Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern
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Speaker 2: This is a joy because we keep very much track
Speaker 2: of people with short Oh, Mike Green, I'm sorry, we
Speaker 2: got breaking news. You're gonna be on for a minute
Speaker 2: and a half. So this morning, I don't care if
Speaker 2: there's breaking news now, we're not gonna go to it.
Speaker 2: We're gonna go to Mike Green here to get some good,
Speaker 2: good analysis about what's going on. Of course, with Simplify
Speaker 2: asset management, I look at the Washington postfeed, the New
Speaker 2: York Times feed. It's nuts out there. How do you
Speaker 2: synthesize the chaos over into just remain calm to execute
Speaker 2: investment process?
Speaker 3: Well, I think all of us are kind of hoping
Speaker 3: that that chaos that you're describing is just the flurry
Speaker 3: of blows that comes out from an aggressive boxer in
Speaker 3: the first round, and that eventually it settles down. But
Speaker 3: it is remarkable when you kind of look at what's
Speaker 3: happening We used to wake up to market volatility and
Speaker 3: look to the politics to explain it, and instead today
Speaker 3: we're looking at political volatility and the markets remain totally sanguine.
Speaker 2: I think a lot of it is just we don't
Speaker 2: know what to do, right may I look at it.
Speaker 2: I don't know if you know this, but Lisa's newspapers
Speaker 2: at the back end of the seven o'clock hour that's
Speaker 2: funded by an NGO, a government thing, and the answer
Speaker 2: is like, even NGOs, our guests are unfunded right now.
Speaker 3: Yeah, so this is the key question. Now, a federal
Speaker 3: judge just put a stay on this for a week.
Speaker 3: We'll find out on Monday what the ultimate decision is
Speaker 3: around this, or at least what the next step in
Speaker 3: the process. But yeah, this decision to stop funding the NGOs,
Speaker 3: et cetera, in pursue of basically making sure that Trump's
Speaker 3: executive orders are enforced. It's gonna be one of many questions.
Speaker 3: We don't know how many payrolls camp be met. We
Speaker 3: don't know how many different firms are ultimately going to
Speaker 3: be affected by this, how many commercial real estate properties
Speaker 3: that are currently housing people are suddenly going to be
Speaker 3: faced with their bills on paid.
Speaker 2: We just don't know is.
Speaker 4: The best advice for an investor to try to ignore
Speaker 4: the noise and focus on the fundamentals. Where we have
Speaker 4: earnings this week, maybe that's really what matters.
Speaker 3: Well, we do have earnings, and I heard earlier the
Speaker 3: commentary about, you know, we're excited that ASML's orders are
Speaker 3: off the charts. But remember ASML's reporting off of a
Speaker 3: December quarter deep seat came out on this this past week,
Speaker 3: we've also known that this was kind of the case, right.
Speaker 3: This is very much like the development of you know,
Speaker 3: multiple signals and amplification that happened in fiber optics that
Speaker 3: change the tone around fiber optics.
Speaker 2: I got to go here. Alisa helped me out here,
Speaker 2: T mobiles out well, Lisa's one of Lisa's entourage, whispered
Speaker 2: in my ear, go to our inn T mobile. I
Speaker 2: mean it's plus plus two twenty one and it's up seven.
Speaker 5: Dollars now, yeah, earning smash expectations for it. So I
Speaker 5: wanted to look, let's check in Core.
Speaker 2: Do you know I pay a mortgage payment to remember
Speaker 2: Vince Ferrell. Vince Ferrell was just such a great supporter
Speaker 2: of Bloomberg surveillance. I miss him every day. We lost
Speaker 2: Vince Ferrell way too long. We used to sit in
Speaker 2: tears in the radio studio with Ken Pruitt and try
Speaker 2: to figure out how many children their phone bills we
Speaker 2: were paying and with t good Morning tea mobile mortgage payment? Help, Pa?
Speaker 2: Why did you keep us going with Mike cream? Hey Mike,
Speaker 2: So we sit here.
Speaker 4: We had twenty twenty three and twenty twenty four both
Speaker 4: north of twenty percent returns on the S and P
Speaker 4: five hundred. How do you think about twenty twenty five
Speaker 4: going into the year? I mean, should we just temper
Speaker 4: that and hope for a single digit return? How do
Speaker 4: you think about it?
Speaker 3: Well, I'm often reminded of an event in late nineteen
Speaker 3: ninety nine when I asked my mother in law, you know,
Speaker 3: she'd had a phenomenal nineteen ninety nine. I said, you
Speaker 3: know what if stocks were up fifteen percent in two thousand,
Speaker 3: would you be surprised? Yeah, I'd be really surprised. I'm like, well,
Speaker 3: then why not take something off the table? And her
Speaker 3: reaction was, I'd be very surprised if they were only
Speaker 3: up fifteen perccon right, So we're if you actually look
Speaker 3: at what's happening in the market on a year to
Speaker 3: day basis, a lot of the not mag seven stocks
Speaker 3: in videos, the non in videos instead.
Speaker 2: Of the world, they're up sharply.
Speaker 3: The Dow is up almost eight percent ye before the
Speaker 3: first month of the year is out of the way,
Speaker 3: so it's hard to argue this is going to be
Speaker 3: another calumn year.
Speaker 4: We're going to hear from the Fed today Tom Keen
Speaker 4: and the Surrounds team of full coverage starting a one
Speaker 4: thirty pm Wall Street time. What do you should we
Speaker 4: expect anything from the Fed this year or just kind
Speaker 4: of sit on the signlines and follow the data.
Speaker 3: You know, this is we definitely want to follow the data.
Speaker 3: But one of the things that I think is really
Speaker 3: critically is the market is only pricing about a ten
Speaker 3: percent probability of a cut at this meeting. They're pricing
Speaker 3: very low probability of the idea of a hike throughout
Speaker 3: the year. That's backed off since obviously in video. But
Speaker 3: if we look at that commentary that's going to come out,
Speaker 3: this is where we're really going to find out what
Speaker 3: the Fed is thinking. Agree, So we aren't going to
Speaker 3: know what the press release. We know what's going to
Speaker 3: happen the market. The FED is not going to surprise
Speaker 3: the market there. Whether Palell chooses to react to the
Speaker 3: first week of the Trump administration in terms of answering questions,
Speaker 3: implications of it, inflation concerns, we genuinely just don't know.
Speaker 2: I totally agree, totally agree. I just I just refuse
Speaker 2: to believe it's a snooze fest with all that's going
Speaker 2: on politically, and why you to treat Mike Green with
Speaker 2: us to simplify, we continue here an extended conversation to
Speaker 2: begin at your day. Many other worthies coming up at
Speaker 2: the FED meeting and on the equity markets. Cam Dawson
Speaker 2: will be with us later as well. The nastic Paul
Speaker 2: up four tenths of a percent right now.
Speaker 4: So, Michael, what do you expect here for earnings? If
Speaker 4: if I've got a FED that's going to be the
Speaker 4: kind of quiecent we're going to say for twenty twenty five,
Speaker 4: maybe one, maybe two great rate cuts. That puts a
Speaker 4: lot of pressure on earnings, doesn't it.
Speaker 3: It does put pressure on earnings. And one of the
Speaker 3: most important areas that puts pressure on earnings is actually
Speaker 3: from not the leading companies, those companies that are flush
Speaker 3: and cash, et cetera, but those companies that are now
Speaker 3: facing refinancing. So if we look at things like the
Speaker 3: high Yield Index, we've actually seen credit spreads compress. Many
Speaker 3: of these companies have not refinanced that paper from the
Speaker 3: twenty twenty twenty twenty one time period. You're now approaching
Speaker 3: that maturity wall. And when these companies refinanced, even though
Speaker 3: credit spreads are tight, the absolute level of interest rates
Speaker 3: are a lot higher. So in many of these companies,
Speaker 3: you're talking about going from four to four and a
Speaker 3: half percent coupons to seven to seven and a half
Speaker 3: or eight percent coupons.
Speaker 2: Ma Green, how do you perceive Apple? On Monday, we
Speaker 2: had a total full scale panic and everybody turned to
Speaker 2: Cooper Tino and said, they're not doing the capex ballet.
Speaker 2: Is that a heritage from Steve Jobs? Is that a
Speaker 2: Tim Cook thing? Or is it blind luck Well.
Speaker 3: I think it's a combination of components. So Apple has
Speaker 3: always been a capital intensive, light business. They've always chosen
Speaker 3: to outsource their manufacturing while keeping control of their intellectual property.
Speaker 3: But I think the much more important message is nobody
Speaker 3: lost their job on Monday, and so four oh one
Speaker 3: k flows continue to come into the markets. Esters are
Speaker 3: continuing to pile in. A lot of this is a
Speaker 3: function of the autopilot of the way that we've set
Speaker 3: up flows into our system. When people are working, they're
Speaker 3: contributing to the stock market. That money is flowing into
Speaker 3: an index fund, and guess what that index fund is buying?
Speaker 2: Spring training February nine. The Dodgers play in Tokyo, so
Speaker 2: they started early spring training. What inning are we in,
Speaker 2: Mike Grain, of this bull market?
Speaker 3: I have thought we've been in extended innings for an
Speaker 3: extended period of time. A typical bear market bowl market
Speaker 3: lasts for between three and five years, so we're probably
Speaker 3: getting towards the end of it.
Speaker 2: Am I yet.
Speaker 3: Ready to call my mother in law and say you.
Speaker 2: Must get out? Not quite. So.
Speaker 4: We had some news earlier about this whole China AI thing,
Speaker 4: and we're all trying to learn it literally on the fly.
Speaker 4: AI has been a theme for this stock market really
Speaker 4: a couple of years now.
Speaker 2: It's been a supporter of growth and.
Speaker 4: It just means so many positive things for so many
Speaker 4: different industries. What's the assumption did anything change for you
Speaker 4: with is deep seek news earlier this week.
Speaker 3: Well, the fascinating thing is that the deep seek news
Speaker 3: was actually out weeks ago, right so and candidly months ago.
Speaker 3: So the key innovation was actually the handling of memory components.
Speaker 3: They announced and released a paper in August of I
Speaker 3: think it was actually August or July of last year
Speaker 3: that actually highlighted these breakthroughs and a lot of this
Speaker 3: stuff if you just think about it in an evolutionary terms,
Speaker 3: is really straightforward. Can we do more computing with less energy?
Speaker 3: Can we actually split up our brain into in terms
Speaker 3: of a reptilian brain and an mammalian brain the Sarah
Speaker 3: bellm etcetera. That's all we're doing with these components, their
Speaker 3: natural evolutionary processes that simply say these things are getting
Speaker 3: better and cheaper, et cetera. One stat I just wanted
Speaker 3: to share with you, if you look at the actual
Speaker 3: inflation adjusted price of an Apple two, the deep seat
Speaker 3: innovations basically drop the cost of AI an LLM for
Speaker 3: the average individual down to roughly the same inflation adjusted
Speaker 3: costs as an Apple too in nineteen seventy seven, My
Speaker 3: cream with.
Speaker 2: Us to simplify, we're going to continue in extended conversation
Speaker 2: to get us going futures up five red and green
Speaker 2: in the screen. But I got a dancetick up four
Speaker 2: tenths of a percent, Meta and Microsoft this afternoon, and
Speaker 2: more importantly, Paul helped me in the eleven o'clock hour.
Speaker 2: You have the chief executive officer of T Mobile.
Speaker 4: Yeah, I think so, absolutely eleven. I think we're good
Speaker 4: on that. Hopefully he won't be coming with a collection
Speaker 4: notice that. Yeah, so we'll get the latest. I mean
Speaker 4: that telecom space, Tom, the wireless space. It's so competitive,
Speaker 4: you know, but.
Speaker 2: So competitive it's kill a millany exactly. You know, you
Speaker 2: don't think, oh you get this, this it's all free,
Speaker 2: free for you, and then.
Speaker 4: Ninety days later it's like hello, yeah, exactly right, Hey Mike,
Speaker 4: what screens well for you guys?
Speaker 2: These days? Are you?
Speaker 4: You know? Ever, I think probably the last ten to
Speaker 4: fifteen years technology has led this market. Is technology still
Speaker 4: going to leave this market going forward?
Speaker 3: Do you think it's It's hard for me to see
Speaker 3: leadership change in a very meaningful way because I spend
Speaker 3: so much my time focused on the passive components and
Speaker 3: these largest companies. There's a free that is created by
Speaker 3: these orders, and so it just pushes the leadership further.
Speaker 3: This Monday, when we had the news of deep seeking
Speaker 3: the hit on Nvidia, I ruffled a lot of feathers
Speaker 3: by saying, I just don't see why this is.
Speaker 2: Going to change. And here we are two or three
Speaker 2: days later.
Speaker 3: Some of these are background charge and markets are being
Speaker 3: led by the largest companies.
Speaker 2: Well, how have ETFs changes in the fact that Mike
Speaker 2: Green and I and Paul Sweeney. Yeah, I'm going back
Speaker 2: to wheat for security now, way back. This is right
Speaker 2: after the Confederacy pulled back comes Shenandoah Valley, and the
Speaker 2: basic idea here is we used to rotate, blowney, we
Speaker 2: don't rotate anymore. How have ETF's the dynamics changed that.
Speaker 3: Well, it's interesting because you actually can see the rotation.
Speaker 3: So immediately after Trump's election, we saw small caps take
Speaker 3: off right and you saw the actual flows into things
Speaker 3: like the IWM ETF. You can track the shares outstanding.
Speaker 3: There's explosive buying of that. On this theory that we
Speaker 3: should rotate, Well, guess what, once you've rotated.
Speaker 2: What do you do next? Rotate?
Speaker 3: And so small caps then saw people basically move away
Speaker 3: from them, and the market went right back to doing
Speaker 3: what it was doing before, which is the vast majority
Speaker 3: of the flows are people who are not rotating, not
Speaker 3: doing anything other than putting money in their paycheck into
Speaker 3: the market on their four oh one case, on a
Speaker 3: weekly basis or a bi weekly.
Speaker 2: That's a second time you've mentioned that. I mean, the
Speaker 2: financial media is ignoring Larry MacDonald was brilliant at this.
Speaker 2: There's just this wall of money almost inputting into the
Speaker 2: market on a daily basis, right, yeah, it really is.
Speaker 3: And that money flows in and what is it by
Speaker 3: the most of in Vidia, Apple, Microsoft, et cetera. Now
Speaker 3: the relative shifts like things like in Vidia catching fire
Speaker 3: and people waking up to it. That's actually exacerbated by
Speaker 3: this because if you think about what ends up happening, right,
Speaker 3: Tom Keen and his brilliance is like in video, it's
Speaker 3: the future. I'm going to buy some of these shares. Well,
Speaker 3: who's going to sell those shares to you? The passive
Speaker 3: index fund will not sell those shares to you under
Speaker 3: any conditions unless a general sellerator comes through. And so
Speaker 3: you're competing with other people who are having the same insights.
Speaker 3: That can cause that sort of sharp performance that we've seen.
Speaker 3: But once it's there, it's kind of built in.
Speaker 2: Mike Cree. One final question. You've got to get Michael
Speaker 2: Barran here, but one final question. It is just simply
Speaker 2: what do you say to our listeners and viewers in cash? Well?
Speaker 3: This is a very challenging one, right because the fomo
Speaker 3: component of watching your neighbor get rich is really really difficult.
Speaker 2: I just keep emphasizing for.
Speaker 3: People invest for what you need, not what your neighbor wants.
Speaker 3: And the reality is is that we've got real interest
Speaker 3: rates through tips and through duration at this point that
Speaker 3: are attractive enough to allow many institutions and many households
Speaker 3: to meet their objection their objectives in terms of retirements.
Speaker 3: I just encourage people to make sure that you're thinking
Speaker 3: about that income portion of your portfolio and recognizing that
Speaker 3: the volatility that we are not seeing currently will eventually return.
Speaker 2: Did you get enough time today? I did? Mike Green,
Speaker 2: thank you so much. He's been in here, folks, like
Speaker 2: three times. It's oh, Mike, I'm sorry you're on for
Speaker 2: ninety seconds. That was great to have an extended conversation.
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: We have to talk to Amanda Linum of Black Rock
Speaker 2: about adult material. But we got to do this first.
Speaker 2: This YouTube thing I'm doing and Paul's doing. Our heads
Speaker 2: are spinning. It's all new. C and End's dealing with it.
Speaker 2: Everybody's dealing with YouTube, and we have a team that's
Speaker 2: been brilliant. The word they use, Paul our colin of
Speaker 2: the Twins says discoverability. Oh okay, And the biggest thing
Speaker 2: I did is I switched to YouTube premium. It's one
Speaker 2: hundred and sixty seven dollars a year. If you pay annually,
Speaker 2: it's ten bucks a month. One twenty. Amanda, you did
Speaker 2: the same thing. What's the difference you perceive in YouTube
Speaker 2: premium versus regular run rate YouTube?
Speaker 6: I love it and thank you for having me because
Speaker 6: I can want you guys on two times the speed
Speaker 6: without the commercials. So I can stay informed. Yes, so
Speaker 6: I can stay informed. But it takes half the time,
Speaker 6: and it's amazing.
Speaker 2: It takes half the time.
Speaker 7: Exactly, But I can you guys are so good that
Speaker 7: I can follow along had.
Speaker 2: Years of fixed in coming analysis. When you're listening at
Speaker 2: two times the speed, how will you listen to Joe Prowl?
Speaker 2: That's an idea the press conference in two times speedly,
Speaker 2: what are you going.
Speaker 7: To listen for today? I'm going to listen for two things.
Speaker 6: One do we still think that policy is meaningfully restrictive?
Speaker 6: And then two, what is the bar for cutting rates?
Speaker 6: Is improvement and inflation enough for them to cut rates
Speaker 6: or do they actually need to see further cooling in
Speaker 6: the labor market. I think that will tell us a
Speaker 6: bit about the forward path. I'm not expecting really a
Speaker 6: cut to be on the table even in the March meeting,
Speaker 6: because the January seasonality and inflation will probably distort the
Speaker 6: numbers of But I do think that as we move
Speaker 6: towards the second half of the year, we'll want to
Speaker 6: see what the next action is in terms of an
Speaker 6: extended pause or a cut across.
Speaker 4: The fixed income community. This year to date, just so
Speaker 4: far here in January, we have some positive returns here
Speaker 4: led by high yield. What does the macro credit call
Speaker 4: for you guys in twenty twenty five?
Speaker 6: So I think the lesson from twenty twenty four is
Speaker 6: that there was an opportunity cost to being too defensive,
Speaker 6: and really our view on credit in twenty twenty fives
Speaker 6: you just have to be very clear on why you're
Speaker 6: buying credit. We're recommending that investors buy credit for carry
Speaker 6: and for yield, not for the total return boost from,
Speaker 6: for example, tightening and spreads or decline in rates. Spreads
Speaker 6: are already quite tight, so there's not a ton of
Speaker 6: room for absolute spread tightening from here. And our base
Speaker 6: case is that structurally higher interest rates will prevail.
Speaker 7: So if we do get.
Speaker 6: A boost to total returns from those typical drivers and
Speaker 6: total returns, that would be a bonus. But actually were
Speaker 6: we see a pretty compelling opportunity from the all in
Speaker 6: yield perspective and corporate credit.
Speaker 4: How do you feel about investment grade versus high yield?
Speaker 6: Yeah, I actually am comfortable moving down the quality spectrum.
Speaker 6: I would say for investors that can only play in
Speaker 6: investment grade, triple b's are a nice option for that.
Speaker 6: So moving down in the quality spectrum, I would say.
Speaker 6: The big takeaway over the past few years, frankly, is
Speaker 6: that there's a lot more fluidity between these markets. Actually,
Speaker 6: if you look at credit metrics, between the high end
Speaker 6: of high yield and the low end of IG, either're converging.
Speaker 6: There's not a steep of a penalty for a company
Speaker 6: to fall from IG to high yield. We're just seeing
Speaker 6: a lot more of the blurring of the lines, and
Speaker 6: so that line of demarcation between IG and high yield.
Speaker 7: Is much less punitive than it used to be. We
Speaker 7: actually like moving down in quality now.
Speaker 6: I would say when you get into things like triple c's,
Speaker 6: especially on triple C loans have underperformed because of certain
Speaker 6: technicals related to colos and rating sensitivity, you have to
Speaker 6: tread a bit carefully.
Speaker 7: But in general we like credit risk.
Speaker 6: And I looked at the Atlanta FED GDP now three
Speaker 6: point two percent, solidly above trend, and so that's the
Speaker 6: key for credit is the growth I totally.
Speaker 2: This is my main theory. Is the number one thing
Speaker 2: we've been wrong on has been the growth story is
Speaker 2: a continuum. Does black Rock believe the growth story continues?
Speaker 2: We do.
Speaker 6: And I would say the one sign post to watch
Speaker 6: because I think amid all of this uncertainty and volatility,
Speaker 6: we just need to know what to watch for the
Speaker 6: growth story has been hinged on the US consumer remaining resilient.
Speaker 6: The pockets of weakness that we've seen have really been
Speaker 6: confined to the low end. That's because the labor market
Speaker 6: is in this kind of low hiring but low firing environment.
Speaker 6: I think the key time for that to change is
Speaker 6: that if corporates start flexing the layoff tool more aggressively,
Speaker 6: that might allow the weakness in the consumer to extend
Speaker 6: beyond that lower income cohort. And I think that could
Speaker 6: be the risk to the US economy because we know
Speaker 6: the consumer generates two thirds of GDP.
Speaker 2: Paul Swedy Craig tourist joining us here in the nine
Speaker 2: o'clock on that lower core. He's got some brilliant research.
Speaker 4: Man, Are there some sectors that screen well for you
Speaker 4: guys right now?
Speaker 7: Folks still like financials.
Speaker 6: I think when you think about some of the tailwes
Speaker 6: in terms of a rebound in capital markets, activity, steeper
Speaker 6: yield curve of you know, deregulation, possibly less exposure to
Speaker 6: kind of global trade tensions.
Speaker 4: Sally support their earnings on a Monday. They come out
Speaker 4: Tuesday with these huge bomb offerings.
Speaker 7: Do you pick up the phone?
Speaker 6: There the new Yeah, the new issue market is a
Speaker 6: really attractive way to put capital to work because those
Speaker 6: deals often come at a spread concession, right, So that's
Speaker 6: a that's a way that investors can kind of participate
Speaker 6: in new issue pricings. Financials are a massive part of
Speaker 6: the investment grade in next but even outside of financials,
Speaker 6: I think there are a lot of sectors.
Speaker 2: Career mortals buy new issue paper or is it like
Speaker 2: the junior members of Blackguard? No, you can't have that,
Speaker 2: Amanda has it.
Speaker 7: The new issue markets are are wide open.
Speaker 6: And actually, what we've seen, even with some of the
Speaker 6: volatility in recent weeks, is that deals are multiple times oversubscribed,
Speaker 6: trading well on the break.
Speaker 7: And so those four times yeah.
Speaker 6: So I think that's really and there's been some consternation
Speaker 6: in the markets, obviously with some of the news flow
Speaker 6: and whether or not we should read this to be
Speaker 6: risk off. In terms of the rally treasuries that we saw,
Speaker 6: credit spreads were incredibly well behaved, and in fact, the
Speaker 6: modest widening that we saw on Monday has for the
Speaker 6: most part been completely retraced.
Speaker 2: Are yields now normal? This is a huge cultural question.
Speaker 2: Are we getting back to normal or do you see
Speaker 2: it vector towards lower end.
Speaker 6: Yes, So our expectation is for a normalizing monetary policy cycle,
Speaker 6: not an easing cycle. So on the front end policy rate,
Speaker 6: we are not expecting to retrace to the zero lower
Speaker 6: bound that was in place for much of the post
Speaker 6: financial crisis era. At the long end of the curve,
Speaker 6: we expect structurally higher rates there as well because of
Speaker 6: an increase in term premium.
Speaker 7: Focus on budget deficits.
Speaker 6: So yes, I think we are in this high for
Speaker 6: longer interest rate environment. However, corporates have been navigating this.
Speaker 6: They've been refinancing into this new regime. They've been taking
Speaker 6: actions to protect margins where they can to compensate for
Speaker 6: higher deck costs. So it hasn't been as disruptive as
Speaker 6: many market participants expected.
Speaker 2: The next time you watch YouTube premium you put it
Speaker 2: on three times.
Speaker 7: I don't think actually that's an often Tom.
Speaker 6: I think actually the max is too, So we're we're
Speaker 6: at max.
Speaker 2: Slow at that. Yes, Amandoliin and thank you so much
Speaker 2: for your support through the year. Blue with black Rock
Speaker 2: and mand Lenman had a macro credit research. You know,
Speaker 2: he's smart, smart and where we're going to are you
Speaker 2: and Jeff Rosenberg on speaking to him.
Speaker 7: Of course he's wonderful.
Speaker 2: Yes, it's wonderful. It's just good. He's up to four
Speaker 2: people of Black Rocket like him.
Speaker 4: It's nice.
Speaker 2: It's amazing.
Speaker 4: You know, it's much over in huts and yards with
Speaker 4: the cool kids.
Speaker 2: Now, oh really yeah? So so like the shop, is
Speaker 2: it like painful? Because you want to shop?
Speaker 7: It's beautiful, brand new, it's it's lovely. You should come over.
Speaker 2: What's your favorite store there? What's the unknown store?
Speaker 7: Too many to choose Tom Studio.
Speaker 6: Yeah, there's a very Yeah, there's a lot of there's
Speaker 6: a lot to choose from.
Speaker 2: So you're you're walking around at leven Yeah, no, that's
Speaker 2: not a good look. No, no one you think. Could
Speaker 2: you see me in Lulu eleven Tights control room just
Speaker 2: turning green? Amandolne, thank you so much for your support
Speaker 2: with Black Red.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto
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Speaker 1: say Alexa play Bloomberg eleven thirty.
Speaker 2: It is FED day with many distractions. I thought the
Speaker 2: Microsoft and video thing there we just did was interesting.
Speaker 2: Cam Dawson was lights many other guests today, But we
Speaker 2: need to get back to the foundation of American macro strategy.
Speaker 2: George Congalfis joins us right now from m UFG on
Speaker 2: this FED day. Where are we going to be at
Speaker 2: four o'clock, Georgia. And I don't mean like trying to
Speaker 2: guess the press conference, but if it's a snooze fest,
Speaker 2: I don't buy it. What will you listen to for
Speaker 2: excitement in the press conference today? Good morning?
Speaker 8: And look, I do think that as much as we
Speaker 8: tend to think of FED events as these potential market
Speaker 8: moving days, and they usually are, I think this is
Speaker 8: one where it's the first meeting of the year. It's
Speaker 8: the first meeting under the new Trump administration two point
Speaker 8: zero world that we're in, and I really don't see
Speaker 8: why Chairpal would want to convey anything that ruffles any feathers.
Speaker 8: And I really do think that they're gonna just stick
Speaker 8: to the script around DAT dependency and that they've largely
Speaker 8: achieved a lot of their goals, but they're gonna this
Speaker 8: is gonna be the first meeting by the way, they're
Speaker 8: gonna skip in the normalization process. They cut one hundred
Speaker 8: basis points last year. This will be the first skip.
Speaker 8: So I think it's gonna be about explaining, like what
Speaker 8: is the game plan for the coming months.
Speaker 4: Will there be any language to suggest that they are
Speaker 4: not committed to further rate cuts data dependent?
Speaker 8: Of course?
Speaker 4: Will there be any language suggests, hey, maybe there are
Speaker 4: scenarios where we sit pat or maybe even rates.
Speaker 8: Yeah, Look, we're we're leaning towards a very neutral message
Speaker 8: out of chair Palell and just from the general statement
Speaker 8: as well. I think it's too early to make that call.
Speaker 8: That would be a surprise, definitely if they come out
Speaker 8: come across as that the normalisition process was is a
Speaker 8: done deal and it's gonna take it's and the bar
Speaker 8: has been raised. I think that they don't want to
Speaker 8: limit themselves so early on in the year, and so
Speaker 8: I don't think that's the case.
Speaker 4: So where do we think about just kind of macro
Speaker 4: strategy here, given that backdrop, George, as we think about stocks, bonds, commodities,
Speaker 4: where's your what's the macro call from you guys in
Speaker 4: the beginning part of twenty twenty five.
Speaker 8: Look, I mean, I think it's a it's a wait
Speaker 8: and see staying very tactical, not really super strategic at
Speaker 8: this point. It's it's really trying to understand what a
Speaker 8: delay of the land going forward, and there's there's a
Speaker 8: lot of jumper risk, there's a lot of uncertainty, and
Speaker 8: we're still kind of going through.
Speaker 2: I think it's I mean, George, don't go with that.
Speaker 2: You're gonna grab the coupon and wait and see. But
Speaker 2: what do you do down short term paper? Our listeners
Speaker 2: and viewers in cash in three months they got the
Speaker 2: Sweeney two year CD whatever. I mean, at that short duration,
Speaker 2: you know, you can take the coupon, but you got
Speaker 2: to make a call here, what does short duration do?
Speaker 8: Look, I think that fixed Ittom still on the buy
Speaker 8: and dips makes a lot of sense. We had that
Speaker 8: rise in rates, it was unsustained, and as long as
Speaker 8: that's the case, I think that we're okay with, you know,
Speaker 8: buying on dips. But the problem is that we don't
Speaker 8: have a dip right now. We're actually at the bottom
Speaker 8: of the ranges, and I think we would like want
Speaker 8: to look for either if data gets stronger in Q one,
Speaker 8: if there are those animal spirits, the euphoria post election.
Speaker 8: If they translate into activity, then rates are gonna go
Speaker 8: back up again, and then that might be a chance
Speaker 8: to buy.
Speaker 4: So, George, where are where's your asset allocation these days?
Speaker 4: I mean, and has it changed in recent period?
Speaker 2: Yeah?
Speaker 8: So, look, we've been more defensive. I mean, credit I
Speaker 8: think is basically priced in all the good news. You know,
Speaker 8: you kind of neutral to on credit and mortgages are
Speaker 8: probably that's still the one fixing come massa class that
Speaker 8: has the most value, but it's at the mercy of
Speaker 8: rate volatility in the shape of the yield curve until
Speaker 8: we get more clarity on that. Mortgages are a good
Speaker 8: product to buy, but really not the real time.
Speaker 2: To do it at this point.
Speaker 8: And so we're gonna be a relative defensive and looking
Speaker 8: for for yield charge.
Speaker 2: We'll tauch you at four pm. See if the world's
Speaker 2: blown up church can call us with this out of
Speaker 2: us macro strategy MUFG.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 1: with the Bloomberg Business app. You can also watch us
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Speaker 2: It is the newspaper, is it daily? Look at the
Speaker 2: front pages at listam tall O moment, Lisa, what do
Speaker 2: you have?
Speaker 5: Okay, Tom, you're not gonna like this one.
Speaker 7: I'm sorry.
Speaker 5: This is in the New York Times national test scores
Speaker 5: showing that the reading skills of American students continuing to fall.
Speaker 5: Let me get to the numbers real quickly. The percentage
Speaker 5: of eighth graders who have below basic reading skills, it
Speaker 5: was the largest it's been in the exams three decade
Speaker 5: in history. That's thirty three percent. It was forty percent
Speaker 5: for fourth graders. There was some progress in math, but
Speaker 5: it didn't just offset those losses. But the interesting thing
Speaker 5: is the reason why the experts feel like this is happening.
Speaker 5: They're just saying the increased screen time, more kids on
Speaker 5: their phone, social media, school absences, all, you know, those
Speaker 5: kind of distractions. They're watching more videos on their phone,
Speaker 5: so they're reading less. You know, they're watching the video.
Speaker 4: I'm I'm in the same pump. Yeah, I mean all
Speaker 4: the time. I used to.
Speaker 7: Yeah, we adults too.
Speaker 5: I know it's true.
Speaker 2: I see the books stacked up an afterthoughts, bedroom unread
Speaker 2: and what I know? Is there something about finishing a
Speaker 2: book it's gone.
Speaker 5: I think it's the attention span.
Speaker 2: I'm trying to do it. Example, I'm reading Rusher Sharma
Speaker 2: right now, folks, fabulous book and capitalism. I'm reading David
Speaker 2: McCullough on Paris just because I need to buy six
Speaker 2: thousand square feet on the river sin blah blah blah. Paul,
Speaker 2: you're reading books. The answer is, I'm trying by example
Speaker 2: to show them to go cover to cover. It ain't working.
Speaker 2: I'm going down in flames.
Speaker 5: It's hard, but that's what they're saying. Because the screen
Speaker 5: times are causing them to have less attention span. They
Speaker 5: can't sit and finish a book and finish reading what
Speaker 5: they're supposed.
Speaker 2: To be reading. It's a huge deal. I don't know
Speaker 2: what to do with it.
Speaker 5: It's a big one.
Speaker 2: I'm depressed. One. I got to go check TikTok.
Speaker 5: Yeah, this wasn't interesting from the Wall Street Journal, New
Speaker 5: York City co Ops not the status symbol that they
Speaker 5: used to be. It has this really interesting read into it.
Speaker 5: These are buildings that you know, sylmbolize this old money elegance, right,
Speaker 5: we're talking about Park at Fifth Avenue, even Central Park West,
Speaker 5: all those co ops because they're saying, younger buyers, they
Speaker 5: want newer, flash your buildings downtown, they want to go downtown.
Speaker 5: A lot of the colt buildings they're older, they're built
Speaker 5: in the nineteen twenties. And then they're choosing the condos
Speaker 5: have fewer rules because the.
Speaker 7: Co ops have a lot the co op process.
Speaker 5: Than the co op process. I'm reading about it.
Speaker 2: It's I applied to a co op, did you get
Speaker 2: fancy one? Like? You know, I would have been the
Speaker 2: poorest person in the building, and I was. I was
Speaker 2: insulted by what they wanted from me.
Speaker 7: I said, no way, And that's that's what a lot
Speaker 7: of people do.
Speaker 2: My entire tax return and that was a year where
Speaker 2: Vet Bill, you know, I had a business that went
Speaker 2: under someone's like fifty four pages, said you know, I'm
Speaker 2: not doing that.
Speaker 5: Yeah, they could order to pay all cashs.
Speaker 2: It's also that they're new and slick in their downtown.
Speaker 2: I mean, it's not just co op. Right, squeeze in
Speaker 2: one more?
Speaker 7: Okay, one more?
Speaker 5: Oh, this one's a dagger Pooksatani Phil's groundhog Day job
Speaker 5: would be in jeopardy. Okay, Peter is suggesting a vegan.
Speaker 7: Weather revealed cake.
Speaker 5: You would love this because they want to retire him
Speaker 5: to a sanctuary. That's what they're asking. They're saying, Phil,
Speaker 5: he's exploited. He would be happier living in his natural habitat.
Speaker 5: So the blue would mean six more weeks of winter.
Speaker 5: The pink would mean an early spring. And that's how
Speaker 5: the cake, the vegan cake would work instead of pusatani.
Speaker 2: Disappoint Can the president do something about this?
Speaker 5: In here ground Homeday, Sunday, Sunday Sunday.
Speaker 4: Okay, Okay, that's why I know what this arm is
Speaker 4: gonna say.
Speaker 5: I've been there reporting.
Speaker 2: Section.
Speaker 7: You know that I was there at the.
Speaker 2: Statue of our mayors have their handbit.
Speaker 5: I actually did.
Speaker 2: He was there for that one. The beast.
Speaker 5: Hell together.
Speaker 7: It was very impressive.
Speaker 2: Hold on your badge, Lisa, Thank you so much, The
Speaker 2: Newspapers with Lisa Matteo.
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
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