1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,880 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:22,000 Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business app. 4 00:00:22,360 --> 00:00:25,680 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:25,760 --> 00:00:27,080 Speaker 1: us live on YouTube. 6 00:00:27,160 --> 00:00:27,840 Speaker 2: This is a joy. 7 00:00:28,040 --> 00:00:29,920 Speaker 3: What we did today is we're going on and getting 8 00:00:30,000 --> 00:00:32,839 Speaker 3: all of our guests who when they were undergraduates it 9 00:00:32,880 --> 00:00:36,159 Speaker 3: was twenty three below zero, like at Niagara University and 10 00:00:36,200 --> 00:00:38,560 Speaker 3: they had to fight their way from the dorms over 11 00:00:38,600 --> 00:00:42,000 Speaker 3: to class at eight oh two am for an exam. 12 00:00:42,280 --> 00:00:42,680 Speaker 2: Very true. 13 00:00:43,080 --> 00:00:45,760 Speaker 3: I was at rit I mean it was just this 14 00:00:45,800 --> 00:00:47,520 Speaker 3: is Rochester, folks, Western New York. 15 00:00:47,720 --> 00:00:49,960 Speaker 2: It's right now. It's like it's like the second. 16 00:00:49,640 --> 00:00:52,879 Speaker 4: Week of March for me and Joe equivalent Joe, I 17 00:00:52,920 --> 00:00:54,400 Speaker 4: saw I read as zero had you had a great 18 00:00:54,400 --> 00:00:56,320 Speaker 4: summary one of the banks Bank of America, I don't 19 00:00:56,320 --> 00:01:00,160 Speaker 4: know who, and basically they said, retail stepped in in 20 00:01:00,160 --> 00:01:02,040 Speaker 4: the Trumpeton in Davos. 21 00:01:02,520 --> 00:01:06,320 Speaker 3: What does it mean to investors or to our confidence 22 00:01:06,400 --> 00:01:09,560 Speaker 3: to invest in our four oh one k If it's 23 00:01:09,760 --> 00:01:13,039 Speaker 3: just retail stepping in fear and missing out. 24 00:01:12,880 --> 00:01:15,560 Speaker 5: I mean they are stepping into and they're buying the dips. 25 00:01:15,640 --> 00:01:18,520 Speaker 5: But you know, remember there's seven point seven trillion dollars 26 00:01:18,560 --> 00:01:21,160 Speaker 5: sitting on the sidelin. It's not all retail institutions. But 27 00:01:21,640 --> 00:01:25,200 Speaker 5: our clients are looking for those dips. Honestly, they're they're 28 00:01:25,200 --> 00:01:27,240 Speaker 5: waiting for them, and they're stepping in and they're they're 29 00:01:27,319 --> 00:01:29,000 Speaker 5: they're hitting the thing. 30 00:01:29,200 --> 00:01:31,120 Speaker 2: Or was it like this in the sixties or in 31 00:01:31,160 --> 00:01:32,120 Speaker 2: the ears before? 32 00:01:32,400 --> 00:01:33,840 Speaker 6: I say, I don't know if it's a new thing. 33 00:01:34,160 --> 00:01:36,880 Speaker 5: I think there's some confidence out there that longer term, 34 00:01:36,920 --> 00:01:39,840 Speaker 5: despite all the headlines, the dramas, what's happening in Washington, 35 00:01:40,200 --> 00:01:43,160 Speaker 5: they like the companies, they believe in technology. They're spreading 36 00:01:43,200 --> 00:01:45,600 Speaker 5: their risk around small caps. So I think it's a 37 00:01:45,640 --> 00:01:49,240 Speaker 5: belief that despite Washington, the real economy is in good shape. 38 00:01:49,760 --> 00:01:52,040 Speaker 2: Paul, you told me to go into small lips. I 39 00:01:52,080 --> 00:01:52,720 Speaker 2: didn't listen. 40 00:01:52,880 --> 00:01:55,480 Speaker 7: Now, So Joe, what we saw a little bit in 41 00:01:56,000 --> 00:01:59,480 Speaker 7: twenty twenty five was as well as the US equity 42 00:01:59,680 --> 00:02:02,240 Speaker 7: in that just did a lot of markets outside of 43 00:02:02,240 --> 00:02:03,520 Speaker 7: the US did a lot better. 44 00:02:03,840 --> 00:02:04,760 Speaker 6: How do you think about the. 45 00:02:04,760 --> 00:02:06,840 Speaker 7: US versus non US these days? What are your clients 46 00:02:06,840 --> 00:02:07,160 Speaker 7: telling you? 47 00:02:07,240 --> 00:02:09,080 Speaker 5: I mean, we still like the US. I think the 48 00:02:09,160 --> 00:02:11,440 Speaker 5: US had an off year. It's it's kind of like, 49 00:02:11,480 --> 00:02:14,000 Speaker 5: you know, the Boston Celtics, one of the greatest dynasties 50 00:02:14,040 --> 00:02:14,400 Speaker 5: out there. 51 00:02:14,520 --> 00:02:16,639 Speaker 6: They don't win every year, but the UC economy. 52 00:02:16,680 --> 00:02:20,680 Speaker 5: It's part of our core portfolio holdings, the equities, but 53 00:02:20,720 --> 00:02:23,720 Speaker 5: we do like overseas where there it's China, tech banks 54 00:02:23,760 --> 00:02:28,320 Speaker 5: in Europe, defense plays in Europe, and South Korea, Japan. 55 00:02:28,400 --> 00:02:32,720 Speaker 5: So the breadth of opportunities for retail institution investors has broughtened. 56 00:02:32,720 --> 00:02:34,520 Speaker 5: So it's just not about the mag seven, it's not 57 00:02:34,600 --> 00:02:35,760 Speaker 5: about the US equities. 58 00:02:35,840 --> 00:02:37,120 Speaker 6: It's broader and that's a good thing. 59 00:02:37,639 --> 00:02:39,520 Speaker 7: What are we doing in the bond market here, because again, 60 00:02:39,600 --> 00:02:42,000 Speaker 7: twenty twenty five was a solid year for folks who 61 00:02:42,520 --> 00:02:46,000 Speaker 7: held bond's high single digit total returns. How about twenty 62 00:02:46,040 --> 00:02:46,560 Speaker 7: twenty six. 63 00:02:46,600 --> 00:02:50,239 Speaker 5: Twenty twenty six. We're shorter durations. We like corporate bunds. 64 00:02:50,360 --> 00:02:53,079 Speaker 5: We think ten year yield. Our interest rate team is 65 00:02:53,120 --> 00:02:55,760 Speaker 5: looking between four twenty five and like four point fifty 66 00:02:55,840 --> 00:02:57,960 Speaker 5: four to seventy five, so a tight. 67 00:02:57,800 --> 00:02:59,160 Speaker 6: Range for the ten year yield. 68 00:03:00,160 --> 00:03:02,880 Speaker 5: You know that could change given with the Fed's next 69 00:03:02,919 --> 00:03:05,639 Speaker 5: path for cutting rates. What's happening in Japan so there's 70 00:03:05,639 --> 00:03:07,400 Speaker 5: a lot at stake there. Joe Quinnlin with. 71 00:03:07,440 --> 00:03:11,600 Speaker 3: This head in CIO market strategy at Merrill and Bank 72 00:03:11,639 --> 00:03:15,640 Speaker 3: of America Private Bank, as Alexis mentioned, your five thousand, 73 00:03:15,919 --> 00:03:19,360 Speaker 3: four thirty four up twenty one dollars. 74 00:03:19,200 --> 00:03:21,640 Speaker 2: On gold pump. Let's go to gold. 75 00:03:21,720 --> 00:03:26,320 Speaker 7: I mean that then gold ripping, silver ripping, all the 76 00:03:26,360 --> 00:03:27,600 Speaker 7: other precious metals ripping. 77 00:03:27,680 --> 00:03:29,840 Speaker 2: I mean who's buying all. 78 00:03:29,760 --> 00:03:34,840 Speaker 5: This stuff retail institutions and in particular central banks. So 79 00:03:34,920 --> 00:03:40,480 Speaker 5: you are seeing some dollar the dollar hedging out for investors. 80 00:03:40,520 --> 00:03:43,360 Speaker 5: So we think that's going to continue. Central banks are diversifying. 81 00:03:43,960 --> 00:03:45,520 Speaker 5: We're seeing a lot of clients. That's one of the 82 00:03:45,560 --> 00:03:47,880 Speaker 5: first questions I asked, how much gold should own? What 83 00:03:48,280 --> 00:03:49,240 Speaker 5: else sho I own? Silver? 84 00:03:49,280 --> 00:03:49,880 Speaker 6: And so forth? 85 00:03:50,000 --> 00:03:52,040 Speaker 5: So that's going to continue. So and if you look 86 00:03:52,080 --> 00:03:54,040 Speaker 5: at the grid, the build out that we need all 87 00:03:54,040 --> 00:03:56,320 Speaker 5: these precious metals and base metals on top of the 88 00:03:56,320 --> 00:03:59,960 Speaker 5: defense outlays, there's a lot of upside yet for commodities. 89 00:04:01,480 --> 00:04:04,040 Speaker 7: I mean, here's one of the issues. We were getting 90 00:04:04,280 --> 00:04:07,040 Speaker 7: right smack into the teeth of earning season right now, 91 00:04:07,280 --> 00:04:10,800 Speaker 7: twenty twenty five, solid solid earnings here a low double 92 00:04:10,840 --> 00:04:13,520 Speaker 7: digit is the earnings out look for twenty six enough 93 00:04:13,520 --> 00:04:15,080 Speaker 7: to support this market here. 94 00:04:15,520 --> 00:04:17,520 Speaker 6: Short answer is yes, longer answers. 95 00:04:17,640 --> 00:04:20,280 Speaker 5: Look what these companies are doing in terms of pivoting, 96 00:04:20,600 --> 00:04:26,320 Speaker 5: using artificial intelligence, robotics, rejiggering their supply chains. You've got 97 00:04:26,320 --> 00:04:29,000 Speaker 5: a good consumer behind them as well. So I think 98 00:04:29,040 --> 00:04:32,159 Speaker 5: the earnings estimates double digits again this year will be 99 00:04:32,240 --> 00:04:35,080 Speaker 5: supported by the US economy. It'll come up behind it. 100 00:04:35,160 --> 00:04:38,120 Speaker 5: So and it's really the management of companies across the 101 00:04:38,120 --> 00:04:39,880 Speaker 5: board that will help driving earnings well. 102 00:04:39,920 --> 00:04:41,760 Speaker 7: I mean, I guess a lot of that earnings growth 103 00:04:41,839 --> 00:04:45,359 Speaker 7: is coming from, not surprisingly the big tech names, the 104 00:04:45,400 --> 00:04:48,279 Speaker 7: MAGS seven if we want to use that nomenclature, or 105 00:04:48,360 --> 00:04:51,120 Speaker 7: just just big tech in general. I guess big tech 106 00:04:51,160 --> 00:04:52,719 Speaker 7: is going to lead us again in twenty six. 107 00:04:52,760 --> 00:04:53,680 Speaker 3: Or next week as well. 108 00:04:53,960 --> 00:04:55,680 Speaker 5: Yeah, or next week or this year, but not as 109 00:04:55,760 --> 00:04:58,000 Speaker 5: much as last year. Big tech earnings your every year 110 00:04:58,000 --> 00:05:00,600 Speaker 5: are coming down. But that's okay because the other parts 111 00:05:00,600 --> 00:05:01,680 Speaker 5: of the market are coming up. 112 00:05:02,120 --> 00:05:06,000 Speaker 3: I mean, I mean Julian Emmanuel this morning, he's modeling 113 00:05:06,080 --> 00:05:07,640 Speaker 3: right now and it's going to change, folks. 114 00:05:07,800 --> 00:05:08,120 Speaker 2: Ready. 115 00:05:08,480 --> 00:05:12,160 Speaker 3: Fourteen point four percent Marines growth is his model guest 116 00:05:12,240 --> 00:05:12,760 Speaker 3: this morning. 117 00:05:12,880 --> 00:05:14,039 Speaker 2: Yep, unbelievable. 118 00:05:14,120 --> 00:05:15,800 Speaker 7: So what do we do here, to the extent we 119 00:05:15,880 --> 00:05:19,279 Speaker 7: want to, I don't know, rotate out broaden trying to 120 00:05:19,279 --> 00:05:20,840 Speaker 7: find some breath in this market. 121 00:05:21,360 --> 00:05:23,280 Speaker 4: What do you say, so you're suggesting to rotate from 122 00:05:23,400 --> 00:05:25,360 Speaker 4: Nvidio and Microsoft exactly. 123 00:05:25,440 --> 00:05:29,839 Speaker 5: Maybe we've been looking at small cap for quite a while. 124 00:05:29,920 --> 00:05:34,960 Speaker 5: We like to cycicles, whether it's financials, materials, metals, industrials, 125 00:05:35,000 --> 00:05:38,279 Speaker 5: some of the old economy stocks that we were accustomed to. 126 00:05:38,600 --> 00:05:39,760 Speaker 6: They're becoming more. 127 00:05:39,640 --> 00:05:43,839 Speaker 5: Technology enablers and adopters and they're going to surprise folks 128 00:05:43,839 --> 00:05:44,359 Speaker 5: to the opsite. 129 00:05:44,400 --> 00:05:47,240 Speaker 3: Kay Nixon was president when you walked into Mary Lynch 130 00:05:47,279 --> 00:05:50,400 Speaker 3: Pierce Center and Smith Joe, let's cut to the chase here. 131 00:05:50,880 --> 00:05:53,400 Speaker 3: How long does this sagin dance keep going? I keep 132 00:05:53,480 --> 00:05:56,520 Speaker 3: I'm talking anamong was it yesterday? She's definitive And the 133 00:05:56,600 --> 00:06:00,279 Speaker 3: answer is we got poping real GDP and massive pop 134 00:06:00,240 --> 00:06:04,120 Speaker 3: penmenal GDP. Like the fourth of July, Does Joe Quinlan 135 00:06:04,200 --> 00:06:06,200 Speaker 3: go into twenty twenty seven? 136 00:06:06,720 --> 00:06:09,159 Speaker 5: Yes, Tom, Because you know, the average bull market is 137 00:06:09,160 --> 00:06:11,480 Speaker 5: typically five and a half years, so we're like not 138 00:06:11,600 --> 00:06:13,400 Speaker 5: even three and a half years into this bull market. 139 00:06:13,480 --> 00:06:16,000 Speaker 5: I see this in the twenty seven and twenty eight, right, 140 00:06:16,160 --> 00:06:18,880 Speaker 5: because we have a lot of just because just see 141 00:06:19,320 --> 00:06:22,080 Speaker 5: Tom Davis is our economy right now is expanding faster 142 00:06:22,200 --> 00:06:24,440 Speaker 5: than China's. 143 00:06:24,480 --> 00:06:26,320 Speaker 6: And so in the earnings we go back to the ball. 144 00:06:26,440 --> 00:06:27,479 Speaker 6: It's supportive that. 145 00:06:27,520 --> 00:06:31,599 Speaker 5: So we've got a lot of energy economy, the stock market, 146 00:06:31,680 --> 00:06:34,360 Speaker 5: the animal spirits that takes us into twenty security. 147 00:06:34,440 --> 00:06:36,760 Speaker 3: So I studied this at Fordham University, which focus is 148 00:06:36,800 --> 00:06:40,240 Speaker 3: expert on this in international economics. Okay, so we have 149 00:06:40,279 --> 00:06:42,640 Speaker 3: a nominal g I did this with Darter Paul the 150 00:06:42,680 --> 00:06:46,000 Speaker 3: other day. We have a nominal GDP popping like China. Yes, 151 00:06:46,080 --> 00:06:49,000 Speaker 3: but we don't have the same economics structure as well. 152 00:06:49,240 --> 00:06:54,120 Speaker 3: Do we embed a permanent inflation because we don't have 153 00:06:54,160 --> 00:06:58,239 Speaker 3: the supplied demand dynamics of a seven percent nominal GDP. 154 00:06:58,520 --> 00:07:01,080 Speaker 5: I think the inflation number of times closer to three percent 155 00:07:01,360 --> 00:07:03,279 Speaker 5: as opposed to two percent. But I don't think it 156 00:07:03,320 --> 00:07:06,039 Speaker 5: has to bust through four or five percent in that sense. 157 00:07:06,240 --> 00:07:09,320 Speaker 5: And that's the sweet spot. Nominal growth seven eight percent, 158 00:07:09,600 --> 00:07:12,200 Speaker 5: that's perfect for earnings. A lot of companies can do 159 00:07:12,240 --> 00:07:15,240 Speaker 5: a lot. It's not American move to Beijing. 160 00:07:15,920 --> 00:07:17,080 Speaker 2: I'll get one more in here. 161 00:07:17,160 --> 00:07:19,920 Speaker 7: Joe what's the discussion you have with the Maryland ba 162 00:07:19,960 --> 00:07:24,560 Speaker 7: A private bank clients about alternative investments, private equity, private credit, 163 00:07:24,640 --> 00:07:27,480 Speaker 7: hedge funds, and what's what's an allocation that you think 164 00:07:27,560 --> 00:07:30,320 Speaker 7: is reasonable for I mean, more of. 165 00:07:30,280 --> 00:07:33,679 Speaker 5: Our clients are looking at that, particularly private credit, private equity. 166 00:07:33,720 --> 00:07:35,880 Speaker 5: They like what they see the opportunities. There's a lot 167 00:07:35,880 --> 00:07:37,840 Speaker 5: of good companies that are not public good tradit, so 168 00:07:37,840 --> 00:07:40,640 Speaker 5: they want to have access. But they're moving slowly. They're 169 00:07:40,680 --> 00:07:43,920 Speaker 5: moving slowly. They still looking at bond stocks, cash, private equity. 170 00:07:44,000 --> 00:07:46,559 Speaker 5: So the conversation has started. They're putting money to work. 171 00:07:47,320 --> 00:07:50,160 Speaker 5: This is wicked and important. Paul's brilliant question here, folks, 172 00:07:50,520 --> 00:07:54,080 Speaker 5: to me, in the zeitgeist, the blooms off the roads. Everybody, 173 00:07:54,240 --> 00:07:58,040 Speaker 5: every marketing type on the fourteenth floor ninety days ago 174 00:07:58,240 --> 00:08:00,640 Speaker 5: was private credit, Give me a piece, give me an our, 175 00:08:01,000 --> 00:08:03,880 Speaker 5: you know, cheerlead none. Paul, do you suggest this a 176 00:08:03,920 --> 00:08:07,720 Speaker 5: little bit like the demand for private credit? And my 177 00:08:07,880 --> 00:08:09,520 Speaker 5: IRA is maybe not there. 178 00:08:09,680 --> 00:08:11,880 Speaker 7: I don't know, Tom. When we go visit some of 179 00:08:11,880 --> 00:08:15,720 Speaker 7: these rias out there, I'm shocked at the allocation they 180 00:08:15,720 --> 00:08:18,560 Speaker 7: out that they do have for alternatives. I would have 181 00:08:18,560 --> 00:08:20,559 Speaker 7: thought it was three percent five percent now they're talking 182 00:08:20,640 --> 00:08:22,120 Speaker 7: ten twenty five percent. 183 00:08:22,400 --> 00:08:25,040 Speaker 5: Really, it's moving higher, for sure, there's no doubt about it. 184 00:08:25,040 --> 00:08:26,960 Speaker 5: But I think it's going to stall out at say 185 00:08:27,000 --> 00:08:28,720 Speaker 5: ten to fifteen percent. It's going to just show me 186 00:08:29,120 --> 00:08:32,920 Speaker 5: it has tax ramifications, the paperwork that comes with the 187 00:08:33,000 --> 00:08:34,880 Speaker 5: tranches to tie ups and so forth. 188 00:08:35,000 --> 00:08:37,320 Speaker 6: So there's clients that really embrace it. 189 00:08:37,320 --> 00:08:40,480 Speaker 5: But in general it's moving higher, but not not close 190 00:08:40,520 --> 00:08:41,439 Speaker 5: to fifteen twenty percent. 191 00:08:41,440 --> 00:08:42,520 Speaker 2: When you talk to Brian. 192 00:08:42,320 --> 00:08:44,839 Speaker 3: Moynan when he's back fancy from Davos, what do you 193 00:08:45,480 --> 00:08:49,320 Speaker 3: say to him about the state of buying the stock market? 194 00:08:49,760 --> 00:08:53,320 Speaker 5: Well, you saw our bank earnings pretty robust last year 195 00:08:53,320 --> 00:08:55,680 Speaker 5: of the year before. We're looking at another good outlook 196 00:08:55,760 --> 00:08:58,360 Speaker 5: this year. Our Bank of American Institute is a da 197 00:08:58,600 --> 00:09:01,880 Speaker 5: data gatherer. Weren't eighty million households here in the US 198 00:09:02,000 --> 00:09:05,319 Speaker 5: Bank of America, so our data is suggesting good. Consumer 199 00:09:05,600 --> 00:09:08,920 Speaker 5: capital investment is strong. Our commercial book is strong as well, 200 00:09:09,000 --> 00:09:13,280 Speaker 5: so Brian eighty contem the CIO where I work all 201 00:09:13,280 --> 00:09:16,480 Speaker 5: pretty positive heading into twenty twenty six. It's a good 202 00:09:16,480 --> 00:09:18,480 Speaker 5: story and people don't believe it, but it's a good 203 00:09:18,480 --> 00:09:19,079 Speaker 5: story because. 204 00:09:19,440 --> 00:09:22,880 Speaker 3: On Friday night at Niagar University. What do you do 205 00:09:23,000 --> 00:09:25,480 Speaker 3: go over to the American Falls. Well, now you go 206 00:09:25,559 --> 00:09:26,480 Speaker 3: to the Freshman you. 207 00:09:26,400 --> 00:09:28,760 Speaker 5: Go to the you go to the Rathskeller, lock the 208 00:09:28,840 --> 00:09:30,360 Speaker 5: door and make sure the kegs are full. 209 00:09:30,480 --> 00:09:34,880 Speaker 3: Okay, Joe Quitman, thank you for that important strategy advice. He, 210 00:09:34,960 --> 00:09:39,679 Speaker 3: of course legendary at Merrill and Bank of America Private Bank. 211 00:09:39,920 --> 00:09:40,680 Speaker 2: Stay with us. 212 00:09:40,880 --> 00:09:44,120 Speaker 3: More from Bloomberg Surveillance coming up after this. 213 00:09:51,360 --> 00:09:54,959 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 214 00:09:55,000 --> 00:09:58,520 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on Apple, 215 00:09:58,600 --> 00:10:01,920 Speaker 1: Karplay and Android Otto with the Bloomberg Business Up, or 216 00:10:02,080 --> 00:10:03,520 Speaker 1: watch us live on YouTube. 217 00:10:03,720 --> 00:10:07,439 Speaker 3: Say She's a JP Morgan Asset management barely describes an 218 00:10:07,440 --> 00:10:11,240 Speaker 3: eclectic track record. I love the idea, folks, that you 219 00:10:11,400 --> 00:10:16,960 Speaker 3: prepare for fixed income, currency and commodities by spending seventeen 220 00:10:17,040 --> 00:10:20,200 Speaker 3: years in equities. You are a strange beast, k ere. 221 00:10:20,640 --> 00:10:23,880 Speaker 3: What is it like moving from equities over to fix 222 00:10:24,040 --> 00:10:25,640 Speaker 3: I mean, that's a rare thing. 223 00:10:25,960 --> 00:10:27,640 Speaker 8: So I'm going to take that as a compliment from you, 224 00:10:27,720 --> 00:10:29,440 Speaker 8: because a strange beest. 225 00:10:29,720 --> 00:10:32,400 Speaker 2: I mean, it's really really a different path, isn't it? 226 00:10:32,440 --> 00:10:33,640 Speaker 8: And I would have thought you would have been in 227 00:10:33,720 --> 00:10:35,920 Speaker 8: Davos this week while I was toiling away at two 228 00:10:36,000 --> 00:10:36,720 Speaker 8: seventy Park. 229 00:10:36,840 --> 00:10:39,400 Speaker 9: You're not out there wearing a fancy sun blisses. 230 00:10:39,440 --> 00:10:42,160 Speaker 3: I did it for twenty years, and you know John Wynn, 231 00:10:42,240 --> 00:10:43,920 Speaker 3: and you know we sent a whole bunch of people 232 00:10:43,960 --> 00:10:46,640 Speaker 3: to Bloomberg House in that. But you know, frankly, I 233 00:10:46,679 --> 00:10:50,040 Speaker 3: get as much done on Davos sitting here as I 234 00:10:50,080 --> 00:10:51,359 Speaker 3: do sitting at the Belvidere. 235 00:10:51,520 --> 00:10:55,240 Speaker 2: What are you nod in your head about? 236 00:10:57,000 --> 00:11:00,760 Speaker 9: So look to answer your question. I love investing. 237 00:11:00,920 --> 00:11:05,280 Speaker 8: I love thinking about what's priced into markets, and investing 238 00:11:05,360 --> 00:11:09,520 Speaker 8: is fundamentally about projecting future cash flows. So the major 239 00:11:09,559 --> 00:11:12,439 Speaker 8: difference between you know, I started as a credit research channelist, 240 00:11:12,440 --> 00:11:14,680 Speaker 8: spent three years as a credit research channelist, then spent 241 00:11:14,760 --> 00:11:17,600 Speaker 8: seventeen years and equities as an analyst and a portfolio 242 00:11:17,760 --> 00:11:20,560 Speaker 8: manager before moving back to fixed income, I guess six 243 00:11:20,600 --> 00:11:24,440 Speaker 8: seven years ago. And the real fundamental difference tom is 244 00:11:24,720 --> 00:11:28,160 Speaker 8: upside or downside, and so inequities, you get to dream 245 00:11:28,360 --> 00:11:32,600 Speaker 8: about things going up ten times, you know, sunglass makers 246 00:11:32,600 --> 00:11:35,040 Speaker 8: going up sixty percent in the week. Bonds were a 247 00:11:35,080 --> 00:11:37,760 Speaker 8: little bit more boring. We're in basis point to basis 248 00:11:37,800 --> 00:11:39,160 Speaker 8: point not losing money. 249 00:11:39,200 --> 00:11:39,960 Speaker 9: So I guess I'm a. 250 00:11:39,920 --> 00:11:42,400 Speaker 8: Little bit better about thinking about downside risk than I 251 00:11:42,440 --> 00:11:46,000 Speaker 8: am about blue sky blue sunglass scenarios. 252 00:11:46,200 --> 00:11:48,600 Speaker 7: Geopolitical risk kind of came back to the four again 253 00:11:48,640 --> 00:11:52,280 Speaker 7: this week. Okay, how do you guys think about that? 254 00:11:52,480 --> 00:11:54,800 Speaker 7: We had to deal with it in April of last year. 255 00:11:54,880 --> 00:11:57,120 Speaker 7: Came back a little bit this week. Do you guys 256 00:11:57,200 --> 00:11:58,120 Speaker 7: just try to see through that? 257 00:11:58,920 --> 00:12:01,960 Speaker 8: You know that it's a great question, and we got 258 00:12:02,000 --> 00:12:05,520 Speaker 8: to separated into two pieces. So when we're managing portfolios, 259 00:12:05,600 --> 00:12:07,720 Speaker 8: you've got to see through it and look to see 260 00:12:07,840 --> 00:12:11,199 Speaker 8: are there any opportunities we can capitalize on. You take 261 00:12:11,240 --> 00:12:13,360 Speaker 8: a step back, though, and you think about the backdrop 262 00:12:13,400 --> 00:12:17,360 Speaker 8: heading into Davos. We've got relatively low volatility of the 263 00:12:17,480 --> 00:12:21,840 Speaker 8: equity and bond markets and relatively high valuations, and so 264 00:12:22,040 --> 00:12:26,280 Speaker 8: you introduce a little bit of geopolitical intrigue and there 265 00:12:26,320 --> 00:12:29,840 Speaker 8: you've got some volatility in markets, and that tends to 266 00:12:29,880 --> 00:12:31,920 Speaker 8: pass along, you know. You think about the bond market 267 00:12:31,960 --> 00:12:35,559 Speaker 8: this week. The tenure Treasury had been kind of range 268 00:12:35,600 --> 00:12:37,920 Speaker 8: bound between three seventy five and four and a quarter 269 00:12:38,000 --> 00:12:40,480 Speaker 8: for a while, edging towards the lower end. When we 270 00:12:40,520 --> 00:12:43,600 Speaker 8: get weak employment number moving back towards the higher end, 271 00:12:43,640 --> 00:12:47,200 Speaker 8: when we get concerns about inflation, and we broke through 272 00:12:47,200 --> 00:12:49,839 Speaker 8: that this week. When the geopolitical tensions, when you look 273 00:12:49,840 --> 00:12:52,080 Speaker 8: at it breaking through the two hundred day moving average, 274 00:12:52,080 --> 00:12:54,760 Speaker 8: which was for twenty three, there's not a lot of 275 00:12:55,679 --> 00:12:59,079 Speaker 8: technical support. And when you start to worry about I 276 00:12:59,120 --> 00:13:02,959 Speaker 8: don't think that you know, invading Denmark was on I'm sorry, 277 00:13:02,960 --> 00:13:08,640 Speaker 8: invading sorry, invading ice cream Land, not Iceland or Denmark 278 00:13:09,120 --> 00:13:11,360 Speaker 8: was on anybody's binko card. So that kind of comes 279 00:13:11,400 --> 00:13:14,360 Speaker 8: in and makes people very volatile. And we've got an 280 00:13:14,400 --> 00:13:18,439 Speaker 8: absence of fundamental data until the next employment data until 281 00:13:18,440 --> 00:13:21,760 Speaker 8: February sixth, so people start to move into conspiracy theories 282 00:13:21,800 --> 00:13:24,280 Speaker 8: and concerns about geopolitical But the answer to your question 283 00:13:24,360 --> 00:13:26,960 Speaker 8: is yes, the fundamentals are what's more important. 284 00:13:27,240 --> 00:13:29,040 Speaker 9: And on the fundamental side. 285 00:13:28,800 --> 00:13:31,600 Speaker 8: What we see is a no hire, no fire market, 286 00:13:32,000 --> 00:13:36,400 Speaker 8: moderating inflation and you know, pretty pretty solid economic growth. 287 00:13:36,400 --> 00:13:38,320 Speaker 8: You saw GDP yesterday at four point four. 288 00:13:38,760 --> 00:13:41,160 Speaker 7: How much credit risk were we taking in twenty twenty six, 289 00:13:41,280 --> 00:13:44,000 Speaker 7: I mean, considered to your treasure and get three zero 290 00:13:44,000 --> 00:13:45,400 Speaker 7: point six percent. That's not bad. 291 00:13:45,800 --> 00:13:49,160 Speaker 8: Yeah, so we like high quality credit, both high quality 292 00:13:49,200 --> 00:13:52,440 Speaker 8: investment grade and high quality high yield. And you know, 293 00:13:52,480 --> 00:13:55,040 Speaker 8: as I was sitting here listening to the meteorologists, which 294 00:13:55,040 --> 00:13:56,760 Speaker 8: I think this is the first time I've ever been 295 00:13:56,800 --> 00:13:59,640 Speaker 8: preceded by a meteorologist on Bloomberg, I was trying to 296 00:13:59,640 --> 00:14:02,520 Speaker 8: pull this together and what are the themes? And Tom's 297 00:14:02,600 --> 00:14:06,200 Speaker 8: this one's for you. Really, the last major snowstorm the 298 00:14:06,200 --> 00:14:09,040 Speaker 8: New York metro area had to my recollection was nineteen 299 00:14:09,120 --> 00:14:09,760 Speaker 8: ninety six. 300 00:14:10,440 --> 00:14:11,079 Speaker 3: That was a big one. 301 00:14:11,200 --> 00:14:14,880 Speaker 8: Credit spreads in ig are back to their nineteen ninety 302 00:14:14,920 --> 00:14:18,960 Speaker 8: eight tights, so we're going back to the nineties this week. 303 00:14:19,240 --> 00:14:22,080 Speaker 3: There's a heritage at JP Morgan on gold. You made 304 00:14:22,080 --> 00:14:24,840 Speaker 3: a splash or a middle last year on a five 305 00:14:24,880 --> 00:14:28,280 Speaker 3: thousand statistic, which is happening way faster than you thought 306 00:14:28,400 --> 00:14:32,160 Speaker 3: or anybody else thought. But bring over how you think 307 00:14:32,560 --> 00:14:39,000 Speaker 3: gold should be an adult, responsible retail even institutional family 308 00:14:39,080 --> 00:14:43,000 Speaker 3: office portfolio. Do you buy broken ill properties of Australia? 309 00:14:43,280 --> 00:14:45,880 Speaker 3: Do you put krueger Rans in the bedroom of the 310 00:14:45,920 --> 00:14:48,960 Speaker 3: third house, you know, the dresser drawer. What does k 311 00:14:49,160 --> 00:14:51,640 Speaker 3: hers say you do? If you say, I guess I 312 00:14:51,720 --> 00:14:53,040 Speaker 3: need to own gold. 313 00:14:54,040 --> 00:14:56,480 Speaker 8: Look I think if you guess you need to own gold, 314 00:14:56,720 --> 00:14:58,600 Speaker 8: I think the biggest change in the market in the 315 00:14:58,680 --> 00:15:02,400 Speaker 8: last few years is that tfs have made that more accessible. 316 00:15:02,560 --> 00:15:05,560 Speaker 8: So I guess I'm an old fashioned by gold jewelry, 317 00:15:05,640 --> 00:15:08,280 Speaker 8: by gold coins, but I think for the average person 318 00:15:08,440 --> 00:15:11,040 Speaker 8: maybe it's more accessible and an ETF type structure or 319 00:15:11,080 --> 00:15:13,520 Speaker 8: something like that. But I think one of the things 320 00:15:13,560 --> 00:15:18,800 Speaker 8: that's driven the increase in prices in gold is the 321 00:15:18,880 --> 00:15:21,440 Speaker 8: creation of the new ETFs in that market and the 322 00:15:21,520 --> 00:15:25,720 Speaker 8: accessibility for gold. And as I'm sure you know, there 323 00:15:25,720 --> 00:15:27,640 Speaker 8: hasn't been the supply of gold hasn't really changed in 324 00:15:27,680 --> 00:15:29,600 Speaker 8: the demand for gold has risen, so I think that's 325 00:15:29,640 --> 00:15:30,520 Speaker 8: what's really driving it. 326 00:15:30,960 --> 00:15:33,480 Speaker 7: Twenty twenty five, we started hearing out a lot more, 327 00:15:33,480 --> 00:15:36,520 Speaker 7: at least I did, about emerging markets and the performance 328 00:15:36,560 --> 00:15:39,400 Speaker 7: there gives your view on emerging markets seas is, how 329 00:15:39,440 --> 00:15:40,640 Speaker 7: are you playing it if at all? 330 00:15:40,880 --> 00:15:42,280 Speaker 9: Yeah, A couple of things on that. 331 00:15:42,400 --> 00:15:46,000 Speaker 8: Yeah, emerging markets really rebounded in a material way last year. 332 00:15:46,800 --> 00:15:48,360 Speaker 8: I think a couple of things when you think about 333 00:15:48,400 --> 00:15:52,120 Speaker 8: the emerging markets. First off, I mean, as we've learned 334 00:15:52,120 --> 00:15:55,160 Speaker 8: over the last couple of years, develop market central banks 335 00:15:55,200 --> 00:15:58,440 Speaker 8: forgot about inflation emerging markets never had the luxury to 336 00:15:58,480 --> 00:16:01,840 Speaker 8: throw out the inflation fighting, so emerging markets were much 337 00:16:01,960 --> 00:16:07,080 Speaker 8: quicker to start hiking rates before inflation got carried away. 338 00:16:07,600 --> 00:16:11,280 Speaker 8: And increasingly they've shown more fiscal discipline as well. So 339 00:16:11,440 --> 00:16:14,800 Speaker 8: when you look at EM versus DM, you're seeing, you know, 340 00:16:14,960 --> 00:16:17,960 Speaker 8: a growth pickup in emerging markets on the order of 341 00:16:18,240 --> 00:16:21,960 Speaker 8: two and a half pike percent above develop markets, and 342 00:16:22,000 --> 00:16:24,760 Speaker 8: that's a pretty attractive opportunity. 343 00:16:25,800 --> 00:16:28,640 Speaker 7: New issuance has been crazy in the fixed income space 344 00:16:28,640 --> 00:16:31,960 Speaker 7: on municipals, investment grade, high yield, and I don't know 345 00:16:32,000 --> 00:16:33,720 Speaker 7: if I listened to the Jamie Diamonds in the one 346 00:16:33,800 --> 00:16:35,200 Speaker 7: hands of the world, it's going to be even more 347 00:16:35,240 --> 00:16:37,960 Speaker 7: so in twenty twenty six. How do you guys as 348 00:16:38,000 --> 00:16:39,760 Speaker 7: investors deal with that, because I would think that would 349 00:16:39,760 --> 00:16:42,280 Speaker 7: be a challenge or a headwind floor performance. 350 00:16:42,800 --> 00:16:45,240 Speaker 8: So it's it's really interesting if you look at the 351 00:16:45,240 --> 00:16:48,240 Speaker 8: investment grade market. We've had one hundred and seventy billion 352 00:16:48,320 --> 00:16:52,720 Speaker 8: dollars issued from jan one through this week and as 353 00:16:52,880 --> 00:16:55,160 Speaker 8: well as you probably would expect with that, and I 354 00:16:55,240 --> 00:16:57,360 Speaker 8: think the first two days of the year were records, 355 00:16:57,360 --> 00:17:00,280 Speaker 8: so market really came out in force force with a 356 00:17:00,320 --> 00:17:03,920 Speaker 8: lot of issuance. But I think it's really interesting to 357 00:17:03,960 --> 00:17:07,480 Speaker 8: think about the fact that in the face of record 358 00:17:07,520 --> 00:17:11,840 Speaker 8: or near record issuance, you've also seen a tightening in spreads. 359 00:17:12,320 --> 00:17:15,480 Speaker 8: So you know, we've heard, you know, talk this week 360 00:17:15,480 --> 00:17:18,040 Speaker 8: about the Cell America trade. Instead, what we've seen is 361 00:17:18,080 --> 00:17:22,000 Speaker 8: record demand for these types of and a tightening in spread. 362 00:17:22,119 --> 00:17:25,040 Speaker 8: So in terms of the question, and I think about 363 00:17:25,119 --> 00:17:28,960 Speaker 8: twenty six and generating investment performance for our clients, I 364 00:17:29,000 --> 00:17:33,560 Speaker 8: think there's likely to be more dispersion in performance of 365 00:17:33,600 --> 00:17:36,320 Speaker 8: different credits, and I think security selection is going to 366 00:17:36,400 --> 00:17:37,480 Speaker 8: be very important. 367 00:17:38,480 --> 00:17:41,239 Speaker 9: So I think that's that's what we are really focused on. 368 00:17:41,320 --> 00:17:45,560 Speaker 8: But I think because of the geopolitical situation this week 369 00:17:45,600 --> 00:17:49,680 Speaker 8: and the fact that some issuers are in blackout, it's 370 00:17:49,680 --> 00:17:52,080 Speaker 8: been relatively quiet this week. I think it comes back 371 00:17:52,119 --> 00:17:54,840 Speaker 8: in force over the next couple of weeks we get 372 00:17:54,840 --> 00:17:55,720 Speaker 8: sever one hundred. 373 00:17:55,480 --> 00:17:59,240 Speaker 3: Thousand job formation. You know, there's eight different opinions on 374 00:17:59,440 --> 00:18:02,800 Speaker 3: the job. Could Michael Faroli with path Baking work on 375 00:18:02,880 --> 00:18:06,960 Speaker 3: potential GDP even a decade ago, eight years ago, and 376 00:18:07,040 --> 00:18:10,480 Speaker 3: yet we've got this boom real GDP, this boom nominal GDP. 377 00:18:11,240 --> 00:18:14,320 Speaker 3: Do you say to your clients, look out past the 378 00:18:14,359 --> 00:18:17,639 Speaker 3: twenty twenty six stimulus, or do you say this is 379 00:18:17,720 --> 00:18:20,440 Speaker 3: part of the new America where you're going to have 380 00:18:20,520 --> 00:18:24,160 Speaker 3: a greater animal spirit from a buoyant nominal GDP. 381 00:18:24,840 --> 00:18:27,359 Speaker 8: You know, I worry about saying in the investment in 382 00:18:27,400 --> 00:18:30,800 Speaker 8: the investment landscape, one of the most dangerous expressions ever 383 00:18:30,960 --> 00:18:33,360 Speaker 8: is this time is different. So I worry about that. 384 00:18:33,760 --> 00:18:36,520 Speaker 8: But I do think that we have what we've seen 385 00:18:36,960 --> 00:18:40,280 Speaker 8: is an enhancement in productivity. So on the topic of 386 00:18:40,320 --> 00:18:42,280 Speaker 8: Mike Farole, he's an outstanding economist. 387 00:18:42,280 --> 00:18:43,960 Speaker 9: I've got a lot of respect for him. 388 00:18:44,200 --> 00:18:48,000 Speaker 8: And the topic of the broader economy, I mean, it 389 00:18:48,040 --> 00:18:50,639 Speaker 8: looks pretty solid across It continues to be a CA 390 00:18:50,800 --> 00:18:52,520 Speaker 8: shaped recovery consumers. 391 00:18:52,560 --> 00:18:55,240 Speaker 9: It's not equally spread across people. 392 00:18:55,960 --> 00:18:59,560 Speaker 8: But I do think we've got some fiscal stimulus this 393 00:18:59,640 --> 00:19:05,200 Speaker 8: year at an administration that is looking to enhance animal spirits. 394 00:19:05,240 --> 00:19:06,119 Speaker 9: I think you're absolutely right. 395 00:19:06,200 --> 00:19:08,400 Speaker 3: How far by I got eight ways to go here? 396 00:19:08,480 --> 00:19:13,919 Speaker 3: How far behind retail is institutional? I saw something yesterday 397 00:19:14,160 --> 00:19:16,520 Speaker 3: that once again they under your own tech into earnings. 398 00:19:16,800 --> 00:19:20,760 Speaker 3: Julian Emmanuel publishes at everquare Isi this morning a fourteen 399 00:19:20,800 --> 00:19:23,960 Speaker 3: point four percent earnings growth run rate. Maybe it's there, 400 00:19:24,240 --> 00:19:26,600 Speaker 3: maybe it's not well know in you know, two weeks, 401 00:19:26,600 --> 00:19:32,440 Speaker 3: six weeks, whatever. How does institutional catch up to this 402 00:19:32,600 --> 00:19:38,240 Speaker 3: retail success in technology? Do they need just simple they 403 00:19:38,280 --> 00:19:41,280 Speaker 3: need to buy more Apple? Don't give me this, it's 404 00:19:41,280 --> 00:19:43,280 Speaker 3: outside your giving you. 405 00:19:44,040 --> 00:19:46,159 Speaker 9: I really don't know how to answer that. But I 406 00:19:46,200 --> 00:19:46,639 Speaker 9: don't know that. 407 00:19:46,720 --> 00:19:48,760 Speaker 8: I don't know that that's I don't know whether the 408 00:19:48,800 --> 00:19:50,720 Speaker 8: premise of your question is accurate or not. I don't 409 00:19:50,760 --> 00:19:52,920 Speaker 8: know that retail is a head of institutional. I think, 410 00:19:53,240 --> 00:19:55,680 Speaker 8: you know, you look at at funded status and pensions 411 00:19:55,680 --> 00:19:57,120 Speaker 8: and things like that. I think we've had some very 412 00:19:57,160 --> 00:20:01,280 Speaker 8: successful institutional investors. So I don't know it's my answer. 413 00:20:01,560 --> 00:20:02,200 Speaker 2: How about earnings? 414 00:20:02,240 --> 00:20:05,000 Speaker 7: We're getting into the teeth of earnings next week. I 415 00:20:05,040 --> 00:20:06,440 Speaker 7: think at three hundred of the S and P five 416 00:20:06,480 --> 00:20:11,720 Speaker 7: hundred companies report. Is the earnings outlook sufficient for markets? 417 00:20:11,760 --> 00:20:13,760 Speaker 7: Do you think these days? Or do we have to 418 00:20:13,800 --> 00:20:15,600 Speaker 7: earn our way into some of these valuations. 419 00:20:16,280 --> 00:20:17,119 Speaker 9: It's a good question. 420 00:20:17,200 --> 00:20:20,520 Speaker 8: I think what you've seen so far in earning season 421 00:20:20,960 --> 00:20:24,320 Speaker 8: is that disappointing earnings have been punished severely. So I 422 00:20:24,320 --> 00:20:26,679 Speaker 8: think it depends on the valuations. I think for the 423 00:20:26,680 --> 00:20:29,880 Speaker 8: bond market. Yes, spreads are tight, but I think earnings 424 00:20:29,920 --> 00:20:32,080 Speaker 8: have been good enough and they'll continue to be good enough. 425 00:20:32,119 --> 00:20:34,320 Speaker 8: I think in the equity market, where some of the 426 00:20:34,400 --> 00:20:37,159 Speaker 8: valuations are a bit more stretched, I think companies have 427 00:20:37,200 --> 00:20:41,040 Speaker 8: to put up numbers that show that they warrant those valuations. 428 00:20:41,440 --> 00:20:43,080 Speaker 3: Thank you so much for coming back. 429 00:20:43,400 --> 00:20:44,080 Speaker 9: Thanks for having me. 430 00:20:44,200 --> 00:20:46,879 Speaker 3: It's lovely to have you here. She's with JP Morgan. 431 00:20:47,200 --> 00:20:49,919 Speaker 3: Folks can't say enough about the process at work the 432 00:20:50,000 --> 00:20:51,240 Speaker 3: kigure has done for years. 433 00:20:51,680 --> 00:20:52,400 Speaker 2: Stay with us. 434 00:20:52,640 --> 00:20:55,880 Speaker 3: More from Bloomberg's Surveillance coming up after this. 435 00:21:03,119 --> 00:21:06,720 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live 436 00:21:06,760 --> 00:21:09,919 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 437 00:21:10,000 --> 00:21:13,439 Speaker 1: applecar Play and Android Auto with the Bloomberg Business app, 438 00:21:13,600 --> 00:21:15,560 Speaker 1: or watch us live on YouTube. 439 00:21:15,640 --> 00:21:17,359 Speaker 2: She's incredibly qualified. 440 00:21:17,359 --> 00:21:22,480 Speaker 3: At Morgan Stanley, Monica Grurge joints Executive Director, Head A 441 00:21:22,560 --> 00:21:24,960 Speaker 3: US Policy at Morgan Stanley. 442 00:21:25,200 --> 00:21:27,840 Speaker 2: There's a stimulus Monica going on right now. 443 00:21:28,240 --> 00:21:30,879 Speaker 3: Alexis is going to get like six two thousand dollars 444 00:21:30,920 --> 00:21:34,240 Speaker 3: checks or whatever. The way she's playing the game, Monica, 445 00:21:34,320 --> 00:21:38,639 Speaker 3: does a stimulus go over to our infrastructure investment in America, 446 00:21:40,480 --> 00:21:41,520 Speaker 3: what we're thinking. 447 00:21:41,280 --> 00:21:43,760 Speaker 10: Right now is that it's likely to go. Actually to 448 00:21:43,800 --> 00:21:47,960 Speaker 10: the defense industry. You had Trump requests a one point 449 00:21:48,000 --> 00:21:51,600 Speaker 10: five trillion dollar defense budget. This is a fifty percent 450 00:21:51,680 --> 00:21:55,320 Speaker 10: increase over the prior year. The largest year over year 451 00:21:55,359 --> 00:21:59,280 Speaker 10: increase since the Korean War is a percent of GDP. 452 00:21:59,600 --> 00:22:02,359 Speaker 10: So while we're not saying this is wartime, it does 453 00:22:02,400 --> 00:22:07,560 Speaker 10: indicate how involved we are on so many geopolitical fronts, 454 00:22:07,920 --> 00:22:10,399 Speaker 10: and that's really where the economic multiplier is likely to 455 00:22:10,440 --> 00:22:13,280 Speaker 10: come from from the fiscal side. In twenty twenty six. 456 00:22:13,760 --> 00:22:17,479 Speaker 7: Monica, it's an election year. Yet again, what does that 457 00:22:17,520 --> 00:22:21,480 Speaker 7: typically mean for markets here? Because you know, oftentimes in 458 00:22:21,520 --> 00:22:24,720 Speaker 7: these you know, midterm elections, you get a change and 459 00:22:24,840 --> 00:22:26,960 Speaker 7: controls of various Houses of Congress. 460 00:22:27,200 --> 00:22:27,879 Speaker 2: How do you play that? 461 00:22:28,920 --> 00:22:33,800 Speaker 10: So midterm electioneers, markets tend to underperform and it's the 462 00:22:33,880 --> 00:22:37,320 Speaker 10: year after that you get the outperformance. And that's because 463 00:22:37,320 --> 00:22:41,520 Speaker 10: folks are waiting to see right that that outcome. Typically 464 00:22:41,560 --> 00:22:44,320 Speaker 10: what you'll get is if we end up with a split, 465 00:22:44,400 --> 00:22:48,040 Speaker 10: you know, gridlock Congress in twenty twenty seven, you're going 466 00:22:48,080 --> 00:22:50,359 Speaker 10: to be off to the races, right because nothing changes 467 00:22:50,400 --> 00:22:52,399 Speaker 10: and policy is stable. But right now we're in that 468 00:22:52,440 --> 00:22:55,280 Speaker 10: policy uncertainty mode. The one thing we do know we're 469 00:22:55,280 --> 00:22:58,639 Speaker 10: going to get is that focus on affordability and the 470 00:22:58,680 --> 00:23:03,080 Speaker 10: Trump administration the midterms as part of every single conversation 471 00:23:03,200 --> 00:23:05,440 Speaker 10: that they have, and one of those things is we're 472 00:23:05,480 --> 00:23:08,120 Speaker 10: going to be seeing it in housing, trying to control 473 00:23:08,240 --> 00:23:12,200 Speaker 10: energy costs as well as making other aspects of spending 474 00:23:12,200 --> 00:23:13,440 Speaker 10: in the consumer affordable. 475 00:23:13,600 --> 00:23:15,800 Speaker 3: But if I get out my rolodex, you're one of 476 00:23:15,840 --> 00:23:20,920 Speaker 3: the best people to talk to about well intentioned politicians, 477 00:23:21,000 --> 00:23:27,040 Speaker 3: quote trying to control Is there any history that politicians 478 00:23:27,080 --> 00:23:29,840 Speaker 3: can you control Paul Sweeney's electric bill? 479 00:23:32,320 --> 00:23:34,240 Speaker 10: I think it's I think it's challenging to do. But 480 00:23:34,320 --> 00:23:36,679 Speaker 10: one of the things that they're that they're looking to 481 00:23:36,920 --> 00:23:41,399 Speaker 10: essentially alleviate the burden is to essentially move from this 482 00:23:41,520 --> 00:23:45,080 Speaker 10: idea that there's an energy transition happening to an energy 483 00:23:45,119 --> 00:23:48,800 Speaker 10: addition and trying to make the public private partnership component 484 00:23:48,880 --> 00:23:52,840 Speaker 10: on the UNI side more accessible and easier for municipal 485 00:23:52,840 --> 00:23:54,879 Speaker 10: wants to come to market in the public power space, 486 00:23:55,240 --> 00:23:58,600 Speaker 10: giving the municipals and the local governments more power to 487 00:23:58,920 --> 00:24:02,080 Speaker 10: have over their energy sources. So this is a long 488 00:24:02,200 --> 00:24:04,119 Speaker 10: term play. It's not going to be overnight, and for 489 00:24:04,200 --> 00:24:07,000 Speaker 10: the midterms it's likely to be even more messaging on 490 00:24:07,240 --> 00:24:10,080 Speaker 10: energy costs versus an actual reduction. 491 00:24:11,240 --> 00:24:11,600 Speaker 2: Monica. 492 00:24:12,440 --> 00:24:14,000 Speaker 7: I guess just this week we saw some of the 493 00:24:14,080 --> 00:24:16,600 Speaker 7: volatility come back into the market that maybe we saw 494 00:24:16,680 --> 00:24:18,919 Speaker 7: early last year. So it relates to teriffs this time 495 00:24:19,000 --> 00:24:22,000 Speaker 7: associated with Greenland. It seems to have tampered down here. 496 00:24:22,040 --> 00:24:24,840 Speaker 7: But do we have to start thinking about some of 497 00:24:24,840 --> 00:24:28,960 Speaker 7: this tariff stuff and crosswinds headwinds for the markets. 498 00:24:30,160 --> 00:24:30,400 Speaker 9: Yeah. 499 00:24:30,440 --> 00:24:32,159 Speaker 10: I mean one of the things that we've you know, 500 00:24:32,359 --> 00:24:36,119 Speaker 10: long held is that the tariff environment is here to stay. 501 00:24:36,680 --> 00:24:39,680 Speaker 10: Even if we IIBA is struck down by the Supreme Court, 502 00:24:39,720 --> 00:24:42,400 Speaker 10: which we think it will be, the administration is doing 503 00:24:42,480 --> 00:24:48,240 Speaker 10: all the legwork in the background to set up certain backfills, 504 00:24:48,240 --> 00:24:50,440 Speaker 10: if you will, so Section two thirty two, Section two 505 00:24:50,440 --> 00:24:53,560 Speaker 10: A one. There's tons right of different categories of trade 506 00:24:53,640 --> 00:24:56,159 Speaker 10: law that they're exploring to try to essentially create a 507 00:24:56,200 --> 00:24:59,200 Speaker 10: patchwork to get us to that final place. The other 508 00:24:59,280 --> 00:25:02,240 Speaker 10: option that people aren't talking about with AIPA is that 509 00:25:02,280 --> 00:25:04,359 Speaker 10: we could end up in a gray zone where you 510 00:25:04,400 --> 00:25:08,200 Speaker 10: get a nuanced carve out on terrorists. So, for example, 511 00:25:08,320 --> 00:25:12,639 Speaker 10: you could say, okay, we could justify China because you 512 00:25:12,680 --> 00:25:14,960 Speaker 10: can argue that we're in an economic cold war with them, 513 00:25:15,520 --> 00:25:17,840 Speaker 10: but you can't from Malaysia. And so then that even 514 00:25:17,880 --> 00:25:20,720 Speaker 10: makes it an easier case for supporting that federal debt 515 00:25:20,720 --> 00:25:22,680 Speaker 10: and deficit in the budget if they lose. 516 00:25:23,440 --> 00:25:26,520 Speaker 3: Is Alexis going to get a tariff rebate check for 517 00:25:26,600 --> 00:25:29,000 Speaker 3: the banana she bought ninety days ago. 518 00:25:29,200 --> 00:25:31,800 Speaker 10: I'm waiting, all right, So this is going to come 519 00:25:31,840 --> 00:25:35,879 Speaker 10: full circle to my first comment about defense. So if 520 00:25:35,880 --> 00:25:39,639 Speaker 10: we're thinking about that significant amount of fiscal spending that 521 00:25:39,680 --> 00:25:43,240 Speaker 10: could be coming for these defense and geopolitical priorities, and argue, 522 00:25:43,320 --> 00:25:46,040 Speaker 10: it really lowers the likelihood that you're going to get 523 00:25:46,040 --> 00:25:48,879 Speaker 10: an appetite for a rebate check. 524 00:25:48,800 --> 00:25:50,560 Speaker 2: For you sure, for your care. 525 00:25:50,880 --> 00:25:54,760 Speaker 10: So we think that's unlikely, hopefully unlikely you're going to 526 00:25:54,760 --> 00:25:56,879 Speaker 10: get that check. But rather than going to try to 527 00:25:56,920 --> 00:26:00,600 Speaker 10: come at the affordable piece through you know, other measures. 528 00:26:00,960 --> 00:26:03,800 Speaker 7: That's kind of i mean affordabilities kind of to really 529 00:26:03,800 --> 00:26:07,440 Speaker 7: come into the top of the discussion pile here. Given 530 00:26:07,480 --> 00:26:10,080 Speaker 7: some of the elections we saw in New Jersey and 531 00:26:10,160 --> 00:26:12,440 Speaker 7: Virginia and some others, is that something that you expect 532 00:26:12,480 --> 00:26:13,880 Speaker 7: the administration to focus on? 533 00:26:14,680 --> 00:26:17,399 Speaker 10: Absolutely and one of the things that's important though, is 534 00:26:17,400 --> 00:26:20,480 Speaker 10: that even though Trump's you know, proposing say a ten 535 00:26:20,520 --> 00:26:23,080 Speaker 10: percent cap on credit card interest, it's going to take 536 00:26:23,080 --> 00:26:25,080 Speaker 10: an Act of Congress to move a lot of this along, 537 00:26:25,320 --> 00:26:28,679 Speaker 10: which is helpful for members of Congress that are running. 538 00:26:28,880 --> 00:26:29,440 Speaker 9: We don't know. 539 00:26:29,400 --> 00:26:32,440 Speaker 10: Exactly what's viable because there's still a lot of infighting 540 00:26:32,520 --> 00:26:35,080 Speaker 10: and sort of you know, setting the table for twenty 541 00:26:35,119 --> 00:26:37,280 Speaker 10: twenty six, but we're going to see more and more 542 00:26:37,320 --> 00:26:39,199 Speaker 10: of this discussion because it is going to be a 543 00:26:39,240 --> 00:26:41,040 Speaker 10: winning category on that campaign. 544 00:26:41,119 --> 00:26:44,320 Speaker 3: Trail Monica, Thank you so much, great brief, terrific brief Monica, 545 00:26:45,119 --> 00:26:47,679 Speaker 3: Morgan Stanley. Again, we protect the copyright of all of 546 00:26:47,680 --> 00:26:52,480 Speaker 3: our guests. Get her wonderful important research from Morgan Stanley. 547 00:26:52,640 --> 00:26:53,320 Speaker 2: Stay with us. 548 00:26:53,560 --> 00:26:56,800 Speaker 3: More from Bloomberg Surveillance coming up after this. 549 00:27:04,040 --> 00:27:07,639 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live 550 00:27:07,680 --> 00:27:10,840 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 551 00:27:10,920 --> 00:27:14,600 Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or 552 00:27:14,760 --> 00:27:16,200 Speaker 1: what us Live on YouTube. 553 00:27:16,320 --> 00:27:19,040 Speaker 3: She's toasting Army. She has been working on the newspapers. 554 00:27:19,080 --> 00:27:22,000 Speaker 3: Alexis Christophus. I hear the set of ideas. 555 00:27:22,119 --> 00:27:25,040 Speaker 11: Yeah, how about this for breakfast, guys? A pint of 556 00:27:25,119 --> 00:27:28,399 Speaker 11: Guinness with some complimentary donuts. Has that sound perfect? 557 00:27:28,720 --> 00:27:29,520 Speaker 9: You know who's doing it? 558 00:27:29,680 --> 00:27:30,360 Speaker 7: Who's doing it? 559 00:27:30,480 --> 00:27:33,520 Speaker 11: JJ Foleys up in Boston. You're calling out all the 560 00:27:33,560 --> 00:27:39,000 Speaker 11: Patriots fans at seven am? How about a Guinness seven am? 561 00:27:39,040 --> 00:27:40,840 Speaker 11: They want you to come on down to JJ Foley's 562 00:27:40,840 --> 00:27:42,840 Speaker 11: there in the South End because the Today Show is 563 00:27:42,840 --> 00:27:43,600 Speaker 11: going to be there there. 564 00:27:43,760 --> 00:27:46,520 Speaker 2: This is Today, This is Today my word. 565 00:27:46,840 --> 00:27:49,240 Speaker 11: So so grab your hat and your scarf and your 566 00:27:49,280 --> 00:27:52,480 Speaker 11: sign and go down there because they want to send 567 00:27:52,520 --> 00:27:55,000 Speaker 11: off their Pats to the game on Sunday against the 568 00:27:55,000 --> 00:27:57,560 Speaker 11: Denver Broncos in style. So you know you're gonna have 569 00:27:57,680 --> 00:28:01,240 Speaker 11: Pat the mascot is going to be there. Pat cheerleaders 570 00:28:01,240 --> 00:28:04,280 Speaker 11: are going to be there, and they're promising some er 571 00:28:04,440 --> 00:28:05,040 Speaker 11: some friend. 572 00:28:05,080 --> 00:28:07,800 Speaker 2: Is South End. It's you know, it's not South Boston. 573 00:28:07,840 --> 00:28:10,760 Speaker 2: It's sort of South End. But it's not Time. I mean, 574 00:28:10,800 --> 00:28:13,200 Speaker 2: I can't see the Today Show at time. English is 575 00:28:14,040 --> 00:28:16,159 Speaker 2: you know, they just you know, they just don't mix. J. J. 576 00:28:16,320 --> 00:28:17,960 Speaker 2: Foley's more upscale, so you. 577 00:28:17,920 --> 00:28:22,359 Speaker 11: Know, yeah, they're the oldest Irish pub I think in Boston. 578 00:28:22,000 --> 00:28:26,520 Speaker 7: Is that right? It looks quick, Western cool, looks cool. 579 00:28:26,520 --> 00:28:29,640 Speaker 2: There's brass flack there for three Lives. 580 00:28:29,320 --> 00:28:34,360 Speaker 7: To go exactly there you go, and Boston sure. 581 00:28:34,640 --> 00:28:36,000 Speaker 11: Absolutely, yeah, we love them. 582 00:28:36,320 --> 00:28:39,000 Speaker 2: Next, Okay, I'm going to move on. 583 00:28:39,240 --> 00:28:41,160 Speaker 11: I was going to say that I was hoping maybe 584 00:28:41,160 --> 00:28:43,240 Speaker 11: the Pats can win on the road this weekend, because 585 00:28:43,400 --> 00:28:45,840 Speaker 11: you know, Broncos QB is out with that ankle injury. 586 00:28:46,080 --> 00:28:48,360 Speaker 3: It's somebody on a map, the entire nations for the 587 00:28:48,400 --> 00:28:51,600 Speaker 3: Denver Broncos except for three zip codes in Boston. 588 00:28:51,680 --> 00:28:53,800 Speaker 11: All right, listen, if you don't want Guinness for breakfast, 589 00:28:54,280 --> 00:28:59,200 Speaker 11: how about biscuits and gravy Here in New York City. 590 00:28:59,240 --> 00:29:01,080 Speaker 11: I know that bagels are a big thing, but there's 591 00:29:01,120 --> 00:29:04,320 Speaker 11: a chain down south. I don't know if you know it, Bojangles. 592 00:29:04,840 --> 00:29:07,240 Speaker 11: So it's going to be opening up its first location 593 00:29:07,360 --> 00:29:09,520 Speaker 11: in New York City. It's going to happen in Flatbush, Brooklyn, 594 00:29:09,600 --> 00:29:13,760 Speaker 11: of course, of course, but whatever that means. And they're 595 00:29:13,800 --> 00:29:17,280 Speaker 11: hoping that biscuits can become the new bagel for folks 596 00:29:17,360 --> 00:29:20,960 Speaker 11: in New York. So the menu includes bacon, egg and cheese, sausage, 597 00:29:20,960 --> 00:29:24,040 Speaker 11: egg and cheese chicken sandwiches, but they all come here's 598 00:29:24,040 --> 00:29:26,520 Speaker 11: the clincher on buttermilk biscuits. 599 00:29:26,600 --> 00:29:29,200 Speaker 7: Yep, get a little gravy, sausage, gravy on there, We're 600 00:29:29,240 --> 00:29:29,720 Speaker 7: set to go. 601 00:29:30,040 --> 00:29:32,600 Speaker 11: Yeah, you know, breakfast is big business though, yep. I 602 00:29:32,640 --> 00:29:34,440 Speaker 11: mean it's becoming big business for a lot of these 603 00:29:34,480 --> 00:29:36,880 Speaker 11: restaurants because you've got you know, people are becoming more 604 00:29:36,920 --> 00:29:39,440 Speaker 11: selective about what they're spending their money on. You've got 605 00:29:39,520 --> 00:29:42,760 Speaker 11: higher prices, so they're you know, breakfast is emerging like. 606 00:29:42,720 --> 00:29:46,160 Speaker 7: A big absolutely absolutely, all right, that's a good one. 607 00:29:46,000 --> 00:29:48,719 Speaker 11: Speaking of prices, so we're talking about this storm, this 608 00:29:48,760 --> 00:29:51,560 Speaker 11: is all that we're talking about, and of course, unfortunately 609 00:29:51,960 --> 00:29:55,280 Speaker 11: we are seeing price gouging right. They're getting you where 610 00:29:55,280 --> 00:29:59,240 Speaker 11: it hurts, no matter if you're trying to buy you know, ice, melt, boots, 611 00:29:59,640 --> 00:30:00,520 Speaker 11: flash flights. 612 00:30:00,640 --> 00:30:02,600 Speaker 7: So this is I don't understand why people do this. 613 00:30:02,680 --> 00:30:04,960 Speaker 7: We're gonna be We're gonna be inside for a day. 614 00:30:05,440 --> 00:30:07,200 Speaker 7: I mean, if you mean you mean why we're stopping 615 00:30:07,280 --> 00:30:09,479 Speaker 7: the nuts, I mean the shop right in Bellmar, New 616 00:30:09,560 --> 00:30:11,960 Speaker 7: Jersey esterday was a war zone and we just drove 617 00:30:12,120 --> 00:30:12,560 Speaker 7: right past it. 618 00:30:13,520 --> 00:30:15,360 Speaker 11: You know, I I give into it, though I am 619 00:30:15,400 --> 00:30:17,520 Speaker 11: guilty of it. I was texting my husband just a 620 00:30:17,560 --> 00:30:20,240 Speaker 11: few minutes ago, I said, please please go get eggs, milk, bread. 621 00:30:20,400 --> 00:30:23,320 Speaker 7: You have milk and bread in my house already. 622 00:30:23,560 --> 00:30:25,280 Speaker 9: It didn't, but I want there. 623 00:30:25,200 --> 00:30:27,320 Speaker 2: Was price coaching going on, and there's not a way 624 00:30:27,360 --> 00:30:28,720 Speaker 2: to protect. For example, the. 625 00:30:28,760 --> 00:30:30,840 Speaker 11: New York Yeah, yeah, so the New York Post actually 626 00:30:30,840 --> 00:30:32,959 Speaker 11: did a little deep dive here and expose. They went 627 00:30:33,000 --> 00:30:37,120 Speaker 11: on Amazon and they checked prices. They saw women's snow 628 00:30:37,120 --> 00:30:40,880 Speaker 11: boots jumping ninety one percent in price in just three days, 629 00:30:41,480 --> 00:30:44,920 Speaker 11: space heaters, flashlights, first aid kits. There was also Petri 630 00:30:45,080 --> 00:30:49,280 Speaker 11: pet safe ice melts. That's hard to say, Yeah, climbing 631 00:30:49,320 --> 00:30:52,719 Speaker 11: forty five percent just this week. So folks, be careful 632 00:30:52,720 --> 00:30:55,520 Speaker 11: out there when you're when you're buying, because you know 633 00:30:55,560 --> 00:30:57,720 Speaker 11: you're going to be you're paying a premium at this point. 634 00:30:57,760 --> 00:31:00,000 Speaker 11: There are tom There are states though, that have laws 635 00:31:00,080 --> 00:31:03,640 Speaker 11: on the books, like New York. I think South Carolina, 636 00:31:03,680 --> 00:31:06,160 Speaker 11: North Carolina that you cannot just go out, you know, 637 00:31:06,280 --> 00:31:09,000 Speaker 11: and charge whatever you want. But you look, when you're desperate, 638 00:31:09,040 --> 00:31:09,800 Speaker 11: it's hard. 639 00:31:09,680 --> 00:31:12,080 Speaker 3: But there's not I mean, the way you rock Alexus 640 00:31:12,160 --> 00:31:15,640 Speaker 3: is bogner. I mean, there's not the kari Ski jacket 641 00:31:15,640 --> 00:31:18,600 Speaker 3: an orange and purple for two thousand dollars. Well, they're 642 00:31:18,600 --> 00:31:20,200 Speaker 3: not raising the price on that during this. 643 00:31:20,360 --> 00:31:22,680 Speaker 11: Now, well you're you're a big spender, tom so Well, 644 00:31:23,160 --> 00:31:24,240 Speaker 11: says Alexus to me. 645 00:31:25,040 --> 00:31:28,240 Speaker 2: It says a low stock. They've already got it, Ryan, 646 00:31:28,320 --> 00:31:29,680 Speaker 2: don't walk the newspapers. 647 00:31:29,680 --> 00:31:30,760 Speaker 3: Thank you so much, Alexus. 648 00:31:30,760 --> 00:31:31,080 Speaker 2: There. 649 00:31:31,120 --> 00:31:35,880 Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify, 650 00:31:36,000 --> 00:31:40,280 Speaker 1: and anywhere else you get your podcasts. Listen live each weekday, 651 00:31:40,440 --> 00:31:43,880 Speaker 1: seven to ten am Eastern on Bloomberg dot com, the 652 00:31:43,960 --> 00:31:48,000 Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You 653 00:31:48,040 --> 00:31:51,400 Speaker 1: can also watch us live every weekday on YouTube and 654 00:31:51,600 --> 00:31:53,320 Speaker 1: always on the Bloomberg terminal