WEBVTT - Equity Rally Post-FOMC 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:21.240 on Apple car Play or Android Auto with the Bloomberg 0:00:21.320 --> 0:00:24.880 Business app. Listen on demand wherever you get your podcasts, 0:00:25.280 --> 0:00:27.240 or watch us live on YouTube. 0:00:27.920 --> 0:00:29.760 Let's start off strong here we get the thoughts about 0:00:29.800 --> 0:00:31.960 where we're going on these markets. Sema Sho, chief global 0:00:31.960 --> 0:00:35.240 strategist at Principal Asset Management. She's based in London, but 0:00:35.280 --> 0:00:38.839 she's getting ready to do like a Midwest America trip. 0:00:39.080 --> 0:00:39.720 Good for her. 0:00:39.880 --> 0:00:42.800 I mean East Lansing, Michigan. I have a soft spot 0:00:42.840 --> 0:00:45.360 in my her for East Lansing, the state capital Michigan, 0:00:45.560 --> 0:00:48.919 Des Moines, Iowa, another great town. Seema, thanks so much 0:00:48.960 --> 0:00:51.360 for joining. You're giving us a little time here in 0:00:51.360 --> 0:00:54.040 New York City. What's the conversation you're having with your 0:00:54.040 --> 0:00:55.760 clients as you come through the US and meeting with 0:00:55.800 --> 0:00:56.560 your clients. 0:00:56.240 --> 0:00:59.480 These days, Hellie, thanks for having me so. The main 0:00:59.520 --> 0:01:02.360 conversation is of course around the FED. That has to 0:01:02.400 --> 0:01:05.319 be the key conversation. And actually it's interesting because what 0:01:05.360 --> 0:01:07.360 we had seen is that over the previous six months 0:01:07.400 --> 0:01:09.800 there really wasn't a conversation about the FED, no one 0:01:09.920 --> 0:01:12.679 was talking about interest rates, and now, of course that 0:01:12.760 --> 0:01:16.360 conversation is completely turned on its head, questioning about inflation, 0:01:16.480 --> 0:01:18.600 whether the rate hikes are coming, and then of course 0:01:18.640 --> 0:01:19.880 if the market can digest that. 0:01:20.560 --> 0:01:22.240 So do you think Kevin a Ware's just the biggest 0:01:22.319 --> 0:01:25.679 change is more policy or communication or maybe both? 0:01:26.400 --> 0:01:28.200 I think could be both. I mean, I think communication 0:01:28.319 --> 0:01:30.360 is obviously at the moment it is the key one, 0:01:30.800 --> 0:01:33.240 and we did see that actually without the communication, the 0:01:33.280 --> 0:01:35.760 market puts more emphasis on the dots, which is the 0:01:35.800 --> 0:01:38.200 exact opposite of what he wanted. But I think as 0:01:38.200 --> 0:01:39.800 we go down the line, as we get towards the 0:01:39.880 --> 0:01:43.280 end of the year, policy really could have some meaningful changes. 0:01:43.360 --> 0:01:44.399 So much it's going to depend on. 0:01:44.400 --> 0:01:45.120 That task force. 0:01:45.480 --> 0:01:48.040 So you know, we're going to be thinking about volatility 0:01:48.040 --> 0:01:50.000 in the next few months around what happens to rates. 0:01:50.360 --> 0:01:53.440 But then at the end of the year there's a 0:01:53.480 --> 0:01:57.200 significant potential for a pretty big market moves around what 0:01:57.240 --> 0:01:58.560 happens from those task forces. 0:01:58.920 --> 0:02:00.320 See what's your inflation call. 0:02:01.000 --> 0:02:03.240 These days, we've seen oil come down, as it seems 0:02:03.240 --> 0:02:05.880 like we may have some progress here on some peace 0:02:05.880 --> 0:02:08.440 and negotiations in Middle East, what's your inflation call overall. 0:02:08.760 --> 0:02:11.320 Yeah, so we've got headline CPR, for example, at around 0:02:11.440 --> 0:02:15.080 four point two percent by year end. The ore price 0:02:15.160 --> 0:02:17.160 coming down certainly helps, but we do think that there's 0:02:17.240 --> 0:02:20.040 structural inflation. It's going to come down further through twenty 0:02:20.120 --> 0:02:22.400 twenty seven. We do think it gets pretty close to 0:02:22.440 --> 0:02:25.720 two percent, but still above and the main reason for 0:02:25.720 --> 0:02:28.040 that is there are some other structural drivers behind inflation 0:02:28.080 --> 0:02:30.440 which are not going to be disappearing anytime soon, mainly 0:02:30.480 --> 0:02:33.119 around the AI capex build out. So this is still 0:02:33.120 --> 0:02:36.000 a high inflation environment. We think that the FED is 0:02:36.040 --> 0:02:37.560 going to stay in hold, but I have to say, 0:02:37.919 --> 0:02:40.400 you know, clearly the risks around a potential hike have 0:02:40.560 --> 0:02:43.959 increased since last week, and so that is something which 0:02:43.960 --> 0:02:44.919 is a life edge for US. 0:02:45.120 --> 0:02:46.920 Hi e Sema, thank you so much for journsh'ming to 0:02:46.919 --> 0:02:49.760 go to Switzerland right now. Seem cheap global strategist for 0:02:49.840 --> 0:02:51.440 phusible Global Investment to stay with us. 0:02:51.520 --> 0:02:53.960 More from Bloomberg Surveillance coming up after this. 0:03:02.880 --> 0:03:06.480 You're listening to the Bloomberg Surveillance podcast. Catch us Live 0:03:06.520 --> 0:03:09.720 weekday afternoons from seven to ten am Eastern Listen on 0:03:09.760 --> 0:03:13.440 Applecarplay and Android auto with the Bloomberg Business app, or 0:03:13.600 --> 0:03:15.040 watch us live on YouTube. 0:03:15.160 --> 0:03:19.480 David Katz, Joints, President and Chief investment Officer, Matrix Asset Advisors. 0:03:19.880 --> 0:03:22.560 David, how do you guys think about small cap stocks 0:03:22.600 --> 0:03:23.040 these days? 0:03:23.280 --> 0:03:26.679 Well, small caps have underperformed large caps for quite some time, 0:03:26.800 --> 0:03:29.000 so we think they are due to start to do better. 0:03:29.080 --> 0:03:31.840 You're starting to see it now. You know, a lot 0:03:31.840 --> 0:03:34.240 of that has come from smaller AI type plays that 0:03:34.280 --> 0:03:37.480 have done well within the small cap space. But we 0:03:37.520 --> 0:03:39.360 think if you look at the next two to four 0:03:39.440 --> 0:03:42.640 years of interest rates ever start trending lower, economy starts 0:03:42.640 --> 0:03:44.520 to pick up. Small caps are selling in a much 0:03:44.560 --> 0:03:48.240 more reasonable valuation than the large caps and megacaps. 0:03:48.520 --> 0:03:50.520 What to you is the most crowded trade in the 0:03:50.560 --> 0:03:52.840 market right now? Or should I even ask that? And 0:03:52.880 --> 0:03:53.760 it's AI. 0:03:55.080 --> 0:03:58.200 Exactly So, it's AI, but it no longer is AI 0:03:58.440 --> 0:04:00.880 like the Googles and the Amazons of the world. It's AI. 0:04:01.000 --> 0:04:05.160 The semiconductors and those benefici areas. The pricing has gone crazy. 0:04:05.240 --> 0:04:08.000 Prices are up one hundred two hundred percent. As a result, 0:04:08.120 --> 0:04:11.240 earnings and profitability and margins are rough very significantly for 0:04:11.280 --> 0:04:13.720 a lot of chip companies, and they're being valued as 0:04:13.720 --> 0:04:15.960 if it's going to stay up there forever. As a result, 0:04:16.000 --> 0:04:18.960 they're selling it very very rich valuations, and we think 0:04:19.000 --> 0:04:21.080 that that's an area to be wory about. We would 0:04:21.120 --> 0:04:23.600 not be throwing new money into the chip area of 0:04:23.640 --> 0:04:24.479 AI right now. 0:04:24.960 --> 0:04:27.400 So when you see an IPO seventy five billion dollars 0:04:27.400 --> 0:04:31.000 of SpaceX, the biggest of all time and whatnot, you've 0:04:31.000 --> 0:04:32.400 got Anthropic in the pipeline. 0:04:32.400 --> 0:04:35.040 We've got open AI in a pipeline again, a jillion 0:04:35.080 --> 0:04:37.160 dollar ie. Because does I tell you anything about the 0:04:37.240 --> 0:04:40.039 nature of the market. Is it light cycle? Is it frothy? 0:04:40.160 --> 0:04:42.320 Is it just sign of a healthy market? How do 0:04:42.320 --> 0:04:43.280 you think about it? All three? 0:04:43.760 --> 0:04:46.200 It's healthy, you're able to sell these things. But it 0:04:46.240 --> 0:04:49.480 definitely is frothy right now. If you look at chat 0:04:49.600 --> 0:04:52.400 EBT and you look at Anthropic, they're looking to be 0:04:52.480 --> 0:04:55.560 about a one trillion dollar company. Microsoft right now sells 0:04:55.600 --> 0:04:59.279 it about three point two trillion dollars. There isn't a 0:04:59.279 --> 0:05:01.640 big mode in a lot of these AI companies. As 0:05:01.640 --> 0:05:05.760 you see Claude is now dominating CHATCHBT. Things change. So 0:05:05.839 --> 0:05:08.360 we think that ultimately you're paying a lot for those 0:05:08.400 --> 0:05:11.200 companies and we think there probably is better opportunity in 0:05:11.240 --> 0:05:13.960 the Googles and Microsofts of the world, because you're not 0:05:14.000 --> 0:05:17.080 getting a AI startup at a low valuation, you're getting 0:05:17.080 --> 0:05:18.600 it at a top valuation. 0:05:19.080 --> 0:05:22.600 You do warrant, though, that AA sentiment could peak before fundamentals. 0:05:22.640 --> 0:05:24.200 Do you think we're getting close to that point. 0:05:25.120 --> 0:05:27.200 We don't know when that point's going to come, but 0:05:27.240 --> 0:05:29.919 that's exactly the point. Typically the stocks are going to 0:05:29.920 --> 0:05:32.360 go down three to six months before the fundamentals start 0:05:32.400 --> 0:05:36.120 to slow. We don't think we're at that point yet, 0:05:36.240 --> 0:05:37.880 but we do think you'll probably get there in the 0:05:37.880 --> 0:05:40.280 next six to eighteen months. And we think that from 0:05:40.320 --> 0:05:43.320 a stock price valuation, they're much better opportunities in the 0:05:43.360 --> 0:05:45.960 market in other areas that are not caught up in 0:05:46.000 --> 0:05:46.680 the excitement. 0:05:47.600 --> 0:05:48.960 What are you doing in the bond market? Do you 0:05:48.960 --> 0:05:50.919 take credit risk cure or do you just clip a 0:05:50.920 --> 0:05:52.800 four point two percent coupon on the two year? 0:05:53.400 --> 0:05:56.279 We clipped the four point two percent coupon in the 0:05:56.320 --> 0:05:58.240 two year. We don't think you want to take credit risk, 0:05:58.279 --> 0:06:00.479 and we don't think you want to take duration. We'd 0:06:00.520 --> 0:06:03.599 focus on one the five years. You're getting a good return. 0:06:03.640 --> 0:06:07.039 We think Ultimately, inflation is a longer term problem. The 0:06:07.120 --> 0:06:09.480 budget deficit is a longer term problem. The FED losing 0:06:09.520 --> 0:06:11.920 its autonomy is a problem. So as a result, we're 0:06:11.960 --> 0:06:15.280 a little bit wary about longer term bonds. Short term bonds, though, 0:06:15.279 --> 0:06:16.680 we think, is a lot that you get that four 0:06:16.680 --> 0:06:17.760 point two percent return. 0:06:18.160 --> 0:06:21.520 You've been bullish all year mostly. What's stopping you from 0:06:21.560 --> 0:06:24.159 being even more bullish today, Well. 0:06:24.040 --> 0:06:26.360 We're sort of counterintuitive. The fact that the market's gone 0:06:26.440 --> 0:06:28.360 up so much this year and the last three and 0:06:28.400 --> 0:06:30.440 a half years, and now sales at twenty three times 0:06:30.520 --> 0:06:33.520 earnings means that there's less upside. We think if the 0:06:33.560 --> 0:06:37.440 market regresses to the normal valuation that you're more limited. 0:06:37.480 --> 0:06:39.799 We think earning growth is very good. An interesting fact, 0:06:40.160 --> 0:06:42.839 a hyper earnings growth twenty percent or more. Earnings growth 0:06:42.920 --> 0:06:46.640 has generally not been an ideal market to make optimal returns, 0:06:46.720 --> 0:06:49.520 usually zero to five percent, five to ten percent better 0:06:49.520 --> 0:06:51.560 for stock market returns. So the fact that we have 0:06:51.600 --> 0:06:53.760 great earning growth doesn't mean that you're gonna have great 0:06:53.760 --> 0:06:56.719 stock market returns, especially going forward, because you've already gotten 0:06:56.920 --> 0:06:58.960 a year's worth of returns in six months. 0:06:59.320 --> 0:07:01.560 Gives name two that you like, right, now because it's 0:07:01.560 --> 0:07:03.560 got to be hard to pick individual names given some 0:07:03.560 --> 0:07:04.480 of the runs we've had. 0:07:04.360 --> 0:07:06.520 But a lot of names have not participated. 0:07:06.680 --> 0:07:08.360 Well, that's the thing, you know, there are certain parts 0:07:08.360 --> 0:07:10.120 of the market that are very expensive. There are lots 0:07:10.160 --> 0:07:12.360 of parts of the market that are very inexpensive. So 0:07:12.400 --> 0:07:14.600 even though we think the market is originally priced, lots 0:07:14.640 --> 0:07:17.720 of opportunities. We like healthcare companies like a Metronic or 0:07:17.720 --> 0:07:21.600 a Thermo Fisher real attractive, we think, you know, also 0:07:21.680 --> 0:07:26.800 consumer staples. You know, companies like Constellation brands pretty attractive. 0:07:27.080 --> 0:07:30.800 Tyson Foods, which is a protein play, is doing quite well. 0:07:31.280 --> 0:07:34.120 They're getting some protein free studio protein acting. 0:07:34.320 --> 0:07:37.800 That's what the kids are doing. It's chicken, it's meat. 0:07:37.840 --> 0:07:39.520 I mean, what are you guys talking about. Go ahead, 0:07:39.560 --> 0:07:40.480 I know you've got to go there. 0:07:41.080 --> 0:07:43.920 But basically with the GLP ones, yeah, people are not 0:07:44.040 --> 0:07:46.880 eating as much of carbohydrates, but they do need more 0:07:46.920 --> 0:07:49.320 and more protein. And the fact that you're having problems 0:07:49.360 --> 0:07:51.560 with the beef market now means more people are going 0:07:51.600 --> 0:07:54.640 to go to chicken. Tyson food benefits by any of that, 0:07:54.680 --> 0:07:56.880 and it's selling it twelve times earnings, three and a 0:07:56.920 --> 0:07:58.680 half percent yields so there are lots of things out 0:07:58.720 --> 0:08:00.920 there that are good if you have a long time 0:08:00.960 --> 0:08:04.480 horizon and you don't mind being in boring stocks. 0:08:05.040 --> 0:08:08.080 So much of the enthusiasm is coming from the back 0:08:08.120 --> 0:08:10.720 of strong corporate earnings. But do you think investors are 0:08:10.760 --> 0:08:14.360 becoming a little bit complacent about the geopolitical risk coming 0:08:14.360 --> 0:08:15.200 from the Middle East? 0:08:15.600 --> 0:08:16.080 We think so. 0:08:16.320 --> 0:08:19.640 You know, you still have the Iran conflict going on 0:08:19.720 --> 0:08:22.320 in terms of they possibly a resolution, but you have 0:08:22.400 --> 0:08:25.760 problems this weekend again with closing the straits. Yet stocks 0:08:25.760 --> 0:08:28.080 are up sixteen percent in the last two months. There 0:08:28.080 --> 0:08:30.120 are at a higher level than when the conflict started. 0:08:30.400 --> 0:08:32.360 So we do think there is a lot of optimism 0:08:32.440 --> 0:08:35.640 and people are ignoring the possible shortfalls. Again, that doesn't 0:08:35.640 --> 0:08:37.440 mean we're bearish, but we do think that you're going 0:08:37.520 --> 0:08:39.400 to be in a trading range. We would not chase 0:08:39.400 --> 0:08:41.800 the market here. If the market were to pull back 0:08:41.840 --> 0:08:44.440 five to ten percent, we'd start to buying on that dip. 0:08:44.720 --> 0:08:47.360 If it goes up five percent, you'd want to look 0:08:47.360 --> 0:08:49.280 at things that have done real well and take some problems. 0:08:49.679 --> 0:08:51.280 David, I'm not going to call you old, but you've 0:08:51.320 --> 0:08:53.040 been around the block once or twice, been. 0:08:52.960 --> 0:08:55.840 Around experience, experience Veteran Alan. 0:08:55.640 --> 0:08:57.160 Greenspan passed away this morning. 0:08:57.320 --> 0:09:00.280 Impact on the markets in general to FED in particular, gular, 0:09:01.040 --> 0:09:03.040 What are your thoughts as you think about the tenure 0:09:03.080 --> 0:09:04.640 of Ellen green spinning FED. 0:09:04.720 --> 0:09:08.280 He was an extraordinarily smart person, did very good things, 0:09:08.440 --> 0:09:11.400 different time. He's not been involved, as you know, for 0:09:11.520 --> 0:09:13.080 quite some time, so it's not going to affect the 0:09:13.120 --> 0:09:16.680 markets now, but the markets should pay, you know, a 0:09:16.760 --> 0:09:18.880 nice respect to him because he really did a good 0:09:18.920 --> 0:09:20.240 job and was a really smart guy. 0:09:20.440 --> 0:09:22.600 Absolutely, all right, Dave, thank you so much for joining us. 0:09:22.640 --> 0:09:27.120 David Catz, President and Chief investment Officer Matrix Asset Advisors. 0:09:26.840 --> 0:09:29.920 Stay with us. More from Bloomberg Surveillance coming up after this. 0:09:38.840 --> 0:09:42.439 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:09:42.480 --> 0:09:45.640 weekday afternoons from seven to ten am Eastern Listen on 0:09:45.720 --> 0:09:49.400 Applecarplay and Android Auto with the Bloomberg Business app, or 0:09:49.559 --> 0:09:51.040 watch us live on YouTube. 0:09:51.240 --> 0:09:53.959 John mclithwait joins us here, editor in chief of Bloomberg News. 0:09:54.080 --> 0:09:57.160 He is in our London office at the moment. John, 0:09:57.200 --> 0:09:59.880 talk to us about your thoughts here on Alan Greenspan, 0:10:00.160 --> 0:10:04.360 such an extraordinary career, spending so many years, so many 0:10:04.440 --> 0:10:08.560 presidencies and reshaping kind of the Federal Reserve. Love to 0:10:08.559 --> 0:10:11.360 get your thoughts on mister green and his passing. 0:10:13.040 --> 0:10:15.800 Well, first, obviously it's a sad day in that respect. 0:10:16.920 --> 0:10:18.880 I think he, you know, Greenspan was one of the 0:10:18.880 --> 0:10:25.720 great central bankers a multiple different levels. Really very very intelligent, 0:10:27.720 --> 0:10:30.800 also kind of very cryptic in terms of the way 0:10:30.840 --> 0:10:34.560 he often communicated to people. But I think he also 0:10:34.600 --> 0:10:38.439 had this very long sort of intellectual history, goes back 0:10:38.480 --> 0:10:40.800 all the way to the fact that he was involved 0:10:41.000 --> 0:10:44.160 with him Anne Rand and stuff like that. He went 0:10:44.200 --> 0:10:48.839 through different kind of intellectual fashions and on the whole 0:10:48.920 --> 0:10:51.080 he ran the economy pretty well. There will always be 0:10:51.080 --> 0:10:54.960 people who question, you know, how much his loosening set 0:10:55.040 --> 0:10:57.679 up the kind of financial crisis, but you know, there 0:10:57.720 --> 0:10:59.920 were other factors at work there as well. It wasn't 0:11:00.120 --> 0:11:03.640 just him. So I think he will he goes as 0:11:03.679 --> 0:11:05.160 a giant of central banking. 0:11:06.800 --> 0:11:08.840 What do you think is the biggest legacy that he 0:11:09.320 --> 0:11:12.000 left us with, especially now as the Federal Reserve and 0:11:12.120 --> 0:11:16.200 questions about it independence continue to hound markets and investors. 0:11:17.920 --> 0:11:21.720 That's a good point. I think he was a very 0:11:21.760 --> 0:11:26.640 strong advocate of Central Bank independence. I mean, sometimes you 0:11:27.160 --> 0:11:31.600 forget these things that you forget how different the world 0:11:31.800 --> 0:11:34.680 was at one time. But the fact that you ended 0:11:34.720 --> 0:11:38.560 up with Paul Volka, Alan Greenspan, obviously people like Ben 0:11:38.600 --> 0:11:44.880 Bananke afterwards. The whole presumption of what they did was 0:11:44.960 --> 0:11:49.000 that the Federal Reserve should be separate and independent. In 0:11:49.040 --> 0:11:51.120 places like Britain where I am at the moment, you know, 0:11:51.160 --> 0:11:54.960 that was also a more recent things. It's this is 0:11:55.040 --> 0:11:58.800 not something that has always been there. It's a kind 0:11:58.840 --> 0:12:01.920 of reputation has to be built. And it's interesting the 0:12:01.920 --> 0:12:04.760 way that Jay Powell has managed to sort of defend that, 0:12:04.880 --> 0:12:09.960 I think actually relatively successfully against Donald Trump's attempts to 0:12:11.320 --> 0:12:13.000 sort of intervene in that area. 0:12:13.679 --> 0:12:16.160 John, like the switch gears here a little bit and 0:12:16.160 --> 0:12:18.920 focus a little bit on what's happening where you are 0:12:19.000 --> 0:12:21.320 right now in Great Britain. Here Starmer said he would 0:12:21.320 --> 0:12:23.720 step down in Britain's Prime Minister, paving the way for 0:12:23.800 --> 0:12:25.040 Anny Burnham. 0:12:24.640 --> 0:12:26.520 To succeed him. John, I'll al for you to just 0:12:26.520 --> 0:12:27.839 give us a little perspective here. 0:12:27.920 --> 0:12:31.120 It was just two years ago that mister Starmer won 0:12:31.160 --> 0:12:33.680 the office seemingly with some pretty broad support. 0:12:34.200 --> 0:12:36.439 What happened in the past two years. 0:12:37.840 --> 0:12:39.800 Well. The interesting thing is that people like me always 0:12:39.880 --> 0:12:42.960 used to be rude about the Italians for their degree 0:12:43.000 --> 0:12:46.120 of political volatility. But what seems to have happened is 0:12:46.160 --> 0:12:49.560 that England Britain has become more like Italy, and Italy 0:12:49.640 --> 0:12:53.120 has become more like Britain, with Georgia Maloney now holding 0:12:53.200 --> 0:12:57.679 on to power quite solidly. I think when you look 0:12:57.720 --> 0:13:02.240 at Starmer, a lot of people, me included, thought that 0:13:02.360 --> 0:13:06.319 he knew exactly what to do. You know, he came in, 0:13:06.880 --> 0:13:10.679 it seemed, with a very efficient campaign. He seemed to 0:13:10.679 --> 0:13:14.120 be heading towards being a kind of Blair Part two. 0:13:15.520 --> 0:13:18.560 He seemed to be friendly to business, especially with his 0:13:19.320 --> 0:13:24.160 Chancellor Rachel Reeves. And really I think it shows two things. 0:13:24.280 --> 0:13:26.880 One is that Britain is much harder to govern than 0:13:26.880 --> 0:13:32.400 it was before Brexit, certainly, and secondly that you know, 0:13:32.920 --> 0:13:35.560 but it wasn't just that. I think he just didn't 0:13:35.640 --> 0:13:39.160 come in with an idea about what exactly he was 0:13:39.200 --> 0:13:42.599 going to do. He was quite sure footed overseas in 0:13:42.720 --> 0:13:45.000 terms of foreign policy. I think he handled Donald Trump 0:13:45.080 --> 0:13:48.600 on the whole relatively well. Although Trump made a predictably 0:13:48.679 --> 0:13:52.040 catty comment about him yesterday. But on the whole he 0:13:52.080 --> 0:13:55.040 did that quite well. But at home he always seemed 0:13:55.040 --> 0:13:58.319 at see. He got into trouble almost immediately with a 0:13:58.640 --> 0:14:01.240 silly thing to do with kind of c expenses. He 0:14:01.320 --> 0:14:05.840 then did this thing to do with pensioners and the 0:14:05.880 --> 0:14:09.400 winter fuel pavement, which sounds like something rather archaic but 0:14:09.480 --> 0:14:12.800 effectively as a way to help people keep warmer in 0:14:12.840 --> 0:14:15.960 the winter. That kind of blew up. But on the 0:14:15.960 --> 0:14:20.080 other hand they hit him, and especially Rachel Reeves really 0:14:20.120 --> 0:14:23.600 did quite a lot of damage to the idea that 0:14:23.720 --> 0:14:26.640 this new version of a labor party was something to 0:14:26.640 --> 0:14:29.440 could get on with business. So he ended up losing 0:14:29.480 --> 0:14:32.720 on both sides, and suddenly in between this he started 0:14:32.760 --> 0:14:37.560 being kind of outsmarted by his own MPs. Normally, when 0:14:37.600 --> 0:14:40.640 you come in with a massive majority, you know that 0:14:40.640 --> 0:14:43.720 should be a sign of strength. But in a strange way, 0:14:43.800 --> 0:14:48.400 that that sheer number gave people room to rebel when 0:14:48.440 --> 0:14:50.920 they wanted to, and that made it very difficult. So yes, 0:14:50.960 --> 0:14:54.000 it does show that Britain is very hard to govern, 0:14:54.480 --> 0:14:56.760 but I think most people would admit that Starmer didn't 0:14:56.800 --> 0:14:59.960 make He certainly didn't govern as well as he can. 0:15:00.040 --> 0:15:01.920 Campaign to become prime Minister. 0:15:02.560 --> 0:15:05.280 And do you think that Andy Burnham will he be 0:15:05.400 --> 0:15:08.520 seen as a continuity candidate or a change candidate. I'm 0:15:08.560 --> 0:15:10.520 just thinking of what the biggest policy difference is we 0:15:10.560 --> 0:15:13.640 could see under a potentially Burnham premiership. 0:15:14.840 --> 0:15:18.200 That's a really good question. The answer is, we don't know. 0:15:18.960 --> 0:15:23.960 He's emerging with something that you people talk about Manchester Manchsterism, 0:15:24.080 --> 0:15:27.840 and it's a bit like an American governor coming in 0:15:27.960 --> 0:15:31.080 to be coming into the White House where people tried 0:15:31.160 --> 0:15:33.720 desperately to work out, you know, what they did in 0:15:33.760 --> 0:15:37.200 Texas or what they did in California, and then trying 0:15:37.240 --> 0:15:38.920 to work out how they could apply that to the 0:15:38.960 --> 0:15:43.000 federal government. With one massive difference is that you know 0:15:43.040 --> 0:15:45.800 that when you become president you have to go through 0:15:45.800 --> 0:15:48.720 lots of campaigns and things. In this case, kind of 0:15:48.880 --> 0:15:51.560 the basic starting point is Andy Burnham has been a 0:15:51.600 --> 0:15:54.960 successful mayor of Manchester. It's quite a long career in 0:15:55.000 --> 0:15:59.840 the Labor Party, and he's enormously more popular than Kirstar, 0:16:00.120 --> 0:16:02.120 so let's give him a go. But nobody, as you 0:16:02.200 --> 0:16:06.560 point it out, really knows exactly what he thinks. To 0:16:06.640 --> 0:16:09.520 the left, he's saying, look, I want to take people 0:16:09.600 --> 0:16:11.960 talk about the way he sort of nationalized the buses 0:16:12.840 --> 0:16:16.600 in Manchester to the right. When people talk at Mansterism, 0:16:16.600 --> 0:16:18.840 it's really about quite a lot, doing quite a lot 0:16:18.880 --> 0:16:22.560 of things with business and working out how to kind 0:16:22.600 --> 0:16:24.720 of boost growth in that way, and that again has 0:16:24.760 --> 0:16:27.480 been something that Starmer has not been good at. So 0:16:27.800 --> 0:16:30.680 at the moment he is a kind of blank slate 0:16:31.360 --> 0:16:34.880 which works brilliantly if you're running to be something, because 0:16:34.920 --> 0:16:39.040 everyone can paint their hopes, dreams, fantasies on you and 0:16:39.080 --> 0:16:40.760 think that you're going to be all these things at 0:16:40.760 --> 0:16:44.080 the same time. But at this precise moment he really 0:16:44.120 --> 0:16:47.840 needs as a plan and a direction and then to 0:16:47.840 --> 0:16:50.000 say look, we're going in this way, and he really 0:16:50.040 --> 0:16:52.920 needs to bring the kind of parliamentary party behind him. 0:16:53.360 --> 0:16:54.160 John, thank you so much. 0:16:54.200 --> 0:16:56.400 We really appreciate getting your thoughts here and your perspective. 0:16:56.480 --> 0:16:58.480 John mcadd wait. He is the editor in chief of 0:16:58.520 --> 0:17:02.920 Bloomberg News. He is in Bloomberg's London headquarters at Queen 0:17:03.040 --> 0:17:06.040 Victoria Street there giving us some thoughts on the passing 0:17:06.040 --> 0:17:10.960 of Alan Greenspan one hundred what a nice life there 0:17:11.000 --> 0:17:13.200 of full life, and then as well as the latest 0:17:13.240 --> 0:17:14.359 on the changes. 0:17:14.520 --> 0:17:17.600 In Stay with us more from Bloomberg Surveillance coming up 0:17:17.960 --> 0:17:18.399 after this. 0:17:27.320 --> 0:17:30.920 You're listening to the Bloomberg Surveillance podcast. Catch us Live 0:17:30.960 --> 0:17:34.119 weekday afternoons from seven to ten am Eastern Listen on 0:17:34.200 --> 0:17:37.600 Apple Karplay and Android Auto with the Bloomberg Business app, 0:17:37.800 --> 0:17:39.439 or watch us Live on YouTube. 0:17:39.640 --> 0:17:41.080 Come back to these markets. We do that with a 0:17:41.560 --> 0:17:44.119 somebody does this stuff for a living. Molly Parni, partner 0:17:44.160 --> 0:17:47.399 and president at Jackman Asset Management. She's a graduate of 0:17:47.520 --> 0:17:50.360 Williman Mary University. I was just on the campus. 0:17:50.160 --> 0:17:52.840 Of Wayman Mary a couple weeks ago. Beautiful as ever 0:17:52.920 --> 0:17:56.480 down there in Williamsburg. It's a great place to visit. Molly. 0:17:56.560 --> 0:17:57.960 Let's talk about these markets here. 0:17:58.359 --> 0:18:00.800 You throw a lot of a black swam in the 0:18:00.840 --> 0:18:04.040 form of an Iranian war, you throw all kinds of 0:18:04.080 --> 0:18:08.480 geopolitical unrest at there, but corporate America continues to come 0:18:08.560 --> 0:18:10.760 through with very strong earnings. 0:18:10.880 --> 0:18:11.880 Is it as simple as that? 0:18:13.480 --> 0:18:18.359 It sounds simple, doesn't It's it's unbelievable. But you know, 0:18:18.480 --> 0:18:20.880 these things can go up into the right for quite 0:18:20.920 --> 0:18:25.120 some time until until they don't. And we've all, i mean, 0:18:25.119 --> 0:18:30.000 we've invested through the dot com, the telecom boom, and 0:18:30.080 --> 0:18:33.040 bust all of what we saw through the Actually, it's 0:18:33.080 --> 0:18:36.600 interesting that the S and P two thousand to twenty 0:18:36.680 --> 0:18:37.800 ten was flat. 0:18:38.200 --> 0:18:40.560 It was like it was flat because they pulled forward. 0:18:40.400 --> 0:18:42.760 All the returns in the dot com bubble, and it 0:18:42.800 --> 0:18:45.480 took that long for the market to actually move up again. 0:18:45.480 --> 0:18:48.000 It's just we haven't seen that in a very long time. 0:18:48.280 --> 0:18:52.359 We've instead seen mid twenties returns every year, seems like 0:18:52.560 --> 0:18:53.760 for several years. 0:18:54.680 --> 0:18:57.679 What about memory cycle? Your notes lean heavily on that. 0:18:57.720 --> 0:19:01.159 Do you think AI has permanently changed memory cycle or 0:19:01.280 --> 0:19:05.600 our investors still underestimating the risk of yet again another downturn. 0:19:06.480 --> 0:19:07.679 Yeah, it's a great question. 0:19:07.960 --> 0:19:12.240 We have a pretty substantial position in Samsung, which we think, 0:19:12.560 --> 0:19:14.280 like we like to do at Yakman, we like to 0:19:14.320 --> 0:19:18.120 get exposure without paying for it. We focus very much 0:19:18.200 --> 0:19:20.640 on the price that we pay for investments, and here 0:19:20.680 --> 0:19:25.440 we get to participate in AI without having to pay 0:19:25.440 --> 0:19:27.240 the multiples that we're seeing in some of the other 0:19:27.359 --> 0:19:28.600 memory players. 0:19:28.800 --> 0:19:29.800 We're actually looking at. 0:19:29.880 --> 0:19:32.480 You can you can invest in Samsung and in three 0:19:32.560 --> 0:19:36.760 years of their forecast you will you'll make the market cap. 0:19:36.960 --> 0:19:39.960 So so there is there is risk and memory it's 0:19:40.040 --> 0:19:43.320 historically been a very cyclical industry boom bus cycles, et cetera, 0:19:43.359 --> 0:19:46.960 et cetera. Uh, until until this giant tail wind came along. 0:19:47.480 --> 0:19:51.800 And uh and it's driving all kinds of purchases price. 0:19:51.840 --> 0:19:54.640 I mean they're taking price there. Uh, I mean they're 0:19:54.680 --> 0:19:57.880 they're big booking out capacity. They're we're hearing things that 0:19:58.240 --> 0:20:02.920 some some customers are even helping to fund capacity build out. 0:20:03.000 --> 0:20:05.320 So it's it's quite a big deal. We didn't see 0:20:05.320 --> 0:20:09.200