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Speaker 2: All right, let's switch our attention back to the geopolitics,
Speaker 2: the story of the really the last forty eight seventy
Speaker 2: two hours of what's happening in the Middle East. Aaron
Speaker 2: David Miller joins us. He's a senior fellow with the
Speaker 2: Carnegian Downmond for International Piece, joining us from Washington, DC
Speaker 2: via zoom. Aaron, thanks so much for taking the time here. Again,
Speaker 2: it's front and center here for not just geo politics,
Speaker 2: but also for financial markets. And that's why we hear
Speaker 2: Bloomberger paying close attention to what's happening in the Middle East.
Speaker 3: Here.
Speaker 2: We had the Iranian attack yesterday. Love for you to
Speaker 2: put that attack into context of what is happening in
Speaker 2: the Middle overall. What's next for Israel?
Speaker 4: Yeah, you know you got thanks for having me here.
Speaker 4: You've got three wars of attrition going on. One greatest
Speaker 4: role in the moss is one's ball on Israel and Iran,
Speaker 4: which is the premiere event here and over the last
Speaker 4: several weeks. As a consequence of Israeli actions in Isabella,
Speaker 4: the balance of power in these three wars of attrition,
Speaker 4: it's fundamentally been altered.
Speaker 5: His Boula is a ver shadow of itself.
Speaker 4: Israeli's estimate, they've they've eliminated half of its high trajectory
Speaker 4: weapons inventory, and those weapons were designed by Iran in
Speaker 4: order to provide a contingency in the event Israel or
Speaker 4: the US attacked around the nuclear sides. Well that's more
Speaker 4: or less degraded. So the Iranians needed to find a
Speaker 4: way to respond both to the Israeli assassination of Ismaila
Speaker 4: ne on July thirty one, leader of Amas. It was
Speaker 4: really didn't think responsibility for that yet, and of course
Speaker 4: the most recent hit on Hassan Azula, the head of
Speaker 4: as a publish So they looked for a response that
Speaker 4: did more than what they did mid April, you recall,
Speaker 4: and they landlu three hundred high trajectory weapons of Israel.
Speaker 4: Most didn't even impact Israeli airspace, but not to trigger
Speaker 4: a major Israeli escalation. I don't think they found the
Speaker 4: sweet spot one hundred and eighty Creuse missiles. Even though
Speaker 4: Iron Dome David slang Arrow intercepted a lot of them.
Speaker 4: US Navy two destroyers took down twelve. The Jordanians participated
Speaker 4: too many got through and two Israelis were lightly wounded,
Speaker 4: and ironically, a Palestinian man from Gaza who was in
Speaker 4: Jericho was killed. But even though there were no casualties
Speaker 4: of a consequential nature other than the unfortunate death of
Speaker 4: the Palestinian man, the Israelis now have to respond in
Speaker 4: and at least portraying their thinking to avoid creating a
Speaker 4: new normal.
Speaker 5: A second time.
Speaker 4: The running substruct Israeli territory, and they're going to respond.
Speaker 4: Biden's going to talk to Ntayahu today before the Rosa
Speaker 4: Chana holidays. But I think these really responses are going
Speaker 4: to be heavy, multiple targets, oil export facilities, running revolutionary Guard,
Speaker 4: core command and control, conventional military sites.
Speaker 5: The nuclear piece fascinating, yep.
Speaker 4: I'm sure the argument's being made that now is the
Speaker 4: time for any number of reasons. I'm thinking, though, coordinating
Speaker 4: with the Americans, I don't think the Israelis are going
Speaker 4: to go after the enrichment facilities, very deep underground.
Speaker 5: But we'll see.
Speaker 3: Well, you mentioned that you have the Richmond facilities under mountains.
Speaker 3: In fact, is that even targetable at this point with
Speaker 3: just with airstrikes right.
Speaker 4: Where you need bunker busters, you need shock and awe,
Speaker 4: which only the US military can actually need deliver. You
Speaker 4: need a degree of saturation and redundancy. Despite israel skill
Speaker 4: and operational capacity, he's really stone half. Nonetheless, I mean,
Speaker 4: I still wouldn't rule it out as part of the
Speaker 4: target set.
Speaker 5: And then the question is.
Speaker 4: Of course how and in what fashion will will the
Speaker 4: Runnings respond? I mean, without much imagination, you could, you know,
Speaker 4: you could envision a hopskip and a jump to something
Speaker 4: the Middle East has never experienced before, which is a
Speaker 4: multi front walk, not with employment of thousands of ground forces,
Speaker 4: but UAVs AI, cyber cruise missiles, ballistic missiles, one way
Speaker 4: attack groans where Iran if it said badly enough going
Speaker 4: after Saudi oil bruising facilities, which they did as you
Speaker 4: were calling twenty nineteen.
Speaker 5: So we're closer.
Speaker 4: I'm still not convinced we're going to get there. Iron's
Speaker 4: weak and it understands the symmetry of power which I.
Speaker 2: Fa So, Aaron, I look for you to kind of
Speaker 2: give us maybe your assessment of where President Prime Minister
Speaker 2: Netanyahu is in terms of his thinking these days. I
Speaker 2: guess we started this war almost a year ago with
Speaker 2: the attacks on Israel, and I guess at that point
Speaker 2: Yah said, Hey, our goal is to incapacitate Hamas and
Speaker 2: get our hostages back. That scope seems to have broadened
Speaker 2: dramatically now to include, you know, maybe some war aims
Speaker 2: in Lebanon, to deal with Iran more broadly. Where is
Speaker 2: he now?
Speaker 5: Look, I think you know, don't never write this guy off.
Speaker 4: I mean, it was unimaginable that a prime Minister or
Speaker 4: presider or the single body of stayed for Jews since
Speaker 4: the liberation of the Nazi death camps, the worst intelligence
Speaker 4: failure in the history of State of Israel, antrial for
Speaker 4: brid re fraud and breach of trust in.
Speaker 5: A Jerusalem dis re court now four years running, would.
Speaker 4: Have gotten himself into a situation where his credibility and
Speaker 4: even some of the numbers.
Speaker 5: In the latest Israeli polls have gone.
Speaker 4: Up, not surprisingly because of the last several weeks and
Speaker 4: what I think we're on the cuspbol with respect to
Speaker 4: an Israeli strike against Iran. So he still does if
Speaker 4: elected were held today, he still doesn't have enough seats
Speaker 4: to put together a coalition.
Speaker 5: But there's no effective opposition.
Speaker 4: And the fact is the kanesstants out of resist until
Speaker 4: the end of October. Benjamin Nataniell will will make an
Speaker 4: assessment on November five with the next President of the
Speaker 4: United States is and he'll adjust his tactics. Importingly, I
Speaker 4: don't see new elections in Israel at the earliest, and
Speaker 4: the government could go to term twenty twenty six. I
Speaker 4: don't see new elections in Israel until sometime in twenty
Speaker 4: twenty five.
Speaker 3: Well what's the response from the rest of the Mid
Speaker 3: East to Saudi Arabia et cetera.
Speaker 4: Well, there's the public and the private response, right, I mean,
Speaker 4: nobody is going to miss other than Hezbollah. Certainly, among
Speaker 4: the Sunnis in the region, no one's going to miss
Speaker 4: Ausun Ocella, certainly, the Saudis won't uh and Sunnis in
Speaker 4: Syria that have prosecuted a terrible war against Sunni populations
Speaker 4: isn't going to miss Nuzula either, So and that goes
Speaker 4: by the way, also for Jakna Sinoir, the pre eminent
Speaker 4: Palestinian leader who's hiding in a bunker somewhere meters below ground,
Speaker 4: probably surrounded by hostages the low Raunis. I think the
Speaker 4: Arab States really understand what they didn't in the way
Speaker 4: to October seventh, when Israeli military capacities seemed to be
Speaker 4: not just diluted, but somehow defeated. The last several weeks,
Speaker 4: the operational effectiveness, the tactical ingenuity of the Israelis has restored.
Speaker 4: I think their street cred comes to the to the
Speaker 4: air world. That's particularly true for the Bobrani societies and
Speaker 4: the Amorates will all have above ground and below ground
Speaker 4: security and intelligence relationships.
Speaker 5: With Israel. But again it's the Middle East. Nobody ever
Speaker 5: lost money.
Speaker 4: Against the peace and stability, and I think that we
Speaker 4: have to still be three sober here. Yeah, yes, can
Speaker 4: the can what the Israelis have done be translated somehow
Speaker 4: into political arrangements lead to greater prosperity instability.
Speaker 5: That's the core question, and.
Speaker 4: You know it's one of the many questions I just
Speaker 4: don't have an answer to you.
Speaker 2: All right, Aaron, thank you so much for joining us.
Speaker 2: We really appreciate getting some of your time to share
Speaker 2: in your expertise. Aaron David Miller. He's a senior fellow
Speaker 2: at the Carnegian Down for International Piece, has decades of
Speaker 2: experience in that part of the world. You appreciate getting
Speaker 2: some of his time.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 6: Alex deeal here alongside Paul Sweeni and John Tucker. This
Speaker 6: is Bloomberg Intelligence Radio. We are broadcasting to live for
Speaker 6: Interactive Brokers Studio right here in Midtown Manhattan. So last night,
Speaker 6: Democratic Governor Tim Watson Republican Senator JD Vans sparred during
Speaker 6: the CBS News vice presidential debate in New York that
Speaker 6: featured fireworks over abortion rights, the economy, and foreign policy,
Speaker 6: in part in an appeal to Midwestern voters.
Speaker 7: One thing that Joe Biden did is he continued some
Speaker 7: of the Trump tariffs that protected American manufacturing jobs. It's
Speaker 7: the one issue where Kamala Harris has run away from
Speaker 7: Joe Biden's record.
Speaker 1: Well, Kamala Harris is Day one was Donald Trump's failure
Speaker 1: on COVID that led to the collapse for our economies.
Speaker 7: If Kamala Harris has such great plans for how to
Speaker 7: address middle class problems, then she ought to do them. Now,
Speaker 7: how is it fair.
Speaker 1: That you're paying your taxes every year and Donald Trump
Speaker 1: hasn't paid any federal text in the last fifteen years.
Speaker 6: Well, joining us now is Henry Natrez, Managing partner and
Speaker 6: director of Economic Policy at Beta Partners. Henrietta, did we
Speaker 6: learn anything last night.
Speaker 8: Well, we learned that maybe both parties candidates have the
Speaker 8: potential to improve their standing with the American voter. The
Speaker 8: surprise to me was that flash poles that came out
Speaker 8: right after the debate showed that viewers considered the two
Speaker 8: men effectively tied in the race. I thought personally that
Speaker 8: Vance had exceeded Waltz, but that's not what we saw
Speaker 8: in the flash polls. And most importantly, amongst unaffiliated voters,
Speaker 8: not Democrats, not Republicans, but sort of third party voters,
Speaker 8: the majority of them thought that Waltz in a better job.
Speaker 8: And you have to think of that as probably some
Speaker 8: of the last moments of the campaign, you know, the
Speaker 8: sort of the debate, the last sort of fifteen minutes
Speaker 8: when they talked about January sixth again. But in general,
Speaker 8: net net, both candidates standing improved materially with voters. I
Speaker 8: want to say that jd. Vance went from a negative
Speaker 8: twenty two percent, a negative thirteen percent rating to a
Speaker 8: negative two percent rating, and Tim Walls also improved from
Speaker 8: his plus three favorability rating to something like plus thirty
Speaker 8: four after last night's debate. So both men did what
Speaker 8: they wanted to do, introduce themselves to the American public,
Speaker 8: and the American public like what they saw.
Speaker 2: Henrietta, can you give us a sense, I'm trying to
Speaker 2: get a handle on this particular number, how many independent
Speaker 2: voters are each candidate trying to get at each campaign, Trenting,
Speaker 2: Do we have a sense of how many they are?
Speaker 7: Well?
Speaker 9: The independent voter base is actually a huge chunk of
Speaker 9: the pie.
Speaker 8: As America has gotten polarized and voters have, you know,
Speaker 8: flocked to the far left of the far right within
Speaker 8: their parties, a big chunk of America now qualifies themselves
Speaker 8: as independ voters. That's different than undecided. Undecided is now
Speaker 8: like four percent seven percent of the electorate.
Speaker 9: Most people have picked a horse and they're moving forward.
Speaker 8: Unfortunately, most likely the people who are undecided did not
Speaker 8: even watch last night's debate, So they're going to be
Speaker 8: getting their internals from what they see on the internet today,
Speaker 8: and it's probably not going to move the needle too much.
Speaker 8: If you have to think about the presidential debate not
Speaker 8: moving the needle a whole lot, you know, a couple
Speaker 8: points to Kamala Harris, it's very unlikely to mean that
Speaker 8: the vice presidential debate last night is going to really
Speaker 8: change things for either ticket.
Speaker 6: So it's October second, if I'm not mistaken, and typically
Speaker 6: we talked about in an October surprise when it comes
Speaker 6: to the election. Is the Iran Israel conflict right now
Speaker 6: that October surprise?
Speaker 9: You know, I want to say yes.
Speaker 8: Obviously, the escalation that we're looking at right now and
Speaker 8: potential for the Middle East disruption is explosive to the
Speaker 8: point where we haven't seen it in decades and you know,
Speaker 8: rapidly escalating and just waiting for Israel's response now. But
Speaker 8: the you know, the question last night was the first
Speaker 8: one on the gate about how to respond to Iran.
Speaker 8: And I think what was interesting is that the electorate
Speaker 8: as a whole in America doesn't consider this a near
Speaker 8: term issue or even something that ranks in the top
Speaker 8: five areas that they care about.
Speaker 9: It's you know, the economy followed by some.
Speaker 8: Combination of abortion and immigration and then everything else sort
Speaker 8: of way underneath that. Foreign policy is just not a
Speaker 8: forte of American voters.
Speaker 2: Henrietta Kamala Harris has been out fundraising former President Trump
Speaker 2: and in past elections like goes that would be really
Speaker 2: big news. Is that big news this time around?
Speaker 9: I think it is. And I want to tie in
Speaker 9: a couple of different components here.
Speaker 8: You know, we have Hurricane Heleen that went straight through
Speaker 8: Trump country in the Panhandle, Florida, Georgia, and North Carolina
Speaker 8: with the exception of Ashville, and like a couple of
Speaker 8: blue pockets. But the turnout campaign, not just on the
Speaker 8: day of the election, but right now as early voting
Speaker 8: has started, is something that all this fundraising is able
Speaker 8: to actually do. Kamala Harris's campaign has you know, a
Speaker 8: dozen field offices in certain states, that are going to
Speaker 8: be pivotal to this election, where Trump has almost none.
Speaker 8: There are campaign volunteers that are getting paid twenty dollars
Speaker 8: an hour to go out into the field and make
Speaker 8: sure that they're knocking on doors and getting people to
Speaker 8: the polls, getting their.
Speaker 9: Mail in ballots.
Speaker 8: Said, that's the kind of money that's being spent right now,
Speaker 8: and you're seeing it trickle down into the state races,
Speaker 8: which are now expanding the Democratic map into places they
Speaker 8: have no business being, you know, Texas, Florida, Nebraska, and
Speaker 8: then also on the House side with an expansion of
Speaker 8: the race sort of exponentially in the last couple of weeks.
Speaker 8: And that's because of the massive fundraising campaign that the
Speaker 8: Harris campaign has generated. I think I could think it's
Speaker 8: if my Memory Service two hundred and eighty seven million
Speaker 8: in August to Trump's eighty four million.
Speaker 9: So they're tripling their numbers.
Speaker 6: Twenty bucks an hour for volunteer. That's that's pretty solid,
Speaker 6: like that something that.
Speaker 3: Doesn't make them a volunteers.
Speaker 6: It is true that feels odd, but you know, maybe
Speaker 6: it's for profit volunteering. Henrietta. When we take a look
Speaker 6: at the broader race in terms of Congress, Senate, and
Speaker 6: the House. Where do we stand? What are some races
Speaker 6: that you're watching?
Speaker 8: Well, I mean, my favorite part of this election is
Speaker 8: that we have the benefit of every single swing state
Speaker 8: also having a Senate race happening. I want to lay
Speaker 8: out two that I think are really important today and
Speaker 8: maybe the VP debate can move the needle.
Speaker 9: In Arizona and Nevada.
Speaker 8: You see Kamala Harris's strength coming from the fact that
Speaker 8: she's pulling thirteen to fifteen percent of the Republican voter base.
Speaker 8: So in Arizona, fifteen percent of voters that identify as
Speaker 8: Republicans are saying, you know what, not today, not for Trump,
Speaker 8: not for Carrie Lake, who is the Republican Senate candidate there.
Speaker 8: They're going for Galleo and they're going for Kamala Harris.
Speaker 8: And that's why she is even playing ball in a
Speaker 8: state like Arizona that used to be deep red. And
Speaker 8: that's translating just next door to Nevada, where you're seeing
Speaker 8: strength for Kamala Harris amongst Republican voters, and that's translating
Speaker 8: down ballot to Jackie Rosen in that Senate seat, who's
Speaker 8: ahead by ten in the latest polls on average, if
Speaker 8: I'm not mistaken something like that. So the Senate candidates
Speaker 8: down ballot for the Democratic Party are pulling so far
Speaker 8: ahead of Kamala Harris, so far ahead of their Republican challengers,
Speaker 8: and not all of them are incumbents, you know, whether
Speaker 8: that's in Michigan or other states. There are Democratic Senate
Speaker 8: races being held in all these pivotal states that Kamala
Speaker 8: Harris must win and I think get four tens either
Speaker 8: a massive split election or additional votes that Kamala Harris
Speaker 8: can get in the final days of the campaign.
Speaker 6: All right, Henrietta, thanks so much. We really appreciate it.
Speaker 6: Henrita trans managing partner and director of Economic Policy at
Speaker 6: Vita Partners joining us there. You early vootered already, didn't you?
Speaker 7: I did?
Speaker 2: I just mad, I think yesterday early and often. I'm
Speaker 2: a big believer in that. And I'm also happy that
Speaker 2: we are not I'm not in a swing state, John,
Speaker 2: We're not in a swing state?
Speaker 3: Are we in New Jersey? Well, don't say your vote
Speaker 3: doesn't every single vote Council's inphasized. So I dropped it
Speaker 3: early on even though we're in New Jersey.
Speaker 2: So, but in New Jersey, we're not as state, so
Speaker 2: we're not getting crushed by the political ads yet. But
Speaker 2: even the national buys are noticeable, you know. But I mean,
Speaker 2: you get in a swing state, every local buy is
Speaker 2: on every station.
Speaker 4: You can go.
Speaker 6: I can't imagine. I mean, I've always lived in New York,
Speaker 6: so I literally can't imagine.
Speaker 1: You're listening to the Bloomberg Intelligence podcast. Catch us live
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Speaker 2: Looking at the markets here, I mean again you could say,
Speaker 2: given the geopolitical tensions, maybe this market's behaving fairly well,
Speaker 2: you know, over the past a couple of days. As
Speaker 2: John has just mentioned, we do have a little bit
Speaker 2: of a sell off here, off just on about two
Speaker 2: ten percent on the SMP five earner. But the question
Speaker 2: is kind of, how do you thinking a little bit
Speaker 2: more long term as you try to think about the geopolitics,
Speaker 2: maybe even the strike of the dock workers in the
Speaker 2: economic impact that could have, how does that impact intermediate
Speaker 2: to longer term views. Let's check them with somebody who
Speaker 2: does this stuff for a living. Mary and Bartel's chief investments.
Speaker 2: It just for Sanctuary Wealth. Marion with a name like
Speaker 2: Sanctuary Wealth. I'm thinking you guys think long term, maybe
Speaker 2: relatively low levels of risk. What's your investment view of
Speaker 2: markets these days?
Speaker 10: Oh, I can't get more bullish. And I understand that
Speaker 10: there's a lot of geopolitical risks. We have a port strike,
Speaker 10: we have an unpresidented presidential election. But what I've learned
Speaker 10: in my forty years is that liquidity trumps everything, and
Speaker 10: the Federal Reserve is on an aggressive path in my
Speaker 10: view of now easing monetary policy at a time when
Speaker 10: our economy is growing, We're growing at least about two percent.
Speaker 10: I would argue, we're still at full employment, and we
Speaker 10: still have corporate profits growth. We're not even a recession
Speaker 10: for corporate profits. That this is going to ignite our economy,
Speaker 10: maintain in employment. And I'm pretty bullish.
Speaker 5: Now.
Speaker 10: That's not to say that the markets can't be a
Speaker 10: little tricky or spooky in the month of October. But
Speaker 10: what the month of October has that most people don't
Speaker 10: talk about is we make important market bottoms that allow
Speaker 10: the market to have its strong year end rally.
Speaker 2: Where do you think the best opportunities are now? I
Speaker 2: mean we've had some rotation in this marketplace. It's no
Speaker 2: longer the big tech stocks that are leading us higher.
Speaker 2: We've had some rotation some other sectors. How are you positioned?
Speaker 10: So that's really a bullish thing that we have the
Speaker 10: breath of the market expanding. So when we recently had
Speaker 10: new record highs in the market, breath hit a new high,
Speaker 10: we got volume expanding. That tells us we're in a
Speaker 10: very strong market or very strong tape. I haven't given
Speaker 10: up on tech. I think tech is in a consolidation.
Speaker 10: It's have an extraordinary move, but it's allowed other pockets
Speaker 10: of the markets to move. Can you believe that utilities
Speaker 10: could rally twenty percent this year? As the market is
Speaker 10: expecting rates to come down, they're seeking out yield within
Speaker 10: the equity market, You've seen moves in reads and it
Speaker 10: might be possible next year that the phrase or word
Speaker 10: tina comes back. There is no other alternative as the
Speaker 10: market continues to seek out yield as the baby boomers
Speaker 10: move into retirement.
Speaker 2: So I mean we've seen some volatility. I mean we
Speaker 2: have the VIX now just still below twenty. But it
Speaker 2: feels like there's been some volatility in these markets. When
Speaker 2: you talk to a lot of pros out there, how
Speaker 2: do you deal with that? Are there sectors maybe protect
Speaker 2: you from that, or are there other ways to look
Speaker 2: at maybe getting a little bit of stability in a portfolio.
Speaker 9: So, I mean, the.
Speaker 10: True way to get stability in a portfolio, if you
Speaker 10: really want to be very defensive, is to own cash.
Speaker 10: And the market's already positioned there. We have six six
Speaker 10: point four trillion dollars in money market funds. Many clients
Speaker 10: have tried to lock in that five five and a
Speaker 10: half percent. I would argue that the market is extremely defensive,
Speaker 10: but you know, pockets of utilities tend to be very
Speaker 10: defensive also within the marketplace. Enough bright spot is we
Speaker 10: have gold that's recently been hitting record all time highs,
Speaker 10: So you know you can put a little bit of
Speaker 10: gold in the portfolio. Because I do think over time
Speaker 10: we are more in an inflationary environment. Although we're seeing
Speaker 10: inflation come down now and I think into next year,
Speaker 10: I think we already have the ingredients for inflation to
Speaker 10: come back.
Speaker 2: All Right, we're speaking with Marion Bartel's chief investment strategist
Speaker 2: at shank Sanctuary Wealth. Thankfully, Alex Steele has made it
Speaker 2: back from her sojourn out to Calgary and she's back
Speaker 2: in our studio.
Speaker 6: I mean, you say that now, but wait until it
Speaker 6: comes out of my mouth the next how and a
Speaker 6: very good So anyway, I just got back, literally just
Speaker 6: got into the studio. Marian I noticed obviously that you
Speaker 6: were talking about being bullish and being positive and liquidity,
Speaker 6: et cetera. How does China factor into this because you're
Speaker 6: already feeling bullish about liquidity regardless of what China is
Speaker 6: actually doing. Could that be a catalyst?
Speaker 10: Yes, it can, and.
Speaker 9: It's not just China.
Speaker 10: We have central banks around the world that are cutting
Speaker 10: interest rates. It is very possible as we move into
Speaker 10: next year that we get monetary stimulus that we haven't
Speaker 10: seen since COVID in two thousand and eight, in two
Speaker 10: thousand and nine.
Speaker 9: And that's what I've.
Speaker 10: Learned throughout the years. Even though some bad things can
Speaker 10: be happening around you, the most important thing to the
Speaker 10: market is can companies grow their corporate profits. Markets trade
Speaker 10: on profits, not on potentials of potential risk. Now, what
Speaker 10: would change my view? Because we do have a lot
Speaker 10: of risks out there. If crude oil spiked very sharply
Speaker 10: and especially got to one hundred and stayed over one hundred,
Speaker 10: I would view that to be extremely negative. I mean,
Speaker 10: my bullishness would turn pretty much to bearishness. But you know,
Speaker 10: as you mentioned China, I think what China is doing
Speaker 10: seems very unprecedented. I'm not an expert on China, but
Speaker 10: the one thing I've learned is when central banks allow
Speaker 10: you to buy the stock market, you should buy bye
Speaker 10: bye We soart Japan do that near its lows?
Speaker 9: In fact, the central bank.
Speaker 10: Actually outright bought its market. So when a central bank
Speaker 10: is allowing buying of the market, I think you should
Speaker 10: own it. I think part of the reason you've seen
Speaker 10: such a sharp move up in China is so many
Speaker 10: traders were short the market, right, so we've had this
Speaker 10: major shortcovering.
Speaker 9: But most fund.
Speaker 10: Managers that manage money, either globally or in the marging
Speaker 10: markets are underweight. We have a lot of room to
Speaker 10: actually move money into China.
Speaker 2: All right, Maria, and thank you so much for joining us.
Speaker 2: Always appreciate getting your thoughts there. Remaining clearly bullish there,
Speaker 2: Marion Bartel's chief investment Strategies for Sanctuary.
Speaker 3: Welcome.
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Speaker 2: One of the names it's under pressure here to take
Speaker 2: off about five six percent is Tesla, the company's first
Speaker 2: quarter sales gains this year. They come up short the
Speaker 2: vehicle deliveries. They did rise six point four percent, which
Speaker 2: is good, but they were trailing analyst estimates here. So
Speaker 2: again is stock selling off a little bit. Let's get
Speaker 2: the latest with Keith Norton. He's a Bloomberg's Auto reporter. Keith,
Speaker 2: what are you hearing out there about Tesla and their
Speaker 2: earnings here?
Speaker 11: Yeah, there's a little disappointment on the vehicle sales. They
Speaker 11: came in just under analysts expectations about one thousand vehicles
Speaker 11: under They sold four hundred and sixty two thousand and
Speaker 11: four hundred and sixty three was more of the it
Speaker 11: was a consensus. But more to the point, they kind
Speaker 11: of missed the whisper expectation, which was maybe as high
Speaker 11: as for seventy seems like there's some softness in the
Speaker 11: cyber truck. There also were high expectations for sort of
Speaker 11: a cash for Clunger's sort of promotion going on in China.
Speaker 11: They've doubled the incentive for EV sales if you turn
Speaker 11: in an older model there. That was expected to give
Speaker 11: more tailwind to Tesla, and that didn't quite materialize the
Speaker 11: way that investors expected.
Speaker 6: So the stock is down, you know, just in terms
Speaker 6: of ubers. For example, every Uber I'm in now feels
Speaker 6: like it's a Tesla. I don't know if you guys
Speaker 6: experienced the same thing. And I feel like, is that
Speaker 6: a good or bad sign for Tesla? Because yeah, okay,
Speaker 6: it's promotional, But I feel like the reason why all
Speaker 6: the ubers are now Tesla is is because it's a
Speaker 6: promotion like get this off my lot. Are we at
Speaker 6: the trough with that?
Speaker 5: Yeah?
Speaker 11: You know, Model three and Model why that is the
Speaker 11: volume of the company, which are their you know, mainstream cars,
Speaker 11: their luxury model sque does not sell very well anymore.
Speaker 11: It's getting pretty long in the tooth. And cyber truck,
Speaker 11: you know, is priced sort of around one hundred thousand,
Speaker 11: and that limits its volume under twenty thousand probably for
Speaker 11: the quarter. So they are becoming a more mainstream brand
Speaker 11: and when that happens, they become ubers.
Speaker 2: So mail Matt from Westchester emails in here and says,
Speaker 2: is Tesla ever gonna have a new model? We haven't
Speaker 2: had a new model like ever, really like just it
Speaker 2: upgraded model.
Speaker 5: Yeah.
Speaker 11: This is you know, sort of a long standing issue
Speaker 11: that the product lineup, with the exception of cyber Truck,
Speaker 11: which for now is a niche vehicle, that the lineup
Speaker 11: is getting stale. But you know, Elon Musk is really
Speaker 11: focusing more on Tesla as an AI company. They have
Speaker 11: this event coming up next week to unveil the Robotaxi
Speaker 11: that he's really been talking up. And that's actually talk
Speaker 11: moved up the stock from the way he's positioning the company.
Speaker 11: So he's trying to speak less like a traditional automaker
Speaker 11: and more like an AI tech company.
Speaker 6: I feel like it's always been that. It's been like
Speaker 6: Tesla's a tech company, Nope, it's a car company, Nope.
Speaker 6: Now it's an AI company. How does the sales though
Speaker 6: that we're seeing for EV's because that's still the bread
Speaker 6: and butter. How is that stacking up against its peers
Speaker 6: like a GM or Forward.
Speaker 11: Well, I mean, Tesla's still far and away leads to
Speaker 11: the market. But GM, for example, had an excellent quarter
Speaker 11: in EV sales because they've just rolled out this thirty
Speaker 11: five thousand dollars Chevy Equinox electric vehicle and that's a
Speaker 11: great price, and it's below Tesla's lowest prices. So you know,
Speaker 11: new competitors are coming in. Tesla's supposed to have a
Speaker 11: lower priced EV coming next year, but Elon hasn't really
Speaker 11: talked much about that. So you know, as more competitors
Speaker 11: come in, as they come in at the lower end
Speaker 11: of the market, that's going to chip way a Testa's share.
Speaker 2: All right, Keith, thanks so much. We appreciate that. As always,
Speaker 2: Keith not an auto reporter for Bloomberg News. Testa reporting
Speaker 2: numbers a little bit light relative to expectations.
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Speaker 2: Looking at the market, it's kind of flat here today.
Speaker 2: I think the market's trying to digest kind of what
Speaker 2: we're seeing coming out of the Middle East, what the
Speaker 2: economic impacts may be from this ongoing port strike, and
Speaker 2: maybe the political landscape as well as their traditional earnings
Speaker 2: and FED watch and all those types of things. But
Speaker 2: let's go to somebody who does this stuff for a living, Colschlife,
Speaker 2: Chief Investment Officer at BIMO Family Office, and we appreciate
Speaker 2: getting some of her time. Carol, thanks so much for
Speaker 2: joining us here. Put all that stuff together, you know,
Speaker 2: the geopolitical stuff, the domestic politics, the earnings, the fetter reserve.
Speaker 2: Where do you guys come out and just say in
Speaker 2: your communication to your clients. These days we.
Speaker 12: Remind clients a lot. The whole reason we build durable
Speaker 12: and sturdy portfolios is to be able to absorb these headlines,
Speaker 12: because it's not at all uncommon for markets to grapple
Speaker 12: these headlines. You know, It's interesting because we end in
Speaker 12: September with many different averages at or near all time highs,
Speaker 12: and so investors are already a little nervous because there's
Speaker 12: that human bias to try to figure out where the
Speaker 12: risk is going to come from. And when you get
Speaker 12: a day like yesterday where all of a sudden it's
Speaker 12: a one two three punch, a lot of times investors
Speaker 12: can be concerned in the short run. But it's interesting
Speaker 12: when you look through it. And the nice thing is
Speaker 12: is we're going into earning seasons, so we'll get a
Speaker 12: lot of color from companies not only about the actual
Speaker 12: earnings that they've reported, but their outlook for what's coming
Speaker 12: next and how they're going to absorb all of the
Speaker 12: shocks from this. But in the in the when you
Speaker 12: look at the last few quarterly reports, especially the big
Speaker 12: months of quarterly report, markets have actually done well because
Speaker 12: the fundamentals have come through and our companies have proven
Speaker 12: very resilient. So having portfolios, your minding investors that we've
Speaker 12: got some fixed income in there for stability, we've got
Speaker 12: some growth bias in there. Because the underlying trends are
Speaker 12: very positive, it's been a great place to be well.
Speaker 6: It also goes to the other point of how many
Speaker 6: bullish catalysts there are out there right now. And I'll
Speaker 6: break it down. Okay, we got margins could actually be
Speaker 6: better than expected as interest rates wind up coming down.
Speaker 6: You also have, as you point out, earnings and expectations
Speaker 6: have been revised lower, so the bar is pretty low.
Speaker 6: The Fed is cutting twenty five or fifty in November,
Speaker 6: but they are cutting stimulus from China. Definitely a fiscal
Speaker 6: spend from the US government no matter who wins the
Speaker 6: White House. And I'm obstruct like what is the downside?
Speaker 6: Like how do you not buy equities in this market?
Speaker 6: And plus, excess liquidity is really hot.
Speaker 12: Well, and I think that's why a lot of times
Speaker 12: it's called the Wall of Warrior, because the market keeps
Speaker 12: grudgingly hitting new highs, but you're not seeing the traditional
Speaker 12: exuberance or ebulliance you would that would mark a market top.
Speaker 12: And so from that perspective, there is a substantial amount underneath.
Speaker 12: And actually you can make an argument that a lot
Speaker 12: of business activities have actually been held in reserve because
Speaker 12: everyone for the last two years has been fearing a
Speaker 12: recession around every corner, and interest rates were high. Now
Speaker 12: you've got a reversal of those. You've got a lot
Speaker 12: of people saying, which is maybe reaverted the recession. And oh,
Speaker 12: by the way, the GDP revisions that we just had
Speaker 12: erased that technical recession that everyone freaked out about a
Speaker 12: year or two ago, because that's not even in the
Speaker 12: numbers anymore. And it goes again to how resilient these
Speaker 12: companies have been.
Speaker 2: Carol, how about the fixed and come space, where do
Speaker 2: you see opportunities there? And again an interest rate environment
Speaker 2: where some of the fed's going to continue to lower.
Speaker 12: Yeah, we actually we're preferring clients not wait around in cash.
Speaker 12: Cash has been very comfortable for a lot of people
Speaker 12: that they at least go a bit out on the
Speaker 12: curb and lock in some of these yields that you're getting. Now,
Speaker 12: we're not ready to go out towards the tenure or
Speaker 12: longer because we actually think the tenure yields are lower
Speaker 12: than they'll end up being, because we do believe there's
Speaker 12: an underlying growth bias. You referenced a lot of the
Speaker 12: fiscal spend that's out there. There's a lot of stuff
Speaker 12: that's been targeted and there's thumbtacks in it, but less
Speaker 12: based on some of the numbers, we're seeing less than
Speaker 12: twenty percent of what's been allocated is actually out there.
Speaker 12: And one of the interesting thing is is you've got
Speaker 12: a lot of bonding bills on state and local ballots
Speaker 12: this fall, and to the extent those get passed, you've
Speaker 12: got a lot of spending teeing up that's matched by
Speaker 12: those federal funds, and so you've got the opportunity to
Speaker 12: really put some extra growth underneath a lot of these things.
Speaker 12: And so we think as that gets absorbed that you'll
Speaker 12: see that the tenure yields drift higher, not lower.
Speaker 6: So, Paul, you'll be so proud of me. I did
Speaker 6: email my guy and I was like, Hey, so I
Speaker 6: had this money in my high heeled savings. Should I
Speaker 6: put it in munis? I'm just saying where the money
Speaker 6: should go. I thought of Paul. He likes the munis.
Speaker 6: But it does raise the question of in the equity side,
Speaker 6: where do you wind up rotating that cash. This an
Speaker 6: area that we all talked about in terms of the
Speaker 6: positive catalysts play out. Do you rotate into the cyclicals,
Speaker 6: do you stick with tech? Do you barbel it?
Speaker 7: I think you.
Speaker 12: Barbel it, and I also think you move down the
Speaker 12: capitalization curve because there's a lot of argument that a
Speaker 12: lot of those small caps have been very fitful at
Speaker 12: their participation. They'll participate for a week or two or
Speaker 12: a day or two, and then they'll pull it all back.
Speaker 12: And on those pull backs, it's nice to be able
Speaker 12: to round up some of those because they have by
Speaker 12: and large, they're going to have better access, they're going
Speaker 12: to have more floating rate debt, they're going to benefit
Speaker 12: more disproportionately, if you will, from it FED bringing rates down,
Speaker 12: and they're also going to participate as the economic activities
Speaker 12: stays robust in the United States.
Speaker 2: Ellen, I want to get your thoughts on alternative investments.
Speaker 2: How do you put them in the context of your
Speaker 2: the Bemo Family office in terms of asset allocation for
Speaker 2: your clients, whether it's private equity, private debt, hedge funds,
Speaker 2: that kind of thing.
Speaker 12: Yep, private equity, private debt, we're probably less. We have
Speaker 12: selective spots where we use hedge funds as much, probably
Speaker 12: not as much as we might have a decade or
Speaker 12: two ago, but a lot of private capital in general.
Speaker 12: We also have other things. We are very active in
Speaker 12: doing some custom structured notes for our clients. We look
Speaker 12: at a lot of interesting non correlated asset class catastrophe bonds.
Speaker 12: Some of the interesting niches and credit. The nice thing
Speaker 12: we have in terms of the private capital that we
Speaker 12: go after is we can go to smaller funds rather
Speaker 12: than the multi billion dollar and super big funds. Sweet
Speaker 12: spot is some smaller funds that get a lot of
Speaker 12: less attention, if you will, and are in some very
Speaker 12: niche stoff, so our clients like it a lot.
Speaker 6: We were just talking about Nike with punam Go Oil
Speaker 6: or Bloomberg intelligence analyst, which leads me to the consumer, Right,
Speaker 6: how do you play K shaped economy At the end
Speaker 6: of the day.
Speaker 12: It is difficult, and it's interesting because one of the
Speaker 12: pieces that I'm preparing to write is you do have this.
Speaker 12: There's a lot of angst out there that is coming
Speaker 12: through in consumer confidence numbers and also coming through in
Speaker 12: polling numbers. But you've got the odd part is is
Speaker 12: the top twenty percent of the populace produces forty percent
Speaker 12: of the GDP activity. The bottom twenty percent produces nine percent,
Speaker 12: So that top twenty percent is really going to drive.
Speaker 5: The overall macro number.
Speaker 12: But interestingly enough, that bottom twenty percent has a chance
Speaker 12: to drive what happens at the ballot box in five
Speaker 12: weeks and to the extent that the turnout and vote
Speaker 12: you have a chance to shape policy intermediate, longer term,
Speaker 12: and so we do a lot of talking like that
Speaker 12: because obviously our clients are going to sit at the
Speaker 12: top portion and they're going to be in a very
Speaker 12: different scenario. But their kids, their grandkids are looking at
Speaker 12: a lot different environment because they're finding it difficult to
Speaker 12: find daycare, difficult to find houses, they're over indebted in
Speaker 12: a lot of cases with college stat things like that.
Speaker 12: So it really is difficult and we have a lot
Speaker 12: of those conversations one by one.
Speaker 2: All Right, Kerl, thank you so much for joining us
Speaker 2: Coush Life. She's a chief investment officer for Bemo Family Office.
Speaker 2: Joining us there via the zoom thing.
Speaker 1: Here, you're listening to the Bloomberg Intelligence Podcast. Catch us
Speaker 1: live weekdays at ten am Eastern on applecar Play and
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Speaker 1: Just say Alexa play Bloomberg eleven.
Speaker 6: Thirty from Alex Steel alongside Paul Sweeney. This is Bloomberg
Speaker 6: Intelligence Radio. We're broadcasting to live from Ournactive Broker studio
Speaker 6: right here. In midtown Manhattan. As Charlie was just talking about,
Speaker 6: WTI is up by about seven tens of one percent.
Speaker 6: We're treating at seventy thirty four. The latest headline that
Speaker 6: just crossed from the Wall Street Journal is it apparently
Speaker 6: key members of an alliance made of OPEC plus agreed
Speaker 6: to ease curbs in December. This is at an online
Speaker 6: gathering that took place on Wednesday, and according to delegates
Speaker 6: in the cartel, basically OPEC plus has taken oil off
Speaker 6: the market and they need to find a time to
Speaker 6: put it back onto the market, whether it's going to
Speaker 6: be a slow drip, whether it's going to be a
Speaker 6: full stop, or whether they're going to have to cut
Speaker 6: again in order to support the oil price. All of
Speaker 6: that surrounding the oil market right now. Ellen Wald is
Speaker 6: president of Transversal Consulting and senior Fellow at Atlanta Council,
Speaker 6: and she joins us, Now, what is your read through
Speaker 6: on that headline?
Speaker 13: Yeah, I think that this headline it comes after a
Speaker 13: couple of interesting headlines from Saudi Arabia saying, know they're
Speaker 13: worried about oil going down maybe to fifty or they're
Speaker 13: not pursuing hundred dollars oil anymore. I think that this
Speaker 13: is really reflective of a process that OPEK has been
Speaker 13: going through over the past quarter, maybe even half a year.
Speaker 13: At this point where they're looking at the market, they
Speaker 13: know they've got to start unwinding these cuts that they've
Speaker 13: had in place for a long time, but they're really
Speaker 13: conscious of where the market is going, what demand looks
Speaker 13: like in China, and what they have to do to
Speaker 13: kind of ease the market into accepting that, yes, they
Speaker 13: are going to be putting more oil on the market.
Speaker 13: They've already delayed the return of this oil was supposed
Speaker 13: to start coming back on the market in October, and
Speaker 13: they're really just they're pushing it back to December, but
Speaker 13: they're saying, yes, you know, we still plan on doing this.
Speaker 13: I do think, as you mentioned before about Iraq and
Speaker 13: Kazakhstan and some overproduction going on there, it's entirely possible
Speaker 13: that they will be excluded from this increase in output
Speaker 13: because the way that it works is each member only
Speaker 13: increases a certain percentage, So each individual member is only
Speaker 13: going to be putting on really a very minimal amount
Speaker 13: of barrels. They may exclude those members that had been
Speaker 13: overproducing from this in order to prevent you know, too
Speaker 13: much oil from flooding the market.
Speaker 7: Hey Ellen.
Speaker 2: Javier Blass, who is a Bloomberg opinion columnist covering the
Speaker 2: energy space. He's out with a note today saying that
Speaker 2: the oil price that matters now is fifty dollars, not
Speaker 2: that one hundred dollars fabled one hundred dollars dollars target,
Speaker 2: that's not relevant anymore. Maybe the new target's fifty. What
Speaker 2: do you think about that?
Speaker 13: You know, that's a that's an interesting conception. I do
Speaker 13: think that there is definitely a we've kind of switched
Speaker 13: from you know, how high is it going to go?
Speaker 13: To how can we prevent you know, how can we
Speaker 13: prevent there from being kind of a bottom. I do
Speaker 13: think that he's saying this in part because the Saudis
Speaker 13: have definitely been hinting at the prospects of you know,
Speaker 13: they have the potential and the ability to flood the
Speaker 13: market with oil and push prices down, and that's really
Speaker 13: the only leverage that they have to get other OPEC
Speaker 13: members and other OPEP plus members in line, and to
Speaker 13: keep them in line and you know, adhering to their
Speaker 13: quotas and so the Satuities say, look, you're you're not hearing.
Speaker 13: We can flood the market. We can open the floodgates,
Speaker 13: and we can you know, increase our production up so
Speaker 13: high that prices will will go down maybe to fifty
Speaker 13: and maybe even lower as we've seen in the past,
Speaker 13: and that will have a major impact on the ability
Speaker 13: of these other countries to bring in revenue. But for
Speaker 13: the Saudis, it's really not that big a deal. Then
Speaker 13: they can take it, whereas those countries will really significantly
Speaker 13: be hurt. And so I don't think that this is
Speaker 13: a threat that they're making idly. But I don't think
Speaker 13: it's you know, around the corner. I think you'd have
Speaker 13: to have some pretty severe actions, you know, to see
Speaker 13: the Saudis go through with this.
Speaker 6: Yeah, and then to that point, their break even for
Speaker 6: oil price is super low, but their fiscal breaking even
Speaker 6: it is like eighty five, So they can just pairback
Speaker 6: spending domestically if they needed to support that. The last
Speaker 6: time they flooded the market, it was to hurt shale producers,
Speaker 6: and I find it interesting that this time if they
Speaker 6: wind up sort of rolling back those cuts, it's to
Speaker 6: force compliance among its own member. It's an interesting twist
Speaker 6: before we let you go how much geopolitical risk premium
Speaker 6: is in the oil price right now and how much
Speaker 6: you think should be in the oil price right now.
Speaker 13: So that's a great question. I do think there is
Speaker 13: some geopolitical risk premium. We've seen prices reacting to events.
Speaker 13: Maybe you know, two percent, three percent is geopolitical risk premium.
Speaker 13: I think, you know, it's hard to kind of divv
Speaker 13: that up between the Middle East, between Russia. I think
Speaker 13: that any kind of risk premium that's associated with the
Speaker 13: idea that Iran might say close the straight of form
Speaker 13: moves is really not well founded because this is not
Speaker 13: the same environment that we saw in the nineties or
Speaker 13: the eighties or even the early two thousands. Iran is
Speaker 13: not going to close the straight of form moves. It's
Speaker 13: not even clear that they can physically do that. But
Speaker 13: doing so would so anger China, and China is now
Speaker 13: the mean customer of it's Iran's main customer, it's Saudi
Speaker 13: Rabie's main customer, it's the mean customer of all of
Speaker 13: the Middle East oil producers, and that would so ainger
Speaker 13: China that the consequences would be such that they would
Speaker 13: be devastating, so I don't see any reason why Iran
Speaker 13: would do that. I do think that there is an
Speaker 13: elevated risk in the Red Sea, and that's really where
Speaker 13: our analysts should be keeping an eye on in terms
Speaker 13: of the potential for some serious disruption.
Speaker 2: All right, Ellen, thank you so much for joining us.
Speaker 2: Ellen Wald she is a president a Transversal Consulting and
Speaker 2: a senior fellow at the Atlanta Council, and she is
Speaker 2: one of our go to voices on all things global oil.
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