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 00:00:22,320 --> 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 --> 00:00:30,960 Speaker 2: The first name on the list was Edward Morse. Absolutely 7 00:00:31,000 --> 00:00:35,320 Speaker 2: definitive within the global zeitgeis, if you will, the Washington 8 00:00:35,320 --> 00:00:39,360 Speaker 2: Consensus on Petroleum. All sorts of efforts here, including his 9 00:00:39,440 --> 00:00:42,240 Speaker 2: work with the Council on Foreign at Relations, and we're 10 00:00:42,240 --> 00:00:45,520 Speaker 2: honored that doctor Morris would join us in our studio today. 11 00:00:45,560 --> 00:00:49,400 Speaker 2: Welcome to Bloomberg, doctor Morse. When I look at this, 12 00:00:49,520 --> 00:00:53,040 Speaker 2: I think the arch question is a cup of coffee 13 00:00:53,080 --> 00:00:56,440 Speaker 2: this morning with the President of the United States, how 14 00:00:56,440 --> 00:00:59,960 Speaker 2: would you brief him on the timeline to get Venezuela 15 00:01:00,440 --> 00:01:03,200 Speaker 2: to a new Caracas, a new Venezuela. 16 00:01:03,360 --> 00:01:07,640 Speaker 3: The timeline is very, very long. The timeline includes not 17 00:01:07,800 --> 00:01:10,960 Speaker 3: just what must be done on the oils patch, but 18 00:01:11,080 --> 00:01:13,800 Speaker 3: also includes how do you get this government to cooperate 19 00:01:13,840 --> 00:01:16,360 Speaker 3: with the United States? And yes, starting out on a 20 00:01:16,360 --> 00:01:19,760 Speaker 3: good foot, but this can't be done without a change 21 00:01:20,000 --> 00:01:24,240 Speaker 3: in the entire view of the government of how they 22 00:01:24,520 --> 00:01:26,440 Speaker 3: do what they do. They're there to make money, they're 23 00:01:26,480 --> 00:01:29,560 Speaker 3: there to control things, and they can't do that and 24 00:01:29,680 --> 00:01:32,759 Speaker 3: have the oil patch resume what it was like twenty 25 00:01:32,800 --> 00:01:33,440 Speaker 3: five years ago. 26 00:01:33,520 --> 00:01:37,280 Speaker 2: This is a transactional president. You have lived, with your 27 00:01:37,480 --> 00:01:43,240 Speaker 2: iconic work at City Group, a transactional big American banks 28 00:01:43,440 --> 00:01:47,680 Speaker 2: enjoying losing big money in Latin America and other places. 29 00:01:48,040 --> 00:01:51,200 Speaker 2: What do you perceive as a relationship of President Trump 30 00:01:51,640 --> 00:01:55,840 Speaker 2: with mister Diamond, with mister moynihan and with other financiers 31 00:01:56,000 --> 00:01:56,880 Speaker 2: of America. 32 00:01:56,960 --> 00:02:00,000 Speaker 3: Well, he's got a good relationship with the financial sect 33 00:02:00,760 --> 00:02:03,040 Speaker 3: for all kinds of good reasons that we can get into. 34 00:02:03,080 --> 00:02:06,200 Speaker 3: That's a separate subject. But here the capital has to 35 00:02:06,240 --> 00:02:09,960 Speaker 3: come from oil companies, and oil companies look at risk. 36 00:02:10,120 --> 00:02:12,880 Speaker 3: They look at the risk in the marketplace, what is 37 00:02:12,880 --> 00:02:16,040 Speaker 3: a supply demand balance, They look at the risks of 38 00:02:16,080 --> 00:02:19,560 Speaker 3: an investment, and in the case of Venezuela, they need 39 00:02:19,680 --> 00:02:23,600 Speaker 3: a lot of capital going into infrastructure, and that infrastructure 40 00:02:23,639 --> 00:02:26,239 Speaker 3: has to be in place before the oil comes out 41 00:02:26,240 --> 00:02:30,080 Speaker 3: of the ground. So we're talking here about billions of 42 00:02:30,120 --> 00:02:35,160 Speaker 3: dollars to start to restore the infrastructure that will get 43 00:02:35,200 --> 00:02:38,840 Speaker 3: things going to allow oil on a sustainable basis to 44 00:02:39,040 --> 00:02:42,040 Speaker 3: rise by a mere four or five hundred thousand barrels 45 00:02:42,040 --> 00:02:45,120 Speaker 3: a day. That's twenty billion dollars. Twenty billion dollars is 46 00:02:45,120 --> 00:02:52,240 Speaker 3: not nothing when oil companies have opportunities in Guyana, opportunities 47 00:02:52,280 --> 00:02:57,079 Speaker 3: in Argentina, opportunities in Brazil, and opportunities in Africa. So 48 00:02:57,480 --> 00:03:00,920 Speaker 3: the question is what will attract companies to spend the 49 00:03:00,960 --> 00:03:03,640 Speaker 3: capital that Trump needs for the transaction toward Paul. 50 00:03:03,600 --> 00:03:07,440 Speaker 2: Chevron debt eleven point seven percent, that's where they are 51 00:03:07,520 --> 00:03:07,880 Speaker 2: right now. 52 00:03:08,000 --> 00:03:09,440 Speaker 4: Just as an example, what do you think the US 53 00:03:09,480 --> 00:03:13,040 Speaker 4: government or what do you think those energy companies would 54 00:03:13,080 --> 00:03:15,560 Speaker 4: need from the US government in terms of assurances or 55 00:03:15,919 --> 00:03:17,560 Speaker 4: whatever to commit that capital. 56 00:03:17,600 --> 00:03:20,720 Speaker 3: Do you think, well, they need the reassurance from the 57 00:03:20,800 --> 00:03:23,320 Speaker 3: Venezuelan side as well as from the US government, because 58 00:03:23,320 --> 00:03:26,399 Speaker 3: the US government said that it's not taking over Venezuela 59 00:03:26,520 --> 00:03:28,480 Speaker 3: have good point, so it needs it needs to have 60 00:03:28,520 --> 00:03:31,960 Speaker 3: the confidence, which will be step by step, and I 61 00:03:32,000 --> 00:03:34,480 Speaker 3: suspect that the first step will be with Chevron to 62 00:03:34,560 --> 00:03:38,640 Speaker 3: see whether they can make good in short term of 63 00:03:38,720 --> 00:03:41,360 Speaker 3: capital with short term return. So I think it's going 64 00:03:41,400 --> 00:03:44,120 Speaker 3: to be a slow process, but it will be trust, 65 00:03:44,120 --> 00:03:47,600 Speaker 3: building on trust, and we'll see how smooth that transition goes. 66 00:03:48,040 --> 00:03:52,360 Speaker 4: Takos to just describe the energy when we talk about Venezuela, 67 00:03:52,440 --> 00:03:54,520 Speaker 4: what do they have, what do they need? 68 00:03:55,440 --> 00:03:56,360 Speaker 2: How big are they is? 69 00:03:56,520 --> 00:03:59,760 Speaker 4: How important is this because I understand there's a lot underground, 70 00:03:59,840 --> 00:04:00,760 Speaker 4: it's quite important. 71 00:04:00,800 --> 00:04:02,440 Speaker 3: So the world is known for a long time that 72 00:04:02,560 --> 00:04:05,800 Speaker 3: Venezuela has the largest known oil reserves in the world. 73 00:04:05,840 --> 00:04:08,000 Speaker 3: The problem is it's not the kind of oil that 74 00:04:08,040 --> 00:04:11,040 Speaker 3: the rest of the world needs or wants. And the 75 00:04:11,080 --> 00:04:16,440 Speaker 3: problem is it's in Venezuela, and it's complicated oil to 76 00:04:16,440 --> 00:04:19,880 Speaker 3: get out of the ground. But they've done it before, 77 00:04:20,080 --> 00:04:23,440 Speaker 3: and they've managed to go from under two million barrels 78 00:04:23,480 --> 00:04:25,840 Speaker 3: a day to three and a half million barrels a 79 00:04:25,960 --> 00:04:28,760 Speaker 3: day in a relatively short period of time a couple 80 00:04:28,800 --> 00:04:32,080 Speaker 3: of decades ago. So if the will is there and 81 00:04:32,120 --> 00:04:35,320 Speaker 3: the government is there to provide the guarantees, but to 82 00:04:35,400 --> 00:04:38,400 Speaker 3: do that you need the government institutions to be rewarned. 83 00:04:38,680 --> 00:04:42,520 Speaker 3: Those government institutions have themselves deteriorate it dramatically. They don't 84 00:04:42,560 --> 00:04:45,160 Speaker 3: have the human resources, they don't have the personnel to 85 00:04:45,160 --> 00:04:47,160 Speaker 3: be able to guide it. So part of the process 86 00:04:47,200 --> 00:04:49,920 Speaker 3: will be a return of that human resource base. 87 00:04:50,080 --> 00:04:52,920 Speaker 2: Edard wars with this for a lengthy conversation this morning 88 00:04:52,960 --> 00:04:55,279 Speaker 2: with heart Tree and of course Definitive It's City Group, 89 00:04:55,560 --> 00:04:59,159 Speaker 2: among other services to the United States over his long 90 00:04:59,279 --> 00:05:03,320 Speaker 2: decades on petroleum on Hydrocarbon's I believe I've shared the 91 00:05:03,440 --> 00:05:06,400 Speaker 2: stage with you and Shannon O'Neil at the Council on 92 00:05:06,520 --> 00:05:11,640 Speaker 2: Foreign Relations. Doctor O'Neil was on with us recently exceptionally 93 00:05:11,720 --> 00:05:17,159 Speaker 2: gloomy about Venezuela's ability to reorganize given an event like 94 00:05:17,240 --> 00:05:20,680 Speaker 2: what we've seen. I assume you've been to Caracas more 95 00:05:20,720 --> 00:05:24,000 Speaker 2: than forty times. You remember a Caracas from another time 96 00:05:24,320 --> 00:05:27,520 Speaker 2: in place. Do you have any optimism that they can 97 00:05:27,600 --> 00:05:31,440 Speaker 2: move from a Cuba like society to something that could 98 00:05:31,480 --> 00:05:32,760 Speaker 2: get capitalism done. 99 00:05:33,279 --> 00:05:35,359 Speaker 3: Well, you have to be a little bit optimistic given 100 00:05:35,440 --> 00:05:38,760 Speaker 3: the change that has already taken place. So changing getting 101 00:05:38,800 --> 00:05:41,719 Speaker 3: Maduro out of that position is a major step. And 102 00:05:41,800 --> 00:05:45,880 Speaker 3: now the government is in a crisis of survival. That 103 00:05:46,000 --> 00:05:48,960 Speaker 3: survival will require them to collaborate with the US. So 104 00:05:49,880 --> 00:05:53,080 Speaker 3: the options that they have are quite limited. Who is 105 00:05:53,120 --> 00:05:56,400 Speaker 3: going to replace the US at this moment in time? 106 00:05:56,640 --> 00:06:01,280 Speaker 3: Given the US military position, the naval position surrounding Venezuela, 107 00:06:01,720 --> 00:06:05,520 Speaker 3: the control that the US has over Venezuelan exports, it's 108 00:06:05,560 --> 00:06:09,000 Speaker 3: not easy to imagine a replacement for that. So the 109 00:06:09,000 --> 00:06:12,159 Speaker 3: good news really is that they are cooperating to start 110 00:06:12,480 --> 00:06:14,080 Speaker 3: and we'll see how that goes, but it will be 111 00:06:14,160 --> 00:06:15,600 Speaker 3: a long road with difficulty. 112 00:06:16,120 --> 00:06:18,400 Speaker 4: Is it your understanding, just based upon the limited reporting 113 00:06:18,400 --> 00:06:21,680 Speaker 4: that we have in the last forty eight hours, that 114 00:06:21,839 --> 00:06:25,480 Speaker 4: the government of Venzezezuela was in contact with the Trump 115 00:06:25,480 --> 00:06:28,760 Speaker 4: administration if to facilitate that mister Maduro being taken. 116 00:06:29,080 --> 00:06:31,160 Speaker 3: Look, it could not have been done without there being 117 00:06:31,240 --> 00:06:35,080 Speaker 3: some contact within the government. We know from reporting that 118 00:06:36,400 --> 00:06:39,360 Speaker 3: the intelligence operations preceded this. They were on the ground, 119 00:06:39,640 --> 00:06:41,360 Speaker 3: they had to have help to be on the ground, 120 00:06:42,080 --> 00:06:44,600 Speaker 3: and undoubtedly they were not taken by surprise because of 121 00:06:44,640 --> 00:06:47,520 Speaker 3: the smooth way events went on over the weekend. 122 00:06:48,720 --> 00:06:51,440 Speaker 4: I do think China is viewing what's going on these days. 123 00:06:51,720 --> 00:06:56,840 Speaker 3: China's in a big difficult position they have. They are 124 00:06:57,080 --> 00:07:01,760 Speaker 3: massive creditor to Venezuela. Venezuela has been part of central 125 00:07:01,839 --> 00:07:08,960 Speaker 3: to the Belton Road initiative enlarging China's influence in Latin America. 126 00:07:09,320 --> 00:07:12,240 Speaker 3: Excuse me and it's been, frankly a failure. They have 127 00:07:12,360 --> 00:07:16,280 Speaker 3: between fifty and one hundred billion of debt. Their operations 128 00:07:16,480 --> 00:07:19,320 Speaker 3: right now are to export oil to pay for that debt. 129 00:07:19,720 --> 00:07:23,120 Speaker 3: The US controls they are exports out of Venezuela. So 130 00:07:23,280 --> 00:07:27,080 Speaker 3: they had, Yes, they came down and condemned the US government. 131 00:07:27,120 --> 00:07:29,800 Speaker 3: They had to do that. But they have to take 132 00:07:29,800 --> 00:07:32,600 Speaker 3: a quiet approach because there's so much at stake between 133 00:07:32,680 --> 00:07:35,360 Speaker 3: them and the US on a global basis, so much 134 00:07:35,400 --> 00:07:38,200 Speaker 3: at stake on a bilateral basis, including their tariffs, that 135 00:07:38,240 --> 00:07:40,560 Speaker 3: they want to see. 136 00:07:40,720 --> 00:07:42,120 Speaker 2: Some resolution on. 137 00:07:42,920 --> 00:07:46,480 Speaker 3: So I think we'll see quiet diplomacy with China and 138 00:07:46,520 --> 00:07:50,800 Speaker 3: the US rather than stamping on the foot or saying 139 00:07:50,840 --> 00:07:52,200 Speaker 3: anything about military force. 140 00:07:52,360 --> 00:07:55,800 Speaker 2: In my reading, I've heard that. But what does Edward Morris, 141 00:07:55,840 --> 00:07:58,840 Speaker 2: I'm going to butcher the pronunciation, doctor Morris. Do we 142 00:07:58,920 --> 00:08:03,320 Speaker 2: need to show the flag this morning and Kaushing Port 143 00:08:03,560 --> 00:08:07,240 Speaker 2: in Taiwan? Does the US Navy need to get over there, 144 00:08:07,560 --> 00:08:11,680 Speaker 2: and you know, like Perry centuries ago, show the flag, tim. 145 00:08:11,720 --> 00:08:14,880 Speaker 3: I think the US showed the flag before Madua was 146 00:08:14,920 --> 00:08:18,600 Speaker 3: taken out. They showed the flag with a massive military 147 00:08:18,720 --> 00:08:23,360 Speaker 3: seal to Taiwan, right, and the military has been there 148 00:08:23,360 --> 00:08:26,320 Speaker 3: the navy has been there. China is not in a 149 00:08:26,360 --> 00:08:29,000 Speaker 3: position to fool around with the US, even with much 150 00:08:29,040 --> 00:08:33,680 Speaker 3: of the US naval fleet now around Venezuela. So I 151 00:08:33,679 --> 00:08:36,440 Speaker 3: think it's going to be stepping you know, very lightly 152 00:08:36,720 --> 00:08:38,640 Speaker 3: on what would happen Van. 153 00:08:38,600 --> 00:08:41,479 Speaker 2: Morris with his folks a special edition of Bloomberg Surveillance. 154 00:08:41,520 --> 00:08:44,120 Speaker 2: We really held back the commercial interruptions to give you 155 00:08:44,520 --> 00:08:49,280 Speaker 2: this conversation for America. Around the world. You have such 156 00:08:49,280 --> 00:08:54,199 Speaker 2: a relationship with Faisal and on in Saudi Arabia. How 157 00:08:54,200 --> 00:08:57,319 Speaker 2: does the Middle East in general, and particularly read and Jetta, 158 00:08:57,440 --> 00:08:59,319 Speaker 2: how do they respond to these actions? 159 00:08:59,480 --> 00:09:03,160 Speaker 3: There is my quite quietly, Riata is looking at the 160 00:09:03,200 --> 00:09:06,600 Speaker 3: global setting. They know that Venezuela could be a threat 161 00:09:06,720 --> 00:09:11,200 Speaker 3: to the production agreement within OPEK plus, but not in 162 00:09:11,240 --> 00:09:13,559 Speaker 3: the short run. And the short run they're looking at 163 00:09:13,559 --> 00:09:15,960 Speaker 3: the year ahead. The year ahead is quite uncertain and 164 00:09:16,000 --> 00:09:19,120 Speaker 3: quite messy, and it was that way before the taking 165 00:09:19,160 --> 00:09:22,800 Speaker 3: of Maduro. So we have Russia, Ukraine, we have uncertainty 166 00:09:22,840 --> 00:09:26,880 Speaker 3: on the distortion and disruption side around the world, and 167 00:09:26,920 --> 00:09:30,480 Speaker 3: the Saudis have also a military tide of the US 168 00:09:30,600 --> 00:09:33,040 Speaker 3: that they don't want to lose, so they have to 169 00:09:33,320 --> 00:09:36,040 Speaker 3: and they look at their budget. The budget requires a 170 00:09:36,080 --> 00:09:40,760 Speaker 3: lot of borrowing. That borrowing may include in their own minds. 171 00:09:41,040 --> 00:09:43,920 Speaker 3: How low can prices go for US six Where. 172 00:09:44,480 --> 00:09:48,960 Speaker 2: Folks I failed the fall, I've failed. Ed Morris nailed 173 00:09:49,160 --> 00:09:51,439 Speaker 2: the decline in oil. Do we have a lower oil 174 00:09:51,600 --> 00:09:53,280 Speaker 2: target from her for heartreat? 175 00:09:54,559 --> 00:09:56,280 Speaker 3: So we don't know how low the price will go. 176 00:09:56,480 --> 00:09:59,079 Speaker 3: It's lifted a little bit by the geopolitical risk. I'd 177 00:09:59,120 --> 00:10:02,520 Speaker 3: say the supply demand balance, which is higher supply than 178 00:10:02,559 --> 00:10:06,439 Speaker 3: the race demand now and going forward, is for oil 179 00:10:06,760 --> 00:10:10,400 Speaker 3: testing branded forty okay, And I think testing branded forty 180 00:10:10,440 --> 00:10:13,480 Speaker 3: is something the Saudia's can swallow. How much lower than 181 00:10:13,480 --> 00:10:15,000 Speaker 3: that they can swallow? It is not known. 182 00:10:15,040 --> 00:10:17,120 Speaker 2: I want to get to say, because Paul's got any questions. 183 00:10:17,559 --> 00:10:20,680 Speaker 2: So you're going to go visit Trump. President Trump is 184 00:10:20,679 --> 00:10:23,000 Speaker 2: going to bean Edward Morris coffee with the President. You're 185 00:10:23,000 --> 00:10:26,319 Speaker 2: going to talk about a transactional American president. And I 186 00:10:26,480 --> 00:10:28,440 Speaker 2: know you're going to get a phone call from Ottawa 187 00:10:28,480 --> 00:10:31,840 Speaker 2: where Mark Kearney is going to go Edmonton's playing Ottawa, 188 00:10:32,240 --> 00:10:36,160 Speaker 2: Edmore's come join me at an Ottawa senator's hockey game. 189 00:10:36,480 --> 00:10:37,760 Speaker 2: I mean, this is the way it's going to work. 190 00:10:37,800 --> 00:10:40,280 Speaker 2: What do you say to Mark Kearney of Canada. 191 00:10:39,960 --> 00:10:42,120 Speaker 3: Well, so with Trump, because I haven't answered your question 192 00:10:42,160 --> 00:10:44,200 Speaker 3: if I say that Trump, and what I said to 193 00:10:44,240 --> 00:10:49,400 Speaker 3: Trump is your policy on energy dominance is a wonderful strategy. 194 00:10:50,040 --> 00:10:53,000 Speaker 3: But mister President, I think you're ignoring some things about 195 00:10:53,080 --> 00:10:56,120 Speaker 3: energy dominance. And there are two things about it. One 196 00:10:56,240 --> 00:10:59,280 Speaker 3: is that you can't get to where you want without 197 00:10:59,360 --> 00:11:04,160 Speaker 3: having a significant growth because this is a world transitioning 198 00:11:04,559 --> 00:11:09,200 Speaker 3: to electricity intensity, and you can't do the electricity intensity 199 00:11:09,200 --> 00:11:12,560 Speaker 3: you need for AI and cloud computing and energy dominance 200 00:11:13,120 --> 00:11:17,200 Speaker 3: without renewables. You can't do it even without hydrogen. So 201 00:11:17,280 --> 00:11:19,880 Speaker 3: you've got to enlarge what you think about energy dominance. 202 00:11:20,360 --> 00:11:22,760 Speaker 3: And then, mister President, you've got to think about the US. 203 00:11:23,640 --> 00:11:26,240 Speaker 3: The US is not one country when it comes to energy. 204 00:11:26,280 --> 00:11:29,760 Speaker 3: At six, we have two exporting segments in the US. 205 00:11:30,240 --> 00:11:33,040 Speaker 3: They are the Gulf Coast of the US and I'm 206 00:11:33,040 --> 00:11:34,920 Speaker 3: not talking about the Gulf of America or the Gulf 207 00:11:34,960 --> 00:11:38,000 Speaker 3: of Mexico, but the Gulf Coast. And we have Alaska, 208 00:11:38,080 --> 00:11:41,880 Speaker 3: both exporters of fossil fuels. And then we have two 209 00:11:42,200 --> 00:11:46,400 Speaker 3: massive importers of fossil fuel with no tie and mister President, 210 00:11:46,559 --> 00:11:49,800 Speaker 3: here is a lesson. The reason that we have two 211 00:11:49,960 --> 00:11:53,040 Speaker 3: importers on the West Coast and the East Coast that 212 00:11:53,120 --> 00:11:56,720 Speaker 3: are massive in scale, global in scale, is because another 213 00:11:56,800 --> 00:12:00,640 Speaker 3: period of dominance around World War One, we thought we 214 00:12:00,720 --> 00:12:03,920 Speaker 3: were the best shipbuilding company country in the world and 215 00:12:03,960 --> 00:12:07,120 Speaker 3: we wanted to retain that dominance. So the Jones Act 216 00:12:07,200 --> 00:12:10,120 Speaker 3: was enacted, and the Jones Act has meant that when 217 00:12:10,120 --> 00:12:12,840 Speaker 3: it comes to energy we are importer. Is because we 218 00:12:12,880 --> 00:12:16,600 Speaker 3: can't afford American chips to take oil from the Gulf 219 00:12:16,600 --> 00:12:19,200 Speaker 3: Coast to the West Coast or the East Coast. We 220 00:12:19,280 --> 00:12:22,480 Speaker 3: need foreign vessels and they carry farm So this is. 221 00:12:22,440 --> 00:12:24,600 Speaker 2: The moment to do away with the Jones Act. 222 00:12:24,840 --> 00:12:27,480 Speaker 3: This is the moment to do it, I mean, and 223 00:12:27,640 --> 00:12:31,000 Speaker 3: also to tell the President energy dominance a good idea 224 00:12:31,440 --> 00:12:33,679 Speaker 3: needs a little bit of massaging at the edge. 225 00:12:33,800 --> 00:12:36,840 Speaker 2: I mean. The photograph of Theodore Roosevelt with a map 226 00:12:36,880 --> 00:12:39,680 Speaker 2: of Venezuela behind him from I believe Paul nineteen oh 227 00:12:39,800 --> 00:12:44,000 Speaker 2: nine was just stunning. I mean, this history going back here, 228 00:12:44,080 --> 00:12:45,880 Speaker 2: Paul Sweeney with Edward Morris. 229 00:12:46,679 --> 00:12:48,280 Speaker 4: So when you go down to Houston, you talk to 230 00:12:48,280 --> 00:12:50,959 Speaker 4: these big energy companies today, are they happy with what's 231 00:12:51,000 --> 00:12:52,920 Speaker 4: going on in the last twenty four or forty eight hours, 232 00:12:53,000 --> 00:12:55,920 Speaker 4: or are they apprehensive that they see a big opportunity here. 233 00:12:56,480 --> 00:12:59,320 Speaker 3: They see a better opportunity that than they've seen in years, 234 00:12:59,480 --> 00:13:03,600 Speaker 3: but they are apprehensive. The risk of putting capital, their capital, 235 00:13:03,640 --> 00:13:07,559 Speaker 3: their shareholders capital at risk looms extremely large in their minds. 236 00:13:07,760 --> 00:13:09,880 Speaker 3: So there's not going to be a rush to put 237 00:13:09,920 --> 00:13:14,120 Speaker 3: money into Venezuela until we see what the structure of 238 00:13:14,200 --> 00:13:15,559 Speaker 3: the investment might look like. 239 00:13:16,720 --> 00:13:19,120 Speaker 4: I'm surprised I don't see a move in WTI and 240 00:13:19,160 --> 00:13:21,000 Speaker 4: Brent Crewe today. Now, I couldn't have told you is 241 00:13:21,000 --> 00:13:23,080 Speaker 4: it going to be a five percent or down five percent? 242 00:13:23,120 --> 00:13:25,400 Speaker 4: But I kind of got nothing going on here today. 243 00:13:25,440 --> 00:13:27,600 Speaker 3: Well, in my prepared remarks, I thought that was the 244 00:13:27,600 --> 00:13:28,240 Speaker 3: first question. 245 00:13:28,360 --> 00:13:28,880 Speaker 5: I didn't know. 246 00:13:29,520 --> 00:13:31,280 Speaker 3: You know that we're going to have prices go down 247 00:13:31,280 --> 00:13:31,600 Speaker 3: a load. 248 00:13:31,720 --> 00:13:35,640 Speaker 2: Its surveillance. You know, we make it up as we're 249 00:13:35,679 --> 00:13:36,120 Speaker 2: winging it. 250 00:13:37,800 --> 00:13:40,240 Speaker 3: No, I'm not surprised. Okay, there is no change in 251 00:13:40,280 --> 00:13:41,520 Speaker 3: the energy market period. 252 00:13:42,240 --> 00:13:44,400 Speaker 4: There you go, all right, So, but I think at 253 00:13:44,440 --> 00:13:48,120 Speaker 4: some point it just feels like almost Opeck and Opeck 254 00:13:48,120 --> 00:13:50,240 Speaker 4: plus become less and less relevant every day. 255 00:13:51,000 --> 00:13:54,280 Speaker 3: Opeck and OUTPECK plus have become less relevant every day 256 00:13:54,800 --> 00:13:57,800 Speaker 3: since the beginning of this decade. And when we look 257 00:13:57,880 --> 00:14:00,679 Speaker 3: at the positions that have put this in, it's not 258 00:14:00,800 --> 00:14:05,559 Speaker 3: just the rise of Guyana and Brazil and Argentina again, 259 00:14:06,000 --> 00:14:09,400 Speaker 3: but it really is the US, the US, you know, 260 00:14:09,800 --> 00:14:13,040 Speaker 3: I have this battle with my colleagues at work almost 261 00:14:13,040 --> 00:14:16,160 Speaker 3: every day. The US is not just a crude oil producer. 262 00:14:17,440 --> 00:14:21,160 Speaker 3: It is a massive liquids producer. We are a producer 263 00:14:21,160 --> 00:14:23,240 Speaker 3: of twenty three to twenty four million barrels a day, 264 00:14:23,880 --> 00:14:27,160 Speaker 3: and our growth has been in natural gas liquids. Natural 265 00:14:27,200 --> 00:14:30,920 Speaker 3: gas liquids compete with oil out of a refinery. They 266 00:14:30,920 --> 00:14:33,880 Speaker 3: compete with gasoline, they compete with dissolate, they compete with 267 00:14:33,880 --> 00:14:37,760 Speaker 3: fuel oil. They're there for transportation, they're there for home 268 00:14:37,800 --> 00:14:41,800 Speaker 3: heating and power generation and industrial use. So we are 269 00:14:42,560 --> 00:14:46,040 Speaker 3: the disruptor of the global market, and we're the ones 270 00:14:46,040 --> 00:14:49,440 Speaker 3: who put OPEC plus in a position of defense. 271 00:14:51,080 --> 00:14:52,440 Speaker 2: I would be out. We're going to have to wrap 272 00:14:52,440 --> 00:14:55,360 Speaker 2: it up here with Mark Champion coming up, folks from Europe, 273 00:14:55,360 --> 00:14:59,680 Speaker 2: with all of his decades of experience, Doctor Morris. Some 274 00:14:59,720 --> 00:15:02,520 Speaker 2: of the the highlights of my career here than with 275 00:15:02,640 --> 00:15:06,200 Speaker 2: you in with Daniel Jurgen. If I was to get 276 00:15:06,240 --> 00:15:09,520 Speaker 2: Jurgen in morse together and look at his the prize, 277 00:15:10,000 --> 00:15:13,440 Speaker 2: just the romance that I, as a kid in college 278 00:15:13,480 --> 00:15:17,280 Speaker 2: read cover to cover. We got to find the romance 279 00:15:17,360 --> 00:15:20,720 Speaker 2: for Venezuela, to save a society, to save a region, 280 00:15:21,080 --> 00:15:23,560 Speaker 2: maybe to support the don Road doctrine. I don't know 281 00:15:24,080 --> 00:15:27,640 Speaker 2: how do we get the romance back that you knew 282 00:15:28,200 --> 00:15:31,640 Speaker 2: working there, that I knew as a student. I don't 283 00:15:31,680 --> 00:15:32,320 Speaker 2: know how we do that. 284 00:15:32,360 --> 00:15:34,480 Speaker 3: I know that I'm not going to bring the romance back, 285 00:15:34,520 --> 00:15:36,880 Speaker 3: and Dan Jurgen certainly has the ability. 286 00:15:36,480 --> 00:15:36,880 Speaker 2: To do it. 287 00:15:37,200 --> 00:15:39,520 Speaker 3: By the way, I was an early reader of the Prize. 288 00:15:40,120 --> 00:15:42,320 Speaker 3: He and I knew each other in graduate school. We 289 00:15:42,320 --> 00:15:45,480 Speaker 3: were in different graduate schools. And when he wrote The Price, 290 00:15:45,840 --> 00:15:48,440 Speaker 3: the original version that I read was actually twice as 291 00:15:48,520 --> 00:15:51,840 Speaker 3: long as a version in print, So he had to 292 00:15:51,880 --> 00:15:54,800 Speaker 3: cut out a lot of wonderful text in order to 293 00:15:54,800 --> 00:15:55,920 Speaker 3: put out that brilliant book. 294 00:15:56,240 --> 00:15:58,040 Speaker 2: The book was it, Paul? It was You had to 295 00:15:58,040 --> 00:15:59,720 Speaker 2: walk around even if you didn't read it. You walked 296 00:15:59,720 --> 00:16:02,880 Speaker 2: a walk it. Yeah, to be cool. You're gonna talk 297 00:16:03,200 --> 00:16:09,040 Speaker 2: about this unique American relationship with various and sundry banana 298 00:16:09,080 --> 00:16:13,760 Speaker 2: republics Reagan and Granada and the rest. Can we develop 299 00:16:13,880 --> 00:16:18,400 Speaker 2: a new process with central in Latin America or will 300 00:16:18,400 --> 00:16:21,240 Speaker 2: this be the same old, same world through the rest 301 00:16:21,240 --> 00:16:22,120 Speaker 2: of the Trump term. 302 00:16:22,920 --> 00:16:25,160 Speaker 3: Now, I think I think there is a process going on. 303 00:16:25,200 --> 00:16:28,320 Speaker 3: If we look at elections that have taken place in 304 00:16:28,400 --> 00:16:32,800 Speaker 3: Latin America, there's a rebellion in those countries against corruption. 305 00:16:33,560 --> 00:16:38,120 Speaker 3: There's a move from the corrupt left to the right. 306 00:16:38,520 --> 00:16:41,240 Speaker 3: We've had a corrupt right in the past, but it's 307 00:16:41,320 --> 00:16:44,640 Speaker 3: been a very constructive set of moves from reelections. So 308 00:16:44,680 --> 00:16:47,640 Speaker 3: I think I think Latin America is in a very 309 00:16:47,720 --> 00:16:50,000 Speaker 3: good position now, better position than it's been in a 310 00:16:50,040 --> 00:16:52,880 Speaker 3: long time. And part of it is the lessons learned 311 00:16:53,240 --> 00:16:57,920 Speaker 3: from China, overspending and having a view that all credit 312 00:16:57,920 --> 00:16:58,760 Speaker 3: has to be repaid. 313 00:16:59,120 --> 00:17:01,560 Speaker 2: Wow, Paul, we got to mark Champion, but doctor Morris, 314 00:17:01,600 --> 00:17:03,400 Speaker 2: I got to bring this up, Paul said, you got 315 00:17:03,400 --> 00:17:06,480 Speaker 2: to ask the question time, what's it mean for land Man? 316 00:17:09,200 --> 00:17:10,560 Speaker 3: Thank you very much for inviting me. 317 00:17:10,600 --> 00:17:13,600 Speaker 2: This had a pleasure to be more. Thank you so much. 318 00:17:13,840 --> 00:17:15,879 Speaker 2: We're the hard Tree And of course doctor Morris was 319 00:17:15,920 --> 00:17:20,320 Speaker 2: City Group for many years. Edward Warrice there stay with us. 320 00:17:20,560 --> 00:17:23,800 Speaker 2: More from Bloomberg Surveillance coming up after this. 321 00:17:31,040 --> 00:17:34,600 Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live 322 00:17:34,680 --> 00:17:38,200 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on Apple, 323 00:17:38,240 --> 00:17:41,600 Speaker 1: Karplay and Android Otto with the Bloomberg Business app, or 324 00:17:41,720 --> 00:17:43,400 Speaker 1: watch us live on YouTube. 325 00:17:43,760 --> 00:17:47,320 Speaker 4: Keith Leernert, he's the CIO and chief market strategist at 326 00:17:47,640 --> 00:17:50,520 Speaker 4: Truest Keith, So we think about twenty twenty six year, 327 00:17:50,520 --> 00:17:53,240 Speaker 4: we got geopolitics front and center here today to start 328 00:17:53,359 --> 00:17:56,439 Speaker 4: kind of the year off, right, let's step back to 329 00:17:56,440 --> 00:17:58,919 Speaker 4: just a little bit there. What are your outlook for 330 00:17:59,040 --> 00:18:02,320 Speaker 4: markets in twenty twenty six after just outstanding results and 331 00:18:02,400 --> 00:18:05,440 Speaker 4: equities and bonds and commodities in twenty twenty five. 332 00:18:06,440 --> 00:18:09,040 Speaker 6: Yeah, well, first, great to kind of bring in the 333 00:18:09,080 --> 00:18:10,040 Speaker 6: new year with you guys. 334 00:18:10,040 --> 00:18:10,600 Speaker 5: Great to be on. 335 00:18:11,400 --> 00:18:14,760 Speaker 6: So our look that we published in December was called 336 00:18:14,800 --> 00:18:17,160 Speaker 6: the seventh Inning Stretch, and the way we thought about 337 00:18:17,160 --> 00:18:18,840 Speaker 6: it is, you know, we've come a long way in 338 00:18:18,880 --> 00:18:20,840 Speaker 6: the economic cycle and the markets. It was a good 339 00:18:20,880 --> 00:18:23,439 Speaker 6: time to kind of access where we are and our 340 00:18:23,520 --> 00:18:27,240 Speaker 6: bottom line is, you know, our way the evidence approach 341 00:18:27,280 --> 00:18:30,919 Speaker 6: suggests it is still upside in both the economy and 342 00:18:30,960 --> 00:18:32,920 Speaker 6: the stock market. So let me just share a couple 343 00:18:33,119 --> 00:18:34,040 Speaker 6: of stats with you. 344 00:18:34,640 --> 00:18:35,880 Speaker 5: The first one is, you. 345 00:18:35,800 --> 00:18:38,359 Speaker 6: Know, we just had our third year anniversary of the 346 00:18:38,359 --> 00:18:42,920 Speaker 6: bullmarket late last year. When we look historically, there's been 347 00:18:43,000 --> 00:18:46,200 Speaker 6: seven bull markets that has had a third year anniversary, 348 00:18:46,480 --> 00:18:49,400 Speaker 6: all them sore gains over the next year. It's only 349 00:18:49,440 --> 00:18:51,320 Speaker 6: a sample size of seven, but as a starting point, 350 00:18:51,359 --> 00:18:54,200 Speaker 6: that's a positive. If I lay on top of that 351 00:18:54,200 --> 00:18:57,359 Speaker 6: that the Fed once again in December cut rates when 352 00:18:57,640 --> 00:18:59,919 Speaker 6: when the SMP was close to all time highs. 353 00:19:00,200 --> 00:19:02,560 Speaker 5: When you test that out about a year. 354 00:19:02,480 --> 00:19:04,639 Speaker 6: Later, the market has been up more than ninety percent 355 00:19:04,640 --> 00:19:07,479 Speaker 6: of the time, so that's also a positive. And then 356 00:19:07,520 --> 00:19:10,480 Speaker 6: you mentioned the earning side. You know, the pe for 357 00:19:10,560 --> 00:19:13,600 Speaker 6: the overall market last year was flat. For the technology 358 00:19:13,640 --> 00:19:16,399 Speaker 6: sector it was actually down. And all the games really 359 00:19:16,480 --> 00:19:19,280 Speaker 6: last year were earnings. As we move forward, we expect 360 00:19:19,359 --> 00:19:25,359 Speaker 6: low double digit earnings again that should support the overall market. 361 00:19:25,400 --> 00:19:27,680 Speaker 6: I will say it is a mid timber election year. 362 00:19:27,880 --> 00:19:30,359 Speaker 6: Those tend to be somewhere more vatile. We have our 363 00:19:30,359 --> 00:19:32,720 Speaker 6: first turn ball that we saw here with the Venezuela 364 00:19:32,960 --> 00:19:34,040 Speaker 6: over yesday. 365 00:19:34,119 --> 00:19:36,080 Speaker 2: What I got most wrong last year was, as in 366 00:19:36,119 --> 00:19:38,840 Speaker 2: the triple leverage, all cash run for the entire year. 367 00:19:39,200 --> 00:19:43,360 Speaker 2: Paul cratered great. I mean that Cratered you learned. What'd 368 00:19:43,400 --> 00:19:44,880 Speaker 2: you get most wrong? Last year? 369 00:19:47,040 --> 00:19:50,359 Speaker 6: When I get most most wrong, I would say, I thought, 370 00:19:50,760 --> 00:19:52,960 Speaker 6: you know, when think about the April trade side, we 371 00:19:53,040 --> 00:19:55,600 Speaker 6: downgraded equities in February. 372 00:19:55,800 --> 00:19:57,720 Speaker 5: We told a lot of investors do not sell at 373 00:19:57,760 --> 00:19:58,199 Speaker 5: the lowest. 374 00:19:58,240 --> 00:20:01,159 Speaker 6: But then after we had the initial pop, we took a. 375 00:20:01,160 --> 00:20:02,199 Speaker 5: Little bit off the table. 376 00:20:02,760 --> 00:20:04,359 Speaker 6: So I think that's probably if you say what you 377 00:20:04,400 --> 00:20:06,000 Speaker 6: got most wrong. What I'm proud of is that we 378 00:20:06,000 --> 00:20:08,439 Speaker 6: didn't stay there too long. We then upgraded stocks are 379 00:20:08,960 --> 00:20:11,600 Speaker 6: shortly thereafter. But it was you know, we follow this 380 00:20:11,640 --> 00:20:14,800 Speaker 6: way of the evidence approach, and you know it overall 381 00:20:14,840 --> 00:20:16,120 Speaker 6: led us directly in the right way. 382 00:20:17,440 --> 00:20:20,600 Speaker 4: So fixed income here high single did your returns in 383 00:20:20,640 --> 00:20:23,760 Speaker 4: twenty twenty five in twenty six? Is it just a 384 00:20:23,800 --> 00:20:24,920 Speaker 4: function of clipping the coupon? 385 00:20:24,960 --> 00:20:25,359 Speaker 2: Do you think? 386 00:20:26,280 --> 00:20:26,480 Speaker 5: Yeah? 387 00:20:26,480 --> 00:20:28,480 Speaker 6: I think so for the most part, I mean our 388 00:20:29,160 --> 00:20:32,280 Speaker 6: house views is the ten year drifts towards three seventy five, 389 00:20:32,359 --> 00:20:34,880 Speaker 6: So maybe you get a little bit of price appreciation, 390 00:20:35,640 --> 00:20:38,000 Speaker 6: and you know, relative to the last ten fifteen years, 391 00:20:38,000 --> 00:20:40,119 Speaker 6: you know, yields are still somewhat attractive. 392 00:20:40,400 --> 00:20:43,280 Speaker 5: So yeah, we think, you know, we we basically clipped 393 00:20:43,320 --> 00:20:44,280 Speaker 5: the coupon. 394 00:20:44,840 --> 00:20:47,440 Speaker 6: That's why I with an overall assd allocation, we still 395 00:20:47,440 --> 00:20:50,240 Speaker 6: have a modest equity tilt, and we still all year along. 396 00:20:50,320 --> 00:20:52,919 Speaker 6: Last year we had our position in gold, which we 397 00:20:53,000 --> 00:20:56,199 Speaker 6: call the MVP, and we still like gold as we 398 00:20:56,240 --> 00:21:00,439 Speaker 6: move into this year, at least from a portfolio diversification standpoint, Say. 399 00:21:00,320 --> 00:21:04,280 Speaker 2: To people, Keith, like they participated, but maybe they were 400 00:21:04,400 --> 00:21:07,160 Speaker 2: you know, sixty forty they were more fixed income or Paul, 401 00:21:07,200 --> 00:21:09,480 Speaker 2: how I mean, how many people are in cash? The 402 00:21:09,520 --> 00:21:12,720 Speaker 2: money mark fronts three point x percent. Yeah, Kathy Jones 403 00:21:12,800 --> 00:21:15,040 Speaker 2: is not agen. She's the only one that hasn't. Hey, 404 00:21:15,200 --> 00:21:18,240 Speaker 2: Keith Lerner, you're talking to Kathy Jones and Charles Schwab 405 00:21:18,600 --> 00:21:21,639 Speaker 2: or anybody else. When did you make the shift to equities? 406 00:21:23,240 --> 00:21:25,359 Speaker 6: Well, you know, you know, I don't think it's like 407 00:21:26,040 --> 00:21:29,000 Speaker 6: on off switch. In our review, we actually have, you know, 408 00:21:29,080 --> 00:21:31,240 Speaker 6: just kind of targeted levels of cash. We've been telling 409 00:21:31,280 --> 00:21:33,359 Speaker 6: folks if you have excess cash to work that in 410 00:21:33,400 --> 00:21:36,000 Speaker 6: the market. It could be inequities, it could be in 411 00:21:36,040 --> 00:21:38,560 Speaker 6: fixed income. And you know you just mentioned yeah, bond's 412 00:21:38,640 --> 00:21:42,480 Speaker 6: underperformed stocks. But you know, you really what you're paying 413 00:21:42,520 --> 00:21:44,520 Speaker 6: for or what you're looking for for fixed income is 414 00:21:44,560 --> 00:21:47,520 Speaker 6: to clip that coupone for income and some stability. 415 00:21:47,600 --> 00:21:49,119 Speaker 5: So I would still be working that money in. 416 00:21:49,119 --> 00:21:51,240 Speaker 6: And we still think there's upside in the equity market, 417 00:21:51,800 --> 00:21:53,520 Speaker 6: in the fixed income market, and we do think that 418 00:21:53,560 --> 00:21:56,880 Speaker 6: will likely see one to two rate cuts this year, 419 00:21:56,880 --> 00:21:59,640 Speaker 6: which means those short term money market rates are likely 420 00:21:59,680 --> 00:22:00,000 Speaker 6: to come down. 421 00:22:00,200 --> 00:22:01,560 Speaker 5: Or is our fixed income. 422 00:22:01,440 --> 00:22:04,359 Speaker 6: Had says the error of you know, buying the T 423 00:22:04,560 --> 00:22:07,720 Speaker 6: bills and just chilling is likely over. 424 00:22:07,800 --> 00:22:08,920 Speaker 5: So I think there's still opportunity. 425 00:22:09,920 --> 00:22:13,119 Speaker 2: Kathy Jones is at peace sitting in her studio because 426 00:22:13,200 --> 00:22:16,440 Speaker 2: Keith saying, take the coupe part and say think one 427 00:22:16,480 --> 00:22:17,480 Speaker 2: more for Keith Learner. 428 00:22:17,640 --> 00:22:20,000 Speaker 4: Hey, Keith, as good as the equity returns in the 429 00:22:20,080 --> 00:22:22,800 Speaker 4: US in twenty twenty five, they were better outside of 430 00:22:22,800 --> 00:22:26,080 Speaker 4: the US. How do you think about US versus the 431 00:22:26,080 --> 00:22:27,840 Speaker 4: rest of the world in terms of the equity markets 432 00:22:27,840 --> 00:22:28,480 Speaker 4: in twenty. 433 00:22:28,200 --> 00:22:32,119 Speaker 6: Six Yeah, big picture, we have a modest over to 434 00:22:32,200 --> 00:22:32,720 Speaker 6: the US. 435 00:22:32,800 --> 00:22:34,200 Speaker 5: We have over the last fifteen. 436 00:22:34,000 --> 00:22:36,720 Speaker 6: Months increased our international We have a global bull market 437 00:22:36,720 --> 00:22:38,440 Speaker 6: on the way. I would just say, though a lot 438 00:22:38,480 --> 00:22:41,720 Speaker 6: of focus on how much in the US underperformed last 439 00:22:41,760 --> 00:22:46,160 Speaker 6: year zoom out. The year before, the US had outperformed 440 00:22:46,160 --> 00:22:48,760 Speaker 6: international developed by the most in the nineties, and it's 441 00:22:48,760 --> 00:22:52,679 Speaker 6: still more than about double the performance of international. 442 00:22:52,119 --> 00:22:53,920 Speaker 5: Over the last five years. So listen. I think there's 443 00:22:53,920 --> 00:22:55,040 Speaker 5: opportunities globally. 444 00:22:55,119 --> 00:22:56,680 Speaker 6: I want to have more allocation there, but we still 445 00:22:56,680 --> 00:22:59,000 Speaker 6: have a bias for the US because their earning trends 446 00:22:59,040 --> 00:23:00,960 Speaker 6: still remain strongest domestically. 447 00:23:01,320 --> 00:23:04,359 Speaker 2: Keith, Thank you so much. Keith lerner with us with 448 00:23:04,480 --> 00:23:07,200 Speaker 2: Truis to get us started in the equity markets. Stay 449 00:23:07,240 --> 00:23:18,200 Speaker 2: with us. More from Bloomberg Surveillance coming up after this. 450 00:23:18,200 --> 00:23:22,120 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 451 00:23:22,119 --> 00:23:25,119 Speaker 1: starting at seven am Eastern on Apple, Cocklay and Android 452 00:23:25,160 --> 00:23:28,200 Speaker 1: Auto with the Bloomberg Business App. You can also listen 453 00:23:28,280 --> 00:23:31,560 Speaker 1: live on Amazon Alexa from our flagship New York station, 454 00:23:32,080 --> 00:23:35,040 Speaker 1: Just say Alexa play Bloomberg eleven thirty. 455 00:23:35,080 --> 00:23:38,199 Speaker 2: Joining us now for Too Sure a visit. Henrietta Treys 456 00:23:38,840 --> 00:23:41,919 Speaker 2: joins us from Data Partners. Henriette an open question, what 457 00:23:42,000 --> 00:23:46,159 Speaker 2: will you study and listen for on Capitol Hill this morning? 458 00:23:47,000 --> 00:23:48,560 Speaker 7: Yeah, that's the question of the hour. 459 00:23:49,080 --> 00:23:51,560 Speaker 8: I would say that the White House likes to tell 460 00:23:51,640 --> 00:23:55,400 Speaker 8: Capitol Hill that they are incredibly transparent, and I think 461 00:23:55,440 --> 00:23:57,359 Speaker 8: what they mean by that is that they talk a lot, 462 00:23:57,400 --> 00:24:02,280 Speaker 8: and they tell voters, they tell lawmakers what they're thinking 463 00:24:02,400 --> 00:24:04,680 Speaker 8: in real time. So one of the things that's most 464 00:24:04,720 --> 00:24:07,320 Speaker 8: important to me is what comes after Venezuela. Obviously we're 465 00:24:07,320 --> 00:24:10,880 Speaker 8: hearing about Cuba, Colombia, and Mexico. And i'd point out 466 00:24:10,880 --> 00:24:13,320 Speaker 8: one thing that I think is really important for investors 467 00:24:13,359 --> 00:24:16,920 Speaker 8: right now, which is that Ambassador Greer, the USTR has 468 00:24:17,400 --> 00:24:20,800 Speaker 8: stopped putting into writing the way that the United States 469 00:24:20,880 --> 00:24:24,879 Speaker 8: is planning to treat the USMCA, the US Mexico Canada 470 00:24:24,920 --> 00:24:27,280 Speaker 8: Trade Agreement. They're saying, we're going to basically adapt to 471 00:24:27,320 --> 00:24:29,520 Speaker 8: this on the fly. We are going to be updating 472 00:24:29,520 --> 00:24:34,199 Speaker 8: things as Mexico responds to our incursions in Venezuela, what 473 00:24:34,320 --> 00:24:37,639 Speaker 8: might be coming in Cuba or Colombia. They're telegraphing that 474 00:24:37,680 --> 00:24:40,080 Speaker 8: there's more to come. So I think when members on 475 00:24:40,119 --> 00:24:42,560 Speaker 8: Capitol Hook get their briefings, they're not going to be 476 00:24:43,040 --> 00:24:45,919 Speaker 8: concerned about the who, what, where, when, why, what happened 477 00:24:45,920 --> 00:24:48,159 Speaker 8: over the weekend. They're looking to what comes next and 478 00:24:48,200 --> 00:24:49,480 Speaker 8: getting out in front of it. And I think the 479 00:24:49,480 --> 00:24:51,880 Speaker 8: White House is telegraphing that there is much more to come. 480 00:24:52,320 --> 00:24:55,680 Speaker 4: Henrietta, what are you with twenty four hours of hindsight here? 481 00:24:55,680 --> 00:24:58,280 Speaker 4: What do you think the political calculus was for President 482 00:24:58,280 --> 00:25:03,000 Speaker 4: Trump and his advisors as it relates to going into 483 00:25:03,119 --> 00:25:07,879 Speaker 4: another perhaps open ended commitment to another country versus kind 484 00:25:07,920 --> 00:25:09,480 Speaker 4: of what he said on the campaign trail about that 485 00:25:09,720 --> 00:25:11,000 Speaker 4: that's not what we're going to do here. We're going 486 00:25:11,040 --> 00:25:13,480 Speaker 4: to get ourselves away from that type of foreign policy. 487 00:25:13,560 --> 00:25:14,680 Speaker 4: How do you think that worked out? 488 00:25:15,680 --> 00:25:15,920 Speaker 2: Yeah? 489 00:25:16,240 --> 00:25:18,840 Speaker 8: I think so far what's happened is that no one 490 00:25:18,880 --> 00:25:22,040 Speaker 8: can say anything negative about what actually went down. There's 491 00:25:22,040 --> 00:25:24,800 Speaker 8: no military desk on the United States side. It was fast. 492 00:25:25,080 --> 00:25:27,560 Speaker 8: Maduro and his wife are in the United States already 493 00:25:27,600 --> 00:25:30,119 Speaker 8: awaiting trial right now. So it's going to be the 494 00:25:30,359 --> 00:25:34,760 Speaker 8: fallout and sort of wrangling members going forward that they're 495 00:25:34,760 --> 00:25:37,720 Speaker 8: going to need to do with every single piece in 496 00:25:37,800 --> 00:25:41,120 Speaker 8: their arsenal. So the briefings on the Senate side today 497 00:25:41,359 --> 00:25:44,920 Speaker 8: between the House Republicans and the President tomorrow, it's going 498 00:25:44,960 --> 00:25:48,200 Speaker 8: to be imperative that they keep descent to a bare minimum. 499 00:25:48,240 --> 00:25:50,000 Speaker 7: So I think that's going to be successful. 500 00:25:50,119 --> 00:25:52,760 Speaker 8: I imagine they lose two votes on the Senate side 501 00:25:52,840 --> 00:25:55,040 Speaker 8: and maybe two votes on the House side, but they 502 00:25:55,080 --> 00:25:58,640 Speaker 8: can keep descent at bay, keep the war powers resolutions 503 00:25:58,640 --> 00:26:00,880 Speaker 8: at bay, and that's going to be their number one priority. 504 00:26:00,960 --> 00:26:03,520 Speaker 7: Keep the Republican rank and file in line. 505 00:26:04,160 --> 00:26:06,680 Speaker 4: Do you think President Trump or in the midterm elections 506 00:26:06,760 --> 00:26:09,440 Speaker 4: Republican Party will pay any price here for this type 507 00:26:09,480 --> 00:26:11,879 Speaker 4: of farm policy, That's the question. 508 00:26:12,119 --> 00:26:15,639 Speaker 8: I would say no, mostly because American voters do not 509 00:26:15,760 --> 00:26:19,439 Speaker 8: care about foreign policy. So unless they're our military desks, 510 00:26:19,480 --> 00:26:21,760 Speaker 8: this can go downward. But there's not an upside for 511 00:26:21,840 --> 00:26:24,639 Speaker 8: the president here. Gas prices are already low. It's going 512 00:26:24,680 --> 00:26:27,200 Speaker 8: to take years to bring Venezuelan and oil onto the market. 513 00:26:27,200 --> 00:26:29,639 Speaker 8: You've got to put it out previously. The maybe Europe 514 00:26:29,640 --> 00:26:32,680 Speaker 8: benefits here, but this is not going to bring gas 515 00:26:32,720 --> 00:26:35,320 Speaker 8: prices down in the United States, is the expectation of 516 00:26:35,359 --> 00:26:38,320 Speaker 8: all the investors I spoke with and energy sector experts 517 00:26:38,359 --> 00:26:40,720 Speaker 8: I spoke with this weekend. So I think we're really 518 00:26:40,800 --> 00:26:44,040 Speaker 8: still on affordability, inflation, jobs, prices, and it is by 519 00:26:44,119 --> 00:26:46,119 Speaker 8: far and away the number one issue of voters, and 520 00:26:46,160 --> 00:26:48,080 Speaker 8: they don't like the President's handling of it. And that's 521 00:26:48,200 --> 00:26:50,160 Speaker 8: that's the reality that the White House and the Republican 522 00:26:50,200 --> 00:26:51,399 Speaker 8: Conference have to face. 523 00:26:51,200 --> 00:26:53,600 Speaker 2: Any of the trades with this Vada partner as we continue. 524 00:26:53,920 --> 00:26:57,440 Speaker 2: Where they're into this closing hour of Bloomberg surveillance is 525 00:26:57,520 --> 00:27:01,199 Speaker 2: seven o'clock. Are here in New York Internet our Michael mcgloan, 526 00:27:01,280 --> 00:27:05,600 Speaker 2: Damien Sasa, Edward Morris, Mark Champion, I think from London, 527 00:27:05,760 --> 00:27:10,119 Speaker 2: as well as Lisa Matteo Henrietta. Unspoken in the X 528 00:27:10,200 --> 00:27:13,760 Speaker 2: number of briefings I've read in the last forty hours 529 00:27:13,840 --> 00:27:19,800 Speaker 2: fifty hours, is the United States military and particularly our Navy. 530 00:27:20,359 --> 00:27:24,480 Speaker 2: Is the feeling in your context that our military is stretched? 531 00:27:26,160 --> 00:27:29,600 Speaker 8: I don't get that impression, mostly because as you've seen 532 00:27:29,640 --> 00:27:34,440 Speaker 8: federal spending on the Navy, on the Coastguard, on the Marines, 533 00:27:34,600 --> 00:27:37,719 Speaker 8: everything has gone up. This year, federal spending is up 534 00:27:37,760 --> 00:27:40,720 Speaker 8: six percent and that's going to continue. So one of 535 00:27:40,720 --> 00:27:43,680 Speaker 8: the things that we don't have is a defense appropriations 536 00:27:43,680 --> 00:27:47,359 Speaker 8: bill beyond January thirtieth, And that's really important because the 537 00:27:47,359 --> 00:27:49,080 Speaker 8: White House is now in a position to come and 538 00:27:49,119 --> 00:27:52,360 Speaker 8: request more money for the Department of Defense, for the Pentagon, 539 00:27:52,520 --> 00:27:55,200 Speaker 8: for any of the agencies associated with the military, and 540 00:27:55,240 --> 00:27:55,880 Speaker 8: you can bet. 541 00:27:55,720 --> 00:27:57,600 Speaker 7: Your bottom Dalla that request is coming. 542 00:27:57,600 --> 00:27:59,440 Speaker 8: In one of the things you might like to do 543 00:27:59,520 --> 00:28:01,639 Speaker 8: is delay that request so it doesn't look like this 544 00:28:01,720 --> 00:28:04,480 Speaker 8: incursion is costing money. They can push it out into 545 00:28:04,520 --> 00:28:06,520 Speaker 8: February and March. I suspect there will be a short 546 00:28:06,600 --> 00:28:10,240 Speaker 8: term cr that punts on long term solutions to the 547 00:28:10,280 --> 00:28:12,760 Speaker 8: Department of Defense and spending there. But there's going to 548 00:28:12,760 --> 00:28:14,359 Speaker 8: be more money flowing to defense. 549 00:28:14,480 --> 00:28:17,480 Speaker 2: It's Washington fighting the last war where what we need 550 00:28:17,560 --> 00:28:21,800 Speaker 2: is another aircraft carrier or is the answer six million drones? 551 00:28:22,560 --> 00:28:24,760 Speaker 7: Oh man, are you bringing in shipbuilding? I will talk 552 00:28:24,800 --> 00:28:28,679 Speaker 7: about that all day. I mean, I know your agent shipbuilding. 553 00:28:28,760 --> 00:28:32,800 Speaker 2: Your agent called me at three am and said, Tom, shipbuilding, Henrietta. 554 00:28:34,320 --> 00:28:36,400 Speaker 8: Yeah, I mean, if you're going to bring up trade 555 00:28:36,600 --> 00:28:39,000 Speaker 8: and you know what we're doing on tariffs and all that, 556 00:28:39,040 --> 00:28:40,800 Speaker 8: it's very much associated with shipbuilding. 557 00:28:40,840 --> 00:28:41,360 Speaker 7: You can see it. 558 00:28:41,560 --> 00:28:45,720 Speaker 8: And the President's you know, not finished but endeavored trade 559 00:28:45,760 --> 00:28:49,200 Speaker 8: deals with Japan, with South Korea, with China, bringing shipbuilding 560 00:28:49,240 --> 00:28:51,600 Speaker 8: back to the United States. So that is definitely a 561 00:28:51,640 --> 00:28:54,920 Speaker 8: part of what President Trump wants. Actual physical you know, 562 00:28:55,880 --> 00:28:57,360 Speaker 8: almost like battleship the game. 563 00:28:57,440 --> 00:28:59,760 Speaker 7: Make sure you have them ships here in the United States. 564 00:28:59,760 --> 00:29:02,440 Speaker 8: They're actively working to build that out, Henrietta. 565 00:29:02,480 --> 00:29:04,760 Speaker 4: We are obviously folcusing today and probably for the days 566 00:29:04,800 --> 00:29:07,240 Speaker 4: to come on geopolitics. But don't we have to keep 567 00:29:07,240 --> 00:29:09,000 Speaker 4: this government open? What's the status there? 568 00:29:10,040 --> 00:29:10,800 Speaker 2: We sure knew. 569 00:29:12,640 --> 00:29:15,800 Speaker 8: The government is prepared to shut down on February first 570 00:29:15,920 --> 00:29:18,760 Speaker 8: if they don't reach a deal. The reality on that 571 00:29:18,960 --> 00:29:20,959 Speaker 8: is that, as I mentioned, Defense is not even funded, 572 00:29:21,120 --> 00:29:23,360 Speaker 8: the Labor Department is not funded. So we're at the 573 00:29:23,400 --> 00:29:26,360 Speaker 8: same sort of negative for the market situation going into 574 00:29:26,360 --> 00:29:29,160 Speaker 8: February as we were back in October, where we lapps 575 00:29:29,440 --> 00:29:31,320 Speaker 8: labor data and BLS data, et cetera. 576 00:29:31,640 --> 00:29:33,320 Speaker 7: So there's a lot of work to be done in. 577 00:29:33,280 --> 00:29:35,560 Speaker 8: The House and the Senator on two totally different pages, 578 00:29:35,600 --> 00:29:38,120 Speaker 8: which is why I suggest that maybe we'll get one 579 00:29:38,160 --> 00:29:41,920 Speaker 8: to even three long term bills funding various sectors of 580 00:29:41,960 --> 00:29:44,440 Speaker 8: the federal government. But for the most part, we're going 581 00:29:44,440 --> 00:29:47,320 Speaker 8: to be operating on a short term basis. Probably into March. 582 00:29:47,360 --> 00:29:50,280 Speaker 8: I could see another cr My odds was shutdown are 583 00:29:50,280 --> 00:29:54,040 Speaker 8: low twenty five percent or lower, but it's going to 584 00:29:54,040 --> 00:29:57,080 Speaker 8: be a major topic of discussion to the end of 585 00:29:57,120 --> 00:29:57,560 Speaker 8: this month. 586 00:29:58,200 --> 00:30:01,120 Speaker 4: What else is on the agenda for Congress? You're going 587 00:30:01,160 --> 00:30:03,600 Speaker 4: forward here, because again I'm assuming geopolitics is going to 588 00:30:03,600 --> 00:30:05,520 Speaker 4: supersede a lot of this at least in the coming back. 589 00:30:05,600 --> 00:30:08,480 Speaker 7: Yes, yeah, for sure. And so anything that you thought 590 00:30:08,600 --> 00:30:09,960 Speaker 7: was going to happen is not going to happen. 591 00:30:10,040 --> 00:30:13,200 Speaker 8: So a second reconciliation bill is highly unlikely. The one 592 00:30:13,240 --> 00:30:15,360 Speaker 8: caveat I'd put on that is to say that there 593 00:30:15,440 --> 00:30:17,640 Speaker 8: is an effort from Lindsay Graham, the chairman of the 594 00:30:17,680 --> 00:30:21,800 Speaker 8: Senate Budget Committee, to deployed military spending into a second 595 00:30:21,840 --> 00:30:24,640 Speaker 8: reconciliation bill, which would be pretty novel in terms of 596 00:30:24,640 --> 00:30:27,720 Speaker 8: what you can do under that authority. But that's something 597 00:30:27,720 --> 00:30:29,600 Speaker 8: to be mindful of if the President really does come 598 00:30:29,600 --> 00:30:31,600 Speaker 8: in with a massive request for the Pedagon in the 599 00:30:31,600 --> 00:30:34,160 Speaker 8: wake of the Venezuela incursion and what's to come in Cuba, 600 00:30:34,200 --> 00:30:38,440 Speaker 8: in Colombia and elsewhere, So that's worth being mindful of. 601 00:30:38,480 --> 00:30:40,520 Speaker 8: But I'm low lot to twenty percent or below. We're 602 00:30:40,520 --> 00:30:42,720 Speaker 8: not going to get that tire freebate dividend check. The 603 00:30:42,720 --> 00:30:44,959 Speaker 8: biggest thing that's actually going to happen is the Supreme 604 00:30:44,960 --> 00:30:48,120 Speaker 8: Court ruling on tariffs. Everything else that Congress wants to do, 605 00:30:48,160 --> 00:30:51,080 Speaker 8: whether it's on crypto or permitting or housing whatever, and 606 00:30:51,120 --> 00:30:52,000 Speaker 8: none of that's going to happen. 607 00:30:52,320 --> 00:30:55,520 Speaker 2: Very quickly here a NERD question unered Greg Giroux or 608 00:30:55,640 --> 00:31:00,520 Speaker 2: Greg Polling Acts. Has mister Trump lost the Latino vote 609 00:31:01,120 --> 00:31:04,240 Speaker 2: and did he get back the Latino vote this weekend? 610 00:31:05,720 --> 00:31:09,240 Speaker 8: That is definitely a great demographic question. The Venezuela vote 611 00:31:09,280 --> 00:31:12,560 Speaker 8: is heavily concentrated in Florida. I would suggest it's maybe 612 00:31:12,560 --> 00:31:14,960 Speaker 8: worth two or three percentage points from the Latino vote 613 00:31:15,000 --> 00:31:17,560 Speaker 8: in the state of Florida, but it's not widespread throughout 614 00:31:17,600 --> 00:31:22,560 Speaker 8: the nation, and the Latino voter from Jersey, Virginia, Tennessee, 615 00:31:22,760 --> 00:31:26,760 Speaker 8: even across the country, certainly California. You've seen absolute hemorrhage 616 00:31:26,800 --> 00:31:30,400 Speaker 8: support for President Trump in the week of his immigration 617 00:31:30,800 --> 00:31:35,360 Speaker 8: and basically his economic handling. When you see Democrats outperforming 618 00:31:35,360 --> 00:31:37,880 Speaker 8: Republicans on the handling of the economy, that goes to 619 00:31:37,920 --> 00:31:40,600 Speaker 8: every voter, Latino or no. So I don't think that 620 00:31:40,640 --> 00:31:43,720 Speaker 8: the Venezuela piece is big enough to move the entire 621 00:31:43,800 --> 00:31:46,880 Speaker 8: Latino vote, and that's going to be a misnomer heading 622 00:31:46,880 --> 00:31:48,960 Speaker 8: into the mitchem Henrietta, thank you so much. 623 00:31:49,160 --> 00:32:00,400 Speaker 2: Stay with us. More from Bloomberg Surveillance coming up after this. 624 00:32:00,400 --> 00:32:04,280 Speaker 1: This is the Bloomberg Surveillance podcast. Listen live each weekday 625 00:32:04,320 --> 00:32:07,320 Speaker 1: starting at seven am Eastern on Apple Coarclay, and Android 626 00:32:07,360 --> 00:32:10,400 Speaker 1: Auto with the Bloomberg Business app. You can also listen 627 00:32:10,480 --> 00:32:13,760 Speaker 1: live on Amazon Alexa from our flagship New York station. 628 00:32:14,280 --> 00:32:18,040 Speaker 1: Just say Alexa play Bloomberg eleven thirty right now. 629 00:32:18,080 --> 00:32:20,600 Speaker 2: As you mentioned, Kathy Jones joins if she's fixed income 630 00:32:20,680 --> 00:32:24,720 Speaker 2: strategists at Charles Schwubb, can't you got eight ways to 631 00:32:24,760 --> 00:32:26,800 Speaker 2: go here? Let me pick up on what mister Lerner 632 00:32:26,920 --> 00:32:30,880 Speaker 2: said is that even if you own in Vidia, there's 633 00:32:30,920 --> 00:32:37,000 Speaker 2: a place for bonds, notes and bills. Explain to the 634 00:32:37,120 --> 00:32:40,880 Speaker 2: tech bro why they should be looking at your world. 635 00:32:41,120 --> 00:32:44,400 Speaker 9: Yeah, I mean one of the basics of asset allocation 636 00:32:44,680 --> 00:32:48,760 Speaker 9: is to have some risk assets and some less risky assets, 637 00:32:48,840 --> 00:32:52,680 Speaker 9: so you get diversification, and they're not correlated with each other, 638 00:32:52,840 --> 00:32:56,480 Speaker 9: so that gives you that efficient You want to be 639 00:32:56,480 --> 00:33:01,200 Speaker 9: on that efficient frontier right where your return is is high, 640 00:33:01,440 --> 00:33:05,640 Speaker 9: but your risk is mitigated. And that's the combination, the 641 00:33:05,680 --> 00:33:09,240 Speaker 9: magic combination when you do asset allocation that you're aiming for. 642 00:33:10,080 --> 00:33:13,360 Speaker 4: We've got it feels like a steepening yield curve here. 643 00:33:13,400 --> 00:33:14,800 Speaker 4: How do you think about that? What does it mean 644 00:33:14,840 --> 00:33:15,600 Speaker 4: for the marketplace? 645 00:33:16,080 --> 00:33:19,680 Speaker 9: Yeah, We've been riding the steepening Eiel curve trade for 646 00:33:19,760 --> 00:33:22,320 Speaker 9: about a year now, and I think one of the 647 00:33:22,440 --> 00:33:26,320 Speaker 9: questions I have is whether that continues in light of 648 00:33:26,320 --> 00:33:30,400 Speaker 9: the expectations of lower inflation due to lower oil prices. 649 00:33:30,720 --> 00:33:33,520 Speaker 9: I think it's premature to make that decision right now, 650 00:33:33,960 --> 00:33:37,840 Speaker 9: but as things are playing out, perhaps there will be 651 00:33:37,920 --> 00:33:41,440 Speaker 9: the expectation of more supply lower oil prices in the future, 652 00:33:41,840 --> 00:33:46,400 Speaker 9: therefore less inflation. But for now, you know, we still 653 00:33:46,440 --> 00:33:49,160 Speaker 9: have the feti using, so that means short end probably 654 00:33:49,200 --> 00:33:51,880 Speaker 9: still come down a bit. When you get to intermediate 655 00:33:51,920 --> 00:33:55,640 Speaker 9: to long term, you still have problems that could keep 656 00:33:55,800 --> 00:33:58,160 Speaker 9: yield sort of where they are, and that would be 657 00:33:58,520 --> 00:34:03,160 Speaker 9: you know, sticky inflation so far, and the deficit and 658 00:34:03,200 --> 00:34:05,160 Speaker 9: the need to deal with supply. 659 00:34:05,360 --> 00:34:07,800 Speaker 2: I was channeling Paul this morning. First chart I looked 660 00:34:07,800 --> 00:34:10,320 Speaker 2: at on the Bloomberg terminal was the difference in yield 661 00:34:10,320 --> 00:34:13,160 Speaker 2: between a five year and a thirty year Paul. The 662 00:34:13,200 --> 00:34:16,240 Speaker 2: only reason I did that was Steve Major. Yep, it wasn't. 663 00:34:16,800 --> 00:34:19,759 Speaker 2: It wasn't an original thought from Tom Kane. Explain to 664 00:34:19,800 --> 00:34:24,040 Speaker 2: our audience. They know that vanilla is the two ten spread. 665 00:34:24,719 --> 00:34:27,399 Speaker 2: You can go three months to thirty year, like the 666 00:34:27,440 --> 00:34:32,799 Speaker 2: whole curve. Explain the efficacy of pistachio the five year 667 00:34:32,880 --> 00:34:34,040 Speaker 2: to thirty years spread. 668 00:34:34,480 --> 00:34:36,799 Speaker 9: Yeah, I think when you're looking at five year to 669 00:34:36,840 --> 00:34:42,080 Speaker 9: thirty year, what you're really trying to do is scope 670 00:34:42,160 --> 00:34:45,520 Speaker 9: out the really long term, what really long duration can 671 00:34:45,560 --> 00:34:47,520 Speaker 9: do for you. When you go into the thirty year, 672 00:34:48,200 --> 00:34:50,239 Speaker 9: it's going to be more volatile and it's going to 673 00:34:50,280 --> 00:34:53,640 Speaker 9: really reflect the long duration view. Right, you take a 674 00:34:53,680 --> 00:34:56,360 Speaker 9: fair amount of duration risk in that. I take a 675 00:34:56,360 --> 00:34:58,839 Speaker 9: lot of duration risk in that. So you have to 676 00:34:58,880 --> 00:35:03,360 Speaker 9: be really convinced that the long term trend is towards 677 00:35:03,400 --> 00:35:07,040 Speaker 9: disinflation for that to really make sense or to get 678 00:35:07,120 --> 00:35:10,480 Speaker 9: you know, so much yield that it compensates you for 679 00:35:10,719 --> 00:35:13,840 Speaker 9: the risk of volatility along the way and surprises along 680 00:35:13,880 --> 00:35:16,719 Speaker 9: the way. And you know, if you're a trader, you 681 00:35:16,760 --> 00:35:20,600 Speaker 9: may look at that. Most everyday investors don't go out 682 00:35:20,680 --> 00:35:21,800 Speaker 9: to thirty years. 683 00:35:23,239 --> 00:35:26,160 Speaker 4: In twenty twenty five, you got paid for taking some 684 00:35:26,200 --> 00:35:28,200 Speaker 4: credit risk. How about in twenty six are you gonna 685 00:35:28,200 --> 00:35:30,359 Speaker 4: get paid for credit risk? Or do I just stay 686 00:35:30,400 --> 00:35:31,840 Speaker 4: a little bit closer in on my credit. 687 00:35:32,120 --> 00:35:35,440 Speaker 9: Yeah, the credit spreads are still tight. We're seeing some 688 00:35:35,480 --> 00:35:41,080 Speaker 9: deterioration in the underlying market. Again, we'd be cautious. It's 689 00:35:41,080 --> 00:35:43,440 Speaker 9: not that you can't take some credit risk, it's that 690 00:35:43,480 --> 00:35:46,440 Speaker 9: you don't want to take too much credit risk. And 691 00:35:47,040 --> 00:35:51,080 Speaker 9: this is a highly unstable environment right now to try 692 00:35:51,080 --> 00:35:53,480 Speaker 9: to predict, you know, where corporate profits are going to go. 693 00:35:53,520 --> 00:35:57,239 Speaker 9: They look good, but you know it's priced in a 694 00:35:57,280 --> 00:35:59,480 Speaker 9: lot of priced in, so we'd be kind of cautious. 695 00:36:00,600 --> 00:36:03,040 Speaker 2: That don't mean to interrupt, but that sounds exactly like 696 00:36:03,239 --> 00:36:06,759 Speaker 2: ninety days ago, one hundred and eighty days ago, two 697 00:36:06,800 --> 00:36:11,680 Speaker 2: hundred and seventy days ago. Remember before the earning season. Yeah, OMG, 698 00:36:12,640 --> 00:36:17,920 Speaker 2: we're not sure. And then what is it January fourteenth, fifteenth. 699 00:36:18,000 --> 00:36:21,920 Speaker 4: Whammo, some solid earnings across the board. Here in twenty 700 00:36:21,960 --> 00:36:25,480 Speaker 4: twenty six. Here are there sectors that screenwall for you. 701 00:36:25,600 --> 00:36:28,279 Speaker 4: How are you thinking about finding opportunity this year? 702 00:36:28,880 --> 00:36:33,080 Speaker 9: Yeah, we like tips. We think they're well priced for 703 00:36:33,280 --> 00:36:37,080 Speaker 9: real return, so you get a positive real return. And 704 00:36:37,120 --> 00:36:40,719 Speaker 9: I think the investors really haven't latched onto this because 705 00:36:40,719 --> 00:36:44,440 Speaker 9: I've had some difficulty kind of reading the tips market. 706 00:36:44,480 --> 00:36:47,200 Speaker 9: But we think tips look pretty good. We think munis 707 00:36:47,239 --> 00:36:51,440 Speaker 9: are undervalued there right now, and that's because supply has 708 00:36:51,480 --> 00:36:54,760 Speaker 9: been really large. But if you're in a higher tax 709 00:36:54,800 --> 00:36:56,640 Speaker 9: bracket and a high tax even if you're not in 710 00:36:56,640 --> 00:36:59,840 Speaker 9: a high tax bracket, they can make sense for tax equivalent. 711 00:37:00,000 --> 00:37:02,240 Speaker 2: I wouldn't ask you this question in March or August, 712 00:37:02,239 --> 00:37:05,240 Speaker 2: but it's January, and my jargon police are out in force. 713 00:37:05,560 --> 00:37:07,040 Speaker 2: What in God's name is a tip? 714 00:37:07,400 --> 00:37:09,879 Speaker 9: Oh, treasury inflation protective securities. 715 00:37:10,040 --> 00:37:11,839 Speaker 2: So you're betting on inflation there. 716 00:37:11,920 --> 00:37:14,399 Speaker 9: Well, what you're doing is you're buying a treasury that's 717 00:37:14,440 --> 00:37:17,640 Speaker 9: index to the CPI, and it's the overall CPI, so 718 00:37:17,840 --> 00:37:20,759 Speaker 9: not excluding food and energy. So right now, the way 719 00:37:20,800 --> 00:37:22,840 Speaker 9: their price, you're going to get one or two percent 720 00:37:23,000 --> 00:37:27,600 Speaker 9: above inflation whatever that right turns out to be. So 721 00:37:27,760 --> 00:37:30,840 Speaker 9: that gives you a real positive, real return kind of 722 00:37:30,960 --> 00:37:32,000 Speaker 9: no matter what happens. 723 00:37:32,200 --> 00:37:34,960 Speaker 2: You and lizz Anne look look tanned and rested. Did 724 00:37:35,040 --> 00:37:38,279 Speaker 2: Kevin Gordon get any time out? Did he work every day? 725 00:37:38,360 --> 00:37:41,040 Speaker 9: Kevin had a good vacation in there, He had some 726 00:37:41,120 --> 00:37:43,839 Speaker 9: time on. He had like twelve hours like you give 727 00:37:43,920 --> 00:37:45,399 Speaker 9: a much chance every once in a while. 728 00:37:45,560 --> 00:37:47,600 Speaker 2: Jathy, thank you so much again, thank you for helping 729 00:37:47,640 --> 00:37:49,800 Speaker 2: us with the FED decides as well. That would be 730 00:37:49,920 --> 00:37:53,880 Speaker 2: January twenty ninth, Miss Jones is with Charles Schwad. 731 00:37:54,560 --> 00:37:59,400 Speaker 1: This is the Bloomberg Surveillance Podcast, available on Apple, Spotify, 732 00:37:59,520 --> 00:38:03,800 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 733 00:38:03,960 --> 00:38:07,400 Speaker 1: seven to ten am Eastern on Bloomberg dot Com, the 734 00:38:07,480 --> 00:38:11,520 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You 735 00:38:11,560 --> 00:38:14,920 Speaker 1: can also watch us live every weekday on YouTube and 736 00:38:15,120 --> 00:38:16,840 Speaker 1: always on the Bloomberg terminal