Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg
Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern
Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business app.
Speaker 1: Listen on demand wherever you get your podcasts, or watch
Speaker 1: us live on YouTube.
Speaker 2: We have right now the perfect guests, given the uncertainties
Speaker 2: out there, the unknown unknowns and selected and movable know knowns.
Speaker 2: Edward your Denny joins us after decades of work with
Speaker 2: c J. Lawrence partran out of Yale University and his
Speaker 2: own yard Denny Research, and he's been absolutely brilliant. Kudos
Speaker 2: as well to Ralph and Kompora for calling the October
Speaker 2: low and I think it was twenty twenty four. Edgar Denny,
Speaker 2: thank you so much for joining Bloomberg. Thank you this morning.
Speaker 3: Ed at the.
Speaker 2: Bottom you go contrarian of your note yesterday, and I
Speaker 2: want to paint this. I said that one of the interns,
Speaker 2: excuse me, they're junior analysts. They're not interns anymore. Year
Speaker 2: Denny doesn't call him interns, the junior analysts, and ed
Speaker 2: I talked to a junior analysts and I tried to
Speaker 2: explain how odd this uncertainty is around presidential whim. How
Speaker 2: do you invest for the long term given in the
Speaker 2: buffeting of Trump tweets.
Speaker 4: Well, I think you have to tune it out. It's
Speaker 4: become more noise than signal. You know, the news changes
Speaker 4: on a daily basis, and I think the market is
Speaker 4: figured that out. You know, we had Liberation Day on
Speaker 4: April second. It was postponed on April ninth until July ninth,
Speaker 4: and now that's been postponed until August first. And the
Speaker 4: market reacted badly to that news yesterday, but not that
Speaker 4: badly all things considered. And it's not down much today
Speaker 4: because everybody's talking about this is the art of the deal,
Speaker 4: this is the way negotiations go when Trump is in charge.
Speaker 2: I will not mince words, folks. A subscription to your
Speaker 2: Denny Research is worth its weight in gold, not because
Speaker 2: of what he tells you to do, but what he
Speaker 2: tells you not to do, which just to go to
Speaker 2: cash in market time. Here's the final paragraph written yesterday.
Speaker 2: We are going to stick with our contrying position and
Speaker 2: bet that the dollar will rebound. I just have to
Speaker 2: stop it there. Talk about contrarian ed yard. Denny. You
Speaker 2: look at a dollar rebound, and do you look for
Speaker 2: a healthy earning season.
Speaker 4: Well, I'm not sure I know of anybody who's bullish
Speaker 4: on the dollar. I think everybody's not just neutral, but
Speaker 4: just outright bearish. It's as though the dollar is about
Speaker 4: to be replaced as a reserve currency by the euro
Speaker 4: and the yu one and the yen, and I just
Speaker 4: don't buy any of that. I think that there's been
Speaker 4: a kind of a reaction to Trump's haranguing of the Fed,
Speaker 4: particularly Fed charge your own Powell. I mean, that's clearly
Speaker 4: weight on the dollar, as has the trade turmoil. But
Speaker 4: as we've seen in recent months, Trump is negotiating, there's
Speaker 4: a bluster and bullying going on there. That's the nature
Speaker 4: of deal making, particularly in New York City real estate negotiations,
Speaker 4: which is where his background is. So I think the
Speaker 4: market's kind of getting used to it, and I think
Speaker 4: that people are going to realize that there's not that
Speaker 4: much positive things going on in Europe other than maybe
Speaker 4: more defense spending, and the Japanese economy doesn't look all
Speaker 4: that wonderful. Meanwhile, the US economy is resilient, We've got
Speaker 4: a huge capital market. So i'd be bullish on the
Speaker 4: dollar here and on earnings, I think it's a layup.
Speaker 4: The estimates for the second quarter have been revised down
Speaker 4: to such an extent, I think they're only expecting a
Speaker 4: three percent increase in just like the first quarter. I
Speaker 4: think we're going to get a big upside surprise.
Speaker 5: I see you've got your research assistant in the background,
Speaker 5: their ed coming into the picture.
Speaker 2: We appreciate that.
Speaker 5: That gives us confidence. Hey, I mean, Bloomberg Economics is
Speaker 5: out with some some research today saying they think, you know,
Speaker 5: at the end of the day, tariffs are going to
Speaker 5: probably level out somewhere around fifteen fifteen and a half percent,
Speaker 5: up from about two percent two point three percent today.
Speaker 5: That's got to have a negative impact on global economies.
Speaker 5: How do you price that in?
Speaker 4: Well, it's it's interesting. Global stock markets are basically around
Speaker 4: the world at an all time record high. The MSCI
Speaker 4: for the world is at an all time record high.
Speaker 4: It's pretty impressive, and stock investors obviously believe that this
Speaker 4: tariff war isn't going to last very long. I don't
Speaker 4: think it will last very long because the administration has
Speaker 4: to recognize they do recognize that the midterm elections are
Speaker 4: coming up now it seems like, well that's November of
Speaker 4: next year. But the administration can't afford to have this
Speaker 4: trade war cause a recession in coming months because that
Speaker 4: will obviously hurt them in the midterm elections, and they've
Speaker 4: got a very few majority and the House and the Senate.
Speaker 2: Edgar Denny with us. We continue with Edge your Denny
Speaker 2: for a lengthy conversation in this hour. Welcome all of
Speaker 2: you in your commute. Good morning on Serious XM Channel one, one,
Speaker 2: Apple Car Play, Android Auto. I'm seeing the dashboards of
Speaker 2: the new cars, Paul, you know, like the beast you
Speaker 2: have it. It's like it looks like a spaceship. It
Speaker 2: is all and you gus the radio. You get fourteen flavors,
Speaker 2: and thank you for picking your flavor to listen and
Speaker 2: do us. Why don't you continue with that here.
Speaker 5: Ed, given kind of what we know about, maybe we're
Speaker 5: trade tariffs and so on, and policy may kind of
Speaker 5: flow here. It's going to be a little bit more restrictive.
Speaker 5: What does the Federal Reserve do here, Ed?
Speaker 2: Nothing?
Speaker 4: That's that's been my view since the beginning of the year.
Speaker 2: None and done.
Speaker 4: When they lowered the interest rates one hundred basis points
Speaker 4: at the end of last year. I thought that made
Speaker 4: no sense. I think they were reacting to some numbers
Speaker 4: that suggested things were getting weaker. But I thought the
Speaker 4: economy was actually going to prove resilient. And I also
Speaker 4: thought that the bondial would actually go up rather than down.
Speaker 4: And that's exactly what happened. Boniill went up one hundred
Speaker 4: basis points as they cut the Fed funds rate by
Speaker 4: one hundred basis points.
Speaker 2: That's the risk they have now if.
Speaker 4: They continue, if they resume easing, And so I endorsed
Speaker 4: their current approach, which is to say that there are
Speaker 4: no rush to lower interest rates. I would actually prefer
Speaker 4: if they said that there are no rush to do anything,
Speaker 4: because by saying they are no rush to lower industrates,
Speaker 4: they are indicating they think interest rates are restrictive when
Speaker 4: it's pretty clear the we're in nirvana right now. Unemployment
Speaker 4: rate is four point one percent, inflation is a little
Speaker 4: above two percent. Why mess with success?
Speaker 2: And you're Denny on the span of your study, I mean,
Speaker 2: I think of you inhibits and his equivalency, you know,
Speaker 2: in terms of the reach back to World War two
Speaker 2: and even back before that. The market treats the focus
Speaker 2: the narrowness of growth is unusual. But is it unusual
Speaker 2: to have so few stocks giving us growthiness and our
Speaker 2: focus into those twenty thirty forty stocks.
Speaker 4: Well, it's really not unusual when you look at it
Speaker 4: on a global basis. In most stock markets, there are
Speaker 4: a handful of big cap stocks that really account for
Speaker 4: most of the market cap of those markets. And I
Speaker 4: think we're in the same same story here. But look,
Speaker 4: I think that the reality is we've had a pretty
Speaker 4: broad bull market. It's just that the Magnificent seven have
Speaker 4: done so extraordinarily well that everything looks kind of punky.
Speaker 2: But that's not the case.
Speaker 4: I mean, we've had, you know, plenty of stocks twenty
Speaker 4: thirty percent, but since we bottomed on October twenty twenty two.
Speaker 4: But you know, the Magnificent Seven obviously have outperformed them all,
Speaker 4: and I have accounted for a lot of the global outperformance. Now,
Speaker 4: they kind of stumbled at the beginning of this year
Speaker 4: and the whole deep seek controversy whether that meant that
Speaker 4: these companies are spending too much on AI infrastructure, and
Speaker 4: they came back in the first quarter and their announcements
Speaker 4: and their earnings announcements and earning's calls and said, no,
Speaker 4: we're we're going to spend this kind of money because
Speaker 4: we think there really is a tremendous business to be
Speaker 4: had with AI. So they're moving forward.
Speaker 2: Do you think the mag seven continue forward here as
Speaker 2: you see US shares gaining overall market share away from Europe? Yeah?
Speaker 2: I do, I do.
Speaker 4: I'm I have been recommending overweighting the US since twenty
Speaker 4: ten and it's worked out extremely well. But I could
Speaker 4: overstay my welcome here. Certainly during the first quarter it
Speaker 4: made more sense to overweight Europe than it made sense
Speaker 4: to overweight the United States. But I kind of view
Speaker 4: that as just a temporary situation. I think the US
Speaker 4: will continue to outperform, though it is. It's that perform
Speaker 4: for so long that it's about seventy five percent of
Speaker 4: the market cap of the global stock market, So I mean,
Speaker 4: there's a limit to how much better it can get.
Speaker 4: I suppose it's been quite a run ed.
Speaker 5: We're going to have earning start next week. Our good
Speaker 5: friends at JP Morgan will kick things off in size here.
Speaker 5: What do you expect to see from this earning cycle?
Speaker 5: What do you expect to hear from companies as a
Speaker 5: talk about the you know, the coming quarters here, because
Speaker 5: last quarter they were arguably and understandably reticent about forecasting
Speaker 5: the future.
Speaker 2: Right.
Speaker 4: Well, you know, first off, the bat will be the
Speaker 4: big banks, and among them will be JP Morgan, and
Speaker 4: undoubtedly Jamie Diamond will be pessimistic as he tends to
Speaker 4: be be nice, and then report amazing results.
Speaker 2: And I got to stop the show. Ed. I looked
Speaker 2: at the Bloomberg FA screen yesterday for JP Morgan. They're
Speaker 2: making so much money huge. They don't want people to
Speaker 2: know how much money they're making. Am I off the
Speaker 2: mark on that? I don't know.
Speaker 4: All I know is that Jamie Diamond and of some
Speaker 4: other vocal billionaires keep telling us how bad things are. Listen,
Speaker 4: and he doesn't have a noisy because, like I mean,
Speaker 4: Michael by Rich they got Michael Barbat is appalling.
Speaker 2: And your Denny doesn't get an invite to the Bezos
Speaker 2: reading in Venice and he's going after billion billionaires to
Speaker 2: close it out. I had to close it out. Torsten Slock,
Speaker 2: brilliant German economist over at poly Global Management, says the
Speaker 2: bond market and the stock market now are inconsistent This
Speaker 2: is not consistent. Either the bond market is wrong in
Speaker 2: rates must move higher due to accelerating growth, or equity
Speaker 2: markets are wrong and stocks have to move lower because
Speaker 2: growth is slowing down. A wise one.
Speaker 6: Brief doctor slock which one is it? I think everything
Speaker 6: is kind of the way it should be. We've got
Speaker 6: the bond market basically has normalized since the abnormality we
Speaker 6: had between the Great Financial Crisis and the Great Virus Crisis.
Speaker 6: I have no problems with the bond market being here
Speaker 6: at four and a half percent plus minus twenty five
Speaker 6: basis points that's been our forecast since the beginning of
Speaker 6: the year, and low and behold, we're still there. And
Speaker 6: I have no problems with the stock market making an
Speaker 6: all time record high because of the resilience of the economy.
Speaker 6: So again, I think we have to pinch ourselves. We're
Speaker 6: in nirvana where the Fed funds rate is where it
Speaker 6: should be, the bondials are where they should be, and
Speaker 6: the stock market's reflecting the optimism about what I call
Speaker 6: the Roaring twenty twenties and the technological revolution we've been
Speaker 6: in since let's say the mid nineteen sixties with IBM
Speaker 6: mainframes leading to this digital revolution.
Speaker 2: For all of you across this nation and worldwide. Paul
Speaker 2: Sweene and I are really committed to reviewing what the
Speaker 2: bulls got right during this time and this turbulence. Names
Speaker 2: like Belski, names like Laidler, names like your Denny that
Speaker 2: had been smart enough to stay on board. Paul, I'd
Speaker 2: include lyz En Saunders. Sure, yeah, not the young guy
Speaker 2: working for him. I mean Kevin, you know I mean suspect.
Speaker 2: But I seriously, folks, this is really really important. If
Speaker 2: you agree or disagree with you your Denny, listen carefully.
Speaker 2: Can't say enough about your Denny at Research Doctor, your Denny,
Speaker 2: Thank you so much for joining us this morning.
Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on
Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or
Speaker 1: watch us live on YouTube.
Speaker 3: So when Kelsey.
Speaker 2: Barrow walks in, you gotta be prepared. I mean, Bob,
Speaker 2: Michael Swanzers and we talked Greek and Latin with Kelsey.
Speaker 2: We gotta do the math. Paul watches the two s
Speaker 2: ten spread the Vanilla's difference. Youel between the ten year
Speaker 2: and the two year, we've had curve steepening where the
Speaker 2: two year was a full percentage point higher than the
Speaker 2: ten year, and we've steadily come up where right now
Speaker 2: the ten years half a percentage point higher than the
Speaker 2: two year. Two standard deviations of this curve steepening is
Speaker 2: sixty five basis points or a little over six tens
Speaker 2: of a percent. What are the ramifications to our listeners
Speaker 2: and viewers if curve steepening gets out there where it
Speaker 2: breaks through two standard deviation steepness.
Speaker 7: Yeah, so the curve has been steepening, it's been steepening
Speaker 7: from inverted levels. But when you look at the twos
Speaker 7: tens curve at fifty basis points versus history, that's still
Speaker 7: not a particularly steep yield curve. And I think that's
Speaker 7: because the FED policy setting at four and three eighths
Speaker 7: is still fairly restrictive. And so you know, we've had
Speaker 7: a modest move lower in the front end of the
Speaker 7: yield curve. We've had a modest move higher in front
Speaker 7: end in longer yields, but that normalization, it's essentially getting
Speaker 7: us back to a normal kind of environment, which now.
Speaker 2: Paul I just kind of tweet a message in here
Speaker 2: down from Washington emails in and says how far out
Speaker 2: the yield curve does the FED have influence directly?
Speaker 7: They only have influence over the very short short end.
Speaker 7: And so I think that is something that we've experienced
Speaker 7: even very recently, with the FED cutting rates at the
Speaker 7: end of twenty twenty four and the tenure yield actually
Speaker 7: moving higher in response to that as a function of
Speaker 7: I think what I would describe as those rate cuts
Speaker 7: were not necessarily cuts into a recession. Those were cuts
Speaker 7: into what I would describe as mid cycle adjustment cuts.
Speaker 7: We've been moving the policy rate towards neutral, and that's
Speaker 7: only further extended the cycle. So I think you know,
Speaker 7: the listener, and thank you for the question. I mean,
Speaker 7: it's a very key observations. It's a very key observation
Speaker 7: that you know there is no direct influence in the
Speaker 7: longer end of the curve. And let's step back and
Speaker 7: think about that structural shift that we've been seeing. There's
Speaker 7: a structural shift we've been seeing in the bond market
Speaker 7: away from the price insensitive holders, which were central banks
Speaker 7: the public sector, to price sensitive holders being the dominant
Speaker 7: driver of the market, that's the retail investor, that's the
Speaker 7: asset manager. They are taking on a larger role in
Speaker 7: the fixed income market, particularly as holders in the treasury market,
Speaker 7: and as a result, you've seen demand for higher term premium.
Speaker 8: Here how much.
Speaker 5: Credit risk does JP Morgan Asset Management want to take
Speaker 5: these days?
Speaker 7: So we're looking at companies and we're still seeing them
Speaker 7: in fairly good shape. So and I don't want to
Speaker 7: take that for granted, but when we press our credit
Speaker 7: analysts across every single sector and we ask them, and
Speaker 7: we've been asking them, what happens if the tarifrate stays
Speaker 7: at ten, what happens actually if the tarifrate goes up
Speaker 7: to twenty percent? How will your companies handle this? And
Speaker 7: what we found when we model out those scenarios is
Speaker 7: that even under a fairly stressed scenario, and I'm talking
Speaker 7: about investment grade companies right now, in a fairly stressed scenario,
Speaker 7: investment grade earnings and revenues will decline but will not
Speaker 7: turn negative under our assumptions, which just is an example
Speaker 7: of how strong the starting point is for companies these days. So, yes,
Speaker 7: I do see a lot of challenges for the economy.
Speaker 7: We're in a subtrend growth environment. I would say that
Speaker 7: with jobs data suggesting that the economy is very narrowly focused,
Speaker 7: it does suggest that there are risks that we are
Speaker 7: more susceptible to those risks. But at the same time,
Speaker 7: companies have been preparing for challenging environments for multiple years now,
Speaker 7: and that set them up to be in a fairly
Speaker 7: good position from a bondholder perspective.
Speaker 3: I look at the.
Speaker 5: End go function on the Bloomberg terminal, the Bloomberg Index browser,
Speaker 5: and fixed income in the US, US corporate high yield
Speaker 5: has been by far the best performer. So it seems
Speaker 5: like the market is still rewarding, you know, even a
Speaker 5: low investment grade.
Speaker 3: Yeah.
Speaker 7: Absolutely, So I would describe this as a carry environment.
Speaker 2: Okay.
Speaker 7: And so if you look at the current index yield
Speaker 7: on the ion screen right so you pull it up
Speaker 7: and you look at the yield to worst right now
Speaker 7: on the US High Eield Index at seven percent, I
Speaker 7: would say it is.
Speaker 5: I'm an equity.
Speaker 2: It's a massive jargon alert.
Speaker 7: Yes, ah, yeah, all right, just just your yield yield.
Speaker 2: To worst yield is afterthought, didn't clean the dishwash?
Speaker 7: What's yield worst regardless of which one of the yields
Speaker 7: you look at, one that adjusts for callable risk, one
Speaker 7: that doesn't. If you look at the yields, seven seven
Speaker 7: percent is essentially where you're at if we just stay here, right,
Speaker 7: spreads don't Why didn't too much? We don't narrow too
Speaker 7: much from your ear here you have treasury yields around
Speaker 7: these levels. You should expect your returns over the next
Speaker 7: twelve months in a high yield index to look similar
Speaker 7: to the to the current yield. And that's essentially where
Speaker 7: we're tracking today. When I look at returns now, there
Speaker 7: is one area where you've you've done actually even better,
Speaker 7: which is just to have an eye towards the global market.
Speaker 7: Is some of these global fixed income indices have done
Speaker 7: even better, and that's been a function of the weaker US.
Speaker 2: We got to get this into the next minute then,
Speaker 2: But then, how does JP Morgan suggest you participate in
Speaker 2: internationally yield given a modeled week dollar. I mean, as
Speaker 2: Casmin looking for.
Speaker 7: A week dollar, we're looking for a week dollar. We've
Speaker 7: been expecting a week dollar. It's been a really good
Speaker 7: call of our currency team at a time where at
Speaker 7: the beginning of the year was actually quite.
Speaker 2: Out of the Ferraris as well.
Speaker 7: They get it, and so you know, I think that
Speaker 7: what we do want to differentiate is the difference between
Speaker 7: sell America and a week dollar. So you can have
Speaker 7: a world and I think we are in a world
Speaker 7: where there is demand for fixed income assets in the US.
Speaker 7: We're seeing it in the strong end user demand for
Speaker 7: treasury auctions, We're seeing it in the strong demand for
Speaker 7: investment grade credit. But you can also have a week dollar.
Speaker 7: And that is a function we've seen of foreign investors
Speaker 7: keeping their US fixed income assets but hedging them back
Speaker 7: to their little currencies.
Speaker 2: Brilliantly explain Kenny's one done bond. I get thirty seconds.
Speaker 2: If Apple came out today with a I'm miss making
Speaker 2: the number of folks, I'm an amateur, a four billion
Speaker 2: dollar bond offering of tranchees or whatever you call it,
Speaker 2: don't they just make one phone call to the fidel,
Speaker 2: to a Fidelity or JP Morgan. I mean, the demand
Speaker 2: for that would be insatiable, right.
Speaker 7: I think we've seen that the demand is very strong
Speaker 7: and typically right when you have periods of volatility like
Speaker 7: we've had so far this year. Cool one, yes, but
Speaker 7: you also see supply step back, you know, come to
Speaker 7: go to the sidelines. We haven't seen that. You know,
Speaker 7: supply has actually continue to chug along. People are out
Speaker 7: there issuing and that's because you know they see the
Speaker 7: demand side.
Speaker 2: Yes, Paul, this is just the strangest s mark. I mean,
Speaker 2: I mean five firms could buy in all of Meg's
Speaker 2: seven debt and like literally not exaggerating one phone call.
Speaker 3: Sorry.
Speaker 5: Rob Shifman has a job.
Speaker 2: It Bloomberg Intelligence Robert Shipping Publishing.
Speaker 4: There.
Speaker 2: I have to look at that. Kelsey Barrow brilliant. That
Speaker 2: was really, really quite good.
Speaker 8: She is with J. B.
Speaker 2: Morgan. She put the flags on the new tower for
Speaker 2: fourth of July.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Apple Corplay and Android
Speaker 1: Auto with the Bloomberg Business app. You can also listen
Speaker 1: live on Amazon Alexa from our flagship New York station.
Speaker 1: Just say Alexa play Bloomberg eleven thirty.
Speaker 2: The Governor of Connecticut joins us. Right now. Governor is
Speaker 2: so serious, I think I just really want to lean
Speaker 2: on this, which is the future of your Democratic party.
Speaker 2: When you grew up and you grew up advantaged there
Speaker 2: was a Republican Long Island and Republican Connecticut and such.
Speaker 2: Do the Democrats have the gift to give up their
Speaker 2: majority because of a weakness of Democratic Party leadership? Could
Speaker 2: that happen?
Speaker 8: I don't think so. I think there's some seasonality back
Speaker 8: and forth when it comes to a politics. Obviously, Donald
Speaker 8: Trump had a big win and he got his budget
Speaker 8: bill passed. I think within a year you'll see the
Speaker 8: effects of that budget bill, and you'll see a Democrat saying,
Speaker 8: you know, this is really hammering a working families in
Speaker 8: the middle class, and you'll see the political tides twist
Speaker 8: and churn.
Speaker 2: New York City has turned upside down. I look in
Speaker 2: the Connecticut Mirror, a CT Mirror conversation with you, you
Speaker 2: say that mister mucdonnie ran a hell of a rasist
Speaker 2: folks as the arch progressive running for mayor of New
Speaker 2: York after a victory over Governor Cuomo and others. How
Speaker 2: should centrist Democrats respond to a generational change?
Speaker 8: Look, I think that he did run a bright campaign,
Speaker 8: and we've got a lot to learn from, especially guys
Speaker 8: my age, like what he did in terms of social media.
Speaker 8: Young people hadn't voted for a long time. They don't
Speaker 8: often vote in primaries, and they often don't vote in
Speaker 8: the cities, and they sure as head voted, So credit
Speaker 8: or credits do. Look, he and I have very different styles,
Speaker 8: but you know, at the end of the day, I've
Speaker 8: got a universal pre k, a down payment there, pre
Speaker 8: natal education, doing everything we can to they get easier
Speaker 8: for people to get ahead in life and make life
Speaker 8: a little more affordable. So there we have a lot
Speaker 8: in common, but we have.
Speaker 5: Different styles governor. President Trump obviously has a great skill
Speaker 5: at just you know, commanding the narrative here and just
Speaker 5: kind of taking for in terms of other folks, maybe
Speaker 5: taking a lot of the oxygen out of the room.
Speaker 5: What are the Democrats need to do from a messaging
Speaker 5: standpoint heading into the midterm elections.
Speaker 8: Look, he's got a very loud voice, sort of hurky
Speaker 8: jerky every day it changes, but he dominates the landscape.
Speaker 8: Very tough for you know, me as a governor when
Speaker 8: you just don't don't know what the budget's going to
Speaker 8: be one day to the that's what the tariffs are
Speaker 8: going to be. It's tough to invest and make long
Speaker 8: term commitments there. I think the Democrats has just got
Speaker 8: to be clear as day. We're fighting for the middle class.
Speaker 8: We believe in them bottom up. We believe in this
Speaker 8: state of Connecticut. We've had more new small business startups
Speaker 8: than ever before. Those are a lot of small businesses
Speaker 8: starting up on Awaley Avenue, New Haven. And I think
Speaker 8: that's how you grow wealth, and I think that's how
Speaker 8: you get our cities back to life, and I think
Speaker 8: that's how you fight for working families in the middle class.
Speaker 5: Governor, it seems like for both parties, perhaps the extreme
Speaker 5: right the extreme left seems to be driving the politics
Speaker 5: for each of those parties. Is there even a center
Speaker 5: left for either party or both parties?
Speaker 8: It's getting smaller because I'm there, and yeah, you're right,
Speaker 8: I think. You know, after Donald Trump's election, the Republicans
Speaker 8: are a.
Speaker 2: Lot less likely to want to talk to me.
Speaker 8: You know, I always have a big table in an
Speaker 8: open door and a lot of people look at me
Speaker 8: and say that it looks a little like Republican. And
Speaker 8: the Democrats are sort of really fighting Trump every day,
Speaker 8: and if you don't go after them on a daily basis,
Speaker 8: you're sort of being weak in terms of your principles.
Speaker 8: So you're right, the middles getting very small, and that's
Speaker 8: not a good.
Speaker 2: Name for America, and that Lamont with us from Connecticut,
Speaker 2: we continue. We welcome all of you across the nation
Speaker 2: and certainly in the Bloomberg eleventh three to zero area.
Speaker 2: Here an interesting conversation of Republicans and Democrats. In the
Speaker 2: summer of twenty twenty five, Governor Lamont Bloomberg wrote this
Speaker 2: up on Paul Tudor Jones noted hedgehund dude exiting to
Speaker 2: Palm Beach, Florida. There's a fear in the Tri state area,
Speaker 2: and frankly there's a fear in Boston and Washington that
Speaker 2: with adverse policy that migration will continue. How have you
Speaker 2: tried to respect bond to fancy people in Greenwich? Is
Speaker 2: a climb on their Hinckley picnic boat in a heads South.
Speaker 2: How have you responded to that threat?
Speaker 8: Tom? I think twofold one we were raising taxes on
Speaker 8: an every other year basis, going back at ten years
Speaker 8: in this state. That hasn't happened on my watch. We
Speaker 8: haven't raised tax rates. I think that gives people some
Speaker 8: comfort that we're getting our fiscal house in order and
Speaker 8: we're not going to balance the budget. By raising taxes
Speaker 8: and also tell people, look, this is the state, the
Speaker 8: tower where you grew up. This is where your children
Speaker 8: or your grandchildren are. You can watch them, you know,
Speaker 8: on zoom from Palm Beach. You can be right here
Speaker 8: with them every day. And it's something to be said
Speaker 8: for making sure this is a place where you can
Speaker 8: stay in the community where you grew up and where
Speaker 8: your family is.
Speaker 5: So governor what's the what do you think the future
Speaker 5: is of this Democratic Party here? How does the Democratic
Speaker 5: Party regain some momentum, any momentum here, because it just
Speaker 5: feels like it has absolutely zero momentum at this point.
Speaker 8: I think you're already seeing it happen. I think you
Speaker 8: know the the Trump you know budget, it's going to
Speaker 8: really impact middle class families. You're gonna see what it
Speaker 8: means in terms of folks getting thrown off of healthcare.
Speaker 2: You're gonna see what it means in terms.
Speaker 8: Of folks and not getting the food benefits. We have
Speaker 8: fifty million dollars of cuts. Just the portal turned off
Speaker 8: three days ago for after school programs. I think this
Speaker 8: is going to impact middle class families. So right now
Speaker 8: it's all beaches and grain and tax cuts, But when
Speaker 8: do you see how this impacts your everyday life?
Speaker 2: Governor? One final question, We have to go back to
Speaker 2: our discussion of a few days ago, heated debate within
Speaker 2: Bloomberg Surveillance and a huge nationwide response. Governor Lamont is
Speaker 2: a traditionalist of old money in America. Do you go
Speaker 2: for the cold Main lobster role or are you loyalty
Speaker 2: the warm Connecticut lobster role.
Speaker 8: You mentioned the word Connecticut. That makes it easy for me.
Speaker 8: But you know the lobsters are fleeing Maine too. They're
Speaker 8: going north to Canada. So you got to watch out.
Speaker 8: The times are turning.
Speaker 2: We'll need a new post. Go ahead, well, we'll need
Speaker 2: a new policy on the Governor. We're out of time.
Speaker 2: Thank you so much for joining us. I believe that
Speaker 2: was a voice for the warm role. That you were
Speaker 2: right sure.
Speaker 3: I mean you know either.
Speaker 2: Exactly, you take both of one of each. Governor, Thank
Speaker 2: you so much for Connecticut there and the future of
Speaker 2: his Democratic Party.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Apple Corplay and Android
Speaker 1: Auto with the Bloomberg Business app. You can also watch
Speaker 1: us live every weekday on YouTube and always on the
Speaker 1: Bloomberg terminal.
Speaker 2: Red Case joins USUS. Now we always have a huge
Speaker 2: response when he's on studying under Robert Schuller at Yale
Speaker 2: at doctor cases with Middelburg communities. They do residential multi
Speaker 2: family real estate in Virginia really into the pulse of
Speaker 2: the market within the zeitgeist. Brad case, what do we
Speaker 2: get most wrong about America's housing market?
Speaker 9: Well, I think that there are a lot of ways
Speaker 9: in which we could work to increase the supply of housing,
Speaker 9: both owner occupied housing and rental housing. And we see
Speaker 9: the importance of that with how expensive houses have become.
Speaker 9: It's really really very difficult for somebody to purchase a
Speaker 9: house nowadays, and especially when they're concerned that the prices
Speaker 9: of housing may go down in the future. So there's
Speaker 9: a lot that governments at all levels can do to
Speaker 9: make it easier to build housing. What we're seeing is
Speaker 9: that there's a tremendous increase into de manned for housing,
Speaker 9: and we're just not seeing an increase in the supply
Speaker 9: of housing. In fact, it's been going down.
Speaker 2: So what's your prescription for New York City is one example?
Speaker 9: Well, you know, New York City is a very special case.
Speaker 9: We focus, in fact, not just in Virginia, but the
Speaker 9: entire mid Atlantic and southeastern part of the country because
Speaker 9: there's such growth in population.
Speaker 3: And employment in that part of the country.
Speaker 9: And that's not a story that's really going to be
Speaker 9: told about New York City or some of the other older,
Speaker 9: very very pleasant cities in the Northeast and the West.
Speaker 3: They're just not growth centers.
Speaker 9: So the prescription for a place like New York is
Speaker 9: entirely different from the prescription for a place that people
Speaker 9: are trying to move to.
Speaker 5: Brad, why is there a supply shortage? I mean, with
Speaker 5: the nail gun. If nothing else, houses go up in
Speaker 5: fifteen minutes these days. Why aren't there more houses out there?
Speaker 5: Why aren't there more housing out there?
Speaker 9: Well, you know, it has to do with providing the
Speaker 9: permission to build housing and the infrastructure. And so what
Speaker 9: we've seen is that is that there are lots of
Speaker 9: places where the people who currently own houses don't want
Speaker 9: to see any more housing because if there's a lack
Speaker 9: of housing around them, that drives up the price of
Speaker 9: their own house. So the problem is that you've got
Speaker 9: a lot of people who need housing who are younger,
Speaker 9: who want to rent a place, want to buy a place,
Speaker 9: but they're being shot out of the market by other
Speaker 9: people whose goal is to increase the.
Speaker 3: Value of their asset.
Speaker 9: So there's a lot of opposition to construction of new
Speaker 9: housing everywhere in the country.
Speaker 3: Boy, I don't know.
Speaker 5: It just seems like I just see these residential communities
Speaker 5: going up all over the place, and yet I still,
Speaker 5: you know, four or five six years in we still
Speaker 5: hear about housing shortages here. How did we get here, Brad?
Speaker 5: In terms of housing shortage, this wasn't a thing I
Speaker 5: don't know, five six, seven, eight years ago. I just
Speaker 5: don't remember ever hearing about it.
Speaker 9: Well, no, I think it's it's actually something that's been
Speaker 9: going on for fifty years. We back into the early
Speaker 9: nineteen seventies, we were building quite a bit of housing,
Speaker 9: and there was a tremendous increase in the number of
Speaker 9: households looking for housing, especially after World War Two. What
Speaker 9: people don't realize is that over the last ten years
Speaker 9: we've had an even bigger increase in the demand for housing.
Speaker 9: But we haven't gone back to those days in the
Speaker 9: sixties and seventies when lots of housing was just being built.
Speaker 2: Have we not gone back to the sixties and seventies
Speaker 2: because the land is not available clearly in the greater
Speaker 2: Tri State area. That's true, it's just maybe up in
Speaker 2: Boston as well. Is it a land issue? Is it
Speaker 2: foundationally about land?
Speaker 3: It's not really about land.
Speaker 9: It is you know, in a place like New York
Speaker 9: or Boston, there's a very strong public transportation system that
Speaker 9: makes suburban areas available to people, so you can put
Speaker 9: housing there and people can still get the jobs. In
Speaker 9: lots of places, they haven't yet built the same level
Speaker 9: of transportation infrastructure, which makes it harder to move out
Speaker 9: farther into the too where the land is available.
Speaker 2: For your community. Across the nation, this is one of
Speaker 2: the chief econdom in history. At Fannie May and with
Speaker 2: Schiller at Yale University. Bread case is with US Middelburg Communities.
Speaker 2: Bread Every weekend there's an article, OMG, the Cell's gonna die.
Speaker 2: Housing prices are down, rents are down. Do you buy it?
Speaker 2: Is there a permanence to that debacle?
Speaker 8: Oh?
Speaker 3: Not at all. In fact, what we've seen.
Speaker 9: What we saw was a tremendous increase in demand for
Speaker 9: housing in the Southeast and in mid Atlantic, especially because
Speaker 9: of the COVID shutdown. But what that did was it
Speaker 9: stimulated a big supply response, and so we had a
Speaker 9: supply surge a few years ago.
Speaker 3: But that supply surge has really entirely ended.
Speaker 9: You know, the new construction of housing, especially in our
Speaker 9: part of the country, has come to a rashing halt,
Speaker 9: and so we very recently, very very quickly moved into
Speaker 9: an undersupply housing shortage situation, even in the part of
Speaker 9: the country where housing is easiest to develop.
Speaker 5: So, Brad, I'm looking at the thirty year fixed mortgage
Speaker 5: from the Mortgage Bankers Association six point seventy nine percent.
Speaker 5: I got to feel like that's kind of got to
Speaker 5: be the new normal. If so, when do buyers and
Speaker 5: sellers kind of accept that.
Speaker 3: As a new normal.
Speaker 5: It doesn't seem like that's the case yet.
Speaker 9: Well, there's no real pressure for sellers to accept the
Speaker 9: lower prices that they would realistically be able to get,
Speaker 9: and the problem for buyers is that they don't want
Speaker 9: to buy into a situation where they will be the
Speaker 9: ones accepting the lower prices.
Speaker 3: I think you're right.
Speaker 9: I don't think there's any reason to think that mortgage
Speaker 9: interest rates will go down anytime soon, even if shorter
Speaker 9: term interest rates go down. The Federal Reserve has indicated
Speaker 9: that it wants to re use what they used to
Speaker 9: what they called the quantitative easing, and that will increase
Speaker 9: mortgage rates.
Speaker 2: So and so many parts of the country. Bread case
Speaker 2: is renting better than buying.
Speaker 9: Well, that is usually the case, and the reason is
Speaker 9: that people don't realize when they buy a house they
Speaker 9: have to give up a huge chunk of money the
Speaker 9: down payment, and if instead they put that money into
Speaker 9: productive investments, especially in the stock market, then in the
Speaker 9: long run they would probably build more wealth. So there
Speaker 9: is this myth that the way to build wealth is
Speaker 9: to buy a house, and the reality is that usually
Speaker 9: that's not the case. If you're able to buy a
Speaker 9: house when houses are cheap and the stock market is overvalued,
Speaker 9: then great, take your money out of the stock market
Speaker 9: and buy a house.
Speaker 3: That's not our situation right now.
Speaker 9: Right now, houses are very expensive and if houses crashed,
Speaker 9: then you'll probably see the stock market crash at the
Speaker 9: same time. So generally speaking, to build wealth, you're better
Speaker 9: off renting. Now, there are other reasons to buy, and
Speaker 9: some people want to buy just so they can say
Speaker 9: their homeowners. That's not the same as building wealth.
Speaker 2: Brad Case, thank you so much. I really can't say
Speaker 2: enough about it. How you get John?
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Apple Corplay and Android
Speaker 1: Auto with the Bloomberg Business App. You can also listen
Speaker 1: live on Amazon Alexa from our flagship New York station,
Speaker 1: Just Say Alexa Play Bloomberg eleven thirty.
Speaker 2: Lisa Matale live and in color digitally perfect on YouTube.
Speaker 2: What do you got today? Lisa? All right?
Speaker 10: Do either of you pay for TSA TSA pre check? Yes,
Speaker 10: you do pay for it and clear and clear clear
Speaker 10: which I'm clear.
Speaker 2: I'm mixed, okay, clear sometimes good.
Speaker 10: So the reason for the TSA pre check the big
Speaker 10: jotto it is what the shoes?
Speaker 8: Right?
Speaker 5: You can leave the shoes.
Speaker 10: On if you have the TSA pre check, Well, pretty
Speaker 10: soon everybody could be get that perk, not just the
Speaker 10: ones who pay for it. Ruses are saying the TSA
Speaker 10: is really considering to make these policy changes. They want
Speaker 10: to kind of speed up the security screening times as
Speaker 10: you go through. It's been rough for nearly two decades.
Speaker 8: I mean you think about it.
Speaker 10: Eleven yeah, two thousand, the shoe bomber. You know, they
Speaker 10: failed attempt, so that's kind of what sparked it. Critics
Speaker 10: are saying, you know what, it does nothing for security.
Speaker 10: It's this whole theatrical thing. So the TSA has not
Speaker 10: made it official. These are just you know, sources saying.
Speaker 10: But other airports, I mean you think about you know,
Speaker 10: across the European Union, d Buy, Singapore, they all allow
Speaker 10: you to keep your shoes on. So come up to date.
Speaker 5: I understand, I understand how it kind of came about,
Speaker 5: but it's come on, it's all the technology today.
Speaker 2: Yeah, you're sitting at Zurich and they're like laughing at us.
Speaker 2: There's no other way to put it.
Speaker 3: I know.
Speaker 10: It is a little and then you know, for the
Speaker 10: women you have, were your shoes and you got to
Speaker 10: carry the socks in your bag because you don't want
Speaker 10: to wear barefoot on the floor. I mean it's it's
Speaker 10: it can be a little bit stressful.
Speaker 5: Okay, good point. That's a good one.
Speaker 3: That's a good one.
Speaker 10: It can it can't. Okay, I have this next one. Yes,
Speaker 10: if you're wearing the fancy shoes.
Speaker 5: Of course, what you always do, you know.
Speaker 10: Okay, next story. I've been kind of toying with the
Speaker 10: idea of getting a tattoo. That's a story for another day.
Speaker 3: I saw this.
Speaker 10: Old street journal. It says that there is an AI
Speaker 10: driven tattoo robot that is taking appointments. Okay. It is
Speaker 10: an awesome Texas space startup. It's called black Dot.
Speaker 8: Okay.
Speaker 10: They raise about seven million dollars for this company. But
Speaker 10: here in New York City they are installing their first one.
Speaker 10: It's taking appointments now. It's at this place called Bang
Speaker 10: Bang in New York City. So the way it works,
Speaker 10: just to give you a brief rundown, the human it
Speaker 10: starts it okay, but then the arms scan this.
Speaker 7: They have this like.
Speaker 10: Extended triple pointed needle. The thing about it is that
Speaker 10: it's supposed to be less. It hurts less because it
Speaker 10: doesn't go as deep into the skinry.
Speaker 2: What tattoo with miss Matato slut.
Speaker 10: I'm thinking about it and maybe a little risk thing.
Speaker 10: I don't know. It could be a mother daughter kind
Speaker 10: of you know, bonding moment. I know, mother of the U.
Speaker 5: Sorry, and I can neither confirm nor deny that I
Speaker 5: have a tattoo.
Speaker 3: Oh so we're just leaving at.
Speaker 10: Then oh Swaine coming through, all right, but it's an interest.
Speaker 10: But the thing that there's concerns from tattoo artists who
Speaker 10: are like, wait a minute, this is my job.
Speaker 5: What are these robots coming in?
Speaker 10: So there's that side of the story too. Okay, I
Speaker 10: want to end with this one. This is in the
Speaker 10: Washington Post. This is a great story. The sixty seven
Speaker 10: year old historic U Street diner. It's anonymous right Washington's
Speaker 10: cultural political landscape. We're talking about Ben's Chili Bowl. Started
Speaker 10: with the Ali family back in nineteen fifty eight, still
Speaker 10: family owned operated. But the thing is it's going to
Speaker 10: be shut down for a while. They're in need of
Speaker 10: these big renovations HVC, you know, HVAC, the roof, the
Speaker 10: electric panels, plumbing, and they're going to be shut down
Speaker 10: for several months. It's the longest stretch ever for this
Speaker 10: restaurant before. So they're hoping that when the updates are
Speaker 10: done that it doesn't change the interior feel of it
Speaker 10: that people are used to. We kind of touched upon
Speaker 10: this with with what I think it was a cracker barrel.
Speaker 10: How they wanted to keep that, you know, same kind
Speaker 10: of inside feel that people are used to, but they're
Speaker 10: hoping that it doesn't change this for the restaurant.
Speaker 2: It is magical. Have they shut down yet?
Speaker 10: I don't think you've been July fourteenth.
Speaker 2: Anybody in Washington has never been U Street Northwest. You
Speaker 2: gotta go. It's it is absolutely magical. Lisa Matteo on
Speaker 2: the way to the tattoo Parla of this after thank
Speaker 2: you so much, greatly appreciate that it's ourly speakers with
Speaker 2: Lisa Matea.
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,
Speaker 1: seven to ten am Eastern on Bloomberg dot com, the
Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You
Speaker 1: can also watch us live every weekday on YouTube and
Speaker 1: always on the Bloomberg terminal