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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern

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Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube right now.

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Speaker 2: A joy to have an extended conversation with Kenneth Grogoff

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Speaker 2: of Harvard University. The scope and scale of his literature,

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Speaker 2: from textbooks the classic Maurice Sobsfeld of Berkeley and International Economics,

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Speaker 2: over to every effort Carmen Reinhardt and him changing the

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Speaker 2: dialogue of America with this time is different. I love

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Speaker 2: the subtitle Paul eight Centuries of Financial follow We've enjoyed

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Speaker 2: them all. The bravest book I've ever seen in doing

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Speaker 2: this act. The Curse of Cash was an exceptionally brave book,

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Speaker 2: going ahead out against corruption, crypto and negative interest rates.

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Speaker 2: And now we celebrate. And it is my book of

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Speaker 2: the summer in economics, Our dollar, Your problem. It's a

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Speaker 2: bright green cover, Ken, I probably Natasha picked out the

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Speaker 2: green cover. Kenneth Rogoff joins us right now, Ken, what

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Speaker 2: a well timed book to say the least is the

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Speaker 2: US dollar resilient.

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Speaker 3: Well, it's resilient, but maybe it might not be as

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Speaker 3: dominant as at once was.

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Speaker 2: I look ken at the scope and scale of your work,

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Speaker 2: and everybody dovetails it in to your look at our

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Speaker 2: fiscal space. We were just talking with way Leah Blackbrock

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Speaker 2: about this exploding debt, these exploding deficits. As you bring

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Speaker 2: out our dollar, your problem is it the same old

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Speaker 2: story of angst and worry about the debt and deficit?

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Speaker 2: But we move forward or are we at a tipping point?

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Speaker 3: Well, I mean, the book is a sweeping history of

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Speaker 3: the rise of the dollar after World War Two, all

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Speaker 3: the competitors, how hard it is to live with crypto

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Speaker 3: and many other things. And by the way, I hope

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Speaker 3: I've made it entertaining enough that people will get through it.

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Speaker 3: But certainly Dad is a big piece of it. If

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Speaker 3: we think of the future, and Tom, you've had all

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Speaker 3: kinds of people on the program. I remember you had

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Speaker 3: Olivier Blanchard and Larry Summers and many others who were

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Speaker 3: convinced that the interest rates were for a long time,

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Speaker 3: we're just going to keep declining forever. So Dad is

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Speaker 3: a free lunch that was Olivier's American Economic Association presidential

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Speaker 3: address in twenty nineteen. It's a great piece of work,

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Speaker 3: but I'm not sure it's a good prediction. I've been

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Speaker 3: arguing for a very long time that they're real interest rates,

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Speaker 3: something about the ten year rate, not the Fed funds rate,

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Speaker 3: that real interest rates have some convergence to mean, reversion

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Speaker 3: to mean, what do you know? And that's happened. That's

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Speaker 3: what the panic about the debt is now. It always

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Speaker 3: was going to happen. So I think people had their

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Speaker 3: head in the sand to think that we were safe

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Speaker 3: from that. Maybe AI will save us, but I don't

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Speaker 3: think so. That's why the debt's filing up. Our interest

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Speaker 3: bill has more than doubled, it's about to triple, and

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Speaker 3: it's more than our defense budget now. So yes, that is,

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Speaker 3: and that and the deficit. And by the way, I'm

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Speaker 3: just amazed at how few people really understand deficit and

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Speaker 3: debt aren't the same thing. I mean, I know most

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Speaker 3: of your listeners do, but you'd be so surprised. You know, obviously,

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Speaker 3: the deficits, how much you're spending, and the debts, what

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Speaker 3: your credit card bill has gotten to. And I think

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Speaker 3: the problem with the United States is not Trump, and

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Speaker 3: it's not Biden. It's not the right, it's not the left.

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Speaker 3: It's the American people right now just don't believe in

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Speaker 3: any need for reigning things in and until we have

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Speaker 3: I think another inflation crisis or some kind of crisis,

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Speaker 3: I don't think anybody's going to be able to achieve that.

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Speaker 2: Kenneth Rogoff for this and extended conversation Yale University Press

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Speaker 2: called me up to DiCaprio is playing Rogueff in the

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Speaker 2: movie coming out in twenty twenty seven. I need to

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Speaker 2: sell the book, folks. It's wonderfully brief, but very deep,

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Speaker 2: and it's wonderfully, wonderfully accessible. This is the book you

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Speaker 2: throw at your brady college kid this summer and say

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Speaker 2: shut up and read it. He opens and this goes

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Speaker 2: back to Rochester, New York, when he and I used

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Speaker 2: to go up to house the guitars years ago. He

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Speaker 2: opens with the economist Grace Slick and Jefferson here played

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Speaker 2: in Sarajebel. This book is accessible when you got Jefferson

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Speaker 2: here Blaine in the first key pages.

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Speaker 4: Paul Sweeney, Professor, I think most of our listeners, most

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Speaker 4: of our viewers over the last several months have kind

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Speaker 4: of brushed up on their knowledge of tariffs. Here we've

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Speaker 4: all tried to figure out what it all means. How

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Speaker 4: do you present the concept of tariffs to your students.

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Speaker 3: Well, I mean, I think we when we teach tariffs,

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Speaker 3: we're not necessily teaching crazy, wild tariffs going all over

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Speaker 3: the place. We teach suppose country A, but it's a

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Speaker 3: five percent tariff on and country B retaliates by putting

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Speaker 3: a five percent tariff. And frankly, if that had been

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Speaker 3: all along, what was going on. It's a tax. I

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Speaker 3: don't agree with it. I don't think it's well conceived,

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Speaker 3: but you know, it wouldn't be the end of the world.

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Speaker 3: We can cut other taxes. What has been, you know,

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Speaker 3: so destabilizing to markets was this idea tariff could be

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Speaker 3: used to solve every problem. I just came back from

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Speaker 3: the UK. I don't know if you followed this that

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Speaker 3: Trump wanted the British to have more free speech as

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Speaker 3: part of his condition for releasing tariffs and things like

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Speaker 3: that all over the world. And you know, I think

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Speaker 3: one of the things that's probably cheered markets up is

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Speaker 3: the I think one of Trump's better qualities is he

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Speaker 3: is a pragmatist, and when something doesn't work, he finds

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Speaker 3: a way to back out. And I think everyone sees

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Speaker 3: that's what's going on. He played some clips of him

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Speaker 3: from a cutter recently, him using the word beautiful constantly.

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Speaker 3: Tariffs were beautiful. It's going to be a beautiful thing. No,

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Speaker 3: it's not. It was a disaster. It's probably the worst

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Speaker 3: policy in my five decades as an economist. But you know,

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Speaker 3: even though he won't admit that it was so dumb,

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Speaker 3: he's retreated, which is smart, and so I think that's

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Speaker 3: probably why the markets are cheered up.

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Speaker 4: The markets are cheered up, a professor. We've seen the

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Speaker 4: stock market RaSE, you know, most of the losses here

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Speaker 4: were now flat for the year. But we haven't seen

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Speaker 4: that in the dollar. The dollar's really taken a pound here,

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Speaker 4: a pounding here. How do you feel about the US

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Speaker 4: dollar here?

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Speaker 3: Well, it's up a shade in the last few days.

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Speaker 3: I think I think the dollar's way over valued. So

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Speaker 3: not for the reasons the administration saying it's just very high.

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Speaker 3: It's not high because the dollars a reserve currency, the

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Speaker 3: mar A Lago plan, the dollar has been very low,

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Speaker 3: and the dollar's been a reserve currency. You know, throughout

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Speaker 3: this the dollar goes in roller coaster waves. It's on

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Speaker 3: a super high. I would have to go back to

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Speaker 3: two thousand and two and before that to nineteen eighty

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Speaker 3: five to see anything like it. And what do I

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Speaker 3: mean by high, I mean looking at the purchasing power

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Speaker 3: of the dollars. So very simplistically, you know, think of

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Speaker 3: yourself as a Japanese tourist in the United States or

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Speaker 3: an American tourist in Japan. You're going to have very

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Speaker 3: different experiences right now than you might have, you know,

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Speaker 3: even ten years ago. So Japan's had almost no inflation.

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Speaker 3: We've had buckets of inflation making prices high. And yet

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Speaker 3: and yet the dollar's gone way up against the end,

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Speaker 3: and the Euro has had a bit of inflation, but

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Speaker 3: less than us. And again the dollar's gone up against zero.

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Speaker 3: It's very hard to predict exchange rates. If I go

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Speaker 3: back to my long career, more than forty years ago,

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Speaker 3: my first really well known paper was about how hard

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Speaker 3: it was to understand, much less predict exchange rates. However,

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Speaker 3: over the years, an exception to that has become clear

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Speaker 3: when something's way out of line. The end right now

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Speaker 3: is really low, the dollars really high. Over a couple

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Speaker 3: of years, it's going to come down. So I think,

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Speaker 3: you know, Trump may take credit for it. I wrote

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Speaker 3: a piece about this a year ago. I said, that

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Speaker 3: doesn't matter whose president, gravity is going to bring the

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Speaker 3: dollar down.

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Speaker 2: Ken Rogoff with his folks who celebrate my economic book

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Speaker 2: of the summer on YouTube, take a look, Break Green

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Speaker 2: cover our dollar, Your problem, Kenneth Rogoff hugely accessible for

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Speaker 2: those of you on Bloomberg Radio. It's just simple. It's

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Speaker 2: very very readable, and I want to go to one

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Speaker 2: of the chapters where there's a bit of heavy lifting.

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Speaker 2: Ken Rogoff, you go back to values you started to

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Speaker 2: staying in France. Who gave us the phrase exorbitant privilege?

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Speaker 2: Berry Keon Green has written about it many other worthies

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Speaker 2: is well, are we losing our exorbitant privilege? Are we

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Speaker 2: losing the American advantage we've had for decades?

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Speaker 3: Well, I think it peaked about a decade ago. By

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Speaker 3: my reckoning. The footprint to the dollar, by some measures,

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Speaker 3: has risen, but I think by really some key ones.

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Speaker 3: In particular, the one I look at is how foreign

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Speaker 3: central banks regulate their economies and their currencies against the dollar.

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Speaker 3: I think it was in decline, and my book argues

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Speaker 3: at the end of it. It's not the whole book,

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Speaker 3: but my book argues at the end of it that

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Speaker 3: in addition to the fact that China needs to break free,

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Speaker 3: that's just happening, and Asia is half the dollar block,

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Speaker 3: so that lowers our footprint. The fact the Europeans also

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Speaker 3: hated and if they hadn't screwed up by bringing Greece

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Speaker 3: into the European the eurosystem way prematurely, the euro might

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Speaker 3: be doing better today. And that's all back on track.

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Speaker 3: But I think the biggest problems are from within, which

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Speaker 3: is that our deficits are out of control, and I

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Speaker 3: don't think we're bringing them under control. And I also

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Speaker 3: feel fatal reserve independence from both the left and the

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Speaker 3: right is under assault. Tom, I want to go back.

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Speaker 3: I'm so glad you noticed Grace slick by the way

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Speaker 3: I bring it in early to show how much other

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Speaker 3: countries love the United States and yet they hate the

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Speaker 3: United States. And I'll mention you know I was seventeen

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Speaker 3: years old. I think when that I was in a

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Speaker 3: bar in Sarajevo people are singing to the Jefferson airplane

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Speaker 3: and I was completely oblivious because I just was so

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Speaker 3: close minded that my best someone who's become my best

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Speaker 3: friend in chess, was actually giving chess lessons to Grace Slick.

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Speaker 2: We should mention here that mister Rugoff inter Ut and

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Speaker 2: we all knew this in Western New York was esteemed

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Speaker 2: in the effort of chess and has kept at it

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Speaker 2: for years and is well. His affiliation with one B.

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Speaker 2: Fisher is noted from his childhood. Oh, let's do this, Paul.

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Speaker 2: Let's jump in here with a couple more questions with

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Speaker 2: Professor Rogoff. We're going to go to news on an

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Speaker 2: incredibly busy day rebrief you on the markets, and we're

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Speaker 2: thrilled to Ken Rogoff will join us on the state

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Speaker 2: of America in another section here in a moment.

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Speaker 4: Paul Sweeney, Professor, I think most of our listeners and

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Speaker 4: yours grew up at a time where globalization was the

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Speaker 4: backdrop for economically.

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Speaker 2: Thank you for bringing this up.

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Speaker 4: Where is globalization over? I can't think of a world

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Speaker 4: where we're not just thinking on a global basis about

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Speaker 4: global economics, global politics, global defense.

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Speaker 3: Well, we're definitely in a different era than we were.

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Speaker 3: I mean, it had been changing before Donald Trump. So actually,

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Speaker 3: economists referred to the period up to the financial crisis

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Speaker 3: two thousand and eight two thousand and nine as the

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Speaker 3: period of hyper globalization. And then it really did slow

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Speaker 3: down a lot. Trade growth, slowed down on other measures,

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Speaker 3: and you sometimes maybe heard the expression slobalization. And now

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Speaker 3: we're definitely in retreat, introducing the tariffs, the war, and

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Speaker 3: the Ukraine, the great cyber Wall of China that's going up,

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Speaker 3: and I think that has dramatic effects for the global economy,

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Speaker 3: for interest rates, for inflation. It's a big thing. I

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Speaker 3: had a paper Brookings just over a year ago of

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Speaker 3: a couple of papers with some very talented young co

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Speaker 3: authors Hassan Afruzi, Marina Hollick, and Pierrard. They joke that

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Speaker 3: they don't think they're young, because the two of them

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Speaker 3: are in the mid forties. But I think they're young.

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Speaker 3: And Piers on Trump's consul of Economic Advisors now, by

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Speaker 3: the way, and we argued that this period where it

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Speaker 3: was easy sledding for the central banks because globalization made

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Speaker 3: it easier to deliver good outcomes it's over and they're

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Speaker 3: in a tougher period.

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Speaker 2: Kind I want to get this in. I think it's

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Speaker 2: too important as we wait for Michael Barr and then

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Speaker 2: it's kind of throwing off from the great moments of

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Speaker 2: my act. Was you and Joe Stiglitz together in Davos.

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Speaker 2: I thought it was a miracle to get you two

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Speaker 2: warring over the years in a collegial way. Joe Stiglitz,

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Speaker 2: change the dialogue as you did with this time is

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Speaker 2: different with our discontent over globalization, Ken Rogoff, what does

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Speaker 2: our next globalization look like?

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Speaker 3: I mean, I think we're going to go through a

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Speaker 3: period where we're breaking up more. Donald Trump initiated it.

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Speaker 3: The Chinese we're doing a lot. So I think we're

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Speaker 3: in a period of retreat. I mean, it's very political.

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Speaker 3: It's hard to know. I think it'll unfold slowly. The princident.

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Speaker 3: Historic economic historian Harold James actually wrote a book, I

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Speaker 3: think around twenty ten, noting that globalization goes in ways,

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Speaker 3: goes off, that goes down just because it's booming. We've

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Speaker 3: had periods what that's happened before, and this kind of

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Speaker 3: populous discontent. He it's normal, and you got a retreat.

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Speaker 3: I think the long term is more, but over the

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Speaker 3: next couple decades maybe not.

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Speaker 2: If we celebrate my book of the summer, our dollar

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Speaker 2: your problem. And as you know, always with Ken Rogoff,

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Speaker 2: there has to be a money chapter on our gross debt.

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Speaker 2: The money chart is on page two sixty six, near

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Speaker 2: the end of the book, and it is on the

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Speaker 2: all in debt. He and Carmen Reinhardt codified this a

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Speaker 2: decade ago, with this time as different. Ken, that chart

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Speaker 2: is absolutely jaw dropping of our gross debt. I guess

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Speaker 2: full faith and credit, corporate and hidden debts as well.

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Speaker 2: Is the rest of the world concerned about our gross debt?

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Speaker 3: Well, excuse me. The United States accounts for roughly half

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Speaker 3: of all advanced country debt, we public debt, we account

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Speaker 3: for more than half, perhaps of all corporate bonds. So

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Speaker 3: we're big. And I think what's hitting the United States

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Speaker 3: now more than the you know, gradual loss of exorbit

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Speaker 3: and privilege. What's hitting us is the normalization of interest rates.

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Speaker 3: If you're the world's biggest debtor, it hurts.

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Speaker 2: I mean, I look Ken at the real yield. I say,

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Speaker 2: Ken in a simplistic way, as we look in the

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Speaker 2: Bloomberg terminal. I look at the ten year real yield

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Speaker 2: as a keel absolutely, I got it. I got a

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Speaker 2: C plus. He gives out He's like Steve roach a yield,

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Speaker 2: he gives out no aser bees. I'm looking Ken rogoff in.

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Speaker 3: A ten year you must be taking another class than mine.

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Speaker 2: But anyway, I look at the ten year real yield

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Speaker 2: two point one. Where is a rogue off normal ten

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Speaker 2: year real yield?

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Speaker 3: Well, it's very volatile. It'd probably think of one to

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Speaker 3: five is where it'll settle after all of this. I

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Speaker 3: mean it had gone to minus one. There is a

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Speaker 3: slight trend, although it's a little bit hard to know

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Speaker 3: if it's up or down. What was so like crazy

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Speaker 3: after the financial crisis is the ten year that you're

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Speaker 3: looking at the real inflation adjusted interest rate. It fell

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Speaker 3: by more than three hundred basis points, even three hundred

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Speaker 3: and fifty basis points. And that's when Larry Summers came

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Speaker 3: out with secular stagnation. We're never going to grow again

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Speaker 3: the interest rate. It's always going to be low. And

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Speaker 3: all this stuff about data is a free lunch. Modern

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Speaker 3: monetary theory, I argued way back when it was happening.

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Speaker 3: That this is normal after a financial crisis. Don't think

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Speaker 3: that this is going to last forever. Happened in the

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Speaker 3: Great Depression, interest rates collapse, it happens in many countries

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Speaker 3: in the in the aftermath of a financial crisis. So

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Speaker 3: I mean a lot of what's going on. It's I

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Speaker 3: think the most that chart you're looking at, it's only

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Speaker 3: one way to capture the real interest rate. There others,

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Speaker 3: But I think it's the most important variable in the

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Speaker 3: world if you believe that it's going to stay on

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Speaker 3: the higher side, as I do. You know, debt is

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Speaker 3: very high, and it does gradually push up interest rates.

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Speaker 3: The whole world, for better or for worse, is remilitarizing. Populism. Deglobalization,

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Speaker 3: which we discussed earlier, also pushes up interest rates. All

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Speaker 3: of these things. I think we could easily see the

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Speaker 3: ten year at that now I'm talking about the nominal,

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Speaker 3: which is now for four or something like that. We

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Speaker 3: could see it at five, five, six within a couple

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Speaker 3: of years. Given how things are going. There are some

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Speaker 3: very smart people, young economists, who think, nope, this is

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Speaker 3: a aberration. We're going to go back on that downward

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Speaker 3: ride and debt is a free lunch after all. That

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Speaker 3: is seems to me a very risky thing to bet

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Speaker 3: the farm on.

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Speaker 4: Well, that's I mean, professor, that's what a lot of

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Speaker 4: folks will come into the studio and tell Tom and

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Speaker 4: me that, Hey, as long as investors, both domestic and international,

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Speaker 4: continue to show up and buy us treasure securities, there's

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Speaker 4: nothing to worry about. How do you respond to that?

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Speaker 2: But let's not.

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Speaker 3: Confuse that with what interest rate they want. So, yes,

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Speaker 3: the market's liquid, but the interest rate we're paying it's

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Speaker 3: been rising, and I predict it's going to keep rising.

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Speaker 3: We're not going to have an Argentina situation. We may

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Speaker 3: commit Harry Carrie, you know, somehow and refuse to pay

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Speaker 3: a debt. We can always inflate, we can use financial repression.

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Speaker 3: My book discusses the stuff at length. An that prints

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Speaker 3: its own money doesn't need to default, sorry about my coughing,

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Speaker 3: doesn't need to the fault. But of course inflation is

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Speaker 3: a form of default. We had an access ten percent

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Speaker 3: inflation the last few years, maybe twelve, and that was

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Speaker 3: a partial default on us dead in real terms. So

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Speaker 3: I actually think we're going to get something like that

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Speaker 3: or even a little bigger over the certainly the next

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Speaker 3: five to seven years is what I say in my book.

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Speaker 3: I maybe would pull it back to four years now

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Speaker 3: that I've seen the opening salvos of the Trump administration.

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Speaker 2: Ken, at the time, we've got left, I got eight

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Speaker 2: ways to go here. You've been more than generous this morning,

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Speaker 2: canceling all your classes, and they got you know, I

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Speaker 2: want to talk about X ten and what Furman's doing

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Speaker 2: up at Harvard. I want to talk about the state

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Speaker 2: of western New York as a wasteland of a former

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Speaker 2: industrial might. I got other things to talk about. Ken.

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Speaker 2: When you look at American exceptionalism in the path of

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Speaker 2: our decade, in the past forward, do you see a

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Speaker 2: continued American exceptionalism after whatever the tenure is of President Trump.

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Speaker 3: I think it was fading somewhat already in some dimensions,

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Speaker 3: but peaking and others. I think we've hit the peak,

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Speaker 3: and I think, you know, I don't. I'm not an investor,

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Speaker 3: but I would say this is a moment to think

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Speaker 3: about diversification more. I see Europe with its forced remilitarization,

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Speaker 3: with its ketchup probably doing outperforming the United States. China

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Speaker 3: not so much. But it's going to break away from

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Speaker 3: the United States. Thank you for mentioning Western New York

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Speaker 3: as a wasteland, because I actually talk a lot about

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Speaker 3: our joint hometown of Rochester quite a bit in the book.

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Speaker 3: But I see certainly the dollars staying on top, but

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Speaker 3: less on top. You mentioned Barry Ikbread. I mean he

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Speaker 3: wrote and many of us thought twenty years ago that

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Speaker 3: we were headed to a more tripolar world. I think

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Speaker 3: we're back on course to that. We'll lose some of

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Speaker 3: our exceptionalism. It will hurt in national security too. There

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Speaker 3: will be other pathways to do transactions. Our sanctions won't

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Speaker 3: be as effective, our spying won't be as effective, and

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Speaker 3: a number of other things. I think Americans are going

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Speaker 3: to happen to adjust. But I think we're going to

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Speaker 3: have a bit a crisis of some sort first, because

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Speaker 3: no politician can rein it in until we do that.

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Speaker 2: Have one ken I've failed. We didn't talk about bitcoin

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Speaker 2: in your magisterial The Curse of Cash. You got to

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Speaker 2: come back at some point here in twenty twenty five

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Speaker 2: and give us an update on your classic book on

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Speaker 2: what I'll call your cryptic book on Crypto. Kenneth rug

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Speaker 2: Off my book of the summer in Economics, Our Dollar,

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Speaker 2: Your Problem. For those of you in radio, I'll get

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Speaker 2: it out on Twitter and on LinkedIn today. It is

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Speaker 2: a celebration of his academics for decades and also a

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Speaker 2: piercing look forward to our debt.

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Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live

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Speaker 1: weekday afternoons from seven to ten am Eastern Listen on

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Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or

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Speaker 1: watch us live on YouTube.

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Speaker 2: There is no one, and I mean no one we

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Speaker 2: speak to who viscerally understands the cadence the culture of China,

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Speaker 2: like Wayley of Blackrock, acclaimed in mathematics and her childhood

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Speaker 2: in China and in Southern Asia as well. We're thrilled

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Speaker 2: to the chief global investment strategists for Blackrock could join

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Speaker 2: us this morning. Let me cut to my sort of

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Speaker 2: theoretical sixty thousand foot view. What is the Chinese timeline?

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Speaker 2: You've lived it, your family has lived it. Don't give

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Speaker 2: me this week. They're trying to get the labor they stuff.

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Speaker 2: Do they just pause in delay in this trade war? Out?

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Speaker 2: One year, three years, five years?

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Speaker 5: Well, certainly timeline is longer than the mid term in

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Speaker 5: the US and the four year cycle in the US,

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Speaker 5: which is why I guess they have longer time on

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Speaker 5: their side as they engage in the in the negotiation.

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Speaker 5: But the bigger picture is that as we kind of

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Speaker 5: go through this period of policy uncertainty and negotiation back

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Speaker 5: and forth, it's basically pointless to try to predict what

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Speaker 5: the next step of policy making is going to be.

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Speaker 5: It has been very very hard, close to impossible. What

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Speaker 5: is more rewarding is to try to appreciate what are

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Speaker 5: the rules that cannot be broken, what are the immutable

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Speaker 5: laws that cannot be broken, in order to gauge what

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Speaker 5: the landing spot is looking.

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Speaker 2: Mutable rule for a totalitarian regime in Beijing, their labor economy,

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Speaker 2: The hardcore foundational rule of China is to keep the.

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Speaker 5: People employed right, and that is the contract today, is

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Speaker 5: the social contract. But another immutable law is global supply chain,

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Speaker 5: deeply deeply intertwined global supply chain that took decades to build.

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Speaker 5: One cannot rip it out just from one day to

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Speaker 5: the next without deep consequences, which is what we have seen.

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Speaker 5: It's not just a matter of inflation getting higher, going higher,

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Speaker 5: prices going higher. It's a matter of access, you know,

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Speaker 5: things not being available on the shelf, which is obviously

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Speaker 5: a problem. So I think these are the rules and

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Speaker 5: and and constraint that ultimately helped guide the pace of

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Speaker 5: negotiation and ultimately, in our review, will shape the landing spot.

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Speaker 4: Is the view? Is your view the view of black

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Speaker 4: Rock that China wants to negotiate with US, wants to

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Speaker 4: have an economic relationship with the US and the West

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Speaker 4: in general.

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Speaker 2: Is that your view?

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Speaker 4: Or do you think they're willing to kind of go

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Speaker 4: it alone a little bit?

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Speaker 5: What seems to have been the case is that both

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Speaker 5: sides are incentivized to engage. It's a trait is bad

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Speaker 5: for global growth, is taxflationary in nature, so decoupling suddenly

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Speaker 5: and thoroughly is bad for both economies. So that the

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Speaker 5: willingness to engage ultimately led to kind of where we

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Speaker 5: are and the economic rules that cannot be broken around

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Speaker 5: that and foreign funding means that we're going to get

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Speaker 5: to a place there is still reasonable for risk assets

431
00:26:49,280 --> 00:26:52,359
Speaker 5: to tolerate, which is why we were able to stay

432
00:26:52,480 --> 00:26:56,520
Speaker 5: risk on US equities in particular, despite the fact that

433
00:26:56,920 --> 00:26:59,960
Speaker 5: we have had such elevated policy uncertainty.

434
00:27:00,520 --> 00:27:04,040
Speaker 4: We saw a lot of investor interest and dollars leave

435
00:27:04,080 --> 00:27:07,080
Speaker 4: the US market in the last couple of months and

436
00:27:07,160 --> 00:27:10,800
Speaker 4: go to Europe particularly a did you see that in

437
00:27:10,840 --> 00:27:14,120
Speaker 4: your business and be do you expect it to come

438
00:27:14,119 --> 00:27:15,720
Speaker 4: back now that we have the US markets kind of

439
00:27:15,840 --> 00:27:16,679
Speaker 4: recovering a little bit.

440
00:27:18,160 --> 00:27:22,879
Speaker 5: The answer is yes. I'm both fronts. I would say, though,

441
00:27:22,920 --> 00:27:25,240
Speaker 5: you know, people look at the fact that the dollar

442
00:27:25,400 --> 00:27:30,159
Speaker 5: was selling off as evidence of investors losing confidence in

443
00:27:30,280 --> 00:27:33,160
Speaker 5: US exceptionalism. But I would say, you know, one thing

444
00:27:33,200 --> 00:27:36,600
Speaker 5: that we heard from our investors and clients is that

445
00:27:36,840 --> 00:27:40,639
Speaker 5: for a long time, international investors holding US assets have

446
00:27:40,760 --> 00:27:45,320
Speaker 5: been somewhat quote unquote lazy with their currency hadgien strategy,

447
00:27:45,400 --> 00:27:49,359
Speaker 5: basically leaving a lot of their US exposures unhadged because

448
00:27:49,400 --> 00:27:53,440
Speaker 5: of hagien cost, but also because hadging for currency oftentimes

449
00:27:53,480 --> 00:27:56,639
Speaker 5: comes as an afterthought. But the volatility in the dollars

450
00:27:56,680 --> 00:27:58,960
Speaker 5: so far this year has taught them to be more

451
00:27:59,040 --> 00:28:02,080
Speaker 5: rigorous around their head strategy, which is in part why

452
00:28:02,200 --> 00:28:04,720
Speaker 5: dollar has been selling off, because investors are hatching their

453
00:28:04,760 --> 00:28:09,760
Speaker 5: dollar dollar denominated the US exposure a bit more rigorously.

454
00:28:09,800 --> 00:28:12,879
Speaker 5: So it's not a sign what it cannot be interpreted

455
00:28:13,160 --> 00:28:17,280
Speaker 5: just as a sign of international investment community losing confidence

456
00:28:17,320 --> 00:28:19,639
Speaker 5: in the US. I think there is still quite a

457
00:28:19,720 --> 00:28:22,760
Speaker 5: lot to go for US exceptionalism, especially for US culprits.

458
00:28:23,280 --> 00:28:25,680
Speaker 2: Really, you're too young to remember this, but I'm sure

459
00:28:25,760 --> 00:28:31,400
Speaker 2: Lawrence Fink remembers that the debt hysteria wrapped around Peterson,

460
00:28:31,560 --> 00:28:36,200
Speaker 2: Paul Sungus of Massachusetts, Sam Nunn of Georgia. To bring

461
00:28:36,240 --> 00:28:40,200
Speaker 2: it forward this time around, with the numbers I'm seeing

462
00:28:40,240 --> 00:28:43,560
Speaker 2: and the legislation, are we finally at a point where

463
00:28:43,600 --> 00:28:47,160
Speaker 2: America must confront its debt and it's deficit.

464
00:28:47,960 --> 00:28:51,640
Speaker 5: Yeah, that is the other immutable law that I didn't

465
00:28:51,800 --> 00:28:55,600
Speaker 5: talk about in detail, that ultimately governed where we are

466
00:28:55,640 --> 00:28:58,080
Speaker 5: now in the negotiation. Right, So, if you think about

467
00:28:58,480 --> 00:29:04,320
Speaker 5: the dynamic of trade and that, if we want to

468
00:29:04,440 --> 00:29:07,520
Speaker 5: close the trade deficits very very quickly, very very southernly,

469
00:29:07,560 --> 00:29:11,080
Speaker 5: we're also shutting out the forum funding market by the

470
00:29:11,120 --> 00:29:16,800
Speaker 5: same magnitude. And US government bonds a quarter of outstanding

471
00:29:16,920 --> 00:29:19,800
Speaker 5: that is owned by international investors. So if we shut

472
00:29:19,840 --> 00:29:23,720
Speaker 5: down the forum market, international investors demanding quite a lot

473
00:29:23,760 --> 00:29:27,080
Speaker 5: more compensation for holding US that, then we have a

474
00:29:27,160 --> 00:29:30,440
Speaker 5: dead arithmetics that do not add up and US that

475
00:29:30,800 --> 00:29:36,280
Speaker 5: is higher than the combined that of the rest of

476
00:29:36,360 --> 00:29:40,120
Speaker 5: G seven. And it's a it's a very real and

477
00:29:40,240 --> 00:29:44,120
Speaker 5: life issue that the government needs to needs to consider.

478
00:29:44,720 --> 00:29:48,240
Speaker 5: If US ten year gets to five percent, we're talking

479
00:29:48,240 --> 00:29:51,520
Speaker 5: about an additional one hundred and fifty billion dollars per

480
00:29:51,560 --> 00:29:54,800
Speaker 5: annum of that servicing cost, which will wipe out all

481
00:29:54,840 --> 00:29:56,960
Speaker 5: the doage saving. So this is a big issue. I

482
00:29:57,000 --> 00:29:59,160
Speaker 5: agree with you one hundred percent, all.

483
00:29:59,080 --> 00:30:01,880
Speaker 4: Right, So I mean we're gonna have to figure it

484
00:30:01,880 --> 00:30:02,600
Speaker 4: out to companies.

485
00:30:02,680 --> 00:30:03,280
Speaker 2: I got the dollar.

486
00:30:03,680 --> 00:30:04,760
Speaker 4: Dollars not rebounded.

487
00:30:05,200 --> 00:30:09,080
Speaker 5: Dollar has not rebounded. US treasury has not rebounded. If

488
00:30:09,120 --> 00:30:13,200
Speaker 5: you think about markets since April second, applet is more

489
00:30:13,280 --> 00:30:17,080
Speaker 5: than recovered in the US term premier went from thirty

490
00:30:17,080 --> 00:30:20,280
Speaker 5: basis point on April second for US ten year treasuries

491
00:30:20,560 --> 00:30:23,040
Speaker 5: to seventy basis points right now. So that has no

492
00:30:23,200 --> 00:30:26,000
Speaker 5: comeback down and dollar has not recovered, which means that

493
00:30:26,120 --> 00:30:29,960
Speaker 5: corporates and companies are more exceptional in the US ware

494
00:30:30,000 --> 00:30:30,280
Speaker 5: leave with.

495
00:30:30,360 --> 00:30:33,080
Speaker 2: Us with black Rock, we continue our discussion. Apple did

496
00:30:33,120 --> 00:30:36,600
Speaker 2: a deal the other day for tranches. Don'tated the details

497
00:30:36,600 --> 00:30:38,560
Speaker 2: in front of me. They made two phone calls, one

498
00:30:38,600 --> 00:30:41,080
Speaker 2: to Black rock and one to somebody else sold the

499
00:30:41,080 --> 00:30:45,240
Speaker 2: thing in three seconds. Is there basically in this topsy

500
00:30:45,320 --> 00:30:50,520
Speaker 2: turvy world and insatiable appetite for debt? I mean, is

501
00:30:51,240 --> 00:30:54,720
Speaker 2: any corporation, any government just yes, we'll take it. That

502
00:30:54,840 --> 00:30:56,040
Speaker 2: is that where we are right now.

503
00:30:56,480 --> 00:30:59,000
Speaker 5: I think there's a difference between corporate debt and government

504
00:30:59,280 --> 00:31:02,200
Speaker 5: that if you look the level of indebtedness in the

505
00:31:02,320 --> 00:31:08,360
Speaker 5: US for government, just since pre GFC peerage level of

506
00:31:08,360 --> 00:31:12,200
Speaker 5: government that was sixty percent, it's now over one hundred

507
00:31:12,200 --> 00:31:14,600
Speaker 5: and twenty percent. And if we look at the equivalent

508
00:31:14,680 --> 00:31:20,280
Speaker 5: for corporate exponancials, that level of indebtedness has basically gone sideways.

509
00:31:20,400 --> 00:31:25,400
Speaker 5: So I think there is greater appetite for that from corporate,

510
00:31:25,560 --> 00:31:32,160
Speaker 5: especially quality corporates versuss US government bonds.

511
00:31:32,440 --> 00:31:34,960
Speaker 4: What do you guys, how do you think about emerging

512
00:31:35,000 --> 00:31:39,920
Speaker 4: markets these days, particularly China, just emerging markets in general,

513
00:31:39,920 --> 00:31:42,360
Speaker 4: because boy, the world's crazy here. There's so much uncertainty

514
00:31:42,360 --> 00:31:45,200
Speaker 4: about tariffs, about trade. I would think you'd had to

515
00:31:45,240 --> 00:31:48,320
Speaker 4: be really careful looking at emerging markets.

516
00:31:49,000 --> 00:31:52,000
Speaker 5: Well, emerging market has a higher beta in terms of

517
00:31:52,000 --> 00:31:56,920
Speaker 5: growth relative to the US, which is why when US

518
00:31:56,960 --> 00:32:01,520
Speaker 5: policy trade policy was leading to kind of market volatility.

519
00:32:01,600 --> 00:32:04,880
Speaker 5: Emergent markets were very much not spared right. But if

520
00:32:04,920 --> 00:32:07,040
Speaker 5: we have a bit of a walk back, which is

521
00:32:07,040 --> 00:32:10,560
Speaker 5: what we're experiencing right now, we could see a tactical

522
00:32:10,760 --> 00:32:15,600
Speaker 5: rebound in this market because by virtual of the higher gearing,

523
00:32:15,760 --> 00:32:18,760
Speaker 5: higher higher beta. But we do want to be selective

524
00:32:18,800 --> 00:32:22,800
Speaker 5: in emerging markets rather than rather than across the board,

525
00:32:22,840 --> 00:32:25,240
Speaker 5: because there is no such a thing as emergent market.

526
00:32:25,320 --> 00:32:27,520
Speaker 5: China is very different from India, that is quite a

527
00:32:27,560 --> 00:32:30,880
Speaker 5: bit more expensive, very different from Latin America as well,

528
00:32:30,920 --> 00:32:35,280
Speaker 5: and we prefer emergent market that more broadly than than

529
00:32:35,320 --> 00:32:37,480
Speaker 5: equities because of the income.

530
00:32:38,440 --> 00:32:40,320
Speaker 2: I just looked at sign dollar. I just looked at

531
00:32:40,360 --> 00:32:43,600
Speaker 2: Taiwan dollar Taiwan dollar. We clearly had a really unique

532
00:32:43,720 --> 00:32:47,480
Speaker 2: four or five six standard deviation move. But is there

533
00:32:47,560 --> 00:32:53,160
Speaker 2: stability on the Pacific rim around this? Just crazy news flow?

534
00:32:53,680 --> 00:32:56,480
Speaker 2: Is there a bet you can make there on Singapore,

535
00:32:56,680 --> 00:32:57,880
Speaker 2: a bet on Taiwan?

536
00:32:59,280 --> 00:33:04,160
Speaker 5: I think the Taiwan dollar episode is another example of

537
00:33:04,200 --> 00:33:08,080
Speaker 5: the debt dynamics at plate right. Like if you want

538
00:33:08,120 --> 00:33:11,840
Speaker 5: to shut off the trade deficit, forum funding all of

539
00:33:11,920 --> 00:33:16,160
Speaker 5: a sudden needs to also decrease in a commensary way,

540
00:33:16,440 --> 00:33:20,760
Speaker 5: and currency Hagien becomes a consideration that leads to huge

541
00:33:20,760 --> 00:33:24,320
Speaker 5: amount of volocility. So we actually look to the Taiwan

542
00:33:24,360 --> 00:33:29,160
Speaker 5: dollar episode as another case in point for why that

543
00:33:29,280 --> 00:33:32,720
Speaker 5: immutable law cannot be broken. But it can be Taiwan dollar,

544
00:33:32,760 --> 00:33:36,360
Speaker 5: it could also be Mexican pestle. It's it's just immutable

545
00:33:36,440 --> 00:33:41,240
Speaker 5: law that governs the pace and destination of negotiations. There

546
00:33:41,280 --> 00:33:47,320
Speaker 5: are selective opportunities in Asia, Asian countries, Southeast Asia, we

547
00:33:47,480 --> 00:33:51,840
Speaker 5: see it. Look at the China export data to the

548
00:33:51,960 --> 00:33:54,720
Speaker 5: US significantly decreasing, but to the rest of the world,

549
00:33:54,880 --> 00:33:57,120
Speaker 5: including reservation increasing.

550
00:33:57,360 --> 00:34:00,520
Speaker 2: But with all your sourcing, can you just say out

551
00:34:01,000 --> 00:34:03,760
Speaker 2: they're down in one eight hundred Vietnam, one eight hundred

552
00:34:03,840 --> 00:34:06,560
Speaker 2: Malaysia and saying we're running it through you guys. Is

553
00:34:06,600 --> 00:34:07,760
Speaker 2: it just as simple as that?

554
00:34:07,920 --> 00:34:11,440
Speaker 5: Oh, we sort that in Trumpton the first term, right,

555
00:34:11,520 --> 00:34:15,080
Speaker 5: like the connector country is benefiting. But I think you

556
00:34:15,120 --> 00:34:18,759
Speaker 5: know that is now well understood, so that could be

557
00:34:18,800 --> 00:34:23,920
Speaker 5: something that gets addressed in the ongoing discussions and negotiations.

558
00:34:23,920 --> 00:34:27,680
Speaker 5: But yeah, connector countries have benefited, which is why their

559
00:34:27,880 --> 00:34:30,400
Speaker 5: markets have also done well during the same period.

560
00:34:30,400 --> 00:34:33,360
Speaker 4: What do you folks at black Rock think about the US,

561
00:34:34,160 --> 00:34:36,200
Speaker 4: What the US will do with interest rates? What will

562
00:34:36,200 --> 00:34:38,279
Speaker 4: FED Chairman j Pal do for the remainder of the year.

563
00:34:38,280 --> 00:34:39,439
Speaker 4: How are you guys baking that in?

564
00:34:40,440 --> 00:34:40,879
Speaker 6: Right now?

565
00:34:40,920 --> 00:34:45,239
Speaker 5: We're looking at one and most two raycuts this year,

566
00:34:45,280 --> 00:34:48,040
Speaker 5: which is not too far from where market's uprising. The

567
00:34:48,080 --> 00:34:50,520
Speaker 5: big picture is that we're talking about an environment where

568
00:34:50,760 --> 00:34:54,239
Speaker 5: tariffs are still going to be effective. Tariff ray for

569
00:34:54,280 --> 00:34:57,480
Speaker 5: the US average ten to fifteen percent, which is the

570
00:34:57,560 --> 00:35:00,560
Speaker 5: highest since the nineteen thirties, and five times the level

571
00:35:00,760 --> 00:35:03,560
Speaker 5: compared to the beginning of the year. Higher tariffs, higher

572
00:35:03,560 --> 00:35:06,560
Speaker 5: inflation as a result of that, and potentially lower growth.

573
00:35:06,760 --> 00:35:09,719
Speaker 5: That's an environment where actually the fat cannot readily come

574
00:35:09,760 --> 00:35:12,960
Speaker 5: to the rescue of the economy. So high rates for

575
00:35:13,040 --> 00:35:17,400
Speaker 5: longer is our base case. But in addition to to

576
00:35:17,640 --> 00:35:19,640
Speaker 5: kind of current lab is it.

577
00:35:19,760 --> 00:35:23,600
Speaker 2: Thirty you know whatever the ridiculous in nineteen thirty seven

578
00:35:23,680 --> 00:35:26,239
Speaker 2: valuation here? Do you just assume we're going to have

579
00:35:26,280 --> 00:35:29,920
Speaker 2: another tranch of tariffs coming lower because the market's going

580
00:35:29,960 --> 00:35:31,319
Speaker 2: to tell the president what to do.

581
00:35:31,920 --> 00:35:34,879
Speaker 5: Well, what we have seen, you know, we have UK deal,

582
00:35:34,960 --> 00:35:39,719
Speaker 5: we have the the posts facing off to China. Ten

583
00:35:39,760 --> 00:35:44,160
Speaker 5: percent reciprocal tariffs have stayed in both cases. That's probably

584
00:35:44,200 --> 00:35:48,759
Speaker 5: a floor rather than to potentially go lower from so

585
00:35:48,880 --> 00:35:52,440
Speaker 5: our expectation at this current juncture is that the final

586
00:35:52,480 --> 00:35:55,759
Speaker 5: destination is somewhere between ten and fifteen percent. It's lower

587
00:35:55,840 --> 00:36:00,960
Speaker 5: than previously, you know, like high meet the twentieth Hi exactly.

588
00:36:01,000 --> 00:36:02,880
Speaker 5: That's the big picture. And the fact that mark is

589
00:36:02,880 --> 00:36:07,880
Speaker 5: a jumping to incremental positive development is the excellent really

590
00:36:07,920 --> 00:36:11,880
Speaker 5: the case, really the perfect case of behavior biers of anchoring.

591
00:36:12,760 --> 00:36:14,920
Speaker 3: Yeah, thank you, Salid, We're rolling it.

592
00:36:15,000 --> 00:36:17,800
Speaker 2: We got way leave from Blackrock and Co. We appreciate

593
00:36:17,800 --> 00:36:19,160
Speaker 2: it from Harvard. Look at her.

594
00:36:19,480 --> 00:36:22,960
Speaker 4: I'm sure schedule today's book like everything, but she makes

595
00:36:23,000 --> 00:36:23,480
Speaker 4: time to come in.

596
00:36:23,520 --> 00:36:25,279
Speaker 5: This is the highlight of my bas.

597
00:36:24,960 --> 00:36:29,279
Speaker 2: Thank you, please, thank you so much. Don't thank you

598
00:36:29,320 --> 00:36:31,680
Speaker 2: Wayley with Blackrock greatly greatly appreciated.

599
00:36:32,360 --> 00:36:36,240
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

600
00:36:36,280 --> 00:36:39,280
Speaker 1: starting at seven am Eastern on Apple Corplay and Android

601
00:36:39,320 --> 00:36:42,360
Speaker 1: Auto with the Bloomberg Business app. You can also listen

602
00:36:42,440 --> 00:36:45,720
Speaker 1: live on Amazon Alexa from our flagship New York station,

603
00:36:46,239 --> 00:36:48,920
Speaker 1: Just Say Alexa Play Bloomberg eleven thirty.

604
00:36:49,160 --> 00:36:53,400
Speaker 2: Lindsay Rosser's age. She's had a multisector investing at Goldman

605
00:36:53,560 --> 00:36:57,360
Speaker 2: Sachs with some tangible portfolio management as well. Could you

606
00:36:57,480 --> 00:36:58,719
Speaker 2: manage money right now?

607
00:36:59,560 --> 00:37:03,560
Speaker 6: I do? Actually I have to. That's my job. So

608
00:37:03,640 --> 00:37:04,839
Speaker 6: I am managing money right?

609
00:37:05,080 --> 00:37:08,960
Speaker 2: Are you doing it? I could not manage money here

610
00:37:09,440 --> 00:37:11,560
Speaker 2: against the perspectus, against the mandate.

611
00:37:11,960 --> 00:37:14,719
Speaker 6: I think you could. I have faith in you, Tom,

612
00:37:15,040 --> 00:37:17,560
Speaker 6: But what you have to do is when you have

613
00:37:17,680 --> 00:37:21,600
Speaker 6: more unpredictability, I think the bar to leave your home

614
00:37:21,640 --> 00:37:25,759
Speaker 6: base asset allocation is higher. And what I mean by

615
00:37:25,800 --> 00:37:28,800
Speaker 6: that is we manage portfolios for all sorts of clients.

616
00:37:28,920 --> 00:37:31,480
Speaker 6: We have a long term alpha objective and tracking error

617
00:37:31,560 --> 00:37:34,319
Speaker 6: for all of them. And with that you can think

618
00:37:34,320 --> 00:37:36,799
Speaker 6: of a home base allocation, the kinra structure of your

619
00:37:36,800 --> 00:37:41,040
Speaker 6: portfolio that should win over a market cycle. This is

620
00:37:41,080 --> 00:37:43,759
Speaker 6: not a market in this moment where it pays to

621
00:37:43,800 --> 00:37:47,680
Speaker 6: be dynamic. Trading policy is a losing game. And I

622
00:37:47,680 --> 00:37:48,640
Speaker 6: think we've all seen that.

623
00:37:48,760 --> 00:37:50,759
Speaker 2: What do you do with equities here? We've had a

624
00:37:50,920 --> 00:37:53,719
Speaker 2: dearth of equity analysis today? So I got to go there.

625
00:37:53,760 --> 00:37:55,880
Speaker 2: I mean, I know it's away from your heritage, but

626
00:37:55,960 --> 00:37:57,280
Speaker 2: what do you do with equities here?

627
00:37:57,680 --> 00:37:59,680
Speaker 6: I did start off in convertible bonds there was a

628
00:37:59,719 --> 00:38:04,400
Speaker 6: twet convertible bonds. It's just it's hard. It's hard to

629
00:38:04,480 --> 00:38:08,040
Speaker 6: leave where you start. But in terms of equities, I mean,

630
00:38:08,120 --> 00:38:10,840
Speaker 6: I think what's going to be really important. It was

631
00:38:10,840 --> 00:38:14,000
Speaker 6: the canary in the coal mine before Walmart and earnings tomorrow.

632
00:38:14,320 --> 00:38:16,840
Speaker 6: I think you want to hear that to learn about

633
00:38:16,960 --> 00:38:19,960
Speaker 6: what's happening with the consumer and what's going on with

634
00:38:20,080 --> 00:38:23,600
Speaker 6: this backdrop of macro uncertainty and have the deals that

635
00:38:23,680 --> 00:38:27,480
Speaker 6: have been I'm struck is probably the wrong word. Have

636
00:38:27,600 --> 00:38:29,800
Speaker 6: they made a difference in terms of tariffs? What's happening

637
00:38:29,840 --> 00:38:30,640
Speaker 6: with input prices?

638
00:38:30,640 --> 00:38:33,239
Speaker 2: Oh, I'm giving a speech. I look out. Somebody asks

639
00:38:33,239 --> 00:38:35,799
Speaker 2: a question and they say, what's the dumbest statistic on

640
00:38:35,840 --> 00:38:42,040
Speaker 2: the Bloomberg terminal? You ready, Walmart forward pe thirty seven.

641
00:38:42,239 --> 00:38:45,799
Speaker 2: I know that's just a single I don't get retail statistic.

642
00:38:46,040 --> 00:38:48,160
Speaker 4: I don't get that Tom's You know, whenever we have

643
00:38:48,160 --> 00:38:50,480
Speaker 4: a Princeton graduate like lindsay, come in, I say, what

644
00:38:50,560 --> 00:38:52,440
Speaker 4: is your go to sandwich at Hogi Haven, which is

645
00:38:52,440 --> 00:38:54,279
Speaker 4: the best Hogies in the world in my opinion, she

646
00:38:54,400 --> 00:38:58,400
Speaker 4: came back with a stellar response. A heart stop. This

647
00:38:58,520 --> 00:39:01,920
Speaker 4: is a cheese steik bake. In eggs ketchup and hot sauce.

648
00:39:02,320 --> 00:39:04,799
Speaker 4: How about that. I didn't expect that that came out.

649
00:39:04,680 --> 00:39:06,520
Speaker 2: At least one of those.

650
00:39:07,160 --> 00:39:11,959
Speaker 6: No, it's in macrobiotic, you know. So it's a little

651
00:39:11,960 --> 00:39:15,680
Speaker 6: bit for everyone. It's cleansing, clensing pleasant.

652
00:39:16,360 --> 00:39:19,040
Speaker 4: That's all I care about. When I meet Princeton people, lindsay,

653
00:39:19,080 --> 00:39:21,080
Speaker 4: what do you do here? I mean, how do you

654
00:39:21,080 --> 00:39:24,520
Speaker 4: think about the markets today versus maybe January first, before

655
00:39:24,520 --> 00:39:27,799
Speaker 4: we got into all this tariff's talk and all this

656
00:39:28,080 --> 00:39:31,200
Speaker 4: economic uncertainty and companies pulling guidance and all that kind

657
00:39:31,200 --> 00:39:31,560
Speaker 4: of stuff.

658
00:39:31,600 --> 00:39:34,080
Speaker 6: Absolutely, So what we try to figure out is what

659
00:39:34,200 --> 00:39:37,040
Speaker 6: is the distribution of outcomes? Because if you think you

660
00:39:37,080 --> 00:39:39,920
Speaker 6: can pinpoint the exact outcome of what's going to happen

661
00:39:39,960 --> 00:39:42,360
Speaker 6: with the economy or the markets, you need to do

662
00:39:42,480 --> 00:39:43,160
Speaker 6: us of humility.

663
00:39:43,320 --> 00:39:43,560
Speaker 2: Yep.

664
00:39:43,760 --> 00:39:47,240
Speaker 6: So in the beginning of the year, the left tail,

665
00:39:47,640 --> 00:39:51,759
Speaker 6: so recession risk was small, and when we looked at

666
00:39:51,840 --> 00:39:54,239
Speaker 6: valuations they were tight. They were in the tenth or

667
00:39:54,280 --> 00:39:58,120
Speaker 6: twentieth percentile from a spread perspective. But it all made

668
00:39:58,200 --> 00:40:02,000
Speaker 6: sense given how small that left was. What has happened

669
00:40:02,200 --> 00:40:06,080
Speaker 6: with the more aggressive tariff policies on Liberation Day and yes,

670
00:40:06,120 --> 00:40:09,799
Speaker 6: we've backed off. Since then, that left tail has expanded,

671
00:40:10,280 --> 00:40:13,279
Speaker 6: and so it really has changed the game since then.

672
00:40:13,320 --> 00:40:15,800
Speaker 6: Now we're in better spot now because we have the

673
00:40:15,880 --> 00:40:18,879
Speaker 6: ninety day reprieve, we've had the beginning of us UK

674
00:40:19,120 --> 00:40:22,719
Speaker 6: us China deals. But things are still challenging on the

675
00:40:22,760 --> 00:40:24,160
Speaker 6: forward economic outlook.

676
00:40:24,760 --> 00:40:27,719
Speaker 4: So in the fixed income space, do you just sit

677
00:40:27,840 --> 00:40:30,400
Speaker 4: short term treasures and clip your four percent coupon on

678
00:40:30,520 --> 00:40:32,440
Speaker 4: two year Where do you take credit risk? How do

679
00:40:32,480 --> 00:40:33,160
Speaker 4: you guys think about that?

680
00:40:33,160 --> 00:40:36,640
Speaker 6: As you sin, Yeah, I think I do multisector fixed

681
00:40:36,680 --> 00:40:40,280
Speaker 6: income portfolios. In terms of portfolio theory, the more degrees

682
00:40:40,320 --> 00:40:42,759
Speaker 6: of freedom you have, the easier it is to get

683
00:40:42,840 --> 00:40:45,560
Speaker 6: further out on the efficient frontier. You want to do

684
00:40:47,000 --> 00:40:50,440
Speaker 6: diversified investments. That's the antidote to what's going on right

685
00:40:50,480 --> 00:40:52,840
Speaker 6: now in the market. That's corporate credit. We like Triple

686
00:40:52,880 --> 00:40:56,719
Speaker 6: B's for example. It's high quality structured product. Bringing them

687
00:40:56,760 --> 00:40:59,720
Speaker 6: all together with some duration should win over time.

688
00:41:00,239 --> 00:41:03,680
Speaker 2: I am absolutely fascinated. And this is after listening to

689
00:41:03,719 --> 00:41:05,799
Speaker 2: Professor Rogoff my book of the summer, and let me

690
00:41:05,840 --> 00:41:07,759
Speaker 2: bring it up one more time for you to bright

691
00:41:07,800 --> 00:41:13,239
Speaker 2: green book. Here our dollar your problem. He's saying that

692
00:41:13,280 --> 00:41:15,040
Speaker 2: we're going to see in his call, and this has

693
00:41:15,040 --> 00:41:17,440
Speaker 2: been ken for decades, We're going to see a persistently

694
00:41:17,560 --> 00:41:22,480
Speaker 2: higher inflation adjusted rate. How does our investment world change

695
00:41:23,080 --> 00:41:26,600
Speaker 2: if we get a rogue off reset to what we

696
00:41:26,719 --> 00:41:30,239
Speaker 2: used to know, which is a higher yield spectrum, a

697
00:41:30,320 --> 00:41:31,480
Speaker 2: higher yield regime.

698
00:41:32,440 --> 00:41:36,040
Speaker 6: Yeah, yields are very simply in the economy the cost

699
00:41:36,080 --> 00:41:42,560
Speaker 6: of capital. So some businesses, also some countries of some consumers,

700
00:41:42,680 --> 00:41:45,360
Speaker 6: it just doesn't work at that higher cost of capital.

701
00:41:45,760 --> 00:41:48,360
Speaker 6: So it's figuring out how much higher it will in

702
00:41:48,440 --> 00:41:53,160
Speaker 6: fact be and what can survive and thrive in that environment.

703
00:41:54,160 --> 00:41:56,640
Speaker 4: So how do you think our federal reserve is going to,

704
00:41:57,680 --> 00:42:00,680
Speaker 4: I guess react going forward this year? How do you

705
00:42:00,719 --> 00:42:04,000
Speaker 4: guys have them trying to, you know, prop things up

706
00:42:04,040 --> 00:42:05,359
Speaker 4: a little bit or are they just going to sit

707
00:42:05,360 --> 00:42:07,279
Speaker 4: on the silines and let this whole thing play out.

708
00:42:07,400 --> 00:42:09,360
Speaker 6: Sure, so we still think that there'll be two cuts

709
00:42:09,360 --> 00:42:11,879
Speaker 6: by the end of the year, but they've been very

710
00:42:11,880 --> 00:42:14,200
Speaker 6: clear in that they are not going to be doing

711
00:42:14,280 --> 00:42:17,640
Speaker 6: preemptive cuts. Okay, the data will guide them. They need

712
00:42:17,719 --> 00:42:20,440
Speaker 6: to see the data, and I think yesterday's muted response

713
00:42:20,480 --> 00:42:23,799
Speaker 6: to CPI is case in point Normally, when you have

714
00:42:23,840 --> 00:42:27,280
Speaker 6: a softer CPI, you would see movement in the forward

715
00:42:27,320 --> 00:42:31,440
Speaker 6: interest rate probabilities on bed funds, and you didn't because

716
00:42:31,760 --> 00:42:35,480
Speaker 6: it's one print only, and it's not inclusive necessarily of

717
00:42:35,520 --> 00:42:38,960
Speaker 6: the big tariff impact. And so the data is one print.

718
00:42:39,080 --> 00:42:39,640
Speaker 6: Let's wait and.

719
00:42:39,600 --> 00:42:42,120
Speaker 2: See Goldvin SAX made a huge splash. I'm going to

720
00:42:42,160 --> 00:42:44,680
Speaker 2: say six months ago plus or minus a month David

721
00:42:44,719 --> 00:42:49,040
Speaker 2: Constant looking at MEME reversion on equities, which gave him

722
00:42:49,239 --> 00:42:52,360
Speaker 2: a vector down to a single digit, even low single

723
00:42:52,400 --> 00:42:57,160
Speaker 2: digit total return. Do you invest every day, Lindsey based

724
00:42:57,160 --> 00:43:00,399
Speaker 2: on equities not giving us the double digit magic we've

725
00:43:00,400 --> 00:43:02,000
Speaker 2: seen post pandemic?

726
00:43:02,480 --> 00:43:05,239
Speaker 6: Well, I invest every day based on what I think

727
00:43:05,320 --> 00:43:07,399
Speaker 6: is going to happen in the bond market. There are

728
00:43:07,440 --> 00:43:11,680
Speaker 6: obviously relationships between the two. I think when you do

729
00:43:11,800 --> 00:43:14,319
Speaker 6: see the volatility in the equity market and you have

730
00:43:14,520 --> 00:43:18,280
Speaker 6: decent yields in fixed income, that to me is encouraging

731
00:43:18,320 --> 00:43:21,080
Speaker 6: from a technical perspective. So I'm really thinking about how

732
00:43:21,120 --> 00:43:23,440
Speaker 6: does capital flow as a result of what may happen

733
00:43:23,480 --> 00:43:28,520
Speaker 6: in equities? And so you need significantly more growth to

734
00:43:28,600 --> 00:43:31,239
Speaker 6: have continued upside, And that's kind of what Datas was

735
00:43:31,280 --> 00:43:33,280
Speaker 6: speaking about bonds look good.

736
00:43:33,280 --> 00:43:37,400
Speaker 2: Relatively quickly or isn't bond demanded satiable? Like, you know

737
00:43:37,440 --> 00:43:42,400
Speaker 2: they make four phone calls Apple computer, you know, Lindsay,

738
00:43:42,680 --> 00:43:43,000
Speaker 2: you know.

739
00:43:44,040 --> 00:43:46,920
Speaker 6: Look investment great deals are four to five times over subscribe.

740
00:43:47,040 --> 00:43:51,760
Speaker 6: So your point is fact, people like bonds, people want bonds.

741
00:43:51,880 --> 00:43:54,200
Speaker 2: Lindsay, thank you so much. Lindsay Rosener with us. She's

742
00:43:54,480 --> 00:43:59,080
Speaker 2: head a multisector investing Golden Sex Asset Management.

743
00:44:04,560 --> 00:44:08,480
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

744
00:44:08,520 --> 00:44:11,920
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

745
00:44:11,960 --> 00:44:14,759
Speaker 1: with the Bloomberg Business app. You can also watch us

746
00:44:14,800 --> 00:44:18,600
Speaker 1: live every weekday on YouTube and always on the Bloomberg terminal.

747
00:44:18,760 --> 00:44:22,120
Speaker 2: We move right on now to what's interesting in wealth management.

748
00:44:22,200 --> 00:44:26,360
Speaker 2: David Bale and iconic at City Group today like announcing

749
00:44:26,400 --> 00:44:30,920
Speaker 2: today the launch of his Capital Group, which is fascinating,

750
00:44:30,920 --> 00:44:33,520
Speaker 2: and some of this comes out to what you observed

751
00:44:33,640 --> 00:44:36,160
Speaker 2: at City Group. I want to talk about cash in

752
00:44:36,200 --> 00:44:39,880
Speaker 2: a moment, but tell us what your new operation is doing.

753
00:44:40,120 --> 00:44:43,880
Speaker 2: I think it's original in terms of helping people manage money.

754
00:44:44,120 --> 00:44:47,200
Speaker 7: Yeah, so the idea behind Cio Group is pretty straightforward.

755
00:44:47,200 --> 00:44:50,160
Speaker 7: We take a family's aggregated data how they actually are

756
00:44:50,200 --> 00:44:52,680
Speaker 7: managing their money using all of their providers all over

757
00:44:53,080 --> 00:44:55,959
Speaker 7: Wall Street and elsewhere. We can look at that every

758
00:44:55,960 --> 00:44:58,120
Speaker 7: single day, the valuations of what they're doing, how they're

759
00:44:58,160 --> 00:45:01,279
Speaker 7: moving capital around, and then able to advise them so

760
00:45:01,320 --> 00:45:04,040
Speaker 7: we can improve portfolios at each of the money managers

761
00:45:04,280 --> 00:45:07,359
Speaker 7: and also run portfolios that augment what they're doing now

762
00:45:07,400 --> 00:45:11,000
Speaker 7: and improve you know, their asset allocation, improve their risk profile.

763
00:45:10,760 --> 00:45:16,680
Speaker 2: Within portfolio turnover increasing or portfolio turnover could decrease.

764
00:45:17,040 --> 00:45:19,799
Speaker 7: Because you're looking every day, right, You're looking every day

765
00:45:19,840 --> 00:45:21,480
Speaker 7: at the sort of behaviors. And then what we have,

766
00:45:21,560 --> 00:45:23,960
Speaker 7: which is really interesting time, is this macro data where

767
00:45:23,960 --> 00:45:26,440
Speaker 7: we can look at family offices as a group to

768
00:45:26,440 --> 00:45:28,640
Speaker 7: see how they behave right. And one of the observations

769
00:45:28,680 --> 00:45:30,799
Speaker 7: we talked about was the fact that they have so

770
00:45:30,920 --> 00:45:33,160
Speaker 7: much cash. They tend to have too much cash. They

771
00:45:33,200 --> 00:45:35,319
Speaker 7: don't view it as a strategic asset. And this year,

772
00:45:35,360 --> 00:45:38,520
Speaker 7: in particular, we see cash levels, you know, families go

773
00:45:38,640 --> 00:45:40,719
Speaker 7: up by two percent when it would have been far

774
00:45:40,800 --> 00:45:42,480
Speaker 7: better off for them to have left them alone.

775
00:45:42,840 --> 00:45:45,080
Speaker 2: I look at the management of cash now. Most of

776
00:45:45,120 --> 00:45:47,919
Speaker 2: our listeners and viewers aren't in family offices. They're trying

777
00:45:47,920 --> 00:45:49,919
Speaker 2: to get to the end of the month. But what's

778
00:45:49,920 --> 00:45:53,840
Speaker 2: the biggest mistake we make when we quote unquote manage cash?

779
00:45:54,040 --> 00:45:56,080
Speaker 7: Right, we just leave it wherever it happens to be.

780
00:45:56,239 --> 00:45:58,000
Speaker 7: So you have a little bit in your brokerage account,

781
00:45:58,000 --> 00:45:59,440
Speaker 7: a little bit in your bank, you know, a little

782
00:45:59,440 --> 00:46:02,160
Speaker 7: bit here in there. You know, most people have five

783
00:46:02,239 --> 00:46:03,799
Speaker 7: or six places where they have their cash, and some

784
00:46:03,840 --> 00:46:06,239
Speaker 7: of them are earning zero or just two percent on

785
00:46:06,640 --> 00:46:09,600
Speaker 7: what they're you know, what's hanging around. We think about

786
00:46:09,680 --> 00:46:12,200
Speaker 7: the idea of aggregating cash in one account. You can

787
00:46:12,239 --> 00:46:15,000
Speaker 7: sweep now with technology, all of your money into one

788
00:46:15,040 --> 00:46:15,600
Speaker 7: cash account.

789
00:46:15,600 --> 00:46:16,920
Speaker 2: It earn two or three percent.

790
00:46:16,760 --> 00:46:19,319
Speaker 7: More for doing that, and we think everybody should do that.

791
00:46:19,840 --> 00:46:24,160
Speaker 4: What should do you think for the average investor, maybe

792
00:46:24,280 --> 00:46:26,960
Speaker 4: your average investor, what should be a cash allocation?

793
00:46:27,239 --> 00:46:30,040
Speaker 7: Generally speaking, so for the average individual, you know, three

794
00:46:30,040 --> 00:46:31,759
Speaker 7: to six months of cash is all they should keep,

795
00:46:31,800 --> 00:46:34,160
Speaker 7: you know, sort of like emergency stack. But what happens

796
00:46:34,239 --> 00:46:37,000
Speaker 7: is that most you know, most larger investors have more

797
00:46:37,040 --> 00:46:39,399
Speaker 7: than a million dollars, have between three and a half

798
00:46:39,440 --> 00:46:41,640
Speaker 7: and five percent in cash, but no real intention to

799
00:46:41,719 --> 00:46:45,000
Speaker 7: actually use it. They claim to be opportunistic, but they aren't,

800
00:46:45,400 --> 00:46:47,600
Speaker 7: and so effectively they should be putting that money back

801
00:46:47,600 --> 00:46:49,359
Speaker 7: into their portfolios automatically.

802
00:46:49,560 --> 00:46:52,080
Speaker 2: So that's like David Balen is going to manage Warren

803
00:46:52,120 --> 00:46:54,640
Speaker 2: Buffett's cash. That would be a good job time.

804
00:46:55,360 --> 00:46:56,960
Speaker 7: I think every one of us would sign up with that.

805
00:46:57,160 --> 00:47:00,240
Speaker 2: But the Warren Buffett with a gajillion dollars in cash,

806
00:47:00,239 --> 00:47:03,400
Speaker 2: that's the lead brick that a lot of people visit it.

807
00:47:03,400 --> 00:47:05,560
Speaker 7: It is, and anyway, it's one of the big reasons

808
00:47:05,560 --> 00:47:08,680
Speaker 7: why portfolios don't even meet, you know, sixty forty averages

809
00:47:08,800 --> 00:47:11,160
Speaker 7: is because of that is because of the cash. And

810
00:47:11,200 --> 00:47:13,000
Speaker 7: then there are other you know, there are other sort

811
00:47:13,040 --> 00:47:15,719
Speaker 7: of symptoms that families have and many other investors have.

812
00:47:16,040 --> 00:47:19,120
Speaker 7: For example, today they're not invested internationally at all, you know,

813
00:47:19,160 --> 00:47:22,319
Speaker 7: they become wholly domestic centric at a time when there

814
00:47:22,360 --> 00:47:25,239
Speaker 7: are really good opportunities overseas with the dollar foling. Well,

815
00:47:25,280 --> 00:47:26,920
Speaker 7: I actually think China is going to make a bit

816
00:47:26,960 --> 00:47:29,239
Speaker 7: of a comeback here. And one of the things that

817
00:47:29,320 --> 00:47:31,000
Speaker 7: you know, people are afraid to talk about, right because

818
00:47:31,000 --> 00:47:33,960
Speaker 7: they're thinking, well, maybe the US will restrict investing in

819
00:47:34,040 --> 00:47:36,880
Speaker 7: Chinese ADRs or or in Chinese funds. But the fact

820
00:47:36,960 --> 00:47:39,200
Speaker 7: is that their economy is now I think, going to

821
00:47:39,200 --> 00:47:41,640
Speaker 7: grow a little bit faster, and their emphasis on technology

822
00:47:41,880 --> 00:47:43,239
Speaker 7: is going to be a little bit greater, and that's

823
00:47:43,320 --> 00:47:44,880
Speaker 7: very investable here in the States.

824
00:47:45,520 --> 00:47:47,680
Speaker 4: How About on the other end of the risk spectrum,

825
00:47:47,719 --> 00:47:52,080
Speaker 4: alternative investments. I've seen them go from five to ten

826
00:47:52,120 --> 00:47:54,520
Speaker 4: percent of a portfolio. So now if I look at

827
00:47:54,520 --> 00:47:58,000
Speaker 4: an endowment, it's forty fifty percent of the portfolio. And

828
00:47:58,080 --> 00:48:01,279
Speaker 4: I even see some rias when we got Field, they're

829
00:48:01,360 --> 00:48:04,600
Speaker 4: saying that their clients won a big allocation to alternatives.

830
00:48:04,600 --> 00:48:05,480
Speaker 2: How do you think about it?

831
00:48:05,560 --> 00:48:08,640
Speaker 7: Yeah, So alternatives are, you know, in an interesting subject

832
00:48:08,719 --> 00:48:10,400
Speaker 7: right now because if you take a look at one

833
00:48:10,440 --> 00:48:13,480
Speaker 7: of the fastest growing segments of it, it's private credit.

834
00:48:13,800 --> 00:48:16,840
Speaker 7: And private credit is providing real high yields to investors.

835
00:48:16,840 --> 00:48:18,759
Speaker 7: You know, nine and a half to eleven percent right now,

836
00:48:19,000 --> 00:48:22,200
Speaker 7: publicly traded b DC is private you know, private investment vehicles,

837
00:48:22,520 --> 00:48:24,319
Speaker 7: and these are very attractive. And one of the reasons

838
00:48:24,400 --> 00:48:26,640
Speaker 7: I talk about that is, if that's the rate you're

839
00:48:26,680 --> 00:48:28,359
Speaker 7: going to earn on the credit, what is the rate

840
00:48:28,360 --> 00:48:30,279
Speaker 7: you're going to earn on equity? And one of the

841
00:48:30,360 --> 00:48:32,960
Speaker 7: risks that investors face right now. That's very significant. Is

842
00:48:33,000 --> 00:48:35,839
Speaker 7: that making long term commitments to private equity with rates

843
00:48:35,880 --> 00:48:37,920
Speaker 7: this high strikes me as really risky.

844
00:48:37,760 --> 00:48:41,520
Speaker 2: Celebration as Cio campbelll Group David Balen here on the

845
00:48:41,560 --> 00:48:44,279
Speaker 2: first day they put this together. Of course forever it's

846
00:48:44,360 --> 00:48:49,120
Speaker 2: City Group helping manage their Christmas club accounts. I'm going

847
00:48:49,200 --> 00:48:51,320
Speaker 2: to go. I mean, Paul wants to go to private equity.

848
00:48:51,760 --> 00:48:56,520
Speaker 2: Come on, nine to eleven percent private credit sounds too

849
00:48:56,600 --> 00:48:59,360
Speaker 2: good to be true to an amateur like me. Is

850
00:48:59,360 --> 00:49:01,719
Speaker 2: that a legit yield or they goosen it?

851
00:49:02,120 --> 00:49:04,160
Speaker 7: No, Well, there's some leverage in some of the publicly

852
00:49:04,200 --> 00:49:06,440
Speaker 7: traded vehicles, but it is a legit yield, you know,

853
00:49:06,520 --> 00:49:09,360
Speaker 7: and it is something to look at, and it's a

854
00:49:09,400 --> 00:49:11,840
Speaker 7: huge part of it's probably the fastest going part of

855
00:49:11,880 --> 00:49:14,520
Speaker 7: the private credit thing, both public and private, for individual

856
00:49:14,520 --> 00:49:17,120
Speaker 7: investors and for wealthy families, and so it's one of

857
00:49:17,160 --> 00:49:18,120
Speaker 7: those things that's there.

858
00:49:18,880 --> 00:49:19,480
Speaker 2: And it does.

859
00:49:19,360 --> 00:49:21,120
Speaker 7: Suggest that, you know, if you can do that, and

860
00:49:21,160 --> 00:49:23,759
Speaker 7: you can basically double your money in seven years, why

861
00:49:23,800 --> 00:49:25,920
Speaker 7: would you not do that right rather than own equities?

862
00:49:26,080 --> 00:49:27,719
Speaker 7: And that I think is the real challenge. So, yes,

863
00:49:27,760 --> 00:49:30,680
Speaker 7: it's real. Those funds typically have you know, a forty

864
00:49:30,680 --> 00:49:33,719
Speaker 7: five to sixty percent exposure right to a given transaction,

865
00:49:34,520 --> 00:49:37,880
Speaker 7: and with the length and give time of leaving transactions,

866
00:49:37,719 --> 00:49:40,560
Speaker 7: it really does suggest that private credit deserves a bigger

867
00:49:40,560 --> 00:49:42,120
Speaker 7: place in portfolios that it's getting.

868
00:49:42,760 --> 00:49:46,040
Speaker 4: How about this world is so much different today than

869
00:49:46,080 --> 00:49:49,080
Speaker 4: the West? January First? How is your view changed of

870
00:49:50,040 --> 00:49:54,760
Speaker 4: risk opportunities, asset allocation? How's kind of your view changed?

871
00:49:55,200 --> 00:49:57,960
Speaker 7: Yeah, so I think that our view is really about

872
00:49:58,040 --> 00:50:01,360
Speaker 7: diversification and this idea of where you can find it.

873
00:50:01,400 --> 00:50:03,200
Speaker 7: So we talked a little bit about China, We've already

874
00:50:03,200 --> 00:50:04,840
Speaker 7: talked a little bit about private credit. I think we

875
00:50:04,880 --> 00:50:07,399
Speaker 7: have to talk about digital assets. I think they belong

876
00:50:07,480 --> 00:50:09,640
Speaker 7: in portfolios now. A little bit of bitcoin and a

877
00:50:09,640 --> 00:50:11,160
Speaker 7: little bit of some of the assets that we're going

878
00:50:11,200 --> 00:50:13,600
Speaker 7: to hear more about, one of which Bloomberg wrote about

879
00:50:13,680 --> 00:50:16,600
Speaker 7: yesterday called hyper liquid, which is the idea that there

880
00:50:16,600 --> 00:50:19,239
Speaker 7: are going to be new technologies, new exchanges that are

881
00:50:19,239 --> 00:50:21,760
Speaker 7: taking place in the digital world, and you can invest

882
00:50:21,800 --> 00:50:23,839
Speaker 7: in those. And the reason I mentioned this is that

883
00:50:23,880 --> 00:50:27,480
Speaker 7: these different investments are going to give you good equity

884
00:50:27,560 --> 00:50:30,240
Speaker 7: like rates of return and potentially higher but they also

885
00:50:30,320 --> 00:50:33,400
Speaker 7: don't behave like traditional US equities, and I think that's

886
00:50:33,560 --> 00:50:35,080
Speaker 7: what we need to add more up to portfolio.

887
00:50:35,160 --> 00:50:38,400
Speaker 2: What is the underlying what do you call it a

888
00:50:38,480 --> 00:50:40,800
Speaker 2: hyper liquid? Hyper liquid is the name of what is

889
00:50:40,840 --> 00:50:44,960
Speaker 2: an underlying of a hyper liquid? What is the quarterly

890
00:50:45,160 --> 00:50:45,920
Speaker 2: cash flow?

891
00:50:46,320 --> 00:50:46,480
Speaker 5: You know?

892
00:50:46,920 --> 00:50:48,359
Speaker 2: I mean, you know where I am on this date?

893
00:50:48,560 --> 00:50:51,680
Speaker 7: What's I am on tom? And what's really incredible is

894
00:50:51,680 --> 00:50:54,440
Speaker 7: that when you go online you can actually see the

895
00:50:54,480 --> 00:50:58,239
Speaker 7: actual revenue production of these digital assets every single day,

896
00:50:58,840 --> 00:51:01,600
Speaker 7: actually how much revenue they generate. Now, it's interesting that no,

897
00:51:01,680 --> 00:51:04,640
Speaker 7: meme coins and NFTs and stuff don't generate revenue, but

898
00:51:04,719 --> 00:51:07,440
Speaker 7: there are a handful of companies that are online that

899
00:51:07,520 --> 00:51:08,959
Speaker 7: literally generate revenue every day.

900
00:51:08,840 --> 00:51:09,440
Speaker 2: And you could see it.

901
00:51:09,920 --> 00:51:11,759
Speaker 7: And this is a company that if it were you know,

902
00:51:11,800 --> 00:51:14,560
Speaker 7: if it were to be Robinhood or would to be coinbased,

903
00:51:14,560 --> 00:51:17,080
Speaker 7: the company would probably be worth four times what its

904
00:51:17,120 --> 00:51:21,960
Speaker 7: market cap is in the digital world.

905
00:51:20,560 --> 00:51:24,000
Speaker 4: Just for example, what a city wealth investor seriously ask

906
00:51:24,080 --> 00:51:25,719
Speaker 4: you about this stuff and say, I want exposure.

907
00:51:25,880 --> 00:51:28,040
Speaker 7: You know, I have to say that six years ago

908
00:51:28,160 --> 00:51:30,719
Speaker 7: I was a wild skeptic about the digital world and

909
00:51:30,760 --> 00:51:33,319
Speaker 7: about cryptocurrencies in general, and I don't like even calling

910
00:51:33,320 --> 00:51:35,840
Speaker 7: them that, but there are a handful of companies that

911
00:51:35,880 --> 00:51:38,000
Speaker 7: are online today that I think are going to be

912
00:51:38,040 --> 00:51:38,560
Speaker 7: game changing.

913
00:51:38,600 --> 00:51:39,799
Speaker 2: They're literally going to be the.

914
00:51:39,719 --> 00:51:42,840
Speaker 7: Next generation of banks, of the next generation of lending,

915
00:51:42,880 --> 00:51:44,799
Speaker 7: and so I think that we're ignorant if we don't

916
00:51:44,800 --> 00:51:46,600
Speaker 7: think we should give our clients exposure to that.

917
00:51:47,239 --> 00:51:50,359
Speaker 2: Congratulations on this new effort. Thank you very much. The

918
00:51:50,400 --> 00:51:55,680
Speaker 2: CIO Capital David Balen is the launch today for family

919
00:51:55,719 --> 00:51:58,920
Speaker 2: offices of the real focus on cash management.

920
00:51:59,560 --> 00:52:03,480
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

921
00:52:03,520 --> 00:52:06,800
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

922
00:52:06,920 --> 00:52:09,879
Speaker 1: with the Bloomberg Business app. You can also listen live

923
00:52:09,960 --> 00:52:13,560
Speaker 1: on Amazon Alexa from our flagship New York station. Just

924
00:52:13,600 --> 00:52:16,120
Speaker 1: say Alexa play Bloomberg eleven thirty.

925
00:52:16,840 --> 00:52:20,439
Speaker 2: Right now, the newspapers, we need this with Lisa Matteo. Lisa,

926
00:52:20,480 --> 00:52:20,840
Speaker 2: what do you have?

927
00:52:20,880 --> 00:52:21,160
Speaker 6: All right?

928
00:52:21,160 --> 00:52:22,760
Speaker 8: So I'll start with the New York Times. They pointed

929
00:52:22,760 --> 00:52:25,879
Speaker 8: out this interesting trend of how rival countries are looking

930
00:52:25,880 --> 00:52:29,200
Speaker 8: to pick up American researchers. But we've seen it. Are

931
00:52:29,320 --> 00:52:32,240
Speaker 8: billions of dollars federal dollars being cut from American research

932
00:52:32,280 --> 00:52:35,439
Speaker 8: funding by the Trump administration. So experts are saying there's

933
00:52:35,440 --> 00:52:38,520
Speaker 8: a thing the salaries are much lower in places like Europe.

934
00:52:38,520 --> 00:52:40,560
Speaker 8: So in France, for example, you have a thirty five

935
00:52:40,640 --> 00:52:43,120
Speaker 8: year old researcher who can earn about four thousand a

936
00:52:43,120 --> 00:52:45,799
Speaker 8: month before taxes, and then you compare that to a

937
00:52:45,920 --> 00:52:49,120
Speaker 8: post doctoral fellow at Stanford who can earn about sixty

938
00:52:49,120 --> 00:52:51,799
Speaker 8: five hundred a month in the US. But experts are

939
00:52:51,800 --> 00:52:56,160
Speaker 8: saying Europe has the better benefits, like the free social security, healthcare,

940
00:52:56,400 --> 00:53:00,000
Speaker 8: university tuition. So there's a bunch of these different countries

941
00:53:00,040 --> 00:53:02,080
Speaker 8: that are starting to look to these American researchers because

942
00:53:02,080 --> 00:53:03,680
Speaker 8: a lot of them may be out of work or

943
00:53:03,719 --> 00:53:06,120
Speaker 8: maybe they're just frustrated with how the system is working,

944
00:53:06,239 --> 00:53:07,719
Speaker 8: so they're starting to kick them up.

945
00:53:07,719 --> 00:53:10,560
Speaker 2: Here' j expert on as Jonathan Cole at Columbia University

946
00:53:11,000 --> 00:53:15,160
Speaker 2: and he centers on the Johns Hopkins University and in Chicago.

947
00:53:15,880 --> 00:53:18,560
Speaker 2: But I would really emphasize, Lisa, it puts a cloud

948
00:53:18,600 --> 00:53:23,400
Speaker 2: over all the universities. I would editorialize Paul that it

949
00:53:23,440 --> 00:53:25,759
Speaker 2: puts a cloud over Duke, it puts a cloud over

950
00:53:26,120 --> 00:53:29,520
Speaker 2: Georgia Tech, it puts a cloud over Harvey Mudd out

951
00:53:29,560 --> 00:53:30,359
Speaker 2: in California.

952
00:53:30,480 --> 00:53:31,960
Speaker 4: Yeah, absolutely, I was just down at Duke for a

953
00:53:32,000 --> 00:53:33,840
Speaker 4: board meeting a few weeks ago, and that was topic

954
00:53:33,920 --> 00:53:35,960
Speaker 4: number one. And they've been taken ACT and they have

955
00:53:36,040 --> 00:53:39,280
Speaker 4: a huge medical center, so they get the NIH funding

956
00:53:39,400 --> 00:53:43,120
Speaker 4: as well. But they're the government's investing in research, which

957
00:53:43,160 --> 00:53:45,520
Speaker 4: is what made America the leading country in the world

958
00:53:45,520 --> 00:53:46,279
Speaker 4: since World War Two.

959
00:53:46,440 --> 00:53:47,399
Speaker 3: So go figure it out.

960
00:53:47,719 --> 00:53:51,200
Speaker 8: Yeah. The next one is what continue with the job market? Right,

961
00:53:51,239 --> 00:53:53,000
Speaker 8: So if you remember this is in the Wall Street

962
00:53:53,040 --> 00:53:55,239
Speaker 8: Journal during the pandemic, a lot of people scored these

963
00:53:55,280 --> 00:53:57,719
Speaker 8: big raises right when they jump from job to job

964
00:53:57,760 --> 00:53:58,960
Speaker 8: to job because you had.

965
00:53:58,800 --> 00:53:59,560
Speaker 6: This talent war.

966
00:54:00,080 --> 00:54:02,680
Speaker 8: But now this is interesting switch because a lot of

967
00:54:02,719 --> 00:54:04,719
Speaker 8: those folks who jump from job to job are saying,

968
00:54:04,760 --> 00:54:07,360
Speaker 8: you know what, we're kind of scared because they're realizing

969
00:54:07,480 --> 00:54:10,279
Speaker 8: they may be getting paid too much. And what that

970
00:54:10,360 --> 00:54:12,200
Speaker 8: does is that puts them at the top of the

971
00:54:12,280 --> 00:54:15,640
Speaker 8: chopping block when it comes to cutting jobs. So they

972
00:54:15,640 --> 00:54:18,080
Speaker 8: think they're going to be replaced by cheaper talent. So

973
00:54:18,520 --> 00:54:21,080
Speaker 8: it shows that, you know, tech and other industries they're

974
00:54:21,080 --> 00:54:23,680
Speaker 8: paid have been falling a little bit. That's what different

975
00:54:24,040 --> 00:54:26,879
Speaker 8: stats are showing. But they're just concerned about it that

976
00:54:27,000 --> 00:54:28,800
Speaker 8: you know, they could lose their jobs.

977
00:54:29,320 --> 00:54:32,000
Speaker 2: It's very look at the Burbery News today. Yeah, and

978
00:54:32,360 --> 00:54:35,000
Speaker 2: then that's not like a summer cut. That's like huge,

979
00:54:35,040 --> 00:54:35,640
Speaker 2: that's a big cut.

980
00:54:36,360 --> 00:54:38,080
Speaker 8: Give me one more, all right, So this one might

981
00:54:38,160 --> 00:54:40,640
Speaker 8: be the thing that finally takes my husband off a cable. Okay,

982
00:54:40,719 --> 00:54:45,640
Speaker 8: So Disney unveil this new ESPN streaming service. It's called

983
00:54:46,040 --> 00:54:49,520
Speaker 8: ESPN yes, originally no plus, no plus, Nope, that's a

984
00:54:49,520 --> 00:54:52,359
Speaker 8: different one. It's just under thirty bucks a month. So

985
00:54:52,400 --> 00:54:55,279
Speaker 8: it's set to start later this year. But what's more

986
00:54:55,320 --> 00:54:57,400
Speaker 8: is that they're going to bundle it. So Disney has

987
00:54:57,440 --> 00:54:59,840
Speaker 8: the new ESPN as part of this bundle with Hulu

988
00:55:00,280 --> 00:55:04,480
Speaker 8: Disney Plus for thirty six dollars in mine. Just a promotion.

989
00:55:05,080 --> 00:55:05,560
Speaker 3: This is it.

990
00:55:05,600 --> 00:55:09,040
Speaker 4: This is the last arrow in the Disney quiver to

991
00:55:09,040 --> 00:55:12,160
Speaker 4: get everybody to go streaming. Because once you put sports, yeah,

992
00:55:12,600 --> 00:55:15,920
Speaker 4: streaming or streaming primarily or streaming only, that's it.

993
00:55:16,040 --> 00:55:16,480
Speaker 3: That's game.

994
00:55:16,640 --> 00:55:20,040
Speaker 2: Listeno, thank you so much the newspapers this morning.

995
00:55:20,400 --> 00:55:25,239
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify

996
00:55:25,360 --> 00:55:29,160
Speaker 1: and anywhere else you get your podcasts. Listen live each

997
00:55:29,160 --> 00:55:33,000
Speaker 1: weekday seven to ten am Eastern on Bloomberg Dot com

998
00:55:33,160 --> 00:55:36,960
Speaker 1: the iHeartRadio app tune In, and the Bloomberg Business app.

999
00:55:37,239 --> 00:55:40,360
Speaker 1: You can also watch us live every weekday on YouTube

1000
00:55:40,640 --> 00:55:42,680
Speaker 1: and always on the Bloomberg terminal