1 00:00:02,400 --> 00:00:07,480 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,680 --> 00:00:15,480 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,520 --> 00:00:18,720 Speaker 2: with Lisa Bromwitz and Amerie Hordern. Join us each day 4 00:00:18,760 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,440 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,960 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,319 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,960 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,040 --> 00:00:35,920 Speaker 2: terminal and the Bloomberg Business App. 10 00:00:36,520 --> 00:00:39,360 Speaker 3: There is still data creeping out before the Christmas holiday. 11 00:00:39,560 --> 00:00:41,200 Speaker 1: Initial job list claims. 12 00:00:41,040 --> 00:00:44,760 Speaker 3: Scarlett coming in at two hundred and fourteen thousand, right, and. 13 00:00:44,680 --> 00:00:46,960 Speaker 4: That is lower than expected. The estimate was for two 14 00:00:47,080 --> 00:00:50,639 Speaker 4: hundred and twenty four thousand, and on a four week basis, 15 00:00:51,040 --> 00:00:53,240 Speaker 4: the four week moving average, it's about two hundred and 16 00:00:53,320 --> 00:00:56,200 Speaker 4: sixteen thousand, which is slightly lower than the previous four 17 00:00:56,240 --> 00:00:58,880 Speaker 4: week period. On a continuing claims basis, we're looking at 18 00:00:58,880 --> 00:01:03,280 Speaker 4: one point nine in terms of the claims for overall, 19 00:01:03,360 --> 00:01:05,680 Speaker 4: and that's compared with one point nine. 20 00:01:05,520 --> 00:01:07,440 Speaker 1: To ZHO as the consensus. 21 00:01:07,440 --> 00:01:10,880 Speaker 4: So these are you know, it's a high frequency data point. 22 00:01:10,880 --> 00:01:13,000 Speaker 4: It's something that we look at more carefully because the 23 00:01:13,080 --> 00:01:16,319 Speaker 4: jobs numbers have been messed up by the government shutdown. 24 00:01:16,480 --> 00:01:18,000 Speaker 4: We haven't gotten a lot of clarity on it, and 25 00:01:18,000 --> 00:01:20,160 Speaker 4: we probably won't get a lot of clarity on those 26 00:01:20,240 --> 00:01:22,560 Speaker 4: jobs numbers for a couple of months to come, especially 27 00:01:22,560 --> 00:01:24,679 Speaker 4: if there's another shutdown potentially in January. 28 00:01:24,720 --> 00:01:27,560 Speaker 3: Absolutely, the distortion from the jobs up from the shutdown 29 00:01:27,680 --> 00:01:28,919 Speaker 3: longest in history. 30 00:01:28,959 --> 00:01:29,880 Speaker 5: What's interesting, though. 31 00:01:29,800 --> 00:01:32,440 Speaker 3: Is the continuing claims that is ticking higher, even though 32 00:01:32,440 --> 00:01:34,039 Speaker 3: we do have the initial claims. 33 00:01:33,840 --> 00:01:34,760 Speaker 1: A little bit softer. 34 00:01:34,880 --> 00:01:37,600 Speaker 3: But to Scarlett's point, these data points really do matter, 35 00:01:37,680 --> 00:01:39,679 Speaker 3: given the fact that we are dealing with potentially this 36 00:01:39,800 --> 00:01:43,160 Speaker 3: distorted data right now. Financial markets though not seeing really 37 00:01:43,200 --> 00:01:46,520 Speaker 3: any action, low volume today. It is Christmas, so potentially 38 00:01:46,520 --> 00:01:49,080 Speaker 3: some individuals not really paying attention to their ecoscreen. 39 00:01:49,400 --> 00:01:50,840 Speaker 1: Joining us now though, discuss more. 40 00:01:50,920 --> 00:01:54,640 Speaker 3: Stephanie Roth of Wolf Research and Bloomberg's Michael Ball, thank 41 00:01:54,680 --> 00:01:57,680 Speaker 3: you both for joining us being in studio. Merry Christmas 42 00:01:57,680 --> 00:01:59,920 Speaker 3: to both of you. Let's just get your reaction, Stephanie. 43 00:02:00,040 --> 00:02:01,200 Speaker 3: From the initial claims. 44 00:02:01,000 --> 00:02:03,880 Speaker 5: Number, it's the data looks solid. It's telling us the 45 00:02:03,920 --> 00:02:08,360 Speaker 5: labor market remains fairly, fairly well contained. The layoffs are 46 00:02:08,400 --> 00:02:10,840 Speaker 5: pretty minimal. There was a bounce back in continuing claims. 47 00:02:10,880 --> 00:02:12,800 Speaker 5: We have to remember that there was volatility around the 48 00:02:12,800 --> 00:02:16,239 Speaker 5: Thanksgiving holiday. The trend seems like in Continuing claims is 49 00:02:16,280 --> 00:02:19,040 Speaker 5: it's actually starting to take down over the past couple 50 00:02:19,080 --> 00:02:21,840 Speaker 5: of weeks, which is a positive sign. Continuing claims are 51 00:02:21,840 --> 00:02:24,000 Speaker 5: important to watch to gauge to what extent people who 52 00:02:24,040 --> 00:02:27,520 Speaker 5: are currently unemployed are finding jobs the job finding rate. 53 00:02:27,600 --> 00:02:31,079 Speaker 3: When you look at this data and compare it to 54 00:02:31,080 --> 00:02:33,400 Speaker 3: what we saw in the latest job support with the inflicate, 55 00:02:33,400 --> 00:02:36,200 Speaker 3: with the unemployment rate actually taking higher, though, what do 56 00:02:36,240 --> 00:02:37,400 Speaker 3: you make of all of it? Or is it just 57 00:02:37,400 --> 00:02:38,079 Speaker 3: too noisy? 58 00:02:38,360 --> 00:02:40,560 Speaker 5: I wouldn't read into the unapployment rate ticking up in 59 00:02:40,600 --> 00:02:43,320 Speaker 5: the last most recent print. I think there was an 60 00:02:43,360 --> 00:02:46,000 Speaker 5: amount of the government shutdown that filtered into the data. 61 00:02:46,320 --> 00:02:48,920 Speaker 5: BLS said that there was an impact from the government shutdown. 62 00:02:49,120 --> 00:02:52,080 Speaker 5: They can't con necessarily quantify exactly how much. I firmly 63 00:02:52,120 --> 00:02:54,960 Speaker 5: believe that in the next December print we will see 64 00:02:55,000 --> 00:02:59,440 Speaker 5: that unployment rate taking down to potentially four to four, 65 00:02:59,800 --> 00:03:00,880 Speaker 5: if not at least four or five. 66 00:03:01,000 --> 00:03:01,920 Speaker 1: Michael, what do you make of this. 67 00:03:02,200 --> 00:03:04,079 Speaker 6: Yeah, the timing was different too, right, So the re 68 00:03:04,280 --> 00:03:06,480 Speaker 6: entries from sort of the college kids coming home had 69 00:03:06,480 --> 00:03:09,760 Speaker 6: a factor. There's this sort of weirder feel to it 70 00:03:09,800 --> 00:03:12,560 Speaker 6: that made it very questionable, again with every other data 71 00:03:12,560 --> 00:03:14,480 Speaker 6: set we've seen from sort of the shutdown. So again 72 00:03:14,639 --> 00:03:17,160 Speaker 6: traders are looking through it, waiting for January to get 73 00:03:17,160 --> 00:03:19,600 Speaker 6: the December data with the hope it's cleaner. But to 74 00:03:19,600 --> 00:03:21,760 Speaker 6: what you just said, uncertain if we will get that 75 00:03:21,840 --> 00:03:25,840 Speaker 6: if there is a shutdown. The lots lots of questions, 76 00:03:25,960 --> 00:03:27,200 Speaker 6: not a lot of answers. 77 00:03:27,000 --> 00:03:28,120 Speaker 1: We've borne there before. 78 00:03:28,440 --> 00:03:31,000 Speaker 4: So, Michael, given all of this, the fact that the 79 00:03:31,080 --> 00:03:33,679 Speaker 4: labor data is going to be not corrupted but incomplete 80 00:03:33,720 --> 00:03:36,400 Speaker 4: for a while, do you then look at the market 81 00:03:36,520 --> 00:03:39,280 Speaker 4: focusing more on things like the weekly joblest claims, which 82 00:03:39,920 --> 00:03:42,320 Speaker 4: didn't really get as affected by the garment shutdown because 83 00:03:42,360 --> 00:03:43,800 Speaker 4: these are state compile numbers. 84 00:03:44,040 --> 00:03:46,280 Speaker 6: Yeah, I think the continuing claims interesting. You did see 85 00:03:46,320 --> 00:03:48,720 Speaker 6: some of that picked up in other survey data. And 86 00:03:48,760 --> 00:03:50,920 Speaker 6: also what I'm looking at a lot is now is beagebook. 87 00:03:51,160 --> 00:03:53,880 Speaker 6: The trending there has been much weaker. You have obviously 88 00:03:54,240 --> 00:03:56,760 Speaker 6: three points growth inflation and the labor market there where 89 00:03:56,760 --> 00:03:58,520 Speaker 6: you can kind of extract a trend, and all of 90 00:03:58,520 --> 00:04:00,440 Speaker 6: it's been sort of negative, including the inflation, which is 91 00:04:00,480 --> 00:04:03,080 Speaker 6: seemed to be stabilized, moved sort of from the forefront 92 00:04:03,080 --> 00:04:05,640 Speaker 6: of the summer now to something secondary and instead now 93 00:04:05,720 --> 00:04:08,760 Speaker 6: guys are talking about lower sales, lower activity, lower investment, 94 00:04:08,800 --> 00:04:10,560 Speaker 6: and we saw some of that a little bit in 95 00:04:10,600 --> 00:04:14,120 Speaker 6: the third quarter GDP, where the investment side was much 96 00:04:14,200 --> 00:04:15,680 Speaker 6: kind of flatter than you would expect. Now there was 97 00:04:15,680 --> 00:04:18,280 Speaker 6: an inventory drag clearly, and most of the power came 98 00:04:18,320 --> 00:04:20,880 Speaker 6: from consumption. But my worry is if we moved past 99 00:04:20,920 --> 00:04:24,200 Speaker 6: the AI pulse, the investment cap X story is much 100 00:04:24,240 --> 00:04:26,960 Speaker 6: weaker and some of the pmis are reflecting that now. 101 00:04:27,040 --> 00:04:28,960 Speaker 4: So for those who don't know, the base will compiles 102 00:04:29,279 --> 00:04:34,279 Speaker 4: anecdotal evidence of what different FED regency taking place in 103 00:04:34,320 --> 00:04:37,479 Speaker 4: their district. Is that based on activity or is it 104 00:04:37,520 --> 00:04:40,400 Speaker 4: based on sentiment? Because we know the soft surveys tend 105 00:04:40,440 --> 00:04:43,279 Speaker 4: to show consumers feeling worried, but in the end they 106 00:04:43,440 --> 00:04:45,000 Speaker 4: end up spending anyway one hundred. 107 00:04:44,760 --> 00:04:47,480 Speaker 6: Percent and sentiment based for sure. They obviously are you 108 00:04:47,720 --> 00:04:50,120 Speaker 6: talking about real activity? And the FED presidents and some 109 00:04:50,160 --> 00:04:52,000 Speaker 6: of the governors like to say they talked to contacts 110 00:04:52,000 --> 00:04:54,520 Speaker 6: in their districts or contacts out there, and this is 111 00:04:54,520 --> 00:04:56,279 Speaker 6: what they're referring to in a lot of ways. But 112 00:04:56,360 --> 00:04:58,080 Speaker 6: to your point to shut down weight on sentiment, we 113 00:04:58,120 --> 00:05:01,360 Speaker 6: obviously have seen consumer confidence hasn't really bounded yet. Business 114 00:05:01,400 --> 00:05:03,599 Speaker 6: sentiment has been moddeling through. If you look at some 115 00:05:03,640 --> 00:05:05,600 Speaker 6: of the regional Fed pmis, it can be quite funny 116 00:05:05,640 --> 00:05:07,520 Speaker 6: when you look at the comments and how frustrated are 117 00:05:07,520 --> 00:05:09,160 Speaker 6: with tariffs and with shutdowns, and. 118 00:05:09,120 --> 00:05:11,279 Speaker 4: Of course it's not there just the jobs data that 119 00:05:11,640 --> 00:05:15,080 Speaker 4: is left kind of incomplete Stuffhan we also see inflation, 120 00:05:15,240 --> 00:05:17,240 Speaker 4: and the latest inflation report was a good example of 121 00:05:17,279 --> 00:05:19,479 Speaker 4: that where we're not getting the full picture, and it 122 00:05:19,480 --> 00:05:20,880 Speaker 4: looks like we're not going to get the full picture 123 00:05:20,920 --> 00:05:21,359 Speaker 4: for a while. 124 00:05:21,800 --> 00:05:23,840 Speaker 5: No, what we're going to see is the inflation data 125 00:05:23,880 --> 00:05:25,520 Speaker 5: is likely to tick higher in the next couple months 126 00:05:25,560 --> 00:05:28,160 Speaker 5: and up until April when we get the bounce back 127 00:05:28,200 --> 00:05:31,599 Speaker 5: in terms of rent inflation, given some assumptions that BLS made. 128 00:05:31,760 --> 00:05:34,400 Speaker 5: So what we'll probably see is an environment where inflation 129 00:05:34,480 --> 00:05:36,200 Speaker 5: is picking higher. And I would actually take the other 130 00:05:36,240 --> 00:05:38,440 Speaker 5: side on the growth from a growth perspective, and our 131 00:05:38,440 --> 00:05:40,440 Speaker 5: expectation is that growth is going to start picking up. 132 00:05:40,640 --> 00:05:42,760 Speaker 5: It's ready. It seems to be inflecting to some extent. 133 00:05:42,960 --> 00:05:45,720 Speaker 5: The Q three GDP data, we're actually pretty decent, and 134 00:05:45,720 --> 00:05:48,479 Speaker 5: my expectation is in Q one the narrative around the 135 00:05:48,480 --> 00:05:51,599 Speaker 5: economy will be somewhat the opposite of what we've seen 136 00:05:51,600 --> 00:05:53,280 Speaker 5: in the past couple months, where it's inflation is a 137 00:05:53,279 --> 00:05:55,240 Speaker 5: little bit elevated and growth is also picking up. 138 00:05:55,360 --> 00:05:57,320 Speaker 3: When it comes to growth, we have the GDP report 139 00:05:57,320 --> 00:06:00,000 Speaker 3: for the third quarter rear view mirror, but more than 140 00:06:00,040 --> 00:06:03,200 Speaker 3: four percent absolutely stellar. Know, the Commerce Secretary thinks that 141 00:06:03,240 --> 00:06:04,760 Speaker 3: means we're all getting a four point. 142 00:06:04,600 --> 00:06:06,800 Speaker 1: Three percent raise. If it were, that wouldn't be great. 143 00:06:06,880 --> 00:06:08,200 Speaker 1: You know, our management. 144 00:06:08,200 --> 00:06:11,160 Speaker 3: If you're watching the Commerce Secretary says, says, that's what 145 00:06:11,200 --> 00:06:13,240 Speaker 3: it is. But when you see that kind of growth, 146 00:06:13,600 --> 00:06:16,240 Speaker 3: do you think that's sustainable into twenty twenty six. 147 00:06:17,000 --> 00:06:18,960 Speaker 5: No, And first of all, four point three percent real 148 00:06:19,000 --> 00:06:22,680 Speaker 5: GDP growth does not mean nominal wages. That's a different concept. 149 00:06:22,720 --> 00:06:24,840 Speaker 5: But putting that aside, you get up. 150 00:06:24,800 --> 00:06:27,320 Speaker 1: With the Commerce Secretary Stephanie. 151 00:06:26,839 --> 00:06:29,640 Speaker 5: Putting that aside. Is it sustainable? 152 00:06:29,680 --> 00:06:29,720 Speaker 7: No? 153 00:06:29,880 --> 00:06:33,119 Speaker 5: Because some of it was linked to net trade, which 154 00:06:33,160 --> 00:06:36,160 Speaker 5: is which added one point six percentage points. What we're 155 00:06:36,160 --> 00:06:38,920 Speaker 5: seeing is an economy that's running between two or two 156 00:06:38,960 --> 00:06:42,479 Speaker 5: and a half percent. Our expectation as will be running 157 00:06:42,720 --> 00:06:45,640 Speaker 5: around that trajectory for twenty twenty six. A four percent 158 00:06:45,720 --> 00:06:49,080 Speaker 5: pace absolutely not sustainable, nor is that really the underlying 159 00:06:49,080 --> 00:06:50,200 Speaker 5: trend anyway. 160 00:06:50,279 --> 00:06:52,920 Speaker 3: And it got the attention of the President. He said, 161 00:06:52,920 --> 00:06:55,240 Speaker 3: the financial news today was great. GDP is at more 162 00:06:55,279 --> 00:06:57,360 Speaker 3: than four percent as opposed to a predicted but the 163 00:06:57,360 --> 00:07:00,320 Speaker 3: modern market we have good news. The market stays evenor 164 00:07:00,400 --> 00:07:03,720 Speaker 3: goes down because Wall Street's heads are wired differently. He says, 165 00:07:03,760 --> 00:07:06,120 Speaker 3: no one that agrees with him cannot become the FED chair. 166 00:07:06,360 --> 00:07:08,599 Speaker 3: What does the FED do with this kind of mixed 167 00:07:08,640 --> 00:07:09,960 Speaker 3: match you're really describing. 168 00:07:10,720 --> 00:07:12,120 Speaker 5: I think they're going to be on hold for a 169 00:07:12,160 --> 00:07:13,720 Speaker 5: lot of next year, at least until we get the 170 00:07:13,760 --> 00:07:16,960 Speaker 5: new chair. This is probably this was probably Powell's last cut. 171 00:07:17,160 --> 00:07:20,000 Speaker 5: It's an environment where inflation is taking higher, like I said, 172 00:07:20,560 --> 00:07:23,160 Speaker 5: employment's likely to start improving, so on point right, like 173 00:07:23,160 --> 00:07:25,680 Speaker 5: we talked about earlier, taking down, and then the trend 174 00:07:25,680 --> 00:07:27,200 Speaker 5: in perils is likely to be a bit better, in 175 00:07:27,280 --> 00:07:29,400 Speaker 5: which case it's a tough environment for them to be cutting. 176 00:07:29,600 --> 00:07:31,520 Speaker 5: So the President may very well not like what he's 177 00:07:31,520 --> 00:07:33,080 Speaker 5: seeing in the first part of the year because the 178 00:07:33,120 --> 00:07:35,200 Speaker 5: Fed's unlikely to be havel to these policy. 179 00:07:34,920 --> 00:07:37,560 Speaker 4: Launch unless the data shows that the labor market is 180 00:07:37,600 --> 00:07:41,000 Speaker 4: deteriorating so quickly bad headline numbers leading to a good 181 00:07:41,000 --> 00:07:43,560 Speaker 4: market outcome. The President has made clear he doesn't like that. 182 00:07:43,640 --> 00:07:44,680 Speaker 4: But will you just take it. 183 00:07:44,600 --> 00:07:45,000 Speaker 1: In the end? 184 00:07:45,600 --> 00:07:47,960 Speaker 6: Yeah, I mean, we'd have to have quite a print 185 00:07:48,160 --> 00:07:50,480 Speaker 6: in January for the December data to make it just 186 00:07:50,600 --> 00:07:52,200 Speaker 6: right so that they would move. And to your point, 187 00:07:52,240 --> 00:07:55,120 Speaker 6: then it's no longer risk management cuts. The market takes 188 00:07:55,120 --> 00:07:57,320 Speaker 6: it totally different. You're cutting now into weakness, and that's 189 00:07:57,360 --> 00:08:00,600 Speaker 6: a totally different vibe to talk about. Lisa likes to 190 00:08:00,600 --> 00:08:02,920 Speaker 6: talk about with the vibes. I knows she's not here today, right. 191 00:08:03,040 --> 00:08:05,640 Speaker 6: That changes the whole vibe, right. The rotation, the reacceleration, 192 00:08:05,760 --> 00:08:08,920 Speaker 6: And I understand what you're saying that basically there is 193 00:08:08,960 --> 00:08:11,040 Speaker 6: this hope that the budget bill and that basically the 194 00:08:11,080 --> 00:08:13,520 Speaker 6: coming up passing of the uncertainty from the shutdown from 195 00:08:13,560 --> 00:08:15,760 Speaker 6: the tariffs will all have a better sort of pulse 196 00:08:15,760 --> 00:08:17,920 Speaker 6: into the first half of next year. And that's why 197 00:08:17,920 --> 00:08:20,400 Speaker 6: we see this rotation trade small cap cycle close even 198 00:08:20,440 --> 00:08:23,800 Speaker 6: pockets of value have outperformed, but overall, again the worry 199 00:08:23,960 --> 00:08:26,480 Speaker 6: is that now the FED further easing is not based 200 00:08:26,520 --> 00:08:28,520 Speaker 6: on sort of that good vibe, It's just based on 201 00:08:28,600 --> 00:08:30,880 Speaker 6: warriors and weakness, and then people have to change the sentiment. 202 00:08:31,560 --> 00:08:34,040 Speaker 4: Sophie, what is your biggest concern? What is the most 203 00:08:34,800 --> 00:08:37,960 Speaker 4: high impact but low probability event that could happen. 204 00:08:38,400 --> 00:08:41,199 Speaker 5: In twenty twenty six? I would say, if we're wrong 205 00:08:41,240 --> 00:08:43,280 Speaker 5: on the land market right, and we see the unemployment 206 00:08:43,360 --> 00:08:46,880 Speaker 5: rate notably taking higher, that would of course be a 207 00:08:46,920 --> 00:08:50,760 Speaker 5: sort of negative batchup. Granted, the FED in that environment, 208 00:08:50,880 --> 00:08:52,920 Speaker 5: in theory, would be able to ease unless we get 209 00:08:53,080 --> 00:08:56,520 Speaker 5: inflations starting to take higher, none of you. But if 210 00:08:56,520 --> 00:08:59,520 Speaker 5: we have an environment where you see both sides of 211 00:08:59,520 --> 00:09:02,080 Speaker 5: the FEDS made, they come into challenge and the inflation 212 00:09:02,200 --> 00:09:04,360 Speaker 5: side is starting to really pick up, which is very 213 00:09:04,360 --> 00:09:06,920 Speaker 5: possible in Q one in particular because Q one tends 214 00:09:06,920 --> 00:09:09,599 Speaker 5: to have seasonal problems, that would be kind of the 215 00:09:09,600 --> 00:09:10,640 Speaker 5: worst environment. 216 00:09:10,240 --> 00:09:12,360 Speaker 1: Of course for both of you. Is there potential for 217 00:09:12,480 --> 00:09:15,480 Speaker 1: recession in twenty twenty six, I. 218 00:09:15,400 --> 00:09:17,480 Speaker 5: Don't think the odds are particularly high. I don't think 219 00:09:17,480 --> 00:09:21,760 Speaker 5: they're particularly higher than the normal recessionary on somewhere between 220 00:09:21,760 --> 00:09:24,320 Speaker 5: fifteen and twenty percent. Of course, the odds are never zero, 221 00:09:24,880 --> 00:09:27,280 Speaker 5: but I don't think it's abnormally high at this factor. 222 00:09:27,360 --> 00:09:29,600 Speaker 3: I guess the question I have, just you know, percolating 223 00:09:29,600 --> 00:09:31,400 Speaker 3: the back of my mind is what does it mean 224 00:09:31,440 --> 00:09:32,760 Speaker 3: if the AI trade. 225 00:09:32,520 --> 00:09:37,080 Speaker 1: Is real and we actually see mass layoffs, that's. 226 00:09:37,000 --> 00:09:39,960 Speaker 5: Not necessarily a recessionary back of course, it depends on 227 00:09:40,040 --> 00:09:43,520 Speaker 5: how it all plays out. If we see an environment 228 00:09:43,520 --> 00:09:46,600 Speaker 5: where the unemployt rate is just steadily moving slightly higher 229 00:09:46,640 --> 00:09:51,040 Speaker 5: because you have AI, then you have strong growth, productivity, 230 00:09:51,559 --> 00:09:54,760 Speaker 5: low inflation, that's not necessarily the worst backdop. If it's 231 00:09:55,640 --> 00:09:58,679 Speaker 5: mass layoffs, then they come quite quickly. Of course that's 232 00:09:58,720 --> 00:10:00,240 Speaker 5: a very different environment. But I think I think the 233 00:10:00,280 --> 00:10:02,400 Speaker 5: way it might play out if it's really AI related 234 00:10:02,800 --> 00:10:05,000 Speaker 5: is a more gradual upward pressure on the unemployment rate, 235 00:10:05,000 --> 00:10:05,920 Speaker 5: which is not recessionary. 236 00:10:06,000 --> 00:10:08,400 Speaker 6: Michael, Yeah, I think you did a shock, something unforseeable 237 00:10:08,440 --> 00:10:09,840 Speaker 6: in a lot of ways to get us there, given 238 00:10:09,880 --> 00:10:12,000 Speaker 6: the momentum is still strong. Again what I was saying earlier, 239 00:10:12,040 --> 00:10:15,240 Speaker 6: I'm worried about this capex pulse. Outside of AI. The 240 00:10:15,360 --> 00:10:17,880 Speaker 6: no higher no fire seems to be holding and as 241 00:10:17,880 --> 00:10:20,120 Speaker 6: we're seeing now, although December look to have cool, the 242 00:10:20,120 --> 00:10:22,760 Speaker 6: consumer has been resilient. Clearly it was in third quarter. 243 00:10:23,120 --> 00:10:24,920 Speaker 6: We'll see what happens in the fourth. And that's all 244 00:10:25,000 --> 00:10:27,119 Speaker 6: driving us into the new year with some good momentum. 245 00:10:27,400 --> 00:10:29,559 Speaker 6: But to the point you know, there is still a 246 00:10:29,640 --> 00:10:33,000 Speaker 6: veil concern with price levels, not necessarily the acceleration of prices, 247 00:10:33,000 --> 00:10:35,400 Speaker 6: but the actual level still weighing on real disposable income 248 00:10:35,760 --> 00:10:37,960 Speaker 6: and hurting the K economy, creating the K economy and 249 00:10:38,000 --> 00:10:38,840 Speaker 6: hurting the lower half. 250 00:10:39,400 --> 00:10:41,679 Speaker 4: The dollar is projected to be lower in twenty twenty 251 00:10:41,720 --> 00:10:44,720 Speaker 4: six as well, and of course we see central banks 252 00:10:44,720 --> 00:10:47,400 Speaker 4: around the rest of the world, in the UK, Europe 253 00:10:47,480 --> 00:10:48,439 Speaker 4: cutting interest rates. 254 00:10:48,600 --> 00:10:50,560 Speaker 1: Talk a little bit about how the dollar factors into 255 00:10:50,559 --> 00:10:50,880 Speaker 1: all of this. 256 00:10:51,280 --> 00:10:52,880 Speaker 6: Yeah, the dollar is the big debate, and I think 257 00:10:52,880 --> 00:10:54,640 Speaker 6: it's interesting because you can spin a number of ways. 258 00:10:54,640 --> 00:10:56,839 Speaker 6: If we do reaccelerate and they are less fed cuts 259 00:10:56,880 --> 00:10:59,719 Speaker 6: for good reasons, one would think that just rate differentials 260 00:10:59,720 --> 00:11:02,280 Speaker 6: alone would support the dollar broadly. Now, of course, there's 261 00:11:02,280 --> 00:11:04,760 Speaker 6: all these idiosyncratic stories with the euro, with the yen 262 00:11:05,120 --> 00:11:07,200 Speaker 6: and even elsewhere on the other g tens that make 263 00:11:07,280 --> 00:11:09,320 Speaker 6: it hard to really look at the basket and say, Okay, 264 00:11:09,320 --> 00:11:11,520 Speaker 6: we're going to have one move in the basket, but overall, 265 00:11:11,559 --> 00:11:12,680 Speaker 6: I think it's just going to be more of an 266 00:11:12,720 --> 00:11:15,680 Speaker 6: alpha from individual crosses and on the end Live team. 267 00:11:15,679 --> 00:11:17,760 Speaker 7: We've been having this debate. 268 00:11:17,520 --> 00:11:19,800 Speaker 1: Quite vigorously lately, Stephanie. 269 00:11:19,840 --> 00:11:21,800 Speaker 4: It's the day before Christmas, It's Christmas Eve, so of 270 00:11:21,840 --> 00:11:23,280 Speaker 4: course there's going to be a lot of people out 271 00:11:23,280 --> 00:11:26,559 Speaker 4: there doing some last minute shopping. Consumer spending, retail sales 272 00:11:26,600 --> 00:11:28,240 Speaker 4: will continue to hold up for December. 273 00:11:28,440 --> 00:11:30,040 Speaker 5: Yeah, I think it should be pretty decent. If you 274 00:11:30,040 --> 00:11:32,600 Speaker 5: look at the real time data, they look fairly steady. 275 00:11:32,640 --> 00:11:35,800 Speaker 5: It seems that the consumer just continues to be fairly resilient. 276 00:11:36,040 --> 00:11:37,520 Speaker 5: And then in twenty twenty six, at the beginning of 277 00:11:37,559 --> 00:11:38,760 Speaker 5: the years, when you're going to start to get the 278 00:11:38,800 --> 00:11:41,400 Speaker 5: impact from one big beautiful bill which then benefits from 279 00:11:41,400 --> 00:11:43,319 Speaker 5: the lower end consumers from no tax on text, no 280 00:11:43,440 --> 00:11:46,400 Speaker 5: tax in overtime via tax refunds that come. 281 00:11:46,240 --> 00:11:49,640 Speaker 3: In, and potentially two thousand dollars checks presents voting tariff 282 00:11:49,640 --> 00:11:50,240 Speaker 3: dividend checks. 283 00:11:50,280 --> 00:11:51,199 Speaker 5: Let's see know about that. 284 00:11:51,280 --> 00:11:52,680 Speaker 1: Let's see what Congress has to say about. 285 00:11:52,720 --> 00:11:56,040 Speaker 3: Stephanie Roth of Wolf Research and my Bloomberg's Michael Ball, 286 00:11:56,120 --> 00:11:58,200 Speaker 3: thank you both for coming and joining us in studio, 287 00:11:58,240 --> 00:11:59,800 Speaker 3: spending your Christmas Eve morning with us. 288 00:12:00,520 --> 00:12:03,960 Speaker 2: Stay with us, Multlmberg Savillah's coming up after this. 289 00:12:13,280 --> 00:12:16,360 Speaker 3: Cameron Dawson of New Edge welth saying equities are undeniably 290 00:12:16,440 --> 00:12:19,960 Speaker 3: expensive and there are signs of complacency, but this market 291 00:12:20,000 --> 00:12:21,200 Speaker 3: can chop to new highs. 292 00:12:21,240 --> 00:12:22,120 Speaker 1: Cameron joins us. 293 00:12:22,120 --> 00:12:24,520 Speaker 3: Now, Cameron, give us a sense of what new highs, 294 00:12:24,520 --> 00:12:27,280 Speaker 3: and merry Christmas to you what new highs we can 295 00:12:27,320 --> 00:12:29,360 Speaker 3: have when it comes to equity markets next year. 296 00:12:30,080 --> 00:12:31,839 Speaker 8: Wecome morning and Merry Christmas. 297 00:12:32,000 --> 00:12:34,720 Speaker 9: I think it's time to dust off the old a dodge, 298 00:12:34,800 --> 00:12:38,559 Speaker 9: which is respect the trend, but don't ignore the risks 299 00:12:38,640 --> 00:12:40,200 Speaker 9: as we go into twenty twenty six. 300 00:12:40,640 --> 00:12:42,960 Speaker 8: Respecting the trend appreciates the fact that. 301 00:12:42,840 --> 00:12:45,200 Speaker 9: We're still very much in an uptrend in this market, 302 00:12:45,320 --> 00:12:48,320 Speaker 9: and it's also being led by pro cyclical areas. You 303 00:12:48,400 --> 00:12:52,920 Speaker 9: mentioned industrial commodities earlier. You also have leadership in things 304 00:12:52,960 --> 00:12:56,400 Speaker 9: like banks as well as transport starting to turn higher. 305 00:12:56,640 --> 00:12:59,959 Speaker 9: So there's a pro cyclical message coming out of this market. 306 00:13:00,400 --> 00:13:04,880 Speaker 9: And you also have a very important uptrend in earning sestiments. 307 00:13:04,320 --> 00:13:05,680 Speaker 8: And GDP estimates. 308 00:13:05,679 --> 00:13:08,360 Speaker 9: And this has been the key fundamental underpinning as to 309 00:13:08,400 --> 00:13:11,400 Speaker 9: why we keep being able to press new highs. As 310 00:13:11,400 --> 00:13:14,480 Speaker 9: long as you're revising estimates higher, that's usually a good 311 00:13:14,600 --> 00:13:17,559 Speaker 9: environment for risk taking. So the second half of that 312 00:13:17,760 --> 00:13:20,240 Speaker 9: is don't ignore the risks, and that's where we look 313 00:13:20,240 --> 00:13:23,360 Speaker 9: at things like valuations. We look at signs of things 314 00:13:23,400 --> 00:13:27,000 Speaker 9: like complacency within markets, look at the vix turning ever 315 00:13:27,160 --> 00:13:30,120 Speaker 9: lower each and every day, and so it could be 316 00:13:30,120 --> 00:13:32,600 Speaker 9: in an environment where we're still able to carve out 317 00:13:32,640 --> 00:13:35,760 Speaker 9: new highs because of those earning sestiments, but there could 318 00:13:35,800 --> 00:13:39,319 Speaker 9: be some volatility and chop along the way simply because 319 00:13:39,360 --> 00:13:41,960 Speaker 9: you have a high bar with valuations and a high 320 00:13:42,040 --> 00:13:44,319 Speaker 9: bar with expectations as well. 321 00:13:44,480 --> 00:13:47,120 Speaker 3: But you still think positioning is not yet stretched. 322 00:13:47,520 --> 00:13:48,840 Speaker 1: What would get us to our point. 323 00:13:49,760 --> 00:13:53,280 Speaker 9: Our favorite measure is looking at the Deutsche Bank consolidated 324 00:13:53,320 --> 00:13:56,959 Speaker 9: equity positioning, and this is really measuring institutional positioning. 325 00:13:57,080 --> 00:13:58,320 Speaker 8: And what's fascinating there. 326 00:13:58,200 --> 00:14:00,520 Speaker 9: Is that we're in the sixty second percent hime, which 327 00:14:00,640 --> 00:14:03,840 Speaker 9: is just about slightly overweight. But if you look at 328 00:14:03,880 --> 00:14:07,440 Speaker 9: discretionary investors, there's still just neutral, and so we think 329 00:14:07,440 --> 00:14:10,320 Speaker 9: that there's still room for more people to get dragged 330 00:14:10,320 --> 00:14:12,680 Speaker 9: into this market. But if we're talking about positioning, we 331 00:14:12,760 --> 00:14:16,000 Speaker 9: also have to mention households as well, and that's where 332 00:14:16,040 --> 00:14:18,920 Speaker 9: you cannot make the argument that people are underweight equities. 333 00:14:19,200 --> 00:14:22,160 Speaker 9: You can look at the AAII survey that looks at 334 00:14:22,200 --> 00:14:25,720 Speaker 9: equity positioning that's at the highest level it's been since 335 00:14:25,800 --> 00:14:29,200 Speaker 9: peaks like twenty eighteen and twenty twenty two. We've talked 336 00:14:29,240 --> 00:14:32,680 Speaker 9: a lot about how margin loans have grown extraordinarily over 337 00:14:32,720 --> 00:14:35,400 Speaker 9: the last six months at about a forty percent clip. 338 00:14:35,760 --> 00:14:39,960 Speaker 9: So there are certainly signs that households are very fully invested, but. 339 00:14:40,000 --> 00:14:42,280 Speaker 8: Some institutional investors have still. 340 00:14:42,040 --> 00:14:45,160 Speaker 9: Sat on the sidelines, which just is likely why over 341 00:14:45,200 --> 00:14:48,120 Speaker 9: the last six months or so every dip has gotten 342 00:14:48,120 --> 00:14:49,400 Speaker 9: bought so rather quickly. 343 00:14:49,880 --> 00:14:52,320 Speaker 4: Yeah, talk a little bit more about that money that's 344 00:14:52,320 --> 00:14:54,520 Speaker 4: sitting on the sidelines, so a dry powder, if you will. 345 00:14:54,880 --> 00:14:56,960 Speaker 4: We've talked a lot in the past about money market 346 00:14:56,960 --> 00:14:59,640 Speaker 4: funds and how there's more than seven trillion dollars of 347 00:14:59,680 --> 00:15:03,960 Speaker 4: money just sitting there waiting to be deployed. Maybe retail 348 00:15:03,960 --> 00:15:07,120 Speaker 4: investors are fully invested, but that doesn't take away from 349 00:15:07,120 --> 00:15:09,880 Speaker 4: the fact that there's always that possibility they could put 350 00:15:09,960 --> 00:15:11,160 Speaker 4: more into the market. 351 00:15:11,360 --> 00:15:12,359 Speaker 1: How are you thinking. 352 00:15:12,080 --> 00:15:14,440 Speaker 4: About what would what it would take to get that 353 00:15:14,480 --> 00:15:15,520 Speaker 4: money to be put to work. 354 00:15:16,160 --> 00:15:19,800 Speaker 9: Yeah, we've never considered the money market funds as exactly 355 00:15:19,920 --> 00:15:23,760 Speaker 9: fungible funds that could go into equities, meaning that these 356 00:15:23,840 --> 00:15:27,760 Speaker 9: were savings and cash balances. They were typically held in 357 00:15:27,800 --> 00:15:31,240 Speaker 9: cash savings accounts versus just things that were anxious and 358 00:15:31,360 --> 00:15:34,480 Speaker 9: waiting to go into equities. So maybe at the margin, 359 00:15:34,960 --> 00:15:37,600 Speaker 9: as you see those money market funds start to fall, 360 00:15:37,760 --> 00:15:41,800 Speaker 9: it does incentivize people to look for other investments, but 361 00:15:41,880 --> 00:15:45,440 Speaker 9: it's not necessarily a direct line straight into the equity market. 362 00:15:45,560 --> 00:15:49,800 Speaker 9: So certainly money market rates falling could push investors into 363 00:15:49,880 --> 00:15:52,320 Speaker 9: looking into other areas instead of just sitting on the 364 00:15:52,320 --> 00:15:56,320 Speaker 9: sidelines and clipping coupons, but not necessarily seven trillion dollars 365 00:15:56,320 --> 00:15:58,280 Speaker 9: of a wall of money that will go into equities. 366 00:15:58,760 --> 00:16:01,320 Speaker 4: So the centrally that we have right now, how much 367 00:16:01,360 --> 00:16:05,080 Speaker 4: of it is driven by technical factors like positioning versus 368 00:16:05,560 --> 00:16:09,080 Speaker 4: true fundamentals, earnings growth, and the earnings outlook for twenty 369 00:16:09,120 --> 00:16:09,680 Speaker 4: twenty six. 370 00:16:10,520 --> 00:16:12,560 Speaker 9: Yeah, this time of year, we try not to read 371 00:16:12,640 --> 00:16:15,960 Speaker 9: too much into the price action given volumes being so 372 00:16:16,200 --> 00:16:18,840 Speaker 9: very light, and we do know that there tends to 373 00:16:18,920 --> 00:16:22,359 Speaker 9: be some kind of window dress in dressing and positioning 374 00:16:22,480 --> 00:16:26,200 Speaker 9: chases into year end. And what's really fascinating is that 375 00:16:26,280 --> 00:16:30,240 Speaker 9: we saw the rotation and leadership start a little early 376 00:16:30,320 --> 00:16:33,440 Speaker 9: this year. Typically we see leadership rotations where you have 377 00:16:33,520 --> 00:16:36,200 Speaker 9: your classic dogs of the Dow or the last Shelby 378 00:16:36,240 --> 00:16:39,720 Speaker 9: First trade that kicks off in January as people start 379 00:16:39,760 --> 00:16:43,200 Speaker 9: to rebalance portfolios in a new tax year. But it 380 00:16:43,320 --> 00:16:46,520 Speaker 9: seemed to start in November this year, where we saw 381 00:16:46,720 --> 00:16:51,880 Speaker 9: value for example, outperform growth by five percent since November first, 382 00:16:52,240 --> 00:16:54,320 Speaker 9: So maybe people are trying to get a little bit 383 00:16:54,360 --> 00:16:56,360 Speaker 9: ahead of that. But at the end of the day, 384 00:16:56,400 --> 00:16:59,120 Speaker 9: we try not to read too much into very end 385 00:16:59,160 --> 00:17:02,520 Speaker 9: of year kind of race action simply because it doesn't 386 00:17:02,520 --> 00:17:05,800 Speaker 9: reflect anything more than likely just positioning chasing. 387 00:17:06,119 --> 00:17:08,399 Speaker 3: Kemer when it comes to the commodity space, if you 388 00:17:08,440 --> 00:17:13,920 Speaker 3: look at what happened this year across the entire spectrum gold, silver, platinum, copper, 389 00:17:14,480 --> 00:17:16,879 Speaker 3: do you look at that and you think you have 390 00:17:16,960 --> 00:17:19,639 Speaker 3: to maintain part of this into twenty twenty six or 391 00:17:19,640 --> 00:17:21,919 Speaker 3: do you think individuals should make sure that commodities are 392 00:17:21,960 --> 00:17:22,840 Speaker 3: part of their portfolio. 393 00:17:24,119 --> 00:17:27,280 Speaker 9: Yeah, we see commodities as a way to have an 394 00:17:27,280 --> 00:17:31,440 Speaker 9: inflation hedge within portfolios, and they work really well when 395 00:17:31,480 --> 00:17:34,199 Speaker 9: they work well, and they don't work so well a 396 00:17:34,200 --> 00:17:36,320 Speaker 9: good portion of the time. So certainly we've been in 397 00:17:36,359 --> 00:17:40,280 Speaker 9: an environment where that has been a very powerful uptrend 398 00:17:40,320 --> 00:17:41,639 Speaker 9: for a lot of these commodities. 399 00:17:41,680 --> 00:17:44,160 Speaker 8: I think the question is how much can it continue? 400 00:17:44,400 --> 00:17:47,120 Speaker 9: Jeff to graph of renaissance Macro put out a great 401 00:17:47,119 --> 00:17:50,639 Speaker 9: piece effectively saying, hey, when you've doubled your return in 402 00:17:50,720 --> 00:17:53,800 Speaker 9: less than two years, the probability of you doing it 403 00:17:53,840 --> 00:17:58,040 Speaker 9: again is extraordinarily low. So it gets back to this 404 00:17:58,119 --> 00:18:02,040 Speaker 9: kind of overall notion of respect uptrends and not ignoring risks. 405 00:18:02,440 --> 00:18:05,199 Speaker 9: Gold isn't a very powerful uptrend. We've been calling it 406 00:18:05,280 --> 00:18:08,000 Speaker 9: the Chuck Norris of commodities. Nothing seems to be able 407 00:18:08,040 --> 00:18:10,280 Speaker 9: to keep it down. It doesn't even touch its fifty 408 00:18:10,359 --> 00:18:13,320 Speaker 9: day moving average. But if you look at longer term charts, 409 00:18:13,400 --> 00:18:17,479 Speaker 9: it is extraordinarily overbought. So it wouldn't be surprising to 410 00:18:17,520 --> 00:18:21,159 Speaker 9: see some kind of consolidation. But we do know that 411 00:18:21,200 --> 00:18:25,359 Speaker 9: there still remains very powerful drivers, for example, central bank 412 00:18:25,440 --> 00:18:30,400 Speaker 9: buying of gold, but also appreciate it has become somewhat memified, 413 00:18:30,520 --> 00:18:33,720 Speaker 9: meaning that it has become effectively a momentum stock. You're 414 00:18:33,760 --> 00:18:36,880 Speaker 9: seeing a lot of training and retail investors as well 415 00:18:36,880 --> 00:18:40,200 Speaker 9: as investors overseas, So it could get a little bit 416 00:18:40,240 --> 00:18:43,480 Speaker 9: over its skis and consolidate, but the uptrend is still 417 00:18:43,560 --> 00:18:44,280 Speaker 9: very much there. 418 00:18:45,840 --> 00:18:48,560 Speaker 1: Stay with us. Mulblomberg Savannah's coming. 419 00:18:48,359 --> 00:18:49,280 Speaker 7: Up after this. 420 00:18:58,720 --> 00:19:00,240 Speaker 1: Here's the latest a federal drug rule. 421 00:19:00,280 --> 00:19:03,080 Speaker 3: The Trump administration can move forward with one hundred thousand 422 00:19:03,119 --> 00:19:07,119 Speaker 3: dollars feet on new H one visa applications. Joining US 423 00:19:07,119 --> 00:19:10,480 Speaker 3: now is Terry Hayes of Pangea Policy. Terry, I got 424 00:19:10,480 --> 00:19:13,080 Speaker 3: to ask you, what do you make of this? Because 425 00:19:13,400 --> 00:19:16,440 Speaker 3: tech CEOs have been going to the White House, and 426 00:19:16,760 --> 00:19:20,160 Speaker 3: I imagine this has been part of the discussion as well. 427 00:19:20,200 --> 00:19:22,440 Speaker 3: They want to make sure that they could still get 428 00:19:22,760 --> 00:19:25,600 Speaker 3: the best in the brightest workers into the United States. 429 00:19:26,359 --> 00:19:29,200 Speaker 10: Oh sure, Marry, Christmas mean Marie, and to you and 430 00:19:29,240 --> 00:19:33,320 Speaker 10: de Scarlett first and most importantly, Yeah, they go to 431 00:19:33,359 --> 00:19:35,520 Speaker 10: their White House and they talk about these things. But 432 00:19:35,600 --> 00:19:38,120 Speaker 10: you know, the tech CEOs have a long list and 433 00:19:38,359 --> 00:19:41,040 Speaker 10: we all know what they are. And the question is 434 00:19:41,080 --> 00:19:46,080 Speaker 10: whether or not H one b's are at the very 435 00:19:46,119 --> 00:19:49,199 Speaker 10: top of that list, And the answer is almost certainly 436 00:19:49,200 --> 00:19:53,600 Speaker 10: they're not compared to AI and anti trust and competition 437 00:19:53,680 --> 00:19:56,240 Speaker 10: and a variety of other things. So yeah, they are 438 00:19:56,320 --> 00:19:59,639 Speaker 10: very important, but you know what you played with the 439 00:19:59,760 --> 00:20:03,600 Speaker 10: lun there on the bumper has been very consistently the 440 00:20:03,640 --> 00:20:07,719 Speaker 10: administration's policy that what it wants to do is not just, 441 00:20:07,840 --> 00:20:10,960 Speaker 10: you know, not just keep those jobs here, but to 442 00:20:11,040 --> 00:20:14,080 Speaker 10: train people up in the United States so that there's 443 00:20:14,160 --> 00:20:17,879 Speaker 10: greater reliance on a United States workforce and frankly greater 444 00:20:18,960 --> 00:20:23,080 Speaker 10: greater ability of that workforce to deal with the twenty 445 00:20:23,119 --> 00:20:27,520 Speaker 10: first century tech challenges in AI and elsewhere. So this 446 00:20:27,720 --> 00:20:32,840 Speaker 10: is not just a matter of the administration flexing its 447 00:20:32,880 --> 00:20:33,439 Speaker 10: own power. 448 00:20:33,480 --> 00:20:34,840 Speaker 7: It's got a policy point by. 449 00:20:35,359 --> 00:20:37,680 Speaker 3: The President in twenty twenty four was on the All 450 00:20:37,760 --> 00:20:40,159 Speaker 3: In podcast and he said that what he wants to 451 00:20:40,160 --> 00:20:42,000 Speaker 3: do is that if you graduate from a college, I 452 00:20:42,000 --> 00:20:44,600 Speaker 3: think you should get automatically as part of your diploma, 453 00:20:44,920 --> 00:20:47,560 Speaker 3: a green card be able to stay in this country. 454 00:20:47,880 --> 00:20:52,480 Speaker 3: That includes junior colleges too. What happened to that idea, I. 455 00:20:52,480 --> 00:20:56,360 Speaker 10: Think it probably got I think they want an idea 456 00:20:56,640 --> 00:20:59,119 Speaker 10: like that, But I think what ends up happening here 457 00:20:59,560 --> 00:21:05,040 Speaker 10: is that it becomes less important when against the broader 458 00:21:05,119 --> 00:21:08,480 Speaker 10: push on H one B's terry. 459 00:21:08,600 --> 00:21:10,240 Speaker 1: Is this issue resolved? 460 00:21:10,280 --> 00:21:12,560 Speaker 4: I mean, I know the US Chamber of Commerce was 461 00:21:12,600 --> 00:21:15,320 Speaker 4: the one that initiated the lawsuit in October, and we 462 00:21:15,359 --> 00:21:17,359 Speaker 4: know that following this ruling, the Chamber of Commerce can 463 00:21:17,400 --> 00:21:20,000 Speaker 4: certainly appeal the ruling. But in their mind, is this 464 00:21:20,080 --> 00:21:22,320 Speaker 4: something that's pretty much a done deal? And you know 465 00:21:22,480 --> 00:21:25,720 Speaker 4: the organizations they represent can kind of move forward. 466 00:21:26,400 --> 00:21:29,200 Speaker 7: Oh, I imagine they'll appeal at Scarlett. You know, there's. 467 00:21:30,480 --> 00:21:34,360 Speaker 10: The thing that markets need to understand is that there 468 00:21:34,400 --> 00:21:38,920 Speaker 10: are six hundred and seventy seven United States District Court judges. 469 00:21:39,280 --> 00:21:41,680 Speaker 10: You know, there's always a district court judge making a 470 00:21:41,800 --> 00:21:42,840 Speaker 10: ruling on something. 471 00:21:43,400 --> 00:21:45,359 Speaker 7: There are two appeal levels above that. 472 00:21:45,600 --> 00:21:49,480 Speaker 10: I have every confidence the Chamber of Commerce will continue 473 00:21:49,480 --> 00:21:53,639 Speaker 10: to appeal. You know that said the arguments the Chamber 474 00:21:53,680 --> 00:21:55,520 Speaker 10: and a lot of other folks may including the state 475 00:21:55,520 --> 00:21:59,600 Speaker 10: of California and trying to overturn this policy, are telling 476 00:21:59,640 --> 00:22:03,840 Speaker 10: all by itself. California, for example, said that, you know, 477 00:22:03,880 --> 00:22:06,159 Speaker 10: one of the two of the reasons that was pushing 478 00:22:06,200 --> 00:22:10,560 Speaker 10: back against the administration was because of the negative implications 479 00:22:11,040 --> 00:22:14,040 Speaker 10: it would have for education and healthcare. Now, if you 480 00:22:14,080 --> 00:22:18,040 Speaker 10: think brought more broadly about the kind of immigration policies 481 00:22:18,040 --> 00:22:21,199 Speaker 10: that say Gavin Newsom is interested in. You know that 482 00:22:21,280 --> 00:22:23,880 Speaker 10: the politicization of that becomes obvious. 483 00:22:24,280 --> 00:22:26,800 Speaker 4: Well, speaking of decisions that were awaiting, of course, a 484 00:22:27,280 --> 00:22:29,639 Speaker 4: Supreme Court is scheduled at some point in the New 485 00:22:29,720 --> 00:22:32,680 Speaker 4: York to come out with its ruling on Trump's tariffs, 486 00:22:32,720 --> 00:22:37,119 Speaker 4: those reciprocal tariffs. What's priced in right now? What is 487 00:22:37,240 --> 00:22:39,960 Speaker 4: kind of the base case here? It seems as if, 488 00:22:40,280 --> 00:22:43,040 Speaker 4: given the arguments that have been heard and the responses 489 00:22:43,080 --> 00:22:45,400 Speaker 4: we've gotten from justices, it is that the Supreme Court 490 00:22:45,400 --> 00:22:46,360 Speaker 4: will roll with those back. 491 00:22:47,680 --> 00:22:51,000 Speaker 10: The base case is that is that the tariffs go away. 492 00:22:51,480 --> 00:22:54,639 Speaker 10: I'm very much nonconsensus on this, as you might know. 493 00:22:56,000 --> 00:22:59,560 Speaker 10: The for two reasons. One is that the court does 494 00:22:59,600 --> 00:23:05,560 Speaker 10: not dispute the fundamental seriousness of the economic emergency. In 495 00:23:05,600 --> 00:23:08,960 Speaker 10: other words, the court's not trying to evaluate whether or 496 00:23:09,040 --> 00:23:11,520 Speaker 10: not there is an economic emergency or not. That actually 497 00:23:11,560 --> 00:23:15,040 Speaker 10: wasn't even know there wasn't among the questions presented, wasn't 498 00:23:15,040 --> 00:23:20,719 Speaker 10: discussed anything. Secondly, there are plenty of other tiff authorities 499 00:23:20,760 --> 00:23:25,040 Speaker 10: that the president can use should this one be turned back. Thirdly, 500 00:23:25,119 --> 00:23:28,800 Speaker 10: I think the court probably gives if there's an infirmity 501 00:23:28,840 --> 00:23:30,840 Speaker 10: in the statute, the court probably gives. 502 00:23:30,600 --> 00:23:34,119 Speaker 7: The Congress an opportunity. 503 00:23:33,520 --> 00:23:35,719 Speaker 10: To correct it, and the Congress in fact will have 504 00:23:35,760 --> 00:23:39,320 Speaker 10: that opportunity in what's now being called Big Beautiful Bill 505 00:23:39,359 --> 00:23:42,159 Speaker 10: two dot oh Reconciliation Bill that I think comes up 506 00:23:42,160 --> 00:23:44,560 Speaker 10: probably in the first quarter of calendar twenty six. 507 00:23:45,320 --> 00:23:47,560 Speaker 7: So all this together means. 508 00:23:47,320 --> 00:23:49,960 Speaker 10: That the wishing and hoping that there's going to be 509 00:23:49,960 --> 00:23:52,359 Speaker 10: some massive tariff rollback and people are going to get 510 00:23:52,359 --> 00:23:54,359 Speaker 10: a windfall is completely off base. 511 00:23:54,760 --> 00:23:55,000 Speaker 1: Terry. 512 00:23:55,040 --> 00:23:57,640 Speaker 3: When it comes to the GDP data yesterday, a lot 513 00:23:57,640 --> 00:24:01,199 Speaker 3: of this is AI investment. Kevin Hassett, speaking to some 514 00:24:01,280 --> 00:24:04,880 Speaker 3: reporters talking about the boom in AI, Trump in November 515 00:24:04,920 --> 00:24:07,240 Speaker 3: says he loves AI, is not worried about it. How 516 00:24:07,240 --> 00:24:09,600 Speaker 3: do you see this debate playing out in Washington, though, 517 00:24:09,640 --> 00:24:13,359 Speaker 3: when you have individuals like Steve Bannon talking about constantly 518 00:24:13,400 --> 00:24:16,880 Speaker 3: that AI might need layoffs by more Americans. 519 00:24:17,880 --> 00:24:22,639 Speaker 10: The administration has made the decision that AI is the 520 00:24:22,680 --> 00:24:25,159 Speaker 10: tail that wags the dog. I think that AI is 521 00:24:25,200 --> 00:24:27,360 Speaker 10: the key to everything right or wrong. I think that's 522 00:24:27,359 --> 00:24:30,359 Speaker 10: what they do. They talk The National Security strategy is 523 00:24:30,440 --> 00:24:33,560 Speaker 10: very plain about that. The so called Genesis Mission or 524 00:24:33,560 --> 00:24:36,359 Speaker 10: Genesis project that Trump announced is very plain about that. 525 00:24:37,280 --> 00:24:37,679 Speaker 7: Even the. 526 00:24:39,280 --> 00:24:44,000 Speaker 10: Defense Department's draft report on the Chinese military threat that 527 00:24:44,119 --> 00:24:46,440 Speaker 10: came out earlier this week is very plain on that. 528 00:24:46,880 --> 00:24:51,240 Speaker 10: So I think that's beyond debate, frankly within the administration, 529 00:24:51,640 --> 00:24:55,400 Speaker 10: and I think that every policy that, every policy economic 530 00:24:55,520 --> 00:25:01,600 Speaker 10: or otherwise that gets discussed, gets discussed and decided through 531 00:25:01,640 --> 00:25:02,680 Speaker 10: the AI prism. 532 00:25:03,200 --> 00:25:05,359 Speaker 3: I wonder what you make of the gallop pulling we 533 00:25:05,440 --> 00:25:08,879 Speaker 3: had this week about Trump's approval rating, especially when it 534 00:25:08,920 --> 00:25:13,320 Speaker 3: comes to the economy. Even among independents, his support has 535 00:25:13,640 --> 00:25:17,800 Speaker 3: a low of twenty five percent. Americans are just not 536 00:25:18,000 --> 00:25:21,560 Speaker 3: feeling everything the administration is touting. Do you think potentially 537 00:25:21,560 --> 00:25:23,480 Speaker 3: going to the midterm election, they will make the same 538 00:25:23,520 --> 00:25:25,960 Speaker 3: mistake the Biden administration. 539 00:25:25,440 --> 00:25:31,679 Speaker 10: Made two points. One is that one is more obvious 540 00:25:31,720 --> 00:25:34,200 Speaker 10: than the other. I think one is that the midterms 541 00:25:34,200 --> 00:25:36,920 Speaker 10: are almost a year away, and in a situation where 542 00:25:36,960 --> 00:25:39,680 Speaker 10: you've got ten percent or more of the House, which 543 00:25:39,720 --> 00:25:45,360 Speaker 10: is really what's in play here, the tiny House majority, 544 00:25:45,640 --> 00:25:48,520 Speaker 10: ten percent or more of the House seats are not 545 00:25:48,600 --> 00:25:51,600 Speaker 10: only open, but we're not sure entirely who's going to 546 00:25:51,640 --> 00:25:54,199 Speaker 10: be running for them. I think it's awfully premature to 547 00:25:54,240 --> 00:25:57,840 Speaker 10: assume that the Democrats will sweep those. Secondly, I do 548 00:25:57,920 --> 00:26:00,280 Speaker 10: not think the administration is going to make the same 549 00:26:00,320 --> 00:26:04,000 Speaker 10: mistake that it did that the Biden administration did on 550 00:26:04,240 --> 00:26:06,320 Speaker 10: assuming everybody understands. 551 00:26:05,760 --> 00:26:08,119 Speaker 7: What they think and we'll conform to it. 552 00:26:08,960 --> 00:26:12,040 Speaker 10: Finally, you know, I think people need to understand that 553 00:26:12,080 --> 00:26:16,560 Speaker 10: the president is the most popular politician in America. By 554 00:26:16,560 --> 00:26:19,160 Speaker 10: carry no water for Trump, by saying that, I will 555 00:26:19,200 --> 00:26:23,320 Speaker 10: say that Trump's favorable unfavorable last week was minus nine 556 00:26:23,640 --> 00:26:27,000 Speaker 10: compared to minus fourteen for Republicans, minus twenty three for 557 00:26:27,119 --> 00:26:30,879 Speaker 10: Democrats overall, and that right track, wrong track since the 558 00:26:30,880 --> 00:26:34,720 Speaker 10: twentieth of January has improved roughly by half. Last week 559 00:26:34,760 --> 00:26:38,640 Speaker 10: it was sixteen and a half roughly, and January twentieth 560 00:26:38,680 --> 00:26:44,080 Speaker 10: it was thirty two. They will attack the affordability problem strongly. 561 00:26:44,400 --> 00:26:48,119 Speaker 10: They don't care about ideology. They'll attack it any way 562 00:26:48,200 --> 00:26:50,680 Speaker 10: they can. That makes sense, and they've got a lot 563 00:26:50,720 --> 00:26:51,560 Speaker 10: of time to do it. 564 00:26:53,560 --> 00:26:57,000 Speaker 2: Stay with us. Mault Blomberg Surveillan's coming up after this. 565 00:27:06,040 --> 00:27:08,600 Speaker 3: Stocks Little chains as a Santa Claus rally lift stocks 566 00:27:08,640 --> 00:27:11,639 Speaker 3: to new all time highs. Michael o'rourk of Jones Trading, 567 00:27:11,640 --> 00:27:15,439 Speaker 3: writing quote, we doubt most investors realize how expensive the 568 00:27:15,520 --> 00:27:16,920 Speaker 3: S and P five hundred really is. 569 00:27:17,200 --> 00:27:19,119 Speaker 1: There's no doubt in our mind. It is a bubble. 570 00:27:19,440 --> 00:27:22,639 Speaker 3: There is strong fundamental business demand, but what matters is 571 00:27:22,680 --> 00:27:26,639 Speaker 3: the price an investor pays for it. Michael joins us. Now, Michael, 572 00:27:26,680 --> 00:27:29,280 Speaker 3: thank you so much for joining us. So you're bursting 573 00:27:29,320 --> 00:27:31,919 Speaker 3: the bubble a little bit this morning. How should we 574 00:27:31,960 --> 00:27:33,440 Speaker 3: think about going into next year? 575 00:27:35,160 --> 00:27:35,280 Speaker 5: Now? 576 00:27:35,440 --> 00:27:39,040 Speaker 11: I think, as we saw that GDP report, the economy 577 00:27:39,160 --> 00:27:42,880 Speaker 11: is doing very well. Obviously AI is driving a lot 578 00:27:42,920 --> 00:27:47,360 Speaker 11: of spending, but we have asset prices are very very 579 00:27:47,480 --> 00:27:51,280 Speaker 11: much inflated. And you know that quote has to do 580 00:27:51,359 --> 00:27:54,320 Speaker 11: with the top twenty marketcap names in the S and 581 00:27:54,359 --> 00:27:59,119 Speaker 11: P five hundred are trading about forty times trailing earnings. 582 00:27:59,119 --> 00:28:01,720 Speaker 11: And that's if you take out Tesla and twenty eight 583 00:28:01,720 --> 00:28:05,360 Speaker 11: times forward earnings, so that you know, those are historically 584 00:28:05,440 --> 00:28:08,840 Speaker 11: high valuations, historically high multiples. And it's funny you're just 585 00:28:08,840 --> 00:28:10,720 Speaker 11: talking about the economy. I would say, you know, we 586 00:28:10,800 --> 00:28:14,240 Speaker 11: talked about the K shaped economy. Uh, where the you know, 587 00:28:14,280 --> 00:28:16,760 Speaker 11: the rich team to get richer and everyone else is 588 00:28:16,840 --> 00:28:17,359 Speaker 11: left behind. 589 00:28:17,480 --> 00:28:19,040 Speaker 7: It's the same thing in the stock market. 590 00:28:19,080 --> 00:28:22,000 Speaker 11: You have these top twenty names driving the you know, 591 00:28:22,119 --> 00:28:25,560 Speaker 11: the overall market, or obviously even that the maggate will 592 00:28:25,760 --> 00:28:27,840 Speaker 11: drive the overall market. But a lot of stocks are 593 00:28:27,840 --> 00:28:31,600 Speaker 11: being left behind on an evaluation basis. So there are 594 00:28:31,720 --> 00:28:34,119 Speaker 11: many attractive names out there, but that's not where we 595 00:28:34,160 --> 00:28:35,200 Speaker 11: are in the index level. 596 00:28:35,560 --> 00:28:38,240 Speaker 3: But do you still want to remain that exposure to 597 00:28:38,320 --> 00:28:41,000 Speaker 3: some of those high flyers, those twenty odd names. 598 00:28:41,960 --> 00:28:44,440 Speaker 11: Now, I think, I think what's what we've seen in 599 00:28:44,440 --> 00:28:48,840 Speaker 11: this market is a the crowding into those megacap names 600 00:28:49,280 --> 00:28:52,520 Speaker 11: has led to crowding out of many other high quality. 601 00:28:52,280 --> 00:28:53,200 Speaker 7: Blue chip names. 602 00:28:53,560 --> 00:28:57,160 Speaker 11: So for example, in the pharmaceutical sector, with everybody chasing 603 00:28:57,200 --> 00:29:00,600 Speaker 11: Lily because the zep bound, you know, and GLP drugs, 604 00:29:00,960 --> 00:29:03,360 Speaker 11: a lot of large CAF former names have seen their 605 00:29:03,400 --> 00:29:07,640 Speaker 11: multiples depressed pe multiples to single digits, and they're you know, 606 00:29:07,720 --> 00:29:10,080 Speaker 11: they're paying somewhere between the three to you know, six 607 00:29:10,120 --> 00:29:13,800 Speaker 11: seven percent dividend yield. So there are attractive areas in 608 00:29:13,840 --> 00:29:16,520 Speaker 11: this market. I would rotate out of those dagger names 609 00:29:16,640 --> 00:29:19,680 Speaker 11: and look, you know, down to the lower market caps, 610 00:29:19,720 --> 00:29:22,960 Speaker 11: but still blue chip names out there in this market. 611 00:29:22,680 --> 00:29:24,480 Speaker 4: Down to the lower market caps, would you go so 612 00:29:24,520 --> 00:29:27,000 Speaker 4: far as to start bidding up the small caps? Every 613 00:29:27,000 --> 00:29:30,080 Speaker 4: single time they look like they're gaining some momentum, they 614 00:29:30,200 --> 00:29:33,360 Speaker 4: kind of lose steam and we start to see everyone 615 00:29:33,480 --> 00:29:35,480 Speaker 4: rotate back into the big cap names because they can't 616 00:29:35,480 --> 00:29:36,560 Speaker 4: get away from them. 617 00:29:37,360 --> 00:29:39,800 Speaker 11: Well, so tho small caps are interesting because they're really, 618 00:29:39,800 --> 00:29:42,400 Speaker 11: for the most part, an interest rate play or a 619 00:29:42,400 --> 00:29:45,320 Speaker 11: FED rate cup play. So most of them momentum we 620 00:29:45,360 --> 00:29:47,320 Speaker 11: see go into the Russell two thousand or the S 621 00:29:47,320 --> 00:29:50,120 Speaker 11: and P six hundred has to do with, oh, we 622 00:29:50,200 --> 00:29:52,080 Speaker 11: got a bad piece of economic out of the Fed's 623 00:29:52,120 --> 00:29:55,480 Speaker 11: gonna lower rates or you know, inflation's coming in. I 624 00:29:55,600 --> 00:30:00,800 Speaker 11: don't see they are more attractively valued. Of the six hundred, 625 00:30:00,800 --> 00:30:02,800 Speaker 11: and the S and P fourgs are more attractively valued 626 00:30:02,800 --> 00:30:05,480 Speaker 11: than it is in B five hundred on an index level. 627 00:30:05,920 --> 00:30:07,080 Speaker 7: But you are in. 628 00:30:07,040 --> 00:30:12,360 Speaker 11: A lot of cases just bouncing around with FED funds expectations, Whereas, 629 00:30:12,600 --> 00:30:14,920 Speaker 11: like I said, there's a lot of blue chip companies 630 00:30:14,960 --> 00:30:18,400 Speaker 11: out there, even in the consumer staples space where you're 631 00:30:18,440 --> 00:30:21,560 Speaker 11: seeing the multiples come in, and they're names that I 632 00:30:21,600 --> 00:30:23,400 Speaker 11: think you're getting out a discount that you can put 633 00:30:23,400 --> 00:30:26,400 Speaker 11: await for a long time. Because everyone's crowding into the 634 00:30:26,440 --> 00:30:28,520 Speaker 11: megicaps and chasing this AI trade. 635 00:30:28,640 --> 00:30:31,160 Speaker 4: Yeah, you're talking about the bad news is good news dynamic, 636 00:30:31,240 --> 00:30:31,960 Speaker 4: especially as it. 637 00:30:31,920 --> 00:30:33,240 Speaker 1: Plays out for small caps. 638 00:30:33,560 --> 00:30:35,720 Speaker 4: Michael, What do you worry about the most in twenty 639 00:30:35,760 --> 00:30:39,000 Speaker 4: twenty six in terms of potential land minds? What is 640 00:30:39,040 --> 00:30:40,480 Speaker 4: the single biggest risk out there? 641 00:30:42,240 --> 00:30:45,000 Speaker 11: I think this AI trade. I do think of the bubble. 642 00:30:45,640 --> 00:30:49,280 Speaker 11: I think there's massive speculation space. I think you're going 643 00:30:49,320 --> 00:30:52,360 Speaker 11: to see some of these deals start to unwind or 644 00:30:52,600 --> 00:30:56,280 Speaker 11: not come to fruition as far as funding rounds and 645 00:30:56,320 --> 00:30:59,520 Speaker 11: things like that, and I think that's going to spook people. 646 00:31:00,120 --> 00:31:03,840 Speaker 7: And you know, while the technology is phenomenal. 647 00:31:03,640 --> 00:31:05,920 Speaker 11: I think what kind of got was lost by a 648 00:31:05,960 --> 00:31:08,880 Speaker 11: lot of investors is the disruption is pretty easy, and 649 00:31:08,920 --> 00:31:10,360 Speaker 11: we got our first go first. 650 00:31:10,400 --> 00:31:12,440 Speaker 7: We shore cases that would deep seek early at the 651 00:31:12,440 --> 00:31:13,760 Speaker 7: beginning of this year, but. 652 00:31:13,760 --> 00:31:16,280 Speaker 11: Then last month when Google came out with Gemini three, 653 00:31:16,680 --> 00:31:19,120 Speaker 11: people realized, oh wow, someone could do this better and 654 00:31:19,160 --> 00:31:21,720 Speaker 11: they could do with cheaper chips. So I think that's 655 00:31:21,720 --> 00:31:24,960 Speaker 11: a real risk to the you know, so much money 656 00:31:25,000 --> 00:31:27,800 Speaker 11: chasing the AI trades start going to this new year, Michael. 657 00:31:27,800 --> 00:31:29,880 Speaker 3: When you look at the third quarter GDP report AI 658 00:31:30,000 --> 00:31:34,160 Speaker 3: investment and household consumption by obviously the higher income Americans. 659 00:31:34,400 --> 00:31:38,360 Speaker 3: That's seventy percent of the growth. Those two components together 660 00:31:38,760 --> 00:31:40,760 Speaker 3: what we saw on the third quarter of GDP. Obviously 661 00:31:40,800 --> 00:31:42,800 Speaker 3: it's a rear view mirror, but that's where the money 662 00:31:42,880 --> 00:31:43,400 Speaker 3: was spending. 663 00:31:43,520 --> 00:31:44,560 Speaker 1: AI investment. 664 00:31:44,960 --> 00:31:47,720 Speaker 3: So if you think that this is overdone, is it 665 00:31:47,760 --> 00:31:50,000 Speaker 3: not just an issue for the stock market? Is this 666 00:31:50,040 --> 00:31:53,600 Speaker 3: also a huge issue for the US economy, the real economy? 667 00:31:54,760 --> 00:31:57,200 Speaker 11: Well, I would think it is because that's where the 668 00:31:57,200 --> 00:31:59,400 Speaker 11: growth is, right, you know, like you said, we talked 669 00:31:59,440 --> 00:32:01,600 Speaker 11: about this case shaped economy, and we have people. 670 00:32:01,320 --> 00:32:02,200 Speaker 7: Worried about jobs. 671 00:32:02,200 --> 00:32:05,600 Speaker 11: That labor market obviously has been under pressure since the summer, 672 00:32:06,040 --> 00:32:08,160 Speaker 11: So if that slows down, it is an issue. I mean, 673 00:32:08,200 --> 00:32:11,800 Speaker 11: I was looking at the contributions you know, to technologies 674 00:32:11,800 --> 00:32:14,560 Speaker 11: and you know investment over the course of this year, 675 00:32:15,040 --> 00:32:17,920 Speaker 11: and I think it totaled or equaled you know, the 676 00:32:17,960 --> 00:32:19,240 Speaker 11: past several years. 677 00:32:19,800 --> 00:32:23,440 Speaker 7: So it's been strong throughout the year, and the question is. 678 00:32:23,360 --> 00:32:25,440 Speaker 11: Can you continue at the same pace and can it 679 00:32:25,480 --> 00:32:29,000 Speaker 11: continue to do push this economy forward. Now that said, 680 00:32:29,120 --> 00:32:32,760 Speaker 11: the present has announced a lot of initiatives to increase 681 00:32:32,800 --> 00:32:35,840 Speaker 11: investment in this country, and so you know that appears 682 00:32:35,840 --> 00:32:38,040 Speaker 11: to be coming through. So I do think we have 683 00:32:38,120 --> 00:32:40,720 Speaker 11: to see that how it plays out in Q one 684 00:32:40,840 --> 00:32:43,920 Speaker 11: Q two of next year, because right now it doesn't 685 00:32:43,920 --> 00:32:47,160 Speaker 11: seem like the monum stopping. But again, even a slowdown 686 00:32:47,200 --> 00:32:50,360 Speaker 11: will be you know a problem for stocks. Like what 687 00:32:50,440 --> 00:32:52,520 Speaker 11: a lot of people forget is back in two thousand, 688 00:32:52,560 --> 00:32:55,400 Speaker 11: when the Internet bubble pop you still had companies like 689 00:32:55,480 --> 00:32:59,880 Speaker 11: Cisco Systems growing their revenues at fifty and sixty percent, 690 00:33:00,320 --> 00:33:03,720 Speaker 11: you know, nine to twelve months after their stock peak. 691 00:33:04,240 --> 00:33:06,960 Speaker 11: So there's still going to be fundamental growth out there. 692 00:33:07,160 --> 00:33:09,960 Speaker 11: It's just at decelerations what's going to spook investors? 693 00:33:10,320 --> 00:33:12,880 Speaker 4: Well speaking spooky investors, there were some concerns about the 694 00:33:12,920 --> 00:33:16,920 Speaker 4: credit market. You had first brands Trinklor earlier this quarter, 695 00:33:17,040 --> 00:33:19,480 Speaker 4: and of course the AI bubble feares are starting to 696 00:33:19,520 --> 00:33:22,120 Speaker 4: show up as well. I look at Oracle bonds and 697 00:33:22,160 --> 00:33:25,280 Speaker 4: Oracle credit default swaps. Do you see those bubble fears 698 00:33:25,320 --> 00:33:28,200 Speaker 4: that you mentioned earlier showing up first in credit markets? 699 00:33:28,240 --> 00:33:30,680 Speaker 4: And if that's the case, are we starting to see 700 00:33:30,680 --> 00:33:31,120 Speaker 4: it already? 701 00:33:32,560 --> 00:33:32,880 Speaker 7: Well? 702 00:33:33,120 --> 00:33:35,680 Speaker 11: It is interesting, as you brought up. You know, we've 703 00:33:35,720 --> 00:33:38,440 Speaker 11: seen that in the auto sector. So you've seen some 704 00:33:38,480 --> 00:33:42,320 Speaker 11: weakness there. I mean, the tricky part of the credit space, 705 00:33:42,440 --> 00:33:45,360 Speaker 11: the private credit space for the most part, is you really, 706 00:33:45,560 --> 00:33:48,680 Speaker 11: you really don't know where the valuation, the true valuation is. 707 00:33:48,960 --> 00:33:51,880 Speaker 11: We've seen some private credit funds list and they wind 708 00:33:51,960 --> 00:33:55,360 Speaker 11: up listening at or in private real estate funds listing 709 00:33:55,760 --> 00:33:59,400 Speaker 11: at seventy five percent of NAV or twenty five percent discount. 710 00:33:59,720 --> 00:34:02,720 Speaker 11: So you know, there's more underlying weakness out there, but 711 00:34:02,840 --> 00:34:05,520 Speaker 11: again it takes time to show up, you know, without 712 00:34:05,600 --> 00:34:09,879 Speaker 11: real pricing, without transparent pricing and market pricing, it's hard 713 00:34:09,880 --> 00:34:13,800 Speaker 11: to tell. But again, if if you know, if you 714 00:34:13,920 --> 00:34:16,200 Speaker 11: have a private credit managers, you get a little more 715 00:34:16,239 --> 00:34:19,640 Speaker 11: cautious out there and not writing the loans for these projects, 716 00:34:19,960 --> 00:34:24,080 Speaker 11: or you're you know, or demanding tougher terms. Again, that 717 00:34:24,120 --> 00:34:27,600 Speaker 11: becomes another potential headwind for the market or in the economy. 718 00:34:27,440 --> 00:34:29,960 Speaker 4: Right right, I think about this sell size strategists and 719 00:34:29,960 --> 00:34:32,400 Speaker 4: they're forecast for the market overall, and they are almost 720 00:34:32,480 --> 00:34:35,840 Speaker 4: uniformly bullish. Michael about eleven percent gain for the S 721 00:34:35,880 --> 00:34:38,320 Speaker 4: and P five hundred following three straight years of double 722 00:34:38,400 --> 00:34:42,520 Speaker 4: digit growth. It feels like everyone's already priced in everything, 723 00:34:42,680 --> 00:34:47,160 Speaker 4: which then leaves room for external shocks really damaging sentiment 724 00:34:47,239 --> 00:34:48,440 Speaker 4: and therefore market pricing. 725 00:34:50,200 --> 00:34:52,200 Speaker 11: Yeah, I mean when you look at when you look 726 00:34:52,200 --> 00:34:55,200 Speaker 11: at the environment we're in, we have equity valuations are 727 00:34:55,200 --> 00:34:57,400 Speaker 11: extremely rich, you know, whether you compare it to you know, 728 00:34:58,200 --> 00:35:01,120 Speaker 11: the Russell two three thousands, two hundred and forty percent 729 00:35:01,160 --> 00:35:04,440 Speaker 11: of GDP. If you take public and private stocks, I 730 00:35:04,440 --> 00:35:06,160 Speaker 11: think they're about three hundred and twenty five or three 731 00:35:06,200 --> 00:35:07,400 Speaker 11: hundred and thirty percent of GDP. 732 00:35:07,680 --> 00:35:10,759 Speaker 7: These are record levels, right, you know. 733 00:35:10,360 --> 00:35:13,719 Speaker 11: Bloomberd Intelligence came with the statistic that the largest two 734 00:35:13,840 --> 00:35:17,319 Speaker 11: hundred private private companies are so their valuations increased by 735 00:35:17,320 --> 00:35:20,200 Speaker 11: two trillion dollars. And then you have the entire crypto 736 00:35:20,200 --> 00:35:22,280 Speaker 11: space out there, which is another three trillion dollars. 737 00:35:22,680 --> 00:35:25,880 Speaker 7: So you have a lot of a lot of rich. 738 00:35:25,680 --> 00:35:28,480 Speaker 11: Asset prices out there, and that will just make you 739 00:35:28,560 --> 00:35:31,600 Speaker 11: more vulnerable, vulnerable to shocks should a bad piece of 740 00:35:31,600 --> 00:35:32,360 Speaker 11: news come along. 741 00:35:33,520 --> 00:35:37,080 Speaker 2: This is the Bloomberg Savannas podcast, bringing you the best 742 00:35:37,120 --> 00:35:40,200 Speaker 2: in markets, economics, and GIA politics. You can watch the 743 00:35:40,200 --> 00:35:43,200 Speaker 2: show live on bloombag TV weekday mornings from six am 744 00:35:43,360 --> 00:35:47,320 Speaker 2: to nine am Eastern. Subscribe to the podcast on Apple, Spotify, 745 00:35:47,480 --> 00:35:49,719 Speaker 2: or anywhere else you listen, and as always on the 746 00:35:49,719 --> 00:35:52,160 Speaker 2: bloombag terminal and the Bloomberg Business app.