WEBVTT - Iran Ceasefire Deal Spurs Global Relief Rally 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:21.240 on Apple car Play or Android Auto with the Bloomberg 0:00:21.320 --> 0:00:24.840 Business App. Listen on demand wherever you get your podcasts, 0:00:25.280 --> 0:00:27.040 or watch us live on YouTube. 0:00:27.840 --> 0:00:31.960 John Stolfus APCO, We're thrilled that he could join us today. 0:00:31.960 --> 0:00:34.320 What are you writing this morning? I mean, my head 0:00:34.400 --> 0:00:37.159 is spinning over the last forty eight hours. Just give 0:00:37.240 --> 0:00:41.519 us a summary of the Stolfus. It's cast in stone, 0:00:41.560 --> 0:00:45.040 it's in granite out. What are you writing this morning? 0:00:45.120 --> 0:00:49.760 Well, actually we're not writing yet because I'm sitting here. 0:00:49.760 --> 0:00:52.120 But I can tell you what we have done this 0:00:52.240 --> 0:00:55.880 year thus far is we have not made any changes 0:00:56.000 --> 0:00:58.640 on our outlook for the year. We continue with an 0:00:58.640 --> 0:01:01.320 eighty one hundred target for the S and P five hundred. 0:01:01.640 --> 0:01:08.160 Our favorite sectors continue to be information technology, communications services, 0:01:08.560 --> 0:01:13.320 consumer discretionary industrials, and financials, all of which have been 0:01:14.120 --> 0:01:18.280 hurt over the period of the year since the market 0:01:18.319 --> 0:01:20.880 hit the top I think it was in January twenty seventh, 0:01:22.040 --> 0:01:23.800 and we think that we're going to get back to 0:01:23.880 --> 0:01:27.960 business here. That said, we have to say that you know. 0:01:28.040 --> 0:01:31.119 This is we've been at many different points in the 0:01:31.160 --> 0:01:34.760 history of this country since we boomers have been around, 0:01:35.160 --> 0:01:37.960 when it looks like pieces in the Middle East and 0:01:38.000 --> 0:01:40.640 that it doesn't actually come to fruition or it is 0:01:40.760 --> 0:01:44.960 very tentative. I think the markets remain sensitive to the 0:01:44.959 --> 0:01:47.800 news flow on a day to day basis, but overall, 0:01:48.280 --> 0:01:51.680 I think this today, what we know, at least for 0:01:51.760 --> 0:01:56.440 today is certainly calls justifies a rally, but we think, 0:01:56.680 --> 0:02:00.360 you know, it's like John McLaughlin the guitar and his 0:02:00.760 --> 0:02:04.080 acoustic album once set a thousand years ago. My goal 0:02:04.200 --> 0:02:04.840 is beyond. 0:02:05.320 --> 0:02:06.080 Our goal is. 0:02:06.080 --> 0:02:09.480 Beyond as intermediate to longer term investors. So that's why 0:02:09.960 --> 0:02:13.240 with all that occurred, we keep looking ahead and we 0:02:13.360 --> 0:02:15.720 have to think that this situation in the Middle East 0:02:15.800 --> 0:02:18.720 is so extraordinary that it had to be dealt with 0:02:18.800 --> 0:02:22.320 in some fashion, and the fact that there's a different 0:02:22.400 --> 0:02:28.080 play in terms of the allies. If you consider Saudi Arabia, Arabia, 0:02:28.440 --> 0:02:32.200 the UAE, of a variety of very major players in 0:02:32.240 --> 0:02:35.680 the Middle East that are on our side here and 0:02:35.840 --> 0:02:40.520 have been attacked by around this is a very different situation. 0:02:40.600 --> 0:02:43.240 They always say, be careful when you say this time 0:02:43.360 --> 0:02:45.880 is different, but I think in so many ways, the 0:02:45.919 --> 0:02:49.440 way we were is no longer the way we are today. 0:02:50.680 --> 0:02:52.240 Believe it or not, we're going to get back to 0:02:52.360 --> 0:02:54.560 some fundamentals next week, whether we like it or not. 0:02:54.639 --> 0:02:57.600 Earnings are going to start here again. What are your expectations? 0:02:57.639 --> 0:02:59.040 What do you think we're going to hear from companies? 0:02:59.120 --> 0:03:03.280 Is they try to navigate this uncertainty. They've kind of 0:03:03.320 --> 0:03:05.560 navigated terrorists. That was the last year's story. Now it 0:03:05.600 --> 0:03:07.480 seems like war is going to be this year's story. 0:03:07.639 --> 0:03:07.840 You know. 0:03:08.120 --> 0:03:10.640 I think it will, and I think in many cases, 0:03:10.680 --> 0:03:14.400 what we'll likely see is how technology and the experience 0:03:14.440 --> 0:03:19.800 of solid managements being able to have over the last 0:03:20.400 --> 0:03:26.880 eighteen years, gotten over the financial crisis, COVID, the variety 0:03:27.080 --> 0:03:31.160 of intensity and supply chain disruptions. I think we'll actually 0:03:31.240 --> 0:03:35.000 hear some very positive things from many companies. The initial 0:03:35.040 --> 0:03:38.200 I think only seventeen companies are reported thus far, But 0:03:38.240 --> 0:03:40.720 if you look at the EA page, it's a little wild. 0:03:40.800 --> 0:03:43.240 I mean, the growth looks so good in some areas 0:03:44.280 --> 0:03:46.880 and others it doesn't, but overall it's. 0:03:46.800 --> 0:03:47.600 Very good so far. 0:03:47.680 --> 0:03:52.160 I think we'll get plenty of positive surprises. I do think. 0:03:52.280 --> 0:03:54.880 You know, we've always got to remember, just like with 0:03:54.920 --> 0:03:58.200 the non farm payroll number, the one prior to this 0:03:58.240 --> 0:04:01.800 one was a negative one. There's all is volatility. It'll 0:04:01.840 --> 0:04:05.120 be a mixed bag, but I think overall it'll be positive. 0:04:05.160 --> 0:04:07.040 I think we continue with good growth. 0:04:07.360 --> 0:04:10.600 Have you ever seen in your arched career, Glen back 0:04:10.640 --> 0:04:13.960 to Les Paul, have you ever seen a decline in 0:04:14.080 --> 0:04:16.320 multiple like we've enjoyed in Microsoft? 0:04:17.040 --> 0:04:20.800 You know, not that I can think of off of 0:04:20.880 --> 0:04:22.920 the top of my head, because I wasn't prepared to 0:04:22.960 --> 0:04:25.760 answer this question without taking a look at the multiple 0:04:25.800 --> 0:04:27.000 going back over the years. 0:04:27.080 --> 0:04:28.320 Let's go prominent. 0:04:28.000 --> 0:04:31.440 Company, whatever done twenty one, I would have to say, 0:04:31.600 --> 0:04:34.839 I don't think so. It is extraordinary. And what I 0:04:34.960 --> 0:04:37.640 find that in many ways today, and it might have 0:04:37.680 --> 0:04:40.599 to do with social media, is the large s that 0:04:40.760 --> 0:04:44.680 is given to all kinds of negativity and projections on 0:04:44.880 --> 0:04:48.880 companies and what has what has hit that company? For example, 0:04:49.600 --> 0:04:53.640 when when you think about how powerful their position is 0:04:53.680 --> 0:04:56.840 and being deeply embedded in the lives of both business 0:04:56.960 --> 0:05:00.599 and the consumers and their financial standing. The idea that 0:05:00.760 --> 0:05:03.840 companies that are investing large sums of money in AI 0:05:04.080 --> 0:05:08.239 have to be profitable on those investments immediate. It gives 0:05:08.279 --> 0:05:11.080 me the question of where were they? When were these 0:05:11.120 --> 0:05:15.000 people born? I mean, profitability usually takes time to come around. 0:05:15.240 --> 0:05:17.479 John stulf is with us and we will continue a 0:05:17.600 --> 0:05:21.359 headline we have anticipated. I'm sure the Secretary of Defense 0:05:21.480 --> 0:05:27.080 is anticipated as well. This from Iran state television. First 0:05:27.080 --> 0:05:31.800 ship passed through Harmez since cease fire. We'll see what 0:05:31.839 --> 0:05:33.919 that does to the market. We haven't really seen that 0:05:34.160 --> 0:05:37.200 tone yet. We need confirmation of that, of course, but 0:05:37.279 --> 0:05:39.920 there it is a tentative lift to the market here 0:05:39.960 --> 0:05:42.640 at futures up one hundred and seventy eight points down, 0:05:42.680 --> 0:05:46.200 features up one thousand, two hundred and sixty six points 0:05:46.200 --> 0:05:50.520 two point seven percent. Good morning across America. We continue 0:05:50.960 --> 0:05:53.640 Paul Sweeney with John Stolphus of OpCo. 0:05:54.320 --> 0:05:56.520 John, what'll be doing in the bond market here these days? 0:05:56.560 --> 0:05:58.960 I mean people are clipping some nice coupons just in 0:05:59.000 --> 0:06:02.400 the treasury market. Do they need to take credit risk here? 0:06:02.440 --> 0:06:03.800 Do you think? You know? 0:06:04.360 --> 0:06:06.960 I have to think when it comes to the bond market, 0:06:07.320 --> 0:06:12.839 the bond market, within the community, within the bond market, 0:06:12.880 --> 0:06:16.480 the trades there tends to be an obsession with keeping 0:06:16.600 --> 0:06:19.920 durations shorter rather than longer, and that seems to us 0:06:20.240 --> 0:06:23.200 to be the right thing. With stickier than expected inflation, 0:06:23.680 --> 0:06:28.000 plus the exasperation that people are feeling related to higher 0:06:28.040 --> 0:06:30.960 oil prices, that are likely to take longer to work 0:06:31.000 --> 0:06:33.040 out of the system than one would like to see, 0:06:33.320 --> 0:06:37.080 but at the same time probably getting resolved sooner than 0:06:37.120 --> 0:06:39.839 the skeptics and the most parish would expect to be. 0:06:41.040 --> 0:06:43.679 But we'd have to think, you know, when it comes 0:06:43.720 --> 0:06:47.200 to fixed income, our take is we are overweight equities 0:06:47.240 --> 0:06:50.640 in our position in the portfolios, but with fixed income, 0:06:50.680 --> 0:06:54.640 we see it as a great diversifier and means to 0:06:54.680 --> 0:06:58.719 get current income other than simply dividends, and you just 0:06:58.760 --> 0:07:02.120 have to watch your duration. Is the quality the opportunity 0:07:02.480 --> 0:07:05.640 and tax frees still look very attractive? Does in high 0:07:05.680 --> 0:07:08.120 tax vicinities? 0:07:08.520 --> 0:07:11.120 How about the It doesn't look like the Fed's going 0:07:11.160 --> 0:07:12.480 to give us any help this year. I mean, I'm 0:07:12.480 --> 0:07:14.400 just looking at the Bloomberg terminal and the warp function. 0:07:15.080 --> 0:07:18.040 They've at market priced taken away and maybe any any 0:07:18.120 --> 0:07:21.000 rate cuts this year. Can a market still work in 0:07:21.040 --> 0:07:21.920 that kind of environment? 0:07:22.280 --> 0:07:24.760 I think so based on what we've come to see. 0:07:24.840 --> 0:07:27.680 I mean, we've we've been living now for two years 0:07:28.000 --> 0:07:33.200 in succession with just three cuts after what eleven hikes 0:07:33.200 --> 0:07:38.400 and fourteen pauses at the higher end of that. And 0:07:38.560 --> 0:07:42.920 the economy has shown remarkable resilience. Job growth has shown 0:07:43.440 --> 0:07:48.240 remarkable resilience, even though it's slowing somewhat it could be expected, 0:07:48.640 --> 0:07:52.000 but that we think that the operative word remains resilience here. 0:07:52.120 --> 0:07:57.040 Don't look for robust things, but look for resilience is key. 0:07:57.440 --> 0:08:01.760 What are you hearing from upgo? Your research has been 0:08:01.880 --> 0:08:07.160 so sophisticated over the decades. There's almost a calmness there. 0:08:07.200 --> 0:08:10.160 Are they calm or is there some sweat going up? Well, 0:08:10.400 --> 0:08:15.440 I'm flattered what you just said. Thank you. Stay with us. 0:08:15.640 --> 0:08:18.880 More from Bloomberg Surveillance coming up after this. 0:08:26.120 --> 0:08:29.720 You're listening to the Bloomberg Surveillance Podcast. Catch us live 0:08:29.800 --> 0:08:32.920 weekday afternoons from seven to ten am Eastern Listen on 0:08:33.040 --> 0:08:36.400 Apple Karplay and Android Auto with the Bloomberg Business app, 0:08:36.600 --> 0:08:38.320 or watch us live on YouTube. 0:08:38.600 --> 0:08:43.800 Golder Mountavali is our definitive reporter on her Persia, her around, 0:08:43.800 --> 0:08:46.040 and we're thrilled that she could join us from Queen 0:08:46.120 --> 0:08:51.360 Victoria Street this morning. Golnar, there is Revolution Square, there 0:08:51.440 --> 0:08:55.640 is Freedom Square, there are roads where there are protests 0:08:55.720 --> 0:08:59.920 hiding from security, there are protests often from the rooftop. 0:09:00.520 --> 0:09:03.400 What can you guess is the mood in your Tehran? 0:09:05.960 --> 0:09:09.600 From what I'm hearing from people, there's I think, a 0:09:09.640 --> 0:09:14.880 real mood of relief. I think a lot of Iranians, 0:09:14.880 --> 0:09:19.959 particularly those in the urban centers like Tehran, like Sfahan, 0:09:20.920 --> 0:09:24.719 cities like Tabres, that were seeing a lot of bombardment 0:09:24.840 --> 0:09:28.240 from US and Israeli air strikes. I think from what 0:09:28.320 --> 0:09:32.840 I heard, particularly towards the end of this period, right 0:09:32.880 --> 0:09:37.760 now that we have coming off of this tentative ceasefire 0:09:37.960 --> 0:09:41.480 is exhaustion. I think even if there was a sense 0:09:41.520 --> 0:09:46.040 in the beginning that people, some people, all large numbers 0:09:46.040 --> 0:09:48.679 of the youth, welcome the air strikes because they are 0:09:48.760 --> 0:09:51.839 exhausted with the regime and they really want a change 0:09:51.880 --> 0:09:56.760 in the leadership, I think the extent and the breadth 0:09:57.000 --> 0:10:01.280 and the scale of the bombings caused a kind of 0:10:01.920 --> 0:10:04.760 a change in attitude amongst many. And while I think 0:10:04.880 --> 0:10:11.240 that opposition fundamentally to the theocratic system still holds, I 0:10:11.280 --> 0:10:14.720 think people just don't want or they don't want to 0:10:14.760 --> 0:10:17.800 be attacked again like this ever again. And I think 0:10:17.840 --> 0:10:20.600 while there's a sense of relief, I think there's going 0:10:20.640 --> 0:10:24.560 to be a lot of realization of the damage that's 0:10:24.600 --> 0:10:26.920 taken place and what they now have to do to 0:10:26.960 --> 0:10:31.400 repair and recover emotionally as well as economically, which is 0:10:31.440 --> 0:10:33.520 going to be difficult for Iran obviously because it's so 0:10:33.520 --> 0:10:34.360 heavily sanctioned. 0:10:34.559 --> 0:10:37.280 Goner. We have a widely read morning note from Mike 0:10:37.360 --> 0:10:40.720 Allen at Axios. This is Neil Rothschild folks this morning 0:10:41.200 --> 0:10:44.800 in Axios, and the key data point that they report 0:10:44.880 --> 0:10:49.000 on Gonor Montevali is that the Supreme leader, we believe 0:10:49.040 --> 0:10:53.640 injured out of the picture, clearly had instructed the negotiators 0:10:53.679 --> 0:10:56.680 for the first time since the war began to move 0:10:56.720 --> 0:11:00.520 toward a deal. With your reporting and context, would you 0:11:00.600 --> 0:11:06.400 suggest that the architecture of traditional leadership is still in place. 0:11:09.840 --> 0:11:13.080 That's a very interesting question. I think the scaffolding is 0:11:13.120 --> 0:11:17.679 still there. But I think what has happened with the 0:11:17.800 --> 0:11:24.440 killing of the previous Supreme leader, Ali Harmenee, and with 0:11:24.800 --> 0:11:31.080 the fact that his son has succeeded under extremely difficult 0:11:31.240 --> 0:11:36.360 circumstances during war, it's kind of put the country generally 0:11:36.480 --> 0:11:40.559 in a force majeure situation over the past six weeks 0:11:40.600 --> 0:11:44.679 and the leadership structure that has had to change in 0:11:44.720 --> 0:11:49.560 response to an extraordinary set of events. We've seen a 0:11:49.640 --> 0:11:52.480 kind of this so called mosaic structure of leadership where 0:11:52.520 --> 0:11:57.440 personalities like Ali bath have become very important and very powerful. Earlier, 0:11:57.440 --> 0:12:01.760 before he was killed, Ali Larajani was very influential. I 0:12:01.800 --> 0:12:06.800 think we might see elements of this stay because moj 0:12:06.920 --> 0:12:11.040 Taber Harmonae, the current Supreme Leader, he hasn't been seen, 0:12:11.440 --> 0:12:15.000 he hasn't been heard, and already there is a sense 0:12:15.360 --> 0:12:18.880 that the office of the Supreme Leader itself is not 0:12:19.040 --> 0:12:21.840 the same type of office and doesn't have the same 0:12:22.080 --> 0:12:26.120 level of authority perhaps that it did while Harmonae the 0:12:26.240 --> 0:12:30.160 Elder was still alive. So that points to possibly in 0:12:30.200 --> 0:12:35.840 the future, fundamental changes in the way that the regime 0:12:36.040 --> 0:12:40.360 itself is structured in terms of its leadership. But not 0:12:41.679 --> 0:12:43.520 on the question of whether the regime is going to 0:12:43.559 --> 0:12:46.080 remain in place, I think it's going to stay where 0:12:46.080 --> 0:12:48.240 it is. I think it's going to stay firm. That 0:12:48.280 --> 0:12:51.880 there may be an internal evolution as a result of 0:12:51.920 --> 0:12:52.360 this war. 0:12:52.720 --> 0:12:56.880 Conard, given that uncertainty as to perhaps the leadership structure, 0:12:57.280 --> 0:13:00.880 how far do you think the Iranians can go in 0:13:00.960 --> 0:13:04.880 terms of negotiating peace with the US? Can they can 0:13:04.920 --> 0:13:09.280 they meet the US demands? How much leverage do you 0:13:09.320 --> 0:13:12.280 believe that they have given maybe some of the uncertainty 0:13:12.280 --> 0:13:12.840 in their government. 0:13:15.880 --> 0:13:19.720 I think right now, the feeling, or at least the 0:13:19.760 --> 0:13:23.160 impression that the hardline leadership in terror wants to give 0:13:24.280 --> 0:13:28.199 to the Iranian population, to its own loyal base of supporters, 0:13:28.200 --> 0:13:32.720 and to the world more broadly, is that they're on 0:13:32.760 --> 0:13:36.200 the front foot, that they're the party in the war 0:13:36.280 --> 0:13:40.680 that has managed to get concessions out of Trump in 0:13:40.720 --> 0:13:44.079 the way that this ceasefire or was agree to. Whether 0:13:44.120 --> 0:13:47.400 that's true or not tactically strategically is a separate question, 0:13:47.520 --> 0:13:50.480 but I think on the ground they feel emboldened by 0:13:50.920 --> 0:13:55.160 what has happened because they have managed to extract significant 0:13:55.640 --> 0:13:59.040 major shifts, especially in terms of how the strator formals 0:13:59.120 --> 0:13:59.600 is managed. 0:14:00.840 --> 0:14:03.280 Gonner One final question here, and this goes to the 0:14:03.320 --> 0:14:06.120 heritage of Matthew Winkler, the founder of Bloomberg News, and 0:14:06.200 --> 0:14:10.360 John Minchleswade, our editor in chief. We try to stay 0:14:10.400 --> 0:14:12.760 out of the debate, and Paul and I folks are 0:14:12.960 --> 0:14:16.280 killing ourselves trying not to insert our thoughts at this 0:14:16.480 --> 0:14:21.320 historic moment for America, for Israel, for Iran Goner, I'm 0:14:21.400 --> 0:14:25.480 absolutely flabbergasted by the lack of coverage of Israel in 0:14:25.560 --> 0:14:29.920 the last forty eight hours. How is Israel perceived, not 0:14:30.120 --> 0:14:34.760 by the theocracy, not by the military, how is Israel 0:14:34.880 --> 0:14:37.080 perceived by the people of Persia. 0:14:39.280 --> 0:14:43.880 That's a complicated question. As you know, Historically there was 0:14:43.920 --> 0:14:47.160 a relationship between Iran when it was under the Shah, 0:14:47.240 --> 0:14:51.240 when it was under the monarchy, and Israel. At the 0:14:51.280 --> 0:14:57.880 same time, I think I think the Shah also criticized 0:14:57.960 --> 0:15:03.880 Israel quite heavily for its policy towards the Palestinians, and 0:15:03.960 --> 0:15:08.800 I think he was unofficially not happy with the way 0:15:08.840 --> 0:15:13.520 that Israel conducted itself, particularly in the nineteen seventies following 0:15:13.560 --> 0:15:18.040 those wars. The examp Republic we know, has almost its 0:15:18.040 --> 0:15:23.440 foreign policy has been completely defined by a strong hostility 0:15:24.400 --> 0:15:27.920 towards the very existence of Israel, and a lot of 0:15:27.960 --> 0:15:31.600 that has been based on also the fact that Israel 0:15:31.600 --> 0:15:35.560 occupied Lebanon and that Iran helped fund and established and 0:15:35.600 --> 0:15:39.920 train Hezbolah in the very early nineteen eighties. But that's 0:15:40.160 --> 0:15:44.080 very much the political perception of the establishment in the 0:15:44.120 --> 0:15:48.240 Islamp Republic. I don't think ordinary Iranians feel that way. 0:15:49.360 --> 0:15:52.960 I think many many ordinary Iranians would like to see 0:15:54.080 --> 0:15:58.360 not just a normalized relationship with the whole region, but 0:15:58.480 --> 0:16:02.120 they want to see themselves. They want the world to 0:16:02.160 --> 0:16:06.760 see their country as a normal country in quotes whatever 0:16:06.800 --> 0:16:10.600 that may or or may not mean. But I do 0:16:10.720 --> 0:16:16.720 think that I think this war, Before this war, I 0:16:16.760 --> 0:16:21.880 think there may have been a sentiment, particularly amongst younger 0:16:22.800 --> 0:16:27.400 educated Iranians who maybe have more experience traveling overseas, of 0:16:28.720 --> 0:16:35.120 friendship or just a sense of neutrality and openness towards Israel. 0:16:35.240 --> 0:16:37.680 But I don't know with this bombardment, with the past 0:16:37.720 --> 0:16:41.800 six weeks, with the extent of the air strikes and 0:16:41.840 --> 0:16:45.360 the types of targets that have been hit, I don't 0:16:45.400 --> 0:16:49.800 know whether that has changed, whether it has gone backwards again. 0:16:49.880 --> 0:16:52.920 I think that's something that's too early for us. 0:16:54.080 --> 0:16:56.880 Generous with your time here on an historic day for Iran. 0:16:56.920 --> 0:17:04.040 Glenor Montevali reporting from Queen Victorious read in London. Stay 0:17:04.080 --> 0:17:07.960 with us. More from Bloomberg Surveillance coming up after this. 0:17:15.200 --> 0:17:18.800 You're listening to the Bloomberg Surveillance podcast. Catch US live 0:17:18.840 --> 0:17:22.000 weekday afternoons from seven to ten am Eastern Listen on 0:17:22.080 --> 0:17:25.760 Applecarplay and Android Auto with the Bloomberg Business app, or 0:17:25.920 --> 0:17:27.400 watch US live on YouTube. 0:17:28.280 --> 0:17:34.480 Max Kattner joins US chief Multi asset Strategists at HSBC. Max, again, 0:17:34.560 --> 0:17:37.200 here's just another day of the twists and terms of 0:17:37.240 --> 0:17:42.280 geopolitics inserting itself in financial markets. Here, give us just 0:17:42.280 --> 0:17:44.239 a sense of some of the conversations you've had with 0:17:44.320 --> 0:17:49.080 your institutional clients around the world over the last six weeks. 0:17:50.440 --> 0:17:52.800 Yeah, there's the big question. Those nations that we had really, 0:17:53.080 --> 0:17:55.159 i would say in the last week week and a half, 0:17:55.200 --> 0:17:58.760 and that is when you really realized that not only sentiment, 0:17:58.880 --> 0:18:01.080 not only what people would telling you, but the actual 0:18:01.119 --> 0:18:04.520 positioning was getting much, much, much lighter. So in terms 0:18:04.520 --> 0:18:07.840 of our positioning framework, where we track around twenty five 0:18:07.880 --> 0:18:12.880 different indicators, short term indicators across systematic and discretionary positioning 0:18:12.920 --> 0:18:16.720 as well, that has now become as light as it's 0:18:16.840 --> 0:18:20.440 last been around Deliberation Day SAGA last year. And that 0:18:20.560 --> 0:18:23.280 of course is then allowing these s reps that we're 0:18:23.320 --> 0:18:24.000 seeing this morning. 0:18:24.960 --> 0:18:27.159 So Max, I guess one of the questions for a 0:18:27.160 --> 0:18:30.399 lot of folks, is just what is safety are? What 0:18:30.440 --> 0:18:33.480 are safe havens here? How do you think about it 0:18:33.520 --> 0:18:34.639 in these times? 0:18:34.680 --> 0:18:34.880 Here? 0:18:36.119 --> 0:18:39.200 I think the US dollar overall, right, the green bag 0:18:39.280 --> 0:18:42.760 has really demonstrated that, even though that was coming from 0:18:42.760 --> 0:18:45.240 the US and even though you could argue, well, does 0:18:45.240 --> 0:18:49.760 it maybe call into question the institutional credibility of the dollar? 0:18:49.800 --> 0:18:50.360 You could have. 0:18:50.359 --> 0:18:54.360 Made that case maybe, yeah, But even there then actually 0:18:54.480 --> 0:18:58.320 the US dollar really really worked the best as pretty 0:18:58.359 --> 0:19:01.360 much the only safe haven there was in an environment 0:19:01.440 --> 0:19:04.600 where it's pretty much liquidation across the asset classes, which 0:19:04.640 --> 0:19:09.240 we have seen in four to five days in March, 0:19:09.280 --> 0:19:11.480 where gold sold off, where treasure is sold off, where 0:19:11.480 --> 0:19:15.000 equities sold off, credit em everything except for the US dollars. 0:19:15.000 --> 0:19:17.880 So the US dollar as as a safe haven still 0:19:17.960 --> 0:19:18.680 reigned supreme. 0:19:19.080 --> 0:19:21.240 You know, Max heritage here of the Hong Kong and 0:19:21.280 --> 0:19:24.800 Shanghai Bank is a research combine. You know. I can't 0:19:24.840 --> 0:19:27.560 say enough Paul about this of Ben Ladler years ago 0:19:27.680 --> 0:19:30.240 and David Bloom in Mexican or and all the rest 0:19:30.280 --> 0:19:35.000 of them. You guys nail global correlation like no one. 0:19:35.440 --> 0:19:39.439 Are the markets correlated now? Are they vibrating in a 0:19:39.520 --> 0:19:40.639 constructive way? 0:19:42.400 --> 0:19:45.600 I would say well, today they are in a constructive way. 0:19:46.160 --> 0:19:47.879 I think today is the kind of day where no 0:19:47.920 --> 0:19:51.679 one will complain about positive correlations. If you own rates, 0:19:51.720 --> 0:19:54.360 if you own em if you own equities, if you 0:19:54.359 --> 0:19:57.680 you know your own gold, even everything goes up. Now 0:19:57.720 --> 0:20:00.560 that of course can go the other way, like we've 0:20:00.560 --> 0:20:02.560 seen in the last six weeks, and that is the really, 0:20:02.600 --> 0:20:04.800 really tricky thing. So I think in terms of correlations, 0:20:05.560 --> 0:20:09.040 it is as you've said, when you are pressing in 0:20:09.080 --> 0:20:14.120 a higher likelihood of stagflation. Stagflation is the poisonous pill 0:20:14.480 --> 0:20:18.000 for financial markets because there is nothing where you can 0:20:18.080 --> 0:20:21.200 really hide out except for cash in the green back, 0:20:21.320 --> 0:20:24.680 in US dollar, but everything else, from gold, from precious 0:20:24.720 --> 0:20:29.480 metals to equities, to credit to em everything sells off 0:20:29.800 --> 0:20:33.040 in light of rates selling off, in light of rates 0:20:33.119 --> 0:20:36.920 volatility going higher, and that really spreading pain across the 0:20:37.000 --> 0:20:41.359 asset classes. So in that light, correlations still are unfavorably 0:20:41.400 --> 0:20:42.840 and uncomfortably positive. 0:20:43.600 --> 0:20:43.840 Max. 0:20:43.880 --> 0:20:48.240 How about geographic here we had seen in twenty twenty 0:20:48.280 --> 0:20:52.160 five certainly pretty much all boats lifting with the type, 0:20:52.160 --> 0:20:55.439 but particularly markets outside of the US doing even better. 0:20:56.760 --> 0:20:59.640 How do you think about maybe the US versus rest 0:20:59.640 --> 0:21:00.320 of the world, world. 0:21:00.240 --> 0:21:03.600 Here still very much preferring the rest of the world 0:21:03.720 --> 0:21:06.200 right now, tactically, I think I want to be buying 0:21:06.240 --> 0:21:08.520 most Europe and Asia. I really want to, you know, 0:21:08.640 --> 0:21:10.680 start to pay what we've seen in the last five 0:21:10.800 --> 0:21:13.080 six weeks that you want to buy into Japan. Think 0:21:13.119 --> 0:21:15.720 about how often have you guys talked in the last 0:21:15.720 --> 0:21:18.800 six weeks about the fiscal story in Japan, about the 0:21:18.840 --> 0:21:22.119 aftermath of the Japanese election, Like not not that I'm 0:21:22.119 --> 0:21:24.520 going to put words in your mouth, but I guess 0:21:24.560 --> 0:21:26.760 the answer is not at all. How often have you 0:21:26.800 --> 0:21:30.680 talked about, you know, the really really strong earnings growth 0:21:30.760 --> 0:21:34.560 story earning career career's got one hundred and seventy percent 0:21:34.680 --> 0:21:37.680 twelve month forward earnings growth. Right we're talking about valuations 0:21:37.680 --> 0:21:41.040 of a twelve month formerd P below nine. Those things 0:21:41.040 --> 0:21:42.560 have completely been forgotten. 0:21:43.200 --> 0:21:45.760 This is this a bullish max retur I think it is. 0:21:46.440 --> 0:21:49.560 Explain Europe, Explain Europe, Max ken Her. 0:21:50.359 --> 0:21:54.399 I mean, Tom, I would say I wouldn't characterize myself 0:21:54.400 --> 0:21:56.640 as bullish. We've we've shifted about three and a half weeks, 0:21:56.640 --> 0:21:59.800 we've shifted to maximum bullish and equities, so I cannot 0:21:59.800 --> 0:22:02.040 be more bullish than I am right now there is 0:22:02.160 --> 0:22:04.240 I can't even write by the dip anymore because I 0:22:04.280 --> 0:22:07.200 don't have capital left. I'm as bullish as it can 0:22:07.240 --> 0:22:09.960 get now. In Europe, look look what we are saying today. 0:22:10.000 --> 0:22:12.760 We are seeing guilts rally. We are seeing front end 0:22:12.800 --> 0:22:17.120 guilts rally, the most front end European government bonds ECP 0:22:17.760 --> 0:22:21.800 pricing really really reversing lower. That s deepens the curtain. 0:22:21.840 --> 0:22:24.200 What does that help them? Helps the European banks, whether 0:22:24.240 --> 0:22:29.120 it's UK banks or Eurozone banks. The story around europe infrastructure, stimulus, 0:22:29.240 --> 0:22:32.480 capital goods, defend spinning. None of those stories are going away. 0:22:32.560 --> 0:22:35.400 So it's the banks, it's the industrials. Really, those two 0:22:35.480 --> 0:22:38.359 things that in Europe have been so forgotten I think 0:22:38.400 --> 0:22:41.240 in the last month and attending like it doesn't exist. Next, 0:22:41.320 --> 0:22:42.800 I think that's the stuff you want to buy again. 0:22:42.920 --> 0:22:46.439 Next sounds like Dick Van Dyke and David Tomlinson and 0:22:46.480 --> 0:22:52.040 Mary Poppins railways to India. Right next? Kenner never change. 0:22:52.240 --> 0:22:57.159 Thank you so much. He is with HSBC. Stay with 0:22:57.240 --> 0:23:00.879 us More from Bloomberg's Surveillance coming up after this. 0:23:08.160 --> 0:23:11.760 You're listening to the Bloomberg Surveillance podcast. Catch us Live 0:23:11.840 --> 0:23:14.960 weekday afternoons from seven to ten am Eastern. Listen on 0:23:15.080 --> 0:23:18.720 Applecarplay and Android Auto with the Bloomberg Business app, or 0:23:18.880 --> 0:23:20.640 watch us live on YouTube. 0:23:21.520 --> 0:23:25.000 If Daniel Di Martino Booth joins us right now with 0:23:25.320 --> 0:23:31.200 wonderful and not skeptical, but gently like, what's the BS 0:23:31.240 --> 0:23:35.159 factor on our FED policy? Daniel Di Martino Booth is 0:23:35.200 --> 0:23:38.640 chief strategist QI Research. I got to do an audible 0:23:38.680 --> 0:23:42.160 to private credit as we heard that headline. Mister Diamond 0:23:42.160 --> 0:23:44.480 wrote about it this Annuel letter in the Daniel Di 0:23:44.640 --> 0:23:48.439 Martino Booth Annual Letter. How big a mess is private credit? 0:23:49.119 --> 0:23:50.120 Well, I think we're learning it. 0:23:50.119 --> 0:23:53.280 It's a pretty darn big mess because it's got tentacles. 0:23:53.680 --> 0:23:57.320 And if you don't understand the conduit of non depository 0:23:57.320 --> 0:24:01.920 financial institution loans, which goes straight back into the conventional 0:24:02.000 --> 0:24:05.640 banking system. It's the conventional banks that are making loans 0:24:05.720 --> 0:24:08.120 to the non banks, then you don't have a full 0:24:08.160 --> 0:24:10.600 grasp of the situation. And then on top of that, 0:24:10.640 --> 0:24:14.200 you can weave insurres into this whole private credit mess. 0:24:14.760 --> 0:24:18.240 And these headlines are coming a mile a minute. If 0:24:18.320 --> 0:24:20.560 I pull up my Bloomberg on my phone. The first 0:24:20.560 --> 0:24:22.159 thing that he knows I'm going to search for is 0:24:22.240 --> 0:24:23.320 private credit news. 0:24:24.240 --> 0:24:26.520