1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:22,000 Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business app. 4 00:00:22,360 --> 00:00:25,680 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:25,760 --> 00:00:27,040 Speaker 1: us live on YouTube. 6 00:00:27,440 --> 00:00:31,000 Speaker 2: Seem Ashaw with us right now. Thrilled to ever with 7 00:00:31,160 --> 00:00:35,680 Speaker 2: us from London. Always here on the shifting tides that 8 00:00:35,760 --> 00:00:39,600 Speaker 2: we see with Principal Asset Management, their chief global strategies. 9 00:00:39,640 --> 00:00:43,120 Speaker 2: See I look at the discussion of the last forty 10 00:00:43,120 --> 00:00:46,640 Speaker 2: eight hours, maybe seventy two hours, and there seems to 11 00:00:46,680 --> 00:00:50,720 Speaker 2: be a threat to technology, a threat that takes risk, 12 00:00:51,640 --> 00:00:53,600 Speaker 2: risk loving out of the markets. 13 00:00:54,480 --> 00:00:55,440 Speaker 3: Is that shiftable? 14 00:00:55,520 --> 00:00:57,960 Speaker 2: Do you think that there can be a rebuttal where 15 00:00:58,000 --> 00:01:02,600 Speaker 2: we get back on board and optimism about software, AI 16 00:01:02,680 --> 00:01:04,960 Speaker 2: and technology. 17 00:01:05,280 --> 00:01:09,160 Speaker 4: Yeah, Hi Todd, I certainly think that this is a 18 00:01:09,160 --> 00:01:11,840 Speaker 4: fleeting moment. I mean, I do think that the narrative 19 00:01:11,920 --> 00:01:17,360 Speaker 4: around tech, the potential displacement from which would come from AI, 20 00:01:17,600 --> 00:01:19,240 Speaker 4: is something which is going to be lingering in the 21 00:01:19,280 --> 00:01:20,760 Speaker 4: market for a while. 22 00:01:21,600 --> 00:01:23,319 Speaker 5: But overall, I do think that. 23 00:01:23,160 --> 00:01:26,480 Speaker 4: That sense of risk on can return. The macro backdrop 24 00:01:26,560 --> 00:01:28,640 Speaker 4: is pretty strong. There's a lot of concerns at the 25 00:01:28,640 --> 00:01:31,479 Speaker 4: moment about what I could do two jobs. I think 26 00:01:31,480 --> 00:01:34,040 Speaker 4: a lot of that is a little bit misplaced, very 27 00:01:34,080 --> 00:01:36,840 Speaker 4: very forward looking. So I think as time goes and 28 00:01:36,959 --> 00:01:39,360 Speaker 4: the market should settle down and start to really refocus 29 00:01:39,360 --> 00:01:41,759 Speaker 4: on those fundamentals. But I would continue to expect shopping 30 00:01:41,800 --> 00:01:42,759 Speaker 4: markets going forward. 31 00:01:43,280 --> 00:01:45,600 Speaker 6: So Sima, we've seen that rotation out of some of 32 00:01:45,600 --> 00:01:49,280 Speaker 6: the high growth, higher multiple stocks really starting kind of 33 00:01:49,440 --> 00:01:52,600 Speaker 6: late last year into this year. Is that a short 34 00:01:52,720 --> 00:01:56,920 Speaker 6: term trade? Is that something a longer term theme for 35 00:01:56,960 --> 00:02:00,200 Speaker 6: twenty twenty six, maybe into more value, into maybe wall 36 00:02:00,240 --> 00:02:00,760 Speaker 6: or in mid camp. 37 00:02:02,160 --> 00:02:02,960 Speaker 7: Yeah, Sidy, we. 38 00:02:03,160 --> 00:02:07,200 Speaker 4: Have increasingly light small cups since around Q three of 39 00:02:07,280 --> 00:02:08,840 Speaker 4: last year, and there's you know, there's a couple of 40 00:02:08,880 --> 00:02:12,600 Speaker 4: really key reasons. One is you need to have constructive 41 00:02:12,639 --> 00:02:15,040 Speaker 4: growth backjobs only that's something that we're seeing or just 42 00:02:15,080 --> 00:02:18,080 Speaker 4: in the US for globally. You need to have rate cuts. 43 00:02:19,000 --> 00:02:21,359 Speaker 4: You need to have ideally signs of deregulation. So these 44 00:02:21,400 --> 00:02:23,639 Speaker 4: three things are all coming and then especially at a 45 00:02:23,680 --> 00:02:27,080 Speaker 4: time when valuations are really very favorable for small cups, 46 00:02:27,080 --> 00:02:29,760 Speaker 4: so that continue to be the case. And similar to 47 00:02:30,600 --> 00:02:32,239 Speaker 4: value as well, like a lot of the stuff which 48 00:02:32,240 --> 00:02:36,760 Speaker 4: has been somewhat unloved, has been shifting towards looking at 49 00:02:36,760 --> 00:02:38,799 Speaker 4: other parts of the market, such as value. I think 50 00:02:38,800 --> 00:02:41,280 Speaker 4: that's been interesting is that there's a number of different 51 00:02:41,280 --> 00:02:43,359 Speaker 4: themes going on in the market though, so of course 52 00:02:43,400 --> 00:02:45,600 Speaker 4: there's a shift towards small cap and value. There's also 53 00:02:45,639 --> 00:02:49,160 Speaker 4: been this kind of really strong performance from some of 54 00:02:49,200 --> 00:02:51,960 Speaker 4: the defensives and then at times really strong performance from 55 00:02:52,000 --> 00:02:54,519 Speaker 4: deep cycles. So this is a confusing market. There's a 56 00:02:54,560 --> 00:02:56,720 Speaker 4: lot of different cross currents going on at the moment. 57 00:02:57,240 --> 00:03:01,639 Speaker 2: I mean, this really caught my intention lesson right. Netflix's 58 00:03:01,720 --> 00:03:07,680 Speaker 2: forward pe on the Bloomberg is higher, larger than Microsoft's 59 00:03:07,840 --> 00:03:09,200 Speaker 2: forward welling. 60 00:03:09,280 --> 00:03:11,280 Speaker 3: Okay, that is how things have shifted. 61 00:03:11,320 --> 00:03:13,240 Speaker 8: That's how it has Seema. 62 00:03:13,320 --> 00:03:15,720 Speaker 6: We've seen, you know, as we look back to twenty 63 00:03:15,720 --> 00:03:18,040 Speaker 6: twenty five and so far this year in twenty twenty six, 64 00:03:18,720 --> 00:03:23,120 Speaker 6: non US equity markets perform outperforming the US here across 65 00:03:23,280 --> 00:03:26,680 Speaker 6: the board in a lot of key, key geographical markets. 66 00:03:26,720 --> 00:03:28,519 Speaker 6: How do you think about the US versus rest of 67 00:03:28,520 --> 00:03:28,919 Speaker 6: the world. 68 00:03:30,360 --> 00:03:31,680 Speaker 4: Yeah, you know, this is I mean, this is one 69 00:03:31,680 --> 00:03:34,160 Speaker 4: of those those trades that started last year there were 70 00:03:34,280 --> 00:03:36,400 Speaker 4: question marks around whether it's going to be sustained for 71 00:03:36,440 --> 00:03:39,680 Speaker 4: twenty twenty six. But as we've seen you go into 72 00:03:39,800 --> 00:03:42,480 Speaker 4: this year and actually it seems like it's gaining momentum. 73 00:03:42,480 --> 00:03:45,520 Speaker 4: We've actually seen more and more clients really becoming more 74 00:03:45,520 --> 00:03:48,480 Speaker 4: interested in the national into the international trade. And again 75 00:03:48,520 --> 00:03:49,600 Speaker 4: there's a couple of reasons for that. 76 00:03:49,640 --> 00:03:50,280 Speaker 5: I mean, I think the. 77 00:03:50,200 --> 00:03:53,600 Speaker 4: Global micro performance continues to be pretty strong. You've got good, 78 00:03:54,160 --> 00:03:57,480 Speaker 4: I guess, supportive fiscal emunctory cycles, and a number of 79 00:03:57,480 --> 00:03:59,640 Speaker 4: different parts of the world, there's a week dollar and 80 00:03:59,640 --> 00:04:02,560 Speaker 4: then on top of that, I think the lack of 81 00:04:02,600 --> 00:04:05,440 Speaker 4: certainty with regards to US policy is really starting to 82 00:04:05,520 --> 00:04:08,280 Speaker 4: grate on a lot of investors. And so when you 83 00:04:08,400 --> 00:04:12,240 Speaker 4: have got these cheap evaluations in international markets, when ernest 84 00:04:12,320 --> 00:04:16,120 Speaker 4: growth for these markets is also performing fairly well, and 85 00:04:16,160 --> 00:04:18,960 Speaker 4: then you have the policy uncertainty you thrown into there, 86 00:04:19,640 --> 00:04:22,120 Speaker 4: Certainly that international space is looking more and more interesting, 87 00:04:22,200 --> 00:04:23,880 Speaker 4: and you know, you can point in parts of Europe, 88 00:04:23,880 --> 00:04:26,560 Speaker 4: you can point parts of Asia emerging markets, so a 89 00:04:26,560 --> 00:04:28,480 Speaker 4: ton of other opportunities beyond the US. 90 00:04:28,600 --> 00:04:31,560 Speaker 2: We continue with Seema Shure, a chief global strategiest principal, 91 00:04:31,720 --> 00:04:35,479 Speaker 2: said Management Sam, I look at one of the great 92 00:04:35,520 --> 00:04:37,680 Speaker 2: thoughts out there and what I've seen in the zeitgeist. 93 00:04:38,200 --> 00:04:41,520 Speaker 2: Is Europe still wants to invest in America? Is the 94 00:04:41,600 --> 00:04:46,720 Speaker 2: flow of equity purchase still coming into America? 95 00:04:46,839 --> 00:04:47,039 Speaker 9: Yeah? 96 00:04:47,080 --> 00:04:48,919 Speaker 4: I mean, you know, it's not like the tap has 97 00:04:48,960 --> 00:04:52,560 Speaker 4: been completely switched off. European investors are still looking for 98 00:04:52,600 --> 00:04:55,839 Speaker 4: where there's innovation and growth. But I guess I think 99 00:04:55,880 --> 00:04:59,360 Speaker 4: the opportunities have been really compelling in order to offset 100 00:04:59,360 --> 00:05:04,120 Speaker 4: the currency respects, offset their policy uncertainty, So it has 101 00:05:04,160 --> 00:05:06,920 Speaker 4: to be a very interesting trade. Whereas before just buying 102 00:05:06,920 --> 00:05:09,880 Speaker 4: into the US was almost enough to get that pickup, 103 00:05:10,240 --> 00:05:12,840 Speaker 4: there's just a lot more differentiation, and there's also stronger 104 00:05:12,839 --> 00:05:13,920 Speaker 4: performance out of Europe. 105 00:05:14,080 --> 00:05:15,320 Speaker 5: So I think the hurdle. 106 00:05:15,040 --> 00:05:17,920 Speaker 4: For insting in the US is a little bit higher, 107 00:05:18,760 --> 00:05:21,440 Speaker 4: and it's probably more that the hurdle for investing domestically 108 00:05:21,800 --> 00:05:22,680 Speaker 4: is that much lower. 109 00:05:24,160 --> 00:05:27,400 Speaker 6: The bond market, we've seen bonds, you know, give you 110 00:05:27,440 --> 00:05:30,719 Speaker 6: some solid returns in twenty twenty five, solid returns so 111 00:05:30,800 --> 00:05:34,440 Speaker 6: far here in the start twenty twenty six, radious. The 112 00:05:34,480 --> 00:05:35,760 Speaker 6: opportunities in the bond market. 113 00:05:37,800 --> 00:05:40,640 Speaker 4: Look, we continue to have a fairly constructive outlook for 114 00:05:41,000 --> 00:05:44,080 Speaker 4: US growth, for global growth, so that means that we 115 00:05:44,120 --> 00:05:46,440 Speaker 4: can still be really focused on credit and still focus 116 00:05:46,520 --> 00:05:49,120 Speaker 4: on segments of high yield, but really focusing within the 117 00:05:49,200 --> 00:05:52,719 Speaker 4: higher quality segments of high yield. Probably more than anything, 118 00:05:52,720 --> 00:05:55,200 Speaker 4: there is emerging market debt which continues to look really 119 00:05:55,240 --> 00:05:57,680 Speaker 4: strong for US, and actually emerging markets both across the 120 00:05:57,720 --> 00:06:01,600 Speaker 4: equity space and bond markets. You know, we have a 121 00:06:01,760 --> 00:06:03,640 Speaker 4: belief that the dollar is going to continue to weaken, 122 00:06:03,680 --> 00:06:06,880 Speaker 4: and that certainly helps out that narrative. But certainly we 123 00:06:06,880 --> 00:06:08,640 Speaker 4: do think fixed income is interesting. It's just that we 124 00:06:08,680 --> 00:06:12,640 Speaker 4: would have a probably greater preference for exits in other 125 00:06:12,680 --> 00:06:13,600 Speaker 4: parts of the market. 126 00:06:13,640 --> 00:06:14,800 Speaker 3: Seem very quickly here. 127 00:06:14,880 --> 00:06:17,240 Speaker 2: I just looked at two standard deviation chart of the 128 00:06:17,279 --> 00:06:21,040 Speaker 2: standard of course five hundred. We haven't even had a correction. 129 00:06:21,880 --> 00:06:24,680 Speaker 2: I mean, where we are now, we've barely nudge. Should 130 00:06:24,680 --> 00:06:28,719 Speaker 2: our listeners and viewers focus on the larger index or 131 00:06:28,760 --> 00:06:32,080 Speaker 2: the uproar over technology and software? 132 00:06:33,360 --> 00:06:35,080 Speaker 4: I mean, you're right, it's interesting because there's been so 133 00:06:35,160 --> 00:06:37,760 Speaker 4: much noise and yet absolutely indexes it's very much pretty 134 00:06:37,800 --> 00:06:40,400 Speaker 4: much unchanged. But I do think investors can be looking 135 00:06:40,400 --> 00:06:42,599 Speaker 4: beyond the tech side. There's been a broadening of earnings 136 00:06:42,640 --> 00:06:45,520 Speaker 4: growth to a number of different sectors. We're looking at 137 00:06:45,520 --> 00:06:48,359 Speaker 4: which of the sectors that can benefit from from AI 138 00:06:48,400 --> 00:06:50,560 Speaker 4: and not really be disrupted by AI. So there's a 139 00:06:50,600 --> 00:06:52,840 Speaker 4: lot of opportunities and of course valuations and more compelling 140 00:06:52,880 --> 00:06:54,080 Speaker 4: outside of the tech sector. 141 00:06:54,360 --> 00:06:56,200 Speaker 5: So I think for investors look beyond. 142 00:06:56,000 --> 00:06:57,920 Speaker 4: The index, you know, look to you know, where can 143 00:06:58,160 --> 00:07:01,640 Speaker 4: and this really provide the additional information and sophistication. 144 00:07:01,960 --> 00:07:03,440 Speaker 2: Thank you for the brief to get to start and 145 00:07:03,480 --> 00:07:07,240 Speaker 2: see Mishaw with us with Principal Asset Management. 146 00:07:08,800 --> 00:07:09,720 Speaker 3: Stay with us. 147 00:07:09,720 --> 00:07:12,960 Speaker 2: More from Bloomberg Surveillance coming up after this. 148 00:07:20,200 --> 00:07:23,800 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 149 00:07:23,880 --> 00:07:27,000 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 150 00:07:27,120 --> 00:07:30,520 Speaker 1: Apple Karplay and Android Otto with the Bloomberg Business app, 151 00:07:30,680 --> 00:07:32,760 Speaker 1: or watch us live on YouTube. 152 00:07:32,560 --> 00:07:35,440 Speaker 2: Snow the Sire Franklin Templeton. But let's secuw you into it. 153 00:07:35,680 --> 00:07:39,040 Speaker 2: Robert Schiffman. I don't think he went home for the storm. 154 00:07:39,080 --> 00:07:41,040 Speaker 3: No, he stays, he's got like a pop ten, you know, 155 00:07:41,160 --> 00:07:43,120 Speaker 3: like back on the food court. Yep, down at one 156 00:07:43,160 --> 00:07:47,400 Speaker 3: twenty park. Schiffman just publishes second sense. He notices it's 157 00:07:47,400 --> 00:07:53,040 Speaker 3: snowing today. Second sentence, maybe a bond deal today? Question mark? 158 00:07:53,080 --> 00:07:56,040 Speaker 3: Oh okay, and it's like totally out in the zeitgeist. 159 00:07:56,120 --> 00:07:56,400 Speaker 3: It is. 160 00:07:56,480 --> 00:07:59,240 Speaker 6: I mean, and we've seen you know, Rob Schiffman covers 161 00:07:59,240 --> 00:08:02,720 Speaker 6: all them names, the tech names from a credit perspective, 162 00:08:02,720 --> 00:08:05,600 Speaker 6: and he's been writing about all these big bond deals. 163 00:08:05,600 --> 00:08:08,120 Speaker 6: We've seen, Tom, from the big tech companies and he says, 164 00:08:08,160 --> 00:08:09,400 Speaker 6: the market's still up and bring. 165 00:08:09,320 --> 00:08:12,720 Speaker 3: Them inside baseball. We go to Franklin Templeton today. 166 00:08:12,720 --> 00:08:16,160 Speaker 2: The woman that picks up the phone at Franklin Templeton 167 00:08:16,560 --> 00:08:20,720 Speaker 2: when Google or microsoftware ampletool bond deal, sonew de Side 168 00:08:20,800 --> 00:08:24,800 Speaker 2: joins the CIO fixed income Franklin Templeton. So how does 169 00:08:24,840 --> 00:08:27,360 Speaker 2: it work? Like, I get there's a bond deal, like 170 00:08:27,440 --> 00:08:29,960 Speaker 2: John Dee does the thing? Okay, fine, But if a 171 00:08:30,040 --> 00:08:35,040 Speaker 2: big tech company does an offering, a trunch offering six 172 00:08:35,160 --> 00:08:36,280 Speaker 2: seven eight trunches? 173 00:08:37,000 --> 00:08:40,080 Speaker 3: Do they call Franklin Templeton? Do you call them? Do 174 00:08:40,120 --> 00:08:42,560 Speaker 3: you meet it a Starbucks? How does it work? 175 00:08:43,480 --> 00:08:43,520 Speaker 8: No? 176 00:08:43,679 --> 00:08:45,840 Speaker 5: It doesn't put that way, Tom, I wish you did. 177 00:08:46,080 --> 00:08:49,920 Speaker 5: I'd say that. The first instance, what we have observed is. 178 00:08:49,840 --> 00:08:53,960 Speaker 10: That very large institutional bias tend to have there are 179 00:08:53,960 --> 00:08:57,400 Speaker 10: discussions which take place. I'm talking about large pension funds 180 00:08:57,440 --> 00:08:59,839 Speaker 10: and so on, and so forth. But we absolutely thought 181 00:08:59,920 --> 00:09:03,240 Speaker 10: up as the deals come to market. 182 00:09:03,360 --> 00:09:04,800 Speaker 3: They do they listen to you? 183 00:09:04,880 --> 00:09:07,440 Speaker 2: I mean the heritage of Franklin on the West Coast 184 00:09:07,440 --> 00:09:11,720 Speaker 2: and Templeton and the Bahamas and the huge emotional merger 185 00:09:11,800 --> 00:09:12,880 Speaker 2: decades ago. 186 00:09:13,440 --> 00:09:16,080 Speaker 3: Do they listen to your experts? 187 00:09:16,280 --> 00:09:19,640 Speaker 2: Or is it almost a bond deal of a hyperscaler 188 00:09:19,880 --> 00:09:21,680 Speaker 2: is dictated to the street? 189 00:09:21,760 --> 00:09:22,360 Speaker 3: Which is it? 190 00:09:23,720 --> 00:09:28,720 Speaker 10: You know I had currently in the recent past, I 191 00:09:28,760 --> 00:09:33,680 Speaker 10: would say that these hyperscalers essentially are dictating to the street. 192 00:09:34,160 --> 00:09:36,120 Speaker 10: And this is the truth over the last year when 193 00:09:36,120 --> 00:09:39,080 Speaker 10: we look at the shar volume of debt which has 194 00:09:39,080 --> 00:09:44,439 Speaker 10: been issued, that there is a certain amount of expectation 195 00:09:44,960 --> 00:09:48,040 Speaker 10: of some indigestion as we go further into this year, 196 00:09:48,160 --> 00:09:52,320 Speaker 10: because even those initial assumptions that we would have around 197 00:09:52,720 --> 00:09:56,320 Speaker 10: OLF a trillion of issues this year has now picked 198 00:09:56,400 --> 00:09:59,559 Speaker 10: up to over seven hundred billion this year itself. 199 00:10:00,040 --> 00:10:03,200 Speaker 5: I'd say that we're watching all this with some question. 200 00:10:03,760 --> 00:10:05,880 Speaker 10: It's not that we think the deals will go bad, 201 00:10:05,960 --> 00:10:08,640 Speaker 10: but spreads are likely to take a bit of a 202 00:10:08,720 --> 00:10:11,360 Speaker 10: hit from the quantity of just the share volume. 203 00:10:11,520 --> 00:10:14,000 Speaker 5: It's absorbable, absolutely, but. 204 00:10:16,320 --> 00:10:18,240 Speaker 10: I would anticipate that spreads take a bit of a 205 00:10:18,320 --> 00:10:20,280 Speaker 10: hit on this quantity of supply. 206 00:10:20,880 --> 00:10:24,400 Speaker 6: So we've seen such a tremendous supply of new issuance 207 00:10:24,440 --> 00:10:25,920 Speaker 6: come out of the tech space, which is a little 208 00:10:25,960 --> 00:10:29,240 Speaker 6: bit unusual because the tech companies historically have had great 209 00:10:29,280 --> 00:10:32,400 Speaker 6: cash character, which is great free cash, so it didn't 210 00:10:32,400 --> 00:10:33,760 Speaker 6: really need the bond market. 211 00:10:34,640 --> 00:10:35,559 Speaker 3: At what point do you think the. 212 00:10:35,480 --> 00:10:37,960 Speaker 8: Bond market starts pushing back a little. 213 00:10:37,679 --> 00:10:44,160 Speaker 6: Bit, maybe on the rates, maybe on some covenant language. 214 00:10:44,480 --> 00:10:46,920 Speaker 6: When do you think that it may shift a little 215 00:10:46,920 --> 00:10:49,920 Speaker 6: bit towards the buyer gets a little bit more power here? 216 00:10:50,720 --> 00:10:54,360 Speaker 10: I think the buyer this is the year that happens, right, 217 00:10:54,559 --> 00:10:57,040 Speaker 10: just given again the volume, and I think the first 218 00:10:57,320 --> 00:11:03,120 Speaker 10: elements of pushback are coming. You see it in equity markets, 219 00:11:03,200 --> 00:11:06,959 Speaker 10: and I think you also are seeing it broadly in 220 00:11:07,200 --> 00:11:10,199 Speaker 10: fixed inco markets in the sense that when we looked 221 00:11:10,400 --> 00:11:13,640 Speaker 10: at these issues, they are the picks and shovels piece 222 00:11:13,800 --> 00:11:14,320 Speaker 10: of AI. 223 00:11:14,840 --> 00:11:15,040 Speaker 5: Right. 224 00:11:15,120 --> 00:11:18,520 Speaker 10: For a few years, everything was about mag seven and 225 00:11:18,720 --> 00:11:22,319 Speaker 10: people were super excited and everything looked wonderful, and then 226 00:11:22,360 --> 00:11:25,600 Speaker 10: a lot of the tech companies who did in fact 227 00:11:25,720 --> 00:11:28,439 Speaker 10: have all of that free cash flow, we are now 228 00:11:28,480 --> 00:11:33,000 Speaker 10: observing that the cash flow is not quite as free anymore. 229 00:11:33,000 --> 00:11:34,880 Speaker 10: It's drying up a little bit. They're coming to the 230 00:11:34,880 --> 00:11:38,840 Speaker 10: market for very big tapics. So I think what we 231 00:11:39,000 --> 00:11:45,400 Speaker 10: might start seeing is more of more of the industry 232 00:11:45,480 --> 00:11:53,079 Speaker 10: treating these growth firms, if you will, more like traditional, 233 00:11:53,480 --> 00:11:56,400 Speaker 10: which means show us the money, show us the returns. 234 00:11:56,720 --> 00:11:58,719 Speaker 10: And I think you're beginning to see a little bit 235 00:11:58,760 --> 00:12:02,520 Speaker 10: of that. And since we had the bigs and trouvels, 236 00:12:03,360 --> 00:12:07,080 Speaker 10: then we were looking where is the return that showed 237 00:12:07,080 --> 00:12:10,160 Speaker 10: me the money? Couldn't find it, and therefore I think 238 00:12:10,240 --> 00:12:13,040 Speaker 10: the market switched to saying, so who's losing? And that's 239 00:12:13,080 --> 00:12:15,640 Speaker 10: what's hitting software right now. We're still in a bit 240 00:12:15,760 --> 00:12:19,760 Speaker 10: of a gap, which is, show me the big winners, 241 00:12:19,960 --> 00:12:22,320 Speaker 10: and we don't have them yet, we can't know. And 242 00:12:22,400 --> 00:12:26,360 Speaker 10: I think that's a little bit of almost cognitive dissonance 243 00:12:26,480 --> 00:12:28,200 Speaker 10: right now in the market, which is we all a 244 00:12:28,240 --> 00:12:31,960 Speaker 10: create AI as transformative, but who is it transforming in 245 00:12:32,040 --> 00:12:32,960 Speaker 10: a positive sense? 246 00:12:33,600 --> 00:12:35,680 Speaker 6: So now let's just step back a little bit here. 247 00:12:35,920 --> 00:12:39,280 Speaker 6: In twenty twenty five, fixed income had a very very 248 00:12:39,480 --> 00:12:42,840 Speaker 6: solid year of high single digit all in total returns. 249 00:12:42,840 --> 00:12:45,760 Speaker 6: Here in twenty twenty six, should I be content with 250 00:12:45,960 --> 00:12:49,200 Speaker 6: just clipping coupons here? And if so, where. 251 00:12:50,040 --> 00:12:53,679 Speaker 5: Yes, the answer is yes. 252 00:12:53,760 --> 00:12:58,280 Speaker 10: Look, we are looking at incredibly tight spreads. Everything that 253 00:12:58,360 --> 00:13:02,439 Speaker 10: we see wants us to be a little bit cautious 254 00:13:02,480 --> 00:13:07,560 Speaker 10: in terms of additional spread tightening and in terms of 255 00:13:07,600 --> 00:13:10,720 Speaker 10: where in the fixed income space you look for a terms, 256 00:13:10,960 --> 00:13:13,720 Speaker 10: I'd say look at emergent markets, look a little more global, 257 00:13:13,800 --> 00:13:18,880 Speaker 10: because those areas are still underinvested for most US investors. 258 00:13:18,880 --> 00:13:20,480 Speaker 5: I think it's a good time to start looking at 259 00:13:20,480 --> 00:13:21,280 Speaker 5: some of this again. 260 00:13:21,600 --> 00:13:25,439 Speaker 10: And I also think I would not say don't look 261 00:13:25,480 --> 00:13:27,720 Speaker 10: at high yield. You should be looking at high You 262 00:13:27,720 --> 00:13:30,360 Speaker 10: should be looking at all of these sectors. Because the 263 00:13:30,360 --> 00:13:32,560 Speaker 10: market typically throws a baby out with the bath water. 264 00:13:32,800 --> 00:13:37,560 Speaker 10: All software is not in. It's in a death spiral, 265 00:13:37,840 --> 00:13:40,320 Speaker 10: and you might think it is based on what we're seeing. 266 00:13:40,360 --> 00:13:43,160 Speaker 10: So we are trying to look very carefully to find 267 00:13:43,200 --> 00:13:47,400 Speaker 10: things which might in fact be mispriced at the current market. 268 00:13:47,600 --> 00:13:51,960 Speaker 2: A question from the time where Franklin literally invented folks 269 00:13:52,040 --> 00:13:55,040 Speaker 2: triple tex free. We make a joke about it, but 270 00:13:55,160 --> 00:13:57,720 Speaker 2: somebody had to first do that, and I give Franklin 271 00:13:58,120 --> 00:14:00,520 Speaker 2: all that Dreyfus was there as well. I really give 272 00:14:00,520 --> 00:14:03,959 Speaker 2: Franklin all the credit. Sonew it's just as simple as 273 00:14:04,000 --> 00:14:08,199 Speaker 2: I can. Are the hybrid kind of debt like convertible 274 00:14:08,320 --> 00:14:11,360 Speaker 2: bonds or equity preferreds? 275 00:14:11,720 --> 00:14:12,920 Speaker 3: Are they attractive? Here? 276 00:14:13,040 --> 00:14:16,040 Speaker 2: Are they a legacy from another time and place. 277 00:14:16,800 --> 00:14:17,360 Speaker 5: Common they go? 278 00:14:17,520 --> 00:14:19,920 Speaker 10: And I think converts are still attractive. You have to 279 00:14:19,960 --> 00:14:22,960 Speaker 10: just be careful about which points you pick them right. 280 00:14:23,120 --> 00:14:26,480 Speaker 10: And I think that the question of whether you should 281 00:14:26,520 --> 00:14:29,960 Speaker 10: be looking at interesting triplecs should you be looking at converts, 282 00:14:30,000 --> 00:14:33,400 Speaker 10: that's always going to be from and I think that 283 00:14:33,520 --> 00:14:37,200 Speaker 10: continues to be the case. I think it's definitely premature 284 00:14:37,280 --> 00:14:38,400 Speaker 10: to say that their day is over. 285 00:14:38,760 --> 00:14:41,680 Speaker 2: Hugely valuable. Thank you so much for those comments, Tonew. 286 00:14:41,960 --> 00:14:45,360 Speaker 2: I hope compliance wasn't listening talking about like how do 287 00:14:45,400 --> 00:14:48,840 Speaker 2: you digest a bond deal? That was really informative. Sonel 288 00:14:48,920 --> 00:14:52,440 Speaker 2: Deci with the CIO fixed in at Franklin at Temper 289 00:14:52,560 --> 00:14:53,920 Speaker 2: and we hope she keeps your job. 290 00:14:55,600 --> 00:14:56,320 Speaker 3: Stay with us. 291 00:14:56,560 --> 00:14:59,760 Speaker 2: More from Bloomberg Surveillance coming up after this. 292 00:15:07,040 --> 00:15:10,640 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 293 00:15:10,680 --> 00:15:13,880 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 294 00:15:13,920 --> 00:15:17,600 Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or 295 00:15:17,760 --> 00:15:19,240 Speaker 1: watch us live on YouTube. 296 00:15:19,480 --> 00:15:23,120 Speaker 2: Mandy sing with us here this morning. Of course, on Nvidia. 297 00:15:23,320 --> 00:15:25,440 Speaker 2: The cell side's all in on this. I looked at 298 00:15:25,480 --> 00:15:28,480 Speaker 2: the A and R function. No one's not in love 299 00:15:28,520 --> 00:15:30,880 Speaker 2: with this thing. Some of the you know, they're popping 300 00:15:31,280 --> 00:15:35,280 Speaker 2: up forty two percent return out twelve months. Where is 301 00:15:35,320 --> 00:15:39,280 Speaker 2: the confidence in Nvidia given the tech crisis that we. 302 00:15:39,280 --> 00:15:43,440 Speaker 9: Have, And you're right, I think the tech crisis points 303 00:15:43,480 --> 00:15:46,880 Speaker 9: to the fact that this disruption is real when it 304 00:15:46,960 --> 00:15:52,080 Speaker 9: comes to the AI impact, and Nvidia is the poster 305 00:15:52,240 --> 00:15:54,520 Speaker 9: child when it comes to the demand that they have 306 00:15:54,720 --> 00:15:59,720 Speaker 9: seen for their chips and look all the hyperscalers. We 307 00:16:00,080 --> 00:16:02,480 Speaker 9: started the year thinking they're going to grow their capex 308 00:16:02,520 --> 00:16:06,280 Speaker 9: thirty percent. Now that number is sixty percent. Some of 309 00:16:06,280 --> 00:16:10,040 Speaker 9: that increases because of memory prices, but then you are 310 00:16:10,120 --> 00:16:14,560 Speaker 9: also seeing an increased plans to add capacity, and that's 311 00:16:14,600 --> 00:16:18,640 Speaker 9: where an Nvidia will likely have upside to their numbers tonight. 312 00:16:19,040 --> 00:16:22,920 Speaker 9: The question still remains around the sustainability of growth, because 313 00:16:22,920 --> 00:16:25,760 Speaker 9: when you are growing seventy percent at the scale that 314 00:16:25,920 --> 00:16:28,800 Speaker 9: Nvidia is at, you know, three hundred billion dollars round 315 00:16:28,840 --> 00:16:32,440 Speaker 9: rate for twenty twenty six, the numbers, the growth rates 316 00:16:32,480 --> 00:16:33,000 Speaker 9: will taper. 317 00:16:33,200 --> 00:16:36,280 Speaker 8: It's a given. So that's the part that I think. 318 00:16:36,320 --> 00:16:38,600 Speaker 9: The visibility is what you want to figure out in 319 00:16:38,680 --> 00:16:42,120 Speaker 9: terms of how much visibility the company has and what 320 00:16:42,160 --> 00:16:43,840 Speaker 9: that means in terms of growth rates. 321 00:16:43,960 --> 00:16:46,560 Speaker 6: I mean, again I'm looking at the FA function, which 322 00:16:46,600 --> 00:16:49,600 Speaker 6: is a consensus of all the analysts forecasts here and 323 00:16:49,600 --> 00:16:54,560 Speaker 6: again in Counter twenty six or Counter really twenty six 324 00:16:55,400 --> 00:16:58,360 Speaker 6: fifty percent revenue growth. I mean, it's just extraordinary here. 325 00:17:00,080 --> 00:17:03,040 Speaker 6: What does the street need to hear from Nvidia tonight? 326 00:17:03,040 --> 00:17:05,160 Speaker 6: What's the what are they focusing on these days? 327 00:17:05,840 --> 00:17:10,160 Speaker 9: I mean, Jensen has called out demand being stronger at 328 00:17:10,240 --> 00:17:12,840 Speaker 9: least ten times, you know, since the start of the 329 00:17:12,920 --> 00:17:16,720 Speaker 9: year Cees Davos, and yesterday, you know the fact that 330 00:17:16,840 --> 00:17:20,439 Speaker 9: AMD had this deal with Meta where they ended up 331 00:17:20,480 --> 00:17:24,520 Speaker 9: giving away ten percent of the stock as warrants. To me, 332 00:17:24,720 --> 00:17:28,520 Speaker 9: that's a sign Invidia still is the leader when it 333 00:17:28,560 --> 00:17:31,600 Speaker 9: comes to you know, everyone clamoring to get their chips 334 00:17:31,920 --> 00:17:34,480 Speaker 9: and everyone else is trying to make sure they stay 335 00:17:34,520 --> 00:17:36,399 Speaker 9: in the race, which is what the move I thought 336 00:17:36,720 --> 00:17:37,880 Speaker 9: AMD had yesterday. 337 00:17:38,000 --> 00:17:40,800 Speaker 2: Yesterday, I mean basically put the surveillance cork in my 338 00:17:40,880 --> 00:17:43,720 Speaker 2: mouth and man, he lectured me on the use of AI. 339 00:17:44,680 --> 00:17:48,040 Speaker 2: I look at it as a twenty dollars subscription. How 340 00:17:48,240 --> 00:17:50,760 Speaker 2: God's name did they pay for the billions of data 341 00:17:50,800 --> 00:17:55,119 Speaker 2: centers with twenty dollars from Alexis, twenty dollars from Paul, 342 00:17:55,520 --> 00:17:57,000 Speaker 2: and twenty dollars from Time. 343 00:17:57,640 --> 00:18:01,000 Speaker 9: So right now they are subsidizing it and it is 344 00:18:01,119 --> 00:18:05,000 Speaker 9: being priced below the costs that you know, these hyperscalers 345 00:18:05,000 --> 00:18:07,520 Speaker 9: have to pay to Nvidia to get the chips because 346 00:18:07,640 --> 00:18:10,840 Speaker 9: Nvidia clearly is not taking a hit on their margins. 347 00:18:10,880 --> 00:18:14,280 Speaker 9: They still have that mid seventy percent margins, So prices 348 00:18:14,320 --> 00:18:17,240 Speaker 9: will go up, that twenty dollars subscription will go up, 349 00:18:17,320 --> 00:18:22,880 Speaker 9: and extreme I know, and also the enterprise API usage 350 00:18:22,960 --> 00:18:24,560 Speaker 9: that's a big part of adoption. 351 00:18:24,720 --> 00:18:27,560 Speaker 8: Don't just focus on the corporation. That's corporation. 352 00:18:27,600 --> 00:18:29,320 Speaker 3: They don't pay twenty dollars a bag person. 353 00:18:29,400 --> 00:18:32,200 Speaker 9: Yeah, they're signing multimillion dollar deals right now. 354 00:18:32,320 --> 00:18:34,440 Speaker 6: I mean in Nvidia, you just mentioned three hundred million 355 00:18:34,480 --> 00:18:36,080 Speaker 6: dollars in revenue. I just went on to look at 356 00:18:36,119 --> 00:18:39,480 Speaker 6: AMD forty five billion dollars in revenue. It's not even. 357 00:18:39,400 --> 00:18:40,280 Speaker 3: Close, dude. 358 00:18:40,440 --> 00:18:44,920 Speaker 6: So is Nvidia that much ahead of everybody else in 359 00:18:45,000 --> 00:18:45,879 Speaker 6: terms of this story? 360 00:18:46,320 --> 00:18:46,680 Speaker 8: They are? 361 00:18:46,800 --> 00:18:50,320 Speaker 9: And and that Blackwell chip ramp, that they showed last quarter. 362 00:18:50,920 --> 00:18:53,240 Speaker 9: I mean you will see it in full gear and 363 00:18:53,280 --> 00:18:57,040 Speaker 9: the results tonight. Now they have announced it in next architecture, 364 00:18:57,080 --> 00:19:00,440 Speaker 9: the Ruben architecture. So that's how far ahead there at least, 365 00:19:00,440 --> 00:19:03,240 Speaker 9: you know, eighteen months ahead of everyone in terms off 366 00:19:03,720 --> 00:19:07,640 Speaker 9: the efficiency and the compute capacity and power that they 367 00:19:07,640 --> 00:19:08,800 Speaker 9: are able to show with their. 368 00:19:08,760 --> 00:19:11,800 Speaker 2: Chair accrossination today, Mandy Singe, So then are on ground. 369 00:19:11,880 --> 00:19:16,880 Speaker 2: I just can't say enough about Bloomberg intelligence ability on technology. 370 00:19:16,920 --> 00:19:18,879 Speaker 2: We threaten they have both of them on together, but 371 00:19:18,880 --> 00:19:22,359 Speaker 2: they can't be in the same room at the same time. Okay, Mandy, 372 00:19:22,480 --> 00:19:25,879 Speaker 2: here's the real world on depreciation. I had a twenty 373 00:19:26,000 --> 00:19:30,919 Speaker 2: nineteen Intel cheese grater, fancy fancy Mac computer, fancy people 374 00:19:31,000 --> 00:19:33,879 Speaker 2: like me can buy. It is a depreciated value of 375 00:19:33,960 --> 00:19:37,600 Speaker 2: under four hundred dollars. The fancy Nvidia chip in the 376 00:19:37,640 --> 00:19:40,919 Speaker 2: bottom of my cheese grater is now holding up a 377 00:19:40,920 --> 00:19:44,520 Speaker 2: martini at five PM. I mean, tell us about the 378 00:19:44,560 --> 00:19:49,320 Speaker 2: depreciation and the technological pressure that mister Winning is under 379 00:19:49,920 --> 00:19:53,000 Speaker 2: to get better, better, better, and everything else becomes a 380 00:19:53,040 --> 00:19:54,600 Speaker 2: coffee table for a martini. 381 00:19:54,800 --> 00:19:58,040 Speaker 9: Yes, and that's a great point about the long term. 382 00:19:58,080 --> 00:20:01,080 Speaker 9: You know, multiple that this company can get despite its 383 00:20:01,119 --> 00:20:04,520 Speaker 9: growth is because of that aspects. But right now, the 384 00:20:04,560 --> 00:20:08,680 Speaker 9: real constraint is power. So everyone has a finite amount 385 00:20:08,760 --> 00:20:11,800 Speaker 9: of power, and you want the best compute and that's 386 00:20:11,840 --> 00:20:15,720 Speaker 9: why people are willing to upgrade to Invidia's latest architecture 387 00:20:16,000 --> 00:20:17,560 Speaker 9: because they can't add more power. 388 00:20:18,119 --> 00:20:20,040 Speaker 8: They want to use the chip that is. 389 00:20:20,040 --> 00:20:23,480 Speaker 9: Best optimized for the power they have available, which is 390 00:20:23,480 --> 00:20:27,800 Speaker 9: why Nvidia is releasing their new generations so quickly within 391 00:20:27,840 --> 00:20:28,200 Speaker 9: a year. 392 00:20:28,760 --> 00:20:31,879 Speaker 8: In some cases it's blackwell it is I don't know, 393 00:20:32,240 --> 00:20:33,760 Speaker 8: I get. 394 00:20:33,600 --> 00:20:36,960 Speaker 9: The rental pricing of the older versions of their chips. 395 00:20:37,520 --> 00:20:41,640 Speaker 8: They are pricing rental, yes, I mean they're still off 396 00:20:41,640 --> 00:20:42,080 Speaker 8: the charge. 397 00:20:42,200 --> 00:20:45,280 Speaker 9: Everyone wants to get a hold of whatever the market 398 00:20:45,320 --> 00:20:48,000 Speaker 9: has to offer in terms of the rental price. 399 00:20:48,000 --> 00:20:50,640 Speaker 6: All right, so in the last three, four, five, six 400 00:20:50,680 --> 00:20:53,720 Speaker 6: weeks we've had to sell off in software stocks. What 401 00:20:53,760 --> 00:20:57,760 Speaker 6: are you and onnrock tone institutional investors these days about that. 402 00:20:57,200 --> 00:20:59,719 Speaker 9: That it's going to take a while to clear this 403 00:21:00,000 --> 00:21:03,800 Speaker 9: out in terms of these companies adapting, you know, the 404 00:21:04,200 --> 00:21:05,760 Speaker 9: LM's situation. 405 00:21:05,960 --> 00:21:09,119 Speaker 8: Now they have to integrate llms, they. 406 00:21:09,000 --> 00:21:13,160 Speaker 9: Have to offer you know, functionality that's built on top 407 00:21:13,200 --> 00:21:15,520 Speaker 9: of llms and it's going to take a while too. 408 00:21:15,520 --> 00:21:17,440 Speaker 6: But day run, don't I just run out and buy 409 00:21:17,480 --> 00:21:19,919 Speaker 6: Salesforce dot com? Hand over fist here? I mean, is 410 00:21:19,960 --> 00:21:24,440 Speaker 6: this is AI going to put a Salesforce dot Com. 411 00:21:23,359 --> 00:21:24,440 Speaker 8: Not out of business? 412 00:21:24,960 --> 00:21:27,320 Speaker 9: The terminal value is not in question, but it's going 413 00:21:27,400 --> 00:21:29,960 Speaker 9: to take a while to figure out the margin impact 414 00:21:30,200 --> 00:21:32,439 Speaker 9: when the grow to a rebound, and it's not going 415 00:21:32,520 --> 00:21:34,440 Speaker 9: to happen within Finally. 416 00:21:34,160 --> 00:21:36,960 Speaker 6: Tom, these tech analysts investors actually have to do some 417 00:21:37,080 --> 00:21:39,439 Speaker 6: work before they could just sit back and say, my 418 00:21:39,560 --> 00:21:42,680 Speaker 6: business is going twenty thirty He's built his career on 419 00:21:42,800 --> 00:21:43,080 Speaker 6: just my. 420 00:21:43,040 --> 00:21:44,240 Speaker 8: Business and girl twenty. 421 00:21:43,960 --> 00:21:47,200 Speaker 6: Thirty percent a year in Rocky you just plug it in. Now, 422 00:21:47,240 --> 00:21:48,920 Speaker 6: I think they got it, like, oh boy. 423 00:21:48,800 --> 00:21:51,800 Speaker 3: Okay, find Christian and why it's waiting for us here? 424 00:21:51,840 --> 00:21:54,200 Speaker 2: We gotta we gotta get them on man deep saying 425 00:21:54,280 --> 00:21:59,920 Speaker 2: Microsoft AI transform with Microsoft AI where trust meets innovate. 426 00:22:00,600 --> 00:22:04,760 Speaker 2: Great NBA statement. Okay, wonderful. What's the level of panic 427 00:22:04,880 --> 00:22:08,520 Speaker 2: at Microsoft right now? Good question in the AI wars. 428 00:22:09,280 --> 00:22:12,720 Speaker 9: I mean, look, the whole Open AI situation is what's 429 00:22:12,960 --> 00:22:17,159 Speaker 9: really causing the panic. Microsoft is still deeply embedded to 430 00:22:17,240 --> 00:22:19,479 Speaker 9: Paul's point, you know they are a system of record 431 00:22:19,560 --> 00:22:23,080 Speaker 9: and a lot of the cases and most likely you 432 00:22:23,119 --> 00:22:27,200 Speaker 9: are going to add AI on top of Microsoft software. 433 00:22:27,400 --> 00:22:30,000 Speaker 9: You're not going to rewrite you know what Microsoft is 434 00:22:30,080 --> 00:22:33,160 Speaker 9: doing with Office or Windows or all the other software 435 00:22:33,240 --> 00:22:36,320 Speaker 9: they have. The question is they don't have the own 436 00:22:36,480 --> 00:22:39,800 Speaker 9: LLLM and that's where the reliance on open ai is 437 00:22:39,880 --> 00:22:43,600 Speaker 9: hurting them because open ai wants to get into applications themselves, 438 00:22:43,600 --> 00:22:45,840 Speaker 9: and that whole thing is not panning out. 439 00:22:45,880 --> 00:22:47,760 Speaker 2: I thought l was a law degree out of the 440 00:22:47,840 --> 00:22:51,360 Speaker 2: United king I have no idea. We got to thank 441 00:22:51,400 --> 00:22:53,160 Speaker 2: you so much, appreciate it. 442 00:22:54,960 --> 00:22:55,640 Speaker 3: Stay with us. 443 00:22:55,920 --> 00:22:59,160 Speaker 2: More from Bloomberg Surveillance coming up after this. 444 00:23:06,400 --> 00:23:10,000 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live 445 00:23:10,040 --> 00:23:13,199 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 446 00:23:13,280 --> 00:23:16,680 Speaker 1: Apple Karplay and Android Otto with the Bloomberg Business app, 447 00:23:16,880 --> 00:23:18,520 Speaker 1: or watch us live on YouTube. 448 00:23:18,760 --> 00:23:21,359 Speaker 2: This is going to be a delicate conversation. Here's respect 449 00:23:21,400 --> 00:23:23,760 Speaker 2: for Patrick McHenry. I mean, he said, you know, it's 450 00:23:23,840 --> 00:23:26,840 Speaker 2: like North Carolina and it's Winston Salem and some of 451 00:23:26,880 --> 00:23:30,280 Speaker 2: the world. These are close events, like he won by 452 00:23:30,320 --> 00:23:34,680 Speaker 2: seventy percent. He won by seventy one percent. Seventy two percent. 453 00:23:35,000 --> 00:23:37,840 Speaker 2: But Patrick mcchenry, when you were serving in the House, 454 00:23:37,920 --> 00:23:41,080 Speaker 2: with all of your leadership, House, financial Services and all that, 455 00:23:41,440 --> 00:23:44,960 Speaker 2: all that, you knew Republicans that were winning by two 456 00:23:45,000 --> 00:23:49,360 Speaker 2: percent or two tenths of a percent. I look last night, 457 00:23:50,000 --> 00:23:52,800 Speaker 2: it's a State of the Union. The judges have to 458 00:23:52,840 --> 00:23:56,800 Speaker 2: show up the winning team. In this case, your Republicans 459 00:23:56,840 --> 00:23:59,960 Speaker 2: have to show up. Some of the Democrats didn't show up. 460 00:24:00,160 --> 00:24:04,680 Speaker 2: Elizabeth Warren from the Commonwealth of Massachusetts is sitting there 461 00:24:04,800 --> 00:24:05,840 Speaker 2: all by yourself. 462 00:24:06,200 --> 00:24:08,560 Speaker 3: Is a generalization? What does it mean? 463 00:24:08,640 --> 00:24:13,320 Speaker 2: What's a symbolism when elected officials don't show up for 464 00:24:13,440 --> 00:24:15,040 Speaker 2: the state of the Union. 465 00:24:15,920 --> 00:24:18,679 Speaker 11: Well, first of all, what the Democratic Party did, the 466 00:24:18,720 --> 00:24:20,679 Speaker 11: Democratic leaders in the House and the Senate did was 467 00:24:20,680 --> 00:24:23,919 Speaker 11: effectively give over the state of Union to a rally 468 00:24:23,960 --> 00:24:28,000 Speaker 11: of Republicans. And then they left the gadflies of the 469 00:24:28,040 --> 00:24:31,560 Speaker 11: Democratic Party the far left to make a scene. 470 00:24:31,880 --> 00:24:32,880 Speaker 7: And so Rakim. 471 00:24:32,600 --> 00:24:35,000 Speaker 11: Jefferies was trying to manage his members and say, don't 472 00:24:35,000 --> 00:24:37,479 Speaker 11: take de bay, don't don't fight Trump, don't yell at them, 473 00:24:37,480 --> 00:24:40,560 Speaker 11: don't do stupid things, because our voters that we need 474 00:24:40,600 --> 00:24:44,120 Speaker 11: to win the midterms are people in the middle let's 475 00:24:44,160 --> 00:24:47,560 Speaker 11: not tick them off. And yet we still saw the outburst. 476 00:24:47,640 --> 00:24:51,840 Speaker 11: We saw the outburst of members getting out, getting pulled out. 477 00:24:51,880 --> 00:24:55,919 Speaker 11: We saw the outburst with Democratic members using profanity in 478 00:24:55,920 --> 00:24:57,159 Speaker 11: the middle of the State of Union. 479 00:24:57,240 --> 00:24:59,080 Speaker 7: I mean, this is just gotten out of hand. 480 00:25:00,000 --> 00:25:02,639 Speaker 11: A bad look for the Democratic Party, huge missed opportunity 481 00:25:02,680 --> 00:25:06,399 Speaker 11: for them in trying to give some balance to what 482 00:25:06,520 --> 00:25:09,280 Speaker 11: President Trump said last time. 483 00:25:09,760 --> 00:25:12,400 Speaker 2: It's been wonderful having you as a Bloomberg contributor because 484 00:25:12,400 --> 00:25:14,840 Speaker 2: you're really looking at both sides, even though you're diehard. 485 00:25:15,080 --> 00:25:17,520 Speaker 2: I get a GOP. He was like twelve years old 486 00:25:17,560 --> 00:25:19,960 Speaker 2: when he entered Congress. Yeah, I mean no, you know, 487 00:25:20,359 --> 00:25:23,560 Speaker 2: it's amazing, you know, thinking about that. Folks, John Tucker, 488 00:25:23,640 --> 00:25:25,440 Speaker 2: what were you doing when you were twenty one? 489 00:25:26,480 --> 00:25:27,560 Speaker 8: I was in this seat? 490 00:25:27,920 --> 00:25:29,240 Speaker 3: Okay, right here, Matt. 491 00:25:29,119 --> 00:25:31,719 Speaker 2: Patrick Henry at twenty one says I want to serve America. 492 00:25:31,760 --> 00:25:35,640 Speaker 2: I think that's really cool. Patrick McHenry. The congresswoman from 493 00:25:35,680 --> 00:25:38,280 Speaker 2: the first District of Iowa isn't as lucky as you. 494 00:25:39,119 --> 00:25:39,879 Speaker 3: Miller Meeks. 495 00:25:40,000 --> 00:25:44,080 Speaker 2: Doctor Miller Meeks of Davenport has a razor thin vote. 496 00:25:44,320 --> 00:25:47,560 Speaker 2: What kind of Democrat will defeat her? 497 00:25:48,520 --> 00:25:51,720 Speaker 11: It's going to be somebody who motivates their base, consolidates 498 00:25:51,760 --> 00:25:53,600 Speaker 11: their base, but also is able to reach out to 499 00:25:53,600 --> 00:25:56,880 Speaker 11: the middle, just like Marionette Miller Meeks did and when 500 00:25:56,920 --> 00:26:01,760 Speaker 11: she was elected with the closest election the twenty two cycle. 501 00:26:02,720 --> 00:26:05,200 Speaker 11: So she's battle tests, she knows what she's doing. She's 502 00:26:05,560 --> 00:26:08,439 Speaker 11: a really hard working individual. So you have to have 503 00:26:08,480 --> 00:26:11,879 Speaker 11: somebody that is the Democratic equivalent of Marionette. 504 00:26:11,880 --> 00:26:14,720 Speaker 7: That's a very hard it's a very hard recruit. 505 00:26:14,920 --> 00:26:18,680 Speaker 11: To get somebody mainstream and also tenacious enough to fight 506 00:26:18,720 --> 00:26:19,399 Speaker 11: in a battleground. 507 00:26:19,840 --> 00:26:23,880 Speaker 6: Congressman, this is an election year. What do you think, 508 00:26:24,160 --> 00:26:27,040 Speaker 6: how do you think the President's State of the Union 509 00:26:27,080 --> 00:26:30,800 Speaker 6: speech last night played for Republicans and Democrats as they 510 00:26:31,119 --> 00:26:32,320 Speaker 6: enter into this election season. 511 00:26:32,640 --> 00:26:38,400 Speaker 11: Well, look, since Lincoln, the goal here, since Abraham Lincoln, 512 00:26:38,840 --> 00:26:43,080 Speaker 11: the goal here is to consolidate your traditional base and 513 00:26:43,119 --> 00:26:45,960 Speaker 11: then reach out to those that are persuadable. We're in 514 00:26:45,960 --> 00:26:48,520 Speaker 11: an area, we're in a time frame where there are 515 00:26:48,600 --> 00:26:50,800 Speaker 11: very few persuadables in America today. 516 00:26:50,840 --> 00:26:53,200 Speaker 7: So last night's State of the Union was about. 517 00:26:52,920 --> 00:26:59,200 Speaker 11: Consolidating Conservatives, consolidating Republicans, making sure that President Trump maintains 518 00:26:59,240 --> 00:27:03,560 Speaker 11: this very high, historically high approval rating among his party, 519 00:27:04,440 --> 00:27:06,200 Speaker 11: which I think he was able to do, and then 520 00:27:06,320 --> 00:27:09,600 Speaker 11: reach out to those independents that he had in the 521 00:27:09,680 --> 00:27:14,639 Speaker 11: twenty twenty four election that brought him back to the way. Okay, 522 00:27:14,800 --> 00:27:18,679 Speaker 11: So that message on the economy, health, on healthcare but 523 00:27:18,760 --> 00:27:24,600 Speaker 11: specifically prescription drugs, his emphasis on even smaller issues on 524 00:27:25,280 --> 00:27:30,359 Speaker 11: data and energy use around data centers. That type of 525 00:27:30,400 --> 00:27:33,720 Speaker 11: targeted messaging was about bringing home those people that are 526 00:27:33,880 --> 00:27:34,720 Speaker 11: the truit coalist. 527 00:27:34,960 --> 00:27:37,400 Speaker 2: Come Patrick, man, you're a beast at this. I mean 528 00:27:37,440 --> 00:27:39,800 Speaker 2: you're like total grizzled pro I got eight ways to 529 00:27:39,880 --> 00:27:43,040 Speaker 2: go here, Okay, as simple as I can. How does 530 00:27:43,080 --> 00:27:45,879 Speaker 2: he get back the Latino vote that he shattered? 531 00:27:47,000 --> 00:27:51,520 Speaker 11: Well, first of all, the visual of Minneapolis was horrifying 532 00:27:51,520 --> 00:27:55,960 Speaker 11: to the American people and it really shook the roundup 533 00:27:56,440 --> 00:27:59,959 Speaker 11: approach that the tomorrowent Homeland Securities had the very high profile, 534 00:28:00,040 --> 00:28:06,639 Speaker 11: out very public roundups. That is really alienated Hispanic voters 535 00:28:06,720 --> 00:28:10,280 Speaker 11: that came to President Trump in the twenty twenty four elections, like, 536 00:28:10,359 --> 00:28:14,240 Speaker 11: we got the biggest Hispanic vote the Republicans a Republican 537 00:28:14,280 --> 00:28:15,800 Speaker 11: nominee for president's ever gotten. 538 00:28:16,440 --> 00:28:17,880 Speaker 7: So he's got to stop that. 539 00:28:18,280 --> 00:28:22,720 Speaker 11: Number One, he's got to refocus on traditional his success 540 00:28:22,720 --> 00:28:25,000 Speaker 11: at the border, which he took a victory lap on 541 00:28:25,480 --> 00:28:30,480 Speaker 11: last night, and get into the question of deporting criminal 542 00:28:30,600 --> 00:28:36,000 Speaker 11: illegals that are of a part of crime, families in gangs. 543 00:28:36,440 --> 00:28:38,680 Speaker 11: When you do that, when he does that, that is 544 00:28:38,720 --> 00:28:43,640 Speaker 11: a solid immigration and immigration enforcement message. Not getting in 545 00:28:43,680 --> 00:28:47,440 Speaker 11: fights with liberal protesters and sanctuary cities. 546 00:28:47,480 --> 00:28:48,800 Speaker 7: That doesn't look good. 547 00:28:48,880 --> 00:28:51,959 Speaker 11: Nobody thinks that's effective, nobody thinks that's smart use of 548 00:28:52,000 --> 00:28:53,240 Speaker 11: federal law enforcement. 549 00:28:53,680 --> 00:28:54,320 Speaker 7: And so that. 550 00:28:54,400 --> 00:28:59,080 Speaker 11: Means he's got to get more Holman and less Gnome. 551 00:28:59,840 --> 00:29:02,240 Speaker 11: That is going to be I think we're going to 552 00:29:02,320 --> 00:29:04,640 Speaker 11: see in the coming months, and they've already made that pivot. 553 00:29:06,280 --> 00:29:09,960 Speaker 6: Congressmen, Most polling shows that these tariffs, they don't poll 554 00:29:10,120 --> 00:29:13,120 Speaker 6: very well with most voters out there. Yet, are you 555 00:29:13,160 --> 00:29:16,920 Speaker 6: surprised that the president after the Supreme Court ruling, effectively 556 00:29:16,960 --> 00:29:19,200 Speaker 6: doubled down on the tariff narrative. 557 00:29:21,040 --> 00:29:26,120 Speaker 11: Yes, I'm well, I'm not surprised because the president loves tariffs. 558 00:29:26,440 --> 00:29:29,479 Speaker 7: Regardless of what the polling says. The winning message on 559 00:29:29,600 --> 00:29:30,760 Speaker 7: tariffs is. 560 00:29:31,120 --> 00:29:36,400 Speaker 11: The geopolitical struggle with China that the West has with China. 561 00:29:36,720 --> 00:29:39,880 Speaker 11: This should be the unifying element around his trade agenda, 562 00:29:40,320 --> 00:29:43,640 Speaker 11: and instead of emphasizing that which will culminate in the 563 00:29:43,720 --> 00:29:49,000 Speaker 11: summit with She in a month's time or in months time. Frankly, 564 00:29:49,480 --> 00:29:54,280 Speaker 11: with their scheduled three scheduled meetings this year, he should 565 00:29:54,520 --> 00:29:58,040 Speaker 11: He should emphasize the job lost with China and how 566 00:29:58,080 --> 00:30:00,760 Speaker 11: he's trying to bring that back through the u of terifs, 567 00:30:01,000 --> 00:30:04,440 Speaker 11: but tariffs as the means to the end of job 568 00:30:04,600 --> 00:30:07,640 Speaker 11: creation and wage growth in the United States. He needs 569 00:30:07,680 --> 00:30:10,080 Speaker 11: more of that and less than the emphasis on the 570 00:30:10,120 --> 00:30:11,640 Speaker 11: word T for tariff. 571 00:30:11,720 --> 00:30:14,200 Speaker 6: Yeah, but let's be honest, that's not working. I mean, 572 00:30:14,200 --> 00:30:16,160 Speaker 6: the average person on the street has no idea what's 573 00:30:16,160 --> 00:30:18,440 Speaker 6: going on in China, doesn't care about China. All that 574 00:30:18,480 --> 00:30:21,400 Speaker 6: person knows is prices at the store are very high. 575 00:30:21,560 --> 00:30:24,640 Speaker 6: And I've got somebody in my ear telling me tariffs 576 00:30:24,680 --> 00:30:27,320 Speaker 6: are the reason. That's a tough political play there. 577 00:30:27,760 --> 00:30:28,400 Speaker 7: It is tough. 578 00:30:28,600 --> 00:30:29,120 Speaker 3: It is tough. 579 00:30:29,200 --> 00:30:33,400 Speaker 11: But what I'm saying is the overwhelmingly the bigger issue 580 00:30:33,440 --> 00:30:38,800 Speaker 11: here for us with national security, with economic security is China, 581 00:30:39,360 --> 00:30:43,320 Speaker 11: and the administration is de emphasize that in anticipation of 582 00:30:43,360 --> 00:30:45,840 Speaker 11: a sit down with She and the hope of getting 583 00:30:45,880 --> 00:30:49,640 Speaker 11: a global tariff regime and a new trading relationship with China. 584 00:30:49,800 --> 00:30:53,160 Speaker 11: So they've been too quiet, and they should be stoking 585 00:30:53,200 --> 00:30:58,080 Speaker 11: the American people about this challenge that we have really 586 00:30:58,120 --> 00:31:01,240 Speaker 11: a generational challenge with I know, and we haven't heard 587 00:31:01,200 --> 00:31:05,160 Speaker 11: of that of that. So therefore the dominant effect is 588 00:31:05,200 --> 00:31:08,360 Speaker 11: that tariffs are affiliar with price increases, which is born 589 00:31:08,360 --> 00:31:11,440 Speaker 11: out in economic data, rather than tariffs being the utility 590 00:31:11,440 --> 00:31:12,680 Speaker 11: to go fight the bad guys. 591 00:31:13,040 --> 00:31:14,560 Speaker 7: And we need to have a little more emphasis on 592 00:31:14,600 --> 00:31:15,480 Speaker 7: fighting the bad guys. 593 00:31:15,520 --> 00:31:17,240 Speaker 3: Congress mccanney, if. 594 00:31:17,160 --> 00:31:19,360 Speaker 7: I'm strategizing for the White House, that's what I'm saying. 595 00:31:19,400 --> 00:31:22,760 Speaker 2: Okay, Congress McCanny. A couple issues here. I know you 596 00:31:22,800 --> 00:31:26,400 Speaker 2: haven't been north of the Mason Dixon line since twenty twelve. 597 00:31:26,480 --> 00:31:29,120 Speaker 2: If you ever get to New York, we would blow 598 00:31:29,160 --> 00:31:32,160 Speaker 2: out like half an hour of the show just to 599 00:31:32,240 --> 00:31:34,840 Speaker 2: talk to you. I have such respect for you what 600 00:31:35,000 --> 00:31:37,360 Speaker 2: you did when you were in your early twenties. And 601 00:31:37,400 --> 00:31:39,320 Speaker 2: the second thing is, if you come up here, you 602 00:31:39,440 --> 00:31:42,200 Speaker 2: got to lose the fleece vest. You got to show 603 00:31:42,280 --> 00:31:45,360 Speaker 2: up with a bow tie. Okay, I mean, it's all there. 604 00:31:45,240 --> 00:31:45,600 Speaker 3: Is to it. 605 00:31:45,720 --> 00:31:47,080 Speaker 7: I'm sorry I don't have the boat's eye on. 606 00:31:47,520 --> 00:31:51,160 Speaker 11: I was much more addressed for radio this morning after 607 00:31:51,280 --> 00:31:52,720 Speaker 11: a late night on the city. 608 00:31:52,800 --> 00:31:55,160 Speaker 2: I'm always dress for radio. Actually my bow tie is 609 00:31:55,200 --> 00:31:58,280 Speaker 2: today as well. Patrick McHenry, he is always of the 610 00:31:58,320 --> 00:32:00,080 Speaker 2: Carolina as a Bloomberg. 611 00:32:00,040 --> 00:32:05,959 Speaker 1: Contribute here This is the Bloomberg Surveillance podcast, available on apples, Spotify, 612 00:32:06,080 --> 00:32:10,360 Speaker 1: and anywhere else you get your podcasts. 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