildnna Hi Reck, she's Bloomberg News cross asset
Speaker 1: reporter on the phone Miami. That's significant, right, yeah, definitely.
Speaker 1: I mean people are expecting a big reveal, so I
Speaker 1: guess we're not going to get it. You're listening to
Speaker 1: Bloomberg Business Week with Carol Masser and Bloomberg Quick Takes
Speaker 1: Tim Stenovich on Bloomberg Radio. I will say this was
Speaker 1: the first thing I read in its entirety this morning.
Speaker 1: Sometimes you read in and your skimming this. I was
Speaker 1: just glued to the story from the get go. It
Speaker 1: is among the most read it's the Bloomberg Big Take,
Speaker 1: and it is the domestic cover story of the new
Speaker 1: issue of Bloomberg, which is out Bloomberg Business Week Magazine,
Speaker 1: I should say, out tomorrow, already online and on the Bloomberg.
Speaker 1: It's about the former financial elite and champion of diversity
Speaker 1: and inclusion who is now running for a seat a
Speaker 1: Senate seat in Pennsylvania. UM, I gotta say, Joel Love
Speaker 1: love this story. Joe Webber, editor Bloomberg business Week, is
Speaker 1: here in our interactive broker studio. Who wrote it? Josh Green,
Speaker 1: who is Bloomberg Business Week national correspondent. Uh, this story
Speaker 1: is about Give McCormick, who's uh not that long ago,
Speaker 1: is the CEO of Bridgewater. Obviously Bridgewater, the world's biggest
Speaker 1: hedge fund. Uh. Now, David McCormick is running for a
Speaker 1: Senate seat in Pennsylvania. It's a hot race because he's
Speaker 1: going up against Dr Oz. So we've got a TV
Speaker 1: personality versus a former hedge fund ceo. Josh, how's that
Speaker 1: going so far? Uh? It is, without a doubt, the
Speaker 1: most bizarre, surreal Republican Senate primary of this cycle, for
Speaker 1: for precisely the reasons you laid out, uh and more.
Speaker 1: You know is I write in this problem it's really
Speaker 1: profile McCormick. But there are kind of dispatches from the
Speaker 1: Oz campaign and the McCormick campaign. What both candidates are
Speaker 1: really trying to do here is shed their old personas
Speaker 1: and reinvent themselves as Trump loving Maga acolytes. Because both
Speaker 1: have concluded, um possibly not incorrectly, that that that is
Speaker 1: the surest way to power. So there's some jockeying for
Speaker 1: Trump's endorsement in trying to shed all the biographical baggage
Speaker 1: um that might interfere with that. In McCormick's case, the
Speaker 1: fact that he, until just a few months ago was
Speaker 1: the CEO of the world's largest hedge fund and sort
Speaker 1: of the embodiment of establishment republicans um that of course, uh,
Speaker 1: you know, Trump despises and doesn't want to support. So
Speaker 1: writing about his his reinvention was was a lot of fun.
Speaker 1: And that's that's sort of the focus of this long profile. Well,
Speaker 1: let's talk about that reinvention more. How is it actually going?
Speaker 1: Because I mean, like you alluded to being the CEO
Speaker 1: of one of the biggest hedge funds, the largest hedge
Speaker 1: fund out there, it's not exactly relatable experience, that is right.
Speaker 1: So I described the transformation as being sort of like
Speaker 1: Clark Kent in a phone booth with McCormick went overnight
Speaker 1: from uh, you know, being a regular at Davos to
Speaker 1: being somebody who's out on a campaign trail um, campaigning
Speaker 1: against woke liberalism and that sort of thing. Um. But
Speaker 1: the upshot is it's working for him. So far. There
Speaker 1: have been a lot of polls of this race, but
Speaker 1: the most recent one that I've seen has him up
Speaker 1: about five or six points over Dr Oz. So the
Speaker 1: primary isn't until May seventeenth, but he seems to be
Speaker 1: doing a serviceable job of convincing Pennsylvania Republicans uh that
Speaker 1: he is aligned with Trump and that he will govern
Speaker 1: in a Trump friendly way, which has come as a
Speaker 1: shock to a lot of his former colleagues of Bridgewater
Speaker 1: who don't recognize the guy they see out their campaigning Uh,
Speaker 1: and kind of wonder who the authentic David McCormick is. Uh,
Speaker 1: you had a very memorable interaction with Dr Oz in
Speaker 1: a bathroom. Um what did you? What did Oz have
Speaker 1: to say about McCormick. Well, Uh, you know, the interesting
Speaker 1: thing with Oz is he doesn't like to talk to
Speaker 1: national reporters. But I sort of felt it was my
Speaker 1: duty to go to an Oz campaign event and see
Speaker 1: if I could get him. So I showed up a
Speaker 1: couple of hours early and went into the men's room
Speaker 1: to clean up, and lo and behold, Uh there is
Speaker 1: Dr Oz. And so I politely used myself said that
Speaker 1: I was doing a profile of David McCormick and Oz
Speaker 1: was dying to talk right there as he was washing
Speaker 1: his hands fulminating against Bridgewater and McCormick. And so it's
Speaker 1: one of the otter scenes that I've encountered in my journalism.
Speaker 1: But it goes to show you there's some interview somebody anywhere. Yeah.
Speaker 1: Uh and when you know what one of the things
Speaker 1: that he basically says in that moment though, is, you
Speaker 1: know McCormick is is soft on on China. And so
Speaker 1: there's this tension that you can see where you know
Speaker 1: the Maga element uh that you know, essentral to this
Speaker 1: story that Oz is you know, using that as leverage
Speaker 1: against McCormick. Right, that's exactly right. I mean, Ray Dalio
Speaker 1: and Bridgewater are you know, famously great fans of and
Speaker 1: investors in China. And that's something that is politically problematic
Speaker 1: if you're trying to win over Trump and the Mago audience. Uh.
Speaker 1: So part of McCormick's transformation has been from China dub
Speaker 1: to China hawk uh. And that's a real vulnerability. I mean,
Speaker 1: speaking to political consultants Republicans around Pennsylvania, that is still
Speaker 1: something that people care about. China and they have some
Speaker 1: suspicion some McCormick's work in convincing people that he's authentically
Speaker 1: MAGA on China probably isn't yet isn't yet complete, And
Speaker 1: it is one of the area's vulnerability that that ODDS
Speaker 1: is trying to exploit. Hey, Josh, speaking of going back
Speaker 1: and forth in conversations, your conversation with McCormick on near
Speaker 1: the end of your story where you really try to
Speaker 1: get him to commit to an answer about whether or
Speaker 1: not he agrees with Donald Trump that his election was stolen. Um,
Speaker 1: it feels like he dodged it, wouldn't answer it. Yeah,
Speaker 1: I mean, to me, the most shocking thing about McCormick
Speaker 1: and in this profile is that in order to demonstrate
Speaker 1: your MAGA allegiance, I think he and many other candidates
Speaker 1: have concluded that they have to indulge Trump's uh falsehood
Speaker 1: that election was stolen from him. And so the piece
Speaker 1: concludes with McCormick and I sitting in a in a
Speaker 1: diner booth and I sort of asked him, I'm like,
Speaker 1: you know you you you claim to be authentically pro Trump,
Speaker 1: but do you agree that the election was stolen from
Speaker 1: And I put the question to him four or five
Speaker 1: different times. He simply refused to answer and eventually ended
Speaker 1: the interview. Um So, I think I think what that
Speaker 1: means it shows how enduring Trump's grip over the GOP
Speaker 1: still is. If somebody is credentialed and established and impressive
Speaker 1: in their own way, as McCormick is, fields the need
Speaker 1: to kind of subordinate to Trump to that degree. I
Speaker 1: think what that says is that, you know, our politics
Speaker 1: is a long way from being finished with Donald Trump,
Speaker 1: even if he's not in the headlines every day. So, Josh,
Speaker 1: what all of this this odds and McCormick rays. All
Speaker 1: of this is just to you know, basically win a primary,
Speaker 1: right how much money? And then who might they face
Speaker 1: off on the Democrat side, since you know this would
Speaker 1: just be the Republican Uh well, that is wild. I mean, yeah,
Speaker 1: as you said, this is already shaping up to be
Speaker 1: the world's most expensive Senate primary because you know, McCormick
Speaker 1: is worth somewhere around nine nine figures and Oz has
Speaker 1: tons of money himself. There are other wealthy candidates in
Speaker 1: the race, and they're all wailing on each other with
Speaker 1: negative ads. So we're up in the mid forty million
Speaker 1: dollars already in the primary isn't until May. Whoever does
Speaker 1: is going to have a very expensive general election race.
Speaker 1: Right now on the Democratic side is between John Fetterman,
Speaker 1: very blue collar guy, and Connor Lamb, a moderate who
Speaker 1: is trailing um. But no matter what it is, I
Speaker 1: think this is gonna be probably the central Senate race
Speaker 1: that people are looking at in November. So is McCormick
Speaker 1: survives the primary, he's gonna have another big race right
Speaker 1: after that. In general, it is amazing though about that
Speaker 1: kind of feeling of kissing the ring right for Donald
Speaker 1: Trump still, and that is all about the Republican Party
Speaker 1: and the and the variable is also like what Trump
Speaker 1: has has been quiet, so relatively quiet on this one.
Speaker 1: Right at some point if he opens his boorn, what
Speaker 1: does he say? Yeah, we'll see if Twitter welcomes him back. Hey, guys,
Speaker 1: we gotta run. Josh Green, thank you so much now,
Speaker 1: so national correspondent Bloomberg Business Week on the phone from Washington,
Speaker 1: d C. And of course I think so always to
Speaker 1: Jilt Weber, editor of Bloomberg Business Week, you are listening
Speaker 1: to Bloomberg Business Week, Carol Master, Katy Greifeld, and this
Speaker 1: is Bloomberg Radio. This is Bloomberg Business Week with Carol
Speaker 1: Masser and Bloomberg Quick Takes Tim Stinovic on Bloomberg Radio.
Speaker 1: There's a lot of things going on when it comes
Speaker 1: to Tesla and Elon Musk and Katie and I just
Speaker 1: talked about more things coming this week. More things coming
Speaker 1: this week, including a big party. I wasn't invited. That's
Speaker 1: weird Rodeo Rodio. Where's our invitation? Hey, listen, um, let's
Speaker 1: get to our next guest. He's a Tesla owner and
Speaker 1: investor of Voice that we count on to talk all
Speaker 1: things Tesla. A. Russ Gerber's back with us. He's president
Speaker 1: n CEO Gerber Kawasaki Wealth and Investment Management. He's on
Speaker 1: the phone from Santa Monica, California. Are you out driving
Speaker 1: around in your Tesla now? Oh? Actually, I'm actually at
Speaker 1: the airport going to Austin right now, and I didn't
Speaker 1: want to miss talking to you guys. Ah, So okay,
Speaker 1: what are you expecting? Oh my god. I just set
Speaker 1: off the phone with people from Austin and this is incredible.
Speaker 1: People from all over the country are Pesto fans that
Speaker 1: aren't even going to the event. Are just coming into
Speaker 1: Austin to celebrate the most consequential factory being opened in
Speaker 1: probably modern American history, at the most perfect time to
Speaker 1: be opening, and it's an exciting time. And so will
Speaker 1: you be at the rodeo itself? Oh, for sure, I'm
Speaker 1: gonna be at the rodeo, and I'm hopefully going to
Speaker 1: be able to get access to, you know, the people
Speaker 1: I like to talk to you where I can get
Speaker 1: a great idea of this amazing combination of hardware, software,
Speaker 1: and the complete manufacturing process from you know, you're talking
Speaker 1: from basically rocks all the way through until I finished
Speaker 1: e V all going through. And remember they're using new
Speaker 1: battery cells as well as new hardware in the computers
Speaker 1: that drive full self driving, and now that full self
Speaker 1: driving is getting closer and closer, this entire thing is
Speaker 1: coming together all here and often, and it's hugely consequential technology.
Speaker 1: And so, Ross, I know you're a big Tesla fan,
Speaker 1: and I feel like I might know your answer to
Speaker 1: this question. But something I've been wondering about this week is,
Speaker 1: you know, with Elon Musk clearly going to be taking
Speaker 1: uh not a passive interest in Twitter joining the board,
Speaker 1: I mean, do you have any concerns that you know,
Speaker 1: he could be spreading himself a little too thin, that
Speaker 1: you know, maybe with this focus on Twitter, you know,
Speaker 1: he won't be focusing as much on Tesla. Okay, well,
Speaker 1: let's let's be real if he's got a human being. Okay,
Speaker 1: I'm spread thin and I'm exhausted. So how Elon functions
Speaker 1: in this world that just, frank you don't understand. So
Speaker 1: I don't see with the time he spends on Twitter
Speaker 1: and I do too, and how important Twitter is as
Speaker 1: a vehicle, I don't see this as negative in any way.
Speaker 1: I think this is very common among the extremely wealthy
Speaker 1: to control media platforms as basically that conclose every media
Speaker 1: platform is just smarter than everybody because they're still buying newspapers.
Speaker 1: And he bought Twitter. Uh well, I mean, I mean,
Speaker 1: with with that, lat how do you feel about Twitter?
Speaker 1: You know, is this news enough to you know, make
Speaker 1: you bullish on the stock if you weren't already are
Speaker 1: you buying it? Well? Yeah, you know it's funny because
Speaker 1: I of course immediately wanted to buy the stock, and
Speaker 1: I followed Twitter, and you know, the company internals probably
Speaker 1: better than Elon in some ways, Um, because I know
Speaker 1: a lot of people who work there, and Twitter is
Speaker 1: going through a big transition right now with Hug and
Speaker 1: I think the jury is still out on the math
Speaker 1: and reorganization that's going on actually at Twitter. So I
Speaker 1: I I hear people's perspectives of a good and bad So,
Speaker 1: you know, I just I like the direction that Twitter
Speaker 1: is going in, and with Elon on board, I think
Speaker 1: that's a huge posits that said, I'm not investment in
Speaker 1: social media at this time. I think it's a really
Speaker 1: hard way to make money. I don't think Twitter's value
Speaker 1: is as much as a profit driver as much as
Speaker 1: a utility to society in a way globally. So it's
Speaker 1: worth a lot of money, but I also think I
Speaker 1: don't know how much more it works. So you didn't
Speaker 1: buy any of the stock, and I'm not per se
Speaker 1: against it either, and we're still considering it. What about Tesla,
Speaker 1: which is up almost since mid March? You've gotten sold? Right?
Speaker 1: Have you been selling and pocketing some game here? Well? Um,
Speaker 1: for a couple of a couple of our older clients,
Speaker 1: were you know, barking at me, So I have to
Speaker 1: you know, But now that said, for my fun. You know,
Speaker 1: g K we bought down at eight hundred and we
Speaker 1: haven't sold even though we've actually have over our mandates
Speaker 1: and Tesla right now at a well person allocation, but
Speaker 1: for how uh well educated now with the caveat China
Speaker 1: is a big, big problem right now, and it is
Speaker 1: an issue for Tesla short terms, not long term, and
Speaker 1: I want to discount that. But they're also just opened
Speaker 1: two factories in completely different markets right now. So you know,
Speaker 1: when you think about twelve months from now, I think
Speaker 1: Tesla execution and I think the stuck stot that you
Speaker 1: stuck by any means here. But but I tell me
Speaker 1: a company more consequences than Tesla. Well listen, um, Ross.
Speaker 1: We appreciate you. You're a busy man. You're headed to Austin, UH,
Speaker 1: and we'll be looking for your research after the event
Speaker 1: there with Tesla. And we appreciate our audience who's been listening,
Speaker 1: because we know the sound and audio is a little rough,
Speaker 1: but we like to be able to get to some
Speaker 1: of these investors on these specific names and somebody like
Speaker 1: Ross Gerber, who has owns the car, has been in
Speaker 1: and out of Tesla and has really followed it, really
Speaker 1: closely so our thanks to Ross Gerber, UH President CEO
Speaker 1: Gerber Kawasaki Wealth and Investment Management. On the way to
Speaker 1: the airport UH there in California, headed to Austin. I mean,
Speaker 1: stocks down four point two percent, but as I set
Speaker 1: up about since mid March, oh big time, and I
Speaker 1: mean it's still over a thousand dollars a share. That
Speaker 1: is quite a price tag, even with you know, in
Speaker 1: eight point seven per center off of the last two days, right,
Speaker 1: pretty significant. Yeah, but you let me drive, no, no, no,
Speaker 1: all right, please, I want to drive. It's a good question,
Speaker 1: good drive ride to the globe on radio. Alright, we're
Speaker 1: all getting a little driven crazy by the NonStop FED talk,
Speaker 1: inflation talk, what happens next, balance sheet interest rates? And
Speaker 1: it definitely is playing out after those latest FED minutes today,
Speaker 1: f OMC minutes that we got it two pm. Wall
Speaker 1: Street time, because equity markets bouncing back and forth here
Speaker 1: Katie really trying to make sense. Bond market though, seems
Speaker 1: to have taken it like okay, got this. Yeah, and
Speaker 1: usually I mean you've been seeing bond volatility March higher,
Speaker 1: stock vulatility maybe calmed down a little bit, not so
Speaker 1: much today all right, So let's get to it with
Speaker 1: our market guest. Our Drive to the Close guest with
Speaker 1: Michael Sheldon. He's executive director, chief investment Officer over at
Speaker 1: High Tower r d M Financial Group. He is with
Speaker 1: us on the phone from Westport, Connecticut. Michael, good to
Speaker 1: have you here with Katie and myself. Um, how did
Speaker 1: you Yeah, great to have you here. How did you
Speaker 1: read the minutes today? Well, I think we did get
Speaker 1: some additional information from the FED today and they said
Speaker 1: a couple of things that caught my attention. One is,
Speaker 1: I think the March minutes make it clear that that
Speaker 1: rates will be increased by fifty basis points at the
Speaker 1: May meeting, borrowing some kind of significant shock. Generally, the
Speaker 1: participants at the FED were fairly positive on the outlook
Speaker 1: for the economy right now, and I think, why do
Speaker 1: you say you feel like you've got that clarity. I'm
Speaker 1: just reading. Well, I just read through the individual comments
Speaker 1: of all the different FED districts which contribute to the
Speaker 1: FED for the FED minutes and again, just for all
Speaker 1: the viewers out there, Fed minutes or comments from the
Speaker 1: last FED meeting. The more important FED comments will actually
Speaker 1: be the Beige Book, which comes out in a few weeks,
Speaker 1: and for reference, the Beige Book is what the FED
Speaker 1: will be talking about at their next meeting coming up,
Speaker 1: so just to put things in perspective. But the other thing,
Speaker 1: just to mention is they talked about the balance sheet runoff,
Speaker 1: which is something which was just sort of floating out there,
Speaker 1: and they identified that they planned to roll off about
Speaker 1: billion dollars that will be sort of target amount for
Speaker 1: treasuries and agencies and then only once that's up and
Speaker 1: running will they eventually start actually selling securities. So I
Speaker 1: think we have at least we have a better idea
Speaker 1: of what's ahead. And the market kind of moved around
Speaker 1: and actually was off its lows following the minutes, possibly
Speaker 1: because some investors were expecting even more hawkish comments and
Speaker 1: more negative comments in terms of the balance sheet rolloff.
Speaker 1: And this Fed has come under a lot of criticism,
Speaker 1: you know, for maybe waiting too long, maybe letting themselves
Speaker 1: fall behind the curve. What is your view on the matter,
Speaker 1: Where do you fall on that debate? And how does
Speaker 1: that inform how you're thinking equities and markets will perform
Speaker 1: from here? Right? Well, I mean, if you think about it,
Speaker 1: the FED goals sounds simple in theory. Their goal is
Speaker 1: to raise rates a few times. They want to slow
Speaker 1: the economy somewhat, they want to reduce inflation, but they
Speaker 1: want to keep the economic expansion on track. So the
Speaker 1: FED has accomplished this before in the I think in
Speaker 1: the sixties, the eighties, and the nine nineties, but they
Speaker 1: also unfortunately have a poor track record of of raising
Speaker 1: rates too aggressively and causing a downturn in the economy.
Speaker 1: And that's what I think investors are getting kind of
Speaker 1: a jittery rabat right now. So unfortunately for investors, until
Speaker 1: we find out more about how much the FED intends
Speaker 1: to raise rates, what the speed of the FED sort
Speaker 1: of trajectory will be, um, we're not going to have
Speaker 1: a lot of clarity until later this year, so that
Speaker 1: could create more of a periods of volatility as we
Speaker 1: go through the summer into the fall. So it feels like,
Speaker 1: you know, we go, we get we get some more insight,
Speaker 1: whether it's a FED meeting or FOMC minutes. As you
Speaker 1: said Beige Book. You know, this will be also important
Speaker 1: of course as a next point in terms of figure
Speaker 1: out what FED policy is. But it's kind of a
Speaker 1: reminder Michael right, that the FED um is going to
Speaker 1: look at where we are in the current market condition
Speaker 1: and what they're getting from their regional banks and what
Speaker 1: the data points are telling us. Well, that's really important
Speaker 1: to us. So the said Powell has talked about it
Speaker 1: many meetings in the past. The feed data dependent. So
Speaker 1: one of the issues if you remember back in two
Speaker 1: thousand eighteen, going into Christmas, last of two thousand eighteen,
Speaker 1: after the FED had started as last rate cycle, the
Speaker 1: stock markets sold off sharply heading into Christmas period, and
Speaker 1: that was because after the Feds started raising rates, they
Speaker 1: started to reduce the balance sheet, but they sort of
Speaker 1: kept it on what I think they called it autopilot,
Speaker 1: and they really needed to make adjustments. So this time around,
Speaker 1: I think the FED will be more aware of that.
Speaker 1: In the minutes, they actually talked about looking at the
Speaker 1: two thousand seventeen period for reference. They did talk about
Speaker 1: the fact the economy is on better footing now and
Speaker 1: they do plan to be more aggressive, but I think
Speaker 1: they will be data dependent. And you know, it's not
Speaker 1: it's not all terrible. I mean, there is some good
Speaker 1: news out there. The unemployment rate is currently at three
Speaker 1: point six per weekly jobless claims were recently the lowest
Speaker 1: since nineteen. Consumer balance sheets are strong, and I think
Speaker 1: the outlook for manufacturing generally is pretty positive. But the
Speaker 1: issue is that to consume or sentiment index recently fell
Speaker 1: to a multi year low, and that's really all about inflation,
Speaker 1: and consumers are not feeling good about inflation, and that's
Speaker 1: what's you know, impacting the markets a bit. And when
Speaker 1: you wrap that all together, you know, you have a
Speaker 1: pretty lousy consumers sentiment. You have still very robust job market,
Speaker 1: you have a federal reserve that is starting to tighten,
Speaker 1: plenty more to come. I mean, where do you see
Speaker 1: the most opportunities across asset classes, across markets right now? Well,
Speaker 1: in the first quarter, it was really all about a
Speaker 1: very sort of narrow group the steels, the coppers, oil
Speaker 1: and oil and gas, the commodities. So it was it
Speaker 1: was difficult to make money in the first quarter if
Speaker 1: you weren't in those very small specific parts of the market.
Speaker 1: I think going forward, for now you want to be
Speaker 1: in high quality versus low quality stocks. I think you're
Speaker 1: probably better off in large versus small stocks. Um the
Speaker 1: US is probably a safer place than overseas, although at
Speaker 1: some point in the future foreign stocks will start to
Speaker 1: do better. One thing to watch is the dollar for example,
Speaker 1: and sort of obviously the military events between Ukraine and Russia. Um,
Speaker 1: and between value and growth there is a sort of
Speaker 1: a tough one. But I think you want to have
Speaker 1: whereas over the past decade you wanted to be overweight growth,
Speaker 1: which is what we were, but I think going forward
Speaker 1: you want to have a little more balanced between growth
Speaker 1: and value in your portfolios. Is there a longer term
Speaker 1: thought here in terms of you know, the market, the
Speaker 1: stock market. It's higher than it was five years ago,
Speaker 1: it's higher than it was ten years ago, Like, is
Speaker 1: there a longer thought Michael that we need to have
Speaker 1: in what is a very tricky environment And just got
Speaker 1: about thirty seconds here. Sure, Well, that's that's really a
Speaker 1: good comment. We're investment planners at heart. We run a
Speaker 1: financial advisory firm, so we try and encourage clients to
Speaker 1: have the appropriate asset allocation to basically ride out the
Speaker 1: inevitable ups and downs. And we try and basically preach
Speaker 1: that it's time time in the market, not timing the
Speaker 1: market over the long term. That helps clients reach their
Speaker 1: long term investment goals. Yeah, I know it's it's not
Speaker 1: always easy to do. Things are a little crazy. Um.
Speaker 1: Michael Sheldon, thank you so much. We really appreciate like
Speaker 1: all the prep you do and the reading through UH
Speaker 1: in terms of your commentary that you can bring to
Speaker 1: our Bloomberg audience. Michael Sheldon, executive director and chief investment
Speaker 1: Officer over at High Tower r d M Financial Group,
Speaker 1: on the phone from Westport, Connecticut. Thanks for listening to
Speaker 1: Bloomberg Business Week. Download the podcast on iTunes, SoundCloud, or
Speaker 1: Bloomberg dot com, and you can also listen to our
Speaker 1: radio show at two pm Eastern on Bloomberg Radio or
Speaker 1: watch us on YouTube search Bloomberg Global News