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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern

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Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: We're gonna start good. This is something for bed Emily

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Speaker 2: Rolling on the other day. This disease go to cash.

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Speaker 2: John Stolphus has fought this for a wide and lovely career.

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Speaker 2: He's chief investment strategists at Oppenheimer and Company. Venerable Myron

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Speaker 2: Picot is one of my heroes for those of you

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Speaker 2: that know that name from years ago, and John the

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Speaker 2: first week of April said, you know what faith? Where's

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Speaker 2: the Stolfus faith?

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Speaker 3: This morning?

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Speaker 2: Can you stay on board this historic recovery?

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Speaker 3: Oh?

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Speaker 4: Tom, I will stay on this, this great recovery process.

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Speaker 4: At this point, still cyclicals over defensives in terms of

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Speaker 4: the sector's preference for garpier growth and growthier value, and

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Speaker 4: generally across some diversification across market capitalization on expectation that

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Speaker 4: smalls and mids will more frequently catch a bid as

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Speaker 4: the FED does the right job.

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Speaker 2: At the bad Benet concert in Puerto Rico. Everyone's going

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Speaker 2: to have their Apple iPhone up filming bad Okay? Is

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Speaker 2: the Apple a cyclical? Is it a utility stock? Is

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Speaker 2: it something away from growthiness?

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Speaker 3: Well? I would say it's.

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Speaker 4: A cultural an item in technology primarily as it exists today.

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Speaker 4: We generally as a strategist, the firm doesn't like me

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Speaker 4: commenting on on stocks unless asked for.

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Speaker 3: So can you comment on bed Bunny? But on bad Bunny?

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Speaker 5: I don't know enough about it now to that one.

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Speaker 4: You know my basically he's after my time in terms

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Speaker 4: of music.

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Speaker 3: For me.

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Speaker 4: It sort of ended when Dwayne Allmand passed away. You know,

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Speaker 4: it was that's a long time when.

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Speaker 3: You know who doesn't know?

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Speaker 2: Please on Apple? Is a no growthiness?

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Speaker 3: Well, I've got to say with it, it really is.

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Speaker 4: You know, when you consider what telephone you're gonna buy,

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Speaker 4: you often have to consider who can you send pictures

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Speaker 4: to easily of of a particular guitar you like, or

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Speaker 4: or a particular sunset or something. And you realize that

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Speaker 4: even with all the changes in terms of regulation at all,

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Speaker 4: still those that are on the green phone, so to speak,

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Speaker 4: may not receive your pictures. It's just a it's a

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Speaker 4: more intimate thing and the tendency I think. The announcement

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Speaker 4: related to a cheaper version coming out, I think is

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Speaker 4: actually a good thing. The current model is highly complex,

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Speaker 4: and a simpler version that would be cheaper, I think

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Speaker 4: you'll probably help them out.

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Speaker 6: News is that cheaper version broken by our colleague Mark German.

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Speaker 6: I look at the Stolfast target for the S and

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Speaker 6: P five hundred and fifty nine to fifty if I'm

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Speaker 6: not mistaken, and I note that across Wall Street we've

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Speaker 6: seen some upward revisions and targets by other strategies.

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Speaker 5: You have not done that yet. No one explains it well.

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Speaker 4: I came into the year with a seventy one hundred

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Speaker 4: target looking for about seventeen upside, seventeen percent upside from

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Speaker 4: where it was. I think it was December ninth when

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Speaker 4: we put that target in. When the April second tariffs

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Speaker 4: came out, it looked like a time to revisit the tariffs,

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Speaker 4: not the tariffs, but well it did to revisit the tariffs,

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Speaker 4: but also.

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Speaker 5: Yet to revisit target.

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Speaker 4: Yes, and the target made more sense looking for about

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Speaker 4: sixteen seventeen percent upside at fifty nine to fifty, and

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Speaker 4: indeed we got there, you know, but right now we're

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Speaker 4: waiting to see what happens with the tariffs. You know

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Speaker 4: today the nervousness in the market, it's being expressed. It really,

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Speaker 4: it's the tariffs are the main focus here. Now that

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Speaker 4: we've gotten over the budget, we've gotten over, we've seen

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Speaker 4: what the Fed is saying that it's going to do

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Speaker 4: if effectively when you look probably about two cuts this year,

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Speaker 4: and overall it's the consumer has slowed, but still shopping

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Speaker 4: and jobs still look good. So the economies, you know,

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Speaker 4: the resilience remains in the picture.

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Speaker 6: Help me understand this kind of strange terrorist related ajita

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Speaker 6: in the market. See if John Tucker a moment ago

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Speaker 6: telling us about stock hitting records yesterday, and yet you

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Speaker 6: hear folks worried about where things are headed. You look

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Speaker 6: at the soft data, clearly that's transmitted from consumers and

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Speaker 6: business leaders as well. What explains that the market's complacency

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Speaker 6: is it simply the Robert armstrong Ian taco trade theory

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Speaker 6: playing out in relief here. That's not a pejorative, that's

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Speaker 6: just the way that the market's.

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Speaker 5: Looking at this.

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Speaker 6: How do you look at the kind of apprehension that

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Speaker 6: we're seeing both in the economic data and in the market.

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Speaker 4: David, I'd say there's two communities that are very distinct

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Speaker 4: that stand out in the marketplace today. One is the

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Speaker 4: trading community, and that one can on one day can

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Speaker 4: go for value, the next day go for growth. One

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Speaker 4: day it likes the smalls, the next day it only

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Speaker 4: likes large.

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Speaker 3: Caps, one day it likes mids.

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Speaker 4: On the other hand, the private investor today is investing

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Speaker 4: very differently from the way they did when I got

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Speaker 4: into this business forty two years ago. Forty two years ago,

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Speaker 4: private investors were called the retail investor, and it was

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Speaker 4: it was really it was cocktail party stocks for most people.

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Speaker 4: Some people did invest seriously for their for My aunt,

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Speaker 4: for example, was a serious investors.

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Speaker 3: That's where I come from, you know.

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Speaker 4: But when we look at the environment today, it's you've

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Speaker 4: got the private investors looking towards their retirement or in retirement.

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Speaker 3: It's can sad for the boomers.

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Speaker 4: My gosh, We've got longevity here.

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Speaker 3: You've got to prepare for it.

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Speaker 2: I'm agreed everybody this morning across this nation on a Friday,

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Speaker 2: we are resetting into July and into the summer into

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Speaker 2: earning sea in really Beginning next week with JP Morgan,

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Speaker 2: we start strolling with John Stolfus. Good Morning on Serious

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Speaker 2: XE Channel one twenty one, ninety nine to one FM,

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Speaker 2: Nathan Hager Radio in Washington, ninety two nine FM in Boston,

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Speaker 2: seven in a Row Destined, never has this hope and

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Speaker 2: so large and deep into July. Good Morning Boston in

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Speaker 2: ninety nine FM. On YouTube. Subscribe to Bloomberg Podcast that's

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Speaker 2: growing each in every day, John, what you just said

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Speaker 2: is gospel. There's been a change from George I think

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Speaker 2: we should buy three hundred shares of controlled data to

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Speaker 2: I'm scared stiff. I've got eight hundred thousand in the

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Speaker 2: account and I feel poor. That's where we are today,

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Speaker 2: our retirement accounts. Let's folks, we're gonna bring some jargon

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Speaker 2: in here to help you with the genius, John Stolfus.

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Speaker 2: The adults talk about a terminal value out there somewhere

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Speaker 2: is where we do our math to if we, because

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Speaker 2: of this retirement conundrum, extended our terminal value. So we're

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Speaker 2: buying Microsoft or Apple or name any other growthiness and

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Speaker 2: we're looking at their revenue and earning spot farther out

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Speaker 2: than we did ten years ago or twenty years ago.

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Speaker 3: Most certainly I believe that.

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Speaker 4: And also the fact is technology today is deeply embedded

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Speaker 4: in the lives of both business and the consumer. Just

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Speaker 4: like we mentioned on that telephone manufacturer.

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Speaker 3: Okay, to keep it.

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Speaker 4: As veg as possible, as vega as possible, But what

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Speaker 4: we would say here is is it has a lot

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Speaker 4: to do with changes that are occurring right now. Where

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Speaker 4: you see these companies have very quite apparently a very

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Speaker 4: strong growth potential going forward. So it's needed to be

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Speaker 4: diversified not only within technology, but then within the other

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Speaker 4: eleven sect other ten sectors. In taking the companies that

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Speaker 4: rely on technology to remain competitive to produce revenues and

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Speaker 4: earnings going forward, and you're looking for you want to

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Speaker 4: find good, strong managements that are hip to technology. You know,

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Speaker 4: everybody thought for a while, not everybody, but certainly the

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Speaker 4: traders were thinking, well, you would think we were going

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Speaker 4: back to the abaccas or the Avocus if you prefer,

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Speaker 4: and not when they were selling some of the major

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Speaker 4: tech And now they realized, well, I guess we're not

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Speaker 4: bringing back the slide rule, folks. We're all connected to

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Speaker 4: the cloud. You know, and the AI is being invested

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Speaker 4: in because it is a practical thing to keep competitive

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Speaker 4: in the sectors for managements and for the consumer to

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Speaker 4: be able to interact with the companies that they purchase

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Speaker 4: things from.

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Speaker 6: As we talk about technology here, is there much handwringing

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Speaker 6: in the Stuffitz suite at Oppenheimer headquarters about market concentration,

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Speaker 6: about this market being too concentrated in technology, and in

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Speaker 6: certain sectors of that in specific and INAI for instance, we'd.

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Speaker 4: Have to say that in terms of clients that Oppenheimer

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Speaker 4: certainly have exposure to our thinking and then they with

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Speaker 4: our advisors, will determine how that fits with their experience

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Speaker 4: and tolerance to risk. But you know, when our first

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Speaker 4: shot at just parsing through the S and P five hundred,

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Speaker 4: we come out with about a twenty five or twenty

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Speaker 4: six percent waiting in tech versus a thirty some percent,

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Speaker 4: which might be the market weight in technology only because

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Speaker 4: we recognize the volatility. But the rest of the portfolio

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Speaker 4: we really look for as starting consideration needs to be

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Speaker 4: diversified across the other sectors.

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Speaker 2: Got two ideas here, Let's do this one first For

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Speaker 2: those people that didn't listen to John Stolfus, they're in cash,

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Speaker 2: whether it was the first week of April or not.

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Speaker 2: How do you get back into the market. Does Stulfus

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Speaker 2: dive off the diving board to a cannonball into the

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Speaker 2: deep end or do you ebb your way in with

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Speaker 2: your big toe in the water.

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Speaker 3: We edge our way into the water.

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Speaker 4: We take our time psychological, psychologically, and we ask ourselves what.

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Speaker 3: Do I own? Why do I own it? And we

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Speaker 3: try to.

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Speaker 4: Right size our expectations as to how it will perform

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Speaker 4: depending upon the various machinations the market goes through related

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Speaker 4: to tariffs, whether it's tariffs or whether it's economic growth,

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Speaker 4: whether it's revenue and earnings.

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Speaker 3: You know, but we look to that know what you owned,

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Speaker 3: why you own.

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Speaker 4: It, and have right sized expectations so you don't jerk

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Speaker 4: yourself around going in and out.

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Speaker 2: Sir Rick was at the State Dinner in London. Mick

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Speaker 2: Jagger was there with mccron and the King and Prince

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Speaker 2: William Keith called me and he said, you really should

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Speaker 2: look at this time. Okay, people won't understand this. There's

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Speaker 2: Brazilian Rosewood acoustic guitars. There's also Brazilian Rosewood electric guitars

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Speaker 2: Chicago Music Exchange for for it's not sixty thousand for

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Speaker 2: fifty nine thousand, ninety dollars has a Gibson ES three

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Speaker 2: thirty five Sunburs from nineteen sixty that has a different

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Speaker 2: tone because it's a gorgeous Keith Richards like guitared in

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Speaker 2: Brazilian rosewood.

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Speaker 4: Right, Well, the fingerboard is Brazilian rosewood, but the rest

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Speaker 4: the body itself is made out of plywood, maple, and

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Speaker 4: the sides of the people very likely, I mean, I questioned,

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Speaker 4: you know, the value of a vintage ES three thirty

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Speaker 4: five is primarily because it does have a rosewood fingerboard.

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Speaker 4: The f holes are smaller than the new ones.

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Speaker 2: What does that mean for tone?

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Speaker 4: Well, it actually means it'll perform more like a solid body.

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Speaker 4: So the ES three thirty fives of the vintage era

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Speaker 4: sometimes are considered to be killer guitars versus the less

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Speaker 4: Paul because they don't feedback as.

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Speaker 3: Early as they might if f holes were larger.

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Speaker 4: In addition to that, the way the placement of the neck,

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Speaker 4: the angle of the neck.

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Speaker 3: The size of the of the of the.

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Speaker 4: Heel of the neck is much more comfortable to play

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Speaker 4: than some of the new ones, and yet Gibson has

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Speaker 4: made remarkable strides.

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Speaker 3: Now you know years gosh, well over forty years ago.

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Speaker 4: I convinced Les Paul that the old Less Paul's were

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Speaker 4: better than the new ones. It was a long argument

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Speaker 4: that took about two years, but he got me out

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Speaker 4: to Kalamazoo and we made the argument and it began

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Speaker 4: what caused the Less Paul Heritage series, not the heritage guitar,

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Speaker 4: but the Less Paul Gibson Less Paul Heritage and that

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Speaker 4: started something that now the latest Less Pauls from the

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Speaker 4: custom shop of the fifty nines at the sixties and

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Speaker 4: remarkably close to the old ones.

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Speaker 2: Folks, We're going to stop the show here, Michael Barr's going,

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Speaker 2: what are we talking about? Okay, John Stofus and David

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Speaker 2: Gurray in the same room with me and John here.

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Speaker 2: The heritage of the electric guitar and acoustic guitar in

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Speaker 2: America defined by the name Stolfus and is extraordinary. All

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Speaker 2: of you are going on in God's names.

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Speaker 5: I think that was that was brilliant.

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Speaker 2: Your relationship with Les Pod was absolutely brilliant.

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Speaker 4: That was that was really a great experience that it was.

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Speaker 4: I was a professional musician at the time working on Broadway,

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Speaker 4: and it was it was you know, it was it

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Speaker 4: was my first I dealt with the suits.

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Speaker 2: Okay, Oppenheimer is saying, what in God's name, you know,

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Speaker 2: there's a lot thank you, thank you, thank you so much,

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Speaker 2: Broadway guitarists and par excellons at Oppenheimer and Company.

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

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Speaker 1: weekday afternoons from seven into ten. AMI's darn. Listen on

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Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or

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Speaker 1: watch us live on YouTube, on Copper.

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Speaker 2: Now and for Global Wall Street. This is our definitive

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Speaker 2: core conversation of the morning. Michael Widmer joined us to

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Speaker 2: say he's had a metals research a Bank of America.

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Speaker 2: First of all, he's got to put up with Francisco Blanche.

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Speaker 2: That itself is a problem, but this is one of

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Speaker 2: the giants of America and Copper going back to Lehman Brothers, BMP,

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Speaker 2: Perry BA and forward. Michael, we're honor that you could

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Speaker 2: join us this morning. What's the biggest misconception our listeners

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Speaker 2: and viewers get wrong about Copper?

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Speaker 7: Oh, that's an interesting one. I think. So one big

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Speaker 7: miss perception is when you're looking at the US market

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Speaker 7: that the US is not self sufficient in copper. US

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Speaker 7: is actually self sufficient to borrowm is just that we

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Speaker 7: are not processing enough copper domestically and instead sending it

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Speaker 7: sending it abroad.

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Speaker 2: Michael, if you're sitting with Sacha Nadella Microsoft, he's got

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Speaker 2: to build out three AI things to keep up.

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Speaker 3: With Perplexity and Google.

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Speaker 2: Gemini and all this other AI stuff. I don't understand

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Speaker 2: how much copper does sanch A Nadella need, so I.

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Speaker 1: Can give it to you.

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Speaker 7: I give you an idea in terms of potential copper demandros.

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Speaker 7: So potential copper demancros was the last ten years was

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Speaker 7: probably around two percent. Globally, we see electrification data centers

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Speaker 7: an eye, you can justify a doubling of potential copper

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Speaker 7: demancros to around four percent. So it's quite significant.

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Speaker 6: I'd love to get a sense of the kind of

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Speaker 6: dislocation that's happened since President Trump announced at that Cabinet

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Speaker 6: meeting the imposition of this fifty percent tariff, and what's

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Speaker 6: going to happen towen now in August first, when I gather.

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Speaker 6: It goes into to effect, what does it mean for

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Speaker 6: the global copper market? The level of uncertainty. I think

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Speaker 6: that's that's catalyzed.

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Speaker 7: Look, there's a lot of uncertainy. But the first thing

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Speaker 7: I would say, after the US has outsourced a lot

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Speaker 7: of its manufacturing supply chain during the globalization, it actually

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Speaker 7: only has a very small share in total copper demand.

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Speaker 7: A global copper demand, it's around six seven percent. The

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Speaker 7: biggest I think impact that we potentially see in the

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Speaker 7: short term is really on the domestic on the domestic

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Speaker 7: US price, and we've already started to see a reaction.

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Speaker 7: We're not quite pricing in the fifty percent tariff, but

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Speaker 7: we're somewhere around twenty five to thirty percent at the moment.

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Speaker 7: And look, world outside China, there is a lot of

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Speaker 7: uncertainty about tariffs and trade wars. Anyways, I think there

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Speaker 7: you have a little bit of headwins as well. But

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Speaker 7: the biggest impact we're seeing right now is really on

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Speaker 7: the U S market.

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Speaker 6: Compliance would be unhappy if I asked you to psychoanalyze

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Speaker 6: the president. But let me let me put this a

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Speaker 6: different way, and if I could, that is, what does

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Speaker 6: President Trump want to see happen here. So, from what

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Speaker 6: you're saying, the US doesn't have the capacity to minor

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Speaker 6: produce copper to the scale that the president, I gather

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Speaker 6: would like, how does he see all of this playing out?

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Speaker 6: And what would it take at a very basic level

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Speaker 6: for the US to kind of reclaim the mantle that

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Speaker 6: it had I guess many decades ago when it was

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Speaker 6: producing a lot more copper.

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Speaker 7: Look, it's actually it's an interesting one, I think, because

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Speaker 7: we have gone through almost two years of shutting down

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Speaker 7: not just copper processing capacity, but also aluminum processing capacity.

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Speaker 7: And I think this is where the President then ultimately

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Speaker 7: says that for a national security perspective, this is just

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Speaker 7: not a good state, a good state to be in.

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Speaker 7: So when he announced the aluminum terrorists, when he is

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Speaker 7: now announcing the copper tarots, I think it's relatively clear cut.

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Speaker 7: What he wants to do is in a way, who's

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Speaker 7: the domestic copper price? By that he would effectively make

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Speaker 7: the consumers, so the manufacturers pay a higher price, and

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Speaker 7: that money then potentially goes into the pockets of the producers.

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Speaker 7: And I think the whole ultimately is that is an

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Speaker 7: expansion in domestic margins. You're finally getting the investment that

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Speaker 7: then rebuilds the supply chain for.

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Speaker 2: Global Wall Street. A window into the expertise of copper.

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Speaker 2: Michael Widmer with us here this morning with Bank of America,

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Speaker 2: thrilled that he could be with us. Michael, I wanted

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Speaker 2: to a little window, a snapshot into your complete research

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Speaker 2: on this medal. Out of Georgia Tech was a Richards

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Speaker 2: family starting in nineteen thirty seven, and they established a

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Speaker 2: company called South Wire. South Wire says, the reason Copper's

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Speaker 2: ridiculous is because we're taking scrap copper in Michael Barr's

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Speaker 2: garage and we're sending it to China. Am I right

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Speaker 2: that they want export restrictions so we can't send our

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Speaker 2: garbage copper to China to be remelted.

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Speaker 7: Look, I could give you another piece of anecdotal evidence.

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Speaker 7: It's actually from a year ago. That was when mind

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Speaker 7: supply actually got really tight, and we were then speaking

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Speaker 7: to s manufacturers who actually were very concerned that China

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Speaker 7: was hoovering up all the scrap that they can get

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Speaker 7: in the US market and then sending it over and

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Speaker 7: then sending it over to China. So yes, there's a

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Speaker 7: lot of scrap that is leaving the S and said

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Speaker 7: what I said before to you, Yes, US inputs around

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Speaker 7: eight hundred thousand tons of refined copper, but when you're

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Speaker 7: looking at how much scrap and mind supply is actually

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Speaker 7: being exported, the two effectively square off against each other.

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Speaker 7: So if he actually kept the scrap in the S,

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Speaker 7: processed it in the US, and then fed it back

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Speaker 7: into the supply chain, that would actually help a great

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Speaker 7: deal to alleviate kind of the import pressure for the S.

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Speaker 6: Michael, you're living in this mailstream of uncertainties. We all are,

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Speaker 6: and lost in it, I think is what the President

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Speaker 6: has done when it comes to steal an aluminum. We're

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Speaker 6: focused a lot on these countries specific tariffs. We're looking

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Speaker 6: more recently at the copper tariffs, other sectoral tariffs, but

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Speaker 6: US during his first term that he put those first

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Speaker 6: rounds of tariffs in place on steel and aluminum, and

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Speaker 6: he upped them back in June.

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Speaker 5: What has been the effect of that.

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Speaker 6: We were talking a few moments ago about how he

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Speaker 6: might like to see this play out when it comes

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Speaker 6: to copper. Is it all illustrative for us to look

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Speaker 6: at steel and aluminum as an indicator of what might

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Speaker 6: happen here with copper.

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Speaker 7: No absolutely. And one thing I would say actually as well,

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Speaker 7: is like even during the Biden administration, a lot of

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Speaker 7: those protectionist measures actually stayed a little bit water down,

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Speaker 7: but we're not actually removed what has happened. On the

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Speaker 7: copper side. It is still a little bit young now.

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Speaker 7: But on the aluminum side, we have had the fifty

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Speaker 7: percent or a tariff in place for a little bit longer,

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Speaker 7: and we've actually had one announcement that's from Emirate's Global

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Speaker 7: Aluminum that they are looking to build an aluminum smelter

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Speaker 7: in Oklahoma that's a five of four billion dollar facility.

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Speaker 7: And then I think Century Aluminum again in conjunction visi

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Speaker 7: As administration is actually looking to build a green field

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Speaker 7: or a new aluminum aluminum smelter as well. So days,

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Speaker 7: I think there's there's always this perception that tariffs on

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Speaker 7: there on its own will not really cut it. And

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Speaker 7: it's true if if you if you invest in build

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Speaker 7: a smelt for the next fifty years and you don't

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Speaker 7: know whether whether any terrorists iron placed after four years,

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Speaker 7: it makes a little bit harder to pull the trigger.

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Speaker 7: But this, uh, this a little bit of a push

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Speaker 7: I think some support as well. We've actually started to

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Speaker 7: see the investment coming. And interestingly as well, despite all

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Speaker 7: of the pushback about the effectiveness of the characters, we're

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Speaker 7: actually now starting to see again through also through the

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Speaker 7: supply chain, our manufacturers are rethinking on how they can

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Speaker 7: potentially mitigate the impact of the tarofts of the business.

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Speaker 7: And one area again just to come is scrapinstance, scrap

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Speaker 7: can actually enter the suh taraf Fred, there's a lot

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Speaker 7: of scrap. There's a fair amount of scrap around in

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Speaker 7: the earth. Look, I give you an example. Beverage can

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Speaker 7: recycling rates in the US three percent we have and

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Speaker 7: the other the other all the other bit basically goes

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Speaker 7: into landfill. Thanks cope to improve at improvement there as well.

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Speaker 7: That would actually free some other mini minutes in the US.

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Speaker 2: Michael, we're out of time. Thank you so much for

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Speaker 2: this extended discussion. Mister woodmurers with Bank of America, with

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Speaker 2: Francisco Blonche. He's had a metals research folks for Global

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Speaker 2: Wall Street a clinic. The narrowness of dynamics of supply

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Speaker 2: and demand of copper.

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Speaker 1: This is the bloomberg Surveillance podcast. Listen live each weekday

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00:22:29,760 --> 00:22:33,040
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

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00:22:33,160 --> 00:22:36,120
Speaker 1: with the Bloomberg Business app. You can also listen live

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00:22:36,200 --> 00:22:39,800
Speaker 1: on Amazon Alexa from our flagship New York station, Just

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Speaker 1: Say Alexa Play Bloomberg eleven thirty committed to LinkedIn.

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Speaker 2: Thank you so much, Fidelity. It's Urine Timor. Urine Timor's

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00:22:48,960 --> 00:22:53,960
Speaker 2: presentations on LinkedIn are worth their weight in gold. He

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Speaker 2: joins us now from Boston. Urine a Timor of Fidelity Uriin.

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Speaker 2: What did the charts say about this rate bull market?

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Speaker 8: Well, we've been thank you for the comments, by the way,

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Speaker 8: and good morning. You know, markets are brutally efficient in

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Speaker 8: you know, anticipating all knowable information. And of course last

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Speaker 8: November markets priced in a right till event of you know,

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Speaker 8: a booming economy, roaring twenties and that sort of thing.

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Speaker 8: And then in January they got a little bit of

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Speaker 8: cold water splashed on that thinking about tariffs, and then

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Speaker 8: of course in April that became a much bigger left

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Speaker 8: hill scenario, and then as soon as it started, it ended,

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Speaker 8: and the markets had to sort of reprice to a

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Speaker 8: more moderate tariff situation. And then of course, the Big

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Speaker 8: Beautiful Bill, which should create a little bit of a

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Speaker 8: fiscal boom or boomlet in the US economy, and so

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Speaker 8: earning's got marked down from twelve percent growth in twenty

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Speaker 8: twenty five to seven percent. We're now on the cusp

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Speaker 8: of earning season, of course, next week, and my sense

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Speaker 8: is that those earnings numbers will come back up while

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Speaker 8: we wait to see if the tariff tantrum part two

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Speaker 8: is actually going to happen. I think the market is

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Speaker 8: sort of discounting that and is a little bit desensitized

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Speaker 8: to the headlines. So at this point, the market has

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Speaker 8: fully rebounded. The breath numbers are pretty good, you know,

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Speaker 8: about sixty five percent above their two in moving average.

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Speaker 8: The new highs in the S and P is being

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Speaker 8: supported by new highs in global markets, so that's good

438
00:24:32,520 --> 00:24:37,440
Speaker 8: as well. And so it's it's a pretty good backdrop

439
00:24:38,600 --> 00:24:41,960
Speaker 8: with the tails sort of balancing each other out. You've

440
00:24:41,960 --> 00:24:45,440
Speaker 8: got the right till from the Big Beautiful Bill at

441
00:24:45,480 --> 00:24:48,480
Speaker 8: this point winning the battle over the left till from

442
00:24:48,640 --> 00:24:51,879
Speaker 8: a trade war, and we'll see if that continues or not.

443
00:24:52,000 --> 00:24:54,600
Speaker 8: You know, the headlines keep coming in and then, but

444
00:24:54,720 --> 00:24:57,920
Speaker 8: really in the background is that that ten year yield,

445
00:24:57,920 --> 00:24:59,960
Speaker 8: which I think is probably one of the most important

446
00:25:00,040 --> 00:25:03,320
Speaker 8: indicators out there. As the old saying goes, you know,

447
00:25:03,720 --> 00:25:07,639
Speaker 8: nothing good ever happens after midnight. Well, in the bond market,

448
00:25:07,680 --> 00:25:10,040
Speaker 8: nothing good happens above four and a half percent. And

449
00:25:10,119 --> 00:25:14,760
Speaker 8: so the Greenspan fed model is back right when the

450
00:25:14,840 --> 00:25:18,359
Speaker 8: risk free asset gives you the same yield as the

451
00:25:18,480 --> 00:25:21,360
Speaker 8: risky asset, right, bonds at four and a half roughly

452
00:25:21,880 --> 00:25:24,040
Speaker 8: SMP at four and a half percent earnings yield.

453
00:25:24,560 --> 00:25:26,680
Speaker 3: If yields go up, the stock market.

454
00:25:26,400 --> 00:25:29,120
Speaker 8: Has to pay attention, has to reprice itself in order

455
00:25:29,160 --> 00:25:32,000
Speaker 8: to remain competitive. That was not the issue at a

456
00:25:32,040 --> 00:25:34,240
Speaker 8: one percent yield, but it is an issue if the

457
00:25:34,320 --> 00:25:34,800
Speaker 8: yields go.

458
00:25:34,800 --> 00:25:35,439
Speaker 3: To five percent.

459
00:25:35,520 --> 00:25:38,800
Speaker 8: So that remains to me the big hurdle that the

460
00:25:38,800 --> 00:25:39,960
Speaker 8: market needs to overcome.

461
00:25:40,160 --> 00:25:43,520
Speaker 6: You're in, as you mentioned, the big beautiful bill and yields.

462
00:25:43,960 --> 00:25:47,480
Speaker 6: You right, beware the bond vigilantes. They can bear steep

463
00:25:47,480 --> 00:25:49,600
Speaker 6: in the curve and hit the economy where it really hurts.

464
00:25:50,080 --> 00:25:52,639
Speaker 6: As you're vigilantly watching for them, do you see signs

465
00:25:52,640 --> 00:25:53,760
Speaker 6: of them doing that?

466
00:25:53,880 --> 00:25:55,600
Speaker 5: Yet? What should we be watching for in particular?

467
00:25:56,840 --> 00:25:58,960
Speaker 8: So, and by the way, I had tipped to ed

468
00:25:59,040 --> 00:26:04,800
Speaker 8: Yardenny for coining that phrase many many years ago. You know,

469
00:26:05,320 --> 00:26:08,119
Speaker 8: the ten years is in a range four four and

470
00:26:08,160 --> 00:26:11,400
Speaker 8: a half. When it goes down to four or below,

471
00:26:12,119 --> 00:26:15,000
Speaker 8: it's like a beach ball held underwater, like it doesn't

472
00:26:15,000 --> 00:26:18,960
Speaker 8: belong there. The fundamentals don't support it, and you'll pop

473
00:26:19,040 --> 00:26:20,960
Speaker 8: right back up above. For so, I think four is

474
00:26:21,000 --> 00:26:24,280
Speaker 8: a pretty hard hard line unless we go into some

475
00:26:24,320 --> 00:26:27,639
Speaker 8: sort of recession four and a half, you know, I

476
00:26:27,680 --> 00:26:30,119
Speaker 8: think the buyers do show up between four and a

477
00:26:30,160 --> 00:26:33,199
Speaker 8: half and five, and I think the market is giving

478
00:26:33,840 --> 00:26:37,879
Speaker 8: the Treasury the kind of the benefit of the doubt

479
00:26:37,920 --> 00:26:42,159
Speaker 8: that that Treasurer Secretary Scott Besson will, we'll pull a.

480
00:26:42,200 --> 00:26:43,120
Speaker 3: Rabbit out of a hat.

481
00:26:43,160 --> 00:26:45,439
Speaker 8: I don't know if he can repeat what Janet Yellen

482
00:26:45,480 --> 00:26:48,800
Speaker 8: did back in twenty twenty three when she switched up

483
00:26:48,800 --> 00:26:53,200
Speaker 8: the maturities to T bills, counting on presumably counting on

484
00:26:53,600 --> 00:26:57,000
Speaker 8: all those money market funds just replacing their reverse reposts

485
00:26:57,040 --> 00:26:59,960
Speaker 8: with bills, and that ended up being a pretty good move.

486
00:27:00,080 --> 00:27:02,080
Speaker 8: I don't know if Beson can do the same thing.

487
00:27:02,119 --> 00:27:06,440
Speaker 8: Maybe he's counting on stable coins growing to several trillion

488
00:27:06,480 --> 00:27:10,119
Speaker 8: dollars and tapping into Treasury reserves there, but I think

489
00:27:10,200 --> 00:27:11,919
Speaker 8: the market is in a wait and see mode. But

490
00:27:11,960 --> 00:27:15,160
Speaker 8: I'm pleasantly surprised that we're not at five percent already.

491
00:27:15,359 --> 00:27:17,760
Speaker 2: So within what we do folks here and the bringing

492
00:27:17,840 --> 00:27:20,719
Speaker 2: in of research and all the voices of Bloomberg surveillance,

493
00:27:21,080 --> 00:27:23,560
Speaker 2: sometimes it gets like wicked nerdy. We're not going to

494
00:27:23,640 --> 00:27:27,520
Speaker 2: explain the math. It's PhD level. But right now as

495
00:27:27,560 --> 00:27:33,080
Speaker 2: we speak on LinkedIn, Urine Timor of Fidelity is locked

496
00:27:33,280 --> 00:27:37,439
Speaker 2: in to Olivier Blanchard at the Peterson Institute, one of

497
00:27:37,440 --> 00:27:40,600
Speaker 2: our giants, and a young wonder child named lu Cos

498
00:27:40,720 --> 00:27:44,840
Speaker 2: Rachel who's just brilliant at PhD level math. Urine, I'm

499
00:27:44,880 --> 00:27:46,639
Speaker 2: going to cut to the chase. It has to do

500
00:27:46,720 --> 00:27:51,840
Speaker 2: with something fancy called log linearized Eiler equations. Wicked, wicked

501
00:27:51,880 --> 00:27:55,560
Speaker 2: PhD math. But Urine, it comes over to the common

502
00:27:55,640 --> 00:27:59,439
Speaker 2: sense you have, which is that if we have a

503
00:27:59,440 --> 00:28:04,199
Speaker 2: big death in a big deficit, GDP goes down and

504
00:28:04,320 --> 00:28:07,520
Speaker 2: demand goes down. Is that twenty twenty six?

505
00:28:09,880 --> 00:28:10,399
Speaker 3: It could be?

506
00:28:10,520 --> 00:28:12,800
Speaker 8: But you're right, you know the math I think is

507
00:28:13,320 --> 00:28:15,960
Speaker 8: you can make the math pretty simple, and that is

508
00:28:16,000 --> 00:28:18,320
Speaker 8: that if you have a lot of debt, which the

509
00:28:18,440 --> 00:28:20,520
Speaker 8: US and many other parts of the world.

510
00:28:20,560 --> 00:28:22,800
Speaker 3: Do you know, well over one.

511
00:28:22,760 --> 00:28:26,199
Speaker 8: Hundred percent of GDP, and it's caused by you know,

512
00:28:26,320 --> 00:28:30,920
Speaker 8: slow growth from aging populations, and you end up essentially

513
00:28:30,960 --> 00:28:35,520
Speaker 8: borrowing money just to kind of stay afloat. It becomes

514
00:28:35,600 --> 00:28:38,040
Speaker 8: an issue. And so at that point it's important for

515
00:28:38,120 --> 00:28:41,080
Speaker 8: the GDP growth rate, the nominal growth rate, to be

516
00:28:41,240 --> 00:28:43,640
Speaker 8: higher than the funding rate. And that makes perfect sense.

517
00:28:43,680 --> 00:28:45,960
Speaker 8: Right if you're a business person starting a new business,

518
00:28:46,000 --> 00:28:48,240
Speaker 8: you take out a bank loan at four, you're growing

519
00:28:48,280 --> 00:28:50,400
Speaker 8: your business at ten, Well, you know, that's really good

520
00:28:50,480 --> 00:28:53,560
Speaker 8: use of leverage, but not if you're barely staying alive.

521
00:28:54,120 --> 00:28:59,560
Speaker 8: And so potential GDP growth as defined by the CBO

522
00:29:00,160 --> 00:29:03,040
Speaker 8: as the growth in the labor force plus growth and productivity,

523
00:29:03,520 --> 00:29:06,640
Speaker 8: is currently running at about a six percent five year

524
00:29:06,680 --> 00:29:09,240
Speaker 8: growth rate ten year treasuries at four and a half,

525
00:29:09,320 --> 00:29:12,880
Speaker 8: So all good. Generally speaking, GDP has been above the

526
00:29:12,880 --> 00:29:17,680
Speaker 8: growth the funding rate. But if you go five years

527
00:29:17,680 --> 00:29:22,400
Speaker 8: from now, if the term premium does make a full comeback,

528
00:29:22,440 --> 00:29:25,200
Speaker 8: and it's right now at sixty basis points, if it

529
00:29:25,240 --> 00:29:27,280
Speaker 8: goes to one point fifty, you could be looking at

530
00:29:27,280 --> 00:29:30,280
Speaker 8: a five five and a half percent. Volunteer and if

531
00:29:30,320 --> 00:29:34,120
Speaker 8: the GDP growth is at four, that's a problem. And

532
00:29:34,160 --> 00:29:37,200
Speaker 8: so I think this is why Besent and Treasury is

533
00:29:37,640 --> 00:29:41,320
Speaker 8: correctly focusing on maximizing growth. And I think that's what

534
00:29:41,360 --> 00:29:43,400
Speaker 8: the big beautiful bill is about.

535
00:29:43,520 --> 00:29:45,440
Speaker 2: And end of the weekend, folks, that's the linkage there

536
00:29:45,480 --> 00:29:49,480
Speaker 2: from Professor Blunchard over to Urine Timor Fidelity. Urine, thank

537
00:29:49,520 --> 00:29:52,239
Speaker 2: you so much. I'll get out a combination of what

538
00:29:52,560 --> 00:29:57,800
Speaker 2: Professor Blunchard and Lucas Rachel is doing here with Urine

539
00:29:57,800 --> 00:30:00,360
Speaker 2: and Timmory. I'll try to get that out today. Point

540
00:30:00,480 --> 00:30:03,520
Speaker 2: you're in timor Fidelity on LinkedIn.

541
00:30:09,560 --> 00:30:13,480
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

542
00:30:13,520 --> 00:30:16,920
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

543
00:30:16,960 --> 00:30:19,760
Speaker 1: with the Bloomberg Business app. You can also watch us

544
00:30:19,800 --> 00:30:23,720
Speaker 1: live every weekday on YouTube and always on the Bloomberg Terminal.

545
00:30:24,040 --> 00:30:26,920
Speaker 2: Joining us now, Alan Wald on Oil. We're thrilled she

546
00:30:26,960 --> 00:30:31,000
Speaker 2: could join us. Her book Saudi Inc. Absolutely definitive. Ellen,

547
00:30:31,240 --> 00:30:34,640
Speaker 2: I gotta go narrow. I don't need any Vanna chat opex.

548
00:30:34,640 --> 00:30:37,560
Speaker 2: Seems in a panic they're gonna do. They're gonna produce

549
00:30:37,640 --> 00:30:40,360
Speaker 2: more oil. Is the Saudi's lift.

550
00:30:40,520 --> 00:30:41,480
Speaker 3: Oil output.

551
00:30:41,760 --> 00:30:42,520
Speaker 2: What does that mean?

552
00:30:44,120 --> 00:30:47,080
Speaker 9: So you know, all of them are gonna produce more

553
00:30:47,160 --> 00:30:50,640
Speaker 9: oil within a particular ratio, So the Saudis aren't lifting

554
00:30:50,680 --> 00:30:55,200
Speaker 9: their oil output all that much. We're gonna see probably

555
00:30:55,440 --> 00:30:57,720
Speaker 9: a little more than five hundred thousand barrels a day

556
00:30:57,760 --> 00:31:00,880
Speaker 9: coming on in August, and then in September we're going

557
00:31:00,920 --> 00:31:04,120
Speaker 9: to see another increase. But it does seem that demand

558
00:31:04,320 --> 00:31:05,000
Speaker 9: is able.

559
00:31:04,760 --> 00:31:06,000
Speaker 10: To support this increase.

560
00:31:06,040 --> 00:31:09,520
Speaker 9: I mean, we haven't seen oil prices dropping out as

561
00:31:09,520 --> 00:31:12,040
Speaker 9: a result of this. I think, you know, we've already

562
00:31:12,040 --> 00:31:14,960
Speaker 9: gotten the kind of the war premium has come off,

563
00:31:15,680 --> 00:31:20,240
Speaker 9: and I do think that the economic activity is supporting this.

564
00:31:20,880 --> 00:31:23,920
Speaker 10: And you know, it's an interesting move from OPEK.

565
00:31:24,000 --> 00:31:28,040
Speaker 9: I do think it's one that we really should have anticipated,

566
00:31:28,120 --> 00:31:32,560
Speaker 9: given how much OPEK has really wanted to unwind these cuts,

567
00:31:32,640 --> 00:31:35,440
Speaker 9: especially the voluntary ones, for some time now, and so

568
00:31:36,080 --> 00:31:38,240
Speaker 9: the fact that they're just taking this opportunity to do

569
00:31:38,280 --> 00:31:41,000
Speaker 9: this now really should not come as a surprise.

570
00:31:41,560 --> 00:31:42,920
Speaker 5: Help me with some nuance here.

571
00:31:43,040 --> 00:31:45,760
Speaker 6: So we've heard this story that Saudi Arabia has been

572
00:31:45,760 --> 00:31:48,520
Speaker 6: pushing to punish some of these other producers for over

573
00:31:49,160 --> 00:31:51,680
Speaker 6: exceeding their quotas, and now we have this news from

574
00:31:51,680 --> 00:31:54,040
Speaker 6: their National Energy Agency saying that Saudi Arabia has been

575
00:31:54,080 --> 00:31:57,840
Speaker 6: doing this themselves. I don't understand the nuance between OPEK

576
00:31:57,880 --> 00:32:00,200
Speaker 6: and Ia in terms of sort of who's policing all

577
00:32:00,200 --> 00:32:01,640
Speaker 6: of this. But what should we take away from this

578
00:32:01,720 --> 00:32:03,120
Speaker 6: news that crossed the wire this morning?

579
00:32:04,520 --> 00:32:08,520
Speaker 9: You know, I think that it's I think it's it's

580
00:32:08,520 --> 00:32:11,640
Speaker 9: it's small potatoes, honestly, I mean, how much oil do

581
00:32:11,680 --> 00:32:14,200
Speaker 9: they really are they really saying that Saudi Arabia is

582
00:32:14,360 --> 00:32:17,720
Speaker 9: putting out that it's more uh. And on the other hand,

583
00:32:17,720 --> 00:32:22,600
Speaker 9: you've also got to understand that during the war with

584
00:32:22,800 --> 00:32:28,240
Speaker 9: Israel and Iran, a Ramco was basically kind of reallocating

585
00:32:28,400 --> 00:32:31,120
Speaker 9: its oil. They were basically focused on how can we

586
00:32:31,480 --> 00:32:33,920
Speaker 9: make sure that if there is a disruption that we

587
00:32:33,960 --> 00:32:36,520
Speaker 9: can still fulfill all of our contracts to all of

588
00:32:36,560 --> 00:32:42,240
Speaker 9: our customers. And so they were basically reallocating oil volumes

589
00:32:42,280 --> 00:32:46,440
Speaker 9: overseas to overseas storage facilities, meaning so that they could

590
00:32:46,640 --> 00:32:49,200
Speaker 9: make sure that even if say there was a disruption

591
00:32:49,360 --> 00:32:52,000
Speaker 9: with oil coming out of the Persian Gulf, that they

592
00:32:52,040 --> 00:32:54,280
Speaker 9: could fulfill their contracts. And this is going to show

593
00:32:54,320 --> 00:32:56,760
Speaker 9: up in the number, So sure, I'm sure Sadi Arabia

594
00:32:56,800 --> 00:33:00,240
Speaker 9: may have been overproducing a little bit, so was so

595
00:33:00,360 --> 00:33:03,400
Speaker 9: probably with the UAE. We know Kazakhstan has been overproducing

596
00:33:03,440 --> 00:33:06,040
Speaker 9: a bit. I think that we're really kind of fighting

597
00:33:06,080 --> 00:33:09,080
Speaker 9: over over small potatoes here in a way, Yes, Sada

598
00:33:09,080 --> 00:33:12,440
Speaker 9: Arabia wants to quote punish the ones who overproduce, but

599
00:33:12,480 --> 00:33:14,360
Speaker 9: there are some chronic overproducers.

600
00:33:14,760 --> 00:33:16,640
Speaker 10: Rock has basically always overproduced.

601
00:33:17,080 --> 00:33:21,000
Speaker 9: Kazakhstan has also been another one that has overproduced chronically,

602
00:33:21,680 --> 00:33:24,840
Speaker 9: and I think that, you know, there's only so much

603
00:33:24,920 --> 00:33:28,920
Speaker 9: pressure that Saudi Arabia and others can put on these

604
00:33:28,960 --> 00:33:31,640
Speaker 9: countries to rain in their oil production.

605
00:33:32,360 --> 00:33:34,160
Speaker 10: You know, they can, they can put pressure on it.

606
00:33:34,200 --> 00:33:35,640
Speaker 10: But at a certain point, OPEK.

607
00:33:35,400 --> 00:33:38,360
Speaker 9: Is a voluntary organization and these countries can if they

608
00:33:38,440 --> 00:33:42,320
Speaker 9: choose to leave, they probably won't. So that's why they're

609
00:33:42,360 --> 00:33:43,920
Speaker 9: kind of all doing this dance and trying to get

610
00:33:43,960 --> 00:33:47,640
Speaker 9: them to cut production at least a little bit to conform.

611
00:33:47,880 --> 00:33:49,960
Speaker 9: You know, at some point Satday can always say, hey,

612
00:33:51,240 --> 00:33:53,680
Speaker 9: you're not gonna add here, then we're just gonna all

613
00:33:53,720 --> 00:33:54,760
Speaker 9: out open the taps.

614
00:33:55,000 --> 00:33:57,160
Speaker 10: So they do always have that kind of card in

615
00:33:57,200 --> 00:33:57,920
Speaker 10: the pocket.

616
00:33:58,320 --> 00:34:00,920
Speaker 2: Ellen, Thank you so much, Ellen, Wild Atlantic Council there

617
00:34:00,920 --> 00:34:03,959
Speaker 2: in Saudi inc. And of lifting and surprise lifting an

618
00:34:04,120 --> 00:34:05,800
Speaker 2: OPEC output of oil.

619
00:34:06,040 --> 00:34:09,920
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

620
00:34:09,960 --> 00:34:13,000
Speaker 1: starting at seven am Eastern on Apple Cocklay and Android

621
00:34:13,000 --> 00:34:16,040
Speaker 1: Auto with the Bloomberg Business App. You can also listen

622
00:34:16,120 --> 00:34:19,400
Speaker 1: live on Amazon Alexa from our flagship New York station.

623
00:34:19,960 --> 00:34:22,600
Speaker 1: Just say Alexa Play Bloomberg eleven thirty.

624
00:34:22,840 --> 00:34:25,879
Speaker 2: Kim Dawson joins us right now with new Edge here

625
00:34:25,920 --> 00:34:27,840
Speaker 2: to get to the weekend cam. You're in one of

626
00:34:27,840 --> 00:34:31,279
Speaker 2: those eight page interviews this weekend, and Baron's what's your message?

627
00:34:31,800 --> 00:34:34,360
Speaker 11: Yeah, well, we do think that message continues to be

628
00:34:34,440 --> 00:34:37,760
Speaker 11: one where markets might be underestimating some of the risks

629
00:34:37,760 --> 00:34:41,480
Speaker 11: coming out of tariffs, but because we still have positioning

630
00:34:41,520 --> 00:34:43,759
Speaker 11: that still is so light, there still is so much

631
00:34:43,800 --> 00:34:46,920
Speaker 11: concern out there if you look at investors sentiment, if

632
00:34:46,960 --> 00:34:50,200
Speaker 11: you look at overall consolidated positioning, this is not in

633
00:34:50,239 --> 00:34:53,520
Speaker 11: a market that is as abulliant as you might expect

634
00:34:53,560 --> 00:34:56,120
Speaker 11: given where we are with all time highs. So that

635
00:34:56,320 --> 00:34:59,240
Speaker 11: just might mean that we have this ever pull higher

636
00:34:59,280 --> 00:35:02,520
Speaker 11: in markets even as we get this tear of headline

637
00:35:02,719 --> 00:35:05,440
Speaker 11: which seems to be catching people off guard. So it

638
00:35:05,520 --> 00:35:08,000
Speaker 11: really is one of where we have complacency, but at

639
00:35:08,000 --> 00:35:10,160
Speaker 11: the same time we have that fear of missing out.

640
00:35:10,280 --> 00:35:12,799
Speaker 10: So back to that push pull of the market, Kim.

641
00:35:13,480 --> 00:35:17,240
Speaker 2: We've screwed up earnings for like four quarters, David, five,

642
00:35:17,440 --> 00:35:20,839
Speaker 2: six quarters in a row. Are we just going to reduct? Oh,

643
00:35:20,920 --> 00:35:25,000
Speaker 2: it's single digit boom eleven percent earnings? Is that's what's

644
00:35:25,000 --> 00:35:26,560
Speaker 2: going to happen starting next week.

645
00:35:27,280 --> 00:35:30,960
Speaker 11: I do think that the buy side number, meaning those

646
00:35:31,000 --> 00:35:33,839
Speaker 11: people who are investors, is higher than the cell side

647
00:35:33,920 --> 00:35:36,480
Speaker 11: number for earnings forecasts, which just means that the cell

648
00:35:36,520 --> 00:35:38,279
Speaker 11: side is saying we think we're going to get four

649
00:35:38,320 --> 00:35:41,240
Speaker 11: percent growth this year or four percent growth this quarter,

650
00:35:41,280 --> 00:35:43,719
Speaker 11: which seems like a low number mostly when you look

651
00:35:43,719 --> 00:35:47,080
Speaker 11: at the first quarter where we were expecting seven percent and.

652
00:35:47,000 --> 00:35:48,240
Speaker 10: We got twelve percent.

653
00:35:48,560 --> 00:35:50,919
Speaker 11: But I've been at conferences this past week and people

654
00:35:51,000 --> 00:35:53,359
Speaker 11: been whispering in my ears saying, hey, we do think

655
00:35:53,400 --> 00:35:55,880
Speaker 11: that earnings are going to come in better than expected.

656
00:35:55,960 --> 00:35:59,000
Speaker 11: So it seems like there is this lifting bar of

657
00:35:59,040 --> 00:36:00,920
Speaker 11: people saying we're to get big.

658
00:36:00,719 --> 00:36:01,520
Speaker 10: Beats this quarter.

659
00:36:02,960 --> 00:36:06,000
Speaker 6: You talk about this as the honey Badger market. I

660
00:36:06,040 --> 00:36:08,879
Speaker 6: remember the meme the honey badger meme, honey badger, don't care,

661
00:36:08,920 --> 00:36:10,920
Speaker 6: And it does seem like that's manifest in the market

662
00:36:10,960 --> 00:36:12,960
Speaker 6: today as you look at the way it's reacted to.

663
00:36:13,040 --> 00:36:14,240
Speaker 2: Train Google Gemini.

664
00:36:14,719 --> 00:36:15,400
Speaker 3: What was that up?

665
00:36:15,440 --> 00:36:19,279
Speaker 6: It's a meme honey badger, don't care from a few

666
00:36:19,360 --> 00:36:21,560
Speaker 6: years back. While he does that Cam. I'm just curious

667
00:36:21,640 --> 00:36:24,640
Speaker 6: why you think the market isn't worried more about what's

668
00:36:24,680 --> 00:36:26,520
Speaker 6: going to happen as a result of yes, the uncertainty,

669
00:36:26,560 --> 00:36:29,520
Speaker 6: but indeed the invariable in variable odds, the President's going

670
00:36:29,560 --> 00:36:31,360
Speaker 6: to let these tariffs go into effect on August first.

671
00:36:32,000 --> 00:36:34,359
Speaker 11: Well, I think it's simply because you haven't seen it

672
00:36:34,440 --> 00:36:37,760
Speaker 11: impact the data yet. If you have things like GDP

673
00:36:37,920 --> 00:36:41,560
Speaker 11: growth estimates that still look fairly resilient, if you haven't

674
00:36:41,600 --> 00:36:44,720
Speaker 11: seen it in the inflation estimates yet, if you haven't

675
00:36:44,719 --> 00:36:48,160
Speaker 11: seen inflation tick back higher, and look at overall corporate

676
00:36:48,200 --> 00:36:51,439
Speaker 11: profits are starting to stabilize on the twenty twenty five

677
00:36:51,560 --> 00:36:55,160
Speaker 11: estimate twenty twenty six in that twelve month forard EPs

678
00:36:55,280 --> 00:36:57,640
Speaker 11: estimate for the S and P five hundred continues to

679
00:36:57,760 --> 00:37:00,480
Speaker 11: drift higher. That just means that people look at tariffs

680
00:37:00,480 --> 00:37:03,960
Speaker 11: and say, what, there is no impact I think that

681
00:37:03,960 --> 00:37:07,560
Speaker 11: that is a form of complacency. It's probably far too

682
00:37:07,640 --> 00:37:10,880
Speaker 11: soon to see that overall impact in markets, which means

683
00:37:10,920 --> 00:37:14,319
Speaker 11: that markets can just run headlong into risk, much like

684
00:37:14,360 --> 00:37:17,480
Speaker 11: the honey badger that runs head first into risk, doesn't

685
00:37:17,520 --> 00:37:22,800
Speaker 11: necessarily care about the dangers and will suffer the consequences eventually,

686
00:37:23,239 --> 00:37:24,040
Speaker 11: but seems to.

687
00:37:24,040 --> 00:37:25,080
Speaker 10: Bounce right back.

688
00:37:26,000 --> 00:37:28,080
Speaker 6: We haven't talked a lot about volatility over the course

689
00:37:28,120 --> 00:37:30,799
Speaker 6: of this show. You had Michael Purvis on a few

690
00:37:30,880 --> 00:37:32,800
Speaker 6: days ago, Tom and did talk about volatility.

691
00:37:32,800 --> 00:37:35,760
Speaker 2: If you sent me a photo from New Hampshire, was there.

692
00:37:36,160 --> 00:37:40,400
Speaker 5: Left here immediately up to New Hampshire backyard? There should be?

693
00:37:40,480 --> 00:37:44,600
Speaker 6: It's yeah, made to order cam Volatility incredibly low, not

694
00:37:44,640 --> 00:37:46,759
Speaker 6: just in stocks but in the bond market as well.

695
00:37:46,800 --> 00:37:48,560
Speaker 6: What is that telling you and do you expect.

696
00:37:48,239 --> 00:37:49,799
Speaker 5: That to continue well?

697
00:37:49,840 --> 00:37:52,120
Speaker 11: Taking the bond market first, one of the things and

698
00:37:52,200 --> 00:37:54,720
Speaker 11: important observations is if you look at the two hundred

699
00:37:54,800 --> 00:37:57,799
Speaker 11: day moving average of the ten year yield, it has

700
00:37:57,880 --> 00:38:01,000
Speaker 11: been effectively flat for the last two year, which means

701
00:38:01,000 --> 00:38:03,640
Speaker 11: that there is not much signal at all to take

702
00:38:03,719 --> 00:38:06,400
Speaker 11: from this ten year yield. We've oscillated around it on

703
00:38:06,480 --> 00:38:09,680
Speaker 11: different feares to the downside when there's growth fears, to

704
00:38:09,719 --> 00:38:13,440
Speaker 11: the upside when there's inflation or potentially deficit fears. But

705
00:38:13,480 --> 00:38:16,600
Speaker 11: we really have been on this road to nowhere. When

706
00:38:16,640 --> 00:38:19,960
Speaker 11: it comes to bond market volatility, it's been fairly contained.

707
00:38:20,520 --> 00:38:22,759
Speaker 10: So the question is what could make it break out

708
00:38:22,800 --> 00:38:23,760
Speaker 10: to the other side.

709
00:38:24,000 --> 00:38:27,440
Speaker 11: Is it higher inflation, is it the actual effectuation of

710
00:38:27,480 --> 00:38:30,680
Speaker 11: some of these higher deficits meaning more treasury issuance, And

711
00:38:30,719 --> 00:38:33,239
Speaker 11: then to the downside, of course, watching things like economic

712
00:38:33,280 --> 00:38:37,320
Speaker 11: surprises that could make yields break down below that low range.

713
00:38:37,960 --> 00:38:40,680
Speaker 2: I look, Kim at where we are, and we've been

714
00:38:40,719 --> 00:38:46,880
Speaker 2: featuring people like you with a wonderful rationalization not go

715
00:38:47,000 --> 00:38:50,960
Speaker 2: to cash. So what does somebody do listening that blew it,

716
00:38:51,600 --> 00:38:55,080
Speaker 2: whether it was October of twenty twenty two or April

717
00:38:55,080 --> 00:38:58,319
Speaker 2: of twenty twenty five, and they're up to their eyeballs

718
00:38:58,320 --> 00:39:03,120
Speaker 2: in cash? What's the behavioral process? You go to these

719
00:39:03,120 --> 00:39:07,680
Speaker 2: conferences cam there's somebody in that audience that's missed the boat.

720
00:39:08,120 --> 00:39:10,000
Speaker 2: How do they get back in the boat.

721
00:39:10,640 --> 00:39:13,719
Speaker 11: Well, the first step is sticking a toe in the water,

722
00:39:14,680 --> 00:39:18,480
Speaker 11: draping your leg over the side, at least getting somewhat comfortable.

723
00:39:18,000 --> 00:39:18,520
Speaker 10: With the water.

724
00:39:18,680 --> 00:39:20,600
Speaker 11: So what we say is that regardless of where the

725
00:39:20,680 --> 00:39:23,840
Speaker 11: valuation is today, we need to get some money invested.

726
00:39:24,120 --> 00:39:27,280
Speaker 11: That helps break down the barriers of that wall of worry.

727
00:39:27,560 --> 00:39:29,080
Speaker 11: And then what we do is we set up a

728
00:39:29,120 --> 00:39:31,359
Speaker 11: plan to be able to say every single month, we're

729
00:39:31,360 --> 00:39:34,040
Speaker 11: going to put a certain amount that's invested, but we

730
00:39:34,080 --> 00:39:36,880
Speaker 11: make it dynamic. If you see a market correction, you

731
00:39:36,920 --> 00:39:39,320
Speaker 11: accelerate it, and if the market correction is even deeper,

732
00:39:39,360 --> 00:39:43,120
Speaker 11: you accelerate it further. Our key message to clients all

733
00:39:43,160 --> 00:39:45,840
Speaker 11: year long is that it is far less important what

734
00:39:45,960 --> 00:39:48,319
Speaker 11: the S and P five hundred ends the year, and

735
00:39:48,440 --> 00:39:51,720
Speaker 11: far more important what you do with the volatility along

736
00:39:51,760 --> 00:39:54,800
Speaker 11: the way. So it's one thing to have optionality and cash.

737
00:39:54,920 --> 00:39:57,120
Speaker 11: It's a very different thing to have the bravery to

738
00:39:57,160 --> 00:39:59,799
Speaker 11: step in and do. What Walter Deamer says is when

739
00:39:59,840 --> 00:40:01,520
Speaker 11: it time's time to buy, Oh, there you go.

740
00:40:02,320 --> 00:40:07,040
Speaker 2: Walter Deemer. Good morning, Boston and Putnam. Walter Deemer, thank

741
00:40:07,080 --> 00:40:07,560
Speaker 2: you so much.

742
00:40:07,600 --> 00:40:09,799
Speaker 6: Maybe it's just the volatility you meet along the way,

743
00:40:10,560 --> 00:40:11,319
Speaker 6: cam Dots and.

744
00:40:11,280 --> 00:40:13,000
Speaker 2: Thank you so much. Greatly appreciate it.

745
00:40:13,120 --> 00:40:17,960
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,

746
00:40:18,080 --> 00:40:22,360
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747
00:40:22,480 --> 00:40:25,960
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748
00:40:26,040 --> 00:40:30,080
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749
00:40:30,120 --> 00:40:33,480
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750
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