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Speaker 2: This is a joy.
Speaker 3: What we did today is we're going on and getting
Speaker 3: all of our guests who when they were undergraduates it
Speaker 3: was twenty three below zero, like at Niagara University and
Speaker 3: they had to fight their way from the dorms over
Speaker 3: to class at eight oh two am for an exam.
Speaker 2: Very true.
Speaker 3: I was at rit I mean it was just this
Speaker 3: is Rochester, folks, Western New York.
Speaker 2: It's right now. It's like it's like the second.
Speaker 4: Week of March for me and Joe equivalent Joe, I
Speaker 4: saw I read as zero had you had a great
Speaker 4: summary one of the banks Bank of America, I don't
Speaker 4: know who, and basically they said, retail stepped in in
Speaker 4: the Trumpeton in Davos.
Speaker 3: What does it mean to investors or to our confidence
Speaker 3: to invest in our four oh one k If it's
Speaker 3: just retail stepping in fear and missing out.
Speaker 5: I mean they are stepping into and they're buying the dips.
Speaker 5: But you know, remember there's seven point seven trillion dollars
Speaker 5: sitting on the sidelin. It's not all retail institutions. But
Speaker 5: our clients are looking for those dips. Honestly, they're they're
Speaker 5: waiting for them, and they're stepping in and they're they're
Speaker 5: they're hitting the thing.
Speaker 2: Or was it like this in the sixties or in
Speaker 2: the ears before?
Speaker 6: I say, I don't know if it's a new thing.
Speaker 5: I think there's some confidence out there that longer term,
Speaker 5: despite all the headlines, the dramas, what's happening in Washington,
Speaker 5: they like the companies, they believe in technology. They're spreading
Speaker 5: their risk around small caps. So I think it's a
Speaker 5: belief that despite Washington, the real economy is in good shape.
Speaker 2: Paul, you told me to go into small lips. I
Speaker 2: didn't listen.
Speaker 7: Now, So Joe, what we saw a little bit in
Speaker 7: twenty twenty five was as well as the US equity
Speaker 7: in that just did a lot of markets outside of
Speaker 7: the US did a lot better.
Speaker 6: How do you think about the.
Speaker 7: US versus non US these days? What are your clients
Speaker 7: telling you?
Speaker 5: I mean, we still like the US. I think the
Speaker 5: US had an off year. It's it's kind of like,
Speaker 5: you know, the Boston Celtics, one of the greatest dynasties
Speaker 5: out there.
Speaker 6: They don't win every year, but the UC economy.
Speaker 5: It's part of our core portfolio holdings, the equities, but
Speaker 5: we do like overseas where there it's China, tech banks
Speaker 5: in Europe, defense plays in Europe, and South Korea, Japan.
Speaker 5: So the breadth of opportunities for retail institution investors has broughtened.
Speaker 5: So it's just not about the mag seven, it's not
Speaker 5: about the US equities.
Speaker 6: It's broader and that's a good thing.
Speaker 7: What are we doing in the bond market here, because again,
Speaker 7: twenty twenty five was a solid year for folks who
Speaker 7: held bond's high single digit total returns. How about twenty
Speaker 7: twenty six.
Speaker 5: Twenty twenty six. We're shorter durations. We like corporate bunds.
Speaker 5: We think ten year yield. Our interest rate team is
Speaker 5: looking between four twenty five and like four point fifty
Speaker 5: four to seventy five, so a tight.
Speaker 6: Range for the ten year yield.
Speaker 5: You know that could change given with the Fed's next
Speaker 5: path for cutting rates. What's happening in Japan so there's
Speaker 5: a lot at stake there. Joe Quinnlin with.
Speaker 3: This head in CIO market strategy at Merrill and Bank
Speaker 3: of America Private Bank, as Alexis mentioned, your five thousand,
Speaker 3: four thirty four up twenty one dollars.
Speaker 2: On gold pump. Let's go to gold.
Speaker 7: I mean that then gold ripping, silver ripping, all the
Speaker 7: other precious metals ripping.
Speaker 2: I mean who's buying all.
Speaker 5: This stuff retail institutions and in particular central banks. So
Speaker 5: you are seeing some dollar the dollar hedging out for investors.
Speaker 5: So we think that's going to continue. Central banks are diversifying.
Speaker 5: We're seeing a lot of clients. That's one of the
Speaker 5: first questions I asked, how much gold should own? What
Speaker 5: else sho I own? Silver?
Speaker 6: And so forth?
Speaker 5: So that's going to continue. So and if you look
Speaker 5: at the grid, the build out that we need all
Speaker 5: these precious metals and base metals on top of the
Speaker 5: defense outlays, there's a lot of upside yet for commodities.
Speaker 7: I mean, here's one of the issues. We were getting
Speaker 7: right smack into the teeth of earning season right now,
Speaker 7: twenty twenty five, solid solid earnings here a low double
Speaker 7: digit is the earnings out look for twenty six enough
Speaker 7: to support this market here.
Speaker 6: Short answer is yes, longer answers.
Speaker 5: Look what these companies are doing in terms of pivoting,
Speaker 5: using artificial intelligence, robotics, rejiggering their supply chains. You've got
Speaker 5: a good consumer behind them as well. So I think
Speaker 5: the earnings estimates double digits again this year will be
Speaker 5: supported by the US economy. It'll come up behind it.
Speaker 5: So and it's really the management of companies across the
Speaker 5: board that will help driving earnings well.
Speaker 7: I mean, I guess a lot of that earnings growth
Speaker 7: is coming from, not surprisingly the big tech names, the
Speaker 7: MAGS seven if we want to use that nomenclature, or
Speaker 7: just just big tech in general. I guess big tech
Speaker 7: is going to lead us again in twenty six.
Speaker 3: Or next week as well.
Speaker 5: Yeah, or next week or this year, but not as
Speaker 5: much as last year. Big tech earnings your every year
Speaker 5: are coming down. But that's okay because the other parts
Speaker 5: of the market are coming up.
Speaker 3: I mean, I mean Julian Emmanuel this morning, he's modeling
Speaker 3: right now and it's going to change, folks.
Speaker 2: Ready.
Speaker 3: Fourteen point four percent Marines growth is his model guest
Speaker 3: this morning.
Speaker 2: Yep, unbelievable.
Speaker 7: So what do we do here, to the extent we
Speaker 7: want to, I don't know, rotate out broaden trying to
Speaker 7: find some breath in this market.
Speaker 4: What do you say, so you're suggesting to rotate from
Speaker 4: Nvidio and Microsoft exactly.
Speaker 5: Maybe we've been looking at small cap for quite a while.
Speaker 5: We like to cycicles, whether it's financials, materials, metals, industrials,
Speaker 5: some of the old economy stocks that we were accustomed to.
Speaker 6: They're becoming more.
Speaker 5: Technology enablers and adopters and they're going to surprise folks
Speaker 5: to the opsite.
Speaker 3: Kay Nixon was president when you walked into Mary Lynch
Speaker 3: Pierce Center and Smith Joe, let's cut to the chase here.
Speaker 3: How long does this sagin dance keep going? I keep
Speaker 3: I'm talking anamong was it yesterday? She's definitive And the
Speaker 3: answer is we got poping real GDP and massive pop
Speaker 3: penmenal GDP. Like the fourth of July, Does Joe Quinlan
Speaker 3: go into twenty twenty seven?
Speaker 5: Yes, Tom, Because you know, the average bull market is
Speaker 5: typically five and a half years, so we're like not
Speaker 5: even three and a half years into this bull market.
Speaker 5: I see this in the twenty seven and twenty eight, right,
Speaker 5: because we have a lot of just because just see
Speaker 5: Tom Davis is our economy right now is expanding faster
Speaker 5: than China's.
Speaker 6: And so in the earnings we go back to the ball.
Speaker 6: It's supportive that.
Speaker 5: So we've got a lot of energy economy, the stock market,
Speaker 5: the animal spirits that takes us into twenty security.
Speaker 3: So I studied this at Fordham University, which focus is
Speaker 3: expert on this in international economics. Okay, so we have
Speaker 3: a nominal g I did this with Darter Paul the
Speaker 3: other day. We have a nominal GDP popping like China. Yes,
Speaker 3: but we don't have the same economics structure as well.
Speaker 3: Do we embed a permanent inflation because we don't have
Speaker 3: the supplied demand dynamics of a seven percent nominal GDP.
Speaker 5: I think the inflation number of times closer to three percent
Speaker 5: as opposed to two percent. But I don't think it
Speaker 5: has to bust through four or five percent in that sense.
Speaker 5: And that's the sweet spot. Nominal growth seven eight percent,
Speaker 5: that's perfect for earnings. A lot of companies can do
Speaker 5: a lot. It's not American move to Beijing.
Speaker 2: I'll get one more in here.
Speaker 7: Joe what's the discussion you have with the Maryland ba
Speaker 7: A private bank clients about alternative investments, private equity, private credit,
Speaker 7: hedge funds, and what's what's an allocation that you think
Speaker 7: is reasonable for I mean, more of.
Speaker 5: Our clients are looking at that, particularly private credit, private equity.
Speaker 5: They like what they see the opportunities. There's a lot
Speaker 5: of good companies that are not public good tradit, so
Speaker 5: they want to have access. But they're moving slowly. They're
Speaker 5: moving slowly. They still looking at bond stocks, cash, private equity.
Speaker 5: So the conversation has started. They're putting money to work.
Speaker 5: This is wicked and important. Paul's brilliant question here, folks,
Speaker 5: to me, in the zeitgeist, the blooms off the roads. Everybody,
Speaker 5: every marketing type on the fourteenth floor ninety days ago
Speaker 5: was private credit, Give me a piece, give me an our,
Speaker 5: you know, cheerlead none. Paul, do you suggest this a
Speaker 5: little bit like the demand for private credit? And my
Speaker 5: IRA is maybe not there.
Speaker 7: I don't know, Tom. When we go visit some of
Speaker 7: these rias out there, I'm shocked at the allocation they
Speaker 7: out that they do have for alternatives. I would have
Speaker 7: thought it was three percent five percent now they're talking
Speaker 7: ten twenty five percent.
Speaker 5: Really, it's moving higher, for sure, there's no doubt about it.
Speaker 5: But I think it's going to stall out at say
Speaker 5: ten to fifteen percent. It's going to just show me
Speaker 5: it has tax ramifications, the paperwork that comes with the
Speaker 5: tranches to tie ups and so forth.
Speaker 6: So there's clients that really embrace it.
Speaker 5: But in general it's moving higher, but not not close
Speaker 5: to fifteen twenty percent.
Speaker 2: When you talk to Brian.
Speaker 3: Moynan when he's back fancy from Davos, what do you
Speaker 3: say to him about the state of buying the stock market?
Speaker 5: Well, you saw our bank earnings pretty robust last year
Speaker 5: of the year before. We're looking at another good outlook
Speaker 5: this year. Our Bank of American Institute is a da
Speaker 5: data gatherer. Weren't eighty million households here in the US
Speaker 5: Bank of America, so our data is suggesting good. Consumer
Speaker 5: capital investment is strong. Our commercial book is strong as well,
Speaker 5: so Brian eighty contem the CIO where I work all
Speaker 5: pretty positive heading into twenty twenty six. It's a good
Speaker 5: story and people don't believe it, but it's a good
Speaker 5: story because.
Speaker 3: On Friday night at Niagar University. What do you do
Speaker 3: go over to the American Falls. Well, now you go
Speaker 3: to the Freshman you.
Speaker 5: Go to the you go to the Rathskeller, lock the
Speaker 5: door and make sure the kegs are full.
Speaker 3: Okay, Joe Quitman, thank you for that important strategy advice. He,
Speaker 3: of course legendary at Merrill and Bank of America Private Bank.
Speaker 2: Stay with us.
Speaker 3: More from Bloomberg Surveillance coming up after this.
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Speaker 3: Say She's a JP Morgan Asset management barely describes an
Speaker 3: eclectic track record. I love the idea, folks, that you
Speaker 3: prepare for fixed income, currency and commodities by spending seventeen
Speaker 3: years in equities. You are a strange beast, k ere.
Speaker 3: What is it like moving from equities over to fix
Speaker 3: I mean, that's a rare thing.
Speaker 8: So I'm going to take that as a compliment from you,
Speaker 8: because a strange beest.
Speaker 2: I mean, it's really really a different path, isn't it?
Speaker 8: And I would have thought you would have been in
Speaker 8: Davos this week while I was toiling away at two
Speaker 8: seventy Park.
Speaker 9: You're not out there wearing a fancy sun blisses.
Speaker 3: I did it for twenty years, and you know John Wynn,
Speaker 3: and you know we sent a whole bunch of people
Speaker 3: to Bloomberg House in that. But you know, frankly, I
Speaker 3: get as much done on Davos sitting here as I
Speaker 3: do sitting at the Belvidere.
Speaker 2: What are you nod in your head about?
Speaker 9: So look to answer your question. I love investing.
Speaker 8: I love thinking about what's priced into markets, and investing
Speaker 8: is fundamentally about projecting future cash flows. So the major
Speaker 8: difference between you know, I started as a credit research channelist,
Speaker 8: spent three years as a credit research channelist, then spent
Speaker 8: seventeen years and equities as an analyst and a portfolio
Speaker 8: manager before moving back to fixed income, I guess six
Speaker 8: seven years ago. And the real fundamental difference tom is
Speaker 8: upside or downside, and so inequities, you get to dream
Speaker 8: about things going up ten times, you know, sunglass makers
Speaker 8: going up sixty percent in the week. Bonds were a
Speaker 8: little bit more boring. We're in basis point to basis
Speaker 8: point not losing money.
Speaker 9: So I guess I'm a.
Speaker 8: Little bit better about thinking about downside risk than I
Speaker 8: am about blue sky blue sunglass scenarios.
Speaker 7: Geopolitical risk kind of came back to the four again
Speaker 7: this week. Okay, how do you guys think about that?
Speaker 7: We had to deal with it in April of last year.
Speaker 7: Came back a little bit this week. Do you guys
Speaker 7: just try to see through that?
Speaker 8: You know that it's a great question, and we got
Speaker 8: to separated into two pieces. So when we're managing portfolios,
Speaker 8: you've got to see through it and look to see
Speaker 8: are there any opportunities we can capitalize on. You take
Speaker 8: a step back, though, and you think about the backdrop
Speaker 8: heading into Davos. We've got relatively low volatility of the
Speaker 8: equity and bond markets and relatively high valuations, and so
Speaker 8: you introduce a little bit of geopolitical intrigue and there
Speaker 8: you've got some volatility in markets, and that tends to
Speaker 8: pass along, you know. You think about the bond market
Speaker 8: this week. The tenure Treasury had been kind of range
Speaker 8: bound between three seventy five and four and a quarter
Speaker 8: for a while, edging towards the lower end. When we
Speaker 8: get weak employment number moving back towards the higher end,
Speaker 8: when we get concerns about inflation, and we broke through
Speaker 8: that this week. When the geopolitical tensions, when you look
Speaker 8: at it breaking through the two hundred day moving average,
Speaker 8: which was for twenty three, there's not a lot of
Speaker 8: technical support. And when you start to worry about I
Speaker 8: don't think that you know, invading Denmark was on I'm sorry,
Speaker 8: invading sorry, invading ice cream Land, not Iceland or Denmark
Speaker 8: was on anybody's binko card. So that kind of comes
Speaker 8: in and makes people very volatile. And we've got an
Speaker 8: absence of fundamental data until the next employment data until
Speaker 8: February sixth, so people start to move into conspiracy theories
Speaker 8: and concerns about geopolitical But the answer to your question
Speaker 8: is yes, the fundamentals are what's more important.
Speaker 9: And on the fundamental side.
Speaker 8: What we see is a no hire, no fire market,
Speaker 8: moderating inflation and you know, pretty pretty solid economic growth.
Speaker 8: You saw GDP yesterday at four point four.
Speaker 7: How much credit risk were we taking in twenty twenty six,
Speaker 7: I mean, considered to your treasure and get three zero
Speaker 7: point six percent. That's not bad.
Speaker 8: Yeah, so we like high quality credit, both high quality
Speaker 8: investment grade and high quality high yield. And you know,
Speaker 8: as I was sitting here listening to the meteorologists, which
Speaker 8: I think this is the first time I've ever been
Speaker 8: preceded by a meteorologist on Bloomberg, I was trying to
Speaker 8: pull this together and what are the themes? And Tom's
Speaker 8: this one's for you. Really, the last major snowstorm the
Speaker 8: New York metro area had to my recollection was nineteen
Speaker 8: ninety six.
Speaker 3: That was a big one.
Speaker 8: Credit spreads in ig are back to their nineteen ninety
Speaker 8: eight tights, so we're going back to the nineties this week.
Speaker 3: There's a heritage at JP Morgan on gold. You made
Speaker 3: a splash or a middle last year on a five
Speaker 3: thousand statistic, which is happening way faster than you thought
Speaker 3: or anybody else thought. But bring over how you think
Speaker 3: gold should be an adult, responsible retail even institutional family
Speaker 3: office portfolio. Do you buy broken ill properties of Australia?
Speaker 3: Do you put krueger Rans in the bedroom of the
Speaker 3: third house, you know, the dresser drawer. What does k
Speaker 3: hers say you do? If you say, I guess I
Speaker 3: need to own gold.
Speaker 8: Look I think if you guess you need to own gold,
Speaker 8: I think the biggest change in the market in the
Speaker 8: last few years is that tfs have made that more accessible.
Speaker 8: So I guess I'm an old fashioned by gold jewelry,
Speaker 8: by gold coins, but I think for the average person
Speaker 8: maybe it's more accessible and an ETF type structure or
Speaker 8: something like that. But I think one of the things
Speaker 8: that's driven the increase in prices in gold is the
Speaker 8: creation of the new ETFs in that market and the
Speaker 8: accessibility for gold. And as I'm sure you know, there
Speaker 8: hasn't been the supply of gold hasn't really changed in
Speaker 8: the demand for gold has risen, so I think that's
Speaker 8: what's really driving it.
Speaker 7: Twenty twenty five, we started hearing out a lot more,
Speaker 7: at least I did, about emerging markets and the performance
Speaker 7: there gives your view on emerging markets seas is, how
Speaker 7: are you playing it if at all?
Speaker 9: Yeah, A couple of things on that.
Speaker 8: Yeah, emerging markets really rebounded in a material way last year.
Speaker 8: I think a couple of things when you think about
Speaker 8: the emerging markets. First off, I mean, as we've learned
Speaker 8: over the last couple of years, develop market central banks
Speaker 8: forgot about inflation emerging markets never had the luxury to
Speaker 8: throw out the inflation fighting, so emerging markets were much
Speaker 8: quicker to start hiking rates before inflation got carried away.
Speaker 8: And increasingly they've shown more fiscal discipline as well. So
Speaker 8: when you look at EM versus DM, you're seeing, you know,
Speaker 8: a growth pickup in emerging markets on the order of
Speaker 8: two and a half pike percent above develop markets, and
Speaker 8: that's a pretty attractive opportunity.
Speaker 7: New issuance has been crazy in the fixed income space
Speaker 7: on municipals, investment grade, high yield, and I don't know
Speaker 7: if I listened to the Jamie Diamonds in the one
Speaker 7: hands of the world, it's going to be even more
Speaker 7: so in twenty twenty six. How do you guys as
Speaker 7: investors deal with that, because I would think that would
Speaker 7: be a challenge or a headwind floor performance.
Speaker 8: So it's it's really interesting if you look at the
Speaker 8: investment grade market. We've had one hundred and seventy billion
Speaker 8: dollars issued from jan one through this week and as
Speaker 8: well as you probably would expect with that, and I
Speaker 8: think the first two days of the year were records,
Speaker 8: so market really came out in force force with a
Speaker 8: lot of issuance. But I think it's really interesting to
Speaker 8: think about the fact that in the face of record
Speaker 8: or near record issuance, you've also seen a tightening in spreads.
Speaker 8: So you know, we've heard, you know, talk this week
Speaker 8: about the Cell America trade. Instead, what we've seen is
Speaker 8: record demand for these types of and a tightening in spread.
Speaker 8: So in terms of the question, and I think about
Speaker 8: twenty six and generating investment performance for our clients, I
Speaker 8: think there's likely to be more dispersion in performance of
Speaker 8: different credits, and I think security selection is going to
Speaker 8: be very important.
Speaker 9: So I think that's that's what we are really focused on.
Speaker 8: But I think because of the geopolitical situation this week
Speaker 8: and the fact that some issuers are in blackout, it's
Speaker 8: been relatively quiet this week. I think it comes back
Speaker 8: in force over the next couple of weeks we get
Speaker 8: sever one hundred.
Speaker 3: Thousand job formation. You know, there's eight different opinions on
Speaker 3: the job. Could Michael Faroli with path Baking work on
Speaker 3: potential GDP even a decade ago, eight years ago, and
Speaker 3: yet we've got this boom real GDP, this boom nominal GDP.
Speaker 3: Do you say to your clients, look out past the
Speaker 3: twenty twenty six stimulus, or do you say this is
Speaker 3: part of the new America where you're going to have
Speaker 3: a greater animal spirit from a buoyant nominal GDP.
Speaker 8: You know, I worry about saying in the investment in
Speaker 8: the investment landscape, one of the most dangerous expressions ever
Speaker 8: is this time is different. So I worry about that.
Speaker 8: But I do think that we have what we've seen
Speaker 8: is an enhancement in productivity. So on the topic of
Speaker 8: Mike Farole, he's an outstanding economist.
Speaker 9: I've got a lot of respect for him.
Speaker 8: And the topic of the broader economy, I mean, it
Speaker 8: looks pretty solid across It continues to be a CA
Speaker 8: shaped recovery consumers.
Speaker 9: It's not equally spread across people.
Speaker 8: But I do think we've got some fiscal stimulus this
Speaker 8: year at an administration that is looking to enhance animal spirits.
Speaker 9: I think you're absolutely right.
Speaker 3: How far by I got eight ways to go here?
Speaker 3: How far behind retail is institutional? I saw something yesterday
Speaker 3: that once again they under your own tech into earnings.
Speaker 3: Julian Emmanuel publishes at everquare Isi this morning a fourteen
Speaker 3: point four percent earnings growth run rate. Maybe it's there,
Speaker 3: maybe it's not well know in you know, two weeks,
Speaker 3: six weeks, whatever. How does institutional catch up to this
Speaker 3: retail success in technology? Do they need just simple they
Speaker 3: need to buy more Apple? Don't give me this, it's
Speaker 3: outside your giving you.
Speaker 9: I really don't know how to answer that. But I
Speaker 9: don't know that.
Speaker 8: I don't know that that's I don't know whether the
Speaker 8: premise of your question is accurate or not. I don't
Speaker 8: know that retail is a head of institutional. I think,
Speaker 8: you know, you look at at funded status and pensions
Speaker 8: and things like that. I think we've had some very
Speaker 8: successful institutional investors. So I don't know it's my answer.
Speaker 2: How about earnings?
Speaker 7: We're getting into the teeth of earnings next week. I
Speaker 7: think at three hundred of the S and P five
Speaker 7: hundred companies report. Is the earnings outlook sufficient for markets?
Speaker 7: Do you think these days? Or do we have to
Speaker 7: earn our way into some of these valuations.
Speaker 9: It's a good question.
Speaker 8: I think what you've seen so far in earning season
Speaker 8: is that disappointing earnings have been punished severely. So I
Speaker 8: think it depends on the valuations. I think for the
Speaker 8: bond market. Yes, spreads are tight, but I think earnings
Speaker 8: have been good enough and they'll continue to be good enough.
Speaker 8: I think in the equity market, where some of the
Speaker 8: valuations are a bit more stretched, I think companies have
Speaker 8: to put up numbers that show that they warrant those valuations.
Speaker 3: Thank you so much for coming back.
Speaker 9: Thanks for having me.
Speaker 3: It's lovely to have you here. She's with JP Morgan.
Speaker 3: Folks can't say enough about the process at work the
Speaker 3: kigure has done for years.
Speaker 2: Stay with us.
Speaker 3: More from Bloomberg's Surveillance coming up after this.
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Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
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Speaker 2: She's incredibly qualified.
Speaker 3: At Morgan Stanley, Monica Grurge joints Executive Director, Head A
Speaker 3: US Policy at Morgan Stanley.
Speaker 2: There's a stimulus Monica going on right now.
Speaker 3: Alexis is going to get like six two thousand dollars
Speaker 3: checks or whatever. The way she's playing the game, Monica,
Speaker 3: does a stimulus go over to our infrastructure investment in America,
Speaker 3: what we're thinking.
Speaker 10: Right now is that it's likely to go. Actually to
Speaker 10: the defense industry. You had Trump requests a one point
Speaker 10: five trillion dollar defense budget. This is a fifty percent
Speaker 10: increase over the prior year. The largest year over year
Speaker 10: increase since the Korean War is a percent of GDP.
Speaker 10: So while we're not saying this is wartime, it does
Speaker 10: indicate how involved we are on so many geopolitical fronts,
Speaker 10: and that's really where the economic multiplier is likely to
Speaker 10: come from from the fiscal side. In twenty twenty six.
Speaker 7: Monica, it's an election year. Yet again, what does that
Speaker 7: typically mean for markets here? Because you know, oftentimes in
Speaker 7: these you know, midterm elections, you get a change and
Speaker 7: controls of various Houses of Congress.
Speaker 2: How do you play that?
Speaker 10: So midterm electioneers, markets tend to underperform and it's the
Speaker 10: year after that you get the outperformance. And that's because
Speaker 10: folks are waiting to see right that that outcome. Typically
Speaker 10: what you'll get is if we end up with a split,
Speaker 10: you know, gridlock Congress in twenty twenty seven, you're going
Speaker 10: to be off to the races, right because nothing changes
Speaker 10: and policy is stable. But right now we're in that
Speaker 10: policy uncertainty mode. The one thing we do know we're
Speaker 10: going to get is that focus on affordability and the
Speaker 10: Trump administration the midterms as part of every single conversation
Speaker 10: that they have, and one of those things is we're
Speaker 10: going to be seeing it in housing, trying to control
Speaker 10: energy costs as well as making other aspects of spending
Speaker 10: in the consumer affordable.
Speaker 3: But if I get out my rolodex, you're one of
Speaker 3: the best people to talk to about well intentioned politicians,
Speaker 3: quote trying to control Is there any history that politicians
Speaker 3: can you control Paul Sweeney's electric bill?
Speaker 10: I think it's I think it's challenging to do. But
Speaker 10: one of the things that they're that they're looking to
Speaker 10: essentially alleviate the burden is to essentially move from this
Speaker 10: idea that there's an energy transition happening to an energy
Speaker 10: addition and trying to make the public private partnership component
Speaker 10: on the UNI side more accessible and easier for municipal
Speaker 10: wants to come to market in the public power space,
Speaker 10: giving the municipals and the local governments more power to
Speaker 10: have over their energy sources. So this is a long
Speaker 10: term play. It's not going to be overnight, and for
Speaker 10: the midterms it's likely to be even more messaging on
Speaker 10: energy costs versus an actual reduction.
Speaker 2: Monica.
Speaker 7: I guess just this week we saw some of the
Speaker 7: volatility come back into the market that maybe we saw
Speaker 7: early last year. So it relates to teriffs this time
Speaker 7: associated with Greenland. It seems to have tampered down here.
Speaker 7: But do we have to start thinking about some of
Speaker 7: this tariff stuff and crosswinds headwinds for the markets.
Speaker 9: Yeah.
Speaker 10: I mean one of the things that we've you know,
Speaker 10: long held is that the tariff environment is here to stay.
Speaker 10: Even if we IIBA is struck down by the Supreme Court,
Speaker 10: which we think it will be, the administration is doing
Speaker 10: all the legwork in the background to set up certain backfills,
Speaker 10: if you will, so Section two thirty two, Section two
Speaker 10: A one. There's tons right of different categories of trade
Speaker 10: law that they're exploring to try to essentially create a
Speaker 10: patchwork to get us to that final place. The other
Speaker 10: option that people aren't talking about with AIPA is that
Speaker 10: we could end up in a gray zone where you
Speaker 10: get a nuanced carve out on terrorists. So, for example,
Speaker 10: you could say, okay, we could justify China because you
Speaker 10: can argue that we're in an economic cold war with them,
Speaker 10: but you can't from Malaysia. And so then that even
Speaker 10: makes it an easier case for supporting that federal debt
Speaker 10: and deficit in the budget if they lose.
Speaker 3: Is Alexis going to get a tariff rebate check for
Speaker 3: the banana she bought ninety days ago.
Speaker 10: I'm waiting, all right, So this is going to come
Speaker 10: full circle to my first comment about defense. So if
Speaker 10: we're thinking about that significant amount of fiscal spending that
Speaker 10: could be coming for these defense and geopolitical priorities, and argue,
Speaker 10: it really lowers the likelihood that you're going to get
Speaker 10: an appetite for a rebate check.
Speaker 2: For you sure, for your care.
Speaker 10: So we think that's unlikely, hopefully unlikely you're going to
Speaker 10: get that check. But rather than going to try to
Speaker 10: come at the affordable piece through you know, other measures.
Speaker 7: That's kind of i mean affordabilities kind of to really
Speaker 7: come into the top of the discussion pile here. Given
Speaker 7: some of the elections we saw in New Jersey and
Speaker 7: Virginia and some others, is that something that you expect
Speaker 7: the administration to focus on?
Speaker 10: Absolutely and one of the things that's important though, is
Speaker 10: that even though Trump's you know, proposing say a ten
Speaker 10: percent cap on credit card interest, it's going to take
Speaker 10: an Act of Congress to move a lot of this along,
Speaker 10: which is helpful for members of Congress that are running.
Speaker 9: We don't know.
Speaker 10: Exactly what's viable because there's still a lot of infighting
Speaker 10: and sort of you know, setting the table for twenty
Speaker 10: twenty six, but we're going to see more and more
Speaker 10: of this discussion because it is going to be a
Speaker 10: winning category on that campaign.
Speaker 3: Trail Monica, Thank you so much, great brief, terrific brief Monica,
Speaker 3: Morgan Stanley. Again, we protect the copyright of all of
Speaker 3: our guests. Get her wonderful important research from Morgan Stanley.
Speaker 2: Stay with us.
Speaker 3: More from Bloomberg Surveillance coming up after this.
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Speaker 3: She's toasting Army. She has been working on the newspapers.
Speaker 3: Alexis Christophus. I hear the set of ideas.
Speaker 11: Yeah, how about this for breakfast, guys? A pint of
Speaker 11: Guinness with some complimentary donuts. Has that sound perfect?
Speaker 9: You know who's doing it?
Speaker 7: Who's doing it?
Speaker 11: JJ Foleys up in Boston. You're calling out all the
Speaker 11: Patriots fans at seven am? How about a Guinness seven am?
Speaker 11: They want you to come on down to JJ Foley's
Speaker 11: there in the South End because the Today Show is
Speaker 11: going to be there there.
Speaker 2: This is Today, This is Today my word.
Speaker 11: So so grab your hat and your scarf and your
Speaker 11: sign and go down there because they want to send
Speaker 11: off their Pats to the game on Sunday against the
Speaker 11: Denver Broncos in style. So you know you're gonna have
Speaker 11: Pat the mascot is going to be there. Pat cheerleaders
Speaker 11: are going to be there, and they're promising some er
Speaker 11: some friend.
Speaker 2: Is South End. It's you know, it's not South Boston.
Speaker 2: It's sort of South End. But it's not Time. I mean,
Speaker 2: I can't see the Today Show at time. English is
Speaker 2: you know, they just you know, they just don't mix. J. J.
Speaker 2: Foley's more upscale, so you.
Speaker 11: Know, yeah, they're the oldest Irish pub I think in Boston.
Speaker 7: Is that right? It looks quick, Western cool, looks cool.
Speaker 2: There's brass flack there for three Lives.
Speaker 7: To go exactly there you go, and Boston sure.
Speaker 11: Absolutely, yeah, we love them.
Speaker 2: Next, Okay, I'm going to move on.
Speaker 11: I was going to say that I was hoping maybe
Speaker 11: the Pats can win on the road this weekend, because
Speaker 11: you know, Broncos QB is out with that ankle injury.
Speaker 3: It's somebody on a map, the entire nations for the
Speaker 3: Denver Broncos except for three zip codes in Boston.
Speaker 11: All right, listen, if you don't want Guinness for breakfast,
Speaker 11: how about biscuits and gravy Here in New York City.
Speaker 11: I know that bagels are a big thing, but there's
Speaker 11: a chain down south. I don't know if you know it, Bojangles.
Speaker 11: So it's going to be opening up its first location
Speaker 11: in New York City. It's going to happen in Flatbush, Brooklyn,
Speaker 11: of course, of course, but whatever that means. And they're
Speaker 11: hoping that biscuits can become the new bagel for folks
Speaker 11: in New York. So the menu includes bacon, egg and cheese, sausage,
Speaker 11: egg and cheese chicken sandwiches, but they all come here's
Speaker 11: the clincher on buttermilk biscuits.
Speaker 7: Yep, get a little gravy, sausage, gravy on there, We're
Speaker 7: set to go.
Speaker 11: Yeah, you know, breakfast is big business though, yep. I
Speaker 11: mean it's becoming big business for a lot of these
Speaker 11: restaurants because you've got you know, people are becoming more
Speaker 11: selective about what they're spending their money on. You've got
Speaker 11: higher prices, so they're you know, breakfast is emerging like.
Speaker 7: A big absolutely absolutely, all right, that's a good one.
Speaker 11: Speaking of prices, so we're talking about this storm, this
Speaker 11: is all that we're talking about, and of course, unfortunately
Speaker 11: we are seeing price gouging right. They're getting you where
Speaker 11: it hurts, no matter if you're trying to buy you know, ice, melt, boots,
Speaker 11: flash flights.
Speaker 7: So this is I don't understand why people do this.
Speaker 7: We're gonna be We're gonna be inside for a day.
Speaker 7: I mean, if you mean you mean why we're stopping
Speaker 7: the nuts, I mean the shop right in Bellmar, New
Speaker 7: Jersey esterday was a war zone and we just drove
Speaker 7: right past it.
Speaker 11: You know, I I give into it, though I am
Speaker 11: guilty of it. I was texting my husband just a
Speaker 11: few minutes ago, I said, please please go get eggs, milk, bread.
Speaker 7: You have milk and bread in my house already.
Speaker 9: It didn't, but I want there.
Speaker 2: Was price coaching going on, and there's not a way
Speaker 2: to protect. For example, the.
Speaker 11: New York Yeah, yeah, so the New York Post actually
Speaker 11: did a little deep dive here and expose. They went
Speaker 11: on Amazon and they checked prices. They saw women's snow
Speaker 11: boots jumping ninety one percent in price in just three days,
Speaker 11: space heaters, flashlights, first aid kits. There was also Petri
Speaker 11: pet safe ice melts. That's hard to say, Yeah, climbing
Speaker 11: forty five percent just this week. So folks, be careful
Speaker 11: out there when you're when you're buying, because you know
Speaker 11: you're going to be you're paying a premium at this point.
Speaker 11: There are tom There are states though, that have laws
Speaker 11: on the books, like New York. I think South Carolina,
Speaker 11: North Carolina that you cannot just go out, you know,
Speaker 11: and charge whatever you want. But you look, when you're desperate,
Speaker 11: it's hard.
Speaker 3: But there's not I mean, the way you rock Alexus
Speaker 3: is bogner. I mean, there's not the kari Ski jacket
Speaker 3: an orange and purple for two thousand dollars. Well, they're
Speaker 3: not raising the price on that during this.
Speaker 11: Now, well you're you're a big spender, tom so Well,
Speaker 11: says Alexus to me.
Speaker 2: It says a low stock. They've already got it, Ryan,
Speaker 2: don't walk the newspapers.
Speaker 3: Thank you so much, Alexus.
Speaker 2: There.
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