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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern

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Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business app.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: This is a joy because we keep very much track

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Speaker 2: of people with short Oh, Mike Green, I'm sorry, we

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Speaker 2: got breaking news. You're gonna be on for a minute

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Speaker 2: and a half. So this morning, I don't care if

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Speaker 2: there's breaking news now, we're not gonna go to it.

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Speaker 2: We're gonna go to Mike Green here to get some good,

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Speaker 2: good analysis about what's going on. Of course, with Simplify

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Speaker 2: asset management, I look at the Washington postfeed, the New

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Speaker 2: York Times feed. It's nuts out there. How do you

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Speaker 2: synthesize the chaos over into just remain calm to execute

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Speaker 2: investment process?

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Speaker 3: Well, I think all of us are kind of hoping

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Speaker 3: that that chaos that you're describing is just the flurry

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Speaker 3: of blows that comes out from an aggressive boxer in

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Speaker 3: the first round, and that eventually it settles down. But

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Speaker 3: it is remarkable when you kind of look at what's

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Speaker 3: happening We used to wake up to market volatility and

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Speaker 3: look to the politics to explain it, and instead today

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Speaker 3: we're looking at political volatility and the markets remain totally sanguine.

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Speaker 2: I think a lot of it is just we don't

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Speaker 2: know what to do, right may I look at it.

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Speaker 2: I don't know if you know this, but Lisa's newspapers

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Speaker 2: at the back end of the seven o'clock hour that's

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Speaker 2: funded by an NGO, a government thing, and the answer

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Speaker 2: is like, even NGOs, our guests are unfunded right now.

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Speaker 3: Yeah, so this is the key question. Now, a federal

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Speaker 3: judge just put a stay on this for a week.

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Speaker 3: We'll find out on Monday what the ultimate decision is

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Speaker 3: around this, or at least what the next step in

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Speaker 3: the process. But yeah, this decision to stop funding the NGOs,

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Speaker 3: et cetera, in pursue of basically making sure that Trump's

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Speaker 3: executive orders are enforced. It's gonna be one of many questions.

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Speaker 3: We don't know how many payrolls camp be met. We

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Speaker 3: don't know how many different firms are ultimately going to

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Speaker 3: be affected by this, how many commercial real estate properties

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Speaker 3: that are currently housing people are suddenly going to be

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Speaker 3: faced with their bills on paid.

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Speaker 2: We just don't know is.

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Speaker 4: The best advice for an investor to try to ignore

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Speaker 4: the noise and focus on the fundamentals. Where we have

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Speaker 4: earnings this week, maybe that's really what matters.

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Speaker 3: Well, we do have earnings, and I heard earlier the

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Speaker 3: commentary about, you know, we're excited that ASML's orders are

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Speaker 3: off the charts. But remember ASML's reporting off of a

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Speaker 3: December quarter deep seat came out on this this past week,

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Speaker 3: we've also known that this was kind of the case, right.

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Speaker 3: This is very much like the development of you know,

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Speaker 3: multiple signals and amplification that happened in fiber optics that

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Speaker 3: change the tone around fiber optics.

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Speaker 2: I got to go here. Alisa helped me out here,

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Speaker 2: T mobiles out well, Lisa's one of Lisa's entourage, whispered

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Speaker 2: in my ear, go to our inn T mobile. I

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Speaker 2: mean it's plus plus two twenty one and it's up seven.

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Speaker 5: Dollars now, yeah, earning smash expectations for it. So I

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Speaker 5: wanted to look, let's check in Core.

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Speaker 2: Do you know I pay a mortgage payment to remember

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Speaker 2: Vince Ferrell. Vince Ferrell was just such a great supporter

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Speaker 2: of Bloomberg surveillance. I miss him every day. We lost

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Speaker 2: Vince Ferrell way too long. We used to sit in

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Speaker 2: tears in the radio studio with Ken Pruitt and try

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Speaker 2: to figure out how many children their phone bills we

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Speaker 2: were paying and with t good Morning tea mobile mortgage payment? Help, Pa?

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Speaker 2: Why did you keep us going with Mike cream? Hey Mike,

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Speaker 2: So we sit here.

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Speaker 4: We had twenty twenty three and twenty twenty four both

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Speaker 4: north of twenty percent returns on the S and P

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Speaker 4: five hundred. How do you think about twenty twenty five

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Speaker 4: going into the year? I mean, should we just temper

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Speaker 4: that and hope for a single digit return? How do

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Speaker 4: you think about it?

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Speaker 3: Well, I'm often reminded of an event in late nineteen

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Speaker 3: ninety nine when I asked my mother in law, you know,

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Speaker 3: she'd had a phenomenal nineteen ninety nine. I said, you

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Speaker 3: know what if stocks were up fifteen percent in two thousand,

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Speaker 3: would you be surprised? Yeah, I'd be really surprised. I'm like, well,

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Speaker 3: then why not take something off the table? And her

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Speaker 3: reaction was, I'd be very surprised if they were only

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Speaker 3: up fifteen perccon right, So we're if you actually look

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Speaker 3: at what's happening in the market on a year to

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Speaker 3: day basis, a lot of the not mag seven stocks

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Speaker 3: in videos, the non in videos instead.

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Speaker 2: Of the world, they're up sharply.

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Speaker 3: The Dow is up almost eight percent ye before the

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Speaker 3: first month of the year is out of the way,

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Speaker 3: so it's hard to argue this is going to be

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Speaker 3: another calumn year.

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Speaker 4: We're going to hear from the Fed today Tom Keen

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Speaker 4: and the Surrounds team of full coverage starting a one

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Speaker 4: thirty pm Wall Street time. What do you should we

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Speaker 4: expect anything from the Fed this year or just kind

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Speaker 4: of sit on the signlines and follow the data.

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Speaker 3: You know, this is we definitely want to follow the data.

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Speaker 3: But one of the things that I think is really

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Speaker 3: critically is the market is only pricing about a ten

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Speaker 3: percent probability of a cut at this meeting. They're pricing

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Speaker 3: very low probability of the idea of a hike throughout

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Speaker 3: the year. That's backed off since obviously in video. But

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Speaker 3: if we look at that commentary that's going to come out,

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Speaker 3: this is where we're really going to find out what

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Speaker 3: the Fed is thinking. Agree, So we aren't going to

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Speaker 3: know what the press release. We know what's going to

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Speaker 3: happen the market. The FED is not going to surprise

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Speaker 3: the market there. Whether Palell chooses to react to the

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Speaker 3: first week of the Trump administration in terms of answering questions,

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Speaker 3: implications of it, inflation concerns, we genuinely just don't know.

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Speaker 2: I totally agree, totally agree. I just I just refuse

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Speaker 2: to believe it's a snooze fest with all that's going

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Speaker 2: on politically, and why you to treat Mike Green with

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Speaker 2: us to simplify, we continue here an extended conversation to

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Speaker 2: begin at your day. Many other worthies coming up at

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Speaker 2: the FED meeting and on the equity markets. Cam Dawson

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Speaker 2: will be with us later as well. The nastic Paul

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Speaker 2: up four tenths of a percent right now.

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Speaker 4: So, Michael, what do you expect here for earnings? If

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Speaker 4: if I've got a FED that's going to be the

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Speaker 4: kind of quiecent we're going to say for twenty twenty five,

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Speaker 4: maybe one, maybe two great rate cuts. That puts a

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Speaker 4: lot of pressure on earnings, doesn't it.

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Speaker 3: It does put pressure on earnings. And one of the

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Speaker 3: most important areas that puts pressure on earnings is actually

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Speaker 3: from not the leading companies, those companies that are flush

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Speaker 3: and cash, et cetera, but those companies that are now

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Speaker 3: facing refinancing. So if we look at things like the

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Speaker 3: high Yield Index, we've actually seen credit spreads compress. Many

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Speaker 3: of these companies have not refinanced that paper from the

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Speaker 3: twenty twenty twenty twenty one time period. You're now approaching

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Speaker 3: that maturity wall. And when these companies refinanced, even though

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Speaker 3: credit spreads are tight, the absolute level of interest rates

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Speaker 3: are a lot higher. So in many of these companies,

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Speaker 3: you're talking about going from four to four and a

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Speaker 3: half percent coupons to seven to seven and a half

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Speaker 3: or eight percent coupons.

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Speaker 2: Ma Green, how do you perceive Apple? On Monday, we

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Speaker 2: had a total full scale panic and everybody turned to

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Speaker 2: Cooper Tino and said, they're not doing the capex ballet.

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Speaker 2: Is that a heritage from Steve Jobs? Is that a

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Speaker 2: Tim Cook thing? Or is it blind luck Well.

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Speaker 3: I think it's a combination of components. So Apple has

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Speaker 3: always been a capital intensive, light business. They've always chosen

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Speaker 3: to outsource their manufacturing while keeping control of their intellectual property.

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Speaker 3: But I think the much more important message is nobody

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Speaker 3: lost their job on Monday, and so four oh one

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Speaker 3: k flows continue to come into the markets. Esters are

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Speaker 3: continuing to pile in. A lot of this is a

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Speaker 3: function of the autopilot of the way that we've set

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Speaker 3: up flows into our system. When people are working, they're

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Speaker 3: contributing to the stock market. That money is flowing into

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Speaker 3: an index fund, and guess what that index fund is buying?

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Speaker 2: Spring training February nine. The Dodgers play in Tokyo, so

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Speaker 2: they started early spring training. What inning are we in,

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Speaker 2: Mike Grain, of this bull market?

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Speaker 3: I have thought we've been in extended innings for an

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Speaker 3: extended period of time. A typical bear market bowl market

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Speaker 3: lasts for between three and five years, so we're probably

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Speaker 3: getting towards the end of it.

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Speaker 2: Am I yet.

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Speaker 3: Ready to call my mother in law and say you.

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Speaker 2: Must get out? Not quite. So.

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Speaker 4: We had some news earlier about this whole China AI thing,

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Speaker 4: and we're all trying to learn it literally on the fly.

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Speaker 4: AI has been a theme for this stock market really

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Speaker 4: a couple of years now.

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Speaker 2: It's been a supporter of growth and.

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Speaker 4: It just means so many positive things for so many

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Speaker 4: different industries. What's the assumption did anything change for you

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Speaker 4: with is deep seek news earlier this week.

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Speaker 3: Well, the fascinating thing is that the deep seek news

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Speaker 3: was actually out weeks ago, right so and candidly months ago.

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Speaker 3: So the key innovation was actually the handling of memory components.

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Speaker 3: They announced and released a paper in August of I

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Speaker 3: think it was actually August or July of last year

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Speaker 3: that actually highlighted these breakthroughs and a lot of this

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Speaker 3: stuff if you just think about it in an evolutionary terms,

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Speaker 3: is really straightforward. Can we do more computing with less energy?

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Speaker 3: Can we actually split up our brain into in terms

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Speaker 3: of a reptilian brain and an mammalian brain the Sarah

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Speaker 3: bellm etcetera. That's all we're doing with these components, their

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Speaker 3: natural evolutionary processes that simply say these things are getting

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Speaker 3: better and cheaper, et cetera. One stat I just wanted

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Speaker 3: to share with you, if you look at the actual

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Speaker 3: inflation adjusted price of an Apple two, the deep seat

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Speaker 3: innovations basically drop the cost of AI an LLM for

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Speaker 3: the average individual down to roughly the same inflation adjusted

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Speaker 3: costs as an Apple too in nineteen seventy seven, My

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Speaker 3: cream with.

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Speaker 2: Us to simplify, we're going to continue in extended conversation

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Speaker 2: to get us going futures up five red and green

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Speaker 2: in the screen. But I got a dancetick up four

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Speaker 2: tenths of a percent, Meta and Microsoft this afternoon, and

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Speaker 2: more importantly, Paul helped me in the eleven o'clock hour.

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Speaker 2: You have the chief executive officer of T Mobile.

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Speaker 4: Yeah, I think so, absolutely eleven. I think we're good

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Speaker 4: on that. Hopefully he won't be coming with a collection

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Speaker 4: notice that. Yeah, so we'll get the latest. I mean

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Speaker 4: that telecom space, Tom, the wireless space. It's so competitive,

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Speaker 4: you know, but.

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Speaker 2: So competitive it's kill a millany exactly. You know, you

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Speaker 2: don't think, oh you get this, this it's all free,

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Speaker 2: free for you, and then.

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Speaker 4: Ninety days later it's like hello, yeah, exactly right, Hey Mike,

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Speaker 4: what screens well for you guys?

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Speaker 2: These days? Are you?

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Speaker 4: You know? Ever, I think probably the last ten to

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Speaker 4: fifteen years technology has led this market. Is technology still

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Speaker 4: going to leave this market going forward?

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Speaker 3: Do you think it's It's hard for me to see

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Speaker 3: leadership change in a very meaningful way because I spend

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Speaker 3: so much my time focused on the passive components and

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Speaker 3: these largest companies. There's a free that is created by

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Speaker 3: these orders, and so it just pushes the leadership further.

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Speaker 3: This Monday, when we had the news of deep seeking

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Speaker 3: the hit on Nvidia, I ruffled a lot of feathers

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Speaker 3: by saying, I just don't see why this is.

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Speaker 2: Going to change. And here we are two or three

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Speaker 2: days later.

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Speaker 3: Some of these are background charge and markets are being

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Speaker 3: led by the largest companies.

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Speaker 2: Well, how have ETFs changes in the fact that Mike

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Speaker 2: Green and I and Paul Sweeney. Yeah, I'm going back

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Speaker 2: to wheat for security now, way back. This is right

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Speaker 2: after the Confederacy pulled back comes Shenandoah Valley, and the

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Speaker 2: basic idea here is we used to rotate, blowney, we

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Speaker 2: don't rotate anymore. How have ETF's the dynamics changed that.

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Speaker 3: Well, it's interesting because you actually can see the rotation.

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Speaker 3: So immediately after Trump's election, we saw small caps take

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Speaker 3: off right and you saw the actual flows into things

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Speaker 3: like the IWM ETF. You can track the shares outstanding.

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Speaker 3: There's explosive buying of that. On this theory that we

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Speaker 3: should rotate, Well, guess what, once you've rotated.

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Speaker 2: What do you do next? Rotate?

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Speaker 3: And so small caps then saw people basically move away

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Speaker 3: from them, and the market went right back to doing

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Speaker 3: what it was doing before, which is the vast majority

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Speaker 3: of the flows are people who are not rotating, not

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Speaker 3: doing anything other than putting money in their paycheck into

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Speaker 3: the market on their four oh one case, on a

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Speaker 3: weekly basis or a bi weekly.

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Speaker 2: That's a second time you've mentioned that. I mean, the

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Speaker 2: financial media is ignoring Larry MacDonald was brilliant at this.

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Speaker 2: There's just this wall of money almost inputting into the

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Speaker 2: market on a daily basis, right, yeah, it really is.

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Speaker 3: And that money flows in and what is it by

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Speaker 3: the most of in Vidia, Apple, Microsoft, et cetera. Now

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Speaker 3: the relative shifts like things like in Vidia catching fire

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Speaker 3: and people waking up to it. That's actually exacerbated by

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Speaker 3: this because if you think about what ends up happening, right,

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Speaker 3: Tom Keen and his brilliance is like in video, it's

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Speaker 3: the future. I'm going to buy some of these shares. Well,

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Speaker 3: who's going to sell those shares to you? The passive

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Speaker 3: index fund will not sell those shares to you under

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Speaker 3: any conditions unless a general sellerator comes through. And so

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Speaker 3: you're competing with other people who are having the same insights.

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Speaker 3: That can cause that sort of sharp performance that we've seen.

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Speaker 3: But once it's there, it's kind of built in.

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Speaker 2: Mike Cree. One final question. You've got to get Michael

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Speaker 2: Barran here, but one final question. It is just simply

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Speaker 2: what do you say to our listeners and viewers in cash? Well?

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Speaker 3: This is a very challenging one, right because the fomo

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Speaker 3: component of watching your neighbor get rich is really really difficult.

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Speaker 2: I just keep emphasizing for.

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Speaker 3: People invest for what you need, not what your neighbor wants.

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Speaker 3: And the reality is is that we've got real interest

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Speaker 3: rates through tips and through duration at this point that

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Speaker 3: are attractive enough to allow many institutions and many households

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Speaker 3: to meet their objection their objectives in terms of retirements.

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Speaker 3: I just encourage people to make sure that you're thinking

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Speaker 3: about that income portion of your portfolio and recognizing that

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Speaker 3: the volatility that we are not seeing currently will eventually return.

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Speaker 2: Did you get enough time today? I did? Mike Green,

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Speaker 2: thank you so much. He's been in here, folks, like

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Speaker 2: three times. It's oh, Mike, I'm sorry you're on for

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Speaker 2: ninety seconds. That was great to have an extended conversation.

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Speaker 1: You're listening to the Bloomberg surveillance podcast. Catch US live

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Speaker 1: weekday afternoons from seven to ten am Eastern Listen on

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Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or

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Speaker 1: watch us live on YouTube.

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Speaker 2: We have to talk to Amanda Linum of Black Rock

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Speaker 2: about adult material. But we got to do this first.

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Speaker 2: This YouTube thing I'm doing and Paul's doing. Our heads

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Speaker 2: are spinning. It's all new. C and End's dealing with it.

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Speaker 2: Everybody's dealing with YouTube, and we have a team that's

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Speaker 2: been brilliant. The word they use, Paul our colin of

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Speaker 2: the Twins says discoverability. Oh okay, And the biggest thing

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Speaker 2: I did is I switched to YouTube premium. It's one

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Speaker 2: hundred and sixty seven dollars a year. If you pay annually,

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Speaker 2: it's ten bucks a month. One twenty. Amanda, you did

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Speaker 2: the same thing. What's the difference you perceive in YouTube

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Speaker 2: premium versus regular run rate YouTube?

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Speaker 6: I love it and thank you for having me because

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Speaker 6: I can want you guys on two times the speed

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Speaker 6: without the commercials. So I can stay informed. Yes, so

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Speaker 6: I can stay informed. But it takes half the time,

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Speaker 6: and it's amazing.

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Speaker 2: It takes half the time.

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Speaker 7: Exactly, But I can you guys are so good that

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Speaker 7: I can follow along had.

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Speaker 2: Years of fixed in coming analysis. When you're listening at

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Speaker 2: two times the speed, how will you listen to Joe Prowl?

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Speaker 2: That's an idea the press conference in two times speedly,

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Speaker 2: what are you going.

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Speaker 7: To listen for today? I'm going to listen for two things.

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Speaker 6: One do we still think that policy is meaningfully restrictive?

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Speaker 6: And then two, what is the bar for cutting rates?

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Speaker 6: Is improvement and inflation enough for them to cut rates

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Speaker 6: or do they actually need to see further cooling in

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Speaker 6: the labor market. I think that will tell us a

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Speaker 6: bit about the forward path. I'm not expecting really a

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Speaker 6: cut to be on the table even in the March meeting,

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Speaker 6: because the January seasonality and inflation will probably distort the

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Speaker 6: numbers of But I do think that as we move

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Speaker 6: towards the second half of the year, we'll want to

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Speaker 6: see what the next action is in terms of an

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Speaker 6: extended pause or a cut across.

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Speaker 4: The fixed income community. This year to date, just so

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Speaker 4: far here in January, we have some positive returns here

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Speaker 4: led by high yield. What does the macro credit call

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Speaker 4: for you guys in twenty twenty five?

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Speaker 6: So I think the lesson from twenty twenty four is

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Speaker 6: that there was an opportunity cost to being too defensive,

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Speaker 6: and really our view on credit in twenty twenty fives

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Speaker 6: you just have to be very clear on why you're

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Speaker 6: buying credit. We're recommending that investors buy credit for carry

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Speaker 6: and for yield, not for the total return boost from,

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Speaker 6: for example, tightening and spreads or decline in rates. Spreads

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Speaker 6: are already quite tight, so there's not a ton of

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Speaker 6: room for absolute spread tightening from here. And our base

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Speaker 6: case is that structurally higher interest rates will prevail.

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Speaker 7: So if we do get.

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Speaker 6: A boost to total returns from those typical drivers and

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Speaker 6: total returns, that would be a bonus. But actually were

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Speaker 6: we see a pretty compelling opportunity from the all in

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Speaker 6: yield perspective and corporate credit.

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Speaker 4: How do you feel about investment grade versus high yield?

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Speaker 6: Yeah, I actually am comfortable moving down the quality spectrum.

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Speaker 6: I would say for investors that can only play in

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Speaker 6: investment grade, triple b's are a nice option for that.

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Speaker 6: So moving down in the quality spectrum, I would say.

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Speaker 6: The big takeaway over the past few years, frankly, is

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Speaker 6: that there's a lot more fluidity between these markets. Actually,

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Speaker 6: if you look at credit metrics, between the high end

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Speaker 6: of high yield and the low end of IG, either're converging.

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Speaker 6: There's not a steep of a penalty for a company

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Speaker 6: to fall from IG to high yield. We're just seeing

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Speaker 6: a lot more of the blurring of the lines, and

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Speaker 6: so that line of demarcation between IG and high yield.

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Speaker 7: Is much less punitive than it used to be. We

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Speaker 7: actually like moving down in quality now.

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Speaker 6: I would say when you get into things like triple c's,

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Speaker 6: especially on triple C loans have underperformed because of certain

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Speaker 6: technicals related to colos and rating sensitivity, you have to

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Speaker 6: tread a bit carefully.

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Speaker 7: But in general we like credit risk.

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Speaker 6: And I looked at the Atlanta FED GDP now three

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Speaker 6: point two percent, solidly above trend, and so that's the

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Speaker 6: key for credit is the growth I totally.

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Speaker 2: This is my main theory. Is the number one thing

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Speaker 2: we've been wrong on has been the growth story is

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Speaker 2: a continuum. Does black Rock believe the growth story continues?

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Speaker 2: We do.

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Speaker 6: And I would say the one sign post to watch

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Speaker 6: because I think amid all of this uncertainty and volatility,

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Speaker 6: we just need to know what to watch for the

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Speaker 6: growth story has been hinged on the US consumer remaining resilient.

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Speaker 6: The pockets of weakness that we've seen have really been

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Speaker 6: confined to the low end. That's because the labor market

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Speaker 6: is in this kind of low hiring but low firing environment.

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Speaker 6: I think the key time for that to change is

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Speaker 6: that if corporates start flexing the layoff tool more aggressively,

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Speaker 6: that might allow the weakness in the consumer to extend

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Speaker 6: beyond that lower income cohort. And I think that could

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Speaker 6: be the risk to the US economy because we know

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Speaker 6: the consumer generates two thirds of GDP.

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Speaker 2: Paul Swedy Craig tourist joining us here in the nine

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Speaker 2: o'clock on that lower core. He's got some brilliant research.

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Speaker 4: Man, Are there some sectors that screen well for you

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Speaker 4: guys right now?

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Speaker 7: Folks still like financials.

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Speaker 6: I think when you think about some of the tailwes

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Speaker 6: in terms of a rebound in capital markets, activity, steeper

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Speaker 6: yield curve of you know, deregulation, possibly less exposure to

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Speaker 6: kind of global trade tensions.

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Speaker 4: Sally support their earnings on a Monday. They come out

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Speaker 4: Tuesday with these huge bomb offerings.

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Speaker 7: Do you pick up the phone?

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Speaker 6: There the new Yeah, the new issue market is a

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Speaker 6: really attractive way to put capital to work because those

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Speaker 6: deals often come at a spread concession, right, So that's

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Speaker 6: a that's a way that investors can kind of participate

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Speaker 6: in new issue pricings. Financials are a massive part of

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Speaker 6: the investment grade in next but even outside of financials,

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Speaker 6: I think there are a lot of sectors.

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Speaker 2: Career mortals buy new issue paper or is it like

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Speaker 2: the junior members of Blackguard? No, you can't have that,

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Speaker 2: Amanda has it.

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Speaker 7: The new issue markets are are wide open.

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Speaker 6: And actually, what we've seen, even with some of the

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Speaker 6: volatility in recent weeks, is that deals are multiple times oversubscribed,

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Speaker 6: trading well on the break.

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Speaker 7: And so those four times yeah.

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Speaker 6: So I think that's really and there's been some consternation

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Speaker 6: in the markets, obviously with some of the news flow

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Speaker 6: and whether or not we should read this to be

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Speaker 6: risk off. In terms of the rally treasuries that we saw,

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Speaker 6: credit spreads were incredibly well behaved, and in fact, the

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Speaker 6: modest widening that we saw on Monday has for the

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Speaker 6: most part been completely retraced.

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Speaker 2: Are yields now normal? This is a huge cultural question.

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Speaker 2: Are we getting back to normal or do you see

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Speaker 2: it vector towards lower end.

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Speaker 6: Yes, So our expectation is for a normalizing monetary policy cycle,

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Speaker 6: not an easing cycle. So on the front end policy rate,

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Speaker 6: we are not expecting to retrace to the zero lower

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Speaker 6: bound that was in place for much of the post

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Speaker 6: financial crisis era. At the long end of the curve,

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Speaker 6: we expect structurally higher rates there as well because of

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Speaker 6: an increase in term premium.

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Speaker 7: Focus on budget deficits.

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Speaker 6: So yes, I think we are in this high for

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Speaker 6: longer interest rate environment. However, corporates have been navigating this.

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Speaker 6: They've been refinancing into this new regime. They've been taking

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Speaker 6: actions to protect margins where they can to compensate for

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Speaker 6: higher deck costs. So it hasn't been as disruptive as

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Speaker 6: many market participants expected.

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Speaker 2: The next time you watch YouTube premium you put it

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Speaker 2: on three times.

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Speaker 7: I don't think actually that's an often Tom.

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Speaker 6: I think actually the max is too, So we're we're

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Speaker 6: at max.

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Speaker 2: Slow at that. Yes, Amandoliin and thank you so much

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Speaker 2: for your support through the year. Blue with black Rock

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Speaker 2: and mand Lenman had a macro credit research. You know,

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Speaker 2: he's smart, smart and where we're going to are you

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Speaker 2: and Jeff Rosenberg on speaking to him.

439
00:20:24,920 --> 00:20:25,800
Speaker 7: Of course he's wonderful.

440
00:20:25,840 --> 00:20:29,240
Speaker 2: Yes, it's wonderful. It's just good. He's up to four

441
00:20:29,280 --> 00:20:30,600
Speaker 2: people of Black Rocket like him.

442
00:20:30,640 --> 00:20:31,400
Speaker 4: It's nice.

443
00:20:31,400 --> 00:20:32,040
Speaker 2: It's amazing.

444
00:20:32,160 --> 00:20:34,560
Speaker 4: You know, it's much over in huts and yards with

445
00:20:34,640 --> 00:20:35,200
Speaker 4: the cool kids.

446
00:20:35,240 --> 00:20:38,639
Speaker 2: Now, oh really yeah? So so like the shop, is

447
00:20:38,640 --> 00:20:40,879
Speaker 2: it like painful? Because you want to shop?

448
00:20:41,440 --> 00:20:44,960
Speaker 7: It's beautiful, brand new, it's it's lovely. You should come over.

449
00:20:45,040 --> 00:20:47,840
Speaker 2: What's your favorite store there? What's the unknown store?

450
00:20:47,840 --> 00:20:51,359
Speaker 7: Too many to choose Tom Studio.

451
00:20:51,680 --> 00:20:56,800
Speaker 6: Yeah, there's a very Yeah, there's a lot of there's

452
00:20:56,800 --> 00:20:57,479
Speaker 6: a lot to choose from.

453
00:20:57,640 --> 00:21:01,640
Speaker 2: So you're you're walking around at leven Yeah, no, that's

454
00:21:01,680 --> 00:21:04,600
Speaker 2: not a good look. No, no one you think. Could

455
00:21:04,640 --> 00:21:07,760
Speaker 2: you see me in Lulu eleven Tights control room just

456
00:21:08,520 --> 00:21:11,840
Speaker 2: turning green? Amandolne, thank you so much for your support

457
00:21:12,160 --> 00:21:12,960
Speaker 2: with Black Red.

458
00:21:13,440 --> 00:21:17,360
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

459
00:21:17,400 --> 00:21:20,800
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

460
00:21:20,800 --> 00:21:23,800
Speaker 1: with the Bloomberg Business app. You can also listen live

461
00:21:23,840 --> 00:21:27,439
Speaker 1: on Amazon Alexa from our flagship New York station, Just

462
00:21:27,480 --> 00:21:30,000
Speaker 1: say Alexa play Bloomberg eleven thirty.

463
00:21:30,160 --> 00:21:32,639
Speaker 2: It is FED day with many distractions. I thought the

464
00:21:32,680 --> 00:21:36,120
Speaker 2: Microsoft and video thing there we just did was interesting.

465
00:21:36,240 --> 00:21:39,320
Speaker 2: Cam Dawson was lights many other guests today, But we

466
00:21:39,400 --> 00:21:43,520
Speaker 2: need to get back to the foundation of American macro strategy.

467
00:21:44,080 --> 00:21:47,439
Speaker 2: George Congalfis joins us right now from m UFG on

468
00:21:47,480 --> 00:21:50,320
Speaker 2: this FED day. Where are we going to be at

469
00:21:50,359 --> 00:21:52,760
Speaker 2: four o'clock, Georgia. And I don't mean like trying to

470
00:21:52,800 --> 00:21:57,560
Speaker 2: guess the press conference, but if it's a snooze fest,

471
00:21:57,760 --> 00:22:01,239
Speaker 2: I don't buy it. What will you listen to for

472
00:22:01,480 --> 00:22:06,720
Speaker 2: excitement in the press conference today? Good morning?

473
00:22:06,720 --> 00:22:09,439
Speaker 8: And look, I do think that as much as we

474
00:22:10,040 --> 00:22:12,679
Speaker 8: tend to think of FED events as these potential market

475
00:22:12,720 --> 00:22:15,480
Speaker 8: moving days, and they usually are, I think this is

476
00:22:15,560 --> 00:22:18,520
Speaker 8: one where it's the first meeting of the year. It's

477
00:22:18,560 --> 00:22:21,200
Speaker 8: the first meeting under the new Trump administration two point

478
00:22:21,280 --> 00:22:23,879
Speaker 8: zero world that we're in, and I really don't see

479
00:22:23,920 --> 00:22:27,760
Speaker 8: why Chairpal would want to convey anything that ruffles any feathers.

480
00:22:27,760 --> 00:22:30,320
Speaker 8: And I really do think that they're gonna just stick

481
00:22:30,359 --> 00:22:33,639
Speaker 8: to the script around DAT dependency and that they've largely

482
00:22:33,680 --> 00:22:35,840
Speaker 8: achieved a lot of their goals, but they're gonna this

483
00:22:35,840 --> 00:22:37,280
Speaker 8: is gonna be the first meeting by the way, they're

484
00:22:37,280 --> 00:22:39,840
Speaker 8: gonna skip in the normalization process. They cut one hundred

485
00:22:39,880 --> 00:22:42,240
Speaker 8: basis points last year. This will be the first skip.

486
00:22:42,320 --> 00:22:45,000
Speaker 8: So I think it's gonna be about explaining, like what

487
00:22:45,119 --> 00:22:46,920
Speaker 8: is the game plan for the coming months.

488
00:22:47,359 --> 00:22:51,080
Speaker 4: Will there be any language to suggest that they are

489
00:22:51,080 --> 00:22:54,359
Speaker 4: not committed to further rate cuts data dependent?

490
00:22:54,440 --> 00:22:54,760
Speaker 8: Of course?

491
00:22:54,760 --> 00:22:56,919
Speaker 4: Will there be any language suggests, hey, maybe there are

492
00:22:56,960 --> 00:23:00,440
Speaker 4: scenarios where we sit pat or maybe even rates.

493
00:23:01,560 --> 00:23:06,480
Speaker 8: Yeah, Look, we're we're leaning towards a very neutral message

494
00:23:06,560 --> 00:23:09,000
Speaker 8: out of chair Palell and just from the general statement

495
00:23:09,040 --> 00:23:11,120
Speaker 8: as well. I think it's too early to make that call.

496
00:23:11,840 --> 00:23:14,040
Speaker 8: That would be a surprise, definitely if they come out

497
00:23:14,119 --> 00:23:17,280
Speaker 8: come across as that the normalisition process was is a

498
00:23:17,320 --> 00:23:19,760
Speaker 8: done deal and it's gonna take it's and the bar

499
00:23:19,800 --> 00:23:21,560
Speaker 8: has been raised. I think that they don't want to

500
00:23:21,600 --> 00:23:23,399
Speaker 8: limit themselves so early on in the year, and so

501
00:23:23,480 --> 00:23:24,639
Speaker 8: I don't think that's the case.

502
00:23:25,560 --> 00:23:27,840
Speaker 4: So where do we think about just kind of macro

503
00:23:28,080 --> 00:23:32,440
Speaker 4: strategy here, given that backdrop, George, as we think about stocks, bonds, commodities,

504
00:23:32,440 --> 00:23:35,119
Speaker 4: where's your what's the macro call from you guys in

505
00:23:35,160 --> 00:23:36,680
Speaker 4: the beginning part of twenty twenty five.

506
00:23:37,160 --> 00:23:39,480
Speaker 8: Look, I mean, I think it's a it's a wait

507
00:23:39,520 --> 00:23:43,320
Speaker 8: and see staying very tactical, not really super strategic at

508
00:23:43,359 --> 00:23:46,359
Speaker 8: this point. It's it's really trying to understand what a

509
00:23:46,400 --> 00:23:49,440
Speaker 8: delay of the land going forward, and there's there's a

510
00:23:49,480 --> 00:23:51,119
Speaker 8: lot of jumper risk, there's a lot of uncertainty, and

511
00:23:51,160 --> 00:23:52,120
Speaker 8: we're still kind of going through.

512
00:23:52,480 --> 00:23:55,359
Speaker 2: I think it's I mean, George, don't go with that.

513
00:23:55,359 --> 00:23:58,919
Speaker 2: You're gonna grab the coupon and wait and see. But

514
00:23:59,040 --> 00:24:01,880
Speaker 2: what do you do down short term paper? Our listeners

515
00:24:01,880 --> 00:24:05,399
Speaker 2: and viewers in cash in three months they got the

516
00:24:05,440 --> 00:24:09,920
Speaker 2: Sweeney two year CD whatever. I mean, at that short duration,

517
00:24:10,920 --> 00:24:13,080
Speaker 2: you know, you can take the coupon, but you got

518
00:24:13,080 --> 00:24:15,720
Speaker 2: to make a call here, what does short duration do?

519
00:24:17,760 --> 00:24:20,240
Speaker 8: Look, I think that fixed Ittom still on the buy

520
00:24:20,280 --> 00:24:22,919
Speaker 8: and dips makes a lot of sense. We had that

521
00:24:23,400 --> 00:24:26,520
Speaker 8: rise in rates, it was unsustained, and as long as

522
00:24:26,520 --> 00:24:29,840
Speaker 8: that's the case, I think that we're okay with, you know,

523
00:24:29,880 --> 00:24:31,520
Speaker 8: buying on dips. But the problem is that we don't

524
00:24:31,560 --> 00:24:33,159
Speaker 8: have a dip right now. We're actually at the bottom

525
00:24:33,200 --> 00:24:35,320
Speaker 8: of the ranges, and I think we would like want

526
00:24:35,359 --> 00:24:37,920
Speaker 8: to look for either if data gets stronger in Q one,

527
00:24:38,080 --> 00:24:41,320
Speaker 8: if there are those animal spirits, the euphoria post election.

528
00:24:41,400 --> 00:24:44,080
Speaker 8: If they translate into activity, then rates are gonna go

529
00:24:44,119 --> 00:24:45,640
Speaker 8: back up again, and then that might be a chance

530
00:24:45,680 --> 00:24:46,000
Speaker 8: to buy.

531
00:24:47,119 --> 00:24:51,600
Speaker 4: So, George, where are where's your asset allocation these days?

532
00:24:51,640 --> 00:24:54,960
Speaker 4: I mean, and has it changed in recent period?

533
00:24:56,400 --> 00:24:56,600
Speaker 2: Yeah?

534
00:24:56,640 --> 00:24:59,680
Speaker 8: So, look, we've been more defensive. I mean, credit I

535
00:24:59,680 --> 00:25:02,480
Speaker 8: think is basically priced in all the good news. You know,

536
00:25:02,520 --> 00:25:05,679
Speaker 8: you kind of neutral to on credit and mortgages are

537
00:25:05,680 --> 00:25:07,879
Speaker 8: probably that's still the one fixing come massa class that

538
00:25:07,920 --> 00:25:10,320
Speaker 8: has the most value, but it's at the mercy of

539
00:25:10,720 --> 00:25:13,000
Speaker 8: rate volatility in the shape of the yield curve until

540
00:25:13,000 --> 00:25:15,880
Speaker 8: we get more clarity on that. Mortgages are a good

541
00:25:15,960 --> 00:25:18,360
Speaker 8: product to buy, but really not the real time.

542
00:25:18,160 --> 00:25:19,040
Speaker 2: To do it at this point.

543
00:25:19,400 --> 00:25:22,320
Speaker 8: And so we're gonna be a relative defensive and looking

544
00:25:22,359 --> 00:25:24,040
Speaker 8: for for yield charge.

545
00:25:24,119 --> 00:25:26,159
Speaker 2: We'll tauch you at four pm. See if the world's

546
00:25:26,160 --> 00:25:28,399
Speaker 2: blown up church can call us with this out of

547
00:25:28,520 --> 00:25:30,760
Speaker 2: us macro strategy MUFG.

548
00:25:36,840 --> 00:25:40,719
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

549
00:25:40,800 --> 00:25:44,199
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

550
00:25:44,200 --> 00:25:47,040
Speaker 1: with the Bloomberg Business app. You can also watch us

551
00:25:47,080 --> 00:25:51,000
Speaker 1: live every weekday on YouTube and always on the Bloomberg terminal.

552
00:25:51,280 --> 00:25:53,399
Speaker 2: It is the newspaper, is it daily? Look at the

553
00:25:53,400 --> 00:25:56,639
Speaker 2: front pages at listam tall O moment, Lisa, what do

554
00:25:56,640 --> 00:25:56,879
Speaker 2: you have?

555
00:25:57,160 --> 00:25:58,639
Speaker 5: Okay, Tom, you're not gonna like this one.

556
00:25:58,680 --> 00:25:59,119
Speaker 7: I'm sorry.

557
00:25:59,200 --> 00:26:01,879
Speaker 5: This is in the New York Times national test scores

558
00:26:01,880 --> 00:26:05,400
Speaker 5: showing that the reading skills of American students continuing to fall.

559
00:26:06,200 --> 00:26:08,120
Speaker 5: Let me get to the numbers real quickly. The percentage

560
00:26:08,119 --> 00:26:10,959
Speaker 5: of eighth graders who have below basic reading skills, it

561
00:26:11,000 --> 00:26:13,359
Speaker 5: was the largest it's been in the exams three decade

562
00:26:13,440 --> 00:26:16,280
Speaker 5: in history. That's thirty three percent. It was forty percent

563
00:26:16,359 --> 00:26:19,359
Speaker 5: for fourth graders. There was some progress in math, but

564
00:26:19,480 --> 00:26:22,640
Speaker 5: it didn't just offset those losses. But the interesting thing

565
00:26:22,920 --> 00:26:25,879
Speaker 5: is the reason why the experts feel like this is happening.

566
00:26:25,920 --> 00:26:28,520
Speaker 5: They're just saying the increased screen time, more kids on

567
00:26:28,560 --> 00:26:32,000
Speaker 5: their phone, social media, school absences, all, you know, those

568
00:26:32,080 --> 00:26:35,520
Speaker 5: kind of distractions. They're watching more videos on their phone,

569
00:26:35,560 --> 00:26:37,320
Speaker 5: so they're reading less. You know, they're watching the video.

570
00:26:37,680 --> 00:26:40,719
Speaker 4: I'm I'm in the same pump. Yeah, I mean all

571
00:26:40,760 --> 00:26:42,080
Speaker 4: the time. I used to.

572
00:26:42,480 --> 00:26:44,000
Speaker 7: Yeah, we adults too.

573
00:26:44,040 --> 00:26:44,640
Speaker 5: I know it's true.

574
00:26:44,760 --> 00:26:48,840
Speaker 2: I see the books stacked up an afterthoughts, bedroom unread

575
00:26:49,680 --> 00:26:53,639
Speaker 2: and what I know? Is there something about finishing a

576
00:26:53,760 --> 00:26:56,280
Speaker 2: book it's gone.

577
00:26:57,240 --> 00:26:58,640
Speaker 5: I think it's the attention span.

578
00:26:59,040 --> 00:27:02,360
Speaker 2: I'm trying to do it. Example, I'm reading Rusher Sharma

579
00:27:02,480 --> 00:27:06,679
Speaker 2: right now, folks, fabulous book and capitalism. I'm reading David

580
00:27:06,760 --> 00:27:09,640
Speaker 2: McCullough on Paris just because I need to buy six

581
00:27:09,680 --> 00:27:13,440
Speaker 2: thousand square feet on the river sin blah blah blah. Paul,

582
00:27:13,480 --> 00:27:18,080
Speaker 2: you're reading books. The answer is, I'm trying by example

583
00:27:18,200 --> 00:27:22,119
Speaker 2: to show them to go cover to cover. It ain't working.

584
00:27:22,560 --> 00:27:23,840
Speaker 2: I'm going down in flames.

585
00:27:23,920 --> 00:27:26,040
Speaker 5: It's hard, but that's what they're saying. Because the screen

586
00:27:26,080 --> 00:27:28,199
Speaker 5: times are causing them to have less attention span. They

587
00:27:28,200 --> 00:27:31,000
Speaker 5: can't sit and finish a book and finish reading what

588
00:27:31,040 --> 00:27:31,920
Speaker 5: they're supposed.

589
00:27:31,560 --> 00:27:33,879
Speaker 2: To be reading. It's a huge deal. I don't know

590
00:27:33,920 --> 00:27:34,640
Speaker 2: what to do with it.

591
00:27:34,640 --> 00:27:35,280
Speaker 5: It's a big one.

592
00:27:35,560 --> 00:27:39,280
Speaker 2: I'm depressed. One. I got to go check TikTok.

593
00:27:39,400 --> 00:27:43,919
Speaker 5: Yeah, this wasn't interesting from the Wall Street Journal, New

594
00:27:44,000 --> 00:27:46,479
Speaker 5: York City co Ops not the status symbol that they

595
00:27:46,600 --> 00:27:49,000
Speaker 5: used to be. It has this really interesting read into it.

596
00:27:49,040 --> 00:27:52,520
Speaker 5: These are buildings that you know, sylmbolize this old money elegance, right,

597
00:27:52,560 --> 00:27:55,840
Speaker 5: we're talking about Park at Fifth Avenue, even Central Park West,

598
00:27:55,880 --> 00:27:58,520
Speaker 5: all those co ops because they're saying, younger buyers, they

599
00:27:58,520 --> 00:28:02,520
Speaker 5: want newer, flash your buildings downtown, they want to go downtown.

600
00:28:02,520 --> 00:28:04,600
Speaker 5: A lot of the colt buildings they're older, they're built

601
00:28:04,600 --> 00:28:07,840
Speaker 5: in the nineteen twenties. And then they're choosing the condos

602
00:28:07,920 --> 00:28:09,360
Speaker 5: have fewer rules because the.

603
00:28:09,320 --> 00:28:12,320
Speaker 7: Co ops have a lot the co op process.

604
00:28:12,119 --> 00:28:14,000
Speaker 5: Than the co op process. I'm reading about it.

605
00:28:14,000 --> 00:28:16,720
Speaker 2: It's I applied to a co op, did you get

606
00:28:16,840 --> 00:28:19,359
Speaker 2: fancy one? Like? You know, I would have been the

607
00:28:19,400 --> 00:28:22,639
Speaker 2: poorest person in the building, and I was. I was

608
00:28:22,720 --> 00:28:25,159
Speaker 2: insulted by what they wanted from me.

609
00:28:25,680 --> 00:28:28,200
Speaker 7: I said, no way, And that's that's what a lot

610
00:28:28,200 --> 00:28:28,720
Speaker 7: of people do.

611
00:28:29,200 --> 00:28:32,200
Speaker 2: My entire tax return and that was a year where

612
00:28:32,280 --> 00:28:34,040
Speaker 2: Vet Bill, you know, I had a business that went

613
00:28:34,119 --> 00:28:36,680
Speaker 2: under someone's like fifty four pages, said you know, I'm

614
00:28:36,720 --> 00:28:37,320
Speaker 2: not doing that.

615
00:28:37,480 --> 00:28:39,000
Speaker 5: Yeah, they could order to pay all cashs.

616
00:28:39,040 --> 00:28:41,400
Speaker 2: It's also that they're new and slick in their downtown.

617
00:28:42,640 --> 00:28:46,360
Speaker 2: I mean, it's not just co op. Right, squeeze in

618
00:28:46,400 --> 00:28:46,680
Speaker 2: one more?

619
00:28:46,880 --> 00:28:47,440
Speaker 7: Okay, one more?

620
00:28:47,480 --> 00:28:51,440
Speaker 5: Oh, this one's a dagger Pooksatani Phil's groundhog Day job

621
00:28:51,640 --> 00:28:56,440
Speaker 5: would be in jeopardy. Okay, Peter is suggesting a vegan.

622
00:28:56,480 --> 00:28:57,920
Speaker 7: Weather revealed cake.

623
00:29:00,080 --> 00:29:02,240
Speaker 5: You would love this because they want to retire him

624
00:29:02,280 --> 00:29:04,880
Speaker 5: to a sanctuary. That's what they're asking. They're saying, Phil,

625
00:29:05,160 --> 00:29:09,680
Speaker 5: he's exploited. He would be happier living in his natural habitat.

626
00:29:10,360 --> 00:29:13,200
Speaker 5: So the blue would mean six more weeks of winter.

627
00:29:13,360 --> 00:29:15,760
Speaker 5: The pink would mean an early spring. And that's how

628
00:29:15,880 --> 00:29:19,800
Speaker 5: the cake, the vegan cake would work instead of pusatani.

629
00:29:19,600 --> 00:29:21,800
Speaker 2: Disappoint Can the president do something about this?

630
00:29:23,000 --> 00:29:26,960
Speaker 5: In here ground Homeday, Sunday, Sunday Sunday.

631
00:29:27,440 --> 00:29:31,000
Speaker 4: Okay, Okay, that's why I know what this arm is

632
00:29:31,040 --> 00:29:31,840
Speaker 4: gonna say.

633
00:29:32,880 --> 00:29:34,440
Speaker 5: I've been there reporting.

634
00:29:37,400 --> 00:29:37,720
Speaker 2: Section.

635
00:29:37,960 --> 00:29:39,720
Speaker 7: You know that I was there at the.

636
00:29:39,720 --> 00:29:42,200
Speaker 2: Statue of our mayors have their handbit.

637
00:29:42,920 --> 00:29:44,160
Speaker 5: I actually did.

638
00:29:45,400 --> 00:29:50,160
Speaker 2: He was there for that one. The beast.

639
00:29:52,280 --> 00:29:53,040
Speaker 5: Hell together.

640
00:29:53,160 --> 00:29:53,920
Speaker 7: It was very impressive.

641
00:29:54,120 --> 00:29:56,480
Speaker 2: Hold on your badge, Lisa, Thank you so much, The

642
00:29:56,600 --> 00:29:59,520
Speaker 2: Newspapers with Lisa Matteo.

643
00:30:00,000 --> 00:30:04,760
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,

644
00:30:04,920 --> 00:30:08,680
Speaker 1: and anywhere else you get your podcasts. Listen live each

645
00:30:08,720 --> 00:30:12,280
Speaker 1: weekday seven to ten am Eastern on Bloomberg dot com,

646
00:30:12,720 --> 00:30:16,480
Speaker 1: the iHeartRadio app, Tune in and the Bloomberg Business app.

647
00:30:16,800 --> 00:30:19,880
Speaker 1: You can also watch us live every weekday on YouTube

648
00:30:20,240 --> 00:30:22,200
Speaker 1: and always on the Bloomberg terminal