Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern
Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App.
Speaker 1: Listen on demand wherever you get your podcasts, or watch
Speaker 1: us live on YouTube.
Speaker 2: Joining us down. I'm really anticipating.
Speaker 3: She doesn't write it out like Cam Dawson joins us
Speaker 3: some new edge this morning.
Speaker 2: You don't do an outlook, do you.
Speaker 4: Oh, we do an outlook, but we publish it in January,
Speaker 4: so we get to look at everybody else's outlooks, see
Speaker 4: where consensus sits, and then make our forecasts.
Speaker 2: Okay, so you know what do you see?
Speaker 5: Well, we see a lot of bullishness.
Speaker 4: You have an environment now where there's not a single
Speaker 4: strategist on the street that is expecting a down year
Speaker 4: in twenty twenty six. Certainly that is as a shift
Speaker 4: from the last couple of years where you had some
Speaker 4: stragglers of bearishness left over after twenty twenty twos week environment.
Speaker 4: But we are an environment in an environment where you're
Speaker 4: still seeing GDP forecasts continue to get revised higher. You're
Speaker 4: seeing EPs forecasts continue to get revised higher, And the
Speaker 4: biggest challenge you have is that valuations are already pricing
Speaker 4: in a lot of good news. So when you look
Speaker 4: at consensus, they're expecting valuations to hold steady and earnings
Speaker 4: to deliver. That does create somewhat of a high bar
Speaker 4: for big, huge.
Speaker 5: Returns in twenty twenty six.
Speaker 6: I'm trying to figure out what is the black swan
Speaker 6: out there that could really crack this market because evaluations
Speaker 6: are high. But I know that high valuations historically do
Speaker 6: not push markets lower. It's usually an event out there
Speaker 6: that says people to look at the market and say, well,
Speaker 6: this is rich, and given what just happened, maybe we
Speaker 6: should take some money off.
Speaker 4: Valuation is a very poor timing tool that has no
Speaker 4: predictive power on one year forward returns, but it does
Speaker 4: have predictive power once you start looking out three, four
Speaker 4: and five years, so you're at an environment or at
Speaker 4: a point where you can say we shouldn't be surprised
Speaker 4: afore it returns are lower over the next three to
Speaker 4: five years than they were over the last five years,
Speaker 4: where they have been extraordinarily strong.
Speaker 5: As far as.
Speaker 4: Catalysts go, valuations are really interesting because it's like that
Speaker 4: old warm buffet phrase of prices what you pay and
Speaker 4: value is what you get. Usually the difference between price
Speaker 4: and value is a certain degree of emotion, meaning there's
Speaker 4: a certain degree of hope and dream within valuations. And
Speaker 4: so if you were to knock something like the AI
Speaker 4: trade and all of that optimism, could that be something
Speaker 4: that sees a broader catalyst as an unwind to overall valuations.
Speaker 4: It's a good watch item for twenty six.
Speaker 2: Technology.
Speaker 6: AI have been the driver of this market for several
Speaker 6: years now. Can we expect that to be the case
Speaker 6: in twenty.
Speaker 5: Six It all depends on earnings.
Speaker 4: One of the reasons why we have seen such a
Speaker 4: powerful degree of outperformance and narrowness of the market is
Speaker 4: because earnings have been narrow. The most startling stat is
Speaker 4: that over the last three years, you've seen the mag
Speaker 4: seven grow earnings by two hundred percent, but the equal
Speaker 4: weight has only grown earnings by sixteen percent.
Speaker 3: Thank you so much for Rina sof I thought it
Speaker 3: was I thought Barons did a great job this weekend.
Speaker 3: Besides the foreheads for cam Dawson and Barons, I thought
Speaker 3: the Barons did a great job parsing is this is
Speaker 3: something Gina Martin Adams really would.
Speaker 2: Push as well. So why is it en? Now?
Speaker 3: I just heard you model out, you know, on a
Speaker 3: cautious strategy like way, single digit performance next year, it's
Speaker 3: not going to be as good. What's a what's the
Speaker 3: w what's the wei go? Paul taught me this functions?
Speaker 3: Sure wei. You know we're up seventeen sixteen percent, SPX,
Speaker 3: NASDA COP up twenty percent, So you model out single
Speaker 3: digit and like you said, we've gotten it wrong for
Speaker 3: three years?
Speaker 2: Why now?
Speaker 5: Why no?
Speaker 4: I think that that there's a lot of expectation that
Speaker 4: you're going to see a deceleration in MAG seven and
Speaker 4: an acceleration and everything else, and that has been an
Speaker 4: area where there's been a lot of surprise. So the
Speaker 4: reason why MAG seven has performed so well is because
Speaker 4: it keeps surprising to the upside. And then the reason
Speaker 4: why eagleweight has been so weak is it keeps surprising
Speaker 4: to the downside.
Speaker 5: So I think that in.
Speaker 4: Order for this to be something more than just a
Speaker 4: flash in the pan rotation, you have to see those
Speaker 4: earnings deliver.
Speaker 3: I was on the phone with Michael Barr this weekend
Speaker 3: as he was losing the house and the Detroit Lions
Speaker 3: of Paul. I'm looking, I said, I got a look
Speaker 3: at the date, January thirteenth of next year.
Speaker 2: Yeah, which is not that far away. JP Morgan Earnings.
Speaker 3: Yeah, we're going to you know, the belief of the
Speaker 3: bulls futures up thirty one, Paul.
Speaker 2: We're going to do it again. Worry angst OMG were
Speaker 2: three four weeks away. JP Morgan, January thirteenth. Hello.
Speaker 6: Are there some sectors, Cameron that maybe screen well for
Speaker 6: you these days? Outside of technology? I mean, I'm sure
Speaker 6: people come out to you and say, I'm I'm long tech,
Speaker 6: I get it, I get out again. But where else
Speaker 6: should I be looking?
Speaker 4: There has been this dynamic that you might call inattentive blindness,
Speaker 4: the idea because people have been focused on just one thing,
Speaker 4: which has been AI and tech. There was a lot
Speaker 4: of good things happening outside of just those areas. So
Speaker 4: look at some of the strength that we've seen in
Speaker 4: some healthcare names, look at some of the strength that
Speaker 4: we're seeing in some of the materials.
Speaker 5: But here's the question. Do you buy things that.
Speaker 4: Are over sold in uptrends like a tech or do
Speaker 4: you buy something that has overboughten a downtrend like a
Speaker 4: healthcare betting on a more sustatial trend change.
Speaker 2: This is really well said.
Speaker 3: Which one do you tilt to in terms of optimum
Speaker 3: outcome of twelve months, eighteen months, three years out?
Speaker 4: I think the prudent thing to do is make sure
Speaker 4: that you start to get closer to neutral. And that
Speaker 4: is the least exciting answer that we can give. But
Speaker 4: most people, given the run that we've had, very overweight tech.
Speaker 3: I thought it was a really rich weekend. There's a
Speaker 3: lot of intellectual work out there. Kim Dawson with a
Speaker 3: speaking of quality, effort and Newish wealth, thrilled that she
Speaker 3: could be with here to get us started strong.
Speaker 2: Whole bunch of other people coming up today as well.
Speaker 3: Air built chunas on ETFs unless the Odolongus hasn't been
Speaker 3: in an agen, so he'll be in here.
Speaker 2: The eight o'clock hour Camp. Paul A Monica killed it
Speaker 2: this weekend.
Speaker 3: Looking at ETFs and factor ETFs, I think of you,
Speaker 3: I think of Liz Anne Saunders and other strategist Brian
Speaker 3: levitt Over and investco factors are everything.
Speaker 2: Does it make sense the bet on momentum?
Speaker 3: Does it make sense as Lamonica brilliantly said to bet On,
Speaker 3: revenue is a factor factor.
Speaker 4: ETFs have been incredibly disappointing this year if you look
Speaker 4: at things like quality factor ETFs, and there's a lot
Speaker 4: of different ways to define quality. Yeah, all of those
Speaker 4: ETFs have substantially underperformed the market. And of course we
Speaker 4: can look to things and say, oh, well, it's just
Speaker 4: concentration in mag seven and the leadership is so narrow,
Speaker 4: but there seems to be a knee to rethink some
Speaker 4: of the way that these ETFs are constructed, potentially making
Speaker 4: them a bit more intelligent and how they define those factors,
Speaker 4: because we've been looking at those factor ETFs going gosh,
Speaker 4: this performance is extraordinarily disappointing.
Speaker 3: This morning, to get you started for a busy, busy week,
Speaker 3: Cameron Dawson with this new edge of Wealth Manager, Good
Speaker 3: morning across the nation, the way you listen to us,
Speaker 3: and good morning on YouTube. Subscribe to Bloomberg Podcasts. We're
Speaker 3: finishing your strong with Bloomberg Podcasts on YouTube.
Speaker 2: Please subscribe.
Speaker 3: You go out there, you search your Paul Sweeney and
Speaker 3: then yes, folks, somebody just emailed it. We'll talk to
Speaker 3: Sweeney about the ski conditions. I promise we'll get to that.
Speaker 2: But on YouTube, subscribe to Bloomberg Podcasts.
Speaker 6: Cameron fixed income mark and we're looking at the iend
Speaker 6: go function on the Bloomberg terminal, the Bloomberg Index browser.
Speaker 6: Welly fixed income high single digit returns twenty twenty five
Speaker 6: across the board like sixty to forty work issues.
Speaker 2: YEA, so fast, I certainly did.
Speaker 6: So what are we thinking about the fictionome marketing twenty six.
Speaker 4: Yeah, we wouldn't be surprised if you continue to see
Speaker 4: this volatility within fixed income. Remember, we came into the
Speaker 4: year with somewhat higher yields, and so there was room
Speaker 4: for downside. But if we continue to chop around in
Speaker 4: this range for yields, it means that maybe the best
Speaker 4: of the return that we get is just the cupon,
Speaker 4: which suggests that maybe not the most exciting returns. But
Speaker 4: I think that the key point is that we do
Speaker 4: expect fixed income to play its role in sixty forty
Speaker 4: if we were to see a weaker growth environment in
Speaker 4: twenty twenty six, meaning that we don't think we're going
Speaker 4: to see at this time a big surge in inflation,
Speaker 4: which means that fix income can be a hedge within portfolios.
Speaker 4: If growth were to weaken.
Speaker 2: Your charm is you have been invested through thick and thin.
Speaker 3: The successful strategist say, you have to participate. There's a
Speaker 3: debate about how you participate, but you participate. So I'm
Speaker 3: looking here. I went back and looked Paul early April. Yeah,
Speaker 3: the world was going to end for Apple. They were done,
Speaker 3: They were finished. Wi mister cook was a failure. All
Speaker 3: that Paul taught me.
Speaker 2: This, folks.
Speaker 3: The description screen in the Bloomberg Apple twelve months return
Speaker 3: up thirteen percent and up a gajillion percent from the
Speaker 3: bottom in April.
Speaker 2: How do our listeners and viewers.
Speaker 3: Use strategy to avoid the fears that we saw in
Speaker 3: early April of Apple.
Speaker 4: I love the concept of fear as an emotion in
Speaker 4: an individual, it can be incredibly blinding. However, if you
Speaker 4: can measure fear in aggregate, it is the most illuminating
Speaker 4: thing possible, meaning that if we can see when everybody
Speaker 4: else is afraid, it shows you when ford returns are
Speaker 4: getting better. So we measure things that capture fear, like
Speaker 4: the percentage of names making new twenty day lows, or
Speaker 4: things like overall breadth within markets, put call ratios ideas
Speaker 4: that when you see fear spike, even though it feels
Speaker 4: terrible to be allocating capital to markets, it usually is
Speaker 4: a time where Ford returns are improving substantially. So we
Speaker 4: measure fear as a way to keep us from making
Speaker 4: poor decisions, which tend to happen at those times.
Speaker 3: Yeah, apple off the bottom in the spring, the world's
Speaker 3: going to end up seven zeros seventy percent.
Speaker 2: Look at that.
Speaker 6: We've seen retail investors come in and buy the dips.
Speaker 6: What dips we've had, we haven't in too many dips,
Speaker 6: but when there's a dip, the retails come in and
Speaker 6: bought What does that tell you out there? I mean,
Speaker 6: you talk to a lot of these folks.
Speaker 4: Yeah, there's a lot of appetite to continue to allocate
Speaker 4: to stocks.
Speaker 5: And you can see it.
Speaker 4: Fineral margin loan balances have been jumping out to us,
Speaker 4: growing forty percent over the last six months. And I
Speaker 4: think the contrast between the retail investor who has been.
Speaker 5: Buying dips and the institutional.
Speaker 4: Investor who hasn't, because ever since the April low, you
Speaker 4: actually have seen institutional investors, based on the Deutsche Bank
Speaker 4: survey not even get back to overweight, So it means
Speaker 4: that a large cohort of this investor, Yes, they've been
Speaker 4: buying some, but not to the degree that you would
Speaker 4: expect that you would normally see.
Speaker 5: Given the strength we've seen in market.
Speaker 4: So retail investors have been right and institutional investors have
Speaker 4: been more on the sidelines.
Speaker 6: What are we doing here with gold? I mean, I
Speaker 6: think we're hitting a new record again today here? I mean,
Speaker 6: do your clients ask you about gold all the time?
Speaker 5: All the time?
Speaker 4: Look, we call gold a psychological commodity because it allows
Speaker 4: you to get some kind of comfort with things like
Speaker 4: fears about currency debasement. But the technicals are the technicals.
Speaker 4: The uptrend is still very much intact. It is incredibly
Speaker 4: overbought on a weekly basis, meaning it's moved up very far,
Speaker 4: very fast. But we've been calling gold Chuck Norris, which
Speaker 4: means that it's just been invincible and nothing can hurt it.
Speaker 4: The trend is really powerful, but keep an eye on
Speaker 4: the tacticals. The narratives will remain, but gold could go
Speaker 4: into a constulidation.
Speaker 2: Lisa, should we have gold called the rock? That would
Speaker 2: work out? Rock? See that as well? Is there a
Speaker 2: legit commodity boom.
Speaker 3: I noticed with gold oil not part anticipating, But I'm sorry,
Speaker 3: there's a legit commodity boom. Is that an expectation out
Speaker 3: front of a recovering Asian?
Speaker 4: Yeah, a bone to pick because everybody looks at the
Speaker 4: b COMM Index, the commodity index and say, look, how
Speaker 4: we're in a commodity boom.
Speaker 5: A lot of that is gold. Look at the b.
Speaker 4: Common Industrial Commodities Index. You're seeing some movement higher.
Speaker 2: In that.
Speaker 4: Show I is the ticker, but it's important to see
Speaker 4: that you have seen some movement higher. However, it's certainly
Speaker 4: not breaking out nearly to the extent that the BCom
Speaker 4: benefiting from gold has See.
Speaker 2: What's the symbol? I got b COMM.
Speaker 5: I can do that be com ion b com. Every
Speaker 5: day's a school day.
Speaker 3: Every day.
Speaker 6: School day was the curling class you hated, sit in
Speaker 6: the front row every time.
Speaker 2: Okay, oh that's it. The bloomer. All right, I got you.
Speaker 2: I'm glad somebody's got you. I got you.
Speaker 6: I mean fifty yeah, all right, I mean commodities are
Speaker 6: just been ripping it.
Speaker 2: So there you go. We learned something new. Can look
Speaker 2: it up?
Speaker 4: All right?
Speaker 3: Oh, Tom, secundo's I'm learning to excuse me. We'll get
Speaker 3: to what would you write that down? Please use this
Speaker 3: terminal seminar cam. DAWs still getting a terminal seminary cam.
Speaker 3: Thank you, Thank you so much greatly. I appreciate you
Speaker 3: coming in.
Speaker 2: Stay with us.
Speaker 3: More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Apple Karplay and Android Auto with the Bloomberg Business app,
Speaker 1: or watch us live.
Speaker 6: On YouTube Ulus your Day launches. He is head of
Speaker 6: asset Allocation at Investco, joining us live here in our
Speaker 6: Bloomberg Interactive Broker studio. Uless you I mean, no matter
Speaker 6: where I allocated money in twenty twenty five, I did
Speaker 6: pretty well. Stocks up double digits, bonds up high single digits,
Speaker 6: commodities through the roof. If your long gold or silver
Speaker 6: or any of that type of stuff. What's the twenty
Speaker 6: twenty six outlock makes you think about where to allocate
Speaker 6: money these days?
Speaker 2: Good morning?
Speaker 7: Yes, you summarized twenty twenty five perfectly right. We were
Speaker 7: only a couple of years ago. We were talking about
Speaker 7: the death of the sixty forty, and here here we are.
Speaker 7: The sixty forty is back twenty twenty six. We expect
Speaker 7: still an environment where you need to be long risk assets.
Speaker 7: Let's keep it simple. We have easing of monetary policy,
Speaker 7: expansionary fiscal policy, and inflation is in check above the
Speaker 7: fat target, but is coming down. That is a mini
Speaker 7: Goldilock scenario right where typically assets do very well. Growth
Speaker 7: not too hot, not too cold. Put keep the risk on.
Speaker 2: Now.
Speaker 7: AI technology is of course the risky part of the
Speaker 7: market in terms of the outcomes. The uncertain is widening
Speaker 7: with respect to the certainty of that payout. We have
Speaker 7: excessive cup expending. Expected earnings growth is now the lowest
Speaker 7: in four years. So for us, the safest way to
Speaker 7: stay invested is to rotate into value, into mid caps
Speaker 7: and international markets.
Speaker 2: Is there such a thing as tech value?
Speaker 7: Actually, the mag seven when you compare it to the
Speaker 7: other pockets of tech, is where the valuations. Yes, at
Speaker 7: twenty six PE the NASDAK today is excessive, but it's
Speaker 7: nothing like the eighty by its.
Speaker 3: Like buying international pay for twenty years.
Speaker 7: It's a good analogy, but the point is this is
Speaker 7: really an environment where we're beginning to see the long
Speaker 7: waited broadening out of participation. You see it also in
Speaker 7: earnings revisions for the first time now all over the
Speaker 7: last twelve months, we're beginning to see earnings revisions in
Speaker 7: development markets outside of the US and emerging markets turning
Speaker 7: positive on a twelve month four basis. So we're beginning
Speaker 7: to see that convergence. So in our opinion, there is
Speaker 7: going to be convergence in the performance of equity sectors
Speaker 7: and styles and also between regions. So staying are located
Speaker 7: overweight equities, underway fixed income, and maintaining a neutral duration posture.
Speaker 7: We are not concerned about that about yields in the US.
Speaker 6: So US versus non US, How should we think about that?
Speaker 6: If I want to go outside the US, am I
Speaker 6: looking at developed markets emerging markets? I've heard a lot
Speaker 6: more discussion about emerging markets over the past six and
Speaker 6: nine months and a half in a.
Speaker 7: While, we find the case for both, with emerging markets
Speaker 7: probably the leading the charge between the two. What are
Speaker 7: the drivers here? We continue to see with high conviction
Speaker 7: and environment of dollar depreciation, dollar depreciation will will favor
Speaker 7: international markets broadly, but with emerging markets in particular, there
Speaker 7: is a rerating fundamentals because as the dollar goes down,
Speaker 7: the level of liabilities for these markets, as they're mostly
Speaker 7: dollar liabilities, goes down. So boost from a currency perspective
Speaker 7: and boost from a fundamental perspective. So we like emerging
Speaker 7: market equities. We like emerging markets local debt, and emerging
Speaker 7: markets our currency debt.
Speaker 3: Let's say gell honest with this, he is with invescos
Speaker 3: we talk about these markets.
Speaker 2: The markets lift this morning.
Speaker 3: Just a quick data check here features up thirty two
Speaker 3: the Vicks a sixteen level paud I noting fifty seven
Speaker 3: handle on American oil and Brent was sixty dollars a
Speaker 3: barrel now sixty one dollars a barrel down, fractioning gold
Speaker 3: a moonshot of forty two dollars four three seven one.
Speaker 2: Wow yeah on gold. Paul Swiney with a let's see
Speaker 2: the dollar.
Speaker 6: The dollar has not bounced back like we saw the
Speaker 6: stock market bounce back and some some other asset classes
Speaker 6: bounce back from the tariff induced sell off earlier in here.
Speaker 6: Why do you think the dollar is Is this was
Speaker 6: a dollar just maybe overbought earlier in the year, or
Speaker 6: is this something more fundamental.
Speaker 7: I think you're highlighting to me the most fascinating the
Speaker 7: coupling in asset performance that happened this year. To your point,
Speaker 7: it's indicative, you know, when we had the tariff scare
Speaker 7: and the big beautiful bill, fiscal expansion, the concern around
Speaker 7: desustainability for the US, the path of least resistance, the
Speaker 7: finance excess spending is a weaker dollar rather than rising
Speaker 7: bond yields. Right, So it is indicative of euro, the Yen,
Speaker 7: and many of these currencies still being cheap relative to
Speaker 7: the dollar by our evaluation metrix. One point thirty on
Speaker 7: the euro is not an aggressive call. Let's not forget
Speaker 7: that the euro was at one forty in the midst
Speaker 7: of the European debt crisis.
Speaker 2: Can I do an audible sure, got to do an
Speaker 2: audible Let the longest.
Speaker 3: Well, what's amazing to me is in many frameworks, Italy
Speaker 3: is in better shape than France. Well, first time I
Speaker 3: met you was in Aperol, sprits on the seventh floor,
Speaker 3: terrorist at the Hassler. Okay, help me here. Is it
Speaker 3: France is doing poor? Or is Italy finally getting its
Speaker 3: act together?
Speaker 7: There's been a convergence Italy has been benefiting tremendously from
Speaker 7: the COVID support the fiscal package from the European Union
Speaker 7: following the COVID support, the money is being well spent
Speaker 7: and directed to the appropriate sectors of the economy. And France,
Speaker 7: just to pick one, as you mentioned, has seen some
Speaker 7: more headwinds to to structural challenges. So the convergence is real.
Speaker 7: Italy has been performing well. The challenge will be will
Speaker 7: the credit will the private sector sustain that rebound that
Speaker 7: was induced by public spending Ulussia?
Speaker 2: Thank you so much.
Speaker 3: Let's you the longest with us year with Invesco here,
Speaker 3: stay with us. More from Bloomberg Surveillance coming up after this.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Apple, Cocklay and Android
Speaker 1: Auto with the Bloomberg Business App. You can also listen
Speaker 1: live on Amazon Alexa from our flagship New York station,
Speaker 1: Just say Alexa play Bloomberg eleven thirty.
Speaker 2: Good time to end the year here with Campbell Harvey.
Speaker 3: He's definitive at Duke University, Thinking Thinking, thinking about the
Speaker 3: broader perspective of technology across the centuries, across the decades
Speaker 3: and into the future.
Speaker 2: Professor Harvey, thank you so much for joining.
Speaker 3: I want to get one question in here before Paul
Speaker 3: talks duke football.
Speaker 2: But Kim, I look at the innovation.
Speaker 3: Is the innovation we're talking about now, is it the
Speaker 3: innovation of our academics of decades ago.
Speaker 2: Or is it a new innovation.
Speaker 8: There's fundamental innovation and there's applied innovation. If you look
Speaker 8: at the actual activity of kind of university based innovation,
Speaker 8: you can argue that it has decreased since the heyday
Speaker 8: of the nineteen sixties and seventies, but more than made
Speaker 8: up for in terms of what's happening with corporations. Indeed,
Speaker 8: it's an extraordinary amount of R and D that the
Speaker 8: US is spending, and it dwarfs, for example, the EU,
Speaker 8: So we spend far more on R and D than
Speaker 8: the EU, even though the EU has a greater population.
Speaker 8: And it's no surprise that seventeen of the largest twenty
Speaker 8: companies in the world are based in the US. Indeed,
Speaker 8: we have companies that spend more on R and D
Speaker 8: than countries like France and Italy.
Speaker 6: So ca as you think about some of the money
Speaker 6: that's being spent on AI. I mean the dollar amounts,
Speaker 6: that total sums are just extraordinary, like we've never seen
Speaker 6: any other industry. I think, is there any way to
Speaker 6: gauge whether this is money well spent or is it
Speaker 6: just kind of too early in the process. Yeah, there's
Speaker 6: lots of comparisons.
Speaker 8: Indeed, what's being spent today is, if we look at
Speaker 8: it in a relative basis, not as much as what
Speaker 8: was spent on the railroads in the mid eighteen hundreds.
Speaker 8: So we need to be careful because there's not that
Speaker 8: many historical episodes, and it is just so tempting to say, oh, well,
Speaker 8: what's happening in twenty twenty five and twenty twenty six
Speaker 8: very much looks like nineteen ninety nine in two thousand.
Speaker 2: I fundamentally disagree with that.
Speaker 6: Cam One of the issues that we've seen in the
Speaker 6: marketplace is I think that some people scratching.
Speaker 2: A head a little bit. Is the US dollar here.
Speaker 6: We've seen the stock market bounce back, seeing a lot
Speaker 6: of commodities hitting all time high, but the dollar seems
Speaker 6: a little bit un loved here. Is that just a
Speaker 6: function of the dollar maybe was over bought at the
Speaker 6: beginning of the year, or there's something fundamental.
Speaker 2: Going on here. Yeah, exactly.
Speaker 8: I think there is noise, so we do get fluctuations
Speaker 8: that aren't necessarily explained by fundamentals. And I think it's
Speaker 8: really important to look at the dollar in a longer
Speaker 8: term perspective, so not just this year or post Liberation Day,
Speaker 8: look at the dollar over the last five or ten
Speaker 8: years to get a perspective.
Speaker 2: So there is fluctuation.
Speaker 8: It has been beaten up mainly because of the chaotic
Speaker 8: nature of the terraff initiative. And I do think that
Speaker 8: in twenty twenty six the terraff initiative will will not
Speaker 8: be as chaotic, It'll be more strategic.
Speaker 3: But is the tariff thing that I'm surprised people are
Speaker 3: talking less about? Is it a germane issue just within
Speaker 3: almost the microeconomics of GDP. I mean, I'm hearing too
Speaker 3: many people telling me tariffs aren't affecting it, and people
Speaker 3: that I know that are struggled or saying, Kim, you're
Speaker 3: out of your mind.
Speaker 2: Tariffs are a huge impact. Which way is it? Professor?
Speaker 8: So I was on the show around Liberation Day and
Speaker 8: then many other outlets. It was not a very popular
Speaker 8: thing to say, but I said that the tariffs were
Speaker 8: not necessarily a big deal, and the math is really simple.
Speaker 8: The size of the US imports is small like our exports,
Speaker 8: so imports are at best fourteen percent of GDP, the
Speaker 8: exports are let's say eleven percent. This is a very
Speaker 8: small amount of our economy, but it was really overblowing
Speaker 8: in my opinion. So again I think that in twenty
Speaker 8: twenty six it will be more strategic. Let me give
Speaker 8: you an example of strategic. So most people hear about
Speaker 8: China dominating the rare earth with over ninety percent of
Speaker 8: world production, but most people don't realize the state of
Speaker 8: aluminum production.
Speaker 2: So aluminum is a.
Speaker 8: Strategic method, so this is important in aircraft and other applications.
Speaker 8: So it turns out that China produces sixty that's six
Speaker 8: zero percent of the world's aluminum. And what about the US.
Speaker 8: The US is less than one percent, So this is
Speaker 8: a microcosm of what's happened in the US. So in
Speaker 8: twenty years ago the manufacturing was approximately double that of China,
Speaker 8: and today China manufacturer sixty percent.
Speaker 2: More than the US.
Speaker 8: So again I think in twenty twenty six whatever tariffs
Speaker 8: will be more strategic, focused on repatriating some manufacturing that
Speaker 8: is strategically important to the US.
Speaker 6: Yeah, and before we let you go, we got to
Speaker 6: talk to you about gold versus bitcoin. Do we talk
Speaker 6: about them in the same sentence these days? Are they
Speaker 6: both stores of value? I don't know what's your latest thinking.
Speaker 8: Yeah, My latest is a new paper called Gold and Bitcoin,
Speaker 8: and I argue in that paper that bitcoin is not
Speaker 8: a substitute for gold. So to be clear here, Bitcoin
Speaker 8: is a great innovation and I'm a big fan of
Speaker 8: the space in general in terms of what it can do.
Speaker 8: I believe stable coins, for example, are the first killer
Speaker 8: app of the decentralized finance space. But be careful of bitcoin.
Speaker 8: It is now the case that it is economically feasible
Speaker 8: to launch an attack on the Bitcoin network. And what
Speaker 8: that means is taking over fifty one percent of the
Speaker 8: computing power of the Bitcoin network. And it is feasible.
Speaker 8: And if you think about it, why spend billions to
Speaker 8: take over the network when you know the price of
Speaker 8: bitcoin is going to go to zero? Well, in finance
Speaker 8: we understand that, and what it involves is a short
Speaker 8: position in bitcoin. And given the derivatus markets are so
Speaker 8: deep today, it is now feasible to take a giant
Speaker 8: short and then attack the network. So there is a scenario,
Speaker 8: a credible scenario, where bitcoin can go to zero. So
Speaker 8: that type of risk does not exist for gold. So
Speaker 8: gold five percent of gold is used in technology, over
Speaker 8: half is used in jewelry. It's got tangible value and
Speaker 8: it doesn't have the same sort of network structure.
Speaker 3: Kay, I've got to leave it there, just because the time,
Speaker 3: it's so much to talk about. Kem Hervey, Professor Hervey,
Speaker 3: thank you so much. He is from Paul Sweeney's Dude University.
Speaker 3: Stay with us. More from Bloomberg Surveillance coming up after this.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto
Speaker 1: with the Bloomberg Business App. You can also listen live
Speaker 1: on Amazon Alexa from our flagship New York station, Just
Speaker 1: say Alexa play Bloomberg eleven thirty.
Speaker 3: Right now, though we digress the newspapers. Here's Lisa Mittao.
Speaker 9: Okay, this one's talking about some of the new stories
Speaker 9: you've been touching about all morning long. This one, John
Speaker 9: Tucker's been talking about the shooting at Sydney's Bondi Beach.
Speaker 9: But this story emerging from it, how the bystander who
Speaker 9: tackled one of the shooters getting praise from so many
Speaker 9: people had well. Local media says that his name is
Speaker 9: Ahmed el Ahmed. He's forty three year old father of
Speaker 9: two from South Sydney. The report say that he was
Speaker 9: shot twice. He's in the hospital being treated there. But
Speaker 9: President Donald Trump at the White House he said he
Speaker 9: saved many lives. He has great respect for him. He's
Speaker 9: also being recognized by Australian Prime Minister Anthony Albanize. And
Speaker 9: this one's kind of interesting. Pershing Square Capital Management's founder
Speaker 9: Bill Ackman, he called him a brave hero. But what
Speaker 9: he also said is he's starting this fund to create
Speaker 9: a reward program for people who carried out similar acts.
Speaker 9: So on X, he said, is a society we don't
Speaker 9: need enough, We don't taken care of enough of our
Speaker 9: heroes in our community. So he said he's going to
Speaker 9: report back once this program gets up and started. But
Speaker 9: there's a go Fundme page for this person. More than
Speaker 9: eight hundred thousand dollars have been set up there. The
Speaker 9: biggest donor is William Ackman. It has the name there
Speaker 9: who just gave under one hundred thousand dollars for that.
Speaker 9: So a lot of praise going to this bystander.
Speaker 2: Very good. What do you have next?
Speaker 9: Okay, So this one is a shift in the way
Speaker 9: we listen to music. Apparently, you know, we've heard about
Speaker 9: vinyl right more people going to vinyl, But apparently there's
Speaker 9: a growing toin of people, particularly gen Z and collectors,
Speaker 9: looking to own DVDs and CDs. I threw them out,
Speaker 9: I don't know.
Speaker 5: I sold them at garage sales.
Speaker 9: I don't know.
Speaker 3: But it's blowning nostalgia.
Speaker 9: Trust. Yeah, it's the vintage media. That's what gen Z
Speaker 9: is looking for. They say that they can better support
Speaker 9: their artists, but they say they want to ditch the
Speaker 9: pricey streaming. They say streaming is costing too much, so
Speaker 9: they'd rather hold on to like three or five dollars
Speaker 9: CDs DVD.
Speaker 2: I am in awe of title. I use title exclusively.
Speaker 3: It sounds exquisite and the fee is like nothing compared
Speaker 3: to the access to music.
Speaker 2: And to me, it's just to fossils. It's streaming. It's
Speaker 2: a it's amazing.
Speaker 3: Yeah, yeah, I mean I found the Duke fight song
Speaker 3: like thirty seconds next.
Speaker 9: They're hoping they've grown value too. Maybe they'll They're hoping
Speaker 9: that it's going to cost uh be a value someday. Okay,
Speaker 9: so what is on your plate playlist? Have you been
Speaker 9: listening to Christmas music yet lately?
Speaker 2: Yeah? Yeah, I mean my birthday, I go. After my birthday,
Speaker 2: I go, yeah, you're the one that they played.
Speaker 6: I learned this a long time ago, and I was
Speaker 6: following the radio industry the ratings for Christmas through the roof,
Speaker 6: Yes and so here in New York it's what's the
Speaker 6: one of six seven? They go to it like yes
Speaker 6: on Thanksgiving Day.
Speaker 2: Or Christmas Music from the scow Here's.
Speaker 9: The here's the number, the number one hit, let's listen
Speaker 9: to it.
Speaker 6: How much does she make off of this song?
Speaker 2: For here?
Speaker 9: No, we have to look into that. She is leaving
Speaker 9: the char yes of course on top. But they're saying,
Speaker 9: as of December one, you know, more people start listening.
Speaker 9: Number two is Brenda Lee's Rocking Around the Christmas Tree
Speaker 9: and then Wham's Last Christmas. Oh I love that one too,
Speaker 9: but they're saying, people, you know, in times of stress,
Speaker 9: the holiday season brings on.
Speaker 2: That's what they go to. Wait, do you have Pan
Speaker 2: Terror's Christmas Alva? You don't have.
Speaker 6: There are some great rock and roll Christmas tunes that
Speaker 6: you don't hear on the list, like WMMR in Philadelphia,
Speaker 6: which is the greatest rock and roll station in the planet.
Speaker 2: They play great Christmas.
Speaker 3: The newspapers, Lisa Matteo lighting things up here on a
Speaker 3: difficult day.
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,
Speaker 1: seven to ten am Eastern on Bloomberg dot Com, the
Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You
Speaker 1: can also watch us live every weekday on YouTube and
Speaker 1: always on the Bloomberg terminal.