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 --> 00:00:17,920 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 --> 00:00:27,200 Speaker 1: us live on YouTube. 6 00:00:27,720 --> 00:00:31,479 Speaker 2: David Kelly is a jewel. He writes incredibly informed work. 7 00:00:31,520 --> 00:00:34,280 Speaker 2: He did this for years at Putnam, now holds court 8 00:00:34,280 --> 00:00:37,599 Speaker 2: at JP Morgan Roshrild. You could get our holiday week here. 9 00:00:37,720 --> 00:00:41,720 Speaker 2: Started strong, strong, strong, David, You start with I love 10 00:00:41,760 --> 00:00:44,600 Speaker 2: this the Red River of the North up in the 11 00:00:44,680 --> 00:00:49,360 Speaker 2: Dakotas and Manitoba up to Lake Winnipeg. And you're talking 12 00:00:49,400 --> 00:00:54,000 Speaker 2: about the crazy river system of our North in Canada 13 00:00:54,080 --> 00:00:56,600 Speaker 2: as well. Why is it like the stock market. 14 00:00:57,400 --> 00:01:01,560 Speaker 3: Well, the key at that particular river is it flows 15 00:01:01,600 --> 00:01:03,800 Speaker 3: from south to north, which is actually very unusual in 16 00:01:03,840 --> 00:01:06,200 Speaker 3: America for a big river. But that's actually a really 17 00:01:06,240 --> 00:01:09,200 Speaker 3: big problem in the spring because what happens is when 18 00:01:09,360 --> 00:01:11,880 Speaker 3: the ice tolls, it all tolls in the south. First, 19 00:01:11,920 --> 00:01:13,759 Speaker 3: it all floods in. But the water can all flood 20 00:01:13,760 --> 00:01:15,800 Speaker 3: into the river. It's just got nowhere to come out, 21 00:01:16,160 --> 00:01:18,720 Speaker 3: and so at inun dates say, you know, Grand Forks 22 00:01:18,760 --> 00:01:21,640 Speaker 3: and Winnipeg and all these poor cities just get flooded 23 00:01:21,880 --> 00:01:23,920 Speaker 3: because there's no way way for the water to get out. 24 00:01:23,959 --> 00:01:26,600 Speaker 3: And the reason that's relevant to the stock market is 25 00:01:26,640 --> 00:01:29,000 Speaker 3: we've been looking at you know, this has been it's 26 00:01:29,040 --> 00:01:31,880 Speaker 3: a tortoise of an economy sort of you know, crawling, 27 00:01:32,040 --> 00:01:34,000 Speaker 3: you know, staggering to the edge of the end of 28 00:01:34,040 --> 00:01:35,680 Speaker 3: the year here. But we've had a hair of a 29 00:01:35,800 --> 00:01:38,559 Speaker 3: market for a third consecutive year. Why is the market 30 00:01:38,640 --> 00:01:42,200 Speaker 3: so strong when the economy is And I think part 31 00:01:42,240 --> 00:01:44,920 Speaker 3: of the reason is because there are institutional things within 32 00:01:45,000 --> 00:01:51,280 Speaker 3: our market, things like stock buybacks, embedded capital gains, money 33 00:01:51,280 --> 00:01:54,400 Speaker 3: flowing into defined contribution plans. 34 00:01:54,440 --> 00:01:55,080 Speaker 2: All this is. 35 00:01:55,040 --> 00:01:58,120 Speaker 3: Funneling money into the equity market and it's hard to 36 00:01:58,160 --> 00:02:00,680 Speaker 3: get it out because of you know, capital gainstown. That's 37 00:02:01,000 --> 00:02:04,040 Speaker 3: pushing money into giving us a really strong stock market 38 00:02:04,120 --> 00:02:07,280 Speaker 3: and what's an okay economy, But it's not nothing to 39 00:02:07,400 --> 00:02:08,320 Speaker 3: write home about it. 40 00:02:08,360 --> 00:02:10,840 Speaker 4: So, you know, David, we had, as you mentioned, a 41 00:02:10,919 --> 00:02:13,880 Speaker 4: really strong twenty twenty five in terms of S and 42 00:02:13,919 --> 00:02:17,160 Speaker 4: P and NASDAC fixed income gave you high single digit 43 00:02:17,280 --> 00:02:20,280 Speaker 4: returns here. Yeah, what's the setup for twenty twenty six? 44 00:02:21,360 --> 00:02:23,880 Speaker 5: Well, I think the economy itself should be okay. 45 00:02:24,200 --> 00:02:26,440 Speaker 3: I think it's going to be strong in the first 46 00:02:26,480 --> 00:02:29,480 Speaker 3: half because of income tax refunds. I think we will 47 00:02:29,480 --> 00:02:31,520 Speaker 3: see a pickup in growth in the first half the year, 48 00:02:31,520 --> 00:02:33,560 Speaker 3: and then it's going to fade because we really are 49 00:02:33,600 --> 00:02:37,520 Speaker 3: short of workers. For the market. We still probably need 50 00:02:37,560 --> 00:02:39,919 Speaker 3: to see a shock to cause a big correction here. 51 00:02:40,720 --> 00:02:43,919 Speaker 3: You know, eventually we will have some shock. Evaluations are 52 00:02:44,080 --> 00:02:47,359 Speaker 3: very high. But you know, I think the base case 53 00:02:47,400 --> 00:02:49,720 Speaker 3: is the market keeps on The equity market keeps on 54 00:02:49,760 --> 00:02:52,839 Speaker 3: moving up, probably broadens out a bit beyond the mag 55 00:02:53,000 --> 00:02:55,240 Speaker 3: seven and you know, it continues sort of broadening out 56 00:02:55,280 --> 00:02:58,480 Speaker 3: to other sectors. But for investors, the real thing is, 57 00:02:58,520 --> 00:03:00,520 Speaker 3: you know, how much risk are you carrying? Because these 58 00:03:00,560 --> 00:03:03,760 Speaker 3: are expensive stocks at this point, and I think really 59 00:03:03,840 --> 00:03:09,160 Speaker 3: the resolution for twenty twenty six is rebalance because you know, 60 00:03:09,240 --> 00:03:11,799 Speaker 3: whatever happens to returns, the risk level is pretty high. 61 00:03:11,840 --> 00:03:14,280 Speaker 4: Here are the earnings that we see out there. I mean, 62 00:03:14,320 --> 00:03:17,000 Speaker 4: the earnings in twenty twenty five have been really really strong. 63 00:03:17,080 --> 00:03:19,440 Speaker 4: Here are they strong enough as you look forward to 64 00:03:19,520 --> 00:03:20,480 Speaker 4: kind of support this market? 65 00:03:21,240 --> 00:03:22,240 Speaker 5: Yeah, I think they should be. 66 00:03:22,280 --> 00:03:25,920 Speaker 3: I mean, it's a as I said, it's a moderately 67 00:03:25,960 --> 00:03:29,079 Speaker 3: growing economy, so long as we avoid recession. One of 68 00:03:29,120 --> 00:03:31,280 Speaker 3: the things that I'm seeing is a fair amount of 69 00:03:31,320 --> 00:03:33,840 Speaker 3: weakness and wages. I mean, there aren't many available workers, 70 00:03:33,840 --> 00:03:36,840 Speaker 3: but workers still can't get a pay increase. And meanwhile 71 00:03:36,960 --> 00:03:39,880 Speaker 3: companies are installing AI. Now I don't know if that's 72 00:03:39,920 --> 00:03:41,960 Speaker 3: making people more productive or not, but they say it's 73 00:03:42,000 --> 00:03:44,320 Speaker 3: making them more productive, and so people are and so 74 00:03:44,400 --> 00:03:47,040 Speaker 3: productivity numbers are going up because you've got fewer workers 75 00:03:47,040 --> 00:03:50,240 Speaker 3: and producing more output, and that helps corporate profits too. 76 00:03:50,280 --> 00:03:52,480 Speaker 3: So overall, I think the profit picture is pretty good. 77 00:03:52,880 --> 00:03:55,160 Speaker 3: I think the rate pricket picture is pretty stable, and 78 00:03:55,160 --> 00:03:58,280 Speaker 3: that should support the stock markets, barring some shop but 79 00:03:58,320 --> 00:03:59,880 Speaker 3: of course there's always the potential for a shop. 80 00:04:00,040 --> 00:04:02,080 Speaker 2: We starts throwing Monday. David Kelly with us for an 81 00:04:02,080 --> 00:04:06,600 Speaker 2: extended conversation. He drives GP Morgan Asset Management with all 82 00:04:06,640 --> 00:04:09,600 Speaker 2: of their strategy. David one of my great insights and 83 00:04:09,600 --> 00:04:11,360 Speaker 2: folks in my last two days of the year here, 84 00:04:11,400 --> 00:04:13,800 Speaker 2: I'm really going to look back here. One of the 85 00:04:13,800 --> 00:04:17,680 Speaker 2: great insights this year was Nancy Wilazar, who David and 86 00:04:17,760 --> 00:04:20,880 Speaker 2: I know for years with Edheimen. Nancy's up in Minnesota 87 00:04:20,920 --> 00:04:25,040 Speaker 2: with Piper, Jeffrey and David. She just said, look, it's 88 00:04:25,080 --> 00:04:29,320 Speaker 2: an economy where there's an odd job creation. You let 89 00:04:29,400 --> 00:04:31,839 Speaker 2: on this two years ago. You're the one that said, 90 00:04:32,320 --> 00:04:35,400 Speaker 2: get used to non farm payrolls under one hundred thousand. 91 00:04:35,800 --> 00:04:38,400 Speaker 2: Do you adjust liked your own Powell and are you 92 00:04:38,440 --> 00:04:41,479 Speaker 2: giving me a real three month moving average? Now that's 93 00:04:41,480 --> 00:04:43,960 Speaker 2: a negative statistic of payroll growth. 94 00:04:45,040 --> 00:04:45,880 Speaker 5: It's very close. 95 00:04:46,000 --> 00:04:48,760 Speaker 3: I mean, I think we're talking about somewhere in the 96 00:04:48,839 --> 00:04:51,880 Speaker 3: range of minus fifty to plus fifty is the trend rate. 97 00:04:51,960 --> 00:04:54,159 Speaker 3: It might pick up a little early next year. But 98 00:04:54,200 --> 00:04:56,080 Speaker 3: we're out of workers. I mean, we don't have good 99 00:04:56,080 --> 00:04:59,200 Speaker 3: immigration data at all. The governments stopped producing a lot 100 00:04:59,240 --> 00:05:01,280 Speaker 3: of data that we need in order to figure out 101 00:05:01,320 --> 00:05:03,560 Speaker 3: exactly what's going on with the growth in the working 102 00:05:03,560 --> 00:05:05,839 Speaker 3: age population. But as far as I can tell, it's shrinking. 103 00:05:06,240 --> 00:05:08,159 Speaker 3: And it's very hard to grow jobs when you're shrinking 104 00:05:08,400 --> 00:05:10,880 Speaker 3: the working age population. But that actually has a feedback 105 00:05:10,920 --> 00:05:13,040 Speaker 3: loop in the overall economy. You know, I don't know 106 00:05:13,040 --> 00:05:17,279 Speaker 3: if you remember says law from your economic theories classes, 107 00:05:17,360 --> 00:05:20,440 Speaker 3: but the idea that supply creates its own demand. If 108 00:05:20,520 --> 00:05:22,800 Speaker 3: you pull back in the number of workers a night, 109 00:05:23,600 --> 00:05:26,200 Speaker 3: and you know, you don't open a restaurant because hey, 110 00:05:26,200 --> 00:05:28,800 Speaker 3: you couldn't stop the restaurants. So those jobs don't get created. 111 00:05:29,240 --> 00:05:31,719 Speaker 3: You know, the meals don't get served, the houses don't 112 00:05:31,720 --> 00:05:33,480 Speaker 3: get built from the people who don't want to are 113 00:05:33,560 --> 00:05:34,400 Speaker 3: around to live in them. 114 00:05:34,480 --> 00:05:36,839 Speaker 5: So the lack of labor supply is slowing the economy 115 00:05:36,880 --> 00:05:37,800 Speaker 5: in itself. 116 00:05:37,680 --> 00:05:41,640 Speaker 2: Right, says Law Paul at Trinity College. Is they open 117 00:05:41,920 --> 00:05:45,480 Speaker 2: the Guinness brewery yep, And if they manufacture the Guinness, 118 00:05:45,520 --> 00:05:49,200 Speaker 2: it somehow it gets consumed. That says Law out of 119 00:05:49,279 --> 00:05:52,800 Speaker 2: David Kelly's Ireland. I look, David at the job economy 120 00:05:53,200 --> 00:05:55,080 Speaker 2: and I look at the worry out there, and to 121 00:05:55,200 --> 00:06:00,560 Speaker 2: me it becomes a political monetary policy. Can economists nor 122 00:06:00,760 --> 00:06:06,920 Speaker 2: a negative non firm payroll trend? Well, I think it probably. 123 00:06:07,040 --> 00:06:11,279 Speaker 3: I think if it continued into the first six months 124 00:06:11,279 --> 00:06:13,960 Speaker 3: of next year, then I think the FED would ease earlier. 125 00:06:14,000 --> 00:06:15,919 Speaker 3: But I think I think we'll see a little pick up, 126 00:06:15,920 --> 00:06:18,040 Speaker 3: as I said, because of income tax refunds. I think 127 00:06:18,080 --> 00:06:19,520 Speaker 3: we'll see a pickup and growth, and I think that 128 00:06:19,560 --> 00:06:25,320 Speaker 3: will stench the bleeding for for a while, but then 129 00:06:25,720 --> 00:06:28,120 Speaker 3: you know, maybe later next year we do get rate cuts, 130 00:06:28,120 --> 00:06:30,000 Speaker 3: but I want to make it clear rate cuts won't 131 00:06:30,040 --> 00:06:32,839 Speaker 3: fix anything here. The problem, the problems that this economy 132 00:06:32,880 --> 00:06:36,039 Speaker 3: faces have got nothing to do with interest rates or 133 00:06:36,040 --> 00:06:36,880 Speaker 3: interest rates being. 134 00:06:36,720 --> 00:06:37,520 Speaker 5: Too high anyway. 135 00:06:38,320 --> 00:06:41,239 Speaker 3: So yes, it may force the Federal Reserve into cutting 136 00:06:41,440 --> 00:06:44,680 Speaker 3: more aggressively later next year if the economy, if we 137 00:06:44,680 --> 00:06:47,080 Speaker 3: don't sort of put some more artificial stimulus into the economy, 138 00:06:47,120 --> 00:06:47,919 Speaker 3: which we may well do. 139 00:06:49,120 --> 00:06:51,360 Speaker 4: David at JPM, we're going to ask the management, how 140 00:06:51,360 --> 00:06:54,120 Speaker 4: do you guys think about alternative investments? 141 00:06:55,640 --> 00:06:57,760 Speaker 5: Well, we think a lot about them. 142 00:06:58,120 --> 00:07:01,640 Speaker 3: Were we were very conscious of the fact you're just 143 00:07:01,680 --> 00:07:03,320 Speaker 3: talking about how good a year has been for the 144 00:07:03,400 --> 00:07:05,520 Speaker 3: stock market and the bond market has given you positive 145 00:07:05,520 --> 00:07:08,680 Speaker 3: returns despite a fair amount of inflation. That means that 146 00:07:08,960 --> 00:07:11,200 Speaker 3: a sort of sixty to forty stock bond portfolio, it's 147 00:07:11,200 --> 00:07:15,280 Speaker 3: pretty expensive and people really need to diversify and reduce risk. 148 00:07:15,320 --> 00:07:17,000 Speaker 3: But one of the key ways they can do that 149 00:07:17,440 --> 00:07:23,320 Speaker 3: is investing in alternatives things like infrastructure, transportation, real estate, 150 00:07:23,680 --> 00:07:26,360 Speaker 3: also private equity and private credit. But you've got to 151 00:07:26,400 --> 00:07:30,160 Speaker 3: know who's managing that money. But we definitely believe that 152 00:07:30,440 --> 00:07:33,560 Speaker 3: all investors need to think about having some alternatives in 153 00:07:33,600 --> 00:07:36,480 Speaker 3: the portfolio beyond the public markets, because the public markets 154 00:07:36,520 --> 00:07:38,200 Speaker 3: do have a certain amount of risk, and by the way, 155 00:07:38,320 --> 00:07:41,080 Speaker 3: there's also a lot of opportunity in private markets. 156 00:07:41,280 --> 00:07:43,360 Speaker 5: The companies don't want to go public, and. 157 00:07:43,280 --> 00:07:46,360 Speaker 3: So a lot of the explosion of ideas around technology 158 00:07:46,360 --> 00:07:47,800 Speaker 3: and AI and biotech. 159 00:07:47,400 --> 00:07:49,960 Speaker 5: And so forth, they're all occurring in the private market space. 160 00:07:50,000 --> 00:07:51,800 Speaker 5: So you really want to be able to access some 161 00:07:51,880 --> 00:07:52,080 Speaker 5: of that. 162 00:07:52,160 --> 00:07:55,800 Speaker 3: So yeah, I think it's beyond time for people to 163 00:07:56,040 --> 00:07:58,480 Speaker 3: when people can just afford to ignore alternatives, I think 164 00:07:58,480 --> 00:08:00,280 Speaker 3: people really need to think about their alternative as it 165 00:08:00,320 --> 00:08:01,320 Speaker 3: go into twenty twenty six. 166 00:08:02,040 --> 00:08:03,880 Speaker 4: So, David, I mean I can sit here in a 167 00:08:03,880 --> 00:08:06,320 Speaker 4: two year treasuring get you know, three point five percent. 168 00:08:06,360 --> 00:08:09,559 Speaker 4: That's a nice coupon relative the last ten or fifteen years. 169 00:08:10,200 --> 00:08:12,120 Speaker 4: Is that good enough in the fixed income space? Or 170 00:08:12,120 --> 00:08:13,680 Speaker 4: should I be taking some credit risk here? 171 00:08:15,040 --> 00:08:16,640 Speaker 5: I wouldn't take too much credit risk. 172 00:08:16,720 --> 00:08:16,960 Speaker 4: I think. 173 00:08:17,160 --> 00:08:20,400 Speaker 3: I think I'd want to have, you know, maybe a 174 00:08:20,400 --> 00:08:22,720 Speaker 3: little bit more duration than that, but not much. I 175 00:08:22,720 --> 00:08:24,760 Speaker 3: don't think there's much money to be made in fixed income, 176 00:08:24,760 --> 00:08:28,240 Speaker 3: but I think that it does help stabilize a portfolio. 177 00:08:28,280 --> 00:08:29,880 Speaker 5: So I wouldn't be underweight fixed income. 178 00:08:29,960 --> 00:08:32,240 Speaker 3: I wouldn't take much credit risk because credit spreads are 179 00:08:32,240 --> 00:08:35,400 Speaker 3: really tight, and if you do have a recession, then 180 00:08:35,800 --> 00:08:37,439 Speaker 3: you know these credit spreads are going to blow out 181 00:08:37,640 --> 00:08:39,720 Speaker 3: and you're going to get hurt. So I just don't 182 00:08:39,720 --> 00:08:42,040 Speaker 3: think you're getting paid for taking risk in the bond market. 183 00:08:42,320 --> 00:08:46,360 Speaker 2: The melting ice, to your analog of the dakotas enough 184 00:08:46,440 --> 00:08:50,400 Speaker 2: to Winnipeg. The melting ice is the yield on money 185 00:08:50,440 --> 00:08:53,960 Speaker 2: market funds. You got some compete, They can do the 186 00:08:54,000 --> 00:08:57,600 Speaker 2: math over there, you know, I mean for Oley, Casman, 187 00:08:58,160 --> 00:09:01,319 Speaker 2: Santo's the rest of them. Maybe Kelly, what's the math 188 00:09:01,880 --> 00:09:05,040 Speaker 2: of when the dam breaks on money market funds, what's 189 00:09:05,080 --> 00:09:07,120 Speaker 2: the yield or the ice melts? 190 00:09:09,200 --> 00:09:10,360 Speaker 5: You know, I don't think that. 191 00:09:11,120 --> 00:09:14,160 Speaker 3: What usually happens is as those rates come down, you 192 00:09:14,240 --> 00:09:15,640 Speaker 3: think a whole pile of money will come out of 193 00:09:15,640 --> 00:09:18,680 Speaker 3: money market funds. But what happens is people get scared 194 00:09:18,720 --> 00:09:23,440 Speaker 3: more and more scared that something is seriously going wrong here. 195 00:09:24,640 --> 00:09:25,800 Speaker 5: It depends, you know, if. 196 00:09:25,640 --> 00:09:29,120 Speaker 3: We have recession, I would expect money to pile out 197 00:09:29,240 --> 00:09:31,800 Speaker 3: of the money market funds to go into the bond market. 198 00:09:31,840 --> 00:09:34,760 Speaker 3: But if it's if it's sort of a recession plus 199 00:09:34,800 --> 00:09:37,360 Speaker 3: inflation threat, because we're going to get more stimulus in 200 00:09:37,360 --> 00:09:38,840 Speaker 3: an economy that's supply constrained. 201 00:09:38,840 --> 00:09:41,280 Speaker 5: If it's that kind of story of twenty twenty two 202 00:09:41,360 --> 00:09:41,880 Speaker 5: all over. 203 00:09:41,720 --> 00:09:43,880 Speaker 3: Again, I think the money will sit in money market 204 00:09:43,880 --> 00:09:45,959 Speaker 3: funds even if the Fed gets strong armed in the 205 00:09:45,960 --> 00:09:48,760 Speaker 3: pushing rates down, because people will be genuinely scared of 206 00:09:48,840 --> 00:09:49,720 Speaker 3: long term assets. 207 00:09:50,840 --> 00:09:53,559 Speaker 4: So David, in the equity markets, the US equity markets, 208 00:09:53,559 --> 00:09:55,920 Speaker 4: the last two or three years, really it's kind of 209 00:09:55,920 --> 00:09:58,600 Speaker 4: been an AI trade, a mag seven, all that kind 210 00:09:58,679 --> 00:09:59,600 Speaker 4: of stuff. 211 00:09:59,600 --> 00:09:59,800 Speaker 2: Here. 212 00:10:00,760 --> 00:10:03,760 Speaker 4: Folks that have been waiting for a broadening out, They've 213 00:10:03,760 --> 00:10:05,840 Speaker 4: been waiting a long time. Here is twenty twenty six 214 00:10:05,880 --> 00:10:07,600 Speaker 4: a year or maybe we can get some broadening out. 215 00:10:08,280 --> 00:10:08,760 Speaker 5: It could be. 216 00:10:08,800 --> 00:10:12,080 Speaker 3: I mean, marketing markets can remain irrational longer than the insolvent, 217 00:10:12,120 --> 00:10:13,600 Speaker 3: as somebody said many many years. 218 00:10:13,480 --> 00:10:17,920 Speaker 5: Ago, so it could broaden out. I think it is. 219 00:10:18,920 --> 00:10:21,480 Speaker 3: If we have a big correction or a bear market, 220 00:10:21,520 --> 00:10:24,000 Speaker 3: it will broaden out because we know that that the 221 00:10:24,400 --> 00:10:26,680 Speaker 3: epicenter of any bear market is going to be the 222 00:10:26,720 --> 00:10:30,160 Speaker 3: area of greatest speculation before it occurred. So I think 223 00:10:30,200 --> 00:10:32,000 Speaker 3: that I think that I think there's a good chance 224 00:10:32,040 --> 00:10:33,760 Speaker 3: that have brought out at some stage here. 225 00:10:33,880 --> 00:10:34,960 Speaker 5: But the other thing to think. 226 00:10:34,800 --> 00:10:37,200 Speaker 3: About is, you know, when you look at these mammoth 227 00:10:37,280 --> 00:10:41,480 Speaker 3: companies who are pouring money into their version of AI, 228 00:10:41,800 --> 00:10:44,280 Speaker 3: they're all making the same bet, and they've all got 229 00:10:44,280 --> 00:10:48,040 Speaker 3: these sort of quasi monopolistic profits which are funneling into 230 00:10:48,360 --> 00:10:51,880 Speaker 3: an enormous amount of spending on data centers and chips 231 00:10:51,920 --> 00:10:55,080 Speaker 3: to be the AI superpower. But they can't all be 232 00:10:55,160 --> 00:10:57,959 Speaker 3: AI superpower. So even within the mag seven there's a 233 00:10:58,040 --> 00:11:00,400 Speaker 3: there's a lot of risk there that they're all chasing 234 00:11:00,440 --> 00:11:04,719 Speaker 3: after a goal, you know, a brass ring that all 235 00:11:04,760 --> 00:11:07,120 Speaker 3: of them cannot achieve, and maybe none of them can 236 00:11:07,160 --> 00:11:09,240 Speaker 3: achieve if you know, China gets there first. 237 00:11:10,000 --> 00:11:13,480 Speaker 2: David trees to the sky. Paul asked about earnings as well. 238 00:11:14,120 --> 00:11:18,240 Speaker 2: Four years double digit return. It's happened like I think 239 00:11:18,320 --> 00:11:22,200 Speaker 2: three times since the Irish kicked the English out of 240 00:11:22,520 --> 00:11:25,680 Speaker 2: David Kelly's Ireland. David, come on, I mean, there's a 241 00:11:25,720 --> 00:11:29,280 Speaker 2: point where this breaks. What should our listeners in viewers 242 00:11:29,960 --> 00:11:33,400 Speaker 2: study and observe to try to get a bit out 243 00:11:33,440 --> 00:11:35,800 Speaker 2: front of when the market breaks. 244 00:11:37,080 --> 00:11:39,200 Speaker 3: Well, I think I think the first thing is look 245 00:11:39,240 --> 00:11:41,440 Speaker 3: at that AI trade and look at the some of 246 00:11:41,480 --> 00:11:43,880 Speaker 3: the big players there. Is it going to come a 247 00:11:44,040 --> 00:11:46,720 Speaker 3: point where people get skittish about some of the players 248 00:11:46,720 --> 00:11:49,200 Speaker 3: in this space whether they will be the winners. Because 249 00:11:49,200 --> 00:11:50,720 Speaker 3: if it looks like you're not going to be the winner, 250 00:11:50,720 --> 00:11:51,840 Speaker 3: then should you be putting all. 251 00:11:51,760 --> 00:11:54,320 Speaker 5: This money into it? And if you shouldn't, then you know, 252 00:11:54,800 --> 00:11:56,040 Speaker 5: what's your business model looking like. 253 00:11:56,040 --> 00:11:58,400 Speaker 3: So I think that's that's one area of vulnerability. And 254 00:11:58,440 --> 00:12:02,200 Speaker 3: then also, FRANKU keep an eye on the politics. 255 00:12:01,640 --> 00:12:02,080 Speaker 2: Of all of this. 256 00:12:02,200 --> 00:12:03,400 Speaker 5: I mean, I'm very worried that. 257 00:12:03,400 --> 00:12:06,360 Speaker 3: We're going to try to do tariff rebate checks, which 258 00:12:06,400 --> 00:12:10,439 Speaker 3: we'll just you know, if we pour more consumer stimulus 259 00:12:10,480 --> 00:12:13,440 Speaker 3: into the economy before the midterm elections when we're supply constrained, 260 00:12:13,480 --> 00:12:14,760 Speaker 3: we're going to reignite inflation. 261 00:12:15,800 --> 00:12:17,920 Speaker 5: And that is certainly a fear. 262 00:12:18,080 --> 00:12:21,600 Speaker 3: If our political system is not capable of dealing with 263 00:12:21,640 --> 00:12:25,120 Speaker 3: the moment with some sort of sobriety, we do have 264 00:12:25,120 --> 00:12:27,079 Speaker 3: a problem. I think that's the other thing people should 265 00:12:27,120 --> 00:12:29,880 Speaker 3: keep an eye on. But more generally, look, we don't 266 00:12:29,920 --> 00:12:31,640 Speaker 3: know where the next shock is going to come from. 267 00:12:31,800 --> 00:12:33,600 Speaker 3: That's why you go into next year with some sort 268 00:12:33,640 --> 00:12:36,360 Speaker 3: of balance. So regardless of how you try and figure 269 00:12:36,360 --> 00:12:38,640 Speaker 3: out the risks, look at your portfolio is that more 270 00:12:38,720 --> 00:12:41,040 Speaker 3: risk than you should be taking. If it is, how 271 00:12:41,080 --> 00:12:43,200 Speaker 3: can you in a tax efficient. 272 00:12:42,800 --> 00:12:45,000 Speaker 5: Way get to more balance? And I think that's a 273 00:12:45,000 --> 00:12:46,360 Speaker 5: real question for twenty twenty six. 274 00:12:46,520 --> 00:12:48,440 Speaker 2: David, Thank you so much. Just a great way to 275 00:12:48,480 --> 00:12:51,800 Speaker 2: start this holiday with David Kelly with This is Forever 276 00:12:52,160 --> 00:12:56,800 Speaker 2: of JP. Stay with us. More from Bloomberg Surveillance coming 277 00:12:56,880 --> 00:12:57,880 Speaker 2: up after this. 278 00:13:05,120 --> 00:13:08,720 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 279 00:13:08,760 --> 00:13:11,920 Speaker 1: weekday afternoons from seven to ten am Eastern Listen on 280 00:13:12,000 --> 00:13:15,400 Speaker 1: Apple Karplay and Android Otto with the Bloomberg Business app, 281 00:13:15,600 --> 00:13:17,439 Speaker 1: or watch us live on YouTube. 282 00:13:17,559 --> 00:13:20,600 Speaker 2: We have the perfect guest after the certitude. Whatever you 283 00:13:20,600 --> 00:13:22,960 Speaker 2: think of the politics and all that, the certitude of 284 00:13:23,040 --> 00:13:25,959 Speaker 2: Stephen Myron. Here, George Borri with us right now, who 285 00:13:25,960 --> 00:13:30,200 Speaker 2: writes in a wonderfully measured approach to fixed income for 286 00:13:30,320 --> 00:13:35,040 Speaker 2: Allspring Global Investments. He's chief investment strategist fixed income at 287 00:13:35,040 --> 00:13:38,760 Speaker 2: the firm. George, I look at forget about the theory. 288 00:13:39,600 --> 00:13:44,120 Speaker 2: The certitude of Stephen Myron is breathtaking. What anybody if 289 00:13:44,679 --> 00:13:47,120 Speaker 2: I more In the day we lost Marty Feldstein as 290 00:13:47,160 --> 00:13:51,160 Speaker 2: PhD advisor. If Professor Feldstein was sitting here, I be saying, 291 00:13:51,200 --> 00:13:54,880 Speaker 2: are you kidding me, professor? Did you teach him this certitude? 292 00:13:55,280 --> 00:14:00,559 Speaker 2: When you hear that certitude of opinion from a legits, 293 00:14:00,679 --> 00:14:01,600 Speaker 2: how do you react. 294 00:14:02,080 --> 00:14:04,720 Speaker 6: I think there were two very strong messages in what 295 00:14:04,800 --> 00:14:07,960 Speaker 6: he had to say, and the first is, really, you know, 296 00:14:08,000 --> 00:14:10,960 Speaker 6: the easing bias is very much in place if there's 297 00:14:10,960 --> 00:14:13,920 Speaker 6: a mixed view. But as he said, you know, Chairman 298 00:14:13,960 --> 00:14:16,640 Speaker 6: Powell's done a good job of wrangling the committee that 299 00:14:16,679 --> 00:14:20,400 Speaker 6: the committee itself seems biased to continue down this eating 300 00:14:20,520 --> 00:14:26,119 Speaker 6: easing path until until data says otherwise. And then secondly, 301 00:14:26,600 --> 00:14:29,320 Speaker 6: you know, they seem committed to wanting to extend the 302 00:14:29,360 --> 00:14:34,000 Speaker 6: cycle and trying to engineer not just a soft landing, 303 00:14:34,040 --> 00:14:37,280 Speaker 6: but an ongoing expansion. And I thought what was really 304 00:14:37,280 --> 00:14:40,480 Speaker 6: interesting is talking about that balance between supply and demand, 305 00:14:40,960 --> 00:14:45,280 Speaker 6: very economic driven basic principles. But if both are expanding 306 00:14:45,320 --> 00:14:50,280 Speaker 6: at the same time, that really is the ultimate cycle extension, 307 00:14:50,440 --> 00:14:53,320 Speaker 6: and it sounds as if the FED is committed to 308 00:14:53,400 --> 00:14:53,800 Speaker 6: doing that. 309 00:14:53,960 --> 00:14:56,160 Speaker 2: I was going backing for the David gerb this we're 310 00:14:56,200 --> 00:14:58,760 Speaker 2: commercial free folks at the top of the hour. Let 311 00:14:58,760 --> 00:15:01,600 Speaker 2: me get one more impulse, George Bory, I look at 312 00:15:01,600 --> 00:15:04,160 Speaker 2: this and I go, okay, we're going to get a 313 00:15:04,240 --> 00:15:08,360 Speaker 2: Myron vector to lower interest rates. I'm not sure it 314 00:15:08,440 --> 00:15:11,800 Speaker 2: benefits they have nots. Let's say it benefits they have 315 00:15:12,280 --> 00:15:16,800 Speaker 2: in the financialization of America. You're living this every day. Yeah, 316 00:15:16,840 --> 00:15:21,200 Speaker 2: if you get a Myron vector, it's like boom, right. 317 00:15:21,680 --> 00:15:24,240 Speaker 6: I think there are three big factors that are going 318 00:15:24,320 --> 00:15:27,640 Speaker 6: to drive through markets next year very much bond market focus. 319 00:15:27,760 --> 00:15:30,080 Speaker 6: Number One, cash is on the move. If the FED 320 00:15:30,160 --> 00:15:33,040 Speaker 6: is the FED is biased to ease, then that eight 321 00:15:33,120 --> 00:15:37,000 Speaker 6: trillion dollars in money markets and in short term deposits 322 00:15:37,280 --> 00:15:39,680 Speaker 6: are going to be looking for other places to go. 323 00:15:39,880 --> 00:15:42,640 Speaker 6: And in a world where inflation still remains up around 324 00:15:42,640 --> 00:15:46,760 Speaker 6: that three percent level, the free trade, the easy trade 325 00:15:46,800 --> 00:15:49,040 Speaker 6: is over, You're going to need to move that cash 326 00:15:49,160 --> 00:15:52,440 Speaker 6: into something else, and so moving out into short duration 327 00:15:52,560 --> 00:15:56,080 Speaker 6: bonds seem likely. The second is the curve. The curve 328 00:15:56,160 --> 00:15:59,000 Speaker 6: itself kind of came down a little bit, yields came 329 00:15:59,040 --> 00:16:01,480 Speaker 6: down a little bit this year. Year sounds as if 330 00:16:01,480 --> 00:16:03,960 Speaker 6: we're going to see more of a twist next year 331 00:16:04,000 --> 00:16:06,920 Speaker 6: that front end coming down, the long end could actually 332 00:16:06,960 --> 00:16:09,320 Speaker 6: start going up again. And so I think that that 333 00:16:09,440 --> 00:16:11,880 Speaker 6: actually is a really big theme that bond investors are 334 00:16:11,880 --> 00:16:14,200 Speaker 6: going to contend with. And then the last you talk 335 00:16:14,200 --> 00:16:16,920 Speaker 6: about haves and have nots. If we look at the 336 00:16:17,720 --> 00:16:22,320 Speaker 6: corporate side of the economy, you know, event risk defaults, 337 00:16:22,680 --> 00:16:25,880 Speaker 6: m and A, the AI build out, the drawdown of 338 00:16:26,040 --> 00:16:29,240 Speaker 6: cash in the system to sort of spend money on 339 00:16:29,360 --> 00:16:33,000 Speaker 6: things has kind of a mixed impact on credit markets, 340 00:16:33,040 --> 00:16:36,600 Speaker 6: and credit markets themselves are seeing a pretty big kind 341 00:16:36,600 --> 00:16:40,160 Speaker 6: of increase in dispersion and would suggest that we're in 342 00:16:40,200 --> 00:16:43,000 Speaker 6: the later stages of a credit cycle, not the end, 343 00:16:43,360 --> 00:16:46,200 Speaker 6: but very much the later phase. And so these three 344 00:16:46,280 --> 00:16:49,560 Speaker 6: big themes are going to be what bond investors and 345 00:16:49,680 --> 00:16:51,040 Speaker 6: any investor really is. 346 00:16:51,000 --> 00:16:52,560 Speaker 5: Going to have to contend with now. 347 00:16:52,880 --> 00:16:56,840 Speaker 6: Navigating that's going to require some maneuverability in your portfolio 348 00:16:57,000 --> 00:16:59,600 Speaker 6: if you do it well. You know, for bond investors, 349 00:17:00,160 --> 00:17:02,600 Speaker 6: you know, mid to high single digit returns is sort 350 00:17:02,600 --> 00:17:04,680 Speaker 6: of what you're shooting for. That's kind of the best 351 00:17:04,720 --> 00:17:07,399 Speaker 6: we can hope for. But it's not going to just 352 00:17:07,520 --> 00:17:10,199 Speaker 6: come to you. The beta trade, if you will happened 353 00:17:10,240 --> 00:17:13,520 Speaker 6: in twenty five, next year twenty six, you're going to 354 00:17:13,600 --> 00:17:16,320 Speaker 6: have to move it around a little to actually achieve 355 00:17:16,680 --> 00:17:17,840 Speaker 6: those kind of returns. 356 00:17:17,880 --> 00:17:21,080 Speaker 4: How about if some of that cash mews into municipal debt, 357 00:17:21,280 --> 00:17:23,879 Speaker 4: particularly for those in high tex jurisdictions. 358 00:17:24,160 --> 00:17:28,160 Speaker 6: Yeah, munis still look very attractive relative to other bonds. 359 00:17:28,920 --> 00:17:31,600 Speaker 6: You know, yields have not moved down as much as 360 00:17:31,600 --> 00:17:35,199 Speaker 6: we've seen in the taxable side of the market, and 361 00:17:35,280 --> 00:17:38,240 Speaker 6: so in the world of munis, where you've got the 362 00:17:38,280 --> 00:17:41,399 Speaker 6: benefit of high ratings, you've got balanced budgets at the 363 00:17:41,440 --> 00:17:45,200 Speaker 6: state levels, and you still have very good income streams 364 00:17:45,240 --> 00:17:48,960 Speaker 6: coming through, we think there's really good value in munis 365 00:17:49,000 --> 00:17:50,960 Speaker 6: and it's a nice way to kind of add to 366 00:17:51,040 --> 00:17:54,720 Speaker 6: that portfolio. The tax advantage is huge for the haves, 367 00:17:55,040 --> 00:17:57,159 Speaker 6: and so we'll see good demand over the course of 368 00:17:57,200 --> 00:18:00,159 Speaker 6: the year, and they're going to be very susceptible to 369 00:18:00,200 --> 00:18:04,440 Speaker 6: those three basic themes of moving out of cash, twisting, 370 00:18:04,480 --> 00:18:06,160 Speaker 6: curve growing, event risk. 371 00:18:06,280 --> 00:18:08,320 Speaker 2: So it's not really ire act. But let's ask what's 372 00:18:08,320 --> 00:18:11,160 Speaker 2: a single point ten year yield for you twelve months out. 373 00:18:11,359 --> 00:18:14,080 Speaker 6: I think twelve months we're probably right around four percent 374 00:18:14,200 --> 00:18:17,399 Speaker 6: fan distribution four percent, we're down a little, down a little. 375 00:18:17,480 --> 00:18:19,240 Speaker 2: So what does a thirty year mortgage do if we 376 00:18:19,280 --> 00:18:22,159 Speaker 2: have curve steepening. Yeah, this is a surprise here. It 377 00:18:22,160 --> 00:18:22,840 Speaker 2: doesn't come in. 378 00:18:22,880 --> 00:18:25,160 Speaker 6: It doesn't come down much because the thirty year could 379 00:18:25,200 --> 00:18:28,280 Speaker 6: be back up above five, and so the twist is 380 00:18:28,359 --> 00:18:30,840 Speaker 6: actually very much around that tenure. 381 00:18:30,920 --> 00:18:31,639 Speaker 5: Part of the curve. 382 00:18:31,960 --> 00:18:35,040 Speaker 6: Front end comes down about twenty five basis point, long 383 00:18:35,160 --> 00:18:39,040 Speaker 6: end goes up a little. Mortgages don't come down that much. 384 00:18:38,960 --> 00:18:43,040 Speaker 2: Which are a surveillance real estate course. Paul Sweeneer. That's grim. 385 00:18:43,080 --> 00:18:44,520 Speaker 4: That is grim because I think if you talk to 386 00:18:44,560 --> 00:18:46,680 Speaker 4: some real estate agents, they say they need to see 387 00:18:46,680 --> 00:18:49,600 Speaker 4: something with a five handle to get people to maybe leave. 388 00:18:49,440 --> 00:18:51,080 Speaker 2: Their homes and put stuff up for sale. I mean, 389 00:18:51,160 --> 00:18:53,199 Speaker 2: Myron's got the trend right here. We got to go 390 00:18:53,240 --> 00:18:58,320 Speaker 2: here like one minute. But George, if Myron, if sort 391 00:18:58,359 --> 00:19:04,159 Speaker 2: of Myron happens and the FED cuts rates, what, I'm sorry, 392 00:19:04,200 --> 00:19:06,960 Speaker 2: what does it do to a sixty forty portfolio. It's 393 00:19:07,000 --> 00:19:10,960 Speaker 2: like it's the edge of nerve. It's like what member, 394 00:19:11,080 --> 00:19:15,480 Speaker 2: when your father made the charcoal fire and you took 395 00:19:15,520 --> 00:19:20,359 Speaker 2: the guests, they can squeezed, Yes, welcome. Isn't that what 396 00:19:20,400 --> 00:19:21,240 Speaker 2: we're talking about? 397 00:19:21,560 --> 00:19:24,920 Speaker 6: It certainly should heat things up, and that's that's that's 398 00:19:24,960 --> 00:19:27,400 Speaker 6: for certain. And so you know that's why we think 399 00:19:27,400 --> 00:19:29,879 Speaker 6: this kind of late cycle, you know, sort of phenomena 400 00:19:30,040 --> 00:19:32,720 Speaker 6: is upon us. It's why you know, intermediate short part 401 00:19:32,720 --> 00:19:35,080 Speaker 6: of the curve, and you're going to be forced out 402 00:19:35,080 --> 00:19:38,400 Speaker 6: of cash. That is the accelerator. That's exactly what we're 403 00:19:38,440 --> 00:19:39,840 Speaker 6: talking about for all of us. 404 00:19:39,920 --> 00:19:42,800 Speaker 2: Thank you so much for your commitment to Bloomberg Surveillance. 405 00:19:42,840 --> 00:19:47,480 Speaker 2: George Bourrien's just really he's all Spring investors. Stay with us. 406 00:19:47,520 --> 00:19:57,800 Speaker 2: More from Bloomberg Surveillance coming up after this. 407 00:19:57,800 --> 00:20:01,720 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 408 00:20:01,760 --> 00:20:05,159 Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto 409 00:20:05,200 --> 00:20:08,160 Speaker 1: with the Bloomberg Business app. You can also listen live 410 00:20:08,240 --> 00:20:11,800 Speaker 1: on Amazon Alexa from our flagship New York station, Just 411 00:20:11,840 --> 00:20:14,359 Speaker 1: say Alexa play Bloomberg eleven thirty. 412 00:20:14,680 --> 00:20:16,800 Speaker 2: Let's move on to Michael Purvis and look at the 413 00:20:16,800 --> 00:20:19,840 Speaker 2: sanity here. Michael, you and I have seen mean Paul's 414 00:20:19,960 --> 00:20:23,040 Speaker 2: ever seen it like this, the stupid season in M 415 00:20:23,119 --> 00:20:26,720 Speaker 2: and A. You've got really a lot of experience in this. 416 00:20:27,080 --> 00:20:31,640 Speaker 2: Michael Purvis, how does the certitude of transactions and combinations, 417 00:20:31,960 --> 00:20:34,720 Speaker 2: how does it end? Well? 418 00:20:34,760 --> 00:20:37,639 Speaker 7: I think for the near term and near term in 419 00:20:37,640 --> 00:20:41,320 Speaker 7: this context may being twenty twenty six, I think we 420 00:20:41,359 --> 00:20:42,640 Speaker 7: should expect. 421 00:20:42,600 --> 00:20:43,320 Speaker 8: More m and A. 422 00:20:43,640 --> 00:20:45,600 Speaker 7: And one of the reasons why I say that is 423 00:20:45,640 --> 00:20:50,760 Speaker 7: because on one hand, you're seeing reasonably strong equity markets 424 00:20:50,800 --> 00:20:53,560 Speaker 7: and some stability and rates, and you know, you look 425 00:20:53,560 --> 00:20:56,320 Speaker 7: at treasury volatility that's much lower. Rates may not be 426 00:20:56,359 --> 00:20:58,600 Speaker 7: as low as some would like, but the rate volatility 427 00:20:58,680 --> 00:21:01,159 Speaker 7: is lower. It's that's a platform. But I think the 428 00:21:01,240 --> 00:21:04,480 Speaker 7: other sort of overarching theme here is that, you know, 429 00:21:04,520 --> 00:21:06,960 Speaker 7: we have this K shaped economy, but I also think 430 00:21:07,000 --> 00:21:10,040 Speaker 7: there's sort of a K shaped stock market dynamic as well. 431 00:21:10,600 --> 00:21:13,119 Speaker 7: And we've talked a little bit about this in the 432 00:21:13,160 --> 00:21:15,280 Speaker 7: past time. But what I mean by that is that 433 00:21:15,440 --> 00:21:23,320 Speaker 7: with AI and with re orienting supply chains, globally, scale matters, right, 434 00:21:23,400 --> 00:21:25,760 Speaker 7: Larger companies are able to sort of manage through these 435 00:21:25,760 --> 00:21:29,840 Speaker 7: transitions better than smaller ones in many cases. There So 436 00:21:29,880 --> 00:21:33,760 Speaker 7: I think you're going to keep seeing smaller medium sized 437 00:21:33,760 --> 00:21:37,840 Speaker 7: companies merging to get scale so that they can survive 438 00:21:37,920 --> 00:21:39,520 Speaker 7: and thrive in this new era. 439 00:21:40,040 --> 00:21:41,680 Speaker 4: And we're seeing that just with the news that Tom 440 00:21:41,720 --> 00:21:43,200 Speaker 4: and I were discussing just a moment ago with a 441 00:21:43,240 --> 00:21:47,400 Speaker 4: Paramount and Warner Brothers Discovery, Michael talk to us about 442 00:21:47,440 --> 00:21:50,960 Speaker 4: kind of the risk outlook for twenty twenty six. Again, 443 00:21:51,400 --> 00:21:56,000 Speaker 4: the stocks and bonds and commodities are just ripping in 444 00:21:56,040 --> 00:21:58,440 Speaker 4: twenty twenty five. How do we set up for twenty 445 00:21:58,440 --> 00:21:58,960 Speaker 4: twenty six? 446 00:22:00,040 --> 00:22:02,919 Speaker 7: Look, I think broadly speaking, the macro that like, we 447 00:22:02,960 --> 00:22:05,679 Speaker 7: have a good sort of macro set up for risk appetite, 448 00:22:06,119 --> 00:22:07,919 Speaker 7: right in terms of you know, we've got sort of 449 00:22:07,960 --> 00:22:11,879 Speaker 7: warm maybe hot monetary policy. We've got some warmth and 450 00:22:11,920 --> 00:22:16,040 Speaker 7: fiscal policy currently you know here on top of reasonably 451 00:22:16,080 --> 00:22:18,639 Speaker 7: strong earnings growth, on top of a not perfect but 452 00:22:19,080 --> 00:22:21,440 Speaker 7: decent enough economy. 453 00:22:21,680 --> 00:22:22,320 Speaker 8: Uh there. 454 00:22:22,400 --> 00:22:26,080 Speaker 7: But I think the the there's one big risk here 455 00:22:26,080 --> 00:22:28,439 Speaker 7: for certainly just talking more about equities here. 456 00:22:28,359 --> 00:22:30,560 Speaker 8: Than than than than rates. 457 00:22:31,080 --> 00:22:34,159 Speaker 7: But if you look at the MAG six or the 458 00:22:34,200 --> 00:22:37,879 Speaker 7: MAG seven that you know, if you look at the 459 00:22:37,920 --> 00:22:41,600 Speaker 7: outperformance over the last several years that has basically matched 460 00:22:42,040 --> 00:22:44,920 Speaker 7: this wonderful performance in the stock market in the US 461 00:22:44,960 --> 00:22:48,959 Speaker 7: stock market here. But right now, these big companies, particularly 462 00:22:49,320 --> 00:22:51,719 Speaker 7: the big cap X spenders here you know, which is 463 00:22:51,840 --> 00:22:57,720 Speaker 7: you know, Meta, Amazon, Google and UH and Microsoft, those 464 00:22:57,760 --> 00:23:01,560 Speaker 7: companies are going through evaluation transitioned here where like if 465 00:23:01,600 --> 00:23:04,440 Speaker 7: you look at the price earnings to growth ratio, things 466 00:23:04,480 --> 00:23:08,000 Speaker 7: look great, very compelling price earnings to growth ratio is 467 00:23:08,000 --> 00:23:09,760 Speaker 7: at zero point eight right now. 468 00:23:10,000 --> 00:23:11,720 Speaker 8: Low, very very low level. 469 00:23:12,280 --> 00:23:16,479 Speaker 7: But their fee cash flow yields are at record lows 470 00:23:16,680 --> 00:23:19,639 Speaker 7: right and their free cash fowields or record lows, not 471 00:23:19,720 --> 00:23:22,480 Speaker 7: because earnings are bad or even Dad's going to be bad, 472 00:23:22,560 --> 00:23:25,880 Speaker 7: but simply because of the capex spend. So what I'm 473 00:23:25,920 --> 00:23:28,719 Speaker 7: looking for, Paul in twenty twenty six is that if 474 00:23:28,720 --> 00:23:31,679 Speaker 7: there's indications that the return on invested capital from this 475 00:23:31,760 --> 00:23:36,399 Speaker 7: capex spend is not there, then you're going to have 476 00:23:36,480 --> 00:23:38,879 Speaker 7: a lot of narratives rewritten, and you're also going to 477 00:23:38,920 --> 00:23:42,280 Speaker 7: have valuations we set lower for these key stocks there. 478 00:23:42,320 --> 00:23:44,359 Speaker 7: And that to me is like micro risk is almost 479 00:23:44,359 --> 00:23:46,600 Speaker 7: a macro risk because we're talking about, you know what, 480 00:23:46,640 --> 00:23:49,640 Speaker 7: a trillion dollars in spend from just four companies over 481 00:23:49,640 --> 00:23:53,080 Speaker 7: the next twenty four months there, So that really flows 482 00:23:53,080 --> 00:23:53,840 Speaker 7: through to everything. 483 00:23:54,000 --> 00:23:56,639 Speaker 2: Michael Purvis with us for a good conversation this morning 484 00:23:56,680 --> 00:23:58,320 Speaker 2: to get set for twenty twenty six. 485 00:23:58,359 --> 00:23:59,159 Speaker 5: We welcome all. 486 00:23:59,040 --> 00:24:02,760 Speaker 2: Of you usin nation the way you listen to us 487 00:24:02,760 --> 00:24:06,280 Speaker 2: Good Morning ninety nine one FM, Nathan Ager Radio in Washington, 488 00:24:06,680 --> 00:24:09,480 Speaker 2: ninety two nine FM in Boston, and Bloomberg eleven three 489 00:24:09,440 --> 00:24:12,280 Speaker 2: You and New York, but around the world on YouTube. 490 00:24:12,359 --> 00:24:15,800 Speaker 2: Subscribe to Bloomberg Podcast. Make it a habit for next 491 00:24:15,880 --> 00:24:18,320 Speaker 2: year when you can. It's a great live chat there. 492 00:24:18,400 --> 00:24:23,119 Speaker 2: But most importantly people watch and people listen to YouTube. 493 00:24:23,520 --> 00:24:25,880 Speaker 2: Well it's on. It's been a huge success for us 494 00:24:26,359 --> 00:24:28,720 Speaker 2: this year. Paul Sweeny with Michael Purvis. 495 00:24:29,119 --> 00:24:31,440 Speaker 4: Michael talk to us about kind of the earnings environment 496 00:24:31,480 --> 00:24:35,920 Speaker 4: out there. We've had really really strong earnings in twenty 497 00:24:35,920 --> 00:24:38,720 Speaker 4: twenty five, particular last couple of quarters. How do you 498 00:24:38,720 --> 00:24:41,560 Speaker 4: think about the earnings growth for twenty twenty six? Is 499 00:24:41,560 --> 00:24:46,160 Speaker 4: that enough to support this market? Paul, It's a tricky one. 500 00:24:46,200 --> 00:24:47,760 Speaker 7: I think if you you know, I look at the 501 00:24:47,880 --> 00:24:50,280 Speaker 7: S and P as sort of like a holding company 502 00:24:50,280 --> 00:24:52,119 Speaker 7: with two divisions that at one of which maybe the 503 00:24:52,119 --> 00:24:54,520 Speaker 7: big tech monsters and then the everything else at a 504 00:24:54,640 --> 00:24:57,280 Speaker 7: very simplistic level, so you can look at the SPX 505 00:24:57,280 --> 00:25:00,879 Speaker 7: equal Weight Index sort of a PROX for everything but 506 00:25:01,000 --> 00:25:04,120 Speaker 7: the NAG seven and if you look at that earnings 507 00:25:04,119 --> 00:25:08,960 Speaker 7: growth year over years sort of four percent, can it 508 00:25:09,000 --> 00:25:11,800 Speaker 7: beat that? Well, it will need to a have some 509 00:25:11,840 --> 00:25:14,240 Speaker 7: decent nomenal GDP to go along with that that I 510 00:25:14,280 --> 00:25:15,680 Speaker 7: think I expect. 511 00:25:15,800 --> 00:25:16,320 Speaker 8: I think the. 512 00:25:16,320 --> 00:25:19,520 Speaker 7: Harder one is whether the margins will really be there 513 00:25:19,600 --> 00:25:24,000 Speaker 7: to support support that embedded in that four percent earnings growth. 514 00:25:24,040 --> 00:25:25,120 Speaker 8: That's that's not in my number. 515 00:25:25,160 --> 00:25:30,840 Speaker 7: That's Bloomberg spottom Up consensus estimates our record earning, earning 516 00:25:30,880 --> 00:25:34,480 Speaker 7: and operating margins, which are to a degree reflect the 517 00:25:34,560 --> 00:25:36,760 Speaker 7: adoption of a successful adoption. 518 00:25:36,440 --> 00:25:39,120 Speaker 8: Of AI and productivity gains within these companies there. 519 00:25:39,480 --> 00:25:41,840 Speaker 7: So I think, you know, it's not a big number, 520 00:25:42,600 --> 00:25:45,760 Speaker 7: they have beaten that number in the past. But it's 521 00:25:45,960 --> 00:25:48,679 Speaker 7: also you know, if we run into sort of a 522 00:25:48,760 --> 00:25:52,080 Speaker 7: more of a stagulationary dynamic and that starts really hitting 523 00:25:52,560 --> 00:25:55,200 Speaker 7: some parts of the economy, the bottom end consumer already 524 00:25:55,240 --> 00:25:57,760 Speaker 7: seeing weakness there, then I think the SPH equal weight 525 00:25:58,359 --> 00:26:00,879 Speaker 7: is not very compelling. By the way, you know, we 526 00:26:00,880 --> 00:26:02,960 Speaker 7: were talking about price earnings to growth ratios. If you 527 00:26:02,960 --> 00:26:05,400 Speaker 7: look at the price earnings to growth ratio for the 528 00:26:05,480 --> 00:26:08,119 Speaker 7: SBAT equal way or for a lot of value in 529 00:26:08,160 --> 00:26:11,440 Speaker 7: cyclical industries in the US stock market, those are very 530 00:26:11,480 --> 00:26:14,440 Speaker 7: high there. So they really need to perform on earnings 531 00:26:14,520 --> 00:26:16,600 Speaker 7: just to justify your current valuations there. 532 00:26:16,800 --> 00:26:22,040 Speaker 2: What's your appetite for the timing of the market. I mean, 533 00:26:22,040 --> 00:26:24,480 Speaker 2: you've been so good about Look, you've got to be 534 00:26:24,520 --> 00:26:27,000 Speaker 2: in the market to play. You've been legendary on that. 535 00:26:27,640 --> 00:26:29,840 Speaker 2: But is timing efficacious now? 536 00:26:32,000 --> 00:26:34,960 Speaker 7: Look, I mean technicals are always really important here. Look 537 00:26:35,000 --> 00:26:37,240 Speaker 7: at my very short term trading call is I think 538 00:26:37,280 --> 00:26:41,359 Speaker 7: we're going to have a nice sort of Santa drift 539 00:26:41,440 --> 00:26:44,239 Speaker 7: up higher in the year end here, probably led by 540 00:26:44,359 --> 00:26:47,480 Speaker 7: large tech shares. That said, if you zoom out and 541 00:26:47,480 --> 00:26:50,280 Speaker 7: you look at long term technical charts, you know you're 542 00:26:50,280 --> 00:26:53,840 Speaker 7: looking at US at trading at high valuations, at the 543 00:26:54,000 --> 00:26:56,119 Speaker 7: very high end of a you know, sort of a 544 00:26:56,320 --> 00:26:59,960 Speaker 7: fifteen year channel coming out of the Great Financial Crisis there, 545 00:27:00,080 --> 00:27:04,399 Speaker 7: and typically there's some significant volatility in the following. 546 00:27:04,080 --> 00:27:05,439 Speaker 8: Year that follows that. 547 00:27:05,920 --> 00:27:08,160 Speaker 7: If you're at the top end of the channel there, 548 00:27:08,480 --> 00:27:12,480 Speaker 7: Momentum signals are are are a little mixed right now, 549 00:27:12,520 --> 00:27:14,760 Speaker 7: depending on what you're looking at. Generally, I think they're 550 00:27:14,800 --> 00:27:17,879 Speaker 7: pretty constructive, but not as constructive as they are for 551 00:27:18,040 --> 00:27:19,080 Speaker 7: gold and silver. 552 00:27:18,960 --> 00:27:21,240 Speaker 2: Well for Global Wall Street. I think you got to 553 00:27:21,240 --> 00:27:24,480 Speaker 2: interrupt and do this. This is reporting off our Tokyo 554 00:27:24,600 --> 00:27:28,560 Speaker 2: desk on Japan. This is with the Finance Minister Satsuki 555 00:27:28,640 --> 00:27:34,159 Speaker 2: Kadayama in conversation with Bloomberg. This is a reporting and 556 00:27:34,200 --> 00:27:38,800 Speaker 2: Bloomberg reports the Finance Minister says Japan can take action 557 00:27:39,000 --> 00:27:43,040 Speaker 2: is set out in US. Japan join a cord, we 558 00:27:43,080 --> 00:27:47,199 Speaker 2: have a Japan has a freehand for bold action in 559 00:27:47,480 --> 00:27:50,880 Speaker 2: FX market if needed. This is about this strange thing 560 00:27:50,920 --> 00:27:56,320 Speaker 2: called intervention and will they intervene to drive the end stronger. 561 00:27:56,480 --> 00:28:01,080 Speaker 2: Carl Weinberg, among others at High Frequency Economic Paul has 562 00:28:01,119 --> 00:28:05,119 Speaker 2: an absolutely blistering noe doubt that this is not going 563 00:28:05,200 --> 00:28:07,680 Speaker 2: to work up well. Intervention is not going to be 564 00:28:07,720 --> 00:28:08,919 Speaker 2: efficacious for Japan. 565 00:28:09,400 --> 00:28:13,719 Speaker 4: Japan ten year yields surged to highest since nineteen ninety nine, 566 00:28:13,760 --> 00:28:16,199 Speaker 4: occurring to when we're reporting there, So that gets your 567 00:28:16,200 --> 00:28:20,560 Speaker 4: attention there, Michael, talk to us about the fix income 568 00:28:20,560 --> 00:28:22,840 Speaker 4: opportunities in twenty twenty six. Twenty twenty five was a 569 00:28:22,840 --> 00:28:25,320 Speaker 4: good year. I mean high single digit returns. I mean 570 00:28:25,400 --> 00:28:28,000 Speaker 4: people actually want to hang out with fixing gum people 571 00:28:28,080 --> 00:28:28,520 Speaker 4: these days. 572 00:28:28,760 --> 00:28:29,760 Speaker 8: What do you think about next year? 573 00:28:30,600 --> 00:28:33,040 Speaker 7: Well, just to pick up on this Japanese yield question, 574 00:28:33,080 --> 00:28:35,280 Speaker 7: I think it's important you know, what's going on with 575 00:28:35,320 --> 00:28:37,080 Speaker 7: the end is sort of what we had in the 576 00:28:37,119 --> 00:28:39,560 Speaker 7: first half of the dollar which is that you saw 577 00:28:41,000 --> 00:28:45,120 Speaker 7: currencies really decouple from their respective real rate differentials, and 578 00:28:45,160 --> 00:28:49,040 Speaker 7: I think that's that's important there. And I do think 579 00:28:49,120 --> 00:28:51,680 Speaker 7: that the you know, we you can sort of feel 580 00:28:51,680 --> 00:28:53,160 Speaker 7: it and see it a little bit in the back 581 00:28:53,280 --> 00:28:57,160 Speaker 7: end of the treasury curve, that the end the movements 582 00:28:57,160 --> 00:29:01,200 Speaker 7: in jgb's and Japanese yields are being exported a little 583 00:29:01,240 --> 00:29:04,160 Speaker 7: bit to our treasury market here there. And if you 584 00:29:04,200 --> 00:29:06,680 Speaker 7: look at the you know, sort of the spread and 585 00:29:06,960 --> 00:29:09,840 Speaker 7: make differentials, you can see that same echo and the 586 00:29:09,880 --> 00:29:13,320 Speaker 7: ten R ten thirty curve here there. So I feel 587 00:29:13,320 --> 00:29:15,280 Speaker 7: like that's that's sort of a new factor that we 588 00:29:15,360 --> 00:29:18,400 Speaker 7: need to consider here. That's not you know, sort of 589 00:29:18,800 --> 00:29:22,560 Speaker 7: an unhealthy type of curve steepening here. All that said, 590 00:29:22,840 --> 00:29:25,560 Speaker 7: I think what I'm predicting is sort of a pretty 591 00:29:25,640 --> 00:29:28,120 Speaker 7: boring year in rates. For all the drama about the 592 00:29:28,160 --> 00:29:30,200 Speaker 7: FED and inflation and all that kind of stuff, all 593 00:29:30,200 --> 00:29:35,280 Speaker 7: of which are very warranted discussions and debates. I'm expecting 594 00:29:35,360 --> 00:29:38,240 Speaker 7: the treasury revolve to get lower. I'm expecting you know, 595 00:29:38,320 --> 00:29:41,240 Speaker 7: one to two cuts. I'm expecting a fair amount of 596 00:29:41,240 --> 00:29:44,160 Speaker 7: descent within the FED, which I think actually suppresses treasure 597 00:29:44,200 --> 00:29:48,440 Speaker 7: evolve and I think we should see some some curve 598 00:29:48,520 --> 00:29:51,160 Speaker 7: steepening that the end, if the FED does cut more 599 00:29:51,200 --> 00:29:52,920 Speaker 7: than perhaps it should, you're. 600 00:29:52,800 --> 00:29:53,720 Speaker 8: Going to see that echo. 601 00:29:54,000 --> 00:29:56,520 Speaker 7: Just you know, the more dubbish you get, the more 602 00:29:56,640 --> 00:29:58,240 Speaker 7: term premian you get on the back end there. 603 00:29:58,240 --> 00:29:59,800 Speaker 8: But I think it all sort of ends up keeping 604 00:29:59,840 --> 00:30:00,120 Speaker 8: the and. 605 00:30:00,160 --> 00:30:02,520 Speaker 2: You're in a range, And I got to be quick here, Michael. 606 00:30:02,520 --> 00:30:04,840 Speaker 2: We got to go to breaking news that Detroit Lions lost. 607 00:30:05,240 --> 00:30:08,880 Speaker 2: But you know, Michael, I'm looking at curve steepening. It's 608 00:30:08,960 --> 00:30:12,760 Speaker 2: clearly nonlinear. How close are we to wear curve steepening 609 00:30:12,800 --> 00:30:13,560 Speaker 2: really matters? 610 00:30:14,680 --> 00:30:17,760 Speaker 7: Well, Look, I you know, in terms of these existential 611 00:30:17,840 --> 00:30:19,480 Speaker 7: questions as to when you know the tenure is going 612 00:30:19,520 --> 00:30:21,920 Speaker 7: to spiral out of control and hit six percent, I'm 613 00:30:22,240 --> 00:30:24,720 Speaker 7: those are always tailor rists to consider. I think right now, 614 00:30:24,800 --> 00:30:27,880 Speaker 7: I think it would be such a problem for every 615 00:30:28,000 --> 00:30:32,040 Speaker 7: facet of the US economy and market and political headaches 616 00:30:32,040 --> 00:30:34,840 Speaker 7: that I sort of think that there'll be something done 617 00:30:35,760 --> 00:30:39,360 Speaker 7: in that respect. But I may not necessarily be the 618 00:30:39,440 --> 00:30:41,280 Speaker 7: right way, But I do think one of the things 619 00:30:41,320 --> 00:30:44,360 Speaker 7: to consider next year is if that if we start 620 00:30:44,400 --> 00:30:47,560 Speaker 7: seeing an unhealthy spiraling of term premium, does the FED 621 00:30:47,640 --> 00:30:49,959 Speaker 7: do something on the back end on it's with its 622 00:30:50,040 --> 00:30:50,600 Speaker 7: balance sheet. 623 00:30:50,960 --> 00:30:52,640 Speaker 8: Michael that's something you have to consider. 624 00:30:52,880 --> 00:30:55,440 Speaker 2: And Michael, thank you so much. He goes up. He's 625 00:30:55,440 --> 00:30:58,720 Speaker 2: on squam Lake even if it's like fifty bulow zero. Yeah, okay, 626 00:30:59,560 --> 00:31:02,800 Speaker 2: Santa first ye Michael purpose with Tallbeck and thank you 627 00:31:02,840 --> 00:31:06,360 Speaker 2: so much. Greatly appreciate it. Stay with us. More from 628 00:31:06,360 --> 00:31:16,120 Speaker 2: Bloomberg Surveillance coming up after this. 629 00:31:16,120 --> 00:31:20,040 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 630 00:31:20,080 --> 00:31:23,080 Speaker 1: starting at seven am Eastern on Apple Coarcklay and Android 631 00:31:23,120 --> 00:31:26,160 Speaker 1: Auto with the Bloomberg Business app. You can also listen 632 00:31:26,240 --> 00:31:29,480 Speaker 1: live on Amazon Alexa from our flagship New York station, 633 00:31:30,040 --> 00:31:34,320 Speaker 1: Just say Alexa, play Bloomberg eleven thirty with our newspapers. 634 00:31:35,200 --> 00:31:36,160 Speaker 5: Okay, did either. 635 00:31:36,000 --> 00:31:38,720 Speaker 9: You go to the movies over the weekend? No? Didn't 636 00:31:38,720 --> 00:31:39,480 Speaker 9: see the Avatar? 637 00:31:39,680 --> 00:31:39,760 Speaker 8: No? 638 00:31:40,080 --> 00:31:42,440 Speaker 9: Oh my goodness. Okay, A bunch of people did that. 639 00:31:42,480 --> 00:31:44,000 Speaker 9: A lot of people did. They did, And that's the 640 00:31:44,040 --> 00:31:46,760 Speaker 9: thing walked to day the Avatar Fire and Ash highest 641 00:31:46,800 --> 00:31:50,280 Speaker 9: grossing film in the box office, eighty eight million tickets 642 00:31:50,640 --> 00:31:54,480 Speaker 9: US and Canada. They were a little bit lower than expected, 643 00:31:54,520 --> 00:31:57,600 Speaker 9: even Disney was expecting about ninety million or so. It 644 00:31:57,640 --> 00:32:01,400 Speaker 9: did well internationally though, that was a big thing in China. Yeah, exactly, 645 00:32:01,520 --> 00:32:04,800 Speaker 9: particularly in China, and where's the sand domestically, So if 646 00:32:04,800 --> 00:32:07,760 Speaker 9: you compare the other Avatar film, so it surpassed the 647 00:32:07,800 --> 00:32:10,200 Speaker 9: first Avatar film that was back in two thousand and nine. 648 00:32:10,520 --> 00:32:13,000 Speaker 9: It fell behind the recent sequel, Avatar The Way of 649 00:32:13,040 --> 00:32:16,040 Speaker 9: Water in twenty twenty two. But I mean this is 650 00:32:16,080 --> 00:32:17,600 Speaker 9: going to keep making money. I mean, the kids are 651 00:32:17,600 --> 00:32:19,240 Speaker 9: going to be off, families are off, and it's going 652 00:32:19,320 --> 00:32:21,080 Speaker 9: to keep pulling in some money. I mean, Disney has 653 00:32:21,080 --> 00:32:23,880 Speaker 9: been pretty good. Lelo and stitch Utopia too, they both 654 00:32:23,880 --> 00:32:26,600 Speaker 9: generated more than a billion dollars at the global. 655 00:32:26,320 --> 00:32:30,600 Speaker 2: Box Lie, it's four hundred year, it's a lot. One 656 00:32:30,640 --> 00:32:33,440 Speaker 2: hundreds used to be like a huge deal. Yeah, what 657 00:32:33,560 --> 00:32:35,760 Speaker 2: do you spend four hundred million on to make a 658 00:32:35,800 --> 00:32:36,719 Speaker 2: two hour movie? 659 00:32:36,720 --> 00:32:39,560 Speaker 4: CGI? Computer generated images all that kind of stuff. But 660 00:32:39,600 --> 00:32:41,480 Speaker 4: I tell you again, the real big story here is 661 00:32:41,880 --> 00:32:44,520 Speaker 4: China is reopening its market to Western films. 662 00:32:44,520 --> 00:32:45,480 Speaker 5: And that's big. 663 00:32:45,640 --> 00:32:47,800 Speaker 2: Because Topia think, well there's yeah, so. 664 00:32:47,720 --> 00:32:49,680 Speaker 4: That's right because it was closed, you know, kind of 665 00:32:49,720 --> 00:32:52,720 Speaker 4: after the pandemic for many many years. So that's good 666 00:32:52,760 --> 00:32:53,360 Speaker 4: news for hollyween. 667 00:32:53,400 --> 00:32:55,880 Speaker 2: I can see paula Netflix. You're sure he could do 668 00:32:55,960 --> 00:33:00,440 Speaker 2: like a daily squak for Netflix. Yes, absolutely, what do 669 00:33:00,480 --> 00:33:01,080 Speaker 2: you got next? 670 00:33:01,400 --> 00:33:06,160 Speaker 9: Okay, online shopping, right, it's been hurting foot traffic in stores. 671 00:33:06,360 --> 00:33:07,920 Speaker 9: So what a lot of retailers are doing, and the 672 00:33:07,960 --> 00:33:10,000 Speaker 9: Wall Street Journal has this about Fao Schwartz, is that 673 00:33:10,040 --> 00:33:12,840 Speaker 9: they're doing a lot of in store experiences to get 674 00:33:12,840 --> 00:33:17,360 Speaker 9: the customers back. So like personal shopping tours, customized toys. 675 00:33:17,600 --> 00:33:19,720 Speaker 9: They're trying to do things. I'll give you an example. Okay, 676 00:33:19,720 --> 00:33:22,840 Speaker 9: so people are paying one hundred dollars for a private 677 00:33:22,880 --> 00:33:25,320 Speaker 9: shopping tour, and then those families go on to spend 678 00:33:25,480 --> 00:33:28,040 Speaker 9: you know, hundreds of more dollars on the toys. Then 679 00:33:28,080 --> 00:33:30,200 Speaker 9: for two hundred and fifty dollars, you can get a 680 00:33:30,240 --> 00:33:33,920 Speaker 9: longer tour session. You can get drinks at the VIP suite, 681 00:33:34,000 --> 00:33:36,760 Speaker 9: you can get shipping arrange for your purchases, and are 682 00:33:36,760 --> 00:33:40,560 Speaker 9: you ready for the top tier? Okay, three thousand, seven 683 00:33:40,640 --> 00:33:42,680 Speaker 9: hundred and fifty dollars for that. You can get a 684 00:33:42,760 --> 00:33:46,240 Speaker 9: tour for the family. Someone is dressed as a toy soldier. 685 00:33:46,280 --> 00:33:48,360 Speaker 9: It's after the store's closed, so you have the whole 686 00:33:48,400 --> 00:33:51,880 Speaker 9: thing to yourself. There's dinner, there's a magician, there's everything 687 00:33:52,000 --> 00:33:54,720 Speaker 9: like that. So they're basically appealing to like the higher 688 00:33:54,880 --> 00:33:57,080 Speaker 9: end you know customer that are doing this. But it's 689 00:33:57,080 --> 00:34:00,160 Speaker 9: a lot of competition because I feel short store to 690 00:34:00,240 --> 00:34:06,120 Speaker 9: be fifty ninth and fifth. But they closed, yopened, yes, 691 00:34:06,520 --> 00:34:07,520 Speaker 9: so now they have reopened. 692 00:34:07,560 --> 00:34:11,360 Speaker 2: Can I just there was a certain value to the 693 00:34:11,400 --> 00:34:15,200 Speaker 2: eventness of the Sears catalog in the living room floor 694 00:34:16,440 --> 00:34:21,280 Speaker 2: and you'd skip the front end with clothes for women 695 00:34:21,440 --> 00:34:23,120 Speaker 2: and you'd go to the back end where there were 696 00:34:23,160 --> 00:34:26,759 Speaker 2: silver tone guitars and you know, I mean it was 697 00:34:26,760 --> 00:34:32,319 Speaker 2: like you know catalog, the series catalog is. It was 698 00:34:32,360 --> 00:34:35,960 Speaker 2: like three inches thick, big thick thing and then you 699 00:34:36,120 --> 00:34:38,719 Speaker 2: just lined it up for your parents. That was that 700 00:34:38,840 --> 00:34:39,400 Speaker 2: was the event. 701 00:34:40,360 --> 00:34:42,440 Speaker 9: They used to have the toys arrest one too. I know, 702 00:34:42,560 --> 00:34:43,239 Speaker 9: it was the thing. 703 00:34:43,480 --> 00:34:49,480 Speaker 2: And now it's three thousand bucks the in store experience experience. 704 00:34:50,120 --> 00:34:53,880 Speaker 5: Oh this is a doozy. Jake Paul went down on Netflix. 705 00:34:54,080 --> 00:34:54,880 Speaker 2: Yes it was. 706 00:34:56,120 --> 00:34:57,840 Speaker 5: I totally watched it off Friday. 707 00:34:58,239 --> 00:35:01,600 Speaker 9: It was beat by Anthony josh you know, former heavyweight champ. 708 00:35:01,880 --> 00:35:03,759 Speaker 9: All right, so he's he's a little bit younger, you know, 709 00:35:03,880 --> 00:35:06,399 Speaker 9: Jake Paul's twenty eight, Joshua was thirty six, but Jason 710 00:35:06,520 --> 00:35:08,520 Speaker 9: was also six foot six. He hit the scale of 711 00:35:08,560 --> 00:35:11,359 Speaker 9: two forty three. Jake Paul, I didn't realize he had 712 00:35:11,400 --> 00:35:14,200 Speaker 9: six foot one, but he weighed about two sixteen. But 713 00:35:14,280 --> 00:35:16,759 Speaker 9: it was a sixth round knocked him out. I think 714 00:35:16,800 --> 00:35:19,439 Speaker 9: even broke his jaw. Jake Paul was posting about that too, 715 00:35:19,600 --> 00:35:23,080 Speaker 9: but he earned nearly one hundred million dollars. 716 00:35:22,680 --> 00:35:25,080 Speaker 8: From it from losing the badge. 717 00:35:26,000 --> 00:35:28,200 Speaker 9: But it just goes to show you sports on Netflix, 718 00:35:28,280 --> 00:35:30,320 Speaker 9: like this is another big thing because you had the 719 00:35:30,400 --> 00:35:33,000 Speaker 9: Jake Paul Mike Tyson fight and now you know this one. 720 00:35:33,239 --> 00:35:33,479 Speaker 2: Yep. 721 00:35:33,760 --> 00:35:35,920 Speaker 9: So a lot of people tuned in. We don't have 722 00:35:35,920 --> 00:35:37,240 Speaker 9: the numbers yet, but a lot of people. 723 00:35:37,320 --> 00:35:37,560 Speaker 2: Nice. 724 00:35:37,640 --> 00:35:39,480 Speaker 8: Okay, Netflix is just riding high. 725 00:35:39,920 --> 00:35:43,759 Speaker 2: I went below fifty ninth Street. Wow, sweet New York 726 00:35:43,840 --> 00:35:46,920 Speaker 2: police and greeted me. I just saw some of the 727 00:35:47,000 --> 00:35:47,759 Speaker 2: Christmas chair. 728 00:35:48,320 --> 00:35:49,640 Speaker 5: Yeah, the newspapers. 729 00:35:49,640 --> 00:35:51,319 Speaker 2: Lisa Mantello, thank you so much. 730 00:35:51,920 --> 00:35:56,759 Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify, 731 00:35:56,880 --> 00:36:00,640 Speaker 1: and anywhere else you get your podcasts. Listen live each 732 00:36:00,680 --> 00:36:04,640 Speaker 1: weekday seven to ten am Eastern on Bloomberg dot com, 733 00:36:04,680 --> 00:36:08,480 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app. 734 00:36:08,760 --> 00:36:11,880 Speaker 1: You can also Watch US live every weekday on YouTube 735 00:36:12,160 --> 00:36:14,200 Speaker 1: and always on the Bloomberg terminal