1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:21,960 Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App. 4 00:00:22,360 --> 00:00:25,680 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:25,760 --> 00:00:27,040 Speaker 1: us live on YouTube. 6 00:00:27,400 --> 00:00:29,200 Speaker 2: Joining us down. I'm really anticipating. 7 00:00:29,440 --> 00:00:32,360 Speaker 3: She doesn't write it out like Cam Dawson joins us 8 00:00:32,360 --> 00:00:34,840 Speaker 3: some new edge this morning. 9 00:00:34,880 --> 00:00:36,400 Speaker 2: You don't do an outlook, do you. 10 00:00:36,720 --> 00:00:40,120 Speaker 4: Oh, we do an outlook, but we publish it in January, 11 00:00:40,159 --> 00:00:42,680 Speaker 4: so we get to look at everybody else's outlooks, see 12 00:00:42,720 --> 00:00:45,680 Speaker 4: where consensus sits, and then make our forecasts. 13 00:00:46,360 --> 00:00:49,680 Speaker 2: Okay, so you know what do you see? 14 00:00:49,960 --> 00:00:51,600 Speaker 5: Well, we see a lot of bullishness. 15 00:00:51,800 --> 00:00:54,480 Speaker 4: You have an environment now where there's not a single 16 00:00:54,520 --> 00:00:57,520 Speaker 4: strategist on the street that is expecting a down year 17 00:00:57,680 --> 00:01:00,640 Speaker 4: in twenty twenty six. Certainly that is as a shift 18 00:01:00,640 --> 00:01:02,480 Speaker 4: from the last couple of years where you had some 19 00:01:02,560 --> 00:01:07,600 Speaker 4: stragglers of bearishness left over after twenty twenty twos week environment. 20 00:01:08,040 --> 00:01:10,960 Speaker 4: But we are an environment in an environment where you're 21 00:01:11,040 --> 00:01:15,399 Speaker 4: still seeing GDP forecasts continue to get revised higher. You're 22 00:01:15,400 --> 00:01:19,160 Speaker 4: seeing EPs forecasts continue to get revised higher, And the 23 00:01:19,200 --> 00:01:23,240 Speaker 4: biggest challenge you have is that valuations are already pricing 24 00:01:23,280 --> 00:01:25,640 Speaker 4: in a lot of good news. So when you look 25 00:01:25,640 --> 00:01:29,320 Speaker 4: at consensus, they're expecting valuations to hold steady and earnings 26 00:01:29,360 --> 00:01:32,399 Speaker 4: to deliver. That does create somewhat of a high bar 27 00:01:32,640 --> 00:01:33,560 Speaker 4: for big, huge. 28 00:01:33,360 --> 00:01:34,680 Speaker 5: Returns in twenty twenty six. 29 00:01:35,959 --> 00:01:37,800 Speaker 6: I'm trying to figure out what is the black swan 30 00:01:37,840 --> 00:01:40,400 Speaker 6: out there that could really crack this market because evaluations 31 00:01:40,440 --> 00:01:43,520 Speaker 6: are high. But I know that high valuations historically do 32 00:01:43,600 --> 00:01:46,959 Speaker 6: not push markets lower. It's usually an event out there 33 00:01:47,080 --> 00:01:49,080 Speaker 6: that says people to look at the market and say, well, 34 00:01:49,120 --> 00:01:51,200 Speaker 6: this is rich, and given what just happened, maybe we 35 00:01:51,240 --> 00:01:52,760 Speaker 6: should take some money off. 36 00:01:53,080 --> 00:01:56,400 Speaker 4: Valuation is a very poor timing tool that has no 37 00:01:56,520 --> 00:01:59,720 Speaker 4: predictive power on one year forward returns, but it does 38 00:01:59,800 --> 00:02:02,600 Speaker 4: have predictive power once you start looking out three, four 39 00:02:02,600 --> 00:02:05,240 Speaker 4: and five years, so you're at an environment or at 40 00:02:05,280 --> 00:02:07,480 Speaker 4: a point where you can say we shouldn't be surprised 41 00:02:07,480 --> 00:02:10,280 Speaker 4: afore it returns are lower over the next three to 42 00:02:10,360 --> 00:02:12,720 Speaker 4: five years than they were over the last five years, 43 00:02:12,760 --> 00:02:14,720 Speaker 4: where they have been extraordinarily strong. 44 00:02:14,760 --> 00:02:15,360 Speaker 5: As far as. 45 00:02:15,520 --> 00:02:19,560 Speaker 4: Catalysts go, valuations are really interesting because it's like that 46 00:02:19,720 --> 00:02:22,560 Speaker 4: old warm buffet phrase of prices what you pay and 47 00:02:22,680 --> 00:02:25,760 Speaker 4: value is what you get. Usually the difference between price 48 00:02:25,840 --> 00:02:28,880 Speaker 4: and value is a certain degree of emotion, meaning there's 49 00:02:28,880 --> 00:02:32,560 Speaker 4: a certain degree of hope and dream within valuations. And 50 00:02:32,639 --> 00:02:35,239 Speaker 4: so if you were to knock something like the AI 51 00:02:35,360 --> 00:02:38,639 Speaker 4: trade and all of that optimism, could that be something 52 00:02:38,800 --> 00:02:42,800 Speaker 4: that sees a broader catalyst as an unwind to overall valuations. 53 00:02:42,800 --> 00:02:44,320 Speaker 4: It's a good watch item for twenty six. 54 00:02:45,080 --> 00:02:45,840 Speaker 2: Technology. 55 00:02:45,880 --> 00:02:48,919 Speaker 6: AI have been the driver of this market for several 56 00:02:49,000 --> 00:02:51,480 Speaker 6: years now. Can we expect that to be the case 57 00:02:51,480 --> 00:02:52,160 Speaker 6: in twenty. 58 00:02:51,919 --> 00:02:53,640 Speaker 5: Six It all depends on earnings. 59 00:02:53,880 --> 00:02:55,960 Speaker 4: One of the reasons why we have seen such a 60 00:02:56,160 --> 00:02:59,600 Speaker 4: powerful degree of outperformance and narrowness of the market is 61 00:02:59,639 --> 00:03:02,440 Speaker 4: because earnings have been narrow. The most startling stat is 62 00:03:02,480 --> 00:03:05,200 Speaker 4: that over the last three years, you've seen the mag 63 00:03:05,240 --> 00:03:09,040 Speaker 4: seven grow earnings by two hundred percent, but the equal 64 00:03:09,040 --> 00:03:11,720 Speaker 4: weight has only grown earnings by sixteen percent. 65 00:03:12,080 --> 00:03:13,760 Speaker 3: Thank you so much for Rina sof I thought it 66 00:03:13,800 --> 00:03:16,000 Speaker 3: was I thought Barons did a great job this weekend. 67 00:03:16,320 --> 00:03:19,440 Speaker 3: Besides the foreheads for cam Dawson and Barons, I thought 68 00:03:19,480 --> 00:03:21,480 Speaker 3: the Barons did a great job parsing is this is 69 00:03:21,520 --> 00:03:24,119 Speaker 3: something Gina Martin Adams really would. 70 00:03:23,919 --> 00:03:26,079 Speaker 2: Push as well. So why is it en? Now? 71 00:03:26,400 --> 00:03:28,480 Speaker 3: I just heard you model out, you know, on a 72 00:03:28,560 --> 00:03:33,040 Speaker 3: cautious strategy like way, single digit performance next year, it's 73 00:03:33,120 --> 00:03:34,920 Speaker 3: not going to be as good. What's a what's the 74 00:03:35,160 --> 00:03:39,400 Speaker 3: w what's the wei go? Paul taught me this functions? 75 00:03:39,440 --> 00:03:43,920 Speaker 3: Sure wei. You know we're up seventeen sixteen percent, SPX, 76 00:03:44,200 --> 00:03:47,640 Speaker 3: NASDA COP up twenty percent, So you model out single 77 00:03:47,720 --> 00:03:50,200 Speaker 3: digit and like you said, we've gotten it wrong for 78 00:03:50,240 --> 00:03:51,360 Speaker 3: three years? 79 00:03:51,880 --> 00:03:52,400 Speaker 2: Why now? 80 00:03:52,680 --> 00:03:53,000 Speaker 5: Why no? 81 00:03:53,160 --> 00:03:56,120 Speaker 4: I think that that there's a lot of expectation that 82 00:03:56,160 --> 00:03:58,840 Speaker 4: you're going to see a deceleration in MAG seven and 83 00:03:58,880 --> 00:04:03,640 Speaker 4: an acceleration and everything else, and that has been an 84 00:04:03,760 --> 00:04:05,760 Speaker 4: area where there's been a lot of surprise. So the 85 00:04:05,840 --> 00:04:08,160 Speaker 4: reason why MAG seven has performed so well is because 86 00:04:08,160 --> 00:04:10,560 Speaker 4: it keeps surprising to the upside. And then the reason 87 00:04:10,560 --> 00:04:12,840 Speaker 4: why eagleweight has been so weak is it keeps surprising 88 00:04:12,880 --> 00:04:14,080 Speaker 4: to the downside. 89 00:04:14,160 --> 00:04:15,360 Speaker 5: So I think that in. 90 00:04:15,400 --> 00:04:17,200 Speaker 4: Order for this to be something more than just a 91 00:04:17,200 --> 00:04:19,440 Speaker 4: flash in the pan rotation, you have to see those 92 00:04:19,480 --> 00:04:20,559 Speaker 4: earnings deliver. 93 00:04:20,760 --> 00:04:22,440 Speaker 3: I was on the phone with Michael Barr this weekend 94 00:04:22,440 --> 00:04:24,760 Speaker 3: as he was losing the house and the Detroit Lions 95 00:04:24,760 --> 00:04:27,240 Speaker 3: of Paul. I'm looking, I said, I got a look 96 00:04:27,240 --> 00:04:29,680 Speaker 3: at the date, January thirteenth of next year. 97 00:04:30,160 --> 00:04:33,040 Speaker 2: Yeah, which is not that far away. JP Morgan Earnings. 98 00:04:33,200 --> 00:04:35,880 Speaker 3: Yeah, we're going to you know, the belief of the 99 00:04:35,920 --> 00:04:39,360 Speaker 3: bulls futures up thirty one, Paul. 100 00:04:39,320 --> 00:04:43,920 Speaker 2: We're going to do it again. Worry angst OMG were 101 00:04:44,000 --> 00:04:47,880 Speaker 2: three four weeks away. JP Morgan, January thirteenth. Hello. 102 00:04:48,320 --> 00:04:51,120 Speaker 6: Are there some sectors, Cameron that maybe screen well for 103 00:04:51,200 --> 00:04:54,680 Speaker 6: you these days? Outside of technology? I mean, I'm sure 104 00:04:54,680 --> 00:04:57,440 Speaker 6: people come out to you and say, I'm I'm long tech, 105 00:04:57,520 --> 00:04:58,920 Speaker 6: I get it, I get out again. But where else 106 00:04:58,960 --> 00:04:59,760 Speaker 6: should I be looking? 107 00:05:00,279 --> 00:05:04,240 Speaker 4: There has been this dynamic that you might call inattentive blindness, 108 00:05:04,400 --> 00:05:07,960 Speaker 4: the idea because people have been focused on just one thing, 109 00:05:07,960 --> 00:05:10,279 Speaker 4: which has been AI and tech. There was a lot 110 00:05:10,320 --> 00:05:14,520 Speaker 4: of good things happening outside of just those areas. So 111 00:05:14,880 --> 00:05:16,640 Speaker 4: look at some of the strength that we've seen in 112 00:05:16,680 --> 00:05:18,760 Speaker 4: some healthcare names, look at some of the strength that 113 00:05:18,800 --> 00:05:20,240 Speaker 4: we're seeing in some of the materials. 114 00:05:20,279 --> 00:05:24,159 Speaker 5: But here's the question. Do you buy things that. 115 00:05:24,160 --> 00:05:28,080 Speaker 4: Are over sold in uptrends like a tech or do 116 00:05:28,120 --> 00:05:30,920 Speaker 4: you buy something that has overboughten a downtrend like a 117 00:05:30,960 --> 00:05:34,040 Speaker 4: healthcare betting on a more sustatial trend change. 118 00:05:34,600 --> 00:05:35,640 Speaker 2: This is really well said. 119 00:05:36,240 --> 00:05:40,039 Speaker 3: Which one do you tilt to in terms of optimum 120 00:05:40,080 --> 00:05:42,800 Speaker 3: outcome of twelve months, eighteen months, three years out? 121 00:05:42,960 --> 00:05:45,280 Speaker 4: I think the prudent thing to do is make sure 122 00:05:45,320 --> 00:05:47,760 Speaker 4: that you start to get closer to neutral. And that 123 00:05:47,920 --> 00:05:51,080 Speaker 4: is the least exciting answer that we can give. But 124 00:05:51,120 --> 00:05:54,920 Speaker 4: most people, given the run that we've had, very overweight tech. 125 00:05:55,080 --> 00:05:56,520 Speaker 3: I thought it was a really rich weekend. There's a 126 00:05:56,560 --> 00:05:59,320 Speaker 3: lot of intellectual work out there. Kim Dawson with a 127 00:05:59,400 --> 00:06:03,159 Speaker 3: speaking of quality, effort and Newish wealth, thrilled that she 128 00:06:03,160 --> 00:06:06,120 Speaker 3: could be with here to get us started strong. 129 00:06:06,160 --> 00:06:08,480 Speaker 2: Whole bunch of other people coming up today as well. 130 00:06:08,520 --> 00:06:12,520 Speaker 3: Air built chunas on ETFs unless the Odolongus hasn't been 131 00:06:12,520 --> 00:06:13,839 Speaker 3: in an agen, so he'll be in here. 132 00:06:14,200 --> 00:06:17,159 Speaker 2: The eight o'clock hour Camp. Paul A Monica killed it 133 00:06:17,240 --> 00:06:17,880 Speaker 2: this weekend. 134 00:06:18,279 --> 00:06:22,400 Speaker 3: Looking at ETFs and factor ETFs, I think of you, 135 00:06:22,560 --> 00:06:25,400 Speaker 3: I think of Liz Anne Saunders and other strategist Brian 136 00:06:25,480 --> 00:06:28,520 Speaker 3: levitt Over and investco factors are everything. 137 00:06:28,960 --> 00:06:31,400 Speaker 2: Does it make sense the bet on momentum? 138 00:06:31,440 --> 00:06:34,960 Speaker 3: Does it make sense as Lamonica brilliantly said to bet On, 139 00:06:35,120 --> 00:06:37,640 Speaker 3: revenue is a factor factor. 140 00:06:37,680 --> 00:06:42,280 Speaker 4: ETFs have been incredibly disappointing this year if you look 141 00:06:42,400 --> 00:06:45,880 Speaker 4: at things like quality factor ETFs, and there's a lot 142 00:06:45,880 --> 00:06:49,000 Speaker 4: of different ways to define quality. Yeah, all of those 143 00:06:49,040 --> 00:06:53,719 Speaker 4: ETFs have substantially underperformed the market. And of course we 144 00:06:53,760 --> 00:06:55,279 Speaker 4: can look to things and say, oh, well, it's just 145 00:06:55,320 --> 00:06:58,279 Speaker 4: concentration in mag seven and the leadership is so narrow, 146 00:06:58,400 --> 00:07:01,120 Speaker 4: but there seems to be a knee to rethink some 147 00:07:01,279 --> 00:07:04,680 Speaker 4: of the way that these ETFs are constructed, potentially making 148 00:07:04,720 --> 00:07:07,920 Speaker 4: them a bit more intelligent and how they define those factors, 149 00:07:08,279 --> 00:07:11,320 Speaker 4: because we've been looking at those factor ETFs going gosh, 150 00:07:11,320 --> 00:07:13,480 Speaker 4: this performance is extraordinarily disappointing. 151 00:07:13,880 --> 00:07:16,440 Speaker 3: This morning, to get you started for a busy, busy week, 152 00:07:16,560 --> 00:07:19,400 Speaker 3: Cameron Dawson with this new edge of Wealth Manager, Good 153 00:07:19,400 --> 00:07:22,560 Speaker 3: morning across the nation, the way you listen to us, 154 00:07:22,560 --> 00:07:26,400 Speaker 3: and good morning on YouTube. Subscribe to Bloomberg Podcasts. We're 155 00:07:26,600 --> 00:07:30,880 Speaker 3: finishing your strong with Bloomberg Podcasts on YouTube. 156 00:07:30,920 --> 00:07:31,840 Speaker 2: Please subscribe. 157 00:07:31,880 --> 00:07:34,760 Speaker 3: You go out there, you search your Paul Sweeney and 158 00:07:34,800 --> 00:07:37,480 Speaker 3: then yes, folks, somebody just emailed it. We'll talk to 159 00:07:37,520 --> 00:07:40,520 Speaker 3: Sweeney about the ski conditions. I promise we'll get to that. 160 00:07:40,760 --> 00:07:44,200 Speaker 2: But on YouTube, subscribe to Bloomberg Podcasts. 161 00:07:43,680 --> 00:07:46,600 Speaker 6: Cameron fixed income mark and we're looking at the iend 162 00:07:46,600 --> 00:07:49,400 Speaker 6: go function on the Bloomberg terminal, the Bloomberg Index browser. 163 00:07:49,840 --> 00:07:54,040 Speaker 6: Welly fixed income high single digit returns twenty twenty five 164 00:07:54,080 --> 00:07:56,400 Speaker 6: across the board like sixty to forty work issues. 165 00:07:56,440 --> 00:07:57,800 Speaker 2: YEA, so fast, I certainly did. 166 00:07:57,880 --> 00:08:01,080 Speaker 6: So what are we thinking about the fictionome marketing twenty six. 167 00:08:01,200 --> 00:08:03,640 Speaker 4: Yeah, we wouldn't be surprised if you continue to see 168 00:08:03,680 --> 00:08:06,880 Speaker 4: this volatility within fixed income. Remember, we came into the 169 00:08:06,960 --> 00:08:09,480 Speaker 4: year with somewhat higher yields, and so there was room 170 00:08:09,520 --> 00:08:11,760 Speaker 4: for downside. But if we continue to chop around in 171 00:08:11,760 --> 00:08:14,800 Speaker 4: this range for yields, it means that maybe the best 172 00:08:14,840 --> 00:08:17,040 Speaker 4: of the return that we get is just the cupon, 173 00:08:17,360 --> 00:08:20,360 Speaker 4: which suggests that maybe not the most exciting returns. But 174 00:08:20,400 --> 00:08:22,400 Speaker 4: I think that the key point is that we do 175 00:08:22,520 --> 00:08:25,560 Speaker 4: expect fixed income to play its role in sixty forty 176 00:08:25,640 --> 00:08:27,880 Speaker 4: if we were to see a weaker growth environment in 177 00:08:27,880 --> 00:08:30,880 Speaker 4: twenty twenty six, meaning that we don't think we're going 178 00:08:30,920 --> 00:08:33,480 Speaker 4: to see at this time a big surge in inflation, 179 00:08:33,720 --> 00:08:37,400 Speaker 4: which means that fix income can be a hedge within portfolios. 180 00:08:37,640 --> 00:08:38,880 Speaker 4: If growth were to weaken. 181 00:08:39,000 --> 00:08:42,920 Speaker 2: Your charm is you have been invested through thick and thin. 182 00:08:43,800 --> 00:08:47,280 Speaker 3: The successful strategist say, you have to participate. There's a 183 00:08:47,320 --> 00:08:51,760 Speaker 3: debate about how you participate, but you participate. So I'm 184 00:08:51,800 --> 00:08:55,320 Speaker 3: looking here. I went back and looked Paul early April. Yeah, 185 00:08:55,400 --> 00:08:58,800 Speaker 3: the world was going to end for Apple. They were done, 186 00:08:59,280 --> 00:09:02,679 Speaker 3: They were finished. Wi mister cook was a failure. All 187 00:09:02,760 --> 00:09:04,360 Speaker 3: that Paul taught me. 188 00:09:04,320 --> 00:09:04,840 Speaker 2: This, folks. 189 00:09:05,040 --> 00:09:08,680 Speaker 3: The description screen in the Bloomberg Apple twelve months return 190 00:09:08,760 --> 00:09:12,680 Speaker 3: up thirteen percent and up a gajillion percent from the 191 00:09:12,720 --> 00:09:13,880 Speaker 3: bottom in April. 192 00:09:14,400 --> 00:09:16,760 Speaker 2: How do our listeners and viewers. 193 00:09:16,960 --> 00:09:21,160 Speaker 3: Use strategy to avoid the fears that we saw in 194 00:09:21,320 --> 00:09:22,800 Speaker 3: early April of Apple. 195 00:09:23,080 --> 00:09:26,640 Speaker 4: I love the concept of fear as an emotion in 196 00:09:26,720 --> 00:09:30,800 Speaker 4: an individual, it can be incredibly blinding. However, if you 197 00:09:30,840 --> 00:09:34,599 Speaker 4: can measure fear in aggregate, it is the most illuminating 198 00:09:34,640 --> 00:09:37,920 Speaker 4: thing possible, meaning that if we can see when everybody 199 00:09:37,920 --> 00:09:41,040 Speaker 4: else is afraid, it shows you when ford returns are 200 00:09:41,040 --> 00:09:44,640 Speaker 4: getting better. So we measure things that capture fear, like 201 00:09:44,720 --> 00:09:47,840 Speaker 4: the percentage of names making new twenty day lows, or 202 00:09:48,000 --> 00:09:54,359 Speaker 4: things like overall breadth within markets, put call ratios ideas 203 00:09:54,440 --> 00:09:57,800 Speaker 4: that when you see fear spike, even though it feels 204 00:09:58,040 --> 00:10:01,360 Speaker 4: terrible to be allocating capital to markets, it usually is 205 00:10:01,400 --> 00:10:05,160 Speaker 4: a time where Ford returns are improving substantially. So we 206 00:10:05,240 --> 00:10:08,320 Speaker 4: measure fear as a way to keep us from making 207 00:10:08,320 --> 00:10:10,480 Speaker 4: poor decisions, which tend to happen at those times. 208 00:10:12,200 --> 00:10:14,960 Speaker 3: Yeah, apple off the bottom in the spring, the world's 209 00:10:15,000 --> 00:10:18,160 Speaker 3: going to end up seven zeros seventy percent. 210 00:10:18,280 --> 00:10:18,880 Speaker 2: Look at that. 211 00:10:20,520 --> 00:10:24,240 Speaker 6: We've seen retail investors come in and buy the dips. 212 00:10:25,120 --> 00:10:26,960 Speaker 6: What dips we've had, we haven't in too many dips, 213 00:10:26,960 --> 00:10:29,040 Speaker 6: but when there's a dip, the retails come in and 214 00:10:29,120 --> 00:10:31,559 Speaker 6: bought What does that tell you out there? I mean, 215 00:10:31,880 --> 00:10:33,120 Speaker 6: you talk to a lot of these folks. 216 00:10:33,400 --> 00:10:36,560 Speaker 4: Yeah, there's a lot of appetite to continue to allocate 217 00:10:36,600 --> 00:10:37,120 Speaker 4: to stocks. 218 00:10:37,120 --> 00:10:37,960 Speaker 5: And you can see it. 219 00:10:38,080 --> 00:10:41,079 Speaker 4: Fineral margin loan balances have been jumping out to us, 220 00:10:41,320 --> 00:10:44,880 Speaker 4: growing forty percent over the last six months. And I 221 00:10:44,880 --> 00:10:48,440 Speaker 4: think the contrast between the retail investor who has been. 222 00:10:48,320 --> 00:10:51,280 Speaker 5: Buying dips and the institutional. 223 00:10:50,520 --> 00:10:54,640 Speaker 4: Investor who hasn't, because ever since the April low, you 224 00:10:54,800 --> 00:10:58,000 Speaker 4: actually have seen institutional investors, based on the Deutsche Bank 225 00:10:58,080 --> 00:11:01,480 Speaker 4: survey not even get back to overweight, So it means 226 00:11:01,480 --> 00:11:04,079 Speaker 4: that a large cohort of this investor, Yes, they've been 227 00:11:04,120 --> 00:11:06,480 Speaker 4: buying some, but not to the degree that you would 228 00:11:06,559 --> 00:11:09,040 Speaker 4: expect that you would normally see. 229 00:11:08,880 --> 00:11:10,480 Speaker 5: Given the strength we've seen in market. 230 00:11:10,600 --> 00:11:14,320 Speaker 4: So retail investors have been right and institutional investors have 231 00:11:14,400 --> 00:11:15,360 Speaker 4: been more on the sidelines. 232 00:11:16,120 --> 00:11:18,400 Speaker 6: What are we doing here with gold? I mean, I 233 00:11:18,400 --> 00:11:20,880 Speaker 6: think we're hitting a new record again today here? I mean, 234 00:11:21,520 --> 00:11:24,679 Speaker 6: do your clients ask you about gold all the time? 235 00:11:24,760 --> 00:11:25,320 Speaker 5: All the time? 236 00:11:25,440 --> 00:11:29,240 Speaker 4: Look, we call gold a psychological commodity because it allows 237 00:11:29,280 --> 00:11:32,800 Speaker 4: you to get some kind of comfort with things like 238 00:11:32,880 --> 00:11:36,880 Speaker 4: fears about currency debasement. But the technicals are the technicals. 239 00:11:37,080 --> 00:11:40,280 Speaker 4: The uptrend is still very much intact. It is incredibly 240 00:11:40,360 --> 00:11:43,839 Speaker 4: overbought on a weekly basis, meaning it's moved up very far, 241 00:11:44,000 --> 00:11:47,120 Speaker 4: very fast. But we've been calling gold Chuck Norris, which 242 00:11:47,160 --> 00:11:49,760 Speaker 4: means that it's just been invincible and nothing can hurt it. 243 00:11:49,800 --> 00:11:52,440 Speaker 4: The trend is really powerful, but keep an eye on 244 00:11:52,440 --> 00:11:55,760 Speaker 4: the tacticals. The narratives will remain, but gold could go 245 00:11:55,800 --> 00:11:56,720 Speaker 4: into a constulidation. 246 00:11:57,080 --> 00:12:00,920 Speaker 2: Lisa, should we have gold called the rock? That would 247 00:12:00,920 --> 00:12:05,280 Speaker 2: work out? Rock? See that as well? Is there a 248 00:12:05,360 --> 00:12:06,480 Speaker 2: legit commodity boom. 249 00:12:06,520 --> 00:12:10,160 Speaker 3: I noticed with gold oil not part anticipating, But I'm sorry, 250 00:12:10,200 --> 00:12:13,640 Speaker 3: there's a legit commodity boom. Is that an expectation out 251 00:12:13,679 --> 00:12:15,600 Speaker 3: front of a recovering Asian? 252 00:12:15,880 --> 00:12:18,000 Speaker 4: Yeah, a bone to pick because everybody looks at the 253 00:12:18,000 --> 00:12:21,079 Speaker 4: b COMM Index, the commodity index and say, look, how 254 00:12:21,120 --> 00:12:22,360 Speaker 4: we're in a commodity boom. 255 00:12:22,400 --> 00:12:24,120 Speaker 5: A lot of that is gold. Look at the b. 256 00:12:24,240 --> 00:12:29,199 Speaker 4: Common Industrial Commodities Index. You're seeing some movement higher. 257 00:12:28,840 --> 00:12:30,880 Speaker 2: In that. 258 00:12:32,440 --> 00:12:38,000 Speaker 4: Show I is the ticker, but it's important to see 259 00:12:38,040 --> 00:12:41,400 Speaker 4: that you have seen some movement higher. However, it's certainly 260 00:12:41,440 --> 00:12:43,920 Speaker 4: not breaking out nearly to the extent that the BCom 261 00:12:43,960 --> 00:12:46,240 Speaker 4: benefiting from gold has See. 262 00:12:46,200 --> 00:12:49,040 Speaker 2: What's the symbol? I got b COMM. 263 00:12:49,040 --> 00:12:53,440 Speaker 5: I can do that be com ion b com. Every 264 00:12:53,480 --> 00:12:54,240 Speaker 5: day's a school day. 265 00:12:54,400 --> 00:12:54,839 Speaker 3: Every day. 266 00:12:55,120 --> 00:12:59,760 Speaker 6: School day was the curling class you hated, sit in 267 00:12:59,760 --> 00:13:01,280 Speaker 6: the front row every time. 268 00:13:01,520 --> 00:13:03,839 Speaker 2: Okay, oh that's it. The bloomer. All right, I got you. 269 00:13:04,400 --> 00:13:06,079 Speaker 2: I'm glad somebody's got you. I got you. 270 00:13:06,160 --> 00:13:08,880 Speaker 6: I mean fifty yeah, all right, I mean commodities are 271 00:13:08,920 --> 00:13:09,600 Speaker 6: just been ripping it. 272 00:13:09,600 --> 00:13:12,480 Speaker 2: So there you go. We learned something new. Can look 273 00:13:12,520 --> 00:13:12,839 Speaker 2: it up? 274 00:13:13,320 --> 00:13:13,880 Speaker 4: All right? 275 00:13:14,559 --> 00:13:18,280 Speaker 3: Oh, Tom, secundo's I'm learning to excuse me. We'll get 276 00:13:18,320 --> 00:13:20,960 Speaker 3: to what would you write that down? Please use this 277 00:13:21,160 --> 00:13:25,520 Speaker 3: terminal seminar cam. DAWs still getting a terminal seminary cam. 278 00:13:25,559 --> 00:13:28,800 Speaker 3: Thank you, Thank you so much greatly. I appreciate you 279 00:13:28,880 --> 00:13:29,280 Speaker 3: coming in. 280 00:13:29,520 --> 00:13:30,240 Speaker 2: Stay with us. 281 00:13:30,480 --> 00:13:33,679 Speaker 3: More from Bloomberg Surveillance coming up after this. 282 00:13:40,920 --> 00:13:44,520 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 283 00:13:44,600 --> 00:13:47,760 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 284 00:13:47,840 --> 00:13:51,240 Speaker 1: Apple Karplay and Android Auto with the Bloomberg Business app, 285 00:13:51,400 --> 00:13:52,640 Speaker 1: or watch us live. 286 00:13:52,520 --> 00:13:55,079 Speaker 6: On YouTube Ulus your Day launches. He is head of 287 00:13:55,120 --> 00:13:58,120 Speaker 6: asset Allocation at Investco, joining us live here in our 288 00:13:58,120 --> 00:14:01,640 Speaker 6: Bloomberg Interactive Broker studio. Uless you I mean, no matter 289 00:14:01,640 --> 00:14:03,640 Speaker 6: where I allocated money in twenty twenty five, I did 290 00:14:03,640 --> 00:14:08,080 Speaker 6: pretty well. Stocks up double digits, bonds up high single digits, 291 00:14:08,520 --> 00:14:11,400 Speaker 6: commodities through the roof. If your long gold or silver 292 00:14:11,440 --> 00:14:13,439 Speaker 6: or any of that type of stuff. What's the twenty 293 00:14:13,440 --> 00:14:16,120 Speaker 6: twenty six outlock makes you think about where to allocate 294 00:14:16,160 --> 00:14:16,840 Speaker 6: money these days? 295 00:14:16,920 --> 00:14:17,439 Speaker 2: Good morning? 296 00:14:17,480 --> 00:14:20,280 Speaker 7: Yes, you summarized twenty twenty five perfectly right. We were 297 00:14:20,360 --> 00:14:22,040 Speaker 7: only a couple of years ago. We were talking about 298 00:14:22,040 --> 00:14:24,560 Speaker 7: the death of the sixty forty, and here here we are. 299 00:14:24,600 --> 00:14:28,560 Speaker 7: The sixty forty is back twenty twenty six. We expect 300 00:14:29,000 --> 00:14:31,840 Speaker 7: still an environment where you need to be long risk assets. 301 00:14:32,720 --> 00:14:36,160 Speaker 7: Let's keep it simple. We have easing of monetary policy, 302 00:14:36,480 --> 00:14:40,680 Speaker 7: expansionary fiscal policy, and inflation is in check above the 303 00:14:40,680 --> 00:14:43,960 Speaker 7: fat target, but is coming down. That is a mini 304 00:14:44,000 --> 00:14:47,720 Speaker 7: Goldilock scenario right where typically assets do very well. Growth 305 00:14:47,800 --> 00:14:50,840 Speaker 7: not too hot, not too cold. Put keep the risk on. 306 00:14:51,280 --> 00:14:51,600 Speaker 2: Now. 307 00:14:52,000 --> 00:14:56,760 Speaker 7: AI technology is of course the risky part of the 308 00:14:56,800 --> 00:15:00,960 Speaker 7: market in terms of the outcomes. The uncertain is widening 309 00:15:01,600 --> 00:15:04,000 Speaker 7: with respect to the certainty of that payout. We have 310 00:15:04,520 --> 00:15:11,240 Speaker 7: excessive cup expending. Expected earnings growth is now the lowest 311 00:15:11,440 --> 00:15:15,360 Speaker 7: in four years. So for us, the safest way to 312 00:15:15,400 --> 00:15:20,400 Speaker 7: stay invested is to rotate into value, into mid caps 313 00:15:20,480 --> 00:15:21,680 Speaker 7: and international markets. 314 00:15:21,760 --> 00:15:23,920 Speaker 2: Is there such a thing as tech value? 315 00:15:26,080 --> 00:15:28,760 Speaker 7: Actually, the mag seven when you compare it to the 316 00:15:28,880 --> 00:15:31,840 Speaker 7: other pockets of tech, is where the valuations. Yes, at 317 00:15:31,880 --> 00:15:37,000 Speaker 7: twenty six PE the NASDAK today is excessive, but it's 318 00:15:37,040 --> 00:15:39,800 Speaker 7: nothing like the eighty by its. 319 00:15:39,680 --> 00:15:43,920 Speaker 3: Like buying international pay for twenty years. 320 00:15:43,680 --> 00:15:47,800 Speaker 7: It's a good analogy, but the point is this is 321 00:15:47,840 --> 00:15:50,320 Speaker 7: really an environment where we're beginning to see the long 322 00:15:50,400 --> 00:15:53,840 Speaker 7: waited broadening out of participation. You see it also in 323 00:15:53,880 --> 00:15:57,600 Speaker 7: earnings revisions for the first time now all over the 324 00:15:57,680 --> 00:16:00,640 Speaker 7: last twelve months, we're beginning to see earnings revisions in 325 00:16:00,720 --> 00:16:03,960 Speaker 7: development markets outside of the US and emerging markets turning 326 00:16:04,040 --> 00:16:06,960 Speaker 7: positive on a twelve month four basis. So we're beginning 327 00:16:06,960 --> 00:16:09,720 Speaker 7: to see that convergence. So in our opinion, there is 328 00:16:09,800 --> 00:16:12,520 Speaker 7: going to be convergence in the performance of equity sectors 329 00:16:12,880 --> 00:16:17,880 Speaker 7: and styles and also between regions. So staying are located 330 00:16:17,960 --> 00:16:23,760 Speaker 7: overweight equities, underway fixed income, and maintaining a neutral duration posture. 331 00:16:23,800 --> 00:16:27,760 Speaker 7: We are not concerned about that about yields in the US. 332 00:16:27,880 --> 00:16:31,680 Speaker 6: So US versus non US, How should we think about that? 333 00:16:31,680 --> 00:16:33,160 Speaker 6: If I want to go outside the US, am I 334 00:16:33,200 --> 00:16:36,760 Speaker 6: looking at developed markets emerging markets? I've heard a lot 335 00:16:36,760 --> 00:16:39,320 Speaker 6: more discussion about emerging markets over the past six and 336 00:16:39,400 --> 00:16:40,360 Speaker 6: nine months and a half in a. 337 00:16:40,280 --> 00:16:43,920 Speaker 7: While, we find the case for both, with emerging markets 338 00:16:43,960 --> 00:16:46,560 Speaker 7: probably the leading the charge between the two. What are 339 00:16:46,560 --> 00:16:50,520 Speaker 7: the drivers here? We continue to see with high conviction 340 00:16:50,600 --> 00:16:54,840 Speaker 7: and environment of dollar depreciation, dollar depreciation will will favor 341 00:16:54,880 --> 00:16:58,760 Speaker 7: international markets broadly, but with emerging markets in particular, there 342 00:16:58,800 --> 00:17:02,800 Speaker 7: is a rerating fundamentals because as the dollar goes down, 343 00:17:02,840 --> 00:17:06,320 Speaker 7: the level of liabilities for these markets, as they're mostly 344 00:17:06,359 --> 00:17:12,000 Speaker 7: dollar liabilities, goes down. So boost from a currency perspective 345 00:17:12,000 --> 00:17:14,680 Speaker 7: and boost from a fundamental perspective. So we like emerging 346 00:17:14,720 --> 00:17:17,800 Speaker 7: market equities. We like emerging markets local debt, and emerging 347 00:17:17,840 --> 00:17:19,040 Speaker 7: markets our currency debt. 348 00:17:19,280 --> 00:17:21,840 Speaker 3: Let's say gell honest with this, he is with invescos 349 00:17:21,840 --> 00:17:23,320 Speaker 3: we talk about these markets. 350 00:17:23,359 --> 00:17:24,679 Speaker 2: The markets lift this morning. 351 00:17:25,119 --> 00:17:27,560 Speaker 3: Just a quick data check here features up thirty two 352 00:17:27,640 --> 00:17:32,280 Speaker 3: the Vicks a sixteen level paud I noting fifty seven 353 00:17:32,320 --> 00:17:35,600 Speaker 3: handle on American oil and Brent was sixty dollars a 354 00:17:35,600 --> 00:17:39,600 Speaker 3: barrel now sixty one dollars a barrel down, fractioning gold 355 00:17:39,840 --> 00:17:44,440 Speaker 3: a moonshot of forty two dollars four three seven one. 356 00:17:44,800 --> 00:17:47,480 Speaker 2: Wow yeah on gold. Paul Swiney with a let's see 357 00:17:47,840 --> 00:17:48,320 Speaker 2: the dollar. 358 00:17:49,800 --> 00:17:52,040 Speaker 6: The dollar has not bounced back like we saw the 359 00:17:52,040 --> 00:17:55,159 Speaker 6: stock market bounce back and some some other asset classes 360 00:17:55,160 --> 00:17:57,800 Speaker 6: bounce back from the tariff induced sell off earlier in here. 361 00:17:58,840 --> 00:18:00,919 Speaker 6: Why do you think the dollar is Is this was 362 00:18:00,920 --> 00:18:03,879 Speaker 6: a dollar just maybe overbought earlier in the year, or 363 00:18:03,960 --> 00:18:05,480 Speaker 6: is this something more fundamental. 364 00:18:05,720 --> 00:18:08,040 Speaker 7: I think you're highlighting to me the most fascinating the 365 00:18:08,119 --> 00:18:11,400 Speaker 7: coupling in asset performance that happened this year. To your point, 366 00:18:12,400 --> 00:18:15,320 Speaker 7: it's indicative, you know, when we had the tariff scare 367 00:18:15,480 --> 00:18:20,760 Speaker 7: and the big beautiful bill, fiscal expansion, the concern around 368 00:18:20,800 --> 00:18:24,520 Speaker 7: desustainability for the US, the path of least resistance, the 369 00:18:24,640 --> 00:18:29,640 Speaker 7: finance excess spending is a weaker dollar rather than rising 370 00:18:29,720 --> 00:18:36,720 Speaker 7: bond yields. Right, So it is indicative of euro, the Yen, 371 00:18:37,040 --> 00:18:39,919 Speaker 7: and many of these currencies still being cheap relative to 372 00:18:39,960 --> 00:18:43,720 Speaker 7: the dollar by our evaluation metrix. One point thirty on 373 00:18:43,800 --> 00:18:46,639 Speaker 7: the euro is not an aggressive call. Let's not forget 374 00:18:46,640 --> 00:18:48,720 Speaker 7: that the euro was at one forty in the midst 375 00:18:48,760 --> 00:18:50,160 Speaker 7: of the European debt crisis. 376 00:18:50,280 --> 00:18:52,320 Speaker 2: Can I do an audible sure, got to do an 377 00:18:52,320 --> 00:18:53,639 Speaker 2: audible Let the longest. 378 00:18:53,920 --> 00:18:57,199 Speaker 3: Well, what's amazing to me is in many frameworks, Italy 379 00:18:57,280 --> 00:19:00,119 Speaker 3: is in better shape than France. Well, first time I 380 00:19:00,160 --> 00:19:02,640 Speaker 3: met you was in Aperol, sprits on the seventh floor, 381 00:19:02,760 --> 00:19:05,720 Speaker 3: terrorist at the Hassler. Okay, help me here. Is it 382 00:19:05,840 --> 00:19:09,040 Speaker 3: France is doing poor? Or is Italy finally getting its 383 00:19:09,040 --> 00:19:09,600 Speaker 3: act together? 384 00:19:09,840 --> 00:19:15,080 Speaker 7: There's been a convergence Italy has been benefiting tremendously from 385 00:19:15,080 --> 00:19:18,760 Speaker 7: the COVID support the fiscal package from the European Union 386 00:19:18,800 --> 00:19:21,919 Speaker 7: following the COVID support, the money is being well spent 387 00:19:22,160 --> 00:19:26,359 Speaker 7: and directed to the appropriate sectors of the economy. And France, 388 00:19:26,760 --> 00:19:29,480 Speaker 7: just to pick one, as you mentioned, has seen some 389 00:19:29,720 --> 00:19:36,160 Speaker 7: more headwinds to to structural challenges. So the convergence is real. 390 00:19:36,480 --> 00:19:39,440 Speaker 7: Italy has been performing well. The challenge will be will 391 00:19:39,480 --> 00:19:43,000 Speaker 7: the credit will the private sector sustain that rebound that 392 00:19:43,119 --> 00:19:45,479 Speaker 7: was induced by public spending Ulussia? 393 00:19:45,560 --> 00:19:46,120 Speaker 2: Thank you so much. 394 00:19:46,240 --> 00:19:48,960 Speaker 3: Let's you the longest with us year with Invesco here, 395 00:19:49,160 --> 00:20:00,400 Speaker 3: stay with us. More from Bloomberg Surveillance coming up after this. 396 00:20:00,400 --> 00:20:04,280 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 397 00:20:04,320 --> 00:20:07,320 Speaker 1: starting at seven am Eastern on Apple, Cocklay and Android 398 00:20:07,359 --> 00:20:10,399 Speaker 1: Auto with the Bloomberg Business App. You can also listen 399 00:20:10,480 --> 00:20:13,760 Speaker 1: live on Amazon Alexa from our flagship New York station, 400 00:20:14,280 --> 00:20:16,960 Speaker 1: Just say Alexa play Bloomberg eleven thirty. 401 00:20:17,119 --> 00:20:19,920 Speaker 2: Good time to end the year here with Campbell Harvey. 402 00:20:19,960 --> 00:20:24,479 Speaker 3: He's definitive at Duke University, Thinking Thinking, thinking about the 403 00:20:24,520 --> 00:20:30,080 Speaker 3: broader perspective of technology across the centuries, across the decades 404 00:20:30,560 --> 00:20:31,479 Speaker 3: and into the future. 405 00:20:31,520 --> 00:20:33,399 Speaker 2: Professor Harvey, thank you so much for joining. 406 00:20:33,520 --> 00:20:35,480 Speaker 3: I want to get one question in here before Paul 407 00:20:35,720 --> 00:20:37,240 Speaker 3: talks duke football. 408 00:20:37,280 --> 00:20:39,640 Speaker 2: But Kim, I look at the innovation. 409 00:20:40,560 --> 00:20:44,160 Speaker 3: Is the innovation we're talking about now, is it the 410 00:20:44,200 --> 00:20:47,320 Speaker 3: innovation of our academics of decades ago. 411 00:20:47,440 --> 00:20:49,200 Speaker 2: Or is it a new innovation. 412 00:20:50,640 --> 00:20:58,200 Speaker 8: There's fundamental innovation and there's applied innovation. If you look 413 00:20:58,359 --> 00:21:03,600 Speaker 8: at the actual activity of kind of university based innovation, 414 00:21:03,920 --> 00:21:09,040 Speaker 8: you can argue that it has decreased since the heyday 415 00:21:09,280 --> 00:21:13,240 Speaker 8: of the nineteen sixties and seventies, but more than made 416 00:21:13,280 --> 00:21:17,520 Speaker 8: up for in terms of what's happening with corporations. Indeed, 417 00:21:17,600 --> 00:21:21,439 Speaker 8: it's an extraordinary amount of R and D that the 418 00:21:21,560 --> 00:21:26,600 Speaker 8: US is spending, and it dwarfs, for example, the EU, 419 00:21:27,080 --> 00:21:29,440 Speaker 8: So we spend far more on R and D than 420 00:21:29,480 --> 00:21:33,400 Speaker 8: the EU, even though the EU has a greater population. 421 00:21:33,920 --> 00:21:39,080 Speaker 8: And it's no surprise that seventeen of the largest twenty 422 00:21:39,119 --> 00:21:43,560 Speaker 8: companies in the world are based in the US. Indeed, 423 00:21:43,720 --> 00:21:47,399 Speaker 8: we have companies that spend more on R and D 424 00:21:48,119 --> 00:21:51,240 Speaker 8: than countries like France and Italy. 425 00:21:52,320 --> 00:21:54,960 Speaker 6: So ca as you think about some of the money 426 00:21:55,000 --> 00:21:58,240 Speaker 6: that's being spent on AI. I mean the dollar amounts, 427 00:21:58,280 --> 00:22:01,880 Speaker 6: that total sums are just extraordinary, like we've never seen 428 00:22:02,359 --> 00:22:05,520 Speaker 6: any other industry. I think, is there any way to 429 00:22:05,560 --> 00:22:07,960 Speaker 6: gauge whether this is money well spent or is it 430 00:22:08,000 --> 00:22:11,400 Speaker 6: just kind of too early in the process. Yeah, there's 431 00:22:11,480 --> 00:22:12,639 Speaker 6: lots of comparisons. 432 00:22:13,160 --> 00:22:18,119 Speaker 8: Indeed, what's being spent today is, if we look at 433 00:22:18,200 --> 00:22:21,359 Speaker 8: it in a relative basis, not as much as what 434 00:22:21,520 --> 00:22:25,800 Speaker 8: was spent on the railroads in the mid eighteen hundreds. 435 00:22:26,320 --> 00:22:29,919 Speaker 8: So we need to be careful because there's not that 436 00:22:30,080 --> 00:22:37,000 Speaker 8: many historical episodes, and it is just so tempting to say, oh, well, 437 00:22:37,040 --> 00:22:39,960 Speaker 8: what's happening in twenty twenty five and twenty twenty six 438 00:22:40,600 --> 00:22:44,240 Speaker 8: very much looks like nineteen ninety nine in two thousand. 439 00:22:44,720 --> 00:22:46,920 Speaker 2: I fundamentally disagree with that. 440 00:22:47,560 --> 00:22:49,119 Speaker 6: Cam One of the issues that we've seen in the 441 00:22:49,160 --> 00:22:51,800 Speaker 6: marketplace is I think that some people scratching. 442 00:22:51,359 --> 00:22:53,120 Speaker 2: A head a little bit. Is the US dollar here. 443 00:22:53,359 --> 00:22:56,080 Speaker 6: We've seen the stock market bounce back, seeing a lot 444 00:22:56,119 --> 00:22:59,399 Speaker 6: of commodities hitting all time high, but the dollar seems 445 00:22:59,400 --> 00:23:01,840 Speaker 6: a little bit un loved here. Is that just a 446 00:23:01,840 --> 00:23:04,119 Speaker 6: function of the dollar maybe was over bought at the 447 00:23:04,119 --> 00:23:07,560 Speaker 6: beginning of the year, or there's something fundamental. 448 00:23:07,119 --> 00:23:10,040 Speaker 2: Going on here. Yeah, exactly. 449 00:23:10,160 --> 00:23:15,120 Speaker 8: I think there is noise, so we do get fluctuations 450 00:23:15,160 --> 00:23:20,000 Speaker 8: that aren't necessarily explained by fundamentals. And I think it's 451 00:23:20,000 --> 00:23:23,159 Speaker 8: really important to look at the dollar in a longer 452 00:23:23,280 --> 00:23:28,160 Speaker 8: term perspective, so not just this year or post Liberation Day, 453 00:23:28,680 --> 00:23:31,160 Speaker 8: look at the dollar over the last five or ten 454 00:23:31,280 --> 00:23:33,240 Speaker 8: years to get a perspective. 455 00:23:33,920 --> 00:23:36,040 Speaker 2: So there is fluctuation. 456 00:23:36,880 --> 00:23:42,080 Speaker 8: It has been beaten up mainly because of the chaotic 457 00:23:42,200 --> 00:23:46,600 Speaker 8: nature of the terraff initiative. And I do think that 458 00:23:47,080 --> 00:23:51,520 Speaker 8: in twenty twenty six the terraff initiative will will not 459 00:23:51,640 --> 00:23:54,600 Speaker 8: be as chaotic, It'll be more strategic. 460 00:23:55,000 --> 00:23:58,600 Speaker 3: But is the tariff thing that I'm surprised people are 461 00:23:58,640 --> 00:24:03,080 Speaker 3: talking less about? Is it a germane issue just within 462 00:24:03,520 --> 00:24:07,840 Speaker 3: almost the microeconomics of GDP. I mean, I'm hearing too 463 00:24:07,880 --> 00:24:11,200 Speaker 3: many people telling me tariffs aren't affecting it, and people 464 00:24:11,240 --> 00:24:13,840 Speaker 3: that I know that are struggled or saying, Kim, you're 465 00:24:13,880 --> 00:24:14,720 Speaker 3: out of your mind. 466 00:24:15,200 --> 00:24:18,200 Speaker 2: Tariffs are a huge impact. Which way is it? Professor? 467 00:24:20,040 --> 00:24:24,680 Speaker 8: So I was on the show around Liberation Day and 468 00:24:24,720 --> 00:24:27,600 Speaker 8: then many other outlets. It was not a very popular 469 00:24:28,440 --> 00:24:32,640 Speaker 8: thing to say, but I said that the tariffs were 470 00:24:32,680 --> 00:24:37,560 Speaker 8: not necessarily a big deal, and the math is really simple. 471 00:24:38,520 --> 00:24:43,639 Speaker 8: The size of the US imports is small like our exports, 472 00:24:43,640 --> 00:24:49,200 Speaker 8: so imports are at best fourteen percent of GDP, the 473 00:24:49,600 --> 00:24:53,119 Speaker 8: exports are let's say eleven percent. This is a very 474 00:24:53,160 --> 00:24:58,320 Speaker 8: small amount of our economy, but it was really overblowing 475 00:24:58,840 --> 00:25:02,920 Speaker 8: in my opinion. So again I think that in twenty 476 00:25:03,040 --> 00:25:06,200 Speaker 8: twenty six it will be more strategic. Let me give 477 00:25:06,200 --> 00:25:11,479 Speaker 8: you an example of strategic. So most people hear about 478 00:25:11,800 --> 00:25:17,679 Speaker 8: China dominating the rare earth with over ninety percent of 479 00:25:17,720 --> 00:25:24,320 Speaker 8: world production, but most people don't realize the state of 480 00:25:24,520 --> 00:25:25,760 Speaker 8: aluminum production. 481 00:25:26,119 --> 00:25:27,720 Speaker 2: So aluminum is a. 482 00:25:27,800 --> 00:25:35,000 Speaker 8: Strategic method, so this is important in aircraft and other applications. 483 00:25:35,400 --> 00:25:40,920 Speaker 8: So it turns out that China produces sixty that's six 484 00:25:41,119 --> 00:25:46,119 Speaker 8: zero percent of the world's aluminum. And what about the US. 485 00:25:46,760 --> 00:25:51,959 Speaker 8: The US is less than one percent, So this is 486 00:25:52,400 --> 00:25:57,080 Speaker 8: a microcosm of what's happened in the US. So in 487 00:25:57,560 --> 00:26:04,879 Speaker 8: twenty years ago the manufacturing was approximately double that of China, 488 00:26:06,080 --> 00:26:10,600 Speaker 8: and today China manufacturer sixty percent. 489 00:26:10,400 --> 00:26:12,880 Speaker 2: More than the US. 490 00:26:13,359 --> 00:26:19,320 Speaker 8: So again I think in twenty twenty six whatever tariffs 491 00:26:19,680 --> 00:26:27,240 Speaker 8: will be more strategic, focused on repatriating some manufacturing that 492 00:26:27,400 --> 00:26:29,680 Speaker 8: is strategically important to the US. 493 00:26:30,680 --> 00:26:32,560 Speaker 6: Yeah, and before we let you go, we got to 494 00:26:32,600 --> 00:26:36,360 Speaker 6: talk to you about gold versus bitcoin. Do we talk 495 00:26:36,400 --> 00:26:38,720 Speaker 6: about them in the same sentence these days? Are they 496 00:26:39,359 --> 00:26:43,920 Speaker 6: both stores of value? I don't know what's your latest thinking. 497 00:26:44,960 --> 00:26:49,440 Speaker 8: Yeah, My latest is a new paper called Gold and Bitcoin, 498 00:26:50,400 --> 00:26:54,359 Speaker 8: and I argue in that paper that bitcoin is not 499 00:26:55,080 --> 00:26:58,920 Speaker 8: a substitute for gold. So to be clear here, Bitcoin 500 00:26:59,000 --> 00:27:01,960 Speaker 8: is a great innovation and I'm a big fan of 501 00:27:02,000 --> 00:27:05,160 Speaker 8: the space in general in terms of what it can do. 502 00:27:06,280 --> 00:27:09,760 Speaker 8: I believe stable coins, for example, are the first killer 503 00:27:09,840 --> 00:27:16,040 Speaker 8: app of the decentralized finance space. But be careful of bitcoin. 504 00:27:16,680 --> 00:27:21,240 Speaker 8: It is now the case that it is economically feasible 505 00:27:21,680 --> 00:27:25,800 Speaker 8: to launch an attack on the Bitcoin network. And what 506 00:27:25,840 --> 00:27:30,000 Speaker 8: that means is taking over fifty one percent of the 507 00:27:30,040 --> 00:27:34,200 Speaker 8: computing power of the Bitcoin network. And it is feasible. 508 00:27:34,359 --> 00:27:36,600 Speaker 8: And if you think about it, why spend billions to 509 00:27:36,680 --> 00:27:38,520 Speaker 8: take over the network when you know the price of 510 00:27:38,560 --> 00:27:41,280 Speaker 8: bitcoin is going to go to zero? Well, in finance 511 00:27:41,400 --> 00:27:45,080 Speaker 8: we understand that, and what it involves is a short 512 00:27:45,359 --> 00:27:49,320 Speaker 8: position in bitcoin. And given the derivatus markets are so 513 00:27:49,520 --> 00:27:52,800 Speaker 8: deep today, it is now feasible to take a giant 514 00:27:52,880 --> 00:27:56,960 Speaker 8: short and then attack the network. So there is a scenario, 515 00:27:57,119 --> 00:28:02,119 Speaker 8: a credible scenario, where bitcoin can go to zero. So 516 00:28:02,400 --> 00:28:06,679 Speaker 8: that type of risk does not exist for gold. So 517 00:28:06,840 --> 00:28:10,720 Speaker 8: gold five percent of gold is used in technology, over 518 00:28:10,880 --> 00:28:15,280 Speaker 8: half is used in jewelry. It's got tangible value and 519 00:28:15,359 --> 00:28:18,120 Speaker 8: it doesn't have the same sort of network structure. 520 00:28:18,359 --> 00:28:20,120 Speaker 3: Kay, I've got to leave it there, just because the time, 521 00:28:20,240 --> 00:28:23,280 Speaker 3: it's so much to talk about. Kem Hervey, Professor Hervey, 522 00:28:23,600 --> 00:28:27,480 Speaker 3: thank you so much. He is from Paul Sweeney's Dude University. 523 00:28:28,080 --> 00:28:39,360 Speaker 3: Stay with us. More from Bloomberg Surveillance coming up after this. 524 00:28:39,360 --> 00:28:43,280 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 525 00:28:43,280 --> 00:28:46,600 Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto 526 00:28:46,720 --> 00:28:49,680 Speaker 1: with the Bloomberg Business App. You can also listen live 527 00:28:49,760 --> 00:28:53,320 Speaker 1: on Amazon Alexa from our flagship New York station, Just 528 00:28:53,400 --> 00:28:55,920 Speaker 1: say Alexa play Bloomberg eleven thirty. 529 00:28:56,280 --> 00:28:59,920 Speaker 3: Right now, though we digress the newspapers. Here's Lisa Mittao. 530 00:29:00,120 --> 00:29:02,320 Speaker 9: Okay, this one's talking about some of the new stories 531 00:29:02,360 --> 00:29:04,560 Speaker 9: you've been touching about all morning long. This one, John 532 00:29:04,600 --> 00:29:07,040 Speaker 9: Tucker's been talking about the shooting at Sydney's Bondi Beach. 533 00:29:07,280 --> 00:29:10,120 Speaker 9: But this story emerging from it, how the bystander who 534 00:29:10,160 --> 00:29:13,600 Speaker 9: tackled one of the shooters getting praise from so many 535 00:29:13,600 --> 00:29:17,160 Speaker 9: people had well. Local media says that his name is 536 00:29:17,200 --> 00:29:19,800 Speaker 9: Ahmed el Ahmed. He's forty three year old father of 537 00:29:19,840 --> 00:29:22,600 Speaker 9: two from South Sydney. The report say that he was 538 00:29:22,640 --> 00:29:25,360 Speaker 9: shot twice. He's in the hospital being treated there. But 539 00:29:25,480 --> 00:29:28,080 Speaker 9: President Donald Trump at the White House he said he 540 00:29:28,160 --> 00:29:31,360 Speaker 9: saved many lives. He has great respect for him. He's 541 00:29:31,400 --> 00:29:34,640 Speaker 9: also being recognized by Australian Prime Minister Anthony Albanize. And 542 00:29:34,720 --> 00:29:37,840 Speaker 9: this one's kind of interesting. Pershing Square Capital Management's founder 543 00:29:37,880 --> 00:29:40,120 Speaker 9: Bill Ackman, he called him a brave hero. But what 544 00:29:40,200 --> 00:29:42,959 Speaker 9: he also said is he's starting this fund to create 545 00:29:43,040 --> 00:29:47,800 Speaker 9: a reward program for people who carried out similar acts. 546 00:29:47,800 --> 00:29:49,800 Speaker 9: So on X, he said, is a society we don't 547 00:29:49,800 --> 00:29:52,000 Speaker 9: need enough, We don't taken care of enough of our 548 00:29:52,040 --> 00:29:53,840 Speaker 9: heroes in our community. So he said he's going to 549 00:29:53,920 --> 00:29:57,320 Speaker 9: report back once this program gets up and started. But 550 00:29:57,360 --> 00:29:59,719 Speaker 9: there's a go Fundme page for this person. More than 551 00:29:59,760 --> 00:30:03,080 Speaker 9: eight hundred thousand dollars have been set up there. The 552 00:30:03,080 --> 00:30:05,800 Speaker 9: biggest donor is William Ackman. It has the name there 553 00:30:05,920 --> 00:30:08,280 Speaker 9: who just gave under one hundred thousand dollars for that. 554 00:30:08,360 --> 00:30:10,600 Speaker 9: So a lot of praise going to this bystander. 555 00:30:10,880 --> 00:30:12,040 Speaker 2: Very good. What do you have next? 556 00:30:12,120 --> 00:30:14,440 Speaker 9: Okay, So this one is a shift in the way 557 00:30:14,720 --> 00:30:18,400 Speaker 9: we listen to music. Apparently, you know, we've heard about 558 00:30:18,440 --> 00:30:20,640 Speaker 9: vinyl right more people going to vinyl, But apparently there's 559 00:30:20,640 --> 00:30:23,840 Speaker 9: a growing toin of people, particularly gen Z and collectors, 560 00:30:24,200 --> 00:30:29,320 Speaker 9: looking to own DVDs and CDs. I threw them out, 561 00:30:29,480 --> 00:30:29,880 Speaker 9: I don't know. 562 00:30:29,920 --> 00:30:31,680 Speaker 5: I sold them at garage sales. 563 00:30:31,960 --> 00:30:32,479 Speaker 9: I don't know. 564 00:30:33,160 --> 00:30:36,680 Speaker 3: But it's blowning nostalgia. 565 00:30:36,800 --> 00:30:42,520 Speaker 9: Trust. Yeah, it's the vintage media. That's what gen Z 566 00:30:42,760 --> 00:30:46,160 Speaker 9: is looking for. They say that they can better support 567 00:30:46,160 --> 00:30:47,600 Speaker 9: their artists, but they say they want to ditch the 568 00:30:47,600 --> 00:30:50,160 Speaker 9: pricey streaming. They say streaming is costing too much, so 569 00:30:50,200 --> 00:30:52,680 Speaker 9: they'd rather hold on to like three or five dollars 570 00:30:52,680 --> 00:30:53,720 Speaker 9: CDs DVD. 571 00:30:54,600 --> 00:30:58,280 Speaker 2: I am in awe of title. I use title exclusively. 572 00:30:58,960 --> 00:31:03,520 Speaker 3: It sounds exquisite and the fee is like nothing compared 573 00:31:03,560 --> 00:31:04,720 Speaker 3: to the access to music. 574 00:31:05,280 --> 00:31:08,680 Speaker 2: And to me, it's just to fossils. It's streaming. It's 575 00:31:08,440 --> 00:31:09,400 Speaker 2: a it's amazing. 576 00:31:09,680 --> 00:31:12,000 Speaker 3: Yeah, yeah, I mean I found the Duke fight song 577 00:31:12,440 --> 00:31:14,800 Speaker 3: like thirty seconds next. 578 00:31:14,680 --> 00:31:17,280 Speaker 9: They're hoping they've grown value too. Maybe they'll They're hoping 579 00:31:17,360 --> 00:31:22,400 Speaker 9: that it's going to cost uh be a value someday. Okay, 580 00:31:22,400 --> 00:31:25,160 Speaker 9: so what is on your plate playlist? Have you been 581 00:31:25,200 --> 00:31:27,280 Speaker 9: listening to Christmas music yet lately? 582 00:31:27,360 --> 00:31:30,280 Speaker 2: Yeah? Yeah, I mean my birthday, I go. After my birthday, 583 00:31:30,320 --> 00:31:34,120 Speaker 2: I go, yeah, you're the one that they played. 584 00:31:34,800 --> 00:31:36,200 Speaker 6: I learned this a long time ago, and I was 585 00:31:36,200 --> 00:31:39,920 Speaker 6: following the radio industry the ratings for Christmas through the roof, 586 00:31:40,000 --> 00:31:42,400 Speaker 6: Yes and so here in New York it's what's the 587 00:31:42,440 --> 00:31:44,960 Speaker 6: one of six seven? They go to it like yes 588 00:31:45,400 --> 00:31:46,520 Speaker 6: on Thanksgiving Day. 589 00:31:46,400 --> 00:31:50,360 Speaker 2: Or Christmas Music from the scow Here's. 590 00:31:50,120 --> 00:31:52,720 Speaker 9: The here's the number, the number one hit, let's listen 591 00:31:52,760 --> 00:31:56,640 Speaker 9: to it. 592 00:31:57,920 --> 00:31:59,400 Speaker 6: How much does she make off of this song? 593 00:31:59,440 --> 00:32:00,240 Speaker 2: For here? 594 00:32:00,320 --> 00:32:03,560 Speaker 9: No, we have to look into that. She is leaving 595 00:32:03,600 --> 00:32:06,200 Speaker 9: the char yes of course on top. But they're saying, 596 00:32:06,640 --> 00:32:09,400 Speaker 9: as of December one, you know, more people start listening. 597 00:32:09,960 --> 00:32:13,080 Speaker 9: Number two is Brenda Lee's Rocking Around the Christmas Tree 598 00:32:13,440 --> 00:32:17,400 Speaker 9: and then Wham's Last Christmas. Oh I love that one too, 599 00:32:18,080 --> 00:32:20,320 Speaker 9: but they're saying, people, you know, in times of stress, 600 00:32:20,440 --> 00:32:21,920 Speaker 9: the holiday season brings on. 601 00:32:22,360 --> 00:32:25,360 Speaker 2: That's what they go to. Wait, do you have Pan 602 00:32:25,520 --> 00:32:28,320 Speaker 2: Terror's Christmas Alva? You don't have. 603 00:32:29,320 --> 00:32:31,680 Speaker 6: There are some great rock and roll Christmas tunes that 604 00:32:31,760 --> 00:32:35,080 Speaker 6: you don't hear on the list, like WMMR in Philadelphia, 605 00:32:35,120 --> 00:32:37,080 Speaker 6: which is the greatest rock and roll station in the planet. 606 00:32:37,400 --> 00:32:39,880 Speaker 2: They play great Christmas. 607 00:32:39,480 --> 00:32:42,520 Speaker 3: The newspapers, Lisa Matteo lighting things up here on a 608 00:32:42,520 --> 00:32:43,560 Speaker 3: difficult day. 609 00:32:43,600 --> 00:32:48,440 Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify, 610 00:32:48,560 --> 00:32:52,840 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 611 00:32:52,960 --> 00:32:56,479 Speaker 1: seven to ten am Eastern on Bloomberg dot Com, the 612 00:32:56,520 --> 00:33:00,560 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You 613 00:33:00,600 --> 00:33:03,960 Speaker 1: can also watch us live every weekday on YouTube and 614 00:33:04,160 --> 00:33:05,880 Speaker 1: always on the Bloomberg terminal.