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Speaker 2: YouTube Right now, David Balin joins chief executive officers CIO
Speaker 2: Capital and of course Decades It's City Group as well.
Speaker 2: What is the emotion that you see out there among investors, David?
Speaker 3: Is it truly the exuberance of a bull market.
Speaker 4: There's no question time that we see the exuberance of
Speaker 4: a bull market. And I think that people are beginning
Speaker 4: to focus on twenty twenty six and take a look
Speaker 4: at what's going to happen for earnings and things like that,
Speaker 4: and they are, you know, they're pretty bullish on it.
Speaker 4: And I think what they're missing right now is that
Speaker 4: if tariffs are cleaned up, if we actually knew what
Speaker 4: the tariff policy was, we can have a very robust
Speaker 4: twenty twenty six. If we continue to have the kind
Speaker 4: of policy now that varies, we're going to see some
Speaker 4: real issues with two different parts of the economy, one
Speaker 4: manufacturing slowing down, and unemployment rising. And the second is
Speaker 4: that there are a lot of tech companies that, if
Speaker 4: they don't get air under their wings, will remain unprofitable
Speaker 4: in twenty six six and that could create an overhanging
Speaker 4: the market.
Speaker 3: I look at my chart.
Speaker 2: Of the day which was on on Twitter, and it's
Speaker 2: a huge investment contribution of AI computer software into our GDP.
Speaker 2: Is this a fictional buoyant economy? Is it a pretend
Speaker 2: buoyant economy?
Speaker 3: It is?
Speaker 4: This is tom This is perhaps the most real investment
Speaker 4: cycle that we've seen since the Internet boom. But the
Speaker 4: difference this time is we're building an extraordinary amount of
Speaker 4: infrastructure order of magnitude. Four hundred billion dollars has been
Speaker 4: committed this year alone. We've seen a forty percent increase
Speaker 4: right in all of the related hardware and commitments for
Speaker 4: chips this year. Next year we expect to see another
Speaker 4: growth rate. The market expects about a ten percent growth
Speaker 4: rate in that area. We think it'll be more like
Speaker 4: fifteen percent on top of that. And that's an enormous
Speaker 4: amount of capital. And then, of course, the impact of
Speaker 4: AI itself on business will take place after that. Not
Speaker 4: all of those investments are going to be successful, but
Speaker 4: they are going to transform the economy here in the
Speaker 4: United States and certainly in China, and that's happening right now.
Speaker 4: And those are both investable, and I think that what
Speaker 4: is county railing that and what's makes you doubted, I think, Tom,
Speaker 4: and there's legitimate, is that you have a boom in
Speaker 4: this area right and you have a bit of a
Speaker 4: bust in two parts of the economy, one being in
Speaker 4: healthcare and specifically you know in the fact that healthcare
Speaker 4: shares are trading perhaps as bad as they have at
Speaker 4: any time in the last twenty years on evaluation basis.
Speaker 4: And the second is you're not seeing a pick up
Speaker 4: in manufacturing or manufacturing employment yet that, as I mentioned,
Speaker 4: is really TIAP related.
Speaker 2: David, You've done a great study of cash. What's changed, say,
Speaker 2: in the last one hundred.
Speaker 3: Days, nothing, Tom.
Speaker 4: Cash is in my mind, simply the most ignored part
Speaker 4: of the retail balance sheet and the family office balant
Speaker 4: sheet that I've ever seen in my entire career. Just
Speaker 4: to give you some numbers, family offices have somewhere between
Speaker 4: on average nine to nine and a half percent in
Speaker 4: cash the average yields that they earn on that are
Speaker 4: a little bit above two percent, they could be earning
Speaker 4: four to four and a half percent, and it is
Speaker 4: something something where there is just in transigent laziness on
Speaker 4: the part of on the part of investors, and frankly,
Speaker 4: I think part of this is on the part of
Speaker 4: firms that are not bringing this to the attention of
Speaker 4: their of their clients. I think it's very important that
Speaker 4: we treat asked cash like an acid class. That's something
Speaker 4: we're going to do at CIO Group from now on
Speaker 4: and talk about the fact that if you're going to
Speaker 4: retain that large a portion of your balance sheet in cash,
Speaker 4: that there are ways in different parts of the market
Speaker 4: that you should be investing in far more aggressively than
Speaker 4: they have been.
Speaker 5: David, we've got a federal reserve that's been gone a
Speaker 5: rate cutting cycle. Here, what does that mean for the
Speaker 5: fixed income market? How are you guys thinking about that?
Speaker 3: Right?
Speaker 4: You know, we've been encouraging our clients to really think
Speaker 4: about having more of their capital deployed in the intermediate
Speaker 4: space anywhere between three and seven years, and they're going
Speaker 4: to get a higher total return over the course of
Speaker 4: the next two years by doing that.
Speaker 3: We think that the rate cycle itself will be extended.
Speaker 4: In other words, it's not going to come down quickly,
Speaker 4: but it will come down consistently over the course of
Speaker 4: twenty twenty six. And part of that, of course, is
Speaker 4: going to be the fact that the economy itself is
Speaker 4: going to be a.
Speaker 3: Little weaker with the exception.
Speaker 4: Time of AI related activity, and that's going to enable
Speaker 4: them to reduce rates. And also this is part of
Speaker 4: a larger plan which I think the administration really wants
Speaker 4: to see lower rates, which they've made very clear, but
Speaker 4: they're going to then do a lot of the debt
Speaker 4: refinancing in the US looking at the five year or
Speaker 4: less and I think that's all part of a larger
Speaker 4: plan to mitigate I think, what are very large deficits
Speaker 4: for the next several years.
Speaker 3: David Bamon, thank you so much for CIO capital. Tiffany
Speaker 3: Wilding has never gone to three decimal points.
Speaker 2: If she did, they throw her out of that acclaim
Speaker 2: meeting at PIMCO where she talks to the fixed income managers.
Speaker 2: I mean, I'm seeing a buoyancy, Tiffany. How do you
Speaker 2: do fixed income in a boom economy?
Speaker 6: Well, I think that there's I think there's winners and
Speaker 6: losers right now in the economy, and that's the result
Speaker 6: of you know, what I would call clashing of three
Speaker 6: three policy pivot slash cycles that are happening. So you
Speaker 6: have the tariffs that have come up quite a bit
Speaker 6: more than any time in a century. You also have
Speaker 6: immigration policy that's done a U term, and underlying all
Speaker 6: of that, we have this tech boom that's also happening.
Speaker 6: So what does that mean, Well, it means the economy
Speaker 6: is adjusting, and certain parts of the economy are do
Speaker 6: look like they're doing worse than other parts. I think
Speaker 6: the most interesting thing right now is the labor markets.
Speaker 6: If you look at the details of it, you know,
Speaker 6: they do look quite recessionary. If you adjust the the
Speaker 6: Establishment Survey for some of the overestimation issues that it's
Speaker 6: had over the past year or of several years, you know,
Speaker 6: it does look contractionary. But however, despite that, you have consumers.
Speaker 6: You have real consumption you know that is still chugging along.
Speaker 6: You have real wage growth that is you know, still
Speaker 6: resilient around one percent that's supporting consumption. And you have
Speaker 6: this AI capital boom that's happening under the surface as well.
Speaker 6: So there's you know, there's a lot of on the
Speaker 6: one hand, on the other hand, not to be a
Speaker 6: two handed economist, but it's an interesting it's an interesting
Speaker 6: economy right now.
Speaker 5: And Tiffany, the inflation data that we just received at
Speaker 5: eight thirty this morning suggests that inflations kind of check here.
Speaker 5: There's nothing really to spook anybody. I don't think what
Speaker 5: did you make of the inflation data?
Speaker 6: Yeah, I mean, I think just taking a step back,
Speaker 6: you know, we haven't seen this type of tariff adjustment
Speaker 6: in a century, so there is a lot of uncertainty
Speaker 6: around just how it would play out. You know, we
Speaker 6: try to have some sort of historical benchmark which suggests that,
Speaker 6: you know, tariffs are passed through to prices. But the
Speaker 6: reality is is when we look at the data right now,
Speaker 6: what's happening is that companies are passing some of it
Speaker 6: through but much less and I think most people expect it.
Speaker 6: And where you're getting more of an adjustment is lower
Speaker 6: cost Companies are trying to manage costs in other places,
Speaker 6: and one of those places is managing labor costs, and
Speaker 6: we think the clash of the AI cycle, you know,
Speaker 6: is also allowing them to manage labor costs. You're already
Speaker 6: seeing tech entry level job hiring a tech firm start
Speaker 6: to slump, So the labor market is taking on more
Speaker 6: of this adjustment than I think most people expected.
Speaker 3: What's your model number? I'm some fan, you know.
Speaker 2: I think Jerome Schneider, I mean, is only working like
Speaker 2: a three day work I mean his idea long term
Speaker 2: it is ninety day paper.
Speaker 3: So you're talking to Jerome Schneider, a Pimco legend and
Speaker 3: short term paper, and Tiffany, you have to talk about
Speaker 3: the buoyancy of the economy.
Speaker 2: Is AI discrete or is the American economy doing better? Yeah?
Speaker 6: I mean again, I think if you just look at
Speaker 6: growth rates last year versus this year, we have seen
Speaker 6: a clear step down in the pace of growth in
Speaker 6: the US economy. You know, we were growing you go,
Speaker 6: call it two and a half to three percent over
Speaker 6: the last you know, not only last year, but of
Speaker 6: the last several years. And now we've stepped that pace
Speaker 6: down to what looks like a one and a half
Speaker 6: to one percent pace. So clearly the economy stepping down,
Speaker 6: you know. But I think what's becoming more clear is
Speaker 6: that any economist, when you have that big of a
Speaker 6: move in growth. You have a deceleration in growth, you know,
Speaker 6: you worry about that momentum, so you worry about the
Speaker 6: economy stalling. But it looks like, you know, when you
Speaker 6: look across indicators, we are not seeing a stalling in
Speaker 6: the economy. We're seeing growth that step down.
Speaker 2: Where is the slowing economy? To me, Paul mentioned it earlier,
Speaker 2: it's just case shape. There's a part of America flat
Speaker 2: on their back. There's a part of America booming wealth
Speaker 2: effect whatever. You know that drill tiffany better than I do.
Speaker 2: What does a FED do? How does a FED manage
Speaker 2: the polarity of the American economic experiment?
Speaker 3: Yeah?
Speaker 6: I mean I think that it's a really tough environment
Speaker 6: to be a central banker, you know, for a lot
Speaker 6: of reasons. And I think how you balance this all
Speaker 6: of these factors is that you remind yourself, as most
Speaker 6: of them do all the time, that you're still above
Speaker 6: neutral policy. You still think you're restrictive, and you do
Speaker 6: have an economy that has slowed. You have a labor
Speaker 6: market that has slowed quite dramatically, and you have inflation
Speaker 6: risks that look less than they did before. And so
Speaker 6: What that means in our mind is that you can
Speaker 6: start cutting interest rates, you know now, because the economy
Speaker 6: doesn't look like it's stalling, and we wouldn't go as
Speaker 6: far as to say recession and aary cuts are needed,
Speaker 6: you know, but starting that cutting cycle back to neutral
Speaker 6: makes sense to us. You get more information, you see
Speaker 6: how the economy is reacting.
Speaker 2: When was the last time I did this, Paul? I
Speaker 2: just did a fibonacci retrace mail boy from the peak
Speaker 2: of the market.
Speaker 3: On September twenty two. We had three down days in
Speaker 3: a row. Ice. Ice stayed solid because I was all
Speaker 3: in cash.
Speaker 2: We just hit the fifty percent retracement yep in like
Speaker 2: a cup of senka. We just hit the fifty percent
Speaker 2: retracement going up of our three day debacle home.
Speaker 3: It was a correction.
Speaker 5: It was a correction for the ages. So, tiffany one
Speaker 5: of the areas that's a little bit concerning for I
Speaker 5: think consermers out there is the housing market here. It's
Speaker 5: just a affordability of housing is such a problem for
Speaker 5: so much of this economy. How do you think about that?
Speaker 6: Yeah, I mean, clearly, the housing affordability issue is a
Speaker 6: very big issue, you know, we would argue it's a
Speaker 6: political issue when we look under the surface of the
Speaker 6: housing market. However, you know what we see as a
Speaker 6: housing market actually that has pretty decent fundamentals, you know,
Speaker 6: just in terms of leverage, equity and homes, you know,
Speaker 6: and the fact that after the Great Financial Crisis you
Speaker 6: had about a decade of underbuilding relative to relative to
Speaker 6: population growth and demographics. You know. So the housing market,
Speaker 6: you know, from a supplied demand perspective, you know, it's
Speaker 6: it's in a tight spot. So that's you know, not
Speaker 6: where it was at all before the you know, the
Speaker 6: two thousand and eight financial crisis. But nevertheless, with COVID
Speaker 6: you saw this very big run up in prices along
Speaker 6: with higher interest rates that's made housing much much less affordable.
Speaker 6: So we need the economy, we need real incomes to
Speaker 6: basically grow into these housing prices, you know, And our
Speaker 6: view is that you're probably going to have housing prices
Speaker 6: that are a bit more sluggish in terms of their
Speaker 6: appreciation over the next several years as you get that
Speaker 6: economy growing into them.
Speaker 2: I mean, Tiffany, I know you lived down the street
Speaker 2: from Antigua a Way in Newport.
Speaker 3: Beach into six six zero.
Speaker 2: I got four bedrooms, four bass twenty seven hundred square
Speaker 2: feet for Paul. That's a small abode, clocking in at
Speaker 2: four point two million dollars.
Speaker 3: I mean, the housing market is nuts. What is the
Speaker 3: most efficacious ten year yield for you? For American society?
Speaker 2: What yield would not the bond guys at PIMCO a
Speaker 2: legitimate economist, what's the best ten year yield for America?
Speaker 6: Well, I mean I think this gets into this concept
Speaker 6: you know that many people criticize but is helpful for
Speaker 6: central banks, of what is the neutral interest rate? And
Speaker 6: that's like the rate that the economy can handle. It's
Speaker 6: never you know, accelerating or decelerating. And I think there's
Speaker 6: a lot of debate around that right now, but many
Speaker 6: people think that a nominal kind of neutral interest rate
Speaker 6: of three percent is you know, something that is more
Speaker 6: neutral for the economy. I mean, if you look at
Speaker 6: broader investment, not just how residential investment, which has been
Speaker 6: you know, very low, flat slash contractionary, a broader set
Speaker 6: of investment in the United States is actually also flat
Speaker 6: to slightly contractionary outside of AI. So if you look
Speaker 6: at everything x AI, you know, it does look like
Speaker 6: monetary policy is restrictive, and so I think as a
Speaker 6: result of that, they have room to bring down interest rates.
Speaker 6: You know, we think kind of a three percent level
Speaker 6: still makes a lot of sense to us, you know,
Speaker 6: you know, Stephen Myron made a made a case for
Speaker 6: something lower than that. I think we just have to see,
Speaker 6: you know, again, taking small steps, seeing how the economy
Speaker 6: reacts to that is what makes sense to us.
Speaker 3: Now, it's gift Tiffany in Trouble Friday. Okay, that's what
Speaker 3: it is called, Tiffany.
Speaker 2: Do you agree with the certitude Governor Myron has of
Speaker 2: a need for a shock rate cut down to a
Speaker 2: new regime.
Speaker 6: Yeah, I mean, I think this is the key issue
Speaker 6: with monetary policy and central banking. You know, the thing
Speaker 6: is is if you're if you're uncertain, the level of
Speaker 6: our star is uncertain. Anybody who's worked on the models
Speaker 6: that try to estimate these things understand how big of
Speaker 6: bands are around the point estimates and uncertainty. And if
Speaker 6: you're uncertain about anything as a central banker, what you
Speaker 6: want to do is move more slowly, and you want
Speaker 6: to take steps, and you want to see how the
Speaker 6: economy reacts. Now, the reasons why you move fast as
Speaker 6: a central banker is that you're worried that inflation expectations
Speaker 6: are going to become unanchored. Inflation expectations look very stable,
Speaker 6: you know, or you worry that the economy is going
Speaker 6: into recession, and then you want to move quickly, you know.
Speaker 6: And again, as I mentioned before, you know, there's a
Speaker 6: lot of data that suggests that, you know, the economy,
Speaker 6: the growth rate has moved down, but we're not necessarily
Speaker 6: nearing it, you know, a stall. So you know, again,
Speaker 6: I think all of that suggests that moving in a
Speaker 6: methodical way makes a lot of sense here for the.
Speaker 2: FED, brilliant, really complete, Thank you so much. Tifhity wild
Speaker 2: there as well. We've pried for what three days to
Speaker 2: get Ethan Deevin.
Speaker 5: On with the schedules and schedule.
Speaker 2: It joins us right now. Senior investment strategists Manetta Group
Speaker 2: love having her on. Even Prime Minister Mitsotakis was collegial
Speaker 2: about the challenge of Europe. Can the fiscal tobaccle, which
Speaker 2: is Europe, can it affect America?
Speaker 7: Very interesting question and yes, better late than never. Great
Speaker 7: to be here again. In terms of Europe, Greece is
Speaker 7: actually a great example of a comeback kid when it
Speaker 7: comes to Europe. They have come from being one of
Speaker 7: the so called pigs back in the day when austerity
Speaker 7: have to dominate, and they've really read engineered their economy.
Speaker 7: They've focused a lot on tourism and they really have
Speaker 7: moved it into that more positive phase. So I'd say
Speaker 7: that is certainly in Europe in Tagant along with Spain,
Speaker 7: as one of the comeback kids. So as to what
Speaker 7: whether Europe is is in adulgence, certainly it is not
Speaker 7: experiencing the same resilient growth as we see in the US,
Speaker 7: and is lower inflation even stagflation areas if you look
Speaker 7: at the UK on the periphery of Europe there.
Speaker 3: So as to whether it will drive the.
Speaker 7: US down, I don't see that the US is firing
Speaker 7: on all cylinders on its own. I think as a
Speaker 7: trading partner it's already gaining independence.
Speaker 5: So if one of the concerns here of the marketplace is, boy,
Speaker 5: this has been such a big run off of that
Speaker 5: April low and if we've gone too far too fast,
Speaker 5: our earnings there to support it? Are is fed policy
Speaker 5: there to support it? How what are the conversations you're
Speaker 5: having with your clients these days about that.
Speaker 7: We're starting, we're having the conversations around some of this
Speaker 7: uncertainty that is circulating on the policy side, on the
Speaker 7: political side, geopolitical side, and then we're contrasting that with
Speaker 7: the resilient market performance which has seemed like that teflon
Speaker 7: market that is marched ahead regardless. So our clients are
Speaker 7: clearly pleased that their worries which they are experiencing are
Speaker 7: not being reflected in their investment portfolio as far as
Speaker 7: whether we see there's a frothiness emerging. How we and
Speaker 7: Manetta are insulating against that is by going back to
Speaker 7: our diversification playbook that we've never really strayed from or
Speaker 7: going back to kind of validate our strategy there, and
Speaker 7: that's diversification into small caps, mid caps, less exciting sectors
Speaker 7: of the economy.
Speaker 3: We've always had a linchpin.
Speaker 7: Of inflation resilient assets such as such as infrastructure and
Speaker 7: real estate. They haven't been stars shining stars at all
Speaker 7: in the portfolio. And we've had that international exposure, which
Speaker 7: has finally started to earn its keep after about ten
Speaker 7: years of languagehaing under performance, as well as the dollar
Speaker 7: was weaker. So the dollar being now and weaker is
Speaker 7: it is making those performance even more compelling. So I'd
Speaker 7: say we are a little concerned about froth. But how
Speaker 7: that will manifest is in more volatility in the tech names.
Speaker 5: Real Quick, thirty seconds. Gold what a star?
Speaker 8: Yeah, gold has been a star.
Speaker 7: We tend to see that more through some of the
Speaker 7: picks and shovels around gold, some of the broader holdings
Speaker 7: within our portfolio. We don't have dedicated exposure to gold.
Speaker 7: I think gold though, can be seen as an alarm bell,
Speaker 7: as a signal as to what investors are really thinking
Speaker 7: about the fiscal state and the concern about dollar debasement.
Speaker 7: So yes, it's positive story, but what can we read
Speaker 7: into that?
Speaker 3: If you can't wait to get you into our studios
Speaker 3: here in New York.
Speaker 2: As devit is, senior investment strategist at Monetta Group.
Speaker 3: Stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after this.
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Speaker 2: From trend following, joining us as Katie's Kaminski really one
Speaker 2: of the leaders in the nation at Alpha Simplex on
Speaker 2: trend following. Let's go back to Soybetia futures and what
Speaker 2: John Henry Monroe, Trout and a whole bunch of others did.
Speaker 2: What did they invent with Sparks stations years ago?
Speaker 9: So trend following is a strategy where you're looking at
Speaker 9: rules and you're looking over different horizons to determine the
Speaker 9: footprint of the market using math. And so what was
Speaker 9: exciting about their approach was they were following market trends
Speaker 9: using math, and today we do the same thing, perhaps.
Speaker 3: A little more math, but this is beautifully explaining, folks.
Speaker 2: What's so important here is they did this on spark stations,
Speaker 2: which were unreachable, and then one day Michael Bloomberg and
Speaker 2: Tom Secundi showed up with a mini Sparks station called
Speaker 2: the Bloomberg Terminal, and all of a sudden, I had
Speaker 2: unit choice. In looking at five, six, seven trend following ideas,
Speaker 2: which unit right now, Katie Kaminski.
Speaker 3: Is most efficacious for staying on trend?
Speaker 9: Well, I think if you think about units, we tend
Speaker 9: to think more about windows and frequencies as the most interesting.
Speaker 9: So longer term horizons have been more more profitable recently,
Speaker 9: thank you, but shorter term horizons have really struggled. So
Speaker 9: we'll see what happened.
Speaker 5: So what are some of the areas now that have
Speaker 5: your attention right now, whether it's stocks, bonds, commodities.
Speaker 9: I think you know who can't ignore what's going on
Speaker 9: in precious metals. I mean that's been very interesting to me.
Speaker 9: I mean we're talking about gold, but take a look
Speaker 9: at slatinum.
Speaker 5: Palladium, looking on GCLO, just really.
Speaker 9: Big trends, and that has been something that we've been
Speaker 9: certainly following because it is sort of at odds with
Speaker 9: sort of that things are looking like we might have cuts.
Speaker 9: So I think what we've seen recently is some new
Speaker 9: trendsforming and some question about fixed income has been just
Speaker 9: really difficult.
Speaker 5: But otherwise so I'm seeing again gold up forty two
Speaker 5: percent year to date, silver up fifty five percent year
Speaker 5: to date. I didn't see that one copper up higher
Speaker 5: as well. Typically for alpha, simplex is a trade that
Speaker 5: you guys put on. What's the typical duration of a
Speaker 5: trade you guys put on?
Speaker 9: So trends can vary in size and link. And what's
Speaker 9: interesting with the gold trend, it's been going on for
Speaker 9: almost two years, so some of these trends have emerged
Speaker 9: more recently. So Gullie silver has been a trend that's
Speaker 9: been emerging more this year. So it really varies depending
Speaker 9: on what the market environment is and what trends are prevailing.
Speaker 2: The first question I mentioned Peter from Connecticut today. The
Speaker 2: second question he asked me was, Tom, tell me about
Speaker 2: moving averages. I use climate exponential moving averages where I'm
Speaker 2: looking at the area between them on a log WI axis. Okay,
Speaker 2: enough jargon. The bottom line for our audience. It drives
Speaker 2: me nuts when I hear a study of death cross
Speaker 2: Katie Kaminski and the preper use of moving averages.
Speaker 9: So if you think about using moving averages, it's really
Speaker 9: about looking at sort of what is the direction across
Speaker 9: different frequencies. So one of the best ways to combine
Speaker 9: these methods is to compare them and then look at
Speaker 9: them across multiple different crosses of moving averages and examine
Speaker 9: how much you're seeing that change across different frequencies of
Speaker 9: trend movements.
Speaker 3: Are you looking at the tangent.
Speaker 2: If you take an exponential moving average, you're looking at
Speaker 2: the engine of it over what time for fourteen days.
Speaker 9: So it depends. I'd say exponential moving averages are better
Speaker 9: than moving averages because they don't drop data points. So
Speaker 9: think if you have sort of a you know, an
Speaker 9: April an April seventh data point in there, boom, it
Speaker 9: will message just.
Speaker 3: Looking at me time, you're such a nerd. All save
Speaker 3: the interview.
Speaker 5: So, in terms of risk managing risk, a typical hedge
Speaker 5: fund might say, hey, if your position moves ten percent
Speaker 5: against you, you cut it in half and moves another five percent,
Speaker 5: you're just out and don't come crying to me. That
Speaker 5: was when I was working hedge funds. That's what my
Speaker 5: Pam would say, is how do you guys manage risk
Speaker 5: in terms of movements?
Speaker 9: You know, this is a good question, and that's why
Speaker 9: trend falling as a strategy is meant to be self
Speaker 9: correcting in the sense that as trends move against you,
Speaker 9: your positions naturally reduce. So as you see trends expand
Speaker 9: you're expanding positioning as you see them contracting, you're contracting positioning.
Speaker 2: All using math, where it is this good morning, Ninettude
Speaker 2: I NFM is a guy named Ed Thorpe. I've had
Speaker 2: the great honor of speaking rhythm a guy named Andrew Lowe.
Speaker 2: One of his disciples is Katie Kaminski here and I
Speaker 2: should mention it. Imperial College, Paul Wilmot, who change quantitative finance.
Speaker 3: So within that you get back to the basic thing.
Speaker 2: That all of our listeners and viewers know is, Okay,
Speaker 2: I'm going to be responsible. I own a video like
Speaker 2: I don't, and I'm going to have a stop loss.
Speaker 3: You don't do stop losses.
Speaker 2: But what do you do when you get a melt
Speaker 2: up all time highs, you get a pullback?
Speaker 3: How do you gauge when to get out?
Speaker 9: So really, when you have sort of a reversal and signal,
Speaker 9: it's a combination of two things. One is sort of
Speaker 9: the reduction in the signal strength. The other is volatility expansion.
Speaker 9: So as volatility expand, you also integrate that and how
Speaker 9: you measure what your position sizing should be. So when
Speaker 9: you see that's why you see a lot of quants
Speaker 9: struggle this year, because when you see those types, it's
Speaker 9: hard to measure it.
Speaker 3: Paul, I want Paul, I could monopolize the whole thing.
Speaker 2: Rudely, Paul, what she just said, folks, position sizing is
Speaker 2: the single most important thing.
Speaker 3: Silence.
Speaker 5: Okay, Paul, fixed coming, you say you kind of threw
Speaker 5: up your hands with fixed income. Why is that?
Speaker 10: So?
Speaker 9: Fixed income has been even though there's been a lot
Speaker 9: of talk about it. If you look at the trend signals,
Speaker 9: they're very range bound and you've seen sort of long
Speaker 9: short But we've actually started to see more momentum in
Speaker 9: fixed income on the long side over the last two months,
Speaker 9: especially going into the first rate cut. So I think
Speaker 9: for me, that's going to be an asset class that
Speaker 9: could have trend potential. And this week was particularly confusing
Speaker 9: because you also saw yields going up on good growth data.
Speaker 9: So the question is could you have steepening of the
Speaker 9: yield curve? We love things like that.
Speaker 2: Are you watching Tiger's Red Sox from Miracle Science?
Speaker 3: The bar perhal gives back in time to see the game?
Speaker 9: I have to admit I live right by Fenway Park,
Speaker 9: so I should probably head.
Speaker 3: Really.
Speaker 2: Somebody said on Twitter we should do a remote from
Speaker 2: caskin Flaggan.
Speaker 5: Sure it would be great, Absolutely, Rip.
Speaker 2: It's exciting isn't it? Katie Kimiski in studio in New York.
Speaker 2: She'll be back at Boston or Doubt for the festivities
Speaker 2: this weekend. She's with Alpha Simplex. Stay with us. More
Speaker 2: from Bloomberg Surveillance coming up after this.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Apple Coarclay, and Android
Speaker 1: Auto with the Bloomberg Business App. You can also listen
Speaker 1: live on Amazon Alexa from our flagship New York station.
Speaker 1: Just say Alexa play Bloomberg eleven thirty.
Speaker 2: We're gonna do this right now. We're gonna get right
Speaker 2: to it with Tannebaum. Daniel Tannebaum's partner and global anti
Speaker 2: financial crime practice leader at Oliver Wyman. He's brilliant on sanctions.
Speaker 3: Five from now.
Speaker 2: We are four years into a Ukraine war. So it
Speaker 2: takes a while for fancy people like at Oliver Wyman
Speaker 2: to get together and say do this, do this, do this.
Speaker 2: There's a laundry list China, India, Israel, Turkey, UAE that
Speaker 2: are basically helping Russia by taking their oil, their product,
Speaker 2: giving them stuff, taking stuff in that.
Speaker 3: What is Europe waiting for four years into Ukraine.
Speaker 10: It's not just Europe. You've also got to remember the
Speaker 10: Trump administration has done literally nothing in terms of actual
Speaker 10: economic pressure on Russia. It's been like a perpetual state
Speaker 10: of Ted Knight standing at the tee screaming, well, we're waiting.
Speaker 10: There have been no actions. It's been a lot of
Speaker 10: idle threats. Europe has already had a plan to wean
Speaker 10: itself off of Russian energy. They've already offered to expedite
Speaker 10: that by year. The whole reason why these sanctions have
Speaker 10: evolved the way they were was to not cut off
Speaker 10: our nose despite our face. It's the reason the Biden
Speaker 10: administration didn't push too hard in the last time in
Speaker 10: the last term, because they knew that Europe couldn't immediately
Speaker 10: go to zero, and so that they are going now.
Speaker 10: They can Now they can on an expedited timeline.
Speaker 3: It could mean.
Speaker 10: Increased prices, but there's still action the US needs to
Speaker 10: take as well. There's really been a bifurcated effort over
Speaker 10: the last nine months, whereas previously the UK, EU and
Speaker 10: US were lockstep in line for three years and just looking.
Speaker 5: At or listening to some of the comments from President
Speaker 5: Trump at the United Nations just this week. It seems
Speaker 5: like for Ukraine and for the Middle East, of presidents
Speaker 5: almost like what you know, wiping his hands and saying, you, guys,
Speaker 5: deal with it well.
Speaker 10: His rhetoric has been as aggressively supportive for Ukraine at
Speaker 10: any point in this term. He's also setting himself up
Speaker 10: to say, well, I told everyone what to do to
Speaker 10: end this conflict. They didn't do it, So this isn't
Speaker 10: my fault. Like that is where this is ultimately.
Speaker 3: Grizzled pros like you like say, okay, where's the.
Speaker 2: Senate, where's the House? Or is the sanctions world a
Speaker 2: very executive branch dominant.
Speaker 10: No, the legislative branch had a role. In twenty seventeen,
Speaker 10: the Senate passed katsa that went on against the president's
Speaker 10: wishes at the time. I've spoken with some of the
Speaker 10: Senators that are involved in crafting the legislation. It's been
Speaker 10: basically written in a way that gives the president card blanche.
Speaker 10: The Senate will not move on this without the President,
Speaker 10: and that is unfortunate because they have a role to
Speaker 10: play here.
Speaker 5: So how do we think about some of these hotspots
Speaker 5: in the world the Middle East, Ukraine. Is it simply
Speaker 5: at whoever gets into the President's ear at last, that's
Speaker 5: what comes out on truth social social or is there
Speaker 5: a state department driven diplomatic plan for either of these places.
Speaker 10: What I know is that a lot of the Russia experts,
Speaker 10: for instance, are gone that were career or civil servants.
Speaker 10: There isn't as much depth as there once was. I
Speaker 10: can't say whether whoever is the last person and the
Speaker 10: president's ear is driving this, but it is unclear what
Speaker 10: tangible actions will be taken to actually execute against this
Speaker 10: disappointment that we keep hearing about in public remarks.
Speaker 2: What are you thinking about this weekend? I mean your
Speaker 2: remit at Oliver Wyman is so broad. What is Dan
Speaker 2: Tannebau'm studying this weekend in this dynamic sanction.
Speaker 10: Well, so I'm actually going to Brussels on Sunday to
Speaker 10: speak on a public event that Bloomberg is the media
Speaker 10: sponsor for with the EU ambassador responsible for their sanctions policy,
Speaker 10: and we're talking about our sanctions effective. And I think
Speaker 10: the question is they've certainly had impact, but Russia's a
Speaker 10: big economy.
Speaker 3: It takes time. There's more that needs to be done.
Speaker 2: Okay, does sanctions come out of Brussels or do they
Speaker 2: come out of Paris, Berlin, bunn wherever do they come
Speaker 2: out of.
Speaker 10: The individual Brussels is trying to align everyone, and the
Speaker 10: work towards the Nineteenth Package in the EU is well underway.
Speaker 10: That is that move towards expediting getting off Ussian energy.
Speaker 10: It's where the discussions around what to do with the
Speaker 10: immobilized Russian assets about two hundred billion dollars reside in
Speaker 10: Europe and you're seeing a lot more talk of actually
Speaker 10: putting those on the table to do something with which
Speaker 10: will make a difference.
Speaker 3: Are you taking missus Tannebau.
Speaker 10: She does not want to come.
Speaker 3: There's a gauntlet of stores in Brussel. Russell's you wouldn't
Speaker 3: believe it. I didn't know.
Speaker 10: This, but it's dangerous. She declined the invitation. Russell's this
Speaker 10: shine very good. I'm shocked. Thank you so much for
Speaker 10: Bloomberg and Brussels.
Speaker 2: Next week he is with Oliver Wyman and we thank
Speaker 2: him for his efforts.
Speaker 3: Stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after this.
Speaker 1: This is the Bloomberg Surveillance podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto
Speaker 1: with the Bloomberg Business app. You can also watch us
Speaker 1: live every weekday on YouTube and always on the Bloomberg terminals.
Speaker 2: The newer are for us on the newspapers. Lisa Mintello
Speaker 2: now with our most popular segment.
Speaker 8: Oh goodness, all right, the pressure's on. So this is
Speaker 8: a topic we've actually been talking about this morning. It's
Speaker 8: the big spending on AI and when it's going to
Speaker 8: pay off. A couple of publications had stories about this,
Speaker 8: so Bloomberg crunts the numbers. So I want to give
Speaker 8: it to you. Tech giants raise roughly one hundred and
Speaker 8: fifty seven billion dollars so far this year, and that's
Speaker 8: up for about seventy percent from the same period last year.
Speaker 8: Some are saying, you know what, maybe the hype is overblown.
Speaker 8: They're giving like similar, you know, comparisons to the dot
Speaker 8: com bubble you had. Head fund manager David Einhorney warns
Speaker 8: that the spending spree could lead to a quote tremendous
Speaker 8: capital destruction even if the technology proves transformative. So you
Speaker 8: get to the Wall Street Journal. They talked to Bane consultants.
Speaker 8: They estimated the wave of AI infrastructure spending is going
Speaker 8: to require two trillion dollars in annual AI revenue by
Speaker 8: twenty thirty.
Speaker 5: That's how much.
Speaker 8: So how much revenue is there now? Morgan Stanley says
Speaker 8: that last year there was there was around forty five
Speaker 8: billion of revenue for AI products.
Speaker 3: So you see the big difference there.
Speaker 8: I mean it's a mix of subscription fees, right, we
Speaker 8: were talking about that for the chatbots, money paid to
Speaker 8: these companies, data centers, things like that. But it's that
Speaker 8: big gap.
Speaker 5: I think this is a great article because it hits
Speaker 5: home to me. You know, you got to start questioning
Speaker 5: some of the stuff. But you know, they say that
Speaker 5: I just have to wait and see it, you know,
Speaker 5: come to fruition and products and services from I don't know,
Speaker 5: companies far and wide. I guess it's going to happen,
Speaker 5: but wow, it.
Speaker 8: Better is it's going to be a wait and see.
Speaker 8: All right, this one, this one's here for you. Paul Okay.
Speaker 8: Bruce Springsteen on the cover of Time magazine.
Speaker 3: All right, miss.
Speaker 8: Yes, okay, so he talks about a lot of rest.
Speaker 5: Yes, there's still Time magazine. Yes that's the point.
Speaker 8: That's okay, Yes, there you go. He talked about fame,
Speaker 8: family therapy, like touring with the Street Band. Also the
Speaker 8: fifteenth anivirtuary of the Board to Run album. Okay, but
Speaker 8: the issue actually five oh five oh yeah, and the
Speaker 8: issue actually comes almost exactly fifty years after he was
Speaker 8: first on Time magazine, So it's kind of like this
Speaker 8: this full circle moment. But the big quotes talked about
Speaker 8: President Trump, which he's talked about before. They've been exchanging
Speaker 8: bars back and forth. He said a lot of things
Speaker 8: about him, you know, he said a lot of people
Speaker 8: brought into the president's lies as the President doesn't care
Speaker 8: about the forgotten. He also though, poked at the Democratic
Speaker 8: Party though at the same time, and he said that
Speaker 8: they need an effective alternative party or the Democratic Party
Speaker 8: has to like find someone who can speak to the
Speaker 8: majority of the nation. So he really really I just
Speaker 8: said out, yeah.
Speaker 3: There's a lot of people doing fossil rock. He's not.
Speaker 5: He's been more prolific in the last ten or fifteen
Speaker 5: years and in his entire career, and that includes the pandemic.
Speaker 5: The guy and he's on tour all with James Taylor.
Speaker 2: These guys are older, but they're not they're not. It's
Speaker 2: done fossil rock in any way, No, it's great.
Speaker 7: What else?
Speaker 3: Yeah? Are you done? Okay?
Speaker 5: No?
Speaker 8: No, NBC Universal, Right, they're continuing negotiations with YouTube TV.
Speaker 8: They're battling over pricing for NBC's programming. Right, So last
Speaker 8: night NBC Universal launched this digital attack ad at YouTube PV.
Speaker 8: So they warned customers, they said, YouTube TV to YouTube
Speaker 8: TV that they could lose access to things like Sunday
Speaker 8: Night Football, NBA basketball, WWE Wrestling, Premier League, and also yes,
Speaker 8: the Real Housewives, Sorry about that, but they also threaten
Speaker 8: a blackout, right if an agreement is not paged by
Speaker 8: next Tuesday.
Speaker 5: Isn't this cable tv exactly exactly exactly right, And so
Speaker 5: this is just trying to get paid as much as
Speaker 5: you can for your programming. They'll come to a deal
Speaker 5: at the last minute. But then, but this is a
Speaker 5: little bit different because YouTube is a lot bigger than
Speaker 5: Comcast ever was, and they have so much more leverage.
Speaker 5: So it's not going to be as easy for NBC
Speaker 5: Universal here going against YouTube. But they'll come to a deal.
Speaker 8: And then you mix the peacock in with it.
Speaker 5: Yes, it's treating. It's all about the sport. You notice
Speaker 5: that Universal led with the sports NFL. You know, so
Speaker 5: share you showtime and your show and your YouTube YouTube TV.
Speaker 5: You need the sports you do all right? Very good
Speaker 5: newspapers with news about Friday Friday versions. That's good.
Speaker 1: This is the Bloomberg Surveillance Podcast, available on Apple, Spotify,
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Speaker 1: seven to ten am Eastern on Bloomberg dot com, the
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