Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
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Speaker 3: Sebastian Page joining us right now. We have three things
Speaker 3: to talk about with him, and of course with Tierro.
Speaker 3: Price had a multi asset chair of asset allocation, and
Speaker 3: you know that's the focus of the discussion. We got
Speaker 3: to talk about his Canada so much in the news
Speaker 3: right now. But I got to put this book up.
Speaker 3: This is out in a couple of weeks, This book
Speaker 3: of the Month Club Readers Digest, The Psychology of Leadership
Speaker 3: coming out Bonus Round, Weekend Readable. It's got the right
Speaker 3: length to it. But what completely separates this book is
Speaker 3: you have you know, we're about the book of the year.
Speaker 3: Maybe it is, maybe it's not even read it yet.
Speaker 3: You have the forward of the year. How did you
Speaker 3: get Larry kaulp to give you the forward to your book?
Speaker 4: Nine enough to accept to participate. Larry was on the
Speaker 4: board of directors for a while for Tiro Price and
Speaker 4: I use every connection I could get to try to
Speaker 4: get to him to ask him for this favor.
Speaker 3: What are the cast practices of mister Caulp at Tiro Price,
Speaker 3: at danaher in the Miracle? He's wrought a generous electric
Speaker 3: What are the cult best practices?
Speaker 4: He's really into the Japanese approach to quality and kaisen,
Speaker 4: and he's really into listening to the customer. I remember, Tom,
Speaker 4: I had to present to the board once about my
Speaker 4: business and the stories in my book. But I presented
Speaker 4: a range in terms of my growth forecast for our business,
Speaker 4: and the range was pretty wide. Let Reculp would not
Speaker 4: have it. They said, what is your goal? So there's
Speaker 4: a lot of discussions around that.
Speaker 3: Our goal right now is mental stability with their portfolios.
Speaker 3: Least is medicaid. But what do we do with this
Speaker 3: uncertainty out there right now? How do you approach that?
Speaker 4: We're not panicking, Tom, I think market's the economy. I
Speaker 4: think we're going to be okay. We're looking at a
Speaker 4: slow down. The data for the consumer is showing that
Speaker 4: things are slowing down and the markets is selling off.
Speaker 4: But it's not just because of tariff headlines. It's because
Speaker 4: of the growth slow down. It's because we had extremely
Speaker 4: high valuations going into this, and yes, the word of
Speaker 4: the hour uncertainty. So it's a combination of all these things.
Speaker 4: But I don't think we're getting a recession about the consumer.
Speaker 5: We've seen some University of Michigan data last week which
Speaker 5: is a little concerning. We had the airlines take their
Speaker 5: guidance down, forward guidance down with a big broad departments
Speaker 5: or like coals take its guidance down.
Speaker 6: How do you think the consumer's doing these days?
Speaker 4: So I don't like the last two retail sales prints.
Speaker 4: The last one was positive but still below expectation. The
Speaker 4: one before was revised minus one point two percent month
Speaker 4: over month. Those two data points are not good and
Speaker 4: they're showing some slowdown overall. The economic surprise index in
Speaker 4: the US is in negative territory, but I'm not counting
Speaker 4: the US consumer out yet. Unemployment at four point one
Speaker 4: percent is a low number for unemployment. Wages for the
Speaker 4: last twelve months are growing at four percent and inflation's
Speaker 4: at three percent. This means that wages are growing faster
Speaker 4: than inflation. And I know it's completely it's really not
Speaker 4: distributed equally, but the aggregate shape of the consumer is
Speaker 4: quite good. The level of household debt to GDP is
Speaker 4: nearer twenty year low. Again, not every not every segment
Speaker 4: of the consumer is healthy, but in aggregate it's I'm
Speaker 4: not counting it out.
Speaker 5: You had a global multi asset, so you can go anywhere.
Speaker 5: Where are you going these days? What are you talking
Speaker 5: to your portfolio managers about?
Speaker 4: You know, going into this, we had been adding to
Speaker 4: europe to international stocks in the on the value side.
Speaker 4: It turns out right now it's maybe, aside from gold,
Speaker 4: the best performing asset last year. Today it's up thirteen percent,
Speaker 4: and we're likely to continue to add. European banks, for example,
Speaker 4: used to trade at two times their book value prior
Speaker 4: to the global financial crisis. They're at one time there
Speaker 4: are but one ex their book value. So we think
Speaker 4: there are opportunities there with positive interest rates.
Speaker 5: So as we think about these, a ten percent pullback,
Speaker 5: let's called an eight percent pull back in the SMP,
Speaker 5: maybe a twelve percent pull back in Nasdaq.
Speaker 6: Buying opportunity buy the dip, be caut what are we
Speaker 6: doing here?
Speaker 4: So we've been de risking, but we're at kind of
Speaker 4: neutral on risk assets right now. We're waiting it out.
Speaker 4: If the vis goes to thirty and stock sell off
Speaker 4: fifteen to twenty percent, we're more likely to buy than
Speaker 4: to sell. So that's what we're kind of watching right now.
Speaker 6: I'm kind of hearing that a lot.
Speaker 5: Like you know, we had Stewart Kaiser from City Group
Speaker 5: on from the trading desk there at City. He's not
Speaker 5: buying here, but he's like, we're close. I mean, but
Speaker 5: to me, it seems like it's kind of all about
Speaker 5: the earnings out there. If the consumer's pulling back, if
Speaker 5: there's a lot of uncertainty out there, I'm not sure
Speaker 5: I can depend upon those earnings numbers that I see
Speaker 5: out there on the street.
Speaker 4: You know, it's interesting to compare the US with Europe
Speaker 4: right now, because the earnings estimates in Europe are trending
Speaker 4: up and the surprises are looking good, better than in
Speaker 4: the US. And then you look at profitability of European stocks,
Speaker 4: it's on the way up, whereas in the US it's stabilized.
Speaker 3: It's stabilized, Like we got a couple things to do here.
Speaker 3: But Sebastian page to ask this right now, there's so
Speaker 3: much uncertainty out there. All my radars says, that's a
Speaker 3: massive opportunity to find the opportunity that comes out of
Speaker 3: any given uncertainty.
Speaker 4: Uncertainty up stocks down usually and historically when they're hispanic
Speaker 4: in the market. I know, Tom, you like to watch
Speaker 4: the vis When the vix hits thirty, historically, it's a
Speaker 4: good time. It's a good time to look for opportunities.
Speaker 4: We like non US value stocks because you have evaluation advantage,
Speaker 4: you have short term momentum, and that short term momentum
Speaker 4: is supported by fundamentals.
Speaker 3: Okay, so you knew Paul years ago that you looked
Speaker 3: at Canton, which was the best school in northern New York.
Speaker 3: You can literally hear the Saint Lawrence River whatever up
Speaker 3: north there, or Clarkson, which is sology one hockey and
Speaker 3: they'd have six ringers from Quebec on there. You don't
Speaker 3: know those folks with Sebastian Page looks like that left
Speaker 3: wing we hated on the other team. He spoke perfect English,
Speaker 3: but when he stepped on the ice he only speaks French.
Speaker 3: So you're even more intimidated by him. You grew up
Speaker 3: in the heart of it. You go from Victoriaville down
Speaker 3: through Windsor to the land of hockey stick Sherbert Quebec.
Speaker 3: Is your Quebec going to be on board with Mark
Speaker 3: Kearney in this battle with the United States.
Speaker 4: You know, I started playing ice hockey at the age
Speaker 4: of five.
Speaker 7: That how you have to do that in Quebec.
Speaker 4: I'm kind of conflicted because have dual citizenship US and Canada.
Speaker 4: I think things were normalized. We just have to be patient,
Speaker 4: wait some of it out and just go along with
Speaker 4: a good faith negotiation. And again I'm kind of my
Speaker 4: heart is in both places.
Speaker 3: So what do you do in the hockey game here?
Speaker 3: The other day US Canada? It was great?
Speaker 4: Well there, yeah, well you know when I swear and
Speaker 4: I watched hockey, I swear in French.
Speaker 6: Yes, there you go.
Speaker 3: Well in French when I missed, when I missed my cue,
Speaker 3: I got asked, we got to get the Jane Foley here.
Speaker 3: But this is too important. Victoriaville CCM five stripe or
Speaker 3: did you go with the local Sherwood?
Speaker 4: The local Sherwood. Yeah, I had the best hockey stole.
Speaker 3: I had the Victoriaville toe curve. It was the only
Speaker 3: thing I'd pay a lot of money.
Speaker 4: Now, yeah, we used to heat it up. He curved
Speaker 4: exactly with the writing.
Speaker 3: You get the blowtorch out here, your mother would be
Speaker 3: like toll part up the basement. Sebastian. Jane Foley's in
Speaker 3: London going what did we got? Stay with talking about
Speaker 3: Sebastian Page, Thank you so much. Book The Psychology a
Speaker 3: Leadership is the book. This will be out so you
Speaker 3: can't get it today. Lawrence Kopp with the introduction to
Speaker 3: the Psychology of Leadership.
Speaker 2: This is the Bloomberg Surveillance Podcast.
Speaker 1: Listen live each weekday starting at seven am Eastern on
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Speaker 3: Jane Foley, she is an Robert Bank. We really appreciate
Speaker 3: her coming on on short notice. I don't want to
Speaker 3: do you know, international relations bit Jane Foley on Turkish
Speaker 3: Lira out two big figures thirty six to thirty eight.
Speaker 3: But it's destabilizing within an emerging market disaster, idiosyncratic disaster.
Speaker 3: What does it signal that the people of Turkey to
Speaker 3: see such an abrupt weakening.
Speaker 9: Well, of course this is related again to the idea
Speaker 9: that Ergon is reassearching a more authority rule. Certainly over
Speaker 9: the last few weeks I suppose that there has been
Speaker 9: a lead up to this, not a huge surprise, but
Speaker 9: of course Erigon needs to have an early presidential election
Speaker 9: if he wants to win again, and it looks as
Speaker 9: if he's taken out some of his main opposition. From
Speaker 9: the markets point of view, of course, there is a
Speaker 9: fear that this could be at learned to unorthodox policies.
Speaker 9: But of course for Europe there's something else as well,
Speaker 9: and this is all related back to Turkey's want potentially
Speaker 9: to become a member of the EU, but also what
Speaker 9: we've been seeing this year in terms of NATO, Europe
Speaker 9: of course having to step up in a much bigger
Speaker 9: way for its own defense, and Turkey putting out there
Speaker 9: the possibility that it, with its second largest army within NATO,
Speaker 9: could play a greater function in that defense if perhaps
Speaker 9: it had a little bit more power within the EU.
Speaker 9: So that is something which I think has created more
Speaker 9: uncertainty in politics in Europe.
Speaker 3: Pass has enough talk on Turkey. Paul wants to know
Speaker 3: what the euro is going to do for travels this summer.
Speaker 3: Are we going to actually model out of euro to
Speaker 3: one fifteen stronger.
Speaker 9: Euro Well, we've got one twelve as our.
Speaker 7: Cancel that exactly.
Speaker 9: But you know, I would say that, you know, you know,
Speaker 9: when you know, with your previous guess you were talking
Speaker 9: about US stocks, I think you know, to put it
Speaker 9: in context, you know, one of the biggest changes for
Speaker 9: the markets this year has been the news regarding German
Speaker 9: you know, fiscal policy, and that the movement higher in
Speaker 9: terms of GDP that we've seen for some German big
Speaker 9: forecasters now not for this year, but for next year
Speaker 9: and the year after. That's a real sea change for Europe.
Speaker 9: And of course we've seen a big sea change in
Speaker 9: China too, and that of course with deep seat but
Speaker 9: also the BYD battery system that we've heard about this
Speaker 9: week too for for autos, and I think these two
Speaker 9: things are really created, you know, a lot of change
Speaker 9: in terms of what investors are looking at in terms
Speaker 9: of investment opportunities. Last year it seemed to be just
Speaker 9: about the US. Now people are thinking, you know, did
Speaker 9: I overlook Europe? Did I overlook China? You know, there
Speaker 9: are opportunities there in which I didn't realize were potentially
Speaker 9: their last year. So this is this is really significant
Speaker 9: and that is why you know, the europe is the
Speaker 9: euro is looking a lot better, even though some of
Speaker 9: that money may not be be spent immediately, it is
Speaker 9: coming in Germany and that's a huge difference.
Speaker 7: Pound.
Speaker 5: Sterling's had a nice kind of run here this year
Speaker 5: as well. Here what's driving.
Speaker 7: That jain and kind of how do you think about
Speaker 7: that going forward?
Speaker 9: Well, you know, the cable certainly had a jitter's right
Speaker 9: at the beginning of the year, partly related of course
Speaker 9: to US eels dragging guilt eels high, but also the
Speaker 9: poor growth outlook which doesn't look good for government finances,
Speaker 9: which of course the strainer in the UK. Now cable
Speaker 9: has gone higher since then, but that's largely related to
Speaker 9: the weakness of the dollar. To be honest, I think
Speaker 9: the euros story has meant that Sterling is going to
Speaker 9: struggle now to win more ground back against the euro.
Speaker 9: But there is a statement, a budget statement to the
Speaker 9: spring statement, I should say, on March the twenty six
Speaker 9: and the government really going to have to come back
Speaker 9: on spending in order to play by its fiscal rules.
Speaker 9: But you know, I think ster is out of the
Speaker 9: limelight that the news has been so much about Germany
Speaker 9: within Europe this year.
Speaker 3: Jane Foley on short notice, we really appreciate a team surveillance.
Speaker 3: Appreciate your effort. This morning with Rabobank Jane Foley in London.
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
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Speaker 5: Our next guest Joints is sar Dean, currenty CEO and
Speaker 5: founder of Macro Risk Advisors.
Speaker 6: What's going on with gold? I mean I get it
Speaker 6: safe haven kind of thing, but is something else going
Speaker 6: on here?
Speaker 7: I think there's a number of things.
Speaker 10: I mean, first sort of stepping back and thinking about
Speaker 10: this idea of diversification and you know, it's a time
Speaker 10: honored pursuit in markets.
Speaker 7: And it's it's elusive.
Speaker 10: And what I mean by that is you can try
Speaker 10: to pick stocks that zig and zag with one another,
Speaker 10: but it turns out that when there is a risk off,
Speaker 10: that's when correlations, you know, really rise. So you have
Speaker 10: got to find assets that are just unlike equities. And
Speaker 10: what I would say is gold is truly unlike stocks.
Speaker 10: If I look at the last twenty odd years of
Speaker 10: both returns and correlations in the S and P and gold,
Speaker 10: the realized correlation of daily returns is five percent.
Speaker 7: That is absurdly low.
Speaker 10: And you just can't find something like that in the
Speaker 10: equity market. If you just chose even two random stocks,
Speaker 10: you're going to get correlations in the forty to seventy percent.
Speaker 10: So gold, first and foremost is a diversifier. And second
Speaker 10: it's a limited supply asset, and I think that's critical
Speaker 10: as well.
Speaker 7: An asset that does not have limited supply is.
Speaker 10: Treasuries, right where a wash in treasuries And I think
Speaker 10: right now you want to find those assets that are disciplined,
Speaker 10: and gold is a disciplined asset, and that there's just
Speaker 10: not a supplier of it.
Speaker 3: I want to come back to gold. But and this
Speaker 3: is too important a question. Is persistent free cash flow
Speaker 3: a scarce item right now?
Speaker 10: I think in some ways yes, I would say that
Speaker 10: as well. The market, of course, has been pricing this
Speaker 10: gigantic capex spend growth. Growth in capex has obviously been
Speaker 10: a big part of what's empowered the MAG seven. You know,
Speaker 10: compare compare the sort of top of the S and
Speaker 10: P the MAG seven to where we were twenty five
Speaker 10: years ago. And you know, just to use this word
Speaker 10: discipline again, profitability in these companies currently is much higher
Speaker 10: than it was back then. The PE ratios, while they're high,
Speaker 10: are much more modest than the Cisco and the Intel,
Speaker 10: you know, the pe boom that was that was the
Speaker 10: two thousand. So free cash flow is an important aspect
Speaker 10: of markets. But I think, you know, right now we're
Speaker 10: in this period where the markets taking a good look
Speaker 10: at future earnings and also you know, rerating the the pe.
Speaker 3: The water's coming out. Who's wearing no clothes as the
Speaker 3: tide pulls out? Right now? Where's the exposure that could
Speaker 3: be embarrassing in the next six months.
Speaker 7: Yeah, I think that it's.
Speaker 10: No, I don't I don't necessarily think that that's as
Speaker 10: big an issue. I mean, I think, if anything, folks
Speaker 10: are excited about the you know, the big change in
Speaker 10: in debt trajectory, at least potentially in Germany.
Speaker 7: We'll we'll see how that plays out. I think the question.
Speaker 10: Around valuations is always going to be an important one.
Speaker 10: And at some point this US exceptionalism theme got to
Speaker 10: be I believe, reasonably overdone. You know, when a market
Speaker 10: outperforms to the extent that the US has. Any allocation
Speaker 10: to foreign stocks, for example, has proven to be, you know,
Speaker 10: taking away from your return. And I think people just
Speaker 10: crowd into a winner, and I think that's where the
Speaker 10: risk is.
Speaker 3: Let's talk, Paul. The arcane language of Dean kerrent Vall
Speaker 3: on Bitcoin and assets related to it. MSTR miners is
Speaker 3: getting hit hard one month implied on ibbit is just
Speaker 3: forty seven. And that's what's in English. The rest of
Speaker 3: it's in Greek. I mean this pro derivative stuff, folks,
Speaker 3: is it's sort of like in the third season and
Speaker 3: Game of Thrones. It's, you know, just a little arcane to.
Speaker 5: Say this loss the rails a little bit. Dean, what
Speaker 5: are clients doing in terms of this year? In twenty
Speaker 5: twenty five, we've had of a higher degree of economic
Speaker 5: policy uncertainty, which has impacted financial markets pretty significantly. What
Speaker 5: are your clients doing in the derivatives market to try
Speaker 5: to I guess play that if you will.
Speaker 10: Yeah, so, I think our major call and our conversations
Speaker 10: with clients have focused on this idea that the stock
Speaker 10: market was diversifying itself.
Speaker 7: In a way that is unsustainable and what do I
Speaker 7: what do I mean by that?
Speaker 10: So if we just look at the MAG seven and
Speaker 10: we look at the way in which its movements are
Speaker 10: relative to the rest of the market, zigging and zagging,
Speaker 10: a lot of diversification even within the MAG seven, unsustainable
Speaker 10: levels of diversification.
Speaker 7: And what that did was it reduced the overall level of.
Speaker 10: Volatility at the index level for the for the S
Speaker 10: and P and so as the Trump administration came in
Speaker 10: and of course there was a lot of enthusiasm for
Speaker 10: a pro growth agenda. I think that the stop start
Speaker 10: of the tariffs has been very, very difficult for folks
Speaker 10: to handicap.
Speaker 7: And so you know, earlier this year we really pushed
Speaker 7: people to say.
Speaker 10: Okay, look, let's buy some insurance. And you know, insurance
Speaker 10: is something you have to pay for.
Speaker 7: It's not free. Nothing, nothing like that is free.
Speaker 10: But there was an opportunity to do relatively basic trades
Speaker 10: in the S and P that allowed you to defray
Speaker 10: your risk for what we thought was a really reasonable cost.
Speaker 7: That's worked quite well in.
Speaker 3: Your morning community across the Nation, Good Morning ninety ninety
Speaker 3: one FM in Washington, Bloomberg eleven three Z on New York,
Speaker 3: ninety two nine FM in Boston, and all the digital
Speaker 3: process that we have Good Morning Sirius XM on YouTube
Speaker 3: as well. Dan current Macro risk Advisors. What are the
Speaker 3: cross moments tell you you're right about Skew, Folks, here's
Speaker 3: the Greek one month, twenty five day call ball is
Speaker 3: up three from a week ago, and twenty five day
Speaker 3: putball is up four point four. Translate the cross moments,
Speaker 3: particularly Skew right Now, well.
Speaker 10: Let's just step back and look at this ten percent
Speaker 10: drid on that we had, you know, in the S
Speaker 10: and P. There's only a handful that you can find
Speaker 10: over the last twenty five years. Some of them are
Speaker 10: the doozies of the GFC COVID. You have the VIX
Speaker 10: event in twenty eighteen. This one has been unique in
Speaker 10: the combination of the speed of it, which has happened
Speaker 10: over just twenty odd days, but a relatively low level
Speaker 10: of realized volatility twenty percent realized volatility, and it's really
Speaker 10: the absence of very large moves. So if I look
Speaker 10: at my subset of ten percent draw downs. I always
Speaker 10: see at least two three percent down days in the SMP.
Speaker 10: My biggest move on this draw down is just two
Speaker 10: point seven percent. So it's the sequencing of down a percent,
Speaker 10: down a percent and a half that has led to,
Speaker 10: you know, a pretty good destruction of wealth at the
Speaker 10: S and P level. That of course has lifted the VIX,
Speaker 10: but it's been a controlled demolition, as one client put it,
Speaker 10: and I think that's a I.
Speaker 7: Think that's well said.
Speaker 10: So the cross moments I don't think are flaring in
Speaker 10: a big way. It's not like we had a VIX
Speaker 10: of ten that went to thirty. We had a VIX
Speaker 10: of fourteen or fifteen that climbed its way into the
Speaker 10: low twenties level. So it's, like I said, very controlled.
Speaker 10: And I think the handoff here is okay. The pods
Speaker 10: for the big multi strat hedge funds have had to
Speaker 10: de risk. That's caused a lot of factor volatility, a.
Speaker 7: Lot of rotation.
Speaker 10: But the big handoff now is what is the impact
Speaker 10: on the real economy. I took real interest in the
Speaker 10: piece on the Bloomberg terminal yesterday, quoting Morgan Stanley's president
Speaker 10: saying deal making has really gotten frozen here. Yep, right,
Speaker 10: So it does feel like corporate America has been stymied
Speaker 10: by the start.
Speaker 7: Stop of the tariff negotiations.
Speaker 5: If I mean again, we've had a straw down the
Speaker 5: SMP roughly eight percent here, the peak to trough was
Speaker 5: roughly ten percent. If I want to buy downside protection here,
Speaker 5: how much more expensive is it today versus a couple
Speaker 5: months ago.
Speaker 7: Yeah, certainly.
Speaker 10: You know they say you can't trade the VIX, and
Speaker 10: that's true.
Speaker 7: The VIX is a calculation agent.
Speaker 10: It sort of dutifully takes in all option prices of
Speaker 10: the S and P and pops out a number.
Speaker 7: But really what it represents is the cost of insurance.
Speaker 10: And so when you move the VICS from fifteen to twenty,
Speaker 10: you're popping the cost of insurance up kind of thirty
Speaker 10: percent one month insurance. I like using what they call
Speaker 10: put spreads, which is what I would call a modified
Speaker 10: insurance policy. If the market truly crashes, that put spread
Speaker 10: is going to get me some insurance back. I'm going
Speaker 10: to get paid back to some extent, but not a
Speaker 10: GFC style insurance right where I would have needed a
Speaker 10: gigantic amount of insurance. So we like using put spreads
Speaker 10: here because you know the VIX is at twenty. It's
Speaker 10: not as if it's a steal. But I do think,
Speaker 10: you know, continuing to maintain some insurance is important.
Speaker 3: So translate the pro put spread structure over to someone
Speaker 3: like Lisa Matteo with a five oh one K. She's
Speaker 3: killed it on the tech play. She's not going to
Speaker 3: do a put spread on a five oh one K.
Speaker 3: How do you be defensive within a.
Speaker 7: Retirement right, And this is where I come back to.
Speaker 10: You know, insurance is costly. We don't ask Geico to
Speaker 10: sell us car insurance and not expect them to make money.
Speaker 10: You shouldn't expect Goldman Sachs and Morgan Stanley to sell
Speaker 10: you financial market insurance and not to make money.
Speaker 7: Insurance is costly. Over time, that cost can add.
Speaker 10: Up, and so where our focus at Macro Risk Advisors
Speaker 10: has been has been on diversifying assets like gold. And
Speaker 10: gold is acting really nicely defensively even as it trends higher.
Speaker 10: So it's not a tail risk hedge that you can
Speaker 10: truly count on. There is some basis risk, but because
Speaker 10: it's got this limited supply profile, and this is the
Speaker 10: most important part it occupies a space in the sort
Speaker 10: of collective intelligence of how people think about markets that
Speaker 10: it benefits from chaos and sadly, I think the world
Speaker 10: is having to confront a lot of uncertainty here and
Speaker 10: so as we try to price in the what ifs
Speaker 10: of Russia, Ukraine, of terror, riffs of monetary policy, that's
Speaker 10: a lot to take in. And gold benefits from this
Speaker 10: sort of widening of you know, what we have to
Speaker 10: handicap in terms of potential outcomes.
Speaker 6: Clients you talk to, do they think there's more another
Speaker 6: leg down in this market?
Speaker 10: Yeah, I'd say it's very easy to paint pictures of,
Speaker 10: you know, further downside. I think it comes, you know,
Speaker 10: back to how much is the real economy truly affected
Speaker 10: by the tariff uncertainty?
Speaker 3: I got to get this in. I mean, it's cruel
Speaker 3: and unusual punishment. You actually bring your children in to
Speaker 3: see Bloomberg surveillance. Can we say good morning to mister
Speaker 3: Thompson really appreciate his attention to the show. My young
Speaker 3: kids even want you on YouTube while they eat breakfast
Speaker 3: night before school. Okay, I would back and said, well
Speaker 3: what do they eat? I figured it was like fruit
Speaker 3: loops or you know, and it's like Alisa Matteo breakfast.
Speaker 3: They're having like gluten free this and you know the
Speaker 3: oatmeal and you know, come on, So we say, mister
Speaker 3: thomp said, this is cruel and unusual. Punishment is, well,
Speaker 3: you didn't bring your offspring in today, did you.
Speaker 10: She could not make the five thirty wake up calls either.
Speaker 3: Either, could I. That's a separate story. Dean Kurtit thank
Speaker 3: you so much with Macros. Can't say enough about his research.
Speaker 3: Now you've got to get that through Macro Risk Advisors.
Speaker 2: This is the Bloomberg Surveillance Podcast.
Speaker 1: Listen live each weekday starting at seven am Eastern on
Speaker 1: Apple Coarplay.
Speaker 8: And Android Auto with the Bloomberg Business app.
Speaker 1: You can also listen live on Amazon Alexa from our
Speaker 1: flagship New York station. Just say Alexa play Bloomberg eleven thirty.
Speaker 3: This is a real bias that I have, folks, Which
Speaker 3: is it? We like people with prodigious engineering chops. We
Speaker 3: get some wonderful pedigree in here. Aaron McLoughlin joins us
Speaker 3: now with a conference board, and I mean the road
Speaker 3: interview is what's the FED gonna do? But underneath it
Speaker 3: all is shocking competent and transportation, Urban studies, and engineering.
Speaker 3: So we're doing a massive audible here with Aaron McLoughlin
Speaker 3: on her massive unique wheelhouse.
Speaker 11: Good morning.
Speaker 3: Why does it take so long to build anything? Paul
Speaker 3: Sweeney is out there every day looking at the tunnel
Speaker 3: over the New Jerseys. Why in America does it take
Speaker 3: so long to build anything?
Speaker 11: Permits, land acquisition, environmental regulations not in my backyard?
Speaker 2: Or do they have all of those things?
Speaker 3: Do they have not in my backyard in Switzerland?
Speaker 11: I imagine they must, although I just went to Switzerland
Speaker 11: a couple weeks ago actually and learned that it's smaller
Speaker 11: than my home state of Massachusetts my population, so you know,
Speaker 11: there's a lot more homogenious thought perhaps in other places
Speaker 11: in the world as we know. I think it's really
Speaker 11: interesting that the current administration is going to speed up
Speaker 11: federal permitting, federal regulations, but we still have state permitting
Speaker 11: and regulations and lots of other bureaucracies that will slow
Speaker 11: things down. And our supply chain is physical. So this
Speaker 11: is all really relevant conversation as we talk about reshoring.
Speaker 3: Well, we get one more thing in here. Whether they're
Speaker 3: building an Intel factory, somewhere sem a conductor and all that.
Speaker 3: Do we have the labor to do the infrastructure, whether
Speaker 3: you're expert at or do we have the labor to
Speaker 3: actually run the companies better than you do three miles
Speaker 3: west of Hong Kong.
Speaker 11: It's very interesting and that sort of lends itself to
Speaker 11: the big uncertainty. Construction labor has I believe, the highest
Speaker 11: percentage of foreign born workers. So my friends that are
Speaker 11: directly in the construction industry right now are seeing labor
Speaker 11: shortages be exasperated by some of the policies.
Speaker 3: And yes, yes we go to surveillance construction expert Paul Sweeney,
Speaker 3: or how about that bathroom redo right now?
Speaker 6: Look looking solid, all those things.
Speaker 5: Just talking about Tom talking about construction, the gateway project,
Speaker 5: the coming into the the what's going to be the
Speaker 5: new Lincoln in the new tunnel, the railroads, unbelievable what
Speaker 5: they've built in just this couple year's time. Really again,
Speaker 5: the progress that they've made out there building that new
Speaker 5: railroad thing in North Jersey's pretty cool.
Speaker 6: What we've been dealing with over the last couple of.
Speaker 5: Months, Aaron, has been economic policy coming out of Washington
Speaker 5: that we're hearing across the board, whether it's talks of
Speaker 5: tariffs or changes in immigration policies, creating a level of
Speaker 5: uncertainty out there for everybody. How do you guys reflect
Speaker 5: that in your data at the Conference Word? What are
Speaker 5: your companies that you talk to?
Speaker 11: What are they saying. So our companies are members of
Speaker 11: the Conference Board, what we're hearing from them is of
Speaker 11: course uncertainty, but it is creating I don't want to
Speaker 11: use the word paralysis, but it is creating an extreme
Speaker 11: slowdown in decision making. And that slow down we think
Speaker 11: will ripple into the economy and cause an economic slowdown.
Speaker 5: And Tom was just calling out the UBS chief executive.
Speaker 5: He's over in London. He's saying, Hey, basically their MNA
Speaker 5: stuff is frozen. I mean, you know, because people don't
Speaker 5: know what to do. How about consumer confidence? Because here
Speaker 5: in the US that's seventy percent of our economy is
Speaker 5: kind of the consumer. What's your data showing.
Speaker 11: So the Conference Board is very well known for our
Speaker 11: consumer confidence index, and it sort of dipped for the
Speaker 11: first time into what we would consider recessionary possible territory.
Speaker 11: We are not calling for a recession, but consumers are
Speaker 11: seeing what's happening around them, and they are cutting back
Speaker 11: on spending that maybe discretionary.
Speaker 9: You have four.
Speaker 3: Degrees in the Act author Education and Infrastructure, including Oxford
Speaker 3: University's wonderful infrastructure development and finance effort. Aeron McLaughlin the
Speaker 3: congestion text. Do you have an opinion that won't get
Speaker 3: you in trouble with the General counsel of the conference Board?
Speaker 11: Well, I know you all were watching outside the windows,
Speaker 11: as was I since I'm based here in mid tois Manhattan,
Speaker 11: and it certainly did ease up on it. It seemed
Speaker 11: to work, you know, like anything else. After a while,
Speaker 11: it would probably have less of an impact. Folks would get,
Speaker 11: you know, accustomed to sort of pain the fee. But
Speaker 11: congestion weighs down our economy. So there's you know, there's
Speaker 11: both sides to the conversation.
Speaker 3: Okay, they're in my ear. Ask her one question about
Speaker 3: the FED. Oh yes, What do we say is the
Speaker 3: consumer is a consumer in this shutdown so broken that
Speaker 3: the FED has to do an audible today and say
Speaker 3: we're going to wait, wait wait.
Speaker 11: I think the FED will wait wait, wait, yes, and
Speaker 11: I think it will be interesting going forward to keep
Speaker 11: an eye on labor inform labor data will increasingly be
Speaker 11: more important this year.
Speaker 3: Now, when you leave the building, if John Tucker or
Speaker 3: Michael Barr tackle you, I know to look for a
Speaker 3: parking garage north of sixtieth Street. Just run. I will
Speaker 3: call security. Aaron McLaughlin, thank you so much for the
Speaker 3: conference Board Senior economists, and we're going to get our
Speaker 3: back on this whole infrastructure debate where everything takes forever
Speaker 3: to build.
Speaker 2: This is the Bloomberg Surveillance Podcast.
Speaker 1: Listen live each weekday starting at seven am Eastern on Apple, Corplay.
Speaker 8: And Android Auto with the Bloomberg Business app.
Speaker 1: You can also watch us live every weekday on YouTube
Speaker 1: and always on the Bloomberg terminal.
Speaker 3: It is the newspapers, and they've really been something. You know,
Speaker 3: we'd like to do some lighthearted stuff here, folks, but
Speaker 3: I'll tell you just newspaper to newspaper right now. Absolutely
Speaker 3: unreal the jumble that's out there with an unreal report today,
Speaker 3: Lisa matel what do you have.
Speaker 12: Well, we always hear different stories right about President Trump's
Speaker 12: hostility toward Canada, how that's affecting different things. Now it's
Speaker 12: actually could be hurting New York City tourism. So this
Speaker 12: was in the New York Times. They say were more
Speaker 12: than one million Canadians visit New York City last year,
Speaker 12: they spent about six hundred million dollars. Only the British
Speaker 12: visit more than Canadians the New York City.
Speaker 6: I didn't realize that.
Speaker 12: So now a lot of them are canceling their trips
Speaker 12: since he imposed the tariffs on Canada, threatened to make
Speaker 12: it the fifty first state. So the data shows last
Speaker 12: month the number of Canadians flying to three airports in
Speaker 12: around the city fell eleven percent compared with twenty twenty
Speaker 12: four that same time period. And the New York Times
Speaker 12: they spoke with different tourism guys. They said, school groups,
Speaker 12: they're calling off those end of the year trips, retirees, newlyweds, friends, families,
Speaker 12: and they say that tourism boycott could extend because now
Speaker 12: people are planning twenty twenty six trips, so they might
Speaker 12: be canceling those as well.
Speaker 3: Because I'm afraid of what I'll said.
Speaker 6: No, it's just it's it's it's sad.
Speaker 5: And again, you think about Florida, and I think I
Speaker 5: know a lot of Canadians go to like you know,
Speaker 5: the Phoenix area in the winter time for all that
Speaker 5: kind of stuff.
Speaker 6: So it's not good.
Speaker 3: I would say more than anything here, I'll just opine,
Speaker 3: it's just talk about fifty first state. I grew up
Speaker 3: in basically southern Toronto which is called Rochester and across
Speaker 3: Lake Ontario. I think, like the airplane flight is eighteen
Speaker 3: minutes or serving. And it's this talk of a fifty
Speaker 3: first state.
Speaker 6: It is just it hurtful.
Speaker 3: Yeah, next, you got something lighter than that place.
Speaker 6: Shoot, how about this?
Speaker 12: More companies leaving Delaware for Nevada.
Speaker 8: Okay, And it's a move.
Speaker 12: It's called dexit, that's what they're calling it. U So
Speaker 12: Delaware's new governor, he's just warning. He's saying they're rolling
Speaker 12: the dice by leaving to Vegas. But the reason why
Speaker 12: they're doing it, they say Nevada offers as much safer
Speaker 12: bet than Delaware and it's recently become easier to move
Speaker 12: because Delaware Supreme Court changed recently they cleared companies to
Speaker 12: leave the state. So they agreed with Nevada's argument because
Speaker 12: Nevada says it should be the companies and not the
Speaker 12: courts that should conduct those costs benefit analysis.
Speaker 6: Over what state offers that better deal. So they have
Speaker 6: had a few more.
Speaker 12: You had a Bill Ackman's Pershing Square, drop box, the
Speaker 12: trade desk. They've gone from Delaware over Toll.
Speaker 3: It's a huge franchise.
Speaker 6: You go down, ye next is definitely okay.
Speaker 12: So the next time any of you please go to
Speaker 12: the Taco Bell to drive through, okay, especially those late
Speaker 12: night runs, AI could be taking your next order. We
Speaker 12: have young brands, they owned Taco Bell, Pizza hut KFC.
Speaker 6: They're partnering with Nvidia.
Speaker 12: To build these AI driven services in the restaurants. So
Speaker 12: some of them are AI powered voice ordering it the
Speaker 12: drive through. So now AI, you won't be talking to
Speaker 12: a person, you'll be talking to I guess a computer
Speaker 12: and it's going to be using about five hundred it's locations.
Speaker 12: But they're saying they're saying they're saying it's going to
Speaker 12: help boost sales doing that instead of you know, going
Speaker 12: with the regular humans. But they're saying that the humans
Speaker 12: are not going to disappear. They're still going to be there.
Speaker 6: They're just going to be.
Speaker 12: Focused more on customers service and helping the customers instead.
Speaker 12: But they're using it in different ways. You know internal
Speaker 12: things too. But McDonald's too has been you know, talking
Speaker 12: about the different technology that.
Speaker 7: Number two with a coke?
Speaker 6: How hard does that?
Speaker 3: Ordering that?
Speaker 6: Since I was fifteen?
Speaker 3: Well, what percentage of their business is like seamless, DoorDash,
Speaker 3: grub Hub.
Speaker 8: That's a good question.
Speaker 12: I know in my house it's Ginoi.
Speaker 6: Not in my house.
Speaker 3: I picked up the bag of McDonald's. I said, why
Speaker 3: are we ordering McDonald's.
Speaker 4: Who are we?
Speaker 3: What have we?
Speaker 12: Well, it's different when you walk in. I truth be told.
Speaker 12: I went to a McDonald's last week, and you go
Speaker 12: there and it's just a computer screen.
Speaker 6: You can't go up to the person anymore.
Speaker 12: So you're sitting there and I'm confused. I'm sitting there
Speaker 12: pressing like fifty million buttons. I'm like what I could
Speaker 12: have just gone to the person, told them what I wanted,
Speaker 12: and we've done like this.
Speaker 6: They made it so easy. I was so confused figured
Speaker 6: it out.
Speaker 12: But technology things are changing.
Speaker 3: Lisa Mateo the Newspapers.
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify
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