WEBVTT - Bloomberg Surveillance TV: December 24th, 2025 0:00:02.400 --> 0:00:07.480 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.520 --> 0:00:18.720 with Lisa Bromwitz and Amerie Hordern. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:35.920 terminal and the Bloomberg Business App. 0:00:36.520 --> 0:00:39.360 There is still data creeping out before the Christmas holiday. 0:00:39.560 --> 0:00:41.200 Initial job list claims. 0:00:41.040 --> 0:00:44.760 Scarlett coming in at two hundred and fourteen thousand, right, and. 0:00:44.680 --> 0:00:46.960 That is lower than expected. The estimate was for two 0:00:47.080 --> 0:00:50.639 hundred and twenty four thousand, and on a four week basis, 0:00:51.040 --> 0:00:53.240 the four week moving average, it's about two hundred and 0:00:53.320 --> 0:00:56.200 sixteen thousand, which is slightly lower than the previous four 0:00:56.240 --> 0:00:58.880 week period. On a continuing claims basis, we're looking at 0:00:58.880 --> 0:01:03.280 one point nine in terms of the claims for overall, 0:01:03.360 --> 0:01:05.680 and that's compared with one point nine. 0:01:05.520 --> 0:01:07.440 To ZHO as the consensus. 0:01:07.440 --> 0:01:10.880 So these are you know, it's a high frequency data point. 0:01:10.880 --> 0:01:13.000 It's something that we look at more carefully because the 0:01:13.080 --> 0:01:16.319 jobs numbers have been messed up by the government shutdown. 0:01:16.480 --> 0:01:18.000 We haven't gotten a lot of clarity on it, and 0:01:18.000 --> 0:01:20.160 we probably won't get a lot of clarity on those 0:01:20.240 --> 0:01:22.560 jobs numbers for a couple of months to come, especially 0:01:22.560 --> 0:01:24.679 if there's another shutdown potentially in January. 0:01:24.720 --> 0:01:27.560 Absolutely, the distortion from the jobs up from the shutdown 0:01:27.680 --> 0:01:28.919 longest in history. 0:01:28.959 --> 0:01:29.880 What's interesting, though. 0:01:29.800 --> 0:01:32.440 Is the continuing claims that is ticking higher, even though 0:01:32.440 --> 0:01:34.039 we do have the initial claims. 0:01:33.840 --> 0:01:34.760 A little bit softer. 0:01:34.880 --> 0:01:37.600 But to Scarlett's point, these data points really do matter, 0:01:37.680 --> 0:01:39.679 given the fact that we are dealing with potentially this 0:01:39.800 --> 0:01:43.160 distorted data right now. Financial markets though not seeing really 0:01:43.200 --> 0:01:46.520 any action, low volume today. It is Christmas, so potentially 0:01:46.520 --> 0:01:49.080 some individuals not really paying attention to their ecoscreen. 0:01:49.400 --> 0:01:50.840 Joining us now though, discuss more. 0:01:50.920 --> 0:01:54.640 Stephanie Roth of Wolf Research and Bloomberg's Michael Ball, thank 0:01:54.680 --> 0:01:57.680 you both for joining us being in studio. Merry Christmas 0:01:57.680 --> 0:01:59.920 to both of you. Let's just get your reaction, Stephanie. 0:02:00.040 --> 0:02:01.200 From the initial claims. 0:02:01.000 --> 0:02:03.880 Number, it's the data looks solid. It's telling us the 0:02:03.920 --> 0:02:08.360 labor market remains fairly, fairly well contained. The layoffs are 0:02:08.400 --> 0:02:10.840 pretty minimal. There was a bounce back in continuing claims. 0:02:10.880 --> 0:02:12.800 We have to remember that there was volatility around the 0:02:12.800 --> 0:02:16.239 Thanksgiving holiday. The trend seems like in Continuing claims is 0:02:16.280 --> 0:02:19.040 it's actually starting to take down over the past couple 0:02:19.080 --> 0:02:21.840 of weeks, which is a positive sign. Continuing claims are 0:02:21.840 --> 0:02:24.000 important to watch to gauge to what extent people who 0:02:24.040 --> 0:02:27.520 are currently unemployed are finding jobs the job finding rate. 0:02:27.600 --> 0:02:31.079 When you look at this data and compare it to 0:02:31.080 --> 0:02:33.400 what we saw in the latest job support with the inflicate, 0:02:33.400 --> 0:02:36.200 with the unemployment rate actually taking higher, though, what do 0:02:36.240 --> 0:02:37.400 you make of all of it? Or is it just 0:02:37.400 --> 0:02:38.079 too noisy? 0:02:38.360 --> 0:02:40.560 I wouldn't read into the unapployment rate ticking up in 0:02:40.600 --> 0:02:43.320 the last most recent print. I think there was an 0:02:43.360 --> 0:02:46.000 amount of the government shutdown that filtered into the data. 0:02:46.320 --> 0:02:48.920 BLS said that there was an impact from the government shutdown. 0:02:49.120 --> 0:02:52.080 They can't con necessarily quantify exactly how much. I firmly 0:02:52.120 --> 0:02:54.960 believe that in the next December print we will see 0:02:55.000 --> 0:02:59.440 that unployment rate taking down to potentially four to four, 0:02:59.800 --> 0:03:00.880 if not at least four or five. 0:03:01.000 --> 0:03:01.920 Michael, what do you make of this. 0:03:02.200 --> 0:03:04.079 Yeah, the timing was different too, right, So the re 0:03:04.280 --> 0:03:06.480 entries from sort of the college kids coming home had 0:03:06.480 --> 0:03:09.760 a factor. There's this sort of weirder feel to it 0:03:09.800 --> 0:03:12.560 that made it very questionable, again with every other data 0:03:12.560 --> 0:03:14.480 set we've seen from sort of the shutdown. So again 0:03:14.639 --> 0:03:17.160 traders are looking through it, waiting for January to get 0:03:17.160 --> 0:03:19.600 the December data with the hope it's cleaner. But to 0:03:19.600 --> 0:03:21.760 what you just said, uncertain if we will get that 0:03:21.840 --> 0:03:25.840 if there is a shutdown. The lots lots of questions, 0:03:25.960 --> 0:03:27.200 not a lot of answers. 0:03:27.000 --> 0:03:28.120 We've borne there before. 0:03:28.440 --> 0:03:31.000 So, Michael, given all of this, the fact that the 0:03:31.080 --> 0:03:33.679 labor data is going to be not corrupted but incomplete 0:03:33.720 --> 0:03:36.400 for a while, do you then look at the market 0:03:36.520 --> 0:03:39.280 focusing more on things like the weekly joblest claims, which 0:03:39.920 --> 0:03:42.320 didn't really get as affected by the garment shutdown because 0:03:42.360 --> 0:03:43.800 these are state compile numbers. 0:03:44.040 --> 0:03:46.280 Yeah, I think the continuing claims interesting. You did see 0:03:46.320 --> 0:03:48.720 some of that picked up in other survey data. And 0:03:48.760 --> 0:03:50.920 also what I'm looking at a lot is now is beagebook. 0:03:51.160 --> 0:03:53.880 The trending there has been much weaker. You have obviously 0:03:54.240 --> 0:03:56.760 three points growth inflation and the labor market there where 0:03:56.760 --> 0:03:58.520 you can kind of extract a trend, and all of 0:03:58.520 --> 0:04:00.440 it's been sort of negative, including the inflation, which is 0:04:00.480 --> 0:04:03.080 seemed to be stabilized, moved sort of from the forefront 0:04:03.080 --> 0:04:05.640 of the summer now to something secondary and instead now 0:04:05.720 --> 0:04:08.760 guys are talking about lower sales, lower activity, lower investment, 0:04:08.800 --> 0:04:10.560 and we saw some of that a little bit in 0:04:10.600 --> 0:04:14.120 the third quarter GDP, where the investment side was much 0:04:14.200 --> 0:04:15.680 kind of flatter than you would expect. Now there was 0:04:15.680 --> 0:04:18.280 an inventory drag clearly, and most of the power came 0:04:18.320 --> 0:04:20.880 from consumption. But my worry is if we moved past 0:04:20.920 --> 0:04:24.200 the AI pulse, the investment cap X story is much 0:04:24.240 --> 0:04:26.960 weaker and some of the pmis are reflecting that now. 0:04:27.040 --> 0:04:28.960 So for those who don't know, the base will compiles 0:04:29.279 --> 0:04:34.279 anecdotal evidence of what different FED regency taking place in 0:04:34.320 --> 0:04:37.479 their district. Is that based on activity or is it 0:04:37.520 --> 0:04:40.400 based on sentiment? Because we know the soft surveys tend 0:04:40.440 --> 0:04:43.279 to show consumers feeling worried, but in the end they 0:04:43.440 --> 0:04:45.000 end up spending anyway one hundred. 0:04:44.760 --> 0:04:47.480 Percent and sentiment based for sure. They obviously are you 0:04:47.720 --> 0:04:50.120 talking about real activity? And the FED presidents and some 0:04:50.160 --> 0:04:52.000 of the governors like to say they talked to contacts 0:04:52.000 --> 0:04:54.520 in their districts or contacts out there, and this is 0:04:54.520 --> 0:04:56.279 what they're referring to in a lot of ways. But 0:04:56.360 --> 0:04:58.080 to your point to shut down weight on sentiment, we 0:04:58.120 --> 0:05:01.360 obviously have seen consumer confidence hasn't really bounded yet. Business 0:05:01.400 --> 0:05:03.599 sentiment has been moddeling through. If you look at some 0:05:03.640 --> 0:05:05.600 of the regional Fed pmis, it can be quite funny 0:05:05.640 --> 0:05:07.520 when you look at the comments and how frustrated are 0:05:07.520 --> 0:05:09.160 with tariffs and with shutdowns, and. 0:05:09.120 --> 0:05:11.279 Of course it's not there just the jobs data that 0:05:11.640 --> 0:05:15.080 is left kind of incomplete Stuffhan we also see inflation, 0:05:15.240 --> 0:05:17.240 and the latest inflation report was a good example of 0:05:17.279 --> 0:05:19.479 that where we're not getting the full picture, and it 0:05:19.480 --> 0:05:20.880 looks like we're not going to get the full picture 0:05:20.920 --> 0:05:21.359 for a while. 0:05:21.800 --> 0:05:23.840 No, what we're going to see is the inflation data 0:05:23.880 --> 0:05:25.520 is likely to tick higher in the next couple months 0:05:25.560 --> 0:05:28.160 and up until April when we get the bounce back 0:05:28.200 --> 0:05:31.599 in terms of rent inflation, given some assumptions that BLS made. 0:05:31.760 --> 0:05:34.400 So what we'll probably see is an environment where inflation 0:05:34.480 --> 0:05:36.200 is picking higher. And I would actually take the other 0:05:36.240 --> 0:05:38.440 side on the growth from a growth perspective, and our 0:05:38.440 --> 0:05:40.440 expectation is that growth is going to start picking up. 0:05:40.640 --> 0:05:42.760 It's ready. It seems to be inflecting to some extent. 0:05:42.960 --> 0:05:45.720 The Q three GDP data, we're actually pretty decent, and 0:05:45.720 --> 0:05:48.479 my expectation is in Q one the narrative around the 0:05:48.480 --> 0:05:51.599 economy will be somewhat the opposite of what we've seen 0:05:51.600 --> 0:05:53.280 in the past couple months, where it's inflation is a 0:05:53.279 --> 0:05:55.240 little bit elevated and growth is also picking up. 0:05:55.360 --> 0:05:57.320 When it comes to growth, we have the GDP report 0:05:57.320 --> 0:06:00.000 for the third quarter rear view mirror, but more than 0:06:00.040 --> 0:06:03.200 four percent absolutely stellar. Know, the Commerce Secretary thinks that 0:06:03.240 --> 0:06:04.760 means we're all getting a four point. 0:06:04.600 --> 0:06:06.800 Three percent raise. If it were, that wouldn't be great. 0:06:06.880 --> 0:06:08.200 You know, our management. 0:06:08.200 --> 0:06:11.160 If you're watching the Commerce Secretary says, says, that's what 0:06:11.200 --> 0:06:13.240 it is. But when you see that kind of growth, 0:06:13.600 --> 0:06:16.240 do you think that's sustainable into twenty twenty six. 0:06:17.000 --> 0:06:18.960 No, And first of all, four point three percent real 0:06:19.000 --> 0:06:22.680 GDP growth does not mean nominal wages. That's a different concept. 0:06:22.720 --> 0:06:24.840 But putting that aside, you get up. 0:06:24.800 --> 0:06:27.320 With the Commerce Secretary Stephanie. 0:06:26.839 --> 0:06:29.640 Putting that aside. Is it sustainable? 0:06:29.680 --> 0:06:29.720 No? 0:06:29.880 --> 0:06:33.119 Because some of it was linked to net trade, which 0:06:33.160 --> 0:06:36.160 is which added one point six percentage points. What we're 0:06:36.160 --> 0:06:38.920 seeing is an economy that's running between two or two 0:06:38.960 --> 0:06:42.479 and a half percent. Our expectation as will be running 0:06:42.720 --> 0:06:45.640 around that trajectory for twenty twenty six. A four percent 0:06:45.720 --> 0:06:49.080 pace absolutely not sustainable, nor is that really the underlying 0:06:49.080 --> 0:06:50.200 trend anyway. 0:06:50.279 --> 0:06:52.920 And it got the attention of the President. He said, 0:06:52.920 --> 0:06:55.240 the financial news today was great. GDP is at more 0:06:55.279 --> 0:06:57.360 than four percent as opposed to a predicted but the 0:06:57.360 --> 0:07:00.320 modern market we have good news. The market stays evenor 0:07:00.400 --> 0:07:03.720 goes down because Wall Street's heads are wired differently. He says, 0:07:03.760 --> 0:07:06.120 no one that agrees with him cannot become the FED chair. 0:07:06.360 --> 0:07:08.599 What does the FED do with this kind of mixed 0:07:08.640 --> 0:07:09.960 match you're really describing. 0:07:10.720 --> 0:07:12.120 I think they're going to be on hold for a 0:07:12.160 --> 0:07:13.720 lot of next year, at least until we get the 0:07:13.760 --> 0:07:16.960 new chair. This is probably this was probably Powell's last cut. 0:07:17.160 --> 0:07:20.000 It's an environment where inflation is taking higher, like I said, 0:07:20.560 --> 0:07:23.160 employment's likely to start improving, so on point right, like 0:07:23.160 --> 0:07:25.680 we talked about earlier, taking down, and then the trend 0:07:25.680 --> 0:07:27.200 in perils is likely to be a bit better, in 0:07:27.280 --> 0:07:29.400 which case it's a tough environment for them to be cutting. 0:07:29.600 --> 0:07:31.520 So the President may very well not like what he's 0:07:31.520 --> 0:07:33.080 seeing in the first part of the year because the 0:07:33.120 --> 0:07:35.200 Fed's unlikely to be havel to these policy. 0:07:34.920 --> 0:07:37.560 Launch unless the data shows that the labor market is 0:07:37.600 --> 0:07:41.000 deteriorating so quickly bad headline numbers leading to a good 0:07:41.000 --> 0:07:43.560 market outcome. The President has made clear he doesn't like that. 0:07:43.640 --> 0:07:44.680 But will you just take it. 0:07:44.600 --> 0:07:45.000 In the end? 0:07:45.600 --> 0:07:47.960 Yeah, I mean, we'd have to have quite a print 0:07:48.160 --> 0:07:50.480 in January for the December data to make it just 0:07:50.600 --> 0:07:52.200 right so that they would move. And to your point, 0:07:52.240 --> 0:07:55.120 then it's no longer risk management cuts. The market takes 0:07:55.120 --> 0:07:57.320 it totally different. You're cutting now into weakness, and that's 0:07:57.360 --> 0:08:00.600 a totally different vibe to talk about. Lisa likes to 0:08:00.600 --> 0:08:02.920 talk about with the vibes. I knows she's not here today, right. 0:08:03.040 --> 0:08:05.640 That changes the whole vibe, right. The rotation, the reacceleration, 0:08:05.760 --> 0:08:08.920 And I understand what you're saying that basically there is 0:08:08.960 --> 0:08:11.040 this hope that the budget bill and that basically the 0:08:11.080 --> 0:08:13.520 coming up passing of the uncertainty from the shutdown from 0:08:13.560 --> 0:08:15.760 the tariffs will all have a better sort of pulse 0:08:15.760 --> 0:08:17.920 into the first half of next year. And that's why 0:08:17.920 --> 0:08:20.400 we see this rotation trade small cap cycle close even 0:08:20.440 --> 0:08:23.800 pockets of value have outperformed, but overall, again the worry 0:08:23.960 --> 0:08:26.480 is that now the FED further easing is not based 0:08:26.520 --> 0:08:28.520 on sort of that good vibe, It's just based on 0:08:28.600 --> 0:08:30.880 warriors and weakness, and then people have to change the sentiment. 0:08:31.560 --> 0:08:34.040 Sophie, what is your biggest concern? What is the most 0:08:34.800 --> 0:08:37.960 high impact but low probability event that could happen. 0:08:38.400 --> 0:08:41.199 In twenty twenty six? I would say, if we're wrong 0:08:41.240 --> 0:08:43.280 on the land market right, and we see the unemployment 0:08:43.360 --> 0:08:46.880 rate notably taking higher, that would of course be a 0:08:46.920 --> 0:08:50.760 sort of negative batchup. Granted, the FED in that environment, 0:08:50.880 --> 0:08:52.920 in theory, would be able to ease unless we get 0:08:53.080 --> 0:08:56.520 inflations starting to take higher, none of you. But if 0:08:56.520 --> 0:08:59.520 we have an environment where you see both sides of 0:08:59.520 --> 0:09:02.080 the FEDS made, they come into challenge and the inflation 0:09:02.200 --> 0:09:04.360 side is starting to really pick up, which is very 0:09:04.360 --> 0:09:06.920 possible in Q one in particular because Q one tends 0:09:06.920 --> 0:09:09.599 to have seasonal problems, that would be kind of the 0:09:09.600 --> 0:09:10.640 worst environment. 0:09:10.240 --> 0:09:12.360 Of course for both of you. Is there potential for 0:09:12.480 --> 0:09:15.480 recession in twenty twenty six, I. 0:09:15.400 --> 0:09:17.480 Don't think the odds are particularly high. I don't think 0:09:17.480 --> 0:09:21.760 they're particularly higher than the normal recessionary on somewhere between 0:09:21.760 --> 0:09:24.320 fifteen and twenty percent. Of course, the odds are never zero, 0:09:24.880 --> 0:09:27.280 but I don't think it's abnormally high at this factor. 0:09:27.360 --> 0:09:29.600 I guess the question I have, just you know, percolating 0:09:29.600 --> 0:09:31.400 the back of my mind is what does it mean 0:09:31.440 --> 0:09:32.760 if the AI trade. 0:09:32.520 --> 0:09:37.080 Is real and we actually see mass layoffs, that's. 0:09:37.000 --> 0:09:39.960 Not necessarily a recessionary back of course, it depends on 0:09:40.040 --> 0:09:43.520 how it all plays out. If we see an environment 0:09:43.520 --> 0:09:46.600 where the unemployt rate is just steadily moving slightly higher 0:09:46.640 --> 0:09:51.040 because you have AI, then you have strong growth, productivity, 0:09:51.559 --> 0:09:54.760 low inflation, that's not necessarily the worst backdop. If it's 0:09:55.640 --> 0:09:58.679 mass layoffs, then they come quite quickly. Of course that's 0:09:58.720 --> 0:10:00.240 a very different environment. But I think I think the 0:10:00.280 --> 0:10:02.400 way it might play out if it's really AI related 0:10:02.800 --> 0:10:05.000 is a more gradual upward pressure on the unemployment rate, 0:10:05.000 --> 0:10:05.920 which is not recessionary. 0:10:06.000 --> 0:10:08.400 Michael, Yeah, I think you did a shock, something unforseeable 0:10:08.440 --> 0:10:09.840 in a lot of ways to get us there, given 0:10:09.880 --> 0:10:12.000 the momentum is still strong. Again what I was saying earlier, 0:10:12.040 --> 0:10:15.240 I'm worried about this capex pulse. Outside of AI. The 0:10:15.360 --> 0:10:17.880 no higher no fire seems to be holding and as 0:10:17.880 --> 0:10:20.120 we're seeing now, although December look to have cool, the 0:10:20.120 --> 0:10:22.760 consumer has been resilient. Clearly it was in third quarter. 0:10:23.120 --> 0:10:24.920 We'll see what happens in the fourth. And that's all 0:10:25.000 --> 0:10:27.119 driving us into the new year with some good momentum. 0:10:27.400 --> 0:10:29.559 But to the point you know, there is still a 0:10:29.640 --> 0:10:33.000 veil concern with price levels, not necessarily the acceleration of prices, 0:10:33.000 --> 0:10:35.400 but the actual level still weighing on real disposable income 0:10:35.760 --> 0:10:37.960 and hurting the K economy, creating the K economy and 0:10:38.000 --> 0:10:38.840 hurting the lower half. 0:10:39.400 --> 0:10:41.679 The dollar is projected to be lower in twenty twenty 0:10:41.720 --> 0:10:44.720 six as well, and of course we see central banks 0:10:44.720 --> 0:10:47.400 around the rest of the world, in the UK, Europe 0:10:47.480 --> 0:10:48.439 cutting interest rates. 0:10:48.600 --> 0:10:50.560 Talk a little bit about how the dollar factors into 0:10:50.559 --> 0:10:50.880 all of this. 0:10:51.280 --> 0:10:52.880 Yeah, the dollar is the big debate, and I think 0:10:52.880 --> 0:10:54.640 it's interesting because you can spin a number of ways. 0:10:54.640 --> 0:10:56.839 If we do reaccelerate and they are less fed cuts 0:10:56.880 --> 0:10:59.719 for good reasons, one would think that just rate differentials 0:10:59.720 --> 0:11:02.280 alone would support the dollar broadly. Now, of course, there's 0:11:02.280 --> 0:11:04.760 all these idiosyncratic stories with the euro, with the yen 0:11:05.120 --> 0:11:07.200 and even elsewhere on the other g tens that make 0:11:07.280 --> 0:11:09.320 it hard to really look at the basket and say, Okay, 0:11:09.320 --> 0:11:11.520 we're going to have one move in the basket, but overall, 0:11:11.559 --> 0:11:12.680 I think it's just going to be more of an 0:11:12.720 --> 0:11:15.680 alpha from individual crosses and on the end Live team. 0:11:15.679 --> 0:11:17.760 We've been having this debate. 0:11:17.520 --> 0:11:19.800 Quite vigorously lately, Stephanie. 0:11:19.840 --> 0:11:21.800 It's the day before Christmas, It's Christmas Eve, so of 0:11:21.840 --> 0:11:23.280 course there's going to be a lot of people out 0:11:23.280 --> 0:11:26.559 there doing some last minute shopping. Consumer spending, retail sales 0:11:26.600 --> 0:11:28.240 will continue to hold up for December. 0:11:28.440 --> 0:11:30.040 Yeah, I think it should be pretty decent. If you 0:11:30.040 --> 0:11:32.600 look at the real time data, they look fairly steady. 0:11:32.640 --> 0:11:35.800 It seems that the consumer just continues to be fairly resilient. 0:11:36.040 --> 0:11:37.520 And then in twenty twenty six, at the beginning of 0:11:37.559 --> 0:11:38.760 the years, when you're going to start to get the 0:11:38.800 --> 0:11:41.400 impact from one big beautiful bill which then benefits from 0:11:41.400 --> 0:11:43.319 the lower end consumers from no tax on text, no 0:11:43.440 --> 0:11:46.400 tax in overtime via tax refunds that come. 0:11:46.240 --> 0:11:49.640 In, and potentially two thousand dollars checks presents voting tariff 0:11:49.640 --> 0:11:50.240 dividend checks. 0:11:50.280 --> 0:11:51.199 Let's see know about that. 0:11:51.280 --> 0:11:52.680 Let's see what Congress has to say about. 0:11:52.720 --> 0:11:56.040 Stephanie Roth of Wolf Research and my Bloomberg's Michael Ball, 0:11:56.120 --> 0:11:58.200 thank you both for coming and joining us in studio, 0:11:58.240 --> 0:11:59.800 spending your Christmas Eve morning with us. 0:12:00.520 --> 0:12:03.960 Stay with us, Multlmberg Savillah's coming up after this. 0:12:13.280 --> 0:12:16.360 Cameron Dawson of New Edge welth saying equities are undeniably 0:12:16.440 --> 0:12:19.960 expensive and there are signs of complacency, but this market 0:12:20.000 --> 0:12:21.200 can chop to new highs. 0:12:21.240 --> 0:12:22.120 Cameron joins us. 0:12:22.120 --> 0:12:24.520 Now, Cameron, give us a sense of what new highs, 0:12:24.520 --> 0:12:27.280 and merry Christmas to you what new highs we can 0:12:27.320 --> 0:12:29.360 have when it comes to equity markets next year. 0:12:30.080 --> 0:12:31.839 Wecome morning and Merry Christmas. 0:12:32.000 --> 0:12:34.720 I think it's time to dust off the old a dodge, 0:12:34.800 --> 0:12:38.559 which is respect the trend, but don't ignore the risks 0:12:38.640 --> 0:12:40.200 as we go into twenty twenty six. 0:12:40.640 --> 0:12:42.960 Respecting the trend appreciates the fact that. 0:12:42.840 --> 0:12:45.200 We're still very much in an uptrend in this market, 0:12:45.320 --> 0:12:48.320 and it's also being led by pro cyclical areas. You 0:12:48.400 --> 0:12:52.920 mentioned industrial commodities earlier. You also have leadership in things 0:12:52.960 --> 0:12:56.400 like banks as well as transport starting to turn higher. 0:12:56.640 --> 0:12:59.959 So there's a pro cyclical message coming out of this market. 0:13:00.400 --> 0:13:04.880 And you also have a very important uptrend in earning sestiments. 0:13:04.320 --> 0:13:05.680 And GDP estimates. 0:13:05.679 --> 0:13:08.360 And this has been the key fundamental underpinning as to 0:13:08.400 --> 0:13:11.400 why we keep being able to press new highs. As 0:13:11.400 --> 0:13:14.480 long as you're revising estimates higher, that's usually a good 0:13:14.600 --> 0:13:17.559 environment for risk taking. So the second half of that 0:13:17.760 --> 0:13:20.240 is don't ignore the risks, and that's where we look 0:13:20.240 --> 0:13:23.360 at things like valuations. We look at signs of things 0:13:23.400 --> 0:13:27.000 like complacency within markets, look at the vix turning ever 0:13:27.160 --> 0:13:30.120 lower each and every day, and so it could be 0:13:30.120 --> 0:13:32.600 in an environment where we're still able to carve out 0:13:32.640 --> 0:13:35.760 new highs because of those earning sestiments, but there could 0:13:35.800 --> 0:13:39.319 be some volatility and chop along the way simply because 0:13:39.360 --> 0:13:41.960 you have a high bar with valuations and a high 0:13:42.040 --> 0:13:44.319 bar with expectations as well. 0:13:44.480 --> 0:13:47.120 But you still think positioning is not yet stretched. 0:13:47.520 --> 0:13:48.840 What would get us to our point. 0:13:49.760 --> 0:13:53.280 Our favorite measure is looking at the Deutsche Bank consolidated 0:13:53.320 --> 0:13:56.959 equity positioning, and this is really measuring institutional positioning. 0:13:57.080 --> 0:13:58.320 And what's fascinating there. 0:13:58.200 --> 0:14:00.520 Is that we're in the sixty second percent hime, which 0:14:00.640 --> 0:14:03.840 is just about slightly overweight. But if you look at 0:14:03.880 --> 0:14:07.440 discretionary investors, there's still just neutral, and so we think 0:14:07.440 --> 0:14:10.320 that there's still room for more people to get dragged 0:14:10.320 --> 0:14:12.680 into this market. But if we're talking about positioning, we 0:14:12.760 --> 0:14:16.000 also have to mention households as well, and that's where 0:14:16.040 --> 0:14:18.920 you cannot make the argument that people are underweight equities. 0:14:19.200 --> 0:14:22.160 You can look at the AAII survey that looks at 0:14:22.200 --> 0:14:25.720 equity positioning that's at the highest level it's been since 0:14:25.800 --> 0:14:29.200 peaks like twenty eighteen and twenty twenty two. We've talked 0:14:29.240 --> 0:14:32.680 a lot about how margin loans have grown extraordinarily over 0:14:32.720 --> 0:14:35.400 the last six months at about a forty percent clip. 0:14:35.760 --> 0:14:39.960 So there are certainly signs that households are very fully invested, but. 0:14:40.000 --> 0:14:42.280 Some institutional investors have still. 0:14:42.040 --> 0:14:45.160 Sat on the sidelines, which just is likely why over 0:14:45.200 --> 0:14:48.120 the last six months or so every dip has gotten 0:14:48.120 --> 0:14:49.400 bought so rather quickly. 0:14:49.880 --> 0:14:52.320 Yeah, talk a little bit more about that money that's 0:14:52.320 --> 0:14:54.520 sitting on the sidelines, so a dry powder, if you will. 0:14:54.880 --> 0:14:56.960 We've talked a lot in the past about money market 0:14:56.960 --> 0:14:59.640 funds and how there's more than seven trillion dollars of 0:14:59.680 --> 0:15:03.960 money just sitting there waiting to be deployed. Maybe retail 0:15:03.960 --> 0:15:07.120 investors are fully invested, but that doesn't take away from 0:15:07.120 --> 0:15:09.880 the fact that there's always that possibility they could put 0:15:09.960 --> 0:15:11.160 more into the market. 0:15:11.360 --> 0:15:12.359 How are you thinking. 0:15:12.080 --> 0:15:14.440 About what would what it would take to get that 0:15:14.480 --> 0:15:15.520 money to be put to work. 0:15:16.160 --> 0:15:19.800 Yeah, we've never considered the money market funds as exactly 0:15:19.920 --> 0:15:23.760 fungible funds that could go into equities, meaning that these 0:15:23.840 --> 0:15:27.760 were savings and cash balances. They were typically held in 0:15:27.800 --> 0:15:31.240 cash savings accounts versus just things that were anxious and 0:15:31.360 --> 0:15:34.480 waiting to go into equities. So maybe at the margin, 0:15:34.960 --> 0:15:37.600 as you see those money market funds start to fall, 0:15:37.760 --> 0:15:41.800 it does incentivize people to look for other investments, but 0:15:41.880 --> 0:15:45.440 it's not necessarily a direct line straight into the equity market. 0:15:45.560 --> 0:15:49.800 So certainly money market rates falling could push investors into 0:15:49.880 --> 0:15:52.320 looking into other areas instead of just sitting on the 0:15:52.320 --> 0:15:56.320 sidelines and clipping coupons, but not necessarily seven trillion dollars 0:15:56.320 --> 0:15:58.280 of a wall of money that will go into equities. 0:15:58.760 --> 0:16:01.320 So the centrally that we have right now, how much 0:16:01.360 --> 0:16:05.080 of it is driven by technical factors like positioning versus 0:16:05.560 --> 0:16:09.080 true fundamentals, earnings growth, and the earnings outlook for twenty 0:16:09.120 --> 0:16:09.680 twenty six. 0:16:10.520 --> 0:16:12.560 Yeah, this time of year, we try not to read 0:16:12.640 --> 0:16:15.960 too much into the price action given volumes being so 0:16:16.200 --> 0:16:18.840 very light, and we do know that there tends to 0:16:18.920 --> 0:16:22.359 be some kind of window dress in dressing and positioning 0:16:22.480 --> 0:16:26.200 chases into year end. And what's really fascinating is that 0:16:26.280 --> 0:16:30.240 we saw the rotation and leadership start a little early 0:16:30.320 --> 0:16:33.440 this year. Typically we see leadership rotations where you have 0:16:33.520 --> 0:16:36.200 your classic dogs of the Dow or the last Shelby 0:16:36.240 --> 0:16:39.720 First trade that kicks off in January as people start 0:16:39.760 --> 0:16:43.200 to rebalance portfolios in a new tax year. But it 0:16:43.320 --> 0:16:46.520 seemed to start in November this year, where we saw 0:16:46.720 --> 0:16:51.880 value for example, outperform growth by five percent since November first, 0:16:52.240 --> 0:16:54.320 So maybe people are trying to get a little bit 0:16:54.360 --> 0:16:56.360 ahead of that. But at the end of the day, 0:16:56.400 --> 0:16:59.120 we try not to read too much into very end 0:16:59.160 --> 0:17:02.520 of year kind of race action simply because it doesn't 0:17:02.520 --> 0:17:05.800 reflect anything more than likely just positioning chasing. 0:17:06.119 --> 0:17:08.399 Kemer when it comes to the commodity space, if you 0:17:08.440 --> 0:17:13.920 look at what happened this year across the entire spectrum gold, silver, platinum, copper, 0:17:14.480 --> 0:17:16.879 do you look at that and you think you have 0:17:16.960 --> 0:17:19.639 to maintain part of this into twenty twenty six or 0:17:19.640 --> 0:17:21.919 do you think individuals should make sure that commodities are 0:17:21.960 --> 0:17:22.840 part of their portfolio. 0:17:24.119 --> 0:17:27.280 Yeah, we see commodities as a way to have an 0:17:27.280 --> 0:17:31.440 inflation hedge within portfolios, and they work really well when 0:17:31.480 --> 0:17:34.199 they work well, and they don't work so well a 0:17:34.200 --> 0:17:36.320 good portion of the time. So certainly we've been in 0:17:36.359 --> 0:17:40.280 an environment where that has been a very powerful uptrend 0:17:40.320 --> 0:17:41.639 for a lot of these commodities. 0:17:41.680 --> 0:17:44.160 I think the question is how much can it continue? 0:17:44.400 --> 0:17:47.120 Jeff to graph of renaissance Macro put out a great 0:17:47.119 --> 0:17:50.639