WEBVTT - Bloomberg Surveillance TV: November 19th, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.720 with Lisa Bromwitz and Ameri Hordern. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:37.680 Terminal and the Bloomberg Business app. Tag. Concerns continue to 0:00:37.680 --> 0:00:40.479 weigh on equity markets worldwide. Alisha Levine of B and 0:00:40.560 --> 0:00:43.760 Y Walth writing, we do not anticipate macro downside and 0:00:43.800 --> 0:00:46.800 so expect the markets rally into year end. The risk 0:00:46.880 --> 0:00:49.680 is to the upside from here. Alisa joins us now 0:00:49.680 --> 0:00:52.040 for more. Alisha Gimnic good Morning said that last time, 0:00:52.159 --> 0:00:53.440 what's gone wrong in the last few weeks? 0:00:53.479 --> 0:00:55.320 Well, I don't think get anything's gone wrong yet. I mean, 0:00:55.320 --> 0:00:57.680 if you think about it, the SMP is off about 0:00:57.720 --> 0:01:00.960 five percent. Really it's the text that took the hit. 0:01:01.320 --> 0:01:03.800 But what's interesting we talked about how how the multiple 0:01:03.880 --> 0:01:05.720 was in the SMP at twenty three times, we're now 0:01:05.760 --> 0:01:08.520 at twenty one times, so the market's done a little 0:01:08.520 --> 0:01:11.120 bit of work here to take some of the froth out. 0:01:11.360 --> 0:01:13.800 In the end, we're always looking forward for our client 0:01:13.840 --> 0:01:17.160 portfolios twelve to eighteen months forward. We think this will 0:01:17.160 --> 0:01:20.920 be a biable moment where it ends. There's going to be. 0:01:21.040 --> 0:01:23.920 As you said, the next twenty four hours gets to 0:01:24.200 --> 0:01:28.880 all the issues, gets to the earnings, the spending, the 0:01:28.920 --> 0:01:32.920 depreciation issue on how the P and L is being 0:01:33.400 --> 0:01:35.720 managed for all these tech companies, which has come up 0:01:35.760 --> 0:01:38.760 in the last week, as well as what's happening with 0:01:38.840 --> 0:01:41.640 the labor market as well as what's happening. 0:01:41.280 --> 0:01:42.320 With the lower end consumer. 0:01:42.480 --> 0:01:47.280 So you're getting all these issues answered in twenty four hours. 0:01:47.360 --> 0:01:50.880 And I just think that market participants did not want 0:01:50.920 --> 0:01:54.400 to carry risk into this. It's just too big because 0:01:54.400 --> 0:01:56.920 you are getting the macro story as well as like 0:01:56.960 --> 0:02:00.000 the micro of what's going on with this particular trade 0:02:00.080 --> 0:02:02.000 that has driven the market for the last eighteen months. 0:02:02.000 --> 0:02:03.400 So ly should have to unpack some of that. So 0:02:03.440 --> 0:02:05.800 we've got a big morning tomorrow Walmart, and we've got 0:02:05.880 --> 0:02:07.760 jobs as well, so that should give you some indication. 0:02:07.960 --> 0:02:09.720 A little bit at least of what the FED might 0:02:09.760 --> 0:02:12.160 do next month. I want to sit on Nvidia as 0:02:12.160 --> 0:02:14.800 a company and as a stock. As a company, the 0:02:14.840 --> 0:02:16.640 earning should be pretty good because we've heard from their 0:02:16.639 --> 0:02:19.119 biggest customers, and their biggest customers want to spend more 0:02:19.240 --> 0:02:21.639 and keep spending more. So I've got that sorted as 0:02:21.639 --> 0:02:24.720 a stock. There's an attitude shift that's developed in this market. 0:02:24.919 --> 0:02:27.080 The things we used to rally on we don't rally 0:02:27.120 --> 0:02:29.639 on anymore. What's behind that and why do you see 0:02:29.639 --> 0:02:30.000 it change? 0:02:30.000 --> 0:02:31.160 It? Look the big. 0:02:30.960 --> 0:02:34.040 Difference here, and you know, I can't talk about particular companies, 0:02:34.320 --> 0:02:35.280 but this is a theoretic. 0:02:35.400 --> 0:02:37.680 This is, you know, the entire market, it's the entire 0:02:37.720 --> 0:02:38.519 market itself. 0:02:39.200 --> 0:02:43.760 Is that the debt financing versus financing from equity or 0:02:43.800 --> 0:02:47.280 financing from cash flow is the biggest change, and it 0:02:47.320 --> 0:02:51.800 does introduce a different risk metric. So to me, it 0:02:51.840 --> 0:02:54.560 does make sense that you're bringing the multiples in a 0:02:54.560 --> 0:02:57.519 little bit simply because if you're debt financing, that is 0:02:57.560 --> 0:03:00.560 a different kettle of fish. In the end, we've talked 0:03:00.600 --> 0:03:03.720 about how the margins are so high, how the cash 0:03:03.720 --> 0:03:06.720 flow margins are so high, particularly for the sector that 0:03:06.840 --> 0:03:10.320 it's able to sustain higher multiples. If that is the case, 0:03:10.520 --> 0:03:12.519 that in this new world, you're going to compress some 0:03:12.639 --> 0:03:14.960 multiples here if there's debt financing. 0:03:15.040 --> 0:03:17.600 So that's the big the big change here. 0:03:18.320 --> 0:03:23.359 The tech sector as a standalone has already dropped two 0:03:23.480 --> 0:03:26.080 turns of multiple as well, from thirty one times to 0:03:26.160 --> 0:03:27.040 twenty nine times. 0:03:27.120 --> 0:03:29.160 So there's been a lot of work done here. I 0:03:29.200 --> 0:03:31.880 think it's a reset because I think we're in early 0:03:31.960 --> 0:03:32.600 innings of this. 0:03:32.880 --> 0:03:35.440 I also think it's healthy that there are larger questions 0:03:35.520 --> 0:03:40.000 asked as we look forward. We expect consumer stimulus coming 0:03:40.040 --> 0:03:45.600 from the tax code February March and aprils refunds to households, 0:03:45.640 --> 0:03:47.880 the lower end households. I think you're getting going to 0:03:47.920 --> 0:03:50.160 get a broadening out here in part because of the 0:03:50.240 --> 0:03:53.000 questions about how this money is actually getting spent. And 0:03:53.080 --> 0:03:55.880 in the end, as we know from twenty five years ago, 0:03:56.160 --> 0:03:59.000 there are winners and losers. We've not asked ourselves that 0:03:59.080 --> 0:04:01.360 question as a mark get as a market, and it's 0:04:01.360 --> 0:04:02.640 almost impossible to know. 0:04:03.040 --> 0:04:04.080 It's impossible to know. 0:04:05.120 --> 0:04:09.200 So, you know, the companies that are the behemoths today 0:04:09.320 --> 0:04:11.680 were like you know, a gleam in an eye of 0:04:11.760 --> 0:04:14.720 some college kid in a basement, you know, back in 0:04:14.760 --> 0:04:16.920 the late nineties. So that is it's hard to know 0:04:16.920 --> 0:04:18.360 how this is going to get monetized. 0:04:18.400 --> 0:04:20.120 But the questions are being asked. I think the questions 0:04:20.120 --> 0:04:20.960 are good questions. 0:04:21.160 --> 0:04:23.680 You don't want a straight upward move in the market, 0:04:23.800 --> 0:04:24.960 so this, I think is healthier. 0:04:25.000 --> 0:04:27.360 Although as an investor, if we're in the early stages, 0:04:27.440 --> 0:04:30.000 how do you pick the winners for even the mid stages? Right? 0:04:30.040 --> 0:04:31.599 And it sort of goes to the heart of do 0:04:31.600 --> 0:04:34.200 you just honker down with the big tech names that 0:04:34.200 --> 0:04:36.800 are the big tech names today and generating cash, or 0:04:36.839 --> 0:04:39.359 do you bet on the evolution of AI to the 0:04:39.400 --> 0:04:41.919 rest of the index the idea of other potential winners 0:04:42.200 --> 0:04:43.160 in this potential race. 0:04:43.200 --> 0:04:45.000 Well, I think part of what we're seeing here is 0:04:45.040 --> 0:04:47.880 that evolution from sort of the picks and shovels and 0:04:47.920 --> 0:04:52.760 the direct beneficiaries to implementation into business strategy. And you're 0:04:52.760 --> 0:04:55.159 starting to see it in some of the industrials, and 0:04:55.200 --> 0:04:57.479 you're even starting to see it in the hyperscalers. Like 0:04:57.520 --> 0:04:59.320 if you just look at some of the revenue per 0:04:59.320 --> 0:05:03.320 employee for some of the hyperscalers, it's gone remarkably higher 0:05:03.600 --> 0:05:08.520 since chat GPT was released, so there is already implementation. 0:05:08.680 --> 0:05:10.800 The market is going to start picking the winners and 0:05:10.839 --> 0:05:12.760 losers in the other four. 0:05:12.640 --> 0:05:14.920 Ninety three and that's what we're going to see. 0:05:15.040 --> 0:05:18.760 That is a healthier place to be if you're changing 0:05:18.760 --> 0:05:21.360 your business model. What we know is that the overall 0:05:21.400 --> 0:05:25.400 margin for the SMP continues to march higher separate from 0:05:25.440 --> 0:05:29.800 the top seven stocks. That means productivity is increasing, and 0:05:29.839 --> 0:05:33.800 it's likely because there is AI being used across the 0:05:33.880 --> 0:05:37.280 value chain in many many companies, whether if there's data 0:05:37.400 --> 0:05:38.880 as part of the company, it's being used. 0:05:39.080 --> 0:05:41.120 One thing that people keep saying is that all this 0:05:41.200 --> 0:05:44.080 is predicated on enough energy to power, and increasingly a 0:05:44.120 --> 0:05:46.680 lot of the hyper scalers are realizing, oh no, we 0:05:46.680 --> 0:05:48.520 don't have that, so we have to come up with 0:05:48.600 --> 0:05:51.080 a backdoor way off the grid to try to power 0:05:51.400 --> 0:05:53.880 our sites. I just wonder at what point you can 0:05:53.880 --> 0:05:56.839 invest in the energy sector or whether it's hamstrung between 0:05:56.880 --> 0:06:00.640 policy and politics between Saudi Arabia and pros Trump the 0:06:00.640 --> 0:06:01.960 potential agreements on oil. 0:06:02.080 --> 0:06:04.120 Right, so look, there are no accidents here, right, I mean, 0:06:04.160 --> 0:06:07.240 I think that part of the new administration, well that's 0:06:07.240 --> 0:06:09.760 not new anymore. But part of the Trump administration's policy 0:06:09.839 --> 0:06:11.680 was to keep a lid on energy prices, and that 0:06:11.800 --> 0:06:15.720 is exactly what's happened. We're sending it sixty dollars on WTI, 0:06:15.880 --> 0:06:19.159 sixty four on Brent. That's exactly what the policy has been. 0:06:19.200 --> 0:06:21.840 And I think it's no surprise that bring energy down 0:06:21.880 --> 0:06:24.520 to drive all of the innovation. In the end, it 0:06:24.560 --> 0:06:28.280 is a competition with our adversaries out there, and so 0:06:28.440 --> 0:06:31.400 this is part of the plan. There will be questions 0:06:31.440 --> 0:06:34.160 asked along the way. You know, you know, the expression 0:06:34.240 --> 0:06:39.880 is wiser but sadder, but wiser. We are wiser about 0:06:40.040 --> 0:06:44.360 technological innovation than twenty five years ago. We understand there 0:06:44.360 --> 0:06:47.000 are bumps along the way. What I see is a 0:06:47.040 --> 0:06:53.720 remarkably resilient corporate sector. The productivity is going across all sectors. 0:06:53.760 --> 0:06:56.640 We will see it. The margins are higher, and. 0:06:56.640 --> 0:06:59.719 So we can ask questions about financing on the top 0:06:59.760 --> 0:07:03.080 seven in stocks. We got four ninety three that can 0:07:03.120 --> 0:07:05.320 also power the market. And I think we you know, 0:07:05.640 --> 0:07:08.279 as a business, we are raising our earnings estimates for 0:07:08.360 --> 0:07:11.760 next year and for the following year into this. 0:07:12.080 --> 0:07:14.360 So we believe in the productivity. We see it. We 0:07:14.400 --> 0:07:15.560 see it in earnings estimates. 0:07:15.640 --> 0:07:19.880 Yes, some textors are coming down, like communications services because 0:07:19.880 --> 0:07:22.600 of the spending of some of the hyperscalers, But overall 0:07:22.680 --> 0:07:23.640 we're raising estimates. 0:07:23.840 --> 0:07:27.400 You think is some scarring from dot com that the 0:07:27.400 --> 0:07:30.480 issues that we saw then have conditioned a certain companies. 0:07:30.080 --> 0:07:33.760 One hundred percent the way we've had scarring from GFC, right, 0:07:33.840 --> 0:07:37.080 like they're scarring there about. You know, is this a 0:07:37.120 --> 0:07:40.200 bubble while we're up one hundred percent? It's not a 0:07:40.200 --> 0:07:42.200 great colleague of mind sent me a bunch of charts 0:07:42.240 --> 0:07:45.360 on like what previous bubbles look like. We're just like 0:07:45.400 --> 0:07:49.400 a tiny little speck, you know, right the appreciation in 0:07:49.440 --> 0:07:53.960 the market and the particular companies at the at the 0:07:54.000 --> 0:07:58.200 heart of this are actually exhibiting a shallow. 0:07:57.960 --> 0:08:00.920 Rise in compared to what we know. Oh, we're bubbles 0:08:00.960 --> 0:08:02.160 in the past. 0:08:02.360 --> 0:08:05.880 We think we're actually early to mid innings of this, 0:08:06.000 --> 0:08:08.760 and there's a way to go. The fact that the 0:08:08.800 --> 0:08:12.520 market appreciated for six months in a row, seven percent 0:08:12.600 --> 0:08:15.360 in the third quarter and we're quivering over a five 0:08:15.440 --> 0:08:18.280 percent down George just tells you how great a year 0:08:18.320 --> 0:08:21.560 it's been. And you know, there was broadening out and 0:08:21.640 --> 0:08:24.160 I think, look, we have to get the FED question also, 0:08:24.240 --> 0:08:25.480 like is the FED going to cut? 0:08:26.440 --> 0:08:30.280 I think the chair has been very careful. 0:08:29.720 --> 0:08:33.520 To keep the probabilities at fifty to fifty, even though 0:08:33.520 --> 0:08:38.080 we've had hawkish comments. The market's not pricing in anything 0:08:38.160 --> 0:08:41.160 less than fifty to fifty on the chances of a cut, 0:08:41.200 --> 0:08:44.000 and that's done for a reason, because they want optionality 0:08:44.720 --> 0:08:45.199 to cut. 0:08:45.320 --> 0:08:47.880 Let's finish on this. What's a good number tomorrow morning? 0:08:48.040 --> 0:08:49.560 On paying rows? I can tink you the estimate in 0:08:49.559 --> 0:08:51.559 our survey it's fifty four. What's a good number for 0:08:51.600 --> 0:08:51.880 this month? 0:08:52.080 --> 0:08:55.079 I think anything over fifty is fine, right because the 0:08:55.640 --> 0:08:59.560 three month rolling average is twenty nine and that's pretty awful. 0:09:00.080 --> 0:09:02.840 So anything that pulls so I think fifty is fine. 0:09:03.720 --> 0:09:06.360 That will change the probability whether we get a cut 0:09:06.480 --> 0:09:10.520 or not. Also in December, I think overall, you'd rather 0:09:10.559 --> 0:09:13.800 see a stronger economy in a better labor market, so 0:09:14.000 --> 0:09:17.520 I think that's important. I think in Nvidia, you know, 0:09:17.559 --> 0:09:19.360 we'll have to see what the earnings are, but like 0:09:19.360 --> 0:09:22.120 you said, the hyperscalers are spending, so that's. 0:09:22.400 --> 0:09:23.760 I think more knowable than not. 0:09:24.720 --> 0:09:28.360 And then ultimately, for the largest retailer on Earth, you know, 0:09:28.440 --> 0:09:32.640 half of the American population is a customer. So we'll 0:09:32.640 --> 0:09:35.319 see what half of America is doing and the. 0:09:35.280 --> 0:09:37.400 Other half things that group one of the airport. That's 0:09:37.440 --> 0:09:40.600 the US economy right now. Alicia Levin of bm myy Wath, Alicia, 0:09:40.640 --> 0:09:45.679 thank you, stay with us. More Bloomberg surveillance coming up 0:09:46.000 --> 0:09:58.080 after this. Let's turn to the labor market, data, invest design, 0:09:58.160 --> 0:10:01.319 the long delay September job support you tomorrow. Francis Donald 0:10:01.360 --> 0:10:03.400 of NBC writing, we think fourth quarter to day too 0:10:03.440 --> 0:10:07.200 will likely add more confusion than clarity. Francis joins is 0:10:07.200 --> 0:10:09.680 now for more. Francis, welcome to the program. If we're 0:10:09.679 --> 0:10:12.600 going to be more confused than clarified, what does that 0:10:12.640 --> 0:10:16.680 mean for that decision on December tenth. 0:10:15.720 --> 0:10:17.440 Well, it means the Federal Reserve is going to be 0:10:17.559 --> 0:10:20.880 more confused and clarified, and the Federal Reserve, just like 0:10:21.000 --> 0:10:23.120 markets and economists, are going to have to think a 0:10:23.200 --> 0:10:26.480 little bit further out into what Q one and Q 0:10:26.559 --> 0:10:30.000 two are going to look like. And probably that tells 0:10:30.080 --> 0:10:34.840 us that employment will become slightly more problematic, not dramatically, 0:10:35.120 --> 0:10:38.760 and inflation will continue to rise. It's a continuation of 0:10:38.800 --> 0:10:41.960 that stagflation light type of environment, and even if we 0:10:42.080 --> 0:10:43.960 have a bit of a whole here in a couple 0:10:44.000 --> 0:10:47.080 months of data looking through, our view is still the same, 0:10:47.080 --> 0:10:49.200 which is growth is going to be slightly below comfort 0:10:49.240 --> 0:10:52.000 level and inflation is going to be slightly above and 0:10:52.040 --> 0:10:54.640 that will be the situation that this federal reserve and 0:10:54.720 --> 0:10:56.920 future federal reserves will likely continue to have. 0:10:56.840 --> 0:10:57.280 To deal with. 0:10:57.400 --> 0:10:59.600 What are you looking at to confirm that view? 0:10:59.640 --> 0:11:02.400 We know that September data is going to be backward looking, yes, 0:11:02.440 --> 0:11:04.640 we get that. Tomorrow. We know that October data is 0:11:04.679 --> 0:11:06.800 going to be mundy at best, confusing at worst, and 0:11:06.840 --> 0:11:09.880 potentially might even distort the picture further because of the 0:11:09.880 --> 0:11:13.160 government shutdown, and it's unclear what CPI data we're going 0:11:13.200 --> 0:11:15.880 to be getting. So what are your benchmark rights benchmarks? 0:11:15.960 --> 0:11:16.320 Right now? 0:11:17.080 --> 0:11:19.559 You know, we definitely have enough on the job side 0:11:19.600 --> 0:11:21.920 from a variety of private sector data in order to 0:11:21.920 --> 0:11:23.720 give us a sense of the momentum. 0:11:23.720 --> 0:11:25.160 Do we know the exact. 0:11:24.840 --> 0:11:28.280 Level, No, but we know it's sort of soft, stabilizing 0:11:28.440 --> 0:11:30.719 enough to bring us towards our forecast to an unemployment 0:11:30.760 --> 0:11:33.680 rate of about four to six later into twenty twenty six, 0:11:34.280 --> 0:11:36.000 So that in and of itself we can see the 0:11:36.040 --> 0:11:38.679 big problem is on the inflation side. That's where we 0:11:38.760 --> 0:11:42.160 have really minimal perspective. We don't have the ability to 0:11:42.200 --> 0:11:44.400 see much of what happened in October, and we're probably 0:11:44.440 --> 0:11:46.200 not going to get full clarity on what that level 0:11:46.200 --> 0:11:49.240 looks like until early in January, and actually you don't 0:11:49.240 --> 0:11:52.040 even get the January data until February of that month. 0:11:52.360 --> 0:11:53.760 But I think one of the stories here is that 0:11:53.760 --> 0:11:55.880 we get so obsessed with month over month data. Is 0:11:55.880 --> 0:11:57.920 if we need to see what happened last month or 0:11:57.960 --> 0:12:00.760 three weeks ago to know the trend of the and 0:12:00.800 --> 0:12:03.960 the truth is we don't. We actually have the ability 0:12:04.000 --> 0:12:06.079 to map out over an extended period of time. That's 0:12:06.080 --> 0:12:09.240 why economists have one year or five year forecasts, because 0:12:09.240 --> 0:12:12.000 if we know the direction, we can make various assumptions. 0:12:12.160 --> 0:12:14.320 And our assumption is that we have not seen the 0:12:14.320 --> 0:12:17.360 inflationary impact of tariffs as of yet. We are still 0:12:17.440 --> 0:12:20.320 drawing down on inventories in the United States, and we're 0:12:20.400 --> 0:12:22.280 likely only going to start seeing that real pressure on 0:12:22.320 --> 0:12:24.800 inflation in early twenty twenty six and in the middle 0:12:24.840 --> 0:12:27.480 of twenty twenty six going forward, So we can maintain 0:12:27.520 --> 0:12:29.560 those assumptions even if we don't have week to week, 0:12:29.960 --> 0:12:32.080 maybe obsession over what the exact level will be. 0:12:32.480 --> 0:12:33.920 One thing that a lot of people said during the 0:12:33.920 --> 0:12:37.120 pandemic was listen to the companies. The companies have the 0:12:37.160 --> 0:12:39.880 front view in terms of how to plan their businesses. 0:12:39.960 --> 0:12:42.560 We heard from home Low's, we learned from home Depot, 0:12:42.600 --> 0:12:43.760 we heard from Target. 0:12:44.080 --> 0:12:45.440 Kind of a motley picture. 0:12:45.480 --> 0:12:48.440 Here are you getting a sense from the retailers, from 0:12:48.440 --> 0:12:52.280 the consumer facing companies of a picture that gives you 0:12:52.360 --> 0:12:54.400 more clarity heading into twenty twenty six. 0:12:55.160 --> 0:12:57.880 Absolutely, we're looking for anyone who can give us information. 0:12:57.960 --> 0:13:00.320 I might add things like the FEDS Beige Book into 0:13:00.360 --> 0:13:03.120 that story. So some of the anecdotal evidence that some 0:13:03.160 --> 0:13:05.520 of these core themes are coming through. The big thing 0:13:05.559 --> 0:13:08.920 we're seeing really now accepted in the broad based narrative 0:13:09.000 --> 0:13:11.080 is something we've been talking about for well over a 0:13:11.160 --> 0:13:13.880 year now, and that's that concept of the K shaped economy. 0:13:14.080 --> 0:13:16.000 And while I think there is still maybe a little 0:13:16.040 --> 0:13:18.280 bit of a view that that just means the halves 0:13:18.320 --> 0:13:21.640 are getting richer and the not halves are getting worse off, 0:13:21.760 --> 0:13:23.679 I don't know that we've really internalized how this is 0:13:23.760 --> 0:13:26.680 changing the dynamic of consumer spends. That we've got some 0:13:26.720 --> 0:13:29.520 consumers that are trading down and that benefits some companies, 0:13:29.640 --> 0:13:32.400 and we've got other consumers that cannot trade down at all. 0:13:32.600 --> 0:13:35.680 It even flows into conversations of, for example, potential two 0:13:35.679 --> 0:13:38.960 thousand dollars checks to American households, will that be inflationary? 0:13:39.200 --> 0:13:41.480 Not for the lower part of the K who are 0:13:41.559 --> 0:13:43.800 still really struggling with affordability crises. 0:13:44.080 --> 0:13:45.280 So we're looking for sort. 0:13:45.120 --> 0:13:47.400 Of evidence of what the shift in the consumer is 0:13:47.480 --> 0:13:49.480 really doing. And I'll add on top of that, it's 0:13:49.520 --> 0:13:52.000 not just a K shaped economy, it's also an increasingly 0:13:52.080 --> 0:13:55.480 retired consumer. What are those spending habits looking like? Because 0:13:55.520 --> 0:13:57.600 this is really a consumer that we haven't seen for 0:13:57.640 --> 0:14:00.200 many decades in the American economy in any time, type 0:14:00.280 --> 0:14:03.000 of anecdotal or hard data that we can get on 0:14:03.040 --> 0:14:05.640 it is very helpful in constructing that narrative and helping 0:14:05.640 --> 0:14:08.720 companies navigate an increasingly difficult operating environment. 0:14:08.760 --> 0:14:11.280 For Insis, I don't expect you to get deeply philosophical 0:14:11.320 --> 0:14:13.280 when I asked this question, but just to take a 0:14:13.320 --> 0:14:16.400 step back, what has gone wrong in the West? Why 0:14:16.400 --> 0:14:19.000 do people hate these economies so much? Because it's not 0:14:19.080 --> 0:14:22.040 unique to America. I stayed across Europe as well. What's 0:14:22.080 --> 0:14:24.320 gone wrong care since the pandemic and what can we 0:14:24.360 --> 0:14:24.800 get right? 0:14:25.920 --> 0:14:28.120 Well, when we look at the data, which is the 0:14:28.160 --> 0:14:31.440 economists perspective to the philosophical questions, what we see is 0:14:31.520 --> 0:14:34.320 really a break in twenty twenty three. And it comes 0:14:34.360 --> 0:14:37.920 back to this perspective that historically, while you know, the 0:14:37.960 --> 0:14:41.200 wealthy spent more than the not wealthy, most of the 0:14:41.240 --> 0:14:44.800 economy followed the same economic cycle. So if your upper 0:14:44.800 --> 0:14:47.560 incomes were doing well, so were your lower incomes. It 0:14:47.640 --> 0:14:50.120 was tides that lifted and sunk all ships at the 0:14:50.160 --> 0:14:53.440 same time. So even though maybe some had more than others, 0:14:53.520 --> 0:14:55.680 it really felt more egalitarian that we're all sort of 0:14:55.680 --> 0:14:58.440 following in the same economy. After twenty twenty three, and 0:14:58.480 --> 0:15:00.680 that's where we see the data really start to break down. 0:15:00.840 --> 0:15:02.840 That's when we see that the haves or the upper 0:15:02.880 --> 0:15:05.320 part of the k are really experiencing an entirely different 0:15:05.360 --> 0:15:08.200 economy and a different economic cycle. And this is I 0:15:08.200 --> 0:15:10.240 think the biggest question for the Federal Reserve. It's not 0:15:10.320 --> 0:15:12.560 who's going to be the chair, is that how does 0:15:12.600 --> 0:15:16.280 policy act in an environment where interest rates impact everybody 0:15:16.480 --> 0:15:19.080 at the same time, but some areas of the economy 0:15:19.120 --> 0:15:22.320 require different interest rate policy, what about things like fiscal 0:15:22.320 --> 0:15:26.040 policy has to become extraordinarily more targeted. My concern heading 0:15:26.040 --> 0:15:28.480 into twenty twenty six, if you've asked me to be philosophical, 0:15:28.600 --> 0:15:32.040 is maybe that that lowercase K becomes even a upper 0:15:32.080 --> 0:15:34.560 case K because we're going to see things like changes 0:15:34.600 --> 0:15:36.720 to the salt cap deductions that's going to benefit the 0:15:36.800 --> 0:15:39.840 upper part of the K. Financial markets doing well benefit 0:15:39.920 --> 0:15:42.800 one side, and we still haven't seen any material relief 0:15:42.800 --> 0:15:45.800 on the affordability side. So when I talk to clients 0:15:45.800 --> 0:15:47.680 about the K shape, they say, well, what solves it? 0:15:47.920 --> 0:15:49.600 And my answer to them is, you should really think 0:15:49.640 --> 0:15:52.880 about this as maybe semi permanent type of dynamic. It's 0:15:52.920 --> 0:15:55.280 not going away anytime soon. And if you're a company 0:15:55.280 --> 0:15:57.120 trying to figure out how to service your clients, you 0:15:57.160 --> 0:15:59.440 have to be really, really aware of which part of 0:15:59.480 --> 0:16:01.800 that K, or maybe we should increasingly call it a 0:16:01.840 --> 0:16:03.400 FAN you need to be looking. 0:16:03.200 --> 0:16:08.960 At stay with us. More Bloomberg surveillance coming up after this. 0:16:17.560 --> 0:16:19.480 Here's a view on Wall Street so far this morning. 0:16:19.520 --> 0:16:21.960 J Emmanuel have Evercore calling for the S and P 0:16:22.120 --> 0:16:24.760 to hit seventy seven fifty by the end of next year, 0:16:24.800 --> 0:16:27.400 writing the path to a bullish long term is often 0:16:27.440 --> 0:16:31.040 a series of volatile, uncomfortable short terms. This is one 0:16:31.040 --> 0:16:33.480 of those times. Julian joined us now for more Judink. 0:16:33.160 --> 0:16:34.120 And Mornic, Good morning. 0:16:34.160 --> 0:16:36.120 Things have changed. Why have they changed? What's behind this 0:16:36.200 --> 0:16:38.640 recent shift the way the market treats this story. 0:16:39.000 --> 0:16:44.120 It's actually the debt concerns in our view. Again, because 0:16:44.240 --> 0:16:46.640 and this is an escapable and we talked about this 0:16:46.720 --> 0:16:49.240 a number of times throughout the year. You cannot get 0:16:49.240 --> 0:16:52.400 away from the comparisons to the late nineteen nineties in 0:16:52.880 --> 0:16:56.120 many respects. And when you think about the late nineteen nineties, 0:16:56.480 --> 0:16:59.440 the problem with the bursting of the bubble, besides the 0:16:59.480 --> 0:17:02.000 fact that the FED was hiking in nineteen ninety nine, 0:17:02.440 --> 0:17:04.760 was the fact that a lot of the build out 0:17:05.359 --> 0:17:08.760 was financed by companies that were incurring debt and had 0:17:08.760 --> 0:17:12.760 no revenues on the other side. And because you've seen 0:17:13.280 --> 0:17:18.719 this accelerating debt issuance, there is the worry that that 0:17:18.960 --> 0:17:21.840 is coming back. And we would say that's actually a 0:17:21.840 --> 0:17:23.600 good rational worry. 0:17:23.760 --> 0:17:25.240 Well, and it's a worry potentially to buy. 0:17:25.280 --> 0:17:26.640 I mean, I guess that this goes to the question 0:17:26.680 --> 0:17:29.480 of why what makes you so bullish on an ongoing 0:17:29.520 --> 0:17:33.720 basis despite some of the rhyming features of this particular 0:17:33.840 --> 0:17:36.000 rally with respect to the debt component. 0:17:35.880 --> 0:17:40.600 Well so a number of things. Again, the macro backdrop 0:17:40.840 --> 0:17:43.959 is favorable. Okay, the Fed is going to be cutting. 0:17:44.200 --> 0:17:46.760 We're going to have more stimulus. Whether we get two 0:17:46.840 --> 0:17:49.520 thousand dollars in our pockets at some point next year 0:17:49.600 --> 0:17:52.120 or not, we're going to have more stimulus. And from 0:17:52.200 --> 0:17:56.879 evaluation perspective, as much as angst as there is, in fact, 0:17:57.880 --> 0:18:01.640 certainly in comparison to the late nineteen nineties, these names 0:18:01.800 --> 0:18:05.200 are I wouldn't say cheap, but they're certainly not expensive 0:18:05.240 --> 0:18:08.119 relative to history, and they're not expensive relative to their 0:18:08.160 --> 0:18:10.720 own history. And what we've seen over the last several 0:18:10.800 --> 0:18:13.160 years and a lot of them is they just mark 0:18:13.240 --> 0:18:17.720 time going sideways, so earnings catch up devaluation, and that's 0:18:17.760 --> 0:18:18.880 an ongoing process. 0:18:19.000 --> 0:18:20.240 At the start of the sell off, at the start 0:18:20.240 --> 0:18:22.320 of November, it was very much what you're talking about, 0:18:22.359 --> 0:18:24.760 a realization of the debt component. It seems like the 0:18:24.760 --> 0:18:27.520 tone has shifted over the past couple of trading sessions 0:18:27.760 --> 0:18:30.480 to not just a techt story, but to an everything story. 0:18:30.600 --> 0:18:32.959 We're raising questions first about whether the FED is going 0:18:33.000 --> 0:18:35.760 to cut next month, and second whether the US economy 0:18:35.800 --> 0:18:38.639 is strong enough to withstand some of the optimism without 0:18:38.640 --> 0:18:42.000 that ratecut. How much do you see that story continuing, 0:18:42.200 --> 0:18:45.119 The idea that maybe the weakness under the hood is 0:18:45.160 --> 0:18:47.639 part of what's pushing this story as much as the 0:18:47.640 --> 0:18:49.920 debt overlaid artificial intelligence. 0:18:49.440 --> 0:18:51.159 Well, a lot of it is the fact that we 0:18:51.200 --> 0:18:53.879 simply haven't gotten data for the last month and a half. 0:18:54.359 --> 0:18:57.600 And you know, in the beginning of it, it was okay, fine, 0:18:57.680 --> 0:19:01.960 the market, we're doing well, you know, we're the uncertainty 0:19:02.080 --> 0:19:07.760 is a positive. But then investors realize that uncertainty is 0:19:07.880 --> 0:19:09.719 uncertainty and should be discounted. 0:19:10.160 --> 0:19:10.359