1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:22,000 Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App. 4 00:00:22,360 --> 00:00:25,680 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:25,760 --> 00:00:27,040 Speaker 1: us live on YouTube. 6 00:00:27,360 --> 00:00:32,519 Speaker 2: Robert Teter joins his chief investment strategists at Silvercrest Asset Management. So, 7 00:00:32,640 --> 00:00:35,519 Speaker 2: Robert giving the back job of a solid I mean 8 00:00:35,680 --> 00:00:38,720 Speaker 2: more than solid twenty twenty five stocks, bonds, commodities. 9 00:00:39,159 --> 00:00:40,760 Speaker 3: How are you kind of framing out twenty six? 10 00:00:41,240 --> 00:00:42,839 Speaker 4: Yeah, well, I think we're starting to see some of 11 00:00:42,880 --> 00:00:45,280 Speaker 4: the clues for twenty six in the fourth quarter here, 12 00:00:45,320 --> 00:00:48,600 Speaker 4: and by that, we've had continued expansion in the economy, 13 00:00:48,720 --> 00:00:51,879 Speaker 4: fantastic earning season, a couple of rate cuts, and yet 14 00:00:51,920 --> 00:00:54,800 Speaker 4: you've had a fairly choppy but still upmarket. So we're 15 00:00:54,800 --> 00:00:56,560 Speaker 4: at new highs here. I would kind of call them 16 00:00:56,560 --> 00:00:57,560 Speaker 4: tentative new highs. 17 00:00:57,640 --> 00:00:58,440 Speaker 5: We took a lot of. 18 00:00:58,360 --> 00:01:00,600 Speaker 4: Fuel to get here, and there's been a lot of 19 00:01:00,680 --> 00:01:02,920 Speaker 4: rotation in this market as well, both on a sector 20 00:01:02,960 --> 00:01:05,680 Speaker 4: basis a market cap basis. You're starting to see a 21 00:01:05,680 --> 00:01:07,520 Speaker 4: lot of churn and so to me, that's a healthy 22 00:01:07,560 --> 00:01:10,280 Speaker 4: sign for twenty twenty six might have to dial back 23 00:01:10,319 --> 00:01:12,480 Speaker 4: expectations a bit. It might not be quite as strong 24 00:01:12,520 --> 00:01:14,800 Speaker 4: as this year, but you're starting to see more guests 25 00:01:14,840 --> 00:01:15,959 Speaker 4: arrive at the party, if you will. 26 00:01:15,959 --> 00:01:17,959 Speaker 5: In terms of the broadening out of the market. 27 00:01:18,200 --> 00:01:20,960 Speaker 6: That's certainly good news. Yeah, we want to talk about 28 00:01:20,959 --> 00:01:23,440 Speaker 6: other stocks involved in the party, but do you think 29 00:01:23,440 --> 00:01:25,560 Speaker 6: we're going to continue to see mixed messaging. I mean, 30 00:01:25,600 --> 00:01:28,560 Speaker 6: we had strong GDP numbers, they don't seem to really 31 00:01:28,720 --> 00:01:32,080 Speaker 6: jive with the labor market which is weakening. 32 00:01:32,480 --> 00:01:32,720 Speaker 5: Yeah. 33 00:01:32,720 --> 00:01:35,560 Speaker 4: Absolutely, that is a really interesting disconnect, and I think 34 00:01:35,560 --> 00:01:37,560 Speaker 4: that also sets the stage a little bit for next 35 00:01:37,600 --> 00:01:39,959 Speaker 4: year in terms of how we think about the economy 36 00:01:40,040 --> 00:01:42,400 Speaker 4: versus earnings and so, one of the themes that we've 37 00:01:42,440 --> 00:01:45,160 Speaker 4: seen has been that companies have been very slow to hire. 38 00:01:45,200 --> 00:01:48,480 Speaker 4: You've had a relatively soft labor market. That's not great 39 00:01:48,520 --> 00:01:50,800 Speaker 4: from a consumer standpoint, but so far it seems to 40 00:01:50,800 --> 00:01:53,040 Speaker 4: be pretty great from an earning standpoint, and that is 41 00:01:53,040 --> 00:01:55,480 Speaker 4: a sign that some of these AI benefits are coming 42 00:01:55,480 --> 00:01:55,920 Speaker 4: into play. 43 00:01:55,960 --> 00:01:57,960 Speaker 5: You're hearing more and more CEOs. 44 00:01:57,520 --> 00:02:00,720 Speaker 4: Talking about keeping headcount flat while revenue is are rising, 45 00:02:00,760 --> 00:02:03,320 Speaker 4: and so that's good for the earnings picture again not 46 00:02:03,400 --> 00:02:06,680 Speaker 4: so great for the consumer picture, although payrolls are still expanding, 47 00:02:06,680 --> 00:02:10,080 Speaker 4: albeit slowly, and wages are still expanding also, albeit slowly. 48 00:02:10,160 --> 00:02:11,760 Speaker 4: So we're not in a spot where we're fearful of 49 00:02:11,800 --> 00:02:14,200 Speaker 4: a recession, just mindful that we might have a little 50 00:02:14,200 --> 00:02:16,360 Speaker 4: bit slower economic growth to work off of. 51 00:02:17,120 --> 00:02:18,240 Speaker 3: Robert, you mentioned earnings. 52 00:02:18,320 --> 00:02:20,560 Speaker 2: We had a pois really solid earnings a year in 53 00:02:20,560 --> 00:02:24,200 Speaker 2: twenty twenty five, second quarter, third quarter really strong? Is 54 00:02:24,240 --> 00:02:26,720 Speaker 2: the earnings ALEC for twenty twenty six? Is that enough 55 00:02:26,720 --> 00:02:27,680 Speaker 2: to support this market? 56 00:02:28,040 --> 00:02:28,680 Speaker 5: I think it is. 57 00:02:29,040 --> 00:02:31,000 Speaker 4: My base case for next year is that we do 58 00:02:31,080 --> 00:02:33,560 Speaker 4: see very solid earnings growth, so kind of low teens 59 00:02:33,600 --> 00:02:36,800 Speaker 4: earnings growth. Maybe a little bit of multiple compression now, 60 00:02:36,840 --> 00:02:38,400 Speaker 4: and part of that's just going to be a factor 61 00:02:38,440 --> 00:02:40,200 Speaker 4: of some of this rotation. Maybe you get a little 62 00:02:40,200 --> 00:02:43,840 Speaker 4: bit of pressure release valve out of the megacaps that 63 00:02:43,919 --> 00:02:46,560 Speaker 4: have been so strong and I think strong for good reasons. 64 00:02:47,000 --> 00:02:49,120 Speaker 4: But as you get some of that rotation, multiples might 65 00:02:49,120 --> 00:02:51,000 Speaker 4: come down a little bit. So we're looking for high 66 00:02:51,000 --> 00:02:53,880 Speaker 4: single digit gains from equities next year powered by double 67 00:02:53,880 --> 00:02:54,840 Speaker 4: digit earnings gains? 68 00:02:55,160 --> 00:02:57,680 Speaker 6: What are you expecting from commodities next year? And I'm 69 00:02:57,680 --> 00:02:59,720 Speaker 6: really topping precious metals. I mean, how much more of 70 00:02:59,760 --> 00:03:02,520 Speaker 6: a way can we possibly have? Silver's up what one 71 00:03:02,600 --> 00:03:04,880 Speaker 6: hundred and seventy percent I think here to date. 72 00:03:05,440 --> 00:03:07,360 Speaker 4: Yeah, it's hard to stand in front of that momentum 73 00:03:07,440 --> 00:03:09,880 Speaker 4: trade and I think it may continue, although it should 74 00:03:09,880 --> 00:03:12,000 Speaker 4: be pretty volidile. I mean we've seen that this year 75 00:03:12,040 --> 00:03:14,200 Speaker 4: as well, where you know, we keep moving higher and 76 00:03:14,240 --> 00:03:17,200 Speaker 4: higher in the commodity space, particularly like say precious metals. 77 00:03:17,400 --> 00:03:19,440 Speaker 4: There's a good trade behind that, I think, which is 78 00:03:19,480 --> 00:03:22,120 Speaker 4: people are really looking for something outside of equities as 79 00:03:22,160 --> 00:03:24,680 Speaker 4: a place to store some capital. It's tough to find 80 00:03:24,680 --> 00:03:27,240 Speaker 4: a spot to do that in bond markets. Yields are 81 00:03:27,240 --> 00:03:29,280 Speaker 4: pretty solid here, but you don't want to put all 82 00:03:29,280 --> 00:03:31,000 Speaker 4: your eggs in that basket, just given some of the 83 00:03:31,000 --> 00:03:33,359 Speaker 4: difficulties on debt and deficit in many of the major 84 00:03:33,440 --> 00:03:36,080 Speaker 4: developed markets. So commodities have been in pretty good pressure 85 00:03:36,080 --> 00:03:37,520 Speaker 4: release valve for some of that interest. 86 00:03:38,360 --> 00:03:40,360 Speaker 2: We haven't talked too much in the last few days, 87 00:03:40,400 --> 00:03:42,560 Speaker 2: at least about the FED. I mean we're getting that 88 00:03:42,640 --> 00:03:45,880 Speaker 2: we got that cut in December. I think the streets 89 00:03:46,000 --> 00:03:49,440 Speaker 2: kind of looking for one, maybe two cuts in twenty 90 00:03:49,560 --> 00:03:52,600 Speaker 2: twenty six. If that's in fact, the case, is that 91 00:03:52,800 --> 00:03:54,880 Speaker 2: enough for this market or does. 92 00:03:54,800 --> 00:03:55,200 Speaker 5: It need more? 93 00:03:55,240 --> 00:03:57,720 Speaker 4: Do you think I think that's enough given where we 94 00:03:57,760 --> 00:04:00,360 Speaker 4: are right now. If you see multiples rise any further, 95 00:04:00,520 --> 00:04:03,200 Speaker 4: that could be problematic. The real challenge for the FED 96 00:04:03,320 --> 00:04:06,960 Speaker 4: is is that issue between GDP and labor market. You know, 97 00:04:07,160 --> 00:04:10,320 Speaker 4: their mandate really is on employment less, so on GDP, 98 00:04:10,520 --> 00:04:13,320 Speaker 4: and so whether they choose to focus on a softer 99 00:04:13,440 --> 00:04:16,599 Speaker 4: labor market and respond to that with rate cuts, whether 100 00:04:16,640 --> 00:04:18,720 Speaker 4: they change the target at all in terms of whether 101 00:04:18,720 --> 00:04:21,600 Speaker 4: they're concerned that rates are over to you, those are 102 00:04:21,600 --> 00:04:23,159 Speaker 4: some of the challenges that they'll be facing. 103 00:04:23,200 --> 00:04:24,360 Speaker 5: But I think so long as the. 104 00:04:24,360 --> 00:04:27,560 Speaker 4: Backdrop is rates will be lower in the future, that 105 00:04:27,640 --> 00:04:30,039 Speaker 4: supports multiples, and that's been our view all throughout the 106 00:04:30,080 --> 00:04:32,040 Speaker 4: course of this year. It doesn't really matter the pacing 107 00:04:32,080 --> 00:04:33,960 Speaker 4: of the rate cuts, just knowing that they're coming and 108 00:04:34,000 --> 00:04:35,000 Speaker 4: knowing the paths lower. 109 00:04:36,000 --> 00:04:39,200 Speaker 6: You said, it's nice to see investors look outside equities. 110 00:04:39,200 --> 00:04:42,200 Speaker 6: We're talking about precious metals a moment ago. What about 111 00:04:42,320 --> 00:04:44,960 Speaker 6: bitcoin and just crypto in general. Is that a place 112 00:04:44,960 --> 00:04:47,240 Speaker 6: that people should still be looking at in twenty twenty six. 113 00:04:47,760 --> 00:04:50,520 Speaker 4: It's a really interesting and challenging spot. You know, it's 114 00:04:50,640 --> 00:04:52,600 Speaker 4: very much more of a momentum trade, so hit a 115 00:04:52,680 --> 00:04:54,719 Speaker 4: high earlier in the year and came down in terms 116 00:04:54,720 --> 00:04:58,760 Speaker 4: of Bitcoin hasn't really correlated exactly with gold and other 117 00:04:58,800 --> 00:05:01,680 Speaker 4: precious metals, and it's a really challenging spot. On the 118 00:05:01,680 --> 00:05:03,440 Speaker 4: one hand, it sort of trades like Nasdaq. On the 119 00:05:03,440 --> 00:05:05,160 Speaker 4: other hand, it sort of trades like gold, and they 120 00:05:05,279 --> 00:05:08,400 Speaker 4: just have to be careful of how you're sizing positioning there. 121 00:05:08,760 --> 00:05:10,599 Speaker 4: One of the things that we've noticed is that people 122 00:05:10,640 --> 00:05:12,400 Speaker 4: do tend to trade it with momentum, and so if 123 00:05:12,440 --> 00:05:15,560 Speaker 4: it significantly off highs, it probably doesn't attract much more 124 00:05:15,600 --> 00:05:19,080 Speaker 4: attention until you clear those highs. We do like outside 125 00:05:19,080 --> 00:05:21,880 Speaker 4: of US large cap equities, we do think some of 126 00:05:21,920 --> 00:05:24,279 Speaker 4: the smaller cap space is starting to see a bid 127 00:05:24,320 --> 00:05:26,960 Speaker 4: as well with that broadening, and we're hopeful that the 128 00:05:27,040 --> 00:05:28,600 Speaker 4: earning's broadened out there as well, and that. 129 00:05:28,640 --> 00:05:31,719 Speaker 6: Lower interest rates could also help to buttress those smaller stocks. 130 00:05:31,880 --> 00:05:35,719 Speaker 4: Absolutely, they're much more interest rate sensitive, much more financing sensitive, 131 00:05:36,080 --> 00:05:38,040 Speaker 4: and our view has been that this AI trade will 132 00:05:38,080 --> 00:05:41,000 Speaker 4: spread from the megacaps, from the builders to the people 133 00:05:41,120 --> 00:05:43,039 Speaker 4: using the technology, and as you start to see some 134 00:05:43,120 --> 00:05:44,840 Speaker 4: signs of that in small cap that should help the 135 00:05:44,880 --> 00:05:45,680 Speaker 4: earnings backdrop. 136 00:05:45,839 --> 00:05:48,240 Speaker 3: How about US versus non US at twenty twenty six. 137 00:05:48,640 --> 00:05:51,720 Speaker 4: Yeah, we're still favoring US, even though you've had a 138 00:05:51,839 --> 00:05:54,760 Speaker 4: nice bid outside the US. It's been encouraging and healthy 139 00:05:54,800 --> 00:05:56,720 Speaker 4: to see. Same as with small caps. As you see 140 00:05:56,760 --> 00:05:58,400 Speaker 4: other parts of the markets start to do well, that's 141 00:05:58,400 --> 00:06:01,000 Speaker 4: a healthy signal. But we think longer term and over 142 00:06:01,080 --> 00:06:05,359 Speaker 4: our three or forecast horizon, US has better demographics, better growth, 143 00:06:05,360 --> 00:06:07,799 Speaker 4: better innovation than most of the other parts of the world. 144 00:06:08,160 --> 00:06:10,600 Speaker 4: Some pocketin em could be interesting, but by and large, 145 00:06:10,600 --> 00:06:11,880 Speaker 4: we think US is the place to be. 146 00:06:12,320 --> 00:06:14,960 Speaker 6: Are you worried at all though, that the consumer may 147 00:06:15,000 --> 00:06:17,600 Speaker 6: really pull back here? I mean, you know, the consumer 148 00:06:17,640 --> 00:06:19,640 Speaker 6: is sort of stuck through it all. We throw a 149 00:06:19,640 --> 00:06:25,000 Speaker 6: bunch of things at ourselves. We've got inflation, we do, 150 00:06:25,120 --> 00:06:28,880 Speaker 6: lots of geopolitical tensions, now, these cracks in the job market. 151 00:06:28,920 --> 00:06:31,279 Speaker 6: But if the consumer does pull back in a meaningful 152 00:06:31,360 --> 00:06:34,320 Speaker 6: way in twenty twenty six, I mean, you know AI 153 00:06:34,440 --> 00:06:36,640 Speaker 6: or no AAI, I don't know how these earnings keep up. 154 00:06:37,000 --> 00:06:38,080 Speaker 5: Yeah, it's a great point. 155 00:06:38,120 --> 00:06:40,599 Speaker 4: I mean, the consumer is a really challenging area to 156 00:06:40,680 --> 00:06:43,000 Speaker 4: evaluate right now. So most of the spending coming from 157 00:06:43,040 --> 00:06:45,000 Speaker 4: the top end, you've had the wealth effect there. It's 158 00:06:45,040 --> 00:06:48,919 Speaker 4: been this positive flywheel of wealth effect feeds into more spending, 159 00:06:48,960 --> 00:06:52,039 Speaker 4: feeds into more wealth effect, and that's been in place 160 00:06:52,080 --> 00:06:54,960 Speaker 4: for quite some time. And the lower end consumer, no doubt, 161 00:06:54,960 --> 00:06:57,599 Speaker 4: is struggling and will continue to struggle. And it's spread 162 00:06:57,640 --> 00:07:00,799 Speaker 4: from other areas as well. You've seen, you know, people 163 00:07:00,800 --> 00:07:03,080 Speaker 4: with college degrees that are younger, having a harder time 164 00:07:03,120 --> 00:07:06,359 Speaker 4: getting a job. Unemployment ticking up there, but by and large, 165 00:07:06,400 --> 00:07:08,920 Speaker 4: in aggregate, the income is there. So we look at 166 00:07:08,920 --> 00:07:12,000 Speaker 4: a metric where we took at payroll expansion, which is 167 00:07:12,000 --> 00:07:14,320 Speaker 4: a little over three percent wage gains, a little over 168 00:07:14,360 --> 00:07:17,760 Speaker 4: three percent net inflation out of that, and in aggregate, 169 00:07:17,800 --> 00:07:19,400 Speaker 4: the consumer still has money to spend. 170 00:07:19,400 --> 00:07:20,520 Speaker 5: It's just in pockets. 171 00:07:20,600 --> 00:07:20,800 Speaker 7: Yep. 172 00:07:20,880 --> 00:07:22,400 Speaker 3: Absolutely all right, Robert, thank you so much. 173 00:07:22,440 --> 00:07:25,720 Speaker 2: We appreciate Robert her, chief investment strategist, Silver Crest Asset Management, 174 00:07:25,800 --> 00:07:28,640 Speaker 2: really appreciate you coming into our studio on Christmas Eve. 175 00:07:28,840 --> 00:07:30,960 Speaker 2: You get an extra star stay with us. More from 176 00:07:31,000 --> 00:07:33,160 Speaker 2: Bloomberg Surveillance coming up after this. 177 00:07:42,040 --> 00:07:45,640 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 178 00:07:45,680 --> 00:07:48,880 Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on 179 00:07:48,920 --> 00:07:52,600 Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or 180 00:07:52,760 --> 00:07:54,400 Speaker 1: watch us live on YouTube. 181 00:07:54,640 --> 00:07:57,320 Speaker 2: How are retail sales looking these days? Are people out 182 00:07:57,360 --> 00:07:59,160 Speaker 2: there shopping this holiday season? 183 00:07:59,160 --> 00:07:59,800 Speaker 3: How's it looking? 184 00:08:00,080 --> 00:08:03,920 Speaker 2: Nicole Larson, National manager of Retail Research at Colliers joined 185 00:08:04,000 --> 00:08:06,360 Speaker 2: us here to give us an update. So, Nicole, it 186 00:08:06,440 --> 00:08:10,080 Speaker 2: seems like I'm hearing some pretty good things. The consumers 187 00:08:10,080 --> 00:08:12,800 Speaker 2: out there spending the mall seem to be pretty full, 188 00:08:12,840 --> 00:08:14,840 Speaker 2: People are clicking away on their e commerce. 189 00:08:14,880 --> 00:08:15,920 Speaker 3: Give us the latest numbers. 190 00:08:17,240 --> 00:08:21,160 Speaker 8: Yeah, so we're really expecting the holiday shopping season this 191 00:08:21,240 --> 00:08:23,840 Speaker 8: year to be fueled by online shopping. So we're expecting 192 00:08:23,920 --> 00:08:27,560 Speaker 8: online sales to grow about six percent and we're expecting 193 00:08:27,680 --> 00:08:30,800 Speaker 8: in store sales to grow about two percent. But that 194 00:08:30,840 --> 00:08:32,960 Speaker 8: doesn't mean that consumers aren't out there at the mall. 195 00:08:33,040 --> 00:08:35,080 Speaker 8: I mean, I just drove by to the nearest outlet 196 00:08:35,120 --> 00:08:37,079 Speaker 8: mall to me and it was really packed yesterday, so 197 00:08:37,160 --> 00:08:39,800 Speaker 8: I can only imagine how today will be. But you know, 198 00:08:39,880 --> 00:08:43,240 Speaker 8: also those malls that have some sort of experiential component 199 00:08:43,320 --> 00:08:46,680 Speaker 8: to it, like American Dream all of America, they saw 200 00:08:47,000 --> 00:08:49,920 Speaker 8: really high foot traffic, close to eight to ten percent 201 00:08:50,559 --> 00:08:53,880 Speaker 8: gains for Black Friday. So we're continuing to see consumers 202 00:08:53,920 --> 00:08:56,600 Speaker 8: willing to spend so long as there is some sort 203 00:08:56,640 --> 00:08:59,240 Speaker 8: of value or entertainment component to it. 204 00:08:59,280 --> 00:09:03,680 Speaker 6: But talk to me about how artificial intelligence is playing 205 00:09:03,720 --> 00:09:05,720 Speaker 6: a part in holiday shopping. So I think this is 206 00:09:05,760 --> 00:09:09,200 Speaker 6: the first holiday shopping season where we're really seeing AI 207 00:09:09,800 --> 00:09:11,199 Speaker 6: sort of take on a role. 208 00:09:12,679 --> 00:09:13,000 Speaker 3: Yeah. 209 00:09:13,040 --> 00:09:15,959 Speaker 8: So AI actually really fueled a lot of the Black 210 00:09:15,960 --> 00:09:18,280 Speaker 8: Friday sales that we saw a few weeks ago. And 211 00:09:18,320 --> 00:09:21,360 Speaker 8: it's really interesting because AI has become this, you know, 212 00:09:21,600 --> 00:09:24,800 Speaker 8: household staple now, so it's helping us grocery shop, it's 213 00:09:24,800 --> 00:09:27,160 Speaker 8: helping us, you know, find the best discounts out there, 214 00:09:27,280 --> 00:09:29,920 Speaker 8: it's making sure that we're price checking. So it's really 215 00:09:29,960 --> 00:09:32,640 Speaker 8: made us as consumers a lot more you know, savvy, 216 00:09:32,679 --> 00:09:34,880 Speaker 8: I would say, when we're shopping, and that's why you're 217 00:09:34,880 --> 00:09:37,439 Speaker 8: going to see a lot more online sales growth this 218 00:09:37,520 --> 00:09:39,480 Speaker 8: holiday season as opposed to in store. 219 00:09:40,080 --> 00:09:42,880 Speaker 2: Do the retailers have any idea what they're doing with AI? 220 00:09:43,240 --> 00:09:45,000 Speaker 2: How's that I can't even imagine? 221 00:09:45,280 --> 00:09:45,680 Speaker 3: So new? 222 00:09:45,880 --> 00:09:49,000 Speaker 8: Yeah, I would say, you know, in twenty twenty six, 223 00:09:49,120 --> 00:09:52,880 Speaker 8: the retailers expect AI to be accountable, so they are 224 00:09:52,920 --> 00:09:55,880 Speaker 8: not going to invest in you know, these really expensive 225 00:09:56,160 --> 00:10:00,000 Speaker 8: tech platforms or automation unless they really see a value 226 00:10:00,240 --> 00:10:02,640 Speaker 8: because you know, us as consumers, we just move so 227 00:10:02,760 --> 00:10:05,280 Speaker 8: quickly with all this technology, so by the time the 228 00:10:05,320 --> 00:10:08,600 Speaker 8: retailers actually implement it in store, we're kind of passive. 229 00:10:08,679 --> 00:10:10,760 Speaker 8: We've moved on it. It might not provide as much 230 00:10:10,840 --> 00:10:13,520 Speaker 8: value as they thought. So that's going to be really 231 00:10:13,600 --> 00:10:16,680 Speaker 8: important to retailers heading into New Year that any sort 232 00:10:16,679 --> 00:10:20,120 Speaker 8: of AI automation technology that is being put into their 233 00:10:20,200 --> 00:10:23,360 Speaker 8: stores is definitely going to need to be helpful and 234 00:10:23,679 --> 00:10:25,280 Speaker 8: provide the best return on investment. 235 00:10:25,600 --> 00:10:28,720 Speaker 6: But what about what we are buying? Because I know 236 00:10:28,880 --> 00:10:32,000 Speaker 6: that consumers have been much more intentional about the things 237 00:10:32,040 --> 00:10:34,840 Speaker 6: they buy. We're seeing consumers in the mid to low 238 00:10:35,000 --> 00:10:38,640 Speaker 6: end really pulling back, especially on discretionary spending. So what 239 00:10:39,200 --> 00:10:40,920 Speaker 6: have we been spending our money on this season? 240 00:10:42,040 --> 00:10:46,079 Speaker 8: Yeah, so really interesting. We're actually seeing service spend grow, 241 00:10:46,240 --> 00:10:49,400 Speaker 8: so whether that's you know, on wellness, any sort of 242 00:10:49,480 --> 00:10:53,280 Speaker 8: experiential going out to theme parks, going to concerts, We're 243 00:10:53,320 --> 00:10:56,079 Speaker 8: seeing that kind of spend grow as opposed to goods. 244 00:10:56,440 --> 00:10:58,840 Speaker 8: And you know, we actually took a survey and it's 245 00:10:58,920 --> 00:11:00,960 Speaker 8: a lot of consumers said that they would actually rather 246 00:11:01,040 --> 00:11:03,440 Speaker 8: spend on going to an event with a loved and 247 00:11:03,440 --> 00:11:06,760 Speaker 8: a family, a friend instead of buying them a physical item. 248 00:11:06,880 --> 00:11:09,559 Speaker 8: So we're definitely seeing a shift, and I think we'll 249 00:11:09,600 --> 00:11:10,880 Speaker 8: see that into the new year. 250 00:11:11,640 --> 00:11:15,160 Speaker 2: Is there any have to have kind of gift out there? 251 00:11:15,240 --> 00:11:18,440 Speaker 2: Is there any tech gadget that people have to have 252 00:11:18,520 --> 00:11:18,920 Speaker 2: out there? 253 00:11:19,720 --> 00:11:22,560 Speaker 8: Oh my gosh, I mean, like I said, tech moves 254 00:11:22,640 --> 00:11:23,240 Speaker 8: so fast. 255 00:11:24,000 --> 00:11:25,840 Speaker 3: I just got an or ring. I really love it. 256 00:11:25,880 --> 00:11:26,559 Speaker 8: I think. 257 00:11:29,280 --> 00:11:33,840 Speaker 3: I think, I know, yeah, I got it on a 258 00:11:33,840 --> 00:11:35,160 Speaker 3: really good Black Friday sale. 259 00:11:35,720 --> 00:11:38,720 Speaker 8: But I'm starting to see wearable earrings that you know, 260 00:11:38,800 --> 00:11:41,200 Speaker 8: con tract your heart rate and all of these different things. 261 00:11:41,240 --> 00:11:44,200 Speaker 8: So I think anything that's you know, aside from an 262 00:11:44,240 --> 00:11:46,640 Speaker 8: iPhone and Apple Watch, those are sort of like must 263 00:11:46,640 --> 00:11:49,240 Speaker 8: have as we already have in our household. But anything 264 00:11:49,320 --> 00:11:51,880 Speaker 8: that can, you know, help track your wellness, help your 265 00:11:51,880 --> 00:11:53,280 Speaker 8: well being, I think you're going to see a lot 266 00:11:53,280 --> 00:11:55,800 Speaker 8: of consumers be willing to spend on that type of product. 267 00:11:56,880 --> 00:11:59,400 Speaker 6: I remember when I'm really dating myself. I remember when 268 00:11:59,400 --> 00:12:03,200 Speaker 6: cabbage passids. Yes, we're like all the craze, and I 269 00:12:03,280 --> 00:12:05,400 Speaker 6: just remember my mother just going insane trying to get 270 00:12:05,400 --> 00:12:07,840 Speaker 6: one from my younger sister. It was dangerous out there 271 00:12:07,920 --> 00:12:10,199 Speaker 6: in the mall. So I would say, I don't know 272 00:12:10,240 --> 00:12:13,160 Speaker 6: what the equivalent to cabbage patches nowadays, but maybe I 273 00:12:13,160 --> 00:12:14,840 Speaker 6: don't know. Is it your ring? I don't know. 274 00:12:15,400 --> 00:12:17,199 Speaker 3: I wanna say maybe a la boo boo. I don't 275 00:12:17,240 --> 00:12:18,319 Speaker 3: know if those are largest. 276 00:12:18,040 --> 00:12:19,559 Speaker 6: Fine looked about those on this show. 277 00:12:19,640 --> 00:12:22,160 Speaker 3: Yes, all right, Nicole, thank you so much for joining us. 278 00:12:22,200 --> 00:12:22,800 Speaker 3: Really appreciated. 279 00:12:22,880 --> 00:12:26,760 Speaker 2: Nicole Larson, National Manager of Retail Research or Tiler's. 280 00:12:26,480 --> 00:12:29,600 Speaker 3: Stay with us. More from Bloomberg Surveillance coming up after this. 281 00:12:38,480 --> 00:12:42,079 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 282 00:12:42,120 --> 00:12:45,280 Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on 283 00:12:45,400 --> 00:12:49,040 Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or 284 00:12:49,200 --> 00:12:50,680 Speaker 1: watch us live on YouTube. 285 00:12:50,720 --> 00:12:52,480 Speaker 2: We're gonna check in with Peter Cheer, head of macro 286 00:12:52,559 --> 00:12:56,840 Speaker 2: Strategy for Academy Securities. Get his thoughts on twenty twenty six. Boy, 287 00:12:56,840 --> 00:12:59,680 Speaker 2: it's can be tough to beat twenty twenty five. But 288 00:13:00,040 --> 00:13:02,880 Speaker 2: what is the out look for stocks, bonds, current currencies, commodities, 289 00:13:02,880 --> 00:13:05,040 Speaker 2: all that kind of good stuff here. We're also going 290 00:13:05,080 --> 00:13:07,920 Speaker 2: to talk to David Catz, President and caa of Matrix 291 00:13:08,240 --> 00:13:12,760 Speaker 2: asset advisors and why value and small caps outpor form 292 00:13:12,880 --> 00:13:15,680 Speaker 2: in the year ahead. Boy, that would be a counter call. 293 00:13:15,679 --> 00:13:17,360 Speaker 2: We haven't really seen that in a long time. So 294 00:13:17,400 --> 00:13:19,040 Speaker 2: we've got a lot coming up on the markets. We 295 00:13:19,040 --> 00:13:22,560 Speaker 2: are looking forward to twenty twenty six years. We wind 296 00:13:22,600 --> 00:13:24,720 Speaker 2: up twenty twenty five. Let's kick this hour off at 297 00:13:24,760 --> 00:13:26,480 Speaker 2: lasse mateo any Bloomberg business flash. 298 00:13:26,640 --> 00:13:28,960 Speaker 9: Yeah, we've got stocks hovering near all time highs ahead 299 00:13:29,000 --> 00:13:29,920 Speaker 9: of the Christmas break. 300 00:13:30,120 --> 00:13:31,560 Speaker 3: A little movement in futures. 301 00:13:31,840 --> 00:13:35,360 Speaker 9: SMP futures down a fraction down, futures down about twenty 302 00:13:35,360 --> 00:13:39,120 Speaker 9: eight points. Nasdaq futures are little change in the yield space. 303 00:13:39,200 --> 00:13:41,200 Speaker 9: Not much movement there as well. The two year three 304 00:13:41,240 --> 00:13:43,480 Speaker 9: point five to four percent and the yield on the 305 00:13:43,520 --> 00:13:47,679 Speaker 9: ten year four point one six percent. Gold, silver, platinum 306 00:13:47,720 --> 00:13:51,120 Speaker 9: set fresh records copperhead for an annual gain of about 307 00:13:51,160 --> 00:13:54,160 Speaker 9: forty percent. We go to the Bloomberg Dollar Spot Index, 308 00:13:54,280 --> 00:13:56,920 Speaker 9: weakening by about a tenth of percent. We are keeping 309 00:13:56,960 --> 00:13:59,480 Speaker 9: an eye on Intel shares this morning. They are down 310 00:13:59,559 --> 00:14:03,199 Speaker 9: more than two percent. Reuters reporting that in Nvidia stop 311 00:14:03,240 --> 00:14:06,120 Speaker 9: testing whether it could make its chips using Intel's eighteen 312 00:14:06,240 --> 00:14:09,440 Speaker 9: A production process. That's the reason for that, and we 313 00:14:09,480 --> 00:14:12,920 Speaker 9: have deal makers working right up to Christmas. Santa Fie 314 00:14:12,960 --> 00:14:15,560 Speaker 9: it agreed to buy Dinovex Technologies for about two point 315 00:14:15,559 --> 00:14:18,840 Speaker 9: two billion dollars. It's a bid to expand its vaccines 316 00:14:18,880 --> 00:14:22,040 Speaker 9: business currently anchored by a flu shot franchise. Shares of 317 00:14:22,080 --> 00:14:25,680 Speaker 9: Dinovcx Technologies. They're up about thirty nine percent on that news. 318 00:14:26,200 --> 00:14:29,120 Speaker 9: VP set to raise about six billion dollars from selling 319 00:14:29,160 --> 00:14:32,360 Speaker 9: a sixty five percent stake in its Castro lubricants business 320 00:14:32,480 --> 00:14:36,040 Speaker 9: to Stone Peak while retaining a minority interest. That is 321 00:14:36,080 --> 00:14:38,400 Speaker 9: your Bloomberg business flash Alexis. 322 00:14:37,920 --> 00:14:41,040 Speaker 6: And Paul right, thanks so much. Lisa eight oh two 323 00:14:41,280 --> 00:14:43,920 Speaker 6: on Wall Street. Want to dig into these markets a 324 00:14:43,960 --> 00:14:47,560 Speaker 6: little more and what might be in store from looking 325 00:14:47,560 --> 00:14:50,600 Speaker 6: at it from the lens of a macro strategy, and 326 00:14:50,640 --> 00:14:53,560 Speaker 6: who better to do that than Peter Cheer. He is 327 00:14:53,600 --> 00:14:57,240 Speaker 6: head of macro strategy at Academy Securities. Peter, thanks so 328 00:14:57,320 --> 00:14:59,320 Speaker 6: much for taking time out of your Christmas Eve to 329 00:14:59,360 --> 00:15:01,480 Speaker 6: be with us. What you're appreciate it so from your 330 00:15:01,600 --> 00:15:05,320 Speaker 6: lens looking at things on the macro level, inflation, GDP, 331 00:15:05,560 --> 00:15:08,640 Speaker 6: interest rates, does this market have what it takes to 332 00:15:09,360 --> 00:15:13,200 Speaker 6: give us a return similar to twenty twenty five. 333 00:15:14,040 --> 00:15:16,680 Speaker 7: Yeah, I think there's that potential. I think one yields 334 00:15:16,720 --> 00:15:18,280 Speaker 7: are going to be under control. I think we are 335 00:15:18,320 --> 00:15:21,160 Speaker 7: going to get cuts the new administration. They're going to 336 00:15:21,200 --> 00:15:24,000 Speaker 7: push people through the FED that want to keep rates low. 337 00:15:24,360 --> 00:15:25,960 Speaker 7: There's all this concern about the long end of the 338 00:15:26,000 --> 00:15:28,280 Speaker 7: yelkreve getting away from itself. I think they will do 339 00:15:28,320 --> 00:15:31,560 Speaker 7: Operation Twist or anything else necessary to keep the ten 340 00:15:31,640 --> 00:15:33,880 Speaker 7: year under four and a quarter four fifty, and they're 341 00:15:33,880 --> 00:15:35,560 Speaker 7: actually going to try and push it under four percent. 342 00:15:36,080 --> 00:15:38,120 Speaker 7: So I think the rate drop backdrop is going to 343 00:15:38,120 --> 00:15:40,080 Speaker 7: be good. And then I think the main driver is 344 00:15:40,080 --> 00:15:41,840 Speaker 7: going to really be what we've been calling this production 345 00:15:41,920 --> 00:15:45,400 Speaker 7: for security or prosec where you're seeing best and talk 346 00:15:45,480 --> 00:15:48,280 Speaker 7: about this more and more right, the need to make chips, 347 00:15:48,320 --> 00:15:50,760 Speaker 7: the need to make electricity, more and more things are 348 00:15:50,760 --> 00:15:52,760 Speaker 7: going to be made domestically, and I think that's going 349 00:15:52,800 --> 00:15:54,720 Speaker 7: to be a big part of this administration's agenda. 350 00:15:54,920 --> 00:15:57,400 Speaker 3: They've already started it. I think it's gaining momentum. 351 00:15:57,600 --> 00:15:59,840 Speaker 7: Not only did this get jump started kind of by 352 00:15:59,880 --> 00:16:03,320 Speaker 7: the men, you're starting to see asset managers really chase 353 00:16:03,400 --> 00:16:06,480 Speaker 7: some of these possible you know, companies. You're looking at 354 00:16:06,480 --> 00:16:09,280 Speaker 7: private equity, searching for companies that have minds that, you know, 355 00:16:09,480 --> 00:16:12,240 Speaker 7: maybe we're useless under prior administrations that could be useful. 356 00:16:12,320 --> 00:16:14,360 Speaker 7: So I think it's all going to be reasonably good. 357 00:16:14,440 --> 00:16:16,840 Speaker 7: I do think the AI story might not be the driver, though, 358 00:16:16,880 --> 00:16:19,040 Speaker 7: I think that might be a little bit overplayed right now. 359 00:16:19,160 --> 00:16:20,600 Speaker 7: It's kind of where I wanted to go, Peter. 360 00:16:20,720 --> 00:16:22,960 Speaker 2: I mean, I guess if we look back here in 361 00:16:23,000 --> 00:16:25,400 Speaker 2: some of the outperformance and equity markets in twenty three, 362 00:16:25,440 --> 00:16:28,280 Speaker 2: twenty four, and twenty five, it just seemed increasingly during 363 00:16:28,280 --> 00:16:31,560 Speaker 2: that period of time, AI was the driving theme here. 364 00:16:31,600 --> 00:16:35,400 Speaker 2: How do you kind of you know, position that for 365 00:16:35,440 --> 00:16:37,360 Speaker 2: twenty six So. 366 00:16:37,320 --> 00:16:38,800 Speaker 7: We've kind of been looking at it two ways, and 367 00:16:38,800 --> 00:16:41,760 Speaker 7: we're talking about the AI debt diet, and you certainly 368 00:16:41,840 --> 00:16:44,120 Speaker 7: can watch the you know, credit default swaps of some 369 00:16:44,160 --> 00:16:46,200 Speaker 7: of these names of widen. You're seeing a little bit 370 00:16:46,240 --> 00:16:48,520 Speaker 7: of pressure both in the public markets and the private market. 371 00:16:48,640 --> 00:16:50,080 Speaker 7: So I think there's going to have to be a 372 00:16:50,080 --> 00:16:53,280 Speaker 7: little bit more clarity from the hyperscalers and the big 373 00:16:53,400 --> 00:16:56,160 Speaker 7: data center buildouts on what they're willing to spend, how 374 00:16:56,160 --> 00:16:58,800 Speaker 7: they're willing to spend it. If there's any conditions under 375 00:16:58,800 --> 00:17:01,160 Speaker 7: which they might not spend. I think that will slow 376 00:17:01,200 --> 00:17:03,920 Speaker 7: it down a little bit on the spending side, not dramatically, 377 00:17:03,960 --> 00:17:06,080 Speaker 7: and I might actually turn out to be slightly healthy 378 00:17:06,080 --> 00:17:08,320 Speaker 7: for the stocks and very good for the credit. The 379 00:17:08,400 --> 00:17:10,560 Speaker 7: other thing that I don't think happens is whether we 380 00:17:10,600 --> 00:17:14,120 Speaker 7: get an AI spending diet, where do companies actually slow 381 00:17:14,160 --> 00:17:17,359 Speaker 7: down their spending and demand for AI. I think a 382 00:17:17,359 --> 00:17:20,119 Speaker 7: lot of companies are showing benefits of using AI. At 383 00:17:20,119 --> 00:17:21,480 Speaker 7: the same time, I think there's a lot that are 384 00:17:21,560 --> 00:17:23,639 Speaker 7: left kind of head scratching, wondering are they getting the 385 00:17:23,640 --> 00:17:25,520 Speaker 7: benefit or not? Should they continue to spend at the 386 00:17:25,520 --> 00:17:27,800 Speaker 7: current pace? That to me would be the biggest risk 387 00:17:27,800 --> 00:17:30,720 Speaker 7: of the economy and markets if you really see companies 388 00:17:30,720 --> 00:17:33,480 Speaker 7: spend less on AI and data centers going into next year. 389 00:17:34,040 --> 00:17:37,639 Speaker 3: And that's the users, not the hyperscalers. Peter. 390 00:17:37,720 --> 00:17:40,400 Speaker 6: For as much as the US doock market has done 391 00:17:40,520 --> 00:17:42,840 Speaker 6: quite well this year, you know if you look over 392 00:17:42,880 --> 00:17:47,480 Speaker 6: at Europe Asia emerging markets, they've actually outperformed US. Do 393 00:17:47,520 --> 00:17:49,600 Speaker 6: you expect that to continue? 394 00:17:50,760 --> 00:17:52,960 Speaker 7: Yeah, I think there's a decent chance that continues. I 395 00:17:52,960 --> 00:17:56,400 Speaker 7: think this kind of concept of production for security, it's 396 00:17:56,440 --> 00:17:58,359 Speaker 7: going to resonate globally, and I think you're going to 397 00:17:58,400 --> 00:18:01,160 Speaker 7: see more and more spending, more and more growth internally 398 00:18:01,200 --> 00:18:02,800 Speaker 7: in some of those countries. I think there is still 399 00:18:02,880 --> 00:18:06,080 Speaker 7: opportunity to move forward. I really do think that this 400 00:18:06,240 --> 00:18:10,240 Speaker 7: concept of production for security is slowly kind of replacing 401 00:18:11,400 --> 00:18:15,640 Speaker 7: ESG as a main thesis for government policy and investment 402 00:18:15,640 --> 00:18:17,320 Speaker 7: policy and ultimately corporate policy. 403 00:18:17,400 --> 00:18:18,480 Speaker 3: So that's where I see the growth. 404 00:18:18,560 --> 00:18:20,720 Speaker 7: And again I do think I think you mentioned earlier 405 00:18:20,720 --> 00:18:22,840 Speaker 7: one of your next guests is coming on about small caps. 406 00:18:22,920 --> 00:18:24,640 Speaker 7: I think there's a big opportunity in the US here. 407 00:18:24,720 --> 00:18:27,359 Speaker 7: So I like mid caps. I like Lobo slightly better 408 00:18:27,400 --> 00:18:29,280 Speaker 7: than big tech US right now. 409 00:18:29,800 --> 00:18:33,600 Speaker 2: Lot of the bond market, Peter, twenty twenty five was 410 00:18:33,600 --> 00:18:36,280 Speaker 2: a very good year for the bond market, kind of 411 00:18:36,359 --> 00:18:39,560 Speaker 2: high single digit total returns. You got rewarded for taking 412 00:18:39,640 --> 00:18:41,600 Speaker 2: risk if you're in a high yield or the leverage 413 00:18:41,600 --> 00:18:45,400 Speaker 2: loan business. Is twenty six going to be a year 414 00:18:45,400 --> 00:18:47,679 Speaker 2: where maybe we just clip coupons, which is not a 415 00:18:47,680 --> 00:18:48,920 Speaker 2: bad thing given where rates are. 416 00:18:49,720 --> 00:18:52,000 Speaker 7: Yeah, I think we can maybe do slightly better than 417 00:18:52,000 --> 00:18:53,919 Speaker 7: clipping coupons. I think you might see a little bit 418 00:18:53,960 --> 00:18:57,160 Speaker 7: of spread appreciation as we kind of come through year end. 419 00:18:57,440 --> 00:18:59,399 Speaker 7: I think on yields we might get a little bit 420 00:18:59,440 --> 00:19:02,040 Speaker 7: lower four percent on tens, but it's going to be 421 00:19:02,080 --> 00:19:05,280 Speaker 7: a clipping coupon. So again, i'd probably the under allocated 422 00:19:05,320 --> 00:19:08,040 Speaker 7: bonds a little bit, just because I think we've seen 423 00:19:08,080 --> 00:19:10,399 Speaker 7: a lot of the decent price action. And again, I 424 00:19:10,440 --> 00:19:12,359 Speaker 7: think some of those sectors that we talked about earlier 425 00:19:12,480 --> 00:19:15,359 Speaker 7: can really outperform next year as these you know, these 426 00:19:15,359 --> 00:19:17,560 Speaker 7: government programs gaining you know, momentum. 427 00:19:18,400 --> 00:19:20,679 Speaker 6: How much is the Fed We're going to have a 428 00:19:20,680 --> 00:19:25,160 Speaker 6: new FED chief as well, factoring into your overall outlook 429 00:19:25,200 --> 00:19:27,440 Speaker 6: because this market seems to be banking on two interest 430 00:19:27,520 --> 00:19:29,960 Speaker 6: rate cuts next year. If we don't get it, I'm 431 00:19:29,960 --> 00:19:32,120 Speaker 6: not talking about hiking, because I think that's a that's 432 00:19:32,160 --> 00:19:34,360 Speaker 6: an outlier sort of scenario. But if we don't get 433 00:19:34,359 --> 00:19:36,639 Speaker 6: the two rate cuts, is that going to what's that 434 00:19:36,680 --> 00:19:37,639 Speaker 6: going to mean for the market? 435 00:19:38,720 --> 00:19:40,960 Speaker 3: You know, I've been thinking about that a lot. First. 436 00:19:40,960 --> 00:19:42,639 Speaker 7: I actually think we're going to get three rate cuts, 437 00:19:42,640 --> 00:19:44,399 Speaker 7: So I'm a little bit ahead of the market in that, 438 00:19:44,760 --> 00:19:46,600 Speaker 7: and I do think this administration is going to do 439 00:19:46,600 --> 00:19:48,640 Speaker 7: a much better job than the market things on keeping 440 00:19:48,680 --> 00:19:52,159 Speaker 7: yield curves flat. I think people are really underestimating the 441 00:19:52,200 --> 00:19:55,000 Speaker 7: willingness of Treasury and the Fed to work together next 442 00:19:55,040 --> 00:19:57,800 Speaker 7: year to keep yeal curves flatter rather than steeper. So 443 00:19:57,960 --> 00:20:00,280 Speaker 7: I'm slightly bullish on that. You know, Yes, it was 444 00:20:00,280 --> 00:20:02,199 Speaker 7: an interesting day, right, We actually had this you know, 445 00:20:02,320 --> 00:20:06,240 Speaker 7: really strong GDP bond sold off, stocks initially sold. 446 00:20:06,040 --> 00:20:07,320 Speaker 3: Off, and then they kind of bounced back. 447 00:20:07,400 --> 00:20:09,760 Speaker 7: So maybe we are starting to move towards as good 448 00:20:09,800 --> 00:20:12,560 Speaker 7: news can be good again so long as yields remain 449 00:20:12,640 --> 00:20:16,679 Speaker 7: stable and there's no way this Fed's hiking. So I 450 00:20:16,720 --> 00:20:19,440 Speaker 7: think we can actually get there with the Fed idding 451 00:20:19,520 --> 00:20:22,760 Speaker 7: even only once or nothing if growth continues decent. 452 00:20:23,800 --> 00:20:27,280 Speaker 2: Hey, Peter, I know at Academy Securities your heritage is 453 00:20:27,960 --> 00:20:31,680 Speaker 2: geopolitics in large party. You guys really focus on geopolitics 454 00:20:31,720 --> 00:20:35,560 Speaker 2: across the globe and how it may impact investment markets here. 455 00:20:35,600 --> 00:20:39,119 Speaker 2: What's your view towards some of these you know, big 456 00:20:39,840 --> 00:20:42,920 Speaker 2: areas of interest like Ukraine here and the Mid East? 457 00:20:42,920 --> 00:20:44,840 Speaker 3: And maybe what are you telling your clients these days? 458 00:20:45,440 --> 00:20:48,399 Speaker 7: Yeah? So I work with thirty retired general's admirals, a 459 00:20:48,400 --> 00:20:51,080 Speaker 7: couple of CIA people who really do kind of form 460 00:20:51,119 --> 00:20:55,560 Speaker 7: our geopolitical thing. One we have to take the National 461 00:20:55,600 --> 00:20:58,320 Speaker 7: Security Strategy reports seriously. There is going to be a 462 00:20:58,320 --> 00:21:01,400 Speaker 7: focus on North and South America in terms of where 463 00:21:01,400 --> 00:21:03,639 Speaker 7: a policy. Just look what we're trying to do with Venezuela. 464 00:21:03,880 --> 00:21:05,719 Speaker 7: I think we will spend a lot of time on 465 00:21:05,800 --> 00:21:08,679 Speaker 7: Mexico next year once Venezuela kind of gets sorted. So 466 00:21:08,680 --> 00:21:11,240 Speaker 7: I think from an investment philosophy, if you like em 467 00:21:11,320 --> 00:21:12,960 Speaker 7: I think you do want to be concentrated in South 468 00:21:12,960 --> 00:21:14,680 Speaker 7: America because I think that's going to get a boost 469 00:21:14,720 --> 00:21:17,600 Speaker 7: from what the US is doing. I think Russian and Ukraine, 470 00:21:17,760 --> 00:21:19,520 Speaker 7: I really do think Europe had the chance to kind 471 00:21:19,560 --> 00:21:23,359 Speaker 7: of seize Russia's frozen dollars or frozen reserves use. 472 00:21:23,240 --> 00:21:24,280 Speaker 3: That they didn't. 473 00:21:24,440 --> 00:21:26,480 Speaker 7: I think we probably get pushed towards a peace deal 474 00:21:26,520 --> 00:21:28,560 Speaker 7: and it's going to be favorable to Putent, and weirdly, 475 00:21:28,600 --> 00:21:30,440 Speaker 7: I think it's going to be very favorable to the US. 476 00:21:30,720 --> 00:21:33,720 Speaker 7: I know this administration wants to lock in rights for 477 00:21:33,920 --> 00:21:37,640 Speaker 7: US companies in both Russia and Ukraine at the back 478 00:21:37,680 --> 00:21:40,840 Speaker 7: of any piece. Trump is very angry that after the 479 00:21:40,880 --> 00:21:43,840 Speaker 7: Iraq War, US companies didn't get a good deal and 480 00:21:43,880 --> 00:21:46,800 Speaker 7: have a long lead time in Iraq. He wants that 481 00:21:46,840 --> 00:21:49,400 Speaker 7: for Russian Ukraine, so I think that could be really interesting. 482 00:21:49,560 --> 00:21:51,399 Speaker 7: So two other countries I'm looking at poll and I 483 00:21:51,400 --> 00:21:53,520 Speaker 7: think benefits very well. And more and more of a 484 00:21:53,600 --> 00:21:57,119 Speaker 7: geopolitical intelligence group is seeing Romania as being an interesting place. 485 00:21:57,400 --> 00:21:59,399 Speaker 7: And then away from that, it's still all about this 486 00:21:59,520 --> 00:22:02,280 Speaker 7: kind of between US in China. I think it's a 487 00:22:02,400 --> 00:22:05,000 Speaker 7: race for US to develop rare earth and critical minerals, 488 00:22:05,320 --> 00:22:08,520 Speaker 7: not the extraction but the processing refining, while we have 489 00:22:08,600 --> 00:22:11,240 Speaker 7: to still make sure where China stands on data centers 490 00:22:11,240 --> 00:22:13,399 Speaker 7: and AI. They are catching up and they do have 491 00:22:13,400 --> 00:22:15,800 Speaker 7: an advantage in electricity, so that to me is the 492 00:22:15,800 --> 00:22:17,800 Speaker 7: big frictionary I don't have a great call in that. 493 00:22:17,880 --> 00:22:18,720 Speaker 3: I think we're leading. 494 00:22:18,920 --> 00:22:20,800 Speaker 7: I think we're taking a lot of right steps, but 495 00:22:20,840 --> 00:22:22,680 Speaker 7: I think we also might be a little bit complacent 496 00:22:22,720 --> 00:22:25,080 Speaker 7: that China could have some more surprises for us that 497 00:22:25,200 --> 00:22:27,280 Speaker 7: hurts some of our data center and AI companies. 498 00:22:27,800 --> 00:22:31,160 Speaker 6: And you know what, I hear us talking about international 499 00:22:31,200 --> 00:22:35,080 Speaker 6: and geopolitical. Of course, I think the dollar, the US 500 00:22:35,119 --> 00:22:37,440 Speaker 6: dollar has had a challenging here, Peter. I think it's 501 00:22:37,480 --> 00:22:40,240 Speaker 6: down about ten percent year to date against major currencies. 502 00:22:40,600 --> 00:22:43,000 Speaker 6: Do you see that changing in twenty twenty six? 503 00:22:44,520 --> 00:22:45,159 Speaker 3: Not really. 504 00:22:45,240 --> 00:22:47,880 Speaker 7: I think it's going to maybe do a little bit better, 505 00:22:47,880 --> 00:22:49,840 Speaker 7: but I think it's going to have some ongoing weakness. 506 00:22:49,840 --> 00:22:52,639 Speaker 7: When I'm looking at the dollar, I think countries and 507 00:22:52,680 --> 00:22:55,880 Speaker 7: companies across the globe are still very comfortable owning US 508 00:22:55,920 --> 00:22:58,880 Speaker 7: financial assets, So they will own US treasuries, they'll loan 509 00:22:58,960 --> 00:23:01,119 Speaker 7: corporate debt. Really, if you want to have a diversified 510 00:23:01,160 --> 00:23:04,080 Speaker 7: corporate debt portfolio, you need to own US corporate credits. 511 00:23:04,080 --> 00:23:07,240 Speaker 7: So that's going to be a stable part of people's portfolios. Equities, 512 00:23:07,320 --> 00:23:09,080 Speaker 7: right It's really kind of a misnomer to call a 513 00:23:09,080 --> 00:23:12,680 Speaker 7: lot of our stocks US stocks. They're very global in nature. Also, 514 00:23:12,720 --> 00:23:14,040 Speaker 7: if you want exposure to tech, you have to be 515 00:23:14,080 --> 00:23:15,879 Speaker 7: in the US box. I think you will see some 516 00:23:16,000 --> 00:23:18,560 Speaker 7: upward pressure still on the dollar where people are buying 517 00:23:18,560 --> 00:23:21,720 Speaker 7: financial assets. I think there is still a real reluctance 518 00:23:21,760 --> 00:23:24,400 Speaker 7: though to build property, plant and equipment in the US, 519 00:23:24,640 --> 00:23:27,240 Speaker 7: despite all the hype about all the trade deals where 520 00:23:27,280 --> 00:23:29,760 Speaker 7: that's going to come. I think there is a reluctance 521 00:23:29,760 --> 00:23:32,600 Speaker 7: to have dollars invested on the ground from a lot 522 00:23:32,600 --> 00:23:35,479 Speaker 7: of foreign countries right now until they see whether policy 523 00:23:35,560 --> 00:23:37,280 Speaker 7: is going to remain stable or not so I think 524 00:23:37,320 --> 00:23:40,040 Speaker 7: that pressures the dollar because we don't get those capital flows. 525 00:23:40,720 --> 00:23:41,960 Speaker 3: Peter, thanks so much for joining us. 526 00:23:41,960 --> 00:23:44,320 Speaker 2: We always appreciate getting a few minutes of your time 527 00:23:44,359 --> 00:23:48,280 Speaker 2: and a unique perspective of Academy Securities. Again, kind of 528 00:23:48,320 --> 00:23:50,639 Speaker 2: the heritage coming out of the military academies and the 529 00:23:50,720 --> 00:23:54,280 Speaker 2: US military across all services in terms of the ownership 530 00:23:54,280 --> 00:23:58,159 Speaker 2: and management of Academy securities gives them a unique perspective 531 00:23:58,240 --> 00:24:01,400 Speaker 2: on global politics and the impact on financial markets. Peter Cheer, 532 00:24:01,600 --> 00:24:05,000 Speaker 2: head of macro strategy at Academy Securities. 533 00:24:05,080 --> 00:24:08,199 Speaker 3: Stay with us. More from Bloomberg Surveillance coming up after this. 534 00:24:17,080 --> 00:24:20,680 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 535 00:24:20,760 --> 00:24:23,919 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 536 00:24:24,000 --> 00:24:27,679 Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or 537 00:24:27,800 --> 00:24:29,320 Speaker 1: watch us live on YouTube. 538 00:24:29,600 --> 00:24:33,240 Speaker 2: The one constant we do have today is Newspapers with 539 00:24:33,440 --> 00:24:34,000 Speaker 2: Lisa Matteo. 540 00:24:34,080 --> 00:24:34,920 Speaker 3: Lisa, what you got? Okay? 541 00:24:34,920 --> 00:24:36,560 Speaker 9: This one was kind of stuck out to me. It's 542 00:24:36,560 --> 00:24:39,359 Speaker 9: a study surrounding affordability, especially when it comes to home 543 00:24:39,400 --> 00:24:41,960 Speaker 9: ownership and what it means to the economy. So it 544 00:24:42,000 --> 00:24:45,760 Speaker 9: talks about the younger generation who don't think that they 545 00:24:45,800 --> 00:24:48,879 Speaker 9: will ever own a home. So basically they stop trying 546 00:24:48,920 --> 00:24:51,199 Speaker 9: and they focus on just here and now. And so 547 00:24:51,280 --> 00:24:54,640 Speaker 9: they added some of the economists on doctoral candimates Northwestern University, 548 00:24:54,720 --> 00:24:59,000 Speaker 9: University of Chicago. They built this mathematical model of consumer behavior. 549 00:24:59,040 --> 00:25:00,560 Speaker 9: So here's what they found out. They found out that 550 00:25:00,560 --> 00:25:03,080 Speaker 9: when people accept there'll never be able to afford a home, 551 00:25:03,359 --> 00:25:06,080 Speaker 9: they put less effort into their job, they tend to 552 00:25:06,119 --> 00:25:10,160 Speaker 9: spend less on luxuries, they do less long term saving, 553 00:25:10,280 --> 00:25:12,760 Speaker 9: and they're more likely to actually invest in riskier things 554 00:25:12,800 --> 00:25:14,080 Speaker 9: like like cryptocurrencies. 555 00:25:14,440 --> 00:25:15,640 Speaker 6: So it sorts of snow law. 556 00:25:16,000 --> 00:25:18,000 Speaker 9: It does, it does, and it shows that's how it's 557 00:25:18,080 --> 00:25:20,520 Speaker 9: kind of affecting the economy. And so they're showing that, 558 00:25:20,680 --> 00:25:23,080 Speaker 9: you know, the US government should consider grants for those 559 00:25:23,080 --> 00:25:25,199 Speaker 9: people who are kind of giving up, I guess is 560 00:25:25,200 --> 00:25:27,439 Speaker 9: the way they quote put it in giving up. But 561 00:25:27,520 --> 00:25:30,360 Speaker 9: it's a good kind of insight into the struggles and 562 00:25:30,440 --> 00:25:32,160 Speaker 9: just them just kind of thrown up their hands and say, 563 00:25:32,200 --> 00:25:33,440 Speaker 9: you know what, it's never going to happen. 564 00:25:33,520 --> 00:25:36,000 Speaker 2: So that is right, and that's the first time it's 565 00:25:36,080 --> 00:25:38,679 Speaker 2: I think I've not heard that before this generation or 566 00:25:38,680 --> 00:25:41,000 Speaker 2: the last ten to fifteen years. I know, and you 567 00:25:41,040 --> 00:25:45,240 Speaker 2: feel like it's just you could argue a house or 568 00:25:45,240 --> 00:25:48,280 Speaker 2: a home, an abode is a commodity. Build more of them, 569 00:25:49,480 --> 00:25:53,280 Speaker 2: bring down the cost, improve their affordability. But that's not happening, 570 00:25:53,280 --> 00:25:54,320 Speaker 2: I guess, And I don't know why. 571 00:25:54,359 --> 00:25:56,520 Speaker 6: I guess it's more complicated than that. I mean, I 572 00:25:56,520 --> 00:25:58,399 Speaker 6: don't know. It just seems like no matter what they do, 573 00:25:58,440 --> 00:26:00,600 Speaker 6: you know, mortgage rates, even if they come down that debt, 574 00:26:00,680 --> 00:26:04,800 Speaker 6: that's only part of the large problem because its inventory, 575 00:26:04,880 --> 00:26:05,879 Speaker 6: which is prices. 576 00:26:06,119 --> 00:26:07,040 Speaker 5: Yep, drew reading. 577 00:26:07,880 --> 00:26:09,320 Speaker 3: Well, I'll tell you what what I did. 578 00:26:09,480 --> 00:26:11,320 Speaker 2: I was forced and I was an investment banker, a 579 00:26:11,320 --> 00:26:13,480 Speaker 2: young investment bank round of biscal. I had to leave 580 00:26:13,520 --> 00:26:16,600 Speaker 2: the metro area to go relocate to Richmond. 581 00:26:16,280 --> 00:26:18,000 Speaker 3: Virginia solely for housing. 582 00:26:19,240 --> 00:26:20,760 Speaker 2: And I was able to get a job there and 583 00:26:20,840 --> 00:26:22,440 Speaker 2: I made more money than was able to afford to 584 00:26:22,440 --> 00:26:22,879 Speaker 2: come back up. 585 00:26:22,880 --> 00:26:25,240 Speaker 3: But I had to leave the region. Yeah, yeah, yeah, 586 00:26:25,320 --> 00:26:27,600 Speaker 3: this was the area. This was in the nineties. 587 00:26:27,800 --> 00:26:29,480 Speaker 9: I had to live with mom and dad for a year. 588 00:26:32,280 --> 00:26:34,600 Speaker 6: Folks are are graduating and moving back. 589 00:26:34,920 --> 00:26:36,840 Speaker 2: Yeah, you're right, a lot of young folks. I think 590 00:26:36,880 --> 00:26:39,479 Speaker 2: they're preparing themselves to be long term, if not permanent 591 00:26:39,480 --> 00:26:42,720 Speaker 2: renters and put your money and put that down payment 592 00:26:42,760 --> 00:26:44,680 Speaker 2: in the stock marker, put that down payment somewhere else. 593 00:26:44,720 --> 00:26:47,480 Speaker 3: I don't know. So it's different. It's a different way life. 594 00:26:47,520 --> 00:26:50,879 Speaker 9: It definitely is. Okay, this one is kind of a 595 00:26:50,880 --> 00:26:52,880 Speaker 9: different way of life too, because you hear so much 596 00:26:52,880 --> 00:26:55,600 Speaker 9: about the VIP lounges right in the airports and people 597 00:26:55,600 --> 00:26:58,280 Speaker 9: flocking to them. Well, now they're saying that more travelers 598 00:26:58,320 --> 00:27:00,919 Speaker 9: are enjoying the smaller airports, like the perks of the 599 00:27:00,960 --> 00:27:03,800 Speaker 9: smaller airports. This was in the journal. They spoke to 600 00:27:03,840 --> 00:27:06,040 Speaker 9: travelers who said they like the cheap parking, they like 601 00:27:06,119 --> 00:27:09,320 Speaker 9: the minimal tsa weights, and they like the friendly employees. 602 00:27:09,440 --> 00:27:11,920 Speaker 9: So they say they like the atmosphere of it. They're 603 00:27:11,920 --> 00:27:14,879 Speaker 9: willing to drive further if they have to, or some 604 00:27:15,040 --> 00:27:18,160 Speaker 9: live close so they like traveling closer. And they even 605 00:27:18,200 --> 00:27:20,439 Speaker 9: don't mind the connecting flights because usually at a smaller 606 00:27:20,480 --> 00:27:22,600 Speaker 9: airport you need the connecting flight. 607 00:27:22,840 --> 00:27:25,280 Speaker 2: And my professional career, I've lived in two small markets 608 00:27:25,760 --> 00:27:27,160 Speaker 2: and that all that is true. 609 00:27:27,200 --> 00:27:29,360 Speaker 3: You can park, pull right up, walk right in, you're 610 00:27:29,400 --> 00:27:29,720 Speaker 3: on your. 611 00:27:29,600 --> 00:27:32,880 Speaker 2: Plane, but you have to connect, connect, and the worst 612 00:27:32,920 --> 00:27:35,520 Speaker 2: thing is man having to connect coming home and you're 613 00:27:35,520 --> 00:27:37,760 Speaker 2: always going to miss your connection this or that or 614 00:27:38,080 --> 00:27:41,600 Speaker 2: I've met the stress associated with the connections. I found 615 00:27:41,960 --> 00:27:43,320 Speaker 2: like one of the things I love about living in 616 00:27:43,359 --> 00:27:46,000 Speaker 2: metron Eric area. I don't connect for anywhere in the world. 617 00:27:46,200 --> 00:27:47,080 Speaker 2: I don't connect anywhere. 618 00:27:47,200 --> 00:27:49,159 Speaker 6: I don't have the planet. I won't because I've been 619 00:27:49,200 --> 00:27:50,920 Speaker 6: down that road where you're on the plane or you're 620 00:27:50,920 --> 00:27:52,919 Speaker 6: going I want to miss this connected. Yes, and I 621 00:27:52,960 --> 00:27:55,240 Speaker 6: did miss that, and I ran through the airport, you know, 622 00:27:55,359 --> 00:27:58,080 Speaker 6: like for the commercials, and it is running and it 623 00:27:58,240 --> 00:28:00,520 Speaker 6: was not a good story. So you do get the 624 00:28:00,560 --> 00:28:03,440 Speaker 6: cheaper airfares generally a smaller. 625 00:28:03,119 --> 00:28:05,960 Speaker 9: Airport and now more more airlines like Allegiant Breeze, like 626 00:28:06,040 --> 00:28:08,280 Speaker 9: all those airlines are coming more to the smaller airport, 627 00:28:08,359 --> 00:28:09,439 Speaker 9: so it makes it a little bit more. 628 00:28:09,600 --> 00:28:11,840 Speaker 2: In the last twenty four hours, Yeah, my knowledge of 629 00:28:11,880 --> 00:28:17,159 Speaker 2: Coquito has quadruplet yesterday right now now it's all over me, 630 00:28:17,480 --> 00:28:19,880 Speaker 2: like it's about the Danish I was getting Coquito from 631 00:28:19,960 --> 00:28:20,800 Speaker 2: all different parts of me. 632 00:28:21,000 --> 00:28:22,640 Speaker 3: It is. You got to go to the New York Times. 633 00:28:22,640 --> 00:28:25,240 Speaker 9: They have it how it's going kind of like mainstream. 634 00:28:25,400 --> 00:28:28,240 Speaker 9: Even listen to this. Jimmy Fallon made a song about 635 00:28:28,240 --> 00:28:28,480 Speaker 9: it too. 636 00:28:28,520 --> 00:28:35,080 Speaker 3: Take a listen. That's the sound of the coutea. I 637 00:28:35,200 --> 00:28:36,200 Speaker 3: love it. 638 00:28:36,200 --> 00:28:38,600 Speaker 9: It's always been like this family thing, but the secret right, 639 00:28:38,680 --> 00:28:41,400 Speaker 9: like everybody would hide their secrets in the family, but 640 00:28:42,000 --> 00:28:43,560 Speaker 9: it's out there. It's on social media. 641 00:28:43,560 --> 00:28:44,560 Speaker 3: There's different flavors. 642 00:28:44,560 --> 00:28:49,640 Speaker 9: You have coffee shops in New York City having coquito, lattest. 643 00:28:48,920 --> 00:28:51,040 Speaker 6: Drink right, drink. 644 00:28:51,240 --> 00:28:55,120 Speaker 9: Yes, it's condensed milk, evaporated milk, cream of coconut, rom cinnamon. 645 00:28:55,160 --> 00:28:56,080 Speaker 3: It's delicious. 646 00:28:56,280 --> 00:28:58,200 Speaker 6: Next time bring them for all of us. 647 00:28:58,400 --> 00:29:01,120 Speaker 9: Well, I do have one of my death that can 648 00:29:01,160 --> 00:29:01,720 Speaker 9: I see it? 649 00:29:02,600 --> 00:29:03,040 Speaker 3: What time? 650 00:29:03,240 --> 00:29:06,120 Speaker 2: Lisa Mateo with the newspaper's Coquito. 651 00:29:06,840 --> 00:29:11,719 Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify, 652 00:29:11,840 --> 00:29:16,120 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 653 00:29:16,240 --> 00:29:19,720 Speaker 1: seven to ten am Eastern on Bloomberg dot Com, the 654 00:29:19,800 --> 00:29:23,800 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You 655 00:29:23,840 --> 00:29:27,200 Speaker 1: can also watch us live every weekday on YouTube and 656 00:29:27,400 --> 00:29:29,160 Speaker 1: always on the Bloomberg terminal