Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern
Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App,
Speaker 1: Listen on demand wherever you get your podcasts, or watch
Speaker 1: us live on YouTube.
Speaker 2: Michelle Hossein is with us. She flew in to go
Speaker 2: to a quiet White House correspondence dinner, despect to Pig
Speaker 2: Field of the American Express definitive in the United Kingdom
Speaker 2: where they work at the BBC, and of course the
Speaker 2: host of the Michelle Hussein Show across all of the
Speaker 2: Bloomberg platform. We're thrilled she could pick up the pieces
Speaker 2: for us on this Monday morning. Michelle, I think we've
Speaker 2: all seen the video, seen the tape, relived it. I
Speaker 2: don't want to do that. What Americans want to know
Speaker 2: of every persuasion is how does the unit did Kingdom
Speaker 2: have less violence than we have? I guess it goes
Speaker 2: back to a horrific event in the nineties, But what
Speaker 2: is the legislative parliamentary courage that your nation has that
Speaker 2: we just can't do?
Speaker 3: Good morning, tom Good morning, Paul. Wow, you are really
Speaker 3: putting me through my paces right at the beginning of
Speaker 3: this it's so good to be with you from DC,
Speaker 3: And yeah, it was a really dramatic event. I will
Speaker 3: say that, you know, there was this sense of anticipation,
Speaker 3: a real sort of freesaw around this particular dinner because
Speaker 3: the president was coming. But as I was crouched under
Speaker 3: the tables for those minutes, it took before the room
Speaker 3: was cleared of the VIPs and it appeared that the
Speaker 3: person was dealt with and we kind of emerged back
Speaker 3: into putting our heads above the parapet as it were.
Speaker 3: In those moments, I was thinking, as an outsider to
Speaker 3: the United States about the nature of gun culture in
Speaker 3: this country, how different it is in the UK. And
Speaker 3: I will say that you have a long running history
Speaker 3: where you know the right to bear arms. It is
Speaker 3: there as part of as part of your history for
Speaker 3: such a long time. The UK never had that for starters.
Speaker 3: But in nineteen ninety six there was a horrific school
Speaker 3: shooting at a primary school in Scotland and that did
Speaker 3: lead to the licensing of firearms regime that we continue
Speaker 3: to have in the United Kingdom and which some people
Speaker 3: continue to criticize as being too lax. But essentially the
Speaker 3: framework is that licensing of firearms is done through your
Speaker 3: local police force. So every local police force in the
Speaker 3: United Kingdom knows who is licensed to bear arms within
Speaker 3: their community. That's the hallmark of it. So Dunblane, that
Speaker 3: town in Scotland became the tourists for a school shooting.
Speaker 3: But the culture, the environ, the trajectory, the rights are
Speaker 3: very different in the United States. But yeah, all of
Speaker 3: this was going through my mind as I was under
Speaker 3: that table on Saturday.
Speaker 4: Night, Michelle, Another big day in Washington, DC today is
Speaker 4: the King and Queen of England arrive here. What do
Speaker 4: you think the agenda is for the King and Queen?
Speaker 3: You know, this visit was already complex for a number
Speaker 3: of reasons, primarily because of tensions between the US and
Speaker 3: the UK governments over the Iran War. The difference of opinion,
Speaker 3: the fact that British ministers and the Prime Minister openly
Speaker 3: refer to this as being President Trump's war. That has
Speaker 3: been a real disappointment to the President, who would like
Speaker 3: the UK to be firmly on side. The UK position
Speaker 3: is that British bases are only to be used for
Speaker 3: defensive action against Iran so that was complex. The fallout
Speaker 3: from Jeffrey Epstein already made that complex. That's what the
Speaker 3: King is flying into today. But then I was with
Speaker 3: Britain diplomats on Saturday night. They were amongst the guests
Speaker 3: in the room, Bloomberg's guests and the guests of other
Speaker 3: news organizations, and of course they were immediately thinking and
Speaker 3: we immediately started to think about any review of the
Speaker 3: arrangements for this particular visit. So there has been a
Speaker 3: last minute review of security. Some arrangements perhaps have been
Speaker 3: changing around the margins, but this is a tight itinery
Speaker 3: in DC, in Virginia, in New York in the coming
Speaker 3: four days. And basically the King's mission is going to
Speaker 3: be to use his lifelong diplomatic skills to try and
Speaker 3: to try and improve the relationship. And really that means
Speaker 3: the relationship between the Prime Minister and the President, which
Speaker 3: is not as the UK would want it.
Speaker 2: In the way they're going to improve. This is up
Speaker 2: Massachusetts Avenue. Michell Hussein with us with Bloomberg again the
Speaker 2: Michelle Hossein Show, and we continue with her this morning. Now, Michelle,
Speaker 2: I want to cut to the chase. It's the Royal
Speaker 2: Garden party ending it is well, if I went, can
Speaker 2: you see me in the Lack and Company London black
Speaker 2: beaver furfelt at it's thirteen hundred dollars? Could I pull
Speaker 2: off the top? At Michelle?
Speaker 3: The dress code, I'm sorry to disappoint you, is I
Speaker 3: think going to be more ordinary. We've actually been told
Speaker 3: hats are not encouraged, whereas if you go to a
Speaker 3: Buckingham Palace garden party it's very much hats encouraged for
Speaker 3: the guests. So there's going to be a different vibe.
Speaker 3: But this is one of the first engagements that the
Speaker 3: King and Queen will have here in the United States.
Speaker 3: It'll be in the beautiful setting of the British Embassy,
Speaker 3: just you know, about fifteen minutes drive away from where
Speaker 3: I am, the incredible Edwin Luttein's designed residence, So that's
Speaker 3: the setting. The King, with his interest in gardens, will
Speaker 3: no doubt be looking around the gardens very carefully. So
Speaker 3: I think the hope will be that it sets a
Speaker 3: tone for the visit and therefore for the next few days,
Speaker 3: and again this sense that perhaps the King is the
Speaker 3: one who can sort of smooth over the troubled waters.
Speaker 3: I mean, let's face it, the most likely scenario is
Speaker 3: that God willing, everything goes well for the next few days.
Speaker 3: The President says nice things about the UK, the King
Speaker 3: says nice things. We know he will about the United States.
Speaker 3: There's a lot of there'll be a lot of talk
Speaker 3: about America at two fifty. That is the reason for
Speaker 3: this particular visit. Most likely things will go back, but
Speaker 3: too after they leave.
Speaker 2: I got to get to sim Michelle David Charter over
Speaker 2: at the Times of London. This is the heart of
Speaker 2: the matter. A royal visit after a presidential shooting. It's
Speaker 2: nineteen seventy six all over again. Your visit is changed,
Speaker 2: is it not.
Speaker 3: Yes, no doubt. There's you know, that evidence that we
Speaker 3: had on Saturday night of just how inflamed the political
Speaker 3: climate is in the United States. That's going to be
Speaker 3: in everyone's forefront of everyone's minds. The fact that this
Speaker 3: hugely important state visit comes less than forty eight hours
Speaker 3: after that White House correspondence dinner. I think, you know,
Speaker 3: from the British hope and expectation will be that the
Speaker 3: King sort of elevates that situation, that there's something about
Speaker 3: his presence that makes everyone around him rise above politics,
Speaker 3: and that will have been the hope for the UK
Speaker 3: US bond at this particular moment in time. Maybe even
Speaker 3: it's got something to offer the United States domestically as well,
Speaker 3: a reminder that there are conversations that happen like above
Speaker 3: and beyond the political phrase. So perhaps that's what he
Speaker 3: brings with him as he flies in today.
Speaker 2: Michelle, thank you so much with her coverage here of
Speaker 2: the visit of the King and Queen. Stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after this.
Speaker 1: You are listening to the Bloomberg Surveillance podcast. Catch us
Speaker 1: Live weekday afternoons from seven to ten am Eastern Listen
Speaker 1: on Applecarplay and Android Otto with the Bloomberg Business app,
Speaker 1: or watch us Live on YouTube.
Speaker 2: I have three words when I speak to Cherubs and
Speaker 2: I talk about concision. I talk about acuity. I talk
Speaker 2: about avoiding conflation, which is something that you conflate two
Speaker 2: ideas together and you get in trouble. You are the
Speaker 2: queen because the queen's visiting in Washington. You are the
Speaker 2: queen of acuity, and you walked in the studio having
Speaker 2: a full Patterson tantrum over sovereign wealth. Funds beware, Yeah,
Speaker 2: what do I need to know about the rich guys
Speaker 2: country to country?
Speaker 5: So I think one of the biggest underappreciated risks right
Speaker 5: now for US financial markets and especially this tech rally,
Speaker 5: is the possibility. I'm not saying it will happen, but
Speaker 5: there is a probability that's not zero, that some of
Speaker 5: the golf sovereign wealth funds, particularly I think Saudi and UAE,
Speaker 5: if this war lasts a little longer, are going to
Speaker 5: need cash. They're going to need it to shore up defenses,
Speaker 5: to shore up damaged infrastructure. And right now the sovereign
Speaker 5: wealth fund cash is largely We're the biggest single recipient
Speaker 5: going to the US, and it's going fairly concentrated to
Speaker 5: technology and through a handful of financial intermediaries. Now I'm
Speaker 5: not saying it'll stop coming, but if that flow is
Speaker 5: cut by a third even it would have a material
Speaker 5: impact on the US. So that is a risk I'm
Speaker 5: watching carefully. Saudi Arabia has a pretty big budget deficit,
Speaker 5: so it's not like they have a ton of cash
Speaker 5: sitting around they can easily tap.
Speaker 4: Interesting just in the small little world of professional golf,
Speaker 4: we're starting to see it. There's reports out there, widely
Speaker 4: reported that they may withdraw their financial support of the
Speaker 4: Live Golf tour to the tune of a five billion
Speaker 4: dollar number, and that caught everybody by surprise, and I
Speaker 4: think in some of their discussions they were suggesting, Hey,
Speaker 4: is the pressure from the war, we need to rethink
Speaker 4: some of our investments. That ties in, yeah, exactly with.
Speaker 5: It and PIF, which is the Saudi main sovereign will fund.
Speaker 5: There's about thirteen big ones in the Gulf countries the GCC.
Speaker 5: But PIF, even before the war in December, came out
Speaker 5: with its five year plan saying it wanted to be
Speaker 5: more efficient, more and more domestically focused with its investment.
Speaker 5: So I just think we need to be thoughtful on
Speaker 5: assuming that capital just keeps coming to the same degree
Speaker 5: it has.
Speaker 4: And I'm not sure what that says about that whole
Speaker 4: region of the world, which was the money was just flowing.
Speaker 2: In there for years and years.
Speaker 4: Every financial firm in the world was setting up an
Speaker 4: office in that part of the world, and that was
Speaker 4: expected to be maybe a new financial globe, the.
Speaker 5: Capital of capital exactly right, that's what they wanted to be.
Speaker 5: So after I mean it's been going on for a while.
Speaker 5: But twenty fifteen, twenty sixteen, you guys remember oil prices
Speaker 5: crashing in that period, partly because US fracking took off
Speaker 5: and the Middle East had an Aha moment and they said,
Speaker 5: wait a second, we need to double down on diversifying
Speaker 5: our economies. Of that was the sovereign wealth funds making
Speaker 5: these big strategic investments and attracting US money to them.
Speaker 5: So it is a quid pro quo. And they've built
Speaker 5: up tourism, they've built up high value manufacturing, they've built
Speaker 5: up tech and finance, of course, but can it last?
Speaker 5: Partly it depends how long this war goes. Is it
Speaker 5: just temporary damage or is it something bigger?
Speaker 2: I get an email coming in here in anticipation of
Speaker 2: Rebecca Patterson being with his threads down in Durham. First
Speaker 2: of all, I'd love to go down just to see
Speaker 2: the Durham Bulls play in the stadium. But they got
Speaker 2: a new arena which is still a jewel, very nice.
Speaker 2: It's right downtown and you know, good morning down in
Speaker 2: North Carolina. And he is an absolutely brilliant question which
Speaker 2: goes back to your time at Best in your trust. Okay,
Speaker 2: We have been schooled that for certain our actual assumption
Speaker 2: of equity returns will be single digit, two hundred beeps
Speaker 2: above nominal GDP. We all studied the test, drank the
Speaker 2: kool aid, and it's just been wrong, wrong, wrong, for years.
Speaker 2: Fred wants to know who's right this equity market are
Speaker 2: single digits subsided equity returns? Which is it?
Speaker 5: I mean the equity returns we've had over the last
Speaker 5: call it, fifteen years or so have been fueled by
Speaker 5: I think three main forces. Unusually large fiscal stimulus. Some
Speaker 5: of that was pandemic related, and some of it was
Speaker 5: national security economic security related, monetary policy. Remember it wasn't
Speaker 5: that long ago that we had zero and even in
Speaker 5: some countries negative interest rates that fueled equity assets. And
Speaker 5: then the structural tech trend. And I think those three
Speaker 5: things combined help explain the differential between the economy and
Speaker 5: the equity markets. Now going forward, are we able to
Speaker 5: continue this or do we go back to something more
Speaker 5: in line with historical averages. With bond yields at four
Speaker 5: point three one this morning, and the FED in my view,
Speaker 5: unlikely to go back to a zero world or something
Speaker 5: close to that anytime soon. Because inflation is structurally higher.
Speaker 5: I think it's going to be difficult to continue the
Speaker 5: ride we've had with stocks. I mean, again, this year,
Speaker 5: we're only up four percent year to date. It's funny,
Speaker 5: everyone's like an all time high, all time high. It
Speaker 5: feels like it should be more. It's only four percent. Right,
Speaker 5: If you had your money in Japan, you'd be up
Speaker 5: twenty percent already this year.
Speaker 4: Are you surprised though, that when we did have that
Speaker 4: sell off with the beginning of the war.
Speaker 3: I think a lot of.
Speaker 4: People were surprised the veracity of the snapback one hundred percent.
Speaker 2: One hundred percent.
Speaker 5: I mean the fact that we have oil prices at
Speaker 5: one hundred and seven hundred and eight dollars I'm looking
Speaker 5: at Brent crude, that we have higher bond yields, that
Speaker 5: we have a worsening fiscal position, we have a K
Speaker 5: shaped economy with those lower end consumers hit harder by
Speaker 5: high energy and high food prices. It is and job
Speaker 5: markets that aren't worsening but have stalled. The Fact that
Speaker 5: stocks are here and it rallies so hard is striking
Speaker 5: to me. I think investors have been conditioned in recent
Speaker 5: years to expect that we will have a resolution quickly
Speaker 5: because it's a midterm election year and it's not in
Speaker 5: the GOP's interest to have a prolonged war that could
Speaker 5: hurt voters. And they've been conditioned to expect that buying
Speaker 5: the dip pays. It worked in pandemic, it worked in
Speaker 5: Liberation Day. But I think you have to be really
Speaker 5: careful about that.
Speaker 2: You know. Rebecca's people called me up this weekend, stop
Speaker 2: me on the street, I should say, rather, and they said, Tom,
Speaker 2: if you don't plug the Council for Economic Education, she's
Speaker 2: not coming back. This is a cool event you got.
Speaker 2: Jan Axi is showing up of Goldman Sachs and I've
Speaker 2: done this years ago. I think this is your diamond
Speaker 2: Gala event. Yep. And is it like with the King
Speaker 2: and Queen Meat, is it like you know, tuxedos and
Speaker 2: all that.
Speaker 5: You No, we don't force tuxedos. We let people show
Speaker 5: up in their work clothes. And you all are obviously
Speaker 5: invited as guests to my table if you can be
Speaker 5: free on a six. But the SEED Council on Economic
Speaker 5: Education is focused on making sure K through twelve students
Speaker 5: finish high school understanding the basics of economics and personal finances.
Speaker 5: It's getting more traction. In recent years, we've seen state
Speaker 5: legislatures wake up. We now have thirty nine states in
Speaker 5: the US that require high school kids to take at
Speaker 5: least one personal finance class before they graduate. So thirty
Speaker 5: nine is a huge step forward from where we were,
Speaker 5: but it's not fifty, which is crazy because this is
Speaker 5: so fundamental. If we want a strong economy, if we
Speaker 5: want strong stock markets, we have to have financially healthy consumers.
Speaker 5: So you can talk about the moral arguments for this,
Speaker 5: the ability to narrow that opportunity gap. But at the
Speaker 5: end of the day, if I'm an equity investor listening
Speaker 5: to this conversation, this is in my interest.
Speaker 6: Interesting my daughter has. They just added that course a
Speaker 6: personal finance and it's an AP course, so advanced placement, yes,
Speaker 6: which is an incentive for kids to take it. And
Speaker 6: I was still happy to see that.
Speaker 5: Yeah. So we've just partnered with the college board on
Speaker 5: that course, and we agree if you can get kids
Speaker 5: focusing on this, they're going to have a better time
Speaker 5: in college, and they're going to have better prospects going ahead.
Speaker 5: They'll understand what the credit score is, how to borrow
Speaker 5: how to save those are.
Speaker 6: Great to the thirteen colonies, but you got to know
Speaker 6: how to also bounce the chess and what compounding.
Speaker 2: Means ob comparedison. Thank you so much, Thank you, I
Speaker 2: appreciate it. With the Council on Foreign Relations, and again
Speaker 2: the CEE the Council of Economic Education with their event
Speaker 2: in early May. Stay with us. More from Bloomberg Surveillance
Speaker 2: 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 2: Nancy Tegler joining US Chief Executive Offer Cio Laffer Tanglar
Speaker 2: Investments this morning. My deepest sympathies. You're joining Webbush and
Speaker 2: then Nutcase Dan Ives. Why pray tell you're dressed in black.
Speaker 2: That's not allowed it web.
Speaker 7: Bush, I know, I know, but it's the shoes for me,
Speaker 7: and you can't see those on radio.
Speaker 2: They saw your track record, which is the classic Nancy Tanglar.
Speaker 2: Just shut up and be optimistic and be in the market.
Speaker 2: I'm not going to go to the numbers now. We
Speaker 2: don't have time. But you are the definition of excellence.
Speaker 2: How did you do it well?
Speaker 7: Discipline? I mean, that's what it takes tom as you know,
Speaker 7: and you actually have to anticipate and be willing to
Speaker 7: go against the crowd. So we called for a bottom
Speaker 7: on April sixth, April fourth. Really we were in buying
Speaker 7: on April seventh, and that's how you make money in
Speaker 7: the market. We did the same thing with deep Seak.
Speaker 7: The naysayers, the hedge funds, they're always short, fast quick.
Speaker 7: We're investing for the next two to three to five years.
Speaker 4: We're going to get a big, big week of tech
Speaker 4: earnings this week. What are you looking for for some
Speaker 4: of those big names.
Speaker 7: Here, Molly, If you haven't beat beat and raised, you've
Speaker 7: gotten slaughtered in this mart And even some companies that
Speaker 7: did beat, beat and raise, it wasn't enough. So what
Speaker 7: we're going to look for is the same thing everyone
Speaker 7: else is looking for. We're going to look at guidance.
Speaker 7: Margins are at historic eyes, so we want to see
Speaker 7: if that can sustain. And then we're looking at you know,
Speaker 7: implementation cases for AI. So if you look at ge Veranova,
Speaker 7: they are benefiting from the AI craze, but on their
Speaker 7: call they were talking about how they were utilizing AI
Speaker 7: to improve margins.
Speaker 4: It seems like the we did have a rotation late
Speaker 4: last year coming into this year out of some of
Speaker 4: those growth names, some of those high multiple names, into
Speaker 4: some more cyclical. But now it seems like that that's
Speaker 4: just reversed. Here is that how you're viewing it here?
Speaker 4: Back to what has been driving this market, which is
Speaker 4: some of that growth in that.
Speaker 7: Sex You have to have technology work in order for
Speaker 7: the market to work, and so that's why we were
Speaker 7: in buying things like adding to Micron at three sixty
Speaker 7: six just three weeks ago, Stocks at four ninety six.
Speaker 7: We were adding to a number of the software names.
Speaker 7: As contrary as that may seem, like pound here, Microsoft.
Speaker 4: How do you view that risk because we did have
Speaker 4: one of like you software is one of those groups
Speaker 4: that sold off because perhaps it's going to be you know,
Speaker 4: really the competitive aspect visa the AI is not going
Speaker 4: to be favorable to some of these software nows.
Speaker 7: How do you view that? Well, we got out of
Speaker 7: some of them in anticipation of that. So we're out
Speaker 7: of Adobe, we're out of Salesforce, the seat model doesn't.
Speaker 7: I don't think isn't going to sustain. And we're hearing
Speaker 7: rumblings that Salesforce is pivoting away from seats, But we
Speaker 7: were adding to names like Microsoft, which we think will
Speaker 7: be a winner. We actually and this is very controversial.
Speaker 7: It goes up and down like a Yo yo, but
Speaker 7: we're actually adding to service now selectively. We do think
Speaker 7: it's a winner long term. And then of course the
Speaker 7: cyber names, so.
Speaker 4: Something like a Salesforce dot com whichsen had been such
Speaker 4: an extraordinary story, right, but the revenue is subscription by seat, right.
Speaker 4: Is there another way for those types of companies to go.
Speaker 7: Yeah, Actually they've purchased recently. One of my clients runs
Speaker 7: a software company that they measure volume, and so that
Speaker 7: I think will be one of the things that will
Speaker 7: shift sort of more of a platform model, which you've
Speaker 7: seen many of the software companies shift to. Margins may
Speaker 7: get compressed some, but we'll see going forward. I think
Speaker 7: AI will drive margin growth.
Speaker 2: The heart of the matter on the arc of a
Speaker 2: decade or two is people are scared stiff, and we
Speaker 2: have climbed in a bull market. A wall of worry
Speaker 2: is the wall of worry psychologically I mean you have
Speaker 2: a huge advantage. You're out in Arizona, where the minimum
Speaker 2: age is forty five. You can't enter the state unless
Speaker 2: you're forty five. I mean, break the breakfast club in Phoenix.
Speaker 2: No one's under seventy years old, okay, and then the
Speaker 2: avocado toast is nine dollars. The fact is, the wall
Speaker 2: of worry is still there, the wall of money, the
Speaker 2: wall of werry. I'm scared, stiff, I'm not going to
Speaker 2: be in the market. That's the heart of this discussion,
Speaker 2: isn't it.
Speaker 7: Yeah, And that's why you got to hire somebody like
Speaker 7: us to do it. Let me do the worrying, because
Speaker 7: it is a brutal business and the goal is us
Speaker 7: to manage all the money for the Bechdel Corporation and
Speaker 7: the family. And I said once that investing was about
Speaker 7: being mostly right. And you could hear an audible gas
Speaker 7: from all the engineers who are building bridges and buildings
Speaker 7: all over the world. But it's a tough business. As
Speaker 7: you know, Tom, We've been through it, and I think
Speaker 7: experience matters in markets like this instead of just reading
Speaker 7: the history books.
Speaker 4: Okay, looks like one word, it looks like we're gonna
Speaker 4: get a new FED chair. Do you care about that
Speaker 4: kind of stuff? Are you folcusing just on the fun
Speaker 4: America stocks?
Speaker 7: We were so critical of FED chair Powell. I'm actually
Speaker 7: pretty excited about some of the things Kevin Moore said,
Speaker 7: so I do think it will matter for investors.
Speaker 2: Nancy Tendler, thank you so much, greatly appreciated this morning.
Speaker 2: Would laugh for Tangler Investments. I can't say enough about
Speaker 2: the numbers. Stay with us. More from Bloomberg Surveillance coming
Speaker 2: up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live
Speaker 1: weekday afternoons from into ten am e'stern Listen on Applecarplay
Speaker 1: and Android Otto with the Bloomberg Business app, or watch
Speaker 1: US live on YouTube.
Speaker 2: Right now, we need to reset on this market. It's
Speaker 2: been an exceptional set of headlines driving the fear and
Speaker 2: the optimism out there. Lori Calvesina had a US equity
Speaker 2: strategy RBC Capital Market with a Monday brief flor what
Speaker 2: did you write this weekend for publication to RBC Capital
Speaker 2: clients this Monday?
Speaker 8: So thanks for having me on as always, tom So,
Speaker 8: I would say it was a little bit of a Hodgepodge.
Speaker 8: In the weekly, we gave our of our first take
Speaker 8: on reporting season in terms of what we read last week,
Speaker 8: which was the first week we really had some sector breadth.
Speaker 8: We also talked a bit about the US non US
Speaker 8: trade and why we think that still has room to run.
Speaker 8: We just saw a new high in the US relative
Speaker 8: to non US. And then we had a quick little
Speaker 8: comment on fun flows, where we're seeing financials starting to
Speaker 8: look a bit better, energy and industrial starting to degrade
Speaker 8: a bit, and also growth flows getting this negative, which
Speaker 8: we all think makes sense from evaluation, earn growth perspective.
Speaker 8: So it's a busy week. It's going to get even
Speaker 8: busier this week. I'm hoping, you know, we we sort
Speaker 8: of gave our take on reporting season so far. I'm
Speaker 8: hoping we're going to get more clarity. There's still a
Speaker 8: lot of fog out there right now.
Speaker 4: I tell you where there's not a lot of fog,
Speaker 4: it seems seems to be some momentum. And that's in
Speaker 4: the Philadelphia stock a semiconductor index eighteen days of gains here.
Speaker 4: What do you make on what's going on in the
Speaker 4: tech trade these days?
Speaker 8: So you know, when we look at semi specifically the
Speaker 8: rate of upward revisions, which is our gauge. Some people
Speaker 8: call that earning's breadth. We call that earning sentiment. But
Speaker 8: when we look at that sector or that industry rather
Speaker 8: across the Russell three thousand, we're at extremely high levels.
Speaker 8: It's really buying the tech sector and that also, in
Speaker 8: turn is really giving some resilience to the US equity
Speaker 8: market's earning story. Now, I'm a little bit of a
Speaker 8: contrarian by nature, as you both know, so we often
Speaker 8: get a little bit nervous when charts are up at
Speaker 8: that level. But we have looked back over a time
Speaker 8: and seeing that when semi upward revisions are at past peaks,
Speaker 8: they can often linger there for quite some time. So
Speaker 8: we're looking for a slowdown in that chart. If it
Speaker 8: or we're where we're monitoring for one, I should I
Speaker 8: should say we're not forecasting one, and if we get it,
Speaker 8: we'll react, but we're just not seeing it yet. And
Speaker 8: I would I just add, you know, as I look
Speaker 8: back on the themes, last week's strength and data centers
Speaker 8: in the AI story is still one of the biggest
Speaker 8: bright spots in the US earning story.
Speaker 2: Nancy Tagler was in earlier wonderful investment performance over the
Speaker 2: last number of quarters. Are people participating in this market, LORI,
Speaker 2: or are there a lot of people behind going into
Speaker 2: Memorial Day in the summer.
Speaker 8: It's a great question. I don't have a fantastic sense
Speaker 8: of that right now. I have heard my smallt yeah,
Speaker 8: and I'm just trying to I've been out on the
Speaker 8: road seeing people, and I would say, you know, my
Speaker 8: last trip, I felt like there was just sort of
Speaker 8: a state of disbelief about where markets are. That we
Speaker 8: hit new highs on the S and P. I do
Speaker 8: know a lot of my long only managers have been
Speaker 8: up the quality spectrum. That's not because they suddenly turned defensive.
Speaker 8: It's just how they tend to invest, especially in the
Speaker 8: small cap space. So we do know during kind of
Speaker 8: the March drawdown that a lot of them were doing
Speaker 8: okay and higher quality was, you know, kind of doing
Speaker 8: better in that environment. My small cap managers have been
Speaker 8: the ones complaining the most to me lately, which probably
Speaker 8: means they're not doing well. But you've started to see
Speaker 8: both in their world and on my factor data, low
Speaker 8: quality outperforming within small calf, which can happen in big
Speaker 8: rallies off bottoms, so I would imagine that Cohort is
Speaker 8: not doing so well right now.
Speaker 4: Hey, Lourie, at the beginning of this war, we had
Speaker 4: I guess, a fairly predictable and ten percent draw down
Speaker 4: in the market. But boy, the market is snap back
Speaker 4: with a vengeance here, and I think that's probably surprised
Speaker 4: a lot of people.
Speaker 2: What do you make of that?
Speaker 8: So, you know, I learned something important with tariffs last
Speaker 8: year when we had that eighteen point nine percent draw down,
Speaker 8: we bounced back pretty fast. And you know, we kind
Speaker 8: of did that all in April. And I remember being
Speaker 8: out on the road in June and talking to some
Speaker 8: of my long only clients, just very very smart people,
Speaker 8: and they were basically of the opinion we paid the
Speaker 8: price for whatever economic damage is coming from tariffs, profitability damage,
Speaker 8: whatever that is in twenty twenty five. We paid the
Speaker 8: price for that on April eighth, and we're looking ahead
Speaker 8: to twenty twenty six, and I remember just being really
Speaker 8: taken aback by how forward looking they were being and
Speaker 8: how done with twenty twenty five they already were at
Speaker 8: the middle of the year, and I'm not hearing the
Speaker 8: conversations about twenty twenty seven yet, But I have thought
Speaker 8: a lot about that example and kind of what that
Speaker 8: moved to minus nine point one percent represented, and that
Speaker 8: is really the depth of a pullback you should do
Speaker 8: if you are not worried about a recession post GFC.
Speaker 8: If you start to be worried about a recession, you're
Speaker 8: going to fall fourteen percent or more. And I never
Speaker 8: really heard that. As worried as people are about the
Speaker 8: Middle East, I never heard that from equity investors. You're
Speaker 8: hearing that from the energy community, but you're not really
Speaker 8: hearing that from equity investors. So much so, I think
Speaker 8: we paid the price for some damage. I think if
Speaker 8: a growth scare, a recession scare comes back, you know
Speaker 8: a bigger pullback is on the table. But I'm just
Speaker 8: not hearing that from the investors right now.
Speaker 2: Laurie, I don't care. The only reason you're on Are
Speaker 2: you going to be in the RBC box at the
Speaker 2: Bell Center game six May one Lightning Canadians? I mean,
Speaker 2: are you going to be I'm not that important.
Speaker 8: I'm a big hockey fan, but I'm a Ranger fan,
Speaker 8: and they know.
Speaker 2: That at all.
Speaker 8: They know that I get invited to those things.
Speaker 2: Can we just stake that on? What is it? TNT
Speaker 2: whatever it is? The Henrik Lundquist. Every time he talks,
Speaker 2: I learned something. Yep, there you go. He's like a
Speaker 2: color announcer, you know, between periods he horbles gaily. He's phenomenal.
Speaker 2: He's like, who's the guy Tony Romo? Yeah, every time
Speaker 2: Tony Romo talks, I'm a dummy. I learned something. Every
Speaker 2: time Lundquist talks, I learned sots a winner. I'm trying
Speaker 2: to say something nice about the Rangers. There's nothing nice
Speaker 2: to say. Look, not this year.
Speaker 8: My family is very disinterested in watching those games this year.
Speaker 8: But I'll tell you Tom, when my husband and I
Speaker 8: used to have season tickets to the Rangers. We don't anymore.
Speaker 8: We're too busy now. But it was during it was
Speaker 8: it was right at the beginning when I started going,
Speaker 8: when Quist, you know, started playing for the Rangers, and
Speaker 8: so that was sort of my heyday of Ranger phantom.
Speaker 8: So I always am interested in what he has to say.
Speaker 2: Amy Wi Silverman just email me. She has tickets in
Speaker 2: the RBC box for me Game six. Laurie, thank you
Speaker 2: so much, greatly appreciate it. Laurie, Calvisina out talking to
Speaker 2: people about the secuity market, which is way more than
Speaker 2: what we do in our hermetically sebled studio.
Speaker 1: This is the Bloomberg Surveillance Podcast, available on Apple, Spotify,
Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,
Speaker 1: seven to ten am Eastern on Bloomberg dot com, the
Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You
Speaker 1: can also watch us live every weekday on YouTube and
Speaker 1: always on the Bloomberg terminal