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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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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: Malex Steel alongside Paul Sweeney. Happy Friday. Everyone made it

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Speaker 2: the end of the week. Yes, we did that. Lots

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Speaker 2: to go through over the next couple hours. We want

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Speaker 2: to kick off with more on that you mished sentiment.

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Speaker 2: It is the final read for November, but I'm interested

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Speaker 2: to see sort of what that brings in when it

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Speaker 2: comes to the election result. So Joe Anshu, University of

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Speaker 2: Michigan Surveys of Consumer Director joins us sentiment coming in

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Speaker 2: at about seventy three point nine, a little bit better

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Speaker 2: current condition sixty four point four, also better expectations, also

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Speaker 2: a touch better. Does this encapsulate the election?

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Speaker 3: Yes it does so.

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Speaker 4: Our preliminary read that we released two weeks ago did

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Speaker 4: not encapsulate the election, but today's release includes two weeks,

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Speaker 4: four and two weeks after the election. Essentially, what we

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Speaker 4: saw was that after Trump was elected, sentiment lost about

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Speaker 4: half of the gains that it had seen in the

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Speaker 4: first two weeks of the month. But on net, we're

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Speaker 4: still a little bit better than we were in October,

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Speaker 4: and we are now at four straight months of incremental gains.

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Speaker 5: Johan, talk to us about inflation out look. I know

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Speaker 5: you guys at Michigan take a look at that in

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Speaker 5: your survey. How are people thinking about the inflation netlook?

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Speaker 4: In the short run, people are expecting inflation to continue stabilizing.

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Speaker 4: We saw the year ahead inflation expectations edged down by

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Speaker 4: one tenth of percent, likely supported by lower gas prices

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Speaker 4: at this time of year. That being said, we actually

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Speaker 4: saw long run inflation expectations go from three point zero

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Speaker 4: to three point two. That's kind of on the high

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Speaker 4: side of the range we've been seeing for the last

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Speaker 4: couple of years. Consumers are perceiving quite a bit of

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Speaker 4: uncertainty over long run inflation, which is consistent with the

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Speaker 4: fact that we don't really know exactly Trump's economic agenda

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Speaker 4: is going to look like over the next four years,

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Speaker 4: So that uncertainty seems quite reasonable.

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Speaker 5: All right, Joe, and thank you so much. We appreciate it.

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Speaker 5: I appreciating a couple of minutes of your time joined shoe.

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Speaker 5: She's at the University of Michigan Surveys of consumer She

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Speaker 5: directs to that whole business here and again the you

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Speaker 5: missurveyed numbers just a headline number. I'm gonna go with that.

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Speaker 5: It came in at seventy one point eight contentius seventy

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Speaker 5: three point nine and also is down a little bit

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Speaker 5: from last period as well.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on applecar Play and Android

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Speaker 1: live on Amazon Alexa from our flagship New York station.

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Speaker 1: Just say Alexa Play Bloomberg eleven thirty.

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Speaker 2: Let's get to the other big news of the day,

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Speaker 2: and that was European PMIS. They were terrible and you

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Speaker 2: definitely then saw rerating in terms of cuts, maybe a

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Speaker 2: fifty basis point cut from the ECB. So we wanted

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Speaker 2: to break it down a little bit more for you

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Speaker 2: with David Powell Senior. You're area economist for Bloomberg Economics.

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Speaker 2: David was so bad about these numbers. What stood out

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Speaker 2: to you, Well.

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Speaker 6: Actually they were bad all around, and that's really what

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Speaker 6: stood out. There was no bright spots here, so the

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Speaker 6: composite figure for the your area declined and the numbers

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Speaker 6: for both the services and manufacturing sectors were weak. In

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Speaker 6: addition to that, we get a national breakdown at the

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Speaker 6: first release which shows the numbers for France and Germany,

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Speaker 6: and it showed both of the your areas to largest

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Speaker 6: economies experience weakness. So it's not something that's just isolated

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Speaker 6: to one country or one sector. It's this broad based weakness.

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Speaker 5: Again, it's interesting that we woke up to this data

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Speaker 5: here in the States, David, and we kind of said

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Speaker 5: we knew there was you know, it was softer in

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Speaker 5: across Europe, but some of this data came in and

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Speaker 5: just really, I think, surprise the markets here. What's the

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Speaker 5: expectation for the next you know, six to twelve months

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Speaker 5: as reached in European economic activity.

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Speaker 6: Well, I think the market is bracing for deterioration in

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Speaker 6: the economic numbers coming out out of coming out of

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Speaker 6: the EUR area, and that's because of the electoral victory

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Speaker 6: of Donald Trump. One of his campaign promises was to

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Speaker 6: impose tariffs not only on China, but smaller tariffs on

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Speaker 6: other trading partners and one country that really stands out

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Speaker 6: in that list is Germany given its huge trade surplus

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Speaker 6: with the United States, and it's a country that Donald

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Speaker 6: Trump specifically referred to on many occasions during the campaign.

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Speaker 6: And we have run the numbers and our estimate is

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Speaker 6: if those tariffs turn out to be as high as

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Speaker 6: Trump promised during the campaign, that could knock in the

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Speaker 6: short term about one percent off of GDP in the

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Speaker 6: EU area. And we've also had estimates come from the

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Speaker 6: Bundesbank Germany Central Bank, and they have a similar estimate

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Speaker 6: for the German economy. And that's going to be a

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Speaker 6: big shock to demand in the your era, which will

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Speaker 6: require the ECB in all likelihood to respond the form

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Speaker 6: of lower interest rates. And that comes on top of

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Speaker 6: what was already a weak economy before any of this happened.

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Speaker 2: Okay, so do you think fifty basis points coming up?

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Speaker 6: I don't think they'll cut by fifty basis points in December.

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Speaker 6: It will certainly introduce that topic for discussion. I think

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Speaker 6: the more likely outcome is you just see a longer

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Speaker 6: period of twenty five basis point cuts. So we look

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Speaker 6: for a cut of twenty five basis points in December,

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Speaker 6: and we think the ECB will keep with these back

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Speaker 6: to back cuts being cut at every meeting until until

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Speaker 6: they reached neutral, which is about two percent. So we're

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Speaker 6: going to have numerous cuts coming up throughout the start

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Speaker 6: of twenty twenty five. And like I said, more frequent

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Speaker 6: cuts is more likely than larger cuts.

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Speaker 5: David, thank you so much for joining us. We appreciate

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Speaker 5: getting a few minutes of your time. David Powell, he's

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Speaker 5: a senior Euro Area economist for Bloomberg Economics. That joining

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Speaker 5: us from via zoom thing.

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Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on fo.

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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: So and video is built as like the biggest event

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Speaker 2: for the end of the year. And so my question

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Speaker 2: over the last twenty four hours has been, Okay, well

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Speaker 2: we're done with that, so then then what? And I

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Speaker 2: keep getting notes in my inbox about how the rally

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Speaker 2: is broadening out and then I hear, ooh, we might

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Speaker 2: be topping out in tech. Go diversify. So let's get

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Speaker 2: someone whose job is to actually understand all this. Grace Lee,

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Speaker 2: senior portfolio manager for Columbia thread Needle, joins us. Now, Grace,

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Speaker 2: what is the right strategy now that we're done with Nvidia?

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Speaker 6: Now? What?

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Speaker 8: Well? I think we always have to pay attention to

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Speaker 8: in video and I think what in videos earnings showed

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Speaker 8: us this week is that the AI theme is still

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Speaker 8: alive and well, and so I think we can't ignore that.

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Speaker 8: That said, there are plenty of other sectors and I

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Speaker 8: think we're starting to see DOT. You know, we've started

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Speaker 8: to see it all year. You know, you've seen a

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Speaker 8: stealth rally in utilities and banks, especially post elections. You know,

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Speaker 8: there has been definitely a people taking a second look

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Speaker 8: at financials and other sectors that might have been a

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Speaker 8: little bit more ignored during the year because of maybe

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Speaker 8: regulatory concerns and things which have certainly eased post elections.

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Speaker 5: Grace, what did the election mean to you and your

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Speaker 5: team when you woke up that Wednesday morning? Did it

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Speaker 5: alter your outlook or how you're thinking about allocation or sectors?

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Speaker 5: How did you think about that?

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Speaker 8: No, I think mostly it was a huge clearing event

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Speaker 8: that it was decisive. It didn't take days or weeks

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Speaker 8: to count the votes or anything, and then I think

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Speaker 8: that it really is probably more of a positive I

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Speaker 8: think for the for the markets. The one takeaway I

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Speaker 8: would say is that at this point I probably don't

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Speaker 8: want to be more defensive. You know, I think I

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Speaker 8: think business leaders, company managements that we've met with since

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Speaker 8: the elections, they are more optimistic about what might happen

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Speaker 8: under a Trump administration and with the Republican Congress.

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Speaker 2: What are your favorite top companies right now? Let's give

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Speaker 2: me a couple that really float your boat.

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Speaker 8: Well, I think in terms of I would broaden it

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Speaker 8: out to maybe some sectors I think, you know, I

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Speaker 8: would say utilities is actually an interesting one. As much

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Speaker 8: as I say, don't get more defensive, there are some

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Speaker 8: some actual secular themes going on in in the utility sector.

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Speaker 8: And by by utilities, I'm not talking certainly the power

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Speaker 8: producers have done very well this year. But you know,

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Speaker 8: when when you think of Plaine Vanilla regulated utilities, I

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Speaker 8: would say that if there's ever a time to get

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Speaker 8: excited about about these companies, now is that time. And

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Speaker 8: you know, these are companies like Excel Energy, Southern Company,

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Speaker 8: the ones that maybe your you know, grandmother might have

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Speaker 8: been clipping the dividends. But at this point, what we've

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Speaker 8: seen is that we've had flat power demand for probably

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Speaker 8: over twenty years, and that is now changing for the

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Speaker 8: next several years where it's not just AI data centers,

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Speaker 8: it's just broader electrification, these crypto mining and resuring. That's

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Speaker 8: going to drive a lot more power demand, which means

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Speaker 8: that the regulated utilities will have to invest, and that

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Speaker 8: means that their earnings growth takes up higher. And we've

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Speaker 8: started seeing that in reality this quarter, where you've seen

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Speaker 8: some really interesting stock reactions, you know, maybe even double

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Speaker 8: digit price gains in a day off of just slightly

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Speaker 8: higher long term earnings outlooks. And I think that can

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Speaker 8: continue within the c Hey grace.

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Speaker 5: As a former banker, when I woke up that Wednesday morning,

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Speaker 5: I said, uh, oh, M and A. I think that

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Speaker 5: could be back on the front burner here. The regulators

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Speaker 5: have been really really tough on M and A or

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Speaker 5: list several years. That might change. Does that factor into

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Speaker 5: how you think about what sectors to get exposure to.

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Speaker 8: I think broadly M and A should pick up. People

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Speaker 8: have been waiting for this for a long time. I

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Speaker 8: think you know, financials are obviously front and center there.

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Speaker 8: You know, we're we're certainly involved in some of the

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Speaker 8: capital market stocks, some of the alternative investment managers which

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Speaker 8: we think we will will certainly see benefits there. But

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Speaker 8: you know, I think broadly and possibly you know, we

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Speaker 8: don't traffic in small caps a ton, but I think

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Speaker 8: some of the smaller mid cap companies might might also

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Speaker 8: be a little bit more interesting in this environment as

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Speaker 8: potential targets.

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Speaker 2: Yeah, profitable small camp that's really been out performing. All right,

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Speaker 2: thanks so much, Grace, really appreciate it. Grace Lee, Senior

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Speaker 2: portfolio manager for Columbia Thread Needle. Joining us.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on applecar.

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Speaker 1: flagship New York station. Just say Alexa play Bloomberg eleven thirty.

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Speaker 2: Another story that we're following today concerns oil and JP

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Speaker 2: Morgan and Iran. So apparently the US Treasury Department is

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Speaker 2: examining JP Morgan's relationship with a hedge fund that is

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Speaker 2: said to be part of a network that's overseen by

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Speaker 2: Iranian oil trader hosting Chamkani. We want to understand sort

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Speaker 2: of more on this. What might this violate in terms

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Speaker 2: of sanctions or not. So we're here to break us

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Speaker 2: down for us as Elliott Stein Bloomberg intelligence litigation analyst.

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Speaker 2: Can you just give us the facts first?

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Speaker 3: Yeah?

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Speaker 9: So, I mean the investigations early, the reporting is early.

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Speaker 9: A lot of unknowns, both known and unknown at this point.

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Speaker 9: But it sounds like the Treasury Department is investigating JP

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Speaker 9: Morgan in relation to its connection to this hedge fund

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Speaker 9: that's based in London and Dubai and the hedge funds

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Speaker 9: connection to an oil trader, And it sounds like the

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Speaker 9: overall investigation is focused on the oil trader, but the

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Speaker 9: Treasury departments also looking at JP Morgan to make sure

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Speaker 9: that it followed its you know, due diligence and did

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Speaker 9: its KYC and know your customer and AML compliance processes.

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Speaker 5: And I guess I'm just looking at the Bloomberg reporting.

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Speaker 5: I guess folks there say JP Morgan feels like they

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Speaker 5: don't need to do anything here because neither the Shimkhani

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Speaker 5: guy nor the company appear in any sanctions list.

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Speaker 3: I guess, right, yeah, and this may be you know,

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Speaker 3: this may be a nothing burger. There may be nothing there.

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Speaker 9: And you know, best case scenario, or one possible scenario

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Speaker 9: where JP Morgan has no exposure, is that maybe it

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Speaker 9: did all its due diligence and it was misled by

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Speaker 9: you know, the the companies that was doing its due

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Speaker 9: diligence on That's just one possibility. But worst case scenario,

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Speaker 9: it didn't do it's due diligence or it ignored red

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Speaker 9: flags and we've seen, you know, recently with TD Bank

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Speaker 9: what that can amount to.

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Speaker 2: So if this oil trader did have a relationship with

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Speaker 2: this individual from Iran, what does that potentially violate? What

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Speaker 2: are the sanctions and the rules currently that would make

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Speaker 2: that a problem, right, So, you.

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Speaker 9: Know, banks should not be doing business with companies that

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Speaker 9: are under sanctions or on you know, special lists, you know,

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Speaker 9: And so it's unclear what the connection is though to

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Speaker 9: this oil trader.

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Speaker 3: Apparently he is the son of someone who was.

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Speaker 9: In the Ayatolla's like inner circle, so there may be

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Speaker 9: some connections. But we've seen in the past that banks

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Speaker 9: have paid billions of dollars for doing transactions with the

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Speaker 9: Iranian government or other Iranian entities that are on sanctions lists.

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Speaker 3: So it can be very costly. But it's not clear

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Speaker 3: that the investigation is even focused on that, and may

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Speaker 3: be sort of just to make sure that JP Morgan

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Speaker 3: was doing its due diligence.

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Speaker 5: And doing through that. The training here at Bloomberg about

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Speaker 5: this type of issues, yeah, the type of training that

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Speaker 5: the same thing we receive and I'm sure everybody across

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Speaker 5: the industry, to various degrees receives about Hey, if you're

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Speaker 5: doing business with somebody that may or may not be

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Speaker 5: on a list, just stop, call your boss, call complaints,

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Speaker 5: see what the gig is before you move forward.

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Speaker 2: Well, it sounds like this could be like a third derivative.

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Speaker 9: Exactly, And that's why there's a lot of unknowns here.

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Speaker 9: The bank may have no exposure, but anytime you're talking

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Speaker 9: about sanctions on Iran and you know banks doing transactions

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Speaker 9: you know indirectly as well, you know, your eyebrows get

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Speaker 9: raised and banks have paid.

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Speaker 3: A lot of money in the past for failures related

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Speaker 3: to this.

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Speaker 2: Do we feel that sanctions could get more strenuous under

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Speaker 2: President Trump? Like, what are you thinking about?

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Speaker 3: Certainly possible, right I mean, yeah, I would expect that.

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Speaker 5: I would expect it, all right, So I'm going to

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Speaker 5: a JP Moore stocks up one percent today, up forty

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Speaker 5: five percent year to date, so I'm assuming the market's

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Speaker 5: discounting this is a non risk issue. How about other

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Speaker 5: litigation that your work? What else are you working on?

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Speaker 5: Because you do the litigation that companies have the deal

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Speaker 5: with that can move stocks.

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Speaker 9: Absolutely and actually in this arena, there are several other

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Speaker 9: banks that are under investigation for either AML violations or

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Speaker 9: potentially sanctions violations. UBS is being investigated with in connection

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Speaker 9: with clients that have took over from Credit Sue who

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Speaker 9: may be in violation of sanctions on Russia. There's a

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Speaker 9: swedest Sweat Bank that has been under investigation for AML

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Speaker 9: violations for years now, so I'm waiting for a penalty there.

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Speaker 9: There's a Turkish bank, Hawkbank, that was indicted by the

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Speaker 9: US government for violating sanctions on Irun.

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Speaker 3: So that's one area I'm looking at.

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Speaker 9: Another big area right now is all these rules and

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Speaker 9: regulations that the SEC and other regulators have put into

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Speaker 9: place under the Biden administration. There's a lot of lawsuits

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Speaker 9: over them, and so we're waiting to see what is

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Speaker 9: going to happen with the rules and with the lawsuits.

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Speaker 2: What else would a Trump victory mean for your world?

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Speaker 9: Right, So, in connection with these rules and regulations that

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Speaker 9: the SEC has promulgated during the Biden administration and the

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Speaker 9: CFPB as well, we're expecting a lot of the rules

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Speaker 9: and regulations to maybe be paused in terms of enforcing them,

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Speaker 9: and then the regulators will probably go back and revisit

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Speaker 9: the rules, but that takes a while. I'm also you know,

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Speaker 9: I'm attuned to the courts as well, and I'm particularly

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Speaker 9: interested in seeing whether.

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Speaker 3: The two oldest justices on the Supreme Court.

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Speaker 9: Clarence Thomas and Sam Alito, retire, probably at some point

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Speaker 9: during this next Trump administrator life, in which case he

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Speaker 9: would name the replacements and you'll have a conservative majority

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Speaker 9: for at least another generation on the Supreme Court.

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Speaker 7: Interesting.

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Speaker 5: Wow, because you started off fine going to Stanford, then

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Speaker 5: you went to get a law degree. It all turns

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Speaker 5: south Man. What were you thinking?

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Speaker 3: Have you marked your calendar for the Stanford Duke basketball game?

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Speaker 5: No, because we're now in the same conference, right, Yeah,

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Speaker 5: when is that?

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Speaker 3: I don't have a car, but I think I think

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Speaker 3: it's in January, maybe February.

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Speaker 5: I want to check it outre Stanford is in the

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Speaker 5: Atlantic Coast Conference. That makes sense.

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Speaker 3: Yeah, big game this weekend.

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Speaker 5: My Duke Field hockey team had a little problem getting

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Speaker 5: out to the Bay Area for their games against it

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Speaker 5: because you have to Drham, you have to transfer and connect,

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Speaker 5: and I'm like, why are my kids going out to

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Speaker 5: San Francisco for It's just the whole thing's a mess.

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Speaker 5: Elliot Stein Bloomberg Intelligence litigation analysts joining us here in

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Speaker 5: our Bloomberg Interactive Brokers Studio.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on applecar.

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Speaker 1: flagship New York station Just say Alexa playing Bloomberg eleven thirty.

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Speaker 2: Happy for Friday. We made it to the end of

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Speaker 2: the week. I'm Alex d alongside Paul swe Need. This

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Speaker 2: is Bloomberg Intelligence Radio. We bring you all the top

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Speaker 2: news and business, economics and finance through our lens of

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Speaker 2: our Bloomberg Intelligence folks. We also tap an amazing network

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Speaker 2: of resources outside of Bloomberg Intelligence, and we're going to

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Speaker 2: tap one right now. Jessica Kriegel is chief strategy Officer

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Speaker 2: of Workforce and Labor at Culture Partner. She joins US

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Speaker 2: now from Sacramento, California. So the headline from this week

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Speaker 2: that we didn't really get to digest as much was

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Speaker 2: Elon Musk and Vivek Ramaswami outlining a plan for large

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Speaker 2: scale firings of the federal workforce, in part, guys, get

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Speaker 2: your butt backs in the office five days a week.

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Speaker 2: You don't want to do it, and then you're going

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Speaker 2: to quit. Is this realistic? What's your take on something

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Speaker 2: like this?

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Speaker 10: Well, they argue that it is absolutely realistic, and you've

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Speaker 10: already seen a precedent set in the corporate world where

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Speaker 10: people are forcing employees back into the office five days

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Speaker 10: a week. What is a little bit different or maybe

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Speaker 10: even refreshing, you could argue, is that they are being

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Speaker 10: straightforward about the fact that they anticipate by forcing people

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Speaker 10: back into the office five days a week, that people

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Speaker 10: will quit, and they welcome that. I think that's probably

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Speaker 10: true for a lot of CEOs who make that decision

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Speaker 10: because they know their workforce values flexibility, and yet they're

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Speaker 10: forcing them to go back into the office. So they

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Speaker 10: are being in some ways at least transparent that there

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Speaker 10: is an alternative motivation for forcing people back into the office.

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Speaker 10: It's not about quote unquote culture, it's not about quote

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Speaker 10: unquote collaboration. It's really about we want to reduce the workforce,

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Speaker 10: and this is one of the many tools that we

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Speaker 10: will use.

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Speaker 5: So I guess in the federal government again, Elon musk

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Speaker 5: vivek Ramaswani, what do you think they could do?

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Speaker 3: Should do?

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Speaker 5: When you think about I don't know, waste inefficiency bureaucracy.

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Speaker 5: Is there a preferred way to kind of go about

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Speaker 5: this or you just take a you know, a clever

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Speaker 5: and lop off ten percent?

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Speaker 3: Well, should do?

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Speaker 10: Can? I'll leave that up to the political analysts. But

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Speaker 10: what I will say is they're arguing that the bureaucracy

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Speaker 10: is wildly inefficient, and they're not wrong because if you

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Speaker 10: look at accountability in bureaucracies as compared to the free markets,

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Speaker 10: there is less accountability, right, There's less consequences for failure

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Speaker 10: in a bureaucracy. There's less competition, and so accountability necessarily

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Speaker 10: goes down. And they're saying we need to address that.

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Speaker 10: It's not necessarily a problem the size of the federal government.

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Speaker 10: The federal government is the largest employer in America with

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Speaker 10: three million employees. But size isn't in and of itself

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Speaker 10: the problem, right Look at Amazon. Amazon has one point

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Speaker 10: five million employees, and they could deliver a band book

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Speaker 10: to your doorstep in the next eight hours. Right. The

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Speaker 10: problem is the lack of accountability, and that is in

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Speaker 10: particular what they are wanting to address with. Yes, it

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Speaker 10: sounds like a cleaver, Uh, how do they do that if?

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Speaker 2: Okay, so let's say that they didn't just do the clever.

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Speaker 2: How do you transform culture and help productivity in a

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Speaker 2: government agency.

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Speaker 10: Well, what we know from helping companies transform culture is

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Speaker 10: that culture does not go down without a fight. So

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Speaker 10: this is going to be incredibly disruptive. And here's the

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Speaker 10: pros and cons of disruption. Innovation comes from disruption. You

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Speaker 10: cannot have innovation without disruption. But disruption does not in

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Speaker 10: and of itself create innovation, right, Disruption can simply be

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Speaker 10: catastrophic to culture. And so what they are doing is

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Speaker 10: they are creating an opportunity, but they are also creating

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Speaker 10: a potential massive headache. And I do believe from the

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Speaker 10: federal workers and also from the public, there will be

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Speaker 10: resistance to change. There's always resistance to massive change like this,

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Speaker 10: And what we've also seen is the best things come

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Speaker 10: from the organizations that embrace change. So the extent to

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Speaker 10: which the federal workers and the public are able to

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Speaker 10: embrace this change will probably have a lot to do

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Speaker 10: with how well this is going to end up.

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Speaker 5: I feel like I have to ask us for a

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Speaker 5: while there this was a big issue for me, but

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Speaker 5: where is the US private sector economy in terms of

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Speaker 5: work from home, hybrid that type of thing. Have we

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Speaker 5: settled into a new normal or are the sands still

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Speaker 5: shifting there?

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Speaker 10: They're still shifting, so we see various plateaus in what

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Speaker 10: normal is year over year. I believe I'm coming out

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Speaker 10: soon with an article on the workplace trends of twenty

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Speaker 10: twenty five. The year twenty twenty five is going to

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Speaker 10: be the year of forcing people back into the office

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Speaker 10: five days a week. Usually what happens is there's a

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Speaker 10: lot of press about one big deal CEO forcing people

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Speaker 10: back into the office, which has already happened, and now

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Speaker 10: it's happening again with this announcement from Bavek and elon.

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Speaker 10: And so next year that empowers other leaders who wish

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Speaker 10: their employees were back in the office to get back

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Speaker 10: into the office. And you're going to continue to see

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Speaker 10: a push. We had plateaued it around three days a week,

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Speaker 10: but it's going to go even more back into the

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Speaker 10: office next year.

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Speaker 2: Okay that this means then that my commute in on

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Speaker 2: Fridays and Mondays now will be more trafficked. I don't

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Speaker 2: love that. I don't love that for me, Like we're

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Speaker 2: already here five days a week, when I've been here

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Speaker 2: five days a week since June and twenty twenty, so

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Speaker 2: it's like, yeah, whatever, but don't make traffic back. That's

440
00:23:01,040 --> 00:23:03,560
Speaker 2: a bummer. Exactly all right, We really appreciate it. Thank

441
00:23:03,600 --> 00:23:06,639
Speaker 2: you so much for all your insight on this. Jessica

442
00:23:06,720 --> 00:23:10,119
Speaker 2: Kriegel as Chief Strategy Officer of Workforce and Labor for

443
00:23:10,480 --> 00:23:13,640
Speaker 2: Culture Partners, joining us on that, speaking of I don't

444
00:23:13,680 --> 00:23:15,080
Speaker 2: know nothing in culture.

445
00:23:14,760 --> 00:23:17,679
Speaker 5: But it's interesting, Like I talked to my twenty eight

446
00:23:17,720 --> 00:23:20,960
Speaker 5: year old daughter who has only worked really during the

447
00:23:21,119 --> 00:23:24,280
Speaker 5: started working kind of in a pandemic era. It's not

448
00:23:24,400 --> 00:23:27,240
Speaker 5: even I guess they can reprogram, but for a while there.

449
00:23:27,240 --> 00:23:30,440
Speaker 5: It wasn't even in her DNA to do that, to

450
00:23:30,520 --> 00:23:33,040
Speaker 5: come in five days a week, I mean, she feels crazy. Yeah.

451
00:23:33,080 --> 00:23:35,919
Speaker 5: So I think they're getting reprogrammed back because they're now

452
00:23:35,960 --> 00:23:37,840
Speaker 5: in four days a week at her employer, which will

453
00:23:37,920 --> 00:23:40,280
Speaker 5: likely go to five. But for a while, it just

454
00:23:40,400 --> 00:23:42,080
Speaker 5: wasn't in her DNA to think about that.

455
00:23:42,440 --> 00:23:45,080
Speaker 2: I mean, I understand having a flex day here and there, like, hey,

456
00:23:45,160 --> 00:23:47,200
Speaker 2: my kids said, I got to work from home. Okay, great,

457
00:23:47,440 --> 00:23:50,439
Speaker 2: but like that's that feels like an exceptions, right.

458
00:23:50,359 --> 00:23:50,600
Speaker 7: It does.

459
00:23:50,680 --> 00:23:54,640
Speaker 5: And I think Jessica was saying, it's slowly been going

460
00:23:54,680 --> 00:23:56,280
Speaker 5: back to work from home, but I mean work from

461
00:23:56,400 --> 00:23:58,680
Speaker 5: the office. But we'll see how that plays out. I

462
00:23:59,160 --> 00:24:02,080
Speaker 5: still see a lot of vacant commercial space here in

463
00:24:02,119 --> 00:24:03,040
Speaker 5: a city, oh my god.

464
00:24:03,160 --> 00:24:05,520
Speaker 2: Yeah, although across the street on Lex it looks like

465
00:24:05,560 --> 00:24:09,440
Speaker 2: they're doing some construction on that massive retail space. Yes, anyway,

466
00:24:09,640 --> 00:24:10,720
Speaker 2: that's just food for thought.

467
00:24:12,200 --> 00:24:16,040
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

468
00:24:16,160 --> 00:24:19,080
Speaker 1: weekdays at ten am Eastern on applecar.

469
00:24:18,680 --> 00:24:21,440
Speaker 7: Play and Android Auto with the Bloomberg Business app.

470
00:24:21,600 --> 00:24:24,399
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00:24:24,440 --> 00:24:28,800
Speaker 1: flagship New York station Just Say Alexa Play Bloomberg eleven thirty.

472
00:24:29,920 --> 00:24:31,480
Speaker 2: All right, let's get back to the market here and

473
00:24:31,560 --> 00:24:34,359
Speaker 2: sort of what's next. I'm getting all the research about

474
00:24:34,400 --> 00:24:37,880
Speaker 2: twenty twenty five and what to expect. Christina Hooper, chief

475
00:24:37,920 --> 00:24:41,120
Speaker 2: Global market strategist at Invesco, joins US now, I feel

476
00:24:41,119 --> 00:24:43,280
Speaker 2: like every strategist is now sixty five hundred and sixty

477
00:24:43,280 --> 00:24:45,359
Speaker 2: six hundred on the S ANDP for next year? Is

478
00:24:45,400 --> 00:24:47,239
Speaker 2: this the right metric for us to be looking at

479
00:24:47,320 --> 00:24:50,639
Speaker 2: right now? So, Alex, we.

480
00:24:50,800 --> 00:24:54,239
Speaker 11: Actually don't give a set target, but I do think

481
00:24:54,359 --> 00:24:58,399
Speaker 11: directionally it's appropriate to assume that we see stocks go

482
00:24:58,640 --> 00:25:01,240
Speaker 11: up next year. I think we shouldn't just be looking

483
00:25:01,280 --> 00:25:02,920
Speaker 11: at the S and P five hundred. We should be

484
00:25:03,040 --> 00:25:06,000
Speaker 11: looking at markets outside the US, and I think directionally

485
00:25:06,400 --> 00:25:08,760
Speaker 11: they're likely to move higher as well. And I actually

486
00:25:08,840 --> 00:25:13,440
Speaker 11: think we could see UK equities, for example, outperform US

487
00:25:13,560 --> 00:25:16,360
Speaker 11: equities next year. I think there are opportunities in emerging

488
00:25:16,520 --> 00:25:20,520
Speaker 11: markets equities, so there is a lot more out there

489
00:25:20,800 --> 00:25:24,120
Speaker 11: than just focusing on US large cap stocks.

490
00:25:24,280 --> 00:25:26,960
Speaker 2: I feel sacriligious, Christina, I thought it was the whole

491
00:25:27,040 --> 00:25:31,160
Speaker 2: US exceptionalism kind of thing. Well, I don't know if.

492
00:25:31,040 --> 00:25:34,520
Speaker 11: It's necessarily US exceptionalism. We had a few things going

493
00:25:34,560 --> 00:25:36,840
Speaker 11: in our favor over the last few years that made

494
00:25:36,880 --> 00:25:40,600
Speaker 11: the US economy more resilient. Namely, I think first and

495
00:25:40,680 --> 00:25:44,560
Speaker 11: foremost would be long term fixed rate mortgages. That meant

496
00:25:44,640 --> 00:25:48,920
Speaker 11: the transmission mechanism for monetary policy wasn't as strong in

497
00:25:49,080 --> 00:25:52,320
Speaker 11: the US. We just didn't have as negative an impact

498
00:25:52,359 --> 00:25:56,040
Speaker 11: from aggressive tightening as some other Western developed economies, and

499
00:25:56,119 --> 00:25:59,080
Speaker 11: that certainly was helpful. The other key factor I think

500
00:25:59,400 --> 00:26:02,480
Speaker 11: was the amount of fiscal stimulus thrown at the US

501
00:26:02,560 --> 00:26:05,960
Speaker 11: economy by the federal government. A lot of governments put

502
00:26:06,040 --> 00:26:08,800
Speaker 11: stimulus into their economies, but not at the level that

503
00:26:08,880 --> 00:26:09,479
Speaker 11: the US did.

504
00:26:10,560 --> 00:26:14,440
Speaker 5: Christina, When you woke up two weeks ago Wednesday and

505
00:26:14,600 --> 00:26:17,400
Speaker 5: we've got you know, we saw the new presidential election

506
00:26:17,520 --> 00:26:19,879
Speaker 5: results and now we know that Congress is firmly in

507
00:26:20,119 --> 00:26:22,600
Speaker 5: the hands of Republicans. Has that changed kind of how

508
00:26:22,640 --> 00:26:26,600
Speaker 5: you guys at investco think about asset allocation, how much

509
00:26:26,720 --> 00:26:28,960
Speaker 5: risk you want to take? Did the elections change anything

510
00:26:29,000 --> 00:26:29,360
Speaker 5: for you guys?

511
00:26:30,920 --> 00:26:33,760
Speaker 11: Not very much, because we think it's far more important.

512
00:26:35,160 --> 00:26:38,639
Speaker 11: The more important factor is who is sitting at the

513
00:26:38,800 --> 00:26:41,040
Speaker 11: helm of the Fed than who was sitting in the

514
00:26:41,080 --> 00:26:44,400
Speaker 11: White House. I think the reality is that monetary policy

515
00:26:44,640 --> 00:26:48,200
Speaker 11: matters more for markets. Now that doesn't mean that policy

516
00:26:48,400 --> 00:26:51,040
Speaker 11: coming out of the White House has no impact. We

517
00:26:51,119 --> 00:26:54,840
Speaker 11: think of it as something akin to swing factors. We

518
00:26:55,000 --> 00:26:57,920
Speaker 11: have to be concerned about tariffs that certainly the first

519
00:26:57,960 --> 00:27:02,480
Speaker 11: time around created more volatility and created some selloffs for

520
00:27:02,880 --> 00:27:06,959
Speaker 11: the stock market. We also have to think about, for example,

521
00:27:07,000 --> 00:27:10,480
Speaker 11: immigration policy and the potential for it to impact inflation.

522
00:27:11,440 --> 00:27:16,920
Speaker 11: But those are really eclipsed by monetary policy and by

523
00:27:17,200 --> 00:27:20,360
Speaker 11: all the factors that have gone into the US economy

524
00:27:20,480 --> 00:27:23,760
Speaker 11: thus far that have enabled it to have essentially a

525
00:27:23,880 --> 00:27:27,400
Speaker 11: soft landing and what I think prepares us for reacceleration

526
00:27:27,600 --> 00:27:27,959
Speaker 11: next year.

527
00:27:28,960 --> 00:27:32,240
Speaker 2: When we take a look at the central bank cutting cycle,

528
00:27:32,359 --> 00:27:35,000
Speaker 2: let's leave Japan out of it. Do you need to

529
00:27:35,080 --> 00:27:37,560
Speaker 2: think about the areas where you might see more cuts?

530
00:27:37,680 --> 00:27:40,200
Speaker 2: So I'm just looking at the data from Europe in

531
00:27:40,320 --> 00:27:43,199
Speaker 2: terms of the pmis, they were terrible. Now we're talking about, oh,

532
00:27:43,240 --> 00:27:45,359
Speaker 2: we're going to see a fifty basis point cut. Is

533
00:27:45,400 --> 00:27:47,000
Speaker 2: that a good indication of kind of where to go

534
00:27:47,240 --> 00:27:48,480
Speaker 2: by how much the bank can cut?

535
00:27:50,359 --> 00:27:50,479
Speaker 6: Well?

536
00:27:50,560 --> 00:27:54,280
Speaker 11: I certainly think that is one helpful factor to consider.

537
00:27:55,280 --> 00:27:58,399
Speaker 11: I think it certainly matters in terms of currencies, and

538
00:28:00,119 --> 00:28:04,560
Speaker 11: I do think that the more easing that comes, certainly

539
00:28:04,680 --> 00:28:08,680
Speaker 11: that can be a powerful catalyst for economies. We also

540
00:28:08,800 --> 00:28:13,080
Speaker 11: have to recognize that part of the equation for investing

541
00:28:13,600 --> 00:28:16,000
Speaker 11: is how much negative sentiment is priced in, and so

542
00:28:16,160 --> 00:28:19,800
Speaker 11: when we do have a scenario where there's some negative

543
00:28:19,880 --> 00:28:23,920
Speaker 11: data coming out, there is the potential for positive surprise,

544
00:28:24,119 --> 00:28:27,919
Speaker 11: especially if we have significant easing. So I am excited

545
00:28:27,920 --> 00:28:31,200
Speaker 11: about European equities. I also think the valuations are attractive.

546
00:28:31,520 --> 00:28:35,440
Speaker 11: I think dividend yields are solid, So that's certainly. Those

547
00:28:35,440 --> 00:28:39,160
Speaker 11: are all factors that I would consider that make for

548
00:28:40,040 --> 00:28:43,000
Speaker 11: investors make a compelling case for investors to at least

549
00:28:43,040 --> 00:28:46,760
Speaker 11: have some exposure to European equities fixed income space.

550
00:28:47,120 --> 00:28:49,440
Speaker 5: Christina, do I sit with my two year Treasury at

551
00:28:49,440 --> 00:28:51,080
Speaker 5: four point three six percent or do I take some

552
00:28:51,200 --> 00:28:51,959
Speaker 5: credit risk out there?

553
00:28:53,560 --> 00:28:55,880
Speaker 11: I think you need to take some credit risk. The

554
00:28:56,040 --> 00:28:59,720
Speaker 11: US economy is in rather good shape and there's the

555
00:28:59,760 --> 00:29:03,720
Speaker 11: potential for I think there's a very good likelihood that

556
00:29:03,800 --> 00:29:07,320
Speaker 11: we see a reacceleration in the US economy next year.

557
00:29:07,720 --> 00:29:10,640
Speaker 11: So in this environment, you want to take credit risk.

558
00:29:11,200 --> 00:29:14,440
Speaker 11: You want to have exposure to high quality, high yield,

559
00:29:14,840 --> 00:29:18,480
Speaker 11: investment grade bank loans. This is an environment where there

560
00:29:18,560 --> 00:29:22,120
Speaker 11: are many attractive asset classes within the fixed income space.

561
00:29:23,480 --> 00:29:25,280
Speaker 2: What happens to all the money and money market funds?

562
00:29:25,320 --> 00:29:27,280
Speaker 2: Do you think eventually that winds up taking on more risk?

563
00:29:27,400 --> 00:29:28,200
Speaker 2: How long does that take?

564
00:29:30,320 --> 00:29:30,360
Speaker 6: So?

565
00:29:30,440 --> 00:29:35,600
Speaker 11: I think it absolutely eventually goes into both equities and

566
00:29:35,680 --> 00:29:39,920
Speaker 11: fixed income. And I think that as we see continued

567
00:29:39,960 --> 00:29:43,640
Speaker 11: easing by the FED, that's certainly a helpful catalyst. As

568
00:29:43,720 --> 00:29:48,360
Speaker 11: well as the psychological impact of FOMO. I think we're

569
00:29:48,560 --> 00:29:51,600
Speaker 11: likely to see stocks move higher from here, and not

570
00:29:51,800 --> 00:29:54,120
Speaker 11: just stocks in the US elsewhere, and so I think

571
00:29:54,240 --> 00:29:59,840
Speaker 11: those are all reasons why and drivers for money start

572
00:30:00,240 --> 00:30:01,720
Speaker 11: to come out of cash.

573
00:30:02,360 --> 00:30:06,000
Speaker 2: I'm thinking about it, thinking about it, liad it. If

574
00:30:06,000 --> 00:30:08,600
Speaker 2: I'm thinking about it, that means stuff. I definitely have

575
00:30:08,720 --> 00:30:10,400
Speaker 2: some viewers that pin me all the time. You're like,

576
00:30:10,440 --> 00:30:12,800
Speaker 2: what are you doing? Get into high yeld ETFs? Come

577
00:30:12,840 --> 00:30:15,040
Speaker 2: on now, all right, Christina, thanks a lot, We really

578
00:30:15,040 --> 00:30:19,240
Speaker 2: appreciate it. Christina Hooper joining us from Investco. She's the

579
00:30:19,280 --> 00:30:22,400
Speaker 2: chief of Global market strategist over on that side.

580
00:30:22,760 --> 00:30:23,360
Speaker 5: This is the.

581
00:30:23,440 --> 00:30:28,280
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582
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