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Speaker 2: Kim Dawson walks in the studio of the market lifts
Speaker 2: NaSTA C up nine tenths of a percent. We need
Speaker 2: a Bloomberg Business Flash from IBKR. Lisa Mattail, you got it.
Speaker 3: Yeah, we do have futures advancing traders kind of assessing.
Speaker 3: Presidents from spledge to impose tariffs on all imports of
Speaker 3: steel and aluminum. We were just talking about it. What
Speaker 3: it's doing is pushing up some American companies linked to
Speaker 3: the metals companies like us Steal up three percent, out
Speaker 3: co Op two percent. We have Cleveland Clips up about
Speaker 3: eight percent, NAZAC futures leading the charge up nine tens
Speaker 3: of percent one hundred and ninety seven points. So we
Speaker 3: have Dow futures up a half percent, SMP futures up
Speaker 3: six ten seven percent, the two year yield at four
Speaker 3: point twenty six percent, that's down two basis points at
Speaker 3: the yield other ten you're four point four to eight percent,
Speaker 3: and that's down one basis point to commodities go hold
Speaker 3: rising to a record. Tariff talk kind of added to
Speaker 3: that uncertainty in the financial market. So we have COMEX
Speaker 3: Gold up twenty nine hundred and twenty four dollars an ounce.
Speaker 3: We go to oil Brent crude seventy five dollars a barrel,
Speaker 3: WTI crewed seventy one dollars a barrel. We'll go to
Speaker 3: shares of BP. They're up six seven percent in London.
Speaker 3: Elliott Investment Management said to have built a significant stake
Speaker 3: in the company. And then we go to earnings. McDonald's
Speaker 3: up two percent. Sales rose in the fourth quarter. Yeah,
Speaker 3: growth in international business actually made up for that drop
Speaker 3: in the US. And it's a big week for earnings.
Speaker 3: This week, we're gonna hear from Wendy's, Deer, Applied Materials,
Speaker 3: Coca Cola, Craft Time, CVS and more. That is your
Speaker 3: Bloomberg business flash, David and Tom.
Speaker 2: He adds, I mean I didn't laugh yesterday except one moment,
Speaker 2: and David, I thought of Cam Dawson. It was a
Speaker 2: wonderful dunk, And don't it's commercial. I wish they do
Speaker 2: them all year round. I thought it was great. And
Speaker 2: Starbucks shows up in the middle of the commercial looking
Speaker 2: for a Coriander latte, and I thought of Kim, And
Speaker 2: you go to Starbucks, what do you order?
Speaker 4: If you're asking me about donuts, I will go for
Speaker 4: Public's donuts every day of the week.
Speaker 5: As a Florida Natives.
Speaker 6: This is a Florida supermarket chain.
Speaker 5: It's They're the greatest, do you know it.
Speaker 2: They're like sweeter than Krispy Kreeks.
Speaker 5: It is Florida.
Speaker 2: Okay, thank you, Kim Dawson joining us right now. In
Speaker 2: the equity markets, and you know, I'm looking at year
Speaker 2: to day Dow up four percent, SPX up two and
Speaker 2: a half percent, and Asda. You know, I'm sorry extrapolated
Speaker 2: out it's a double digit ear Do you model a
Speaker 2: double digit twenty twenty five for the equity market?
Speaker 4: We think that it's going to be more like high
Speaker 4: single digits, but there's potential that you can see ten
Speaker 4: percent rallies, ten percent corrections. Our base case for twenty
Speaker 4: five is a wide, choppy range where you could see
Speaker 4: rallies over the course of the year in these sort
Speaker 4: of risk on moments, but that because you're coming into
Speaker 4: the year at such high valuations, you are very much
Speaker 4: primed to have that downside volatility.
Speaker 2: Okay, I'm gonna get volatility. But the answer is right now,
Speaker 2: we're going up.
Speaker 4: Why we're going up because there still is this risk
Speaker 4: on notion that you are going to see a benefit
Speaker 4: from policy out of Washington. You still are seeing earnings
Speaker 4: go up. So if you look at fourth quarter earnings,
Speaker 4: you went into earning season expecting twelve percent growth. You're
Speaker 4: getting sixteen percent growth for the fourth quarter. But watch
Speaker 4: this closely, you're actually seeing twenty five and twenty twenty
Speaker 4: six estimates for the S and P five hundred get
Speaker 4: trimmed just slightly. If that continues, that portends a bit
Speaker 4: more of a choppy sideways market.
Speaker 6: Peter cherw with us from Academy Securities earlier talking about
Speaker 6: how he is kind of staying invested throughout all of
Speaker 6: this uncertainty and the waves of it. How are you
Speaker 6: approaching the likes of what we saw last night when
Speaker 6: the President was on his plane and flow to what
Speaker 6: maybe announced today. So the ups and downs from a
Speaker 6: policy perspective when it comes just to uncertainty, if we
Speaker 6: could charge if we could chart that.
Speaker 4: Yeah, certainly, we think that there's going to be the
Speaker 4: vagaries of the market as we move through the year.
Speaker 4: And the reality is that unless we are thinking that
Speaker 4: these policies have the potential to significantly dent growth, then
Speaker 4: it does warrant you staying optimistic and invested in writing
Speaker 4: out the volatility. So watch things like credit spreads. We
Speaker 4: think credit spreads will be an important indicator of if
Speaker 4: you're seeing growth start to weaken. If they remain contained,
Speaker 4: it means that it's just equity positioning and valuation.
Speaker 2: Polatility takes It's like scarlet food, it takes.
Speaker 7: Credit right there, credit spreads.
Speaker 2: No, thank you, Yeah, thank you.
Speaker 6: L E s Okay, you know I was off last week,
Speaker 6: but noted the fact that you noted as well in
Speaker 6: that in those Michigan data there was the sense of
Speaker 6: consumer anxiety about inflation where it's headed.
Speaker 7: What do you.
Speaker 6: Extrapolate from that? Putting aside all the concerns about the
Speaker 6: politicization of the Michigan server whatever, how worried are you
Speaker 6: about expectations for inflation becoming kind of unanchry run more, it's.
Speaker 5: Certainly something that's on the fed's mind.
Speaker 4: We do think you have to take the inflation expectations
Speaker 4: stated with a huge grain of salt. First, it's very
Speaker 4: correlated to oil prices, so consumers effectively report what they
Speaker 4: see at the pump, even for long run inflation. Second,
Speaker 4: you have this huge divergence between Republican and Democrat reports
Speaker 4: on inflation expectations. We think watch the independence They've been stable.
Speaker 4: Independents are sitting at three point three percent. It's been
Speaker 4: the same for the last few years.
Speaker 2: You've been great about I gotta be in the market,
Speaker 2: I gotta participate. I forget about the David Gurra political
Speaker 2: overlay right now of basically whatever your politics, total chaos.
Speaker 2: I want you to talk right now to someone in
Speaker 2: a four to one K plan who have a three
Speaker 2: or a seven or a longer term perspective, how do
Speaker 2: they maintain given the news flow.
Speaker 4: Well, certainly we think that keeping that long term perspective
Speaker 4: is incredibly important. And the thing that has to come
Speaker 4: with that is an awareness that volatility is opportunity versus
Speaker 4: something to be afraid of, and that this year is
Speaker 4: likely going to have its twists and turns. We're only
Speaker 4: a month and a half in and we've already gotten them.
Speaker 4: Given the starting point of valuations, you are not set
Speaker 4: up to be able to absorb a lot of bad news.
Speaker 4: But that doesn't mean you should run for the hills.
Speaker 4: We still think that there are good things happening in
Speaker 4: the US economy, really strong things happening in US corporate earnings,
Speaker 4: all things that support risk on assets. And see that
Speaker 4: volatility is an opportunity to add instead of something to
Speaker 4: run away from.
Speaker 6: How why does your aperture when it comes to equities now?
Speaker 6: Are you looking overseas or is the uncertainty of the
Speaker 6: time we just mentioning. I like to harp on something
Speaker 6: that's kind of precluding you from doing that, that there's
Speaker 6: just too much of it and that kind of makes
Speaker 6: difficult investing in overseas markets right now.
Speaker 4: Don't look now, but China tech is outperforming US tech.
Speaker 4: And we've seen this that's short, episodic upside volatility in
Speaker 4: China tech over the course of the last few years,
Speaker 4: and you have a big rally and it gives it
Speaker 4: all back up. So it's not for the faint of heart.
Speaker 4: But we are seeing this shift in some leadership where
Speaker 4: we're seeing signs of life out of non US markets.
Speaker 4: We don't think it's sustainable unless you see a major
Speaker 4: dollar bear market. So we think you have to make
Speaker 4: a dollar call to really push into non US markets,
Speaker 4: And right now we're not seeing signs that the dollar
Speaker 4: is imminently topping, so it could be more of a
Speaker 4: short term.
Speaker 5: Trade, but we think you have to be there.
Speaker 4: You have to be looking because of the discounted valuations,
Speaker 4: even though that's not a catalyst.
Speaker 2: So what do you do with MEG seven right now?
Speaker 2: They just reported The basic theme we got from Anna
Speaker 2: Rag and man Deep was they can't keep up with
Speaker 2: the demand for AI. Is the huge investment numbers we're
Speaker 2: talking about. Do you just maintain MEG seven?
Speaker 4: Well, we put out a note this morning that said,
Speaker 4: maybe it's not the MAG seven, but it's the LAG seven.
Speaker 4: The MAG seven has treated below it's fifty day moving average.
Speaker 4: It's starting to show some signs of a weakening trend,
Speaker 4: and if you look within the MAG seven, there's a
Speaker 4: lot of dispersion. So Microsoft has been flat for a year.
Speaker 4: It's gone nowhere because you've been cutting earning sestiments and
Speaker 4: because they've seen such a huge increase in capex. The
Speaker 4: numbers are wild Microsoft has three exits capex over the last.
Speaker 5: Four years since twenty twenty one.
Speaker 4: So it's cash flow has been weaker, but its operating
Speaker 4: profit is very strong. So we think investors are starting
Speaker 4: to lose a little bit of patience with all of
Speaker 4: this capex that hasn't necessarily materialized in significant uplift in returns.
Speaker 2: How do you respond, Cameron Dawson to people that go,
Speaker 2: I can be solid in munis. They're forminal tax free whatever.
Speaker 2: They are like a set versus equity exposure.
Speaker 4: Well as as a firm that builds custom portfolios for
Speaker 4: our clients. It really depends on your liquidity needs and
Speaker 4: your risk toolery like a lawyer.
Speaker 2: Well, our equity's going to outperform fobal tax free.
Speaker 5: Munis over the long run.
Speaker 4: Yes, but the equity risk premium today is extraordinarily tight.
Speaker 2: Okay, so you're in your all beunies this morning.
Speaker 5: No, we haven't. We maintain a balance portfolio. We are
Speaker 5: so fully invested in that would show up.
Speaker 6: I mean, we had a big sign homes dot Com yesterday.
Speaker 2: It's got the lawyer work go away, Kendogs, thank you
Speaker 2: so much with new Edge.
Speaker 1: Right now, you're listening to the Bloomberg Surveillance Podcast. Catch
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Speaker 2: David Gurth and Tom King of Robert D. Kaplan and
Speaker 2: everyone my affinity for his realist international relations. The body
Speaker 2: of work is absolutely jaw dropping. Years ago my book
Speaker 2: of the summer was the Return of Marco Polo's World.
Speaker 2: My book of the year last year, a wonderful two
Speaker 2: hundred and eighty pages, The Loom of Time between Empire
Speaker 2: and Anarchy. He has been ferociously writing Robert T. Kaplan
Speaker 2: and the must read waste Land, A World in Permanent Crisis.
Speaker 2: David Gura with Robert D.
Speaker 6: Kaplan and few bring in sort of reference to history
Speaker 6: and art and writing with original repretashes as well as
Speaker 6: he Robert Caplan. Great to speak with you this morning,
Speaker 6: and I confess I was thumbing through the galley of
Speaker 6: your latest book, Wasteland, A World in Permanent Crisis, while
Speaker 6: I was covering the G twenty Leaders summ in Brazil
Speaker 6: just a few months ago, and it was such a
Speaker 6: strange moment at which we were looking to see what
Speaker 6: President Biden might say or do. He really stepped back
Speaker 6: and didn't say much of anything during the course of
Speaker 6: that that gathering, and we saw kind of the reconfiguration
Speaker 6: in real time of alliances on the ground there in Brazil,
Speaker 6: the role of America being questioned in other countries coming
Speaker 6: together in new ways as a result, help us understand
Speaker 6: the moment that we're in as we hear so much
Speaker 6: about what's going to happen here, to the rules based order,
Speaker 6: to the way things happen for so much time here,
Speaker 6: as we see a President Trump returning to the White
Speaker 6: House and espousing the protections policies we first saw just
Speaker 6: a few years ago.
Speaker 8: Oh, thanks for having me on. I think we're at
Speaker 8: the end of the post war order, post war I mean,
Speaker 8: post World War two, but also a few decades after
Speaker 8: the end of the Cold War. We've had the same
Speaker 8: international order since nineteen forty five. Essentially, the United States
Speaker 8: has been an empire in reality since then. And you
Speaker 8: see it not only with Trump's lack of interest, not
Speaker 8: just you know, making demands on NATO partners, but his
Speaker 8: lack of interest in the Alliance in general, and the
Speaker 8: Alliance of course rose out of the ashes of World
Speaker 8: War Two. We also see it with his attempt to
Speaker 8: gut to close down the US Agency for International Development
Speaker 8: us ai D, because that too, has been a pillar
Speaker 8: of the postwar order, even though most people until a
Speaker 8: few weeks ago didn't really know much about it, because
Speaker 8: it was through us ai D that American foreign aid
Speaker 8: to countries throughout the developing world was channeled. So you
Speaker 8: had hard power through NATO and our Pacific alliances, and
Speaker 8: you had soft power through us ai D. Trump is
Speaker 8: going after all of that his you know, it's not
Speaker 8: that he's an isolationist. That's absolutely wrong. Trump engages with
Speaker 8: the world. What Trump is doing is he's adding another
Speaker 8: layer to manifest destiny. Manifest destiny you used to be
Speaker 8: about America conquering the west from east to west, from
Speaker 8: the East coast to the West coast in the nineteenth century.
Speaker 8: Now he wants to expand manifest destiny north to south,
Speaker 8: from Greenland to the Panama Canal, from the Arctic to
Speaker 8: the Tropics. He sees a world of regional rather than
Speaker 8: an American led post war order. He sees a world
Speaker 8: of regional regional geography based alliances with China, the United States, etc.
Speaker 6: I want to come back to that in a moment,
Speaker 6: but picking up on something you said a moment ago,
Speaker 6: and that is him kicking that leg of the stool,
Speaker 6: the soft power legout from the stool. What are the
Speaker 6: consequences of that? I mean, we've heard from Samantha Power,
Speaker 6: the most recent head of USAID, making the case for
Speaker 6: preserving that organization and keeping its good work goinging a
Speaker 6: tool Gwande who worked there recently as well. I don't
Speaker 6: know how much that's resonating, But what are the consequences
Speaker 6: of losing that focus on soft power?
Speaker 8: I think there are mens really because solt power you
Speaker 8: need when things are not going well, when you're not
Speaker 8: on top of the heat. When you have you know,
Speaker 8: solt power is influence in countries, you know, having connections
Speaker 8: in company, in countries, knowing people because you're working there,
Speaker 8: you're doing things in case of a hostage crisis or
Speaker 8: some sort of crisis, you always have a phone number
Speaker 8: to call people. You know, it's about building relationships and
Speaker 8: all of that would go just the word on AID.
Speaker 8: You couldn't make the case that AID has not been
Speaker 8: managed as well in recent years. However, the way to
Speaker 8: deal with it is the way the tough Republican presidents
Speaker 8: of the past dealt with it, like Ronald Reagan and others,
Speaker 8: by putting it, by fixing it, by putting in real,
Speaker 8: hard nosed business person types to run it.
Speaker 2: Robert Kaplan with his folks in celebration of his new
Speaker 2: effort two hundred some pages waste Land Gera. Read it
Speaker 2: in Brazil. I haven't be honest read it, but top
Speaker 2: of the pile right now. The loom of time from
Speaker 2: Morocco out to Persia was spectacular in my book of
Speaker 2: the Year last year. Robert Kaplan Egdone alluded to this
Speaker 2: this weekend in the Post. But Richard Nixon in nineteen
Speaker 2: sixty two was an author, and then he enjoyed losing
Speaker 2: as governor of California to Pat Brown. He was at
Speaker 2: his bottom. What comes after Trump? Have you framed out
Speaker 2: in your mind that this let's assume he's not going
Speaker 2: for an FDR three terms, But after President Trump, what
Speaker 2: next for our politics?
Speaker 8: We've had? First of all, one of the problems with
Speaker 8: America in terms of American power and America's trajectory is
Speaker 8: that it is is that the center is gone rather
Speaker 8: than a center, right and a center left governing the country.
Speaker 8: Where elect presidential elections were not existential. You now have
Speaker 8: a progressive left and a populist right. Neither seems to
Speaker 8: talk to the other. I think after Trump, what you're
Speaker 8: likely to get is another populist right regime, or go
Speaker 8: back to the progressive left. The real story in American
Speaker 8: politics is the destruction of the center, the destruction of
Speaker 8: the political center, which is partly the result of the
Speaker 8: end of the print and typewriter age and the beginning
Speaker 8: of the digital video era, where where news is not
Speaker 8: in the middle, nuanced. It's all about passion and anxiety
Speaker 8: and short bursts of simplicity through social media.
Speaker 2: And David, I want to point out from Berkeley, Paul
Speaker 2: Pearson and Eric Schuckler. Folks, for those of you in
Speaker 2: the markets where you want one read here, it's Kaplan
Speaker 2: really accessible Wasteland or the Loom of Time and a
Speaker 2: little more dense. Paul Pearson and Eric Schickler, their book
Speaker 2: Partisan Nation is shocking and describing what doctor Kaplan just mentioned.
Speaker 6: I hear you saying that the center is gone, and
Speaker 6: I can't help but think of the poem from which
Speaker 6: your book takes its name of course the Wasteland by Elliot,
Speaker 6: and how that's always been one we read in compliment
Speaker 6: with or in conversation with the second Coming by Yates.
Speaker 6: Of course, center cannot hold. And what I'm very curious
Speaker 6: about is, and I've thought about it over the course
Speaker 6: of the weekend last week as well, is the role
Speaker 6: that Elon Musk and others from the tech industry are
Speaker 6: playing now in the governance of this country and sort
Speaker 6: of setting the policy direction of the United States. It's
Speaker 6: something that you touch upon in the book, but I
Speaker 6: wonder sort of how what we've seen over the course
Speaker 6: of these last four weeks is advanced. You were thinking
Speaker 6: on that relationship between Silicon Valley, what we identify as
Speaker 6: a genius or technical facility, uh, with with managing this country,
Speaker 6: with with setting its direction, and how perilous that might be.
Speaker 8: Yes, The late Harvard political scientist Samuel Huntington said that
Speaker 8: America was always great, not because of its people, but
Speaker 8: because of its institutions, the separation of powers not just
Speaker 8: in Washington, but between a county, federal and state out
Speaker 8: in the out in the countryside. It was institutions that
Speaker 8: made America great, and the sanctity of them. What we're
Speaker 8: seeing with Elon Musk is an erosion of institutions you
Speaker 8: know where think you know, more and more executive orders.
Speaker 8: This didn't start with Trump, It's started with Biden and
Speaker 8: even before that, but more and more executive orders, the
Speaker 8: increasing power of the executive and the executive in more
Speaker 8: and more collusion with oligars, you know, super wit rich people.
Speaker 2: But then over the week so they were all at
Speaker 2: the Super Bowl, Robert Kaplan with what you just said,
Speaker 2: I think everybody of all political persuasions on this morning
Speaker 2: commute across the nation are simply saying, where's the legislature,
Speaker 2: where's the judiciary? Do you assume that there will be
Speaker 2: checks and balances into March or April?
Speaker 8: I'm not sure. I just know you can devise the
Speaker 8: most brilliant constitution in the world, which the founders did
Speaker 8: through the Federalist Papers. But it oh but and they
Speaker 8: said it that we can devise the greatest constitution. But
Speaker 8: it all ultimately comes down to, you know, to human
Speaker 8: ca character, you know, you know, to the stability of people,
Speaker 8: to their ethics. If you have people who are irrational, unethical,
Speaker 8: or are in some way do not have real standing
Speaker 8: moral standing. The best constitution is not going to help you.
Speaker 6: I have seen you recently described as variously here a pessimist,
Speaker 6: a tragic realist, at a Hobbesian. I wonder what gives
Speaker 6: you any optimism here about the continuation of the American
Speaker 6: experience in light of the reading and work that you
Speaker 6: did on this, this latest volume.
Speaker 8: What gives me optimism is that because America is a
Speaker 8: boisterous democracy, it's gone through these periods before, you know,
Speaker 8: stylistically and in other ways, this is not that much
Speaker 8: different from the Jacksonian upheaval of the early nineteenth century,
Speaker 8: when Andrew Jackson, a rough, un roughun unsophisticated on only
Speaker 8: partially ethical of frontiersmen, came out and wiped out the
Speaker 8: regime of the of the very feet aristocratic people from
Speaker 8: Massachusetts and Virginia and the country. The country went on,
Speaker 8: It went onto a new burst of of development and
Speaker 8: and and and and and and dynamism, et cetera. So
Speaker 8: it's a bad bet to give up on the United
Speaker 8: States completely.
Speaker 2: Robert T. Kaplan, I have to talk here about your
Speaker 2: loom of time, and I just got a minute to
Speaker 2: do it. If you were to write an epilogue of
Speaker 2: the Middle East, of Eurasia, from Morocco over to Persia.
Speaker 2: What would you write of today? What? What?
Speaker 8: I what I would write up today in the loom
Speaker 8: of time. I did not cover the Israel Palestine issue,
Speaker 8: and that was good because I probably would have gotten
Speaker 8: all in the book would have been dated. But I
Speaker 8: would constantly. I would obviously have to write about that,
Speaker 8: what has happened in Gaza, and I would just say
Speaker 8: that the big question out there now that Israel is
Speaker 8: dramatically weakened, Hesba lah Hamas and the hooties in North Yemen.
Speaker 8: The biggest question out there is the future of the
Speaker 8: Iranian regime, because if the Iranian regime were to implode
Speaker 8: in some way or a fashion, it would be a
Speaker 8: world historical event that would change the italiaes.
Speaker 2: I got eight more questions. How many did you have?
Speaker 2: Robert Kaplan? Thank you so much. Too short a visit.
Speaker 2: We thought we'd do that, folks, to frame out where
Speaker 2: our X number of days into Trump second administration. Robert
Speaker 2: Kaplan and celebration of waste Land. Ger is the only
Speaker 2: one on the planet has actually read it, which is
Speaker 2: very cool.
Speaker 6: It is very readable and I commend it to everybody
Speaker 6: you as well.
Speaker 2: Tom. Yeah, I can't say enough about his work. I'll
Speaker 2: do that out on social here in the coming days.
Speaker 2: Robert Kaplan where this was all of his affiliations, including
Speaker 2: Eurasia grew.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 2: Let's talk fourple text free. Pet Askell joins us out
Speaker 2: headed Muni Bond group at Blackrock this morning. I don't
Speaker 2: do enough on muni bonds. Is there any let's start
Speaker 2: with this double tax free, triple tax free. Is there
Speaker 2: a value for a New York state resident to buy
Speaker 2: a Nebraska g O this morning?
Speaker 7: No, I'd rather just stay at New York paper, stay Ky,
Speaker 7: keep the stay exemption. Yeah, New York. Despite some of
Speaker 7: the dysfunction all day, most New York credits are very solid.
Speaker 7: So the I mean we can get into the rit
Speaker 7: Versus Union College later on when we start to talking
Speaker 7: about the small colleges. But the I would stay in
Speaker 7: New York. Now you know that r You know ri
Speaker 7: I T has had Union's number and lacross the last
Speaker 7: few years.
Speaker 2: Yeah, they all right. I was actually the meeting where
Speaker 2: they were going D one is ish and the build
Speaker 2: to you had to build two aster turf you had
Speaker 2: to build two astro turf practice fields.
Speaker 6: Too to get up to a certain leven and there
Speaker 6: was there was.
Speaker 2: A capitol commitment. They made it Union College because a
Speaker 2: black Rock trust it wasn't to.
Speaker 6: Continue to pat How is the the uncertainty that we've
Speaker 6: talked about at this kind of more macro level percolated
Speaker 6: down to to Muni's about about policy.
Speaker 7: Is it yet or is it something that's too The
Speaker 7: Muni market follows but lags the treasure market. So the
Speaker 7: you know four eighty to four forty rally we saw
Speaker 7: in the last month, Munie's rallied with it, and you know,
Speaker 7: the they underperformed a bit. We outperformed a little bit
Speaker 7: on the cell off on Friday, But overall, I would
Speaker 7: say that you know, if you look at correlations over time,
Speaker 7: munions are the least correlated of a large dollar dominant
Speaker 7: bond markets to everything else that's going on the look,
Speaker 7: I think that, you know, I thought it was very
Speaker 7: interesting the Treasury Secretary said that the treasury supply was
Speaker 7: going to be stable over the next couple of quarters,
Speaker 7: because that that's one of our biggest concerns is that
Speaker 7: they start to term out the debt, the bill market
Speaker 7: becomes smaller as the composition of the debt that gives
Speaker 7: us that push up towards five percent and ten year
Speaker 7: no yields, and that you know that, obviously, in my opinion,
Speaker 7: would be an opportunity in the municipal market.
Speaker 6: Cam Dawson, talking a moment ago about her balance portfolio
Speaker 6: talk a bit of bounce rip enthusiasm for muni's from
Speaker 6: consumer investors. How appealing is that, How easy is it
Speaker 6: for people to get it into.
Speaker 7: I think people are getting more excited about about munis
Speaker 7: and fixed income in general, because this is the first
Speaker 7: time we've had real yields at this level since this
Speaker 7: since the financial crisis, except for a few points of
Speaker 7: stress like the pandemic and things like that. So, you know,
Speaker 7: we were we spent a lot of time in the
Speaker 7: road the last last few weeks. We converted our our
Speaker 7: high yield mutual fund, which has an excellent track record
Speaker 7: today and do an actively managed et I had some
Speaker 7: news Tommy, right, the uh and then we're really excited
Speaker 7: about it. So the h I M you, we lowered
Speaker 7: the fee by over twenty five percent, transparent, easy to access,
Speaker 7: the high yield muni market very excited about.
Speaker 2: Can you own munis within a retirement plan? Uh?
Speaker 7: No, because well you can own taxable munis. But yeah,
Speaker 7: but you would never when you already have your tax
Speaker 7: to fur you're not gonna put it. Yeah, you know,
Speaker 7: So how is it?
Speaker 2: Give you an example of a taxable muni that Michael
Speaker 2: Barr would put into his retirement plane.
Speaker 7: The u I would say, any of the any of
Speaker 7: the babs that were issued post financial crisis. You know,
Speaker 7: there's Cow babs outstanding, These New York bab's outstanding. Some
Speaker 7: of those got called last year. But all those are
Speaker 7: high quality, big insurance demand for that, for that high quality,
Speaker 7: long duration paper. It's not enough of it out there.
Speaker 2: Okay, this is the I want to go. David's loaded
Speaker 2: the boat at thirty year bonds for the kids. What's
Speaker 2: the biggest mistake retail makes in duration or maturity of
Speaker 2: communities versus what the adults do.
Speaker 7: I actually think the biggest mistake the mean that retail
Speaker 7: makes vis a vis their curve selection is going too
Speaker 7: short on the curve. Interesting because if you think about
Speaker 7: it immunity markets, it's we fund projects or long duration market. Now,
Speaker 7: look what I've said that at the zero buonoministrates. No,
Speaker 7: but you know now I think you know, having the
Speaker 7: opportunity to opportunity to layer in these you know, eight
Speaker 7: to nine percent after tax returns in the in the
Speaker 7: high yeld muny market, I just don't think we're going
Speaker 7: to see that very often. And if it gets to
Speaker 7: ten eleven percent, you're not going to own a lot
Speaker 7: of equities.
Speaker 6: I remember listening to Taylor Riggs, formerly of here, talking
Speaker 6: a lot about the muni market and all the projects
Speaker 6: that could be she left, there's more news for you.
Speaker 6: What are the projects now that are sort of most
Speaker 6: of the funding is going toward where we seeing the
Speaker 6: greatest greatest interest terms of funny.
Speaker 7: Projects, whether the the biggest. The biggest project on the
Speaker 7: docket for the next couple of weeks is the bright
Speaker 7: Line train out West, which will be a high speed
Speaker 7: electric train going from Las Vegas to Los Angeles. So
Speaker 7: we really that's it's a large, non rated deal. It'll
Speaker 7: be very interesting to see how the market absorbs that.
Speaker 7: It's an exciting project, but it's it's a non rated
Speaker 7: it's a two and a half million dollar deal. It'll
Speaker 7: be interesting to see how the marketing sworts that one.
Speaker 2: The ETFs for munis is get showing interest. I mean,
Speaker 2: this is I think if new ven years ago in
Speaker 2: unit trust or buying individual paper, the wull ETF things
Speaker 2: picking up hip.
Speaker 7: One of the things that people learned, especially after going
Speaker 7: through the pandemic when in some of the mass selling
Speaker 7: in March and April of twenty twenty, is they want
Speaker 7: to know what's inside these funds. And you know there's
Speaker 7: a there's a place for open end mutual funds, no question,
Speaker 7: but you know, being able to see the transparency of
Speaker 7: the portfolio every day is very attractive investors. The other
Speaker 7: thing is is so many financial advisors retool their practices
Speaker 7: and they're using models. ETF fit very easily in the model.
Speaker 7: So the ease of use also is really nice.
Speaker 2: Were you ever at Union College when it was twenty
Speaker 2: six below zero?
Speaker 1: Yes?
Speaker 2: Could you walk across the Mohawk River?
Speaker 7: The that I don't know because we probably hidden basements.
Speaker 7: But the or you're working on the sixth, the sixth
Speaker 7: casees Unica club, the Yeah, I mean there was they
Speaker 7: still let us have kegs back then, the and there
Speaker 7: was a lot of them.
Speaker 2: Thank you so much, him, thanks thanks for having me,
Speaker 2: very good. Thank you. I really appreciate it. Head of
Speaker 2: Muni Bonds at Black Rack.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Apple Coarcklay, and Android
Speaker 1: Auto with the Bloomberg Business app. You can also watch
Speaker 1: us live every weekday on YouTube and always on the
Speaker 1: Bloomberg Terminal.
Speaker 2: Special edition front pages. Today a super Bowl Driven with
Speaker 2: Lisa Mateos. She washed every minute every ad. Mateo reports,
Speaker 2: I am really.
Speaker 5: Feeling it this morning.
Speaker 8: Guys.
Speaker 3: Okay, so fashion, right, you talk Super Bowl and everything,
Speaker 3: but the fashion at the halftime show and of course
Speaker 3: a pop star suite that's all in the headlines. Okay,
Speaker 3: So Kendrick Lamar, you know he did the halftime show.
Speaker 3: Yes he had the fancy varsity jacket, but what people
Speaker 3: are pointing out are the jeans he was wearing. He
Speaker 3: was wearing blue wash, bleachy blue wash bell bottomed jeans.
Speaker 3: So they're saying, is that the new thing? I mean, David,
Speaker 3: I don't know if I could see you in the fit.
Speaker 6: No, but Tom might bring his closet.
Speaker 7: You had them from the Boulder days. Yeah, I didn't
Speaker 7: even know what.
Speaker 2: Year was at the sunk with the Nebraska attack.
Speaker 3: Yes, so you have Kendrick Lamar's bell bottoms. But also
Speaker 3: Taylor Swift. Everybody was wondering what she was going to wear,
Speaker 3: so they're saying she had She had the double breasted
Speaker 3: white San Laurent Blair blazer today, the bedazzled Daisy Dukes.
Speaker 3: You have to have those two, okay, and the white bodysuit,
Speaker 3: the thigh high white stiletto boots.
Speaker 5: The theme is white.
Speaker 3: But everybody was saying, oh, she was wearing white because maybe.
Speaker 5: She was going to get engaged, and that.
Speaker 3: Sparked all this.
Speaker 2: It was too but miss Swift was carrying the cherry
Speaker 2: red Javan she yes, a hit Vanessa Friedman.
Speaker 8: Yes.
Speaker 3: And she also wore remember that that thigh high little
Speaker 3: tea necklace that she wore in the Grammys.
Speaker 5: I yess, she wore it on her neck. So it
Speaker 5: came back again.
Speaker 2: The tea necklacespapers today.
Speaker 3: Fashion Now it's a fashion report because guess who else
Speaker 3: was in the spotlight for something they wore on their wrist.
Speaker 3: That was Tom Brady.
Speaker 6: Tom Brady, did you notice it?
Speaker 3: It was like shining, the lights were bladed. It was okay,
Speaker 3: it was a stunt of Jacob and Company. Do you
Speaker 3: know how much that wash cost?
Speaker 2: Seven hundred and forty.
Speaker 5: Thousand dollars.
Speaker 7: Look for mister Brady.
Speaker 3: Yeah, caviar Torbillon model. It's yellow sapphires design. I mean
Speaker 3: it had forty eight carrots worth of yellow sapphires.
Speaker 6: I never understood, as I don't know was made of alligator.
Speaker 3: Yes, it was there you go. It glistened like pearls
Speaker 3: of caviar.
Speaker 7: That's why it's called it.
Speaker 2: I think it distracted.
Speaker 3: It was a little bit distracted.
Speaker 7: I just said, the ers at home can see my swatch.
Speaker 2: Let me star it twelve seconds. Brady is a pinata, yes,
Speaker 2: And the moment they stopped coaching him and he actually
Speaker 2: talks about what he knows, like not scoring in the
Speaker 2: first quarter.
Speaker 3: He sounds wonderful when he gets out of his head.
Speaker 2: When he gets out of his head, he's like, really
Speaker 2: quite good. Next.
Speaker 3: Okay, Lucashaw, you talked about this, so I want to
Speaker 3: bring it up. Really a good article on the Termin'll
Speaker 3: check it out on screen time talking about why football
Speaker 3: NFL has gotten so big. So one Nielsen counts views
Speaker 3: at bars, restaurants and airports.
Speaker 5: Now, okay, but to the league.
Speaker 3: At shrunk gets off seasons and even during the off season.
Speaker 3: It keeps him that them going. Right, you have the draft,
Speaker 3: you have the NFL scouting combine, so they keep it going.
Speaker 3: And then bar, like Michael Barr said, you know, the
Speaker 3: expansion into streaming, but the NFL itself, the season is short,
Speaker 3: so every game matters.
Speaker 2: Two guys that invented Game of Thrones, Bennioff and the
Speaker 2: other guy, once said to my face it was an
Speaker 2: honor to talk to them for the length of time.
Speaker 2: We thought we had to create a crescendo in the
Speaker 2: show at the last season. Then they learned they had
Speaker 2: to have a crescendo every week twice. That's what the
Speaker 2: NFL's accomplished versus baseball. Baseball still back in the nineteen
Speaker 2: thirties on a train, you know, we got four games
Speaker 2: in Kansas City. Who are you going to pitch? The
Speaker 2: third game. Do you have anything else? Quick?
Speaker 3: What was your favorite super Bowl ad? Because that was
Speaker 3: the one from the YouTube predicted that the top one.
Speaker 1: Was the Muppets.
Speaker 3: Did you see the Muppets looking down?
Speaker 2: Yeah? I thought some were really quite good. In a
Speaker 2: lot of them, I'm like, who are they talking to?
Speaker 4: I loved it.
Speaker 3: The Meg Ryan, Billy, Crystal one, bet the Hellman's Mayname. Yeah,
Speaker 3: that was good.
Speaker 2: Cat's Delli. Lisa'll tell you with a super Bowl report.
Speaker 2: Thank you so much, greatly appreciate it.
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,
Speaker 1: seven to ten am Eastern on Bloomberg dot com, the
Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You
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