WEBVTT - Los Angeles Braces for More Firestorms 0:00:02.720 --> 0:00:10.560 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.560 --> 0:00:14.520 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.560 --> 0:00:18.479 Eastern on Applecarplay and Android Auto with the Bloomberg Business App. 0:00:18.600 --> 0:00:21.840 Listen on demand wherever you get your podcasts, or watch 0:00:21.920 --> 0:00:23.960 us live on YouTube. 0:00:24.520 --> 0:00:27.040 Here are the latest headlines on the Bloomberg. The fierce 0:00:27.040 --> 0:00:31.400 winds expended to continue in southern California, exacerbating wildfires and 0:00:31.440 --> 0:00:34.960 putting lives at risk. And the number of dead that 0:00:35.000 --> 0:00:38.120 we know about right now, it is up to twenty 0:00:38.159 --> 0:00:41.159 four and that's expected to climb. Let's get the update 0:00:41.200 --> 0:00:44.080 on all this. Will Wade is the Bloomberg Energy and 0:00:44.200 --> 0:00:49.000 climate reporter here at Bloomberg. Will put things into perspective 0:00:49.800 --> 0:00:52.440 for those of us on the East Coast. How much 0:00:52.640 --> 0:00:53.519 has burned? 0:00:53.920 --> 0:00:56.160 A lot? I mean a whole lot. We're up to 0:00:56.600 --> 0:00:59.279 about forty thousand acres. I know that sounds like kind 0:00:59.280 --> 0:01:02.240 of a random number. So here's some perspective. Forty thousand 0:01:02.240 --> 0:01:04.760 acres is a little bit bigger than Staten Island. 0:01:05.319 --> 0:01:05.520 Wow. 0:01:05.840 --> 0:01:09.880 Well, what do we know so far about the origins 0:01:09.920 --> 0:01:10.759 of these fires? 0:01:11.000 --> 0:01:11.160 Oh? 0:01:11.440 --> 0:01:12.480 It started, and. 0:01:13.319 --> 0:01:15.240 You know what we don't know a whole lot about that. 0:01:15.360 --> 0:01:19.040 I was just talking to my teammates. We cover utilities, 0:01:19.120 --> 0:01:22.360 so obviously we've seen in the past a lot of 0:01:23.600 --> 0:01:27.040 power lines get blamed for fires, and so often it's 0:01:27.080 --> 0:01:30.280 the case we Pgenie went bankrupt a few years ago 0:01:30.440 --> 0:01:34.000 because they started a terrible fire. Today we don't know 0:01:34.120 --> 0:01:38.720 that utility in Southern California, Southern California Edison, and they 0:01:38.760 --> 0:01:41.600 are looking at their power lines. There's no evidence now, 0:01:41.800 --> 0:01:46.160 but they've fielded some of these requests to retain evidence. 0:01:46.319 --> 0:01:48.680 So that's definitely where people are checking. 0:01:48.760 --> 0:01:52.480 First, we've heard a lot of blame being pointed at 0:01:52.680 --> 0:01:56.720 the mayor, at the governor. Is there any legitimacy to 0:01:56.840 --> 0:01:59.080 any of that at all? As far as you. 0:01:59.000 --> 0:02:02.160 Can tell, As far as I can tell, it seems 0:02:02.280 --> 0:02:06.680 like a lot of politicization. I may turn out to 0:02:06.720 --> 0:02:10.200 be wrong on that, but for today, I'd say, don't 0:02:10.240 --> 0:02:11.960 pay too much attention to that stuff. 0:02:12.400 --> 0:02:17.520 So you're the energy and climate reporter for us folks 0:02:17.520 --> 0:02:20.959 out here in New York. Help us kind of understand 0:02:21.120 --> 0:02:25.080 the climate in California. 0:02:24.200 --> 0:02:28.120 Not only the geography, but just the winds. 0:02:27.840 --> 0:02:31.120 And the weather that they have that kind of propelled 0:02:31.240 --> 0:02:33.720 this fire and is causing it to spread so quickly. 0:02:33.960 --> 0:02:36.600 Sure, I mean, I know this really well. I grew 0:02:36.680 --> 0:02:40.440 up in California the fall and winter months, the Santa 0:02:40.440 --> 0:02:44.080 Ana winds. They come every year. But what's happened in 0:02:44.120 --> 0:02:47.680 the past several years is, you know, with climate change, 0:02:47.680 --> 0:02:52.840 we've got longer, hotter summers. We've been had droughts, so 0:02:53.000 --> 0:02:56.840 you've get these hillsides that are just baked dry all 0:02:56.880 --> 0:03:01.040 summer long, all fall long. There's nothing there but dry 0:03:01.120 --> 0:03:05.120 bush and trees, and it's fuel for fires. And then 0:03:05.120 --> 0:03:08.919 the winds come and any tiny spark can trigger it, 0:03:09.040 --> 0:03:11.520 and the winds are going to just blow these blazes 0:03:11.560 --> 0:03:14.440 all over the place. That's was the problem. A week 0:03:14.480 --> 0:03:18.760 ago when there were like ninety mile an hour winds. 0:03:19.080 --> 0:03:21.160 They died down for a few days, but they started 0:03:21.200 --> 0:03:24.519 back up again. Now it's supposed to last through Wednesday, 0:03:25.080 --> 0:03:27.080 could be more after that. I think they're up to 0:03:28.000 --> 0:03:31.480 seventy mile per hour gusts coming this week. So it 0:03:31.560 --> 0:03:34.640 blows sparks, it fans the flames, it makes it harder 0:03:34.680 --> 0:03:35.640 to put them out. 0:03:35.920 --> 0:03:38.280 What is the What do we know in terms of 0:03:38.280 --> 0:03:39.760 the economic damage so far? 0:03:40.040 --> 0:03:42.160 Oh, it's a big number. I just saw a number 0:03:42.200 --> 0:03:44.840 this morning. We're looking at two hundred and fifty to 0:03:44.880 --> 0:03:47.920 two hundred and seventy five billion dollars in damages. That's 0:03:47.960 --> 0:03:51.840 from damages, lost wages, supply chain disruptions, sort of the 0:03:51.880 --> 0:03:54.120 whole package. But that's that's a lot of money. 0:03:54.600 --> 0:03:57.360 That would place this at I mean, correct me if 0:03:57.360 --> 0:03:59.960 I'm wrong, it would be the in terms of the cost, 0:04:00.200 --> 0:04:04.160 the worst natural disaster in history in the US history. 0:04:04.560 --> 0:04:06.480 I suspect it could be. 0:04:06.560 --> 0:04:08.560 I haven't seen a ranking on that, but certainly it's 0:04:08.560 --> 0:04:10.560 going to be up there. This is a this is 0:04:10.560 --> 0:04:12.880 a big fire, and we're not done yet. I mean, 0:04:12.920 --> 0:04:15.800 the two main fires are the Palisades Fire and the 0:04:15.880 --> 0:04:20.600 Eaten Fire. Palisades is about fourteen percent contained. Eton is 0:04:20.680 --> 0:04:23.159 about thirty something percent contained. 0:04:24.240 --> 0:04:26.120 Okay, what does that mean? 0:04:26.560 --> 0:04:28.919 Like fourteen percent contained? 0:04:29.440 --> 0:04:30.560 Does that mean that. 0:04:31.040 --> 0:04:34.479 It's likely to just continue to keep spreading? Like what 0:04:34.600 --> 0:04:37.599 is the definition of a contained fire? 0:04:39.360 --> 0:04:39.680 You know what? 0:04:39.720 --> 0:04:42.479 I don't know exactly what it means, but it certainly 0:04:42.520 --> 0:04:45.400 means that they are not even close to under control 0:04:45.520 --> 0:04:47.520 yet They're probably going to get bigger. 0:04:49.680 --> 0:04:53.039 That's the economic toll the damage is. There's also a 0:04:53.080 --> 0:04:56.640 psychological aspect of it. You know people out there, you're 0:04:56.680 --> 0:04:59.800 from that area, I do what's going through their minds. 0:05:00.080 --> 0:05:02.240 Well, I'll tell you about my aunt because I was 0:05:02.279 --> 0:05:05.760 texting with her yesterday. Her house is about two and 0:05:05.800 --> 0:05:08.080 a half blocks from the front lines of the Eton 0:05:08.200 --> 0:05:11.720 Fire in North Pasadena. She evacuated a week ago last 0:05:11.760 --> 0:05:15.240 Tuesday night. She was allowed to go home briefly to 0:05:15.279 --> 0:05:17.240 pick up some stuff over the weekend, but she is 0:05:17.360 --> 0:05:23.039 just really rattled. It looks like her house might be safe, 0:05:23.040 --> 0:05:24.719 at least from what I've been looking at today. It 0:05:24.800 --> 0:05:28.440 hasn't encroached on it anymore in the past several days, 0:05:28.640 --> 0:05:31.840 and I hope that stays true. But if she loses 0:05:31.880 --> 0:05:33.920 her house, it's going to be really serious for her. 0:05:34.600 --> 0:05:36.560 And this is an area where it's just like you 0:05:36.600 --> 0:05:39.320 grow up, you live there, and then the landscape just 0:05:39.480 --> 0:05:42.480 like in a few days, completely changes. That's going to 0:05:42.560 --> 0:05:45.400 have a tremendous impact on your psyche. 0:05:45.600 --> 0:05:48.040 Oh yeah, I mean I know this area. I was 0:05:48.080 --> 0:05:51.000 there last summer. My mom texted me last week, She's like, 0:05:51.040 --> 0:05:53.400 remember that place we went for brunch last June when 0:05:53.400 --> 0:05:54.839 you were here. Yeah, it's gone. 0:05:55.440 --> 0:05:59.440 Yeah, even the I've seen photos of some houses on 0:05:59.520 --> 0:06:03.160 blocks are the one house left standing, which, in that sense, 0:06:03.279 --> 0:06:06.359 I guess you can feel lucky if that was your house. 0:06:06.440 --> 0:06:09.080 But then what happens Then you move back into your 0:06:09.080 --> 0:06:11.719 house and all your neighbors are gone, and then you're 0:06:11.760 --> 0:06:13.320 just on an empty block. 0:06:13.400 --> 0:06:16.200 I mean that's devastating. I would think that would really 0:06:16.360 --> 0:06:19.640 be hard to live there, just to look around at 0:06:19.720 --> 0:06:22.599 the community that you used to know, and now it's gone, 0:06:22.680 --> 0:06:25.279 and it'll rebuild, but it'll be different. 0:06:26.080 --> 0:06:28.960 What is your sense of what has to happen in 0:06:29.080 --> 0:06:32.600 terms of rebuilding and what happens in the future. I mean, 0:06:33.200 --> 0:06:36.159 can you really make your house and your property fire proof? 0:06:37.520 --> 0:06:40.479 I mean, you can build it out of concrete. But 0:06:41.440 --> 0:06:43.840 the thing is, I've been writing about climate change for 0:06:44.680 --> 0:06:48.839 years and it just gets worse and people more people 0:06:48.920 --> 0:06:51.560 talk about it now, but we still need to see 0:06:51.880 --> 0:06:56.520 behavioral changes. There are places that are no longer as 0:06:56.600 --> 0:06:58.039 safe as they used to be. 0:06:58.560 --> 0:07:00.680 Well, I mean behavioral changes in terms of what. 0:07:01.040 --> 0:07:03.360 In terms of thinking should I live here? Should I 0:07:03.440 --> 0:07:06.000 not live here? You know, there's a lot of coastal 0:07:06.000 --> 0:07:10.720 communities that are you know, the local agencies are saying 0:07:10.720 --> 0:07:13.240 we're not going to pay to keep rebuilding the roads 0:07:13.280 --> 0:07:17.240 when the oceans overturn it every summer, and you're going 0:07:17.280 --> 0:07:19.320 to have to think about how you want to live there. 0:07:19.760 --> 0:07:22.720 Well, maybe you know, we should all move to Vermont. Oh, 0:07:22.720 --> 0:07:25.600 but wait, part of it was washed out because of 0:07:25.600 --> 0:07:28.720 the heavy rains. Maybe I should move to Florida. But oh, 0:07:28.760 --> 0:07:30.680 I'm going to get hit with you know, where'd he go? 0:07:30.880 --> 0:07:31.520 What's safe? 0:07:31.560 --> 0:07:31.800 Now? 0:07:32.240 --> 0:07:34.320 I wish I had a better answer for you. What 0:07:34.360 --> 0:07:37.760 I know is that climate change is real and it's 0:07:37.800 --> 0:07:39.280 a bigger threat than it ever was. 0:07:39.760 --> 0:07:41.480 Do you get a lot of pushback when you say 0:07:41.480 --> 0:07:42.440 something like that. 0:07:42.760 --> 0:07:44.880 Sometimes when I talk to my relatives in the South. 0:07:45.520 --> 0:07:50.440 Yeah, well, always a pleasure. Thanks Will Wait, Bloomberg Energy 0:07:50.480 --> 0:07:53.640 and Climate Reporter, the Los Angeles wildfires. 0:07:55.400 --> 0:07:59.280 You're listening to the Bloomberg Intelligence Podcast. Catch the program 0:07:59.360 --> 0:08:02.760 lives a ten am Eastern on Apple, Cocklay and Android 0:08:02.800 --> 0:08:05.800 Auto with the Bloomberg Business App. You can also listen 0:08:05.920 --> 0:08:09.160 live on Amazon Alexa from our flagship New York station. 0:08:09.720 --> 0:08:13.640 Just say Alexa play Bloomberg eleven thirty Tech. 0:08:13.480 --> 0:08:18.160 Heavy NASDAK down another one percent in today's trading. So 0:08:18.400 --> 0:08:21.680 what's next. Let's put that question to Kim Forrest, a 0:08:21.720 --> 0:08:26.880 founder at thee Cio Boca Capital Partners. It's kind of 0:08:26.920 --> 0:08:30.160 safe to describe you as something of a tech geek 0:08:30.520 --> 0:08:33.920 considering your background. What's on your Bingo card right now? 0:08:35.000 --> 0:08:40.719 Sure, well, let's just make a mixed metaphor here my 0:08:40.800 --> 0:08:44.320 Bingo card, and I was a software engineer. I became 0:08:44.400 --> 0:08:48.680 a cell side analyst that followed computer company. 0:08:48.840 --> 0:08:51.200 I didn't mean that as a pejorative, but you know, 0:08:51.559 --> 0:08:52.200 I know, no. 0:08:52.720 --> 0:08:54.240 No nervous like a good thing. 0:08:54.280 --> 0:08:57.720 Man, I love it, okay, But anyhow, just giving people background, 0:08:58.200 --> 0:09:01.520 and so I do look at tech and tech you 0:09:01.520 --> 0:09:04.320 know it drove the market. Actually, one company really drove 0:09:04.360 --> 0:09:06.719 the market last year. I was looking at some statistics. 0:09:07.040 --> 0:09:08.679 Do you know that the S and P five hundred 0:09:08.760 --> 0:09:10.439 is fifteen percent in Vidia? 0:09:10.520 --> 0:09:12.400 Holy cow? How'd that get to be there? 0:09:12.880 --> 0:09:16.840 Well, because in Vidia grew, right, But going to is 0:09:16.960 --> 0:09:18.520 in Vidia going to grow this year? 0:09:18.880 --> 0:09:20.040 Probably a little. 0:09:19.760 --> 0:09:22.840 Bit, but not like it did in twenty three for sure, 0:09:22.880 --> 0:09:26.000 and maybe not as it did in twenty four. So 0:09:27.000 --> 0:09:29.320 but should you throw out tech? I don't think so. 0:09:29.440 --> 0:09:32.679 I think there's a lot of smaller companies and probably 0:09:33.800 --> 0:09:36.880 companies that you don't think are in the bullseye of. 0:09:36.880 --> 0:09:38.640 AI that you could take a look at. 0:09:38.720 --> 0:09:41.600 So that's what I do if you are a tech investor, 0:09:42.120 --> 0:09:46.280 But I'd also be very, very concerned about what's happening 0:09:46.320 --> 0:09:49.440 in bonds. And you don't expect a computer person or 0:09:49.800 --> 0:09:52.719 a software person to be concerned with that. But it 0:09:52.800 --> 0:09:56.920 really will affect the market if bond rates go higher 0:09:56.960 --> 0:09:57.760 from here. 0:09:58.120 --> 0:10:03.079 Because the text in particular depend on future earnings and 0:10:03.800 --> 0:10:07.080 yields are going to put it into that party pretty quickly. 0:10:07.120 --> 0:10:10.440 I suppose, yes, yes, I would love to be able 0:10:10.440 --> 0:10:13.600 to escape you know, math and math modeling, but it 0:10:13.679 --> 0:10:17.760 really does limit earnings whenever, you know, rates go up. 0:10:18.200 --> 0:10:22.560 It is the thing that the tenure is the number 0:10:22.640 --> 0:10:27.880 that everybody discounts forward cash flows at. So the higher 0:10:27.920 --> 0:10:31.400 that goes, the lower multiple that you can expect. Is 0:10:31.440 --> 0:10:32.520 it really that easy? 0:10:32.880 --> 0:10:37.960 Sadly it is, okay, But you know, I'm just trying 0:10:38.000 --> 0:10:42.640 to think about years where you know, in the last 0:10:42.679 --> 0:10:45.400 maybe two years or so, there was a lot of 0:10:45.440 --> 0:10:48.400 talk about higher rates and how that was going to 0:10:48.480 --> 0:10:51.400 dent textocs and it hasn't yet. 0:10:51.640 --> 0:10:54.960 I'm wondering if something has changed now that we're in 0:10:55.200 --> 0:10:57.920 what could be I guess a good news for the 0:10:57.960 --> 0:11:01.520 economy means bad news for textiles because rates are higher 0:11:01.559 --> 0:11:03.800 because you know, we were kind of saying that last 0:11:03.880 --> 0:11:09.000 year and it didn't actually play out that way. 0:11:08.000 --> 0:11:11.800 Right, And I agree with you one hundred percent that 0:11:11.880 --> 0:11:15.600 things change and we should never ever just accept like 0:11:16.040 --> 0:11:20.319 those old sayings of Wall Street because every year is different. 0:11:20.720 --> 0:11:23.720 We have different investors, we have different companies, we have 0:11:23.760 --> 0:11:26.600 a different rate environment. There's so much going on. So 0:11:27.080 --> 0:11:29.800 at the basis I agree with you on that. I 0:11:29.920 --> 0:11:33.280 believe if you would have taken out the Magnificent seven, 0:11:33.760 --> 0:11:37.040 which are all growing well mostly you know, we'll kick 0:11:37.040 --> 0:11:41.840 out Netflix and Apple are mostly growing on AI, right, 0:11:41.960 --> 0:11:44.959 the theory that AI is going to drive these things 0:11:45.040 --> 0:11:46.359 higher in perpetuity. 0:11:47.920 --> 0:11:49.839 I think most of tech was down. 0:11:49.960 --> 0:11:53.680 And remember tech spending used to equal business it spending, 0:11:54.160 --> 0:11:57.640 so that's where the higher rates kind of come into play. 0:11:57.760 --> 0:11:59.839 It was businesses are not going to spend on it, 0:12:01.080 --> 0:12:03.320 and you know, because they're going to pull back and 0:12:03.440 --> 0:12:07.320 just not build for the future. So that's kind of 0:12:07.360 --> 0:12:10.920 one driver there. But I also think in Nvidia has 0:12:10.960 --> 0:12:15.080 had such an outweighed emphasis on the market on tech 0:12:15.160 --> 0:12:18.200 and specifically for the last two years. If you go 0:12:18.320 --> 0:12:21.440 and look at their quarterly earnings and just look at 0:12:21.440 --> 0:12:24.960 the revenue. That tells you the entire reason why everybody 0:12:24.960 --> 0:12:28.240 has piled into in Vidia and why it became, you know, 0:12:28.440 --> 0:12:31.760 a less than trillion dollar company surely and now the 0:12:31.760 --> 0:12:35.199 biggest company in the S and P five hundred right 0:12:35.320 --> 0:12:37.680 by market waiting and. 0:12:39.440 --> 0:12:39.800 Price. 0:12:40.080 --> 0:12:44.600 So it's been a completely outsized move because it had 0:12:44.640 --> 0:12:47.439 a completely outside moved in its revenues. 0:12:48.320 --> 0:12:52.200 Okay, so what's a spending going to look like from 0:12:52.200 --> 0:12:52.880 here on out? 0:12:53.920 --> 0:12:55.920 Right? Well, you get you get a kind of a picture. 0:12:56.080 --> 0:12:58.640 Looking at Microsoft, they say they're going to They said 0:12:58.640 --> 0:13:01.160 they're going to spend eighty billion dollars this year, this 0:13:01.160 --> 0:13:04.760 fiscal year. I think it was JP Morgan did a 0:13:04.840 --> 0:13:09.400 quick assessment on how much Meta, Google, Amazon, and Microsoft 0:13:09.440 --> 0:13:12.599 is spent. It looks like Microsoft was on track to 0:13:12.640 --> 0:13:15.240 spend about eighty billion dollars last year because they did 0:13:15.320 --> 0:13:19.640 it from January to August, and I just annualized, you know, 0:13:19.679 --> 0:13:21.760 whatever the run rate was, So that brings us to 0:13:21.840 --> 0:13:26.160 eighty billion. Now, let's not sneeze at eighty billion dollars. 0:13:26.200 --> 0:13:29.040 That's a lot of money, but it's going from eighty 0:13:29.320 --> 0:13:32.400 seventy eight billion in twenty twenty four to eighty billion. 0:13:32.800 --> 0:13:38.120 So I don't know that the big spenders in AI 0:13:38.400 --> 0:13:41.120 are going to increase like they did in the last 0:13:41.160 --> 0:13:44.440 couple of years again because they could. Right they were 0:13:44.480 --> 0:13:47.240 spending zero on it and now they're spending a lot 0:13:47.240 --> 0:13:49.040 on it. But I don't know that they're going to 0:13:49.120 --> 0:13:49.880 double it again. 0:13:51.000 --> 0:13:53.880 Kim boys your pleasure. Thanks for being here. I appreciate it. 0:13:54.360 --> 0:13:58.280 Kim Forrest, founder CIO Boca Capital Partners. 0:14:00.080 --> 0:14:03.760 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:14:03.840 --> 0:14:06.920 weekdays at ten am Eastern on Apple, Cocklay and Android 0:14:06.920 --> 0:14:10.240 Auto with the Bloomberg Business App. Listen on demand wherever 0:14:10.280 --> 0:14:13.840 you get your podcasts, or watch us live on YouTube. 0:14:14.480 --> 0:14:18.640 Matt Miller here sitting in for Alex Emily Graffeo sitting 0:14:18.679 --> 0:14:22.280 in for Paul Sweeney on a day when the markets 0:14:22.320 --> 0:14:26.880 are down again. I looked this morning at the open, Emily, 0:14:26.880 --> 0:14:29.720 we were looking at fifty seven eighty two on the 0:14:29.760 --> 0:14:31.960 S and P five hundred. You know what's interesting, that's 0:14:32.000 --> 0:14:36.920 exactly the closing level on November fifth, really, yes, the 0:14:37.040 --> 0:14:40.360 day of the US election. After that, of course we 0:14:40.520 --> 0:14:45.000 rallied higher. I think we were in the fifty nine 0:14:45.080 --> 0:14:49.040 hundreds already by the morning the open of November sixth, 0:14:49.080 --> 0:14:52.880 but we've erased all of those games and then some 0:14:53.680 --> 0:14:56.880 since we knew that Donald Trump won the presidential election 0:14:56.920 --> 0:14:59.440 on November fifth. We were also at four twenty five 0:14:59.560 --> 0:15:02.000 on the ten year yield back on November fifth, and 0:15:02.040 --> 0:15:07.120 now we're looking at four seventy seven, So for actually no. 0:15:07.240 --> 0:15:10.080 Four seventy nine to sixty four right now on the 0:15:10.160 --> 0:15:16.000 ten year yield, so we're up a solid sixty five 0:15:16.040 --> 0:15:19.640 points from our fifty five points from there. The Bloomberg 0:15:19.680 --> 0:15:24.120 Dollar Index also much higher right now at thirteenenty twenty two. 0:15:24.200 --> 0:15:28.360 We were closer to twelve twenty back on November fifth. 0:15:28.440 --> 0:15:33.360 So we've seen all the wrong assets rise in terms 0:15:33.360 --> 0:15:35.520 of I guess bond yields, and the dollar in the 0:15:35.600 --> 0:15:37.440 right ones fall in terms of the stocks. 0:15:37.640 --> 0:15:39.040 I want to bring in Guarev Moleague to. 0:15:39.040 --> 0:15:42.720 Talk a little bit about this, chief investment officer over 0:15:42.760 --> 0:15:47.400 at Palace Capital Advisors. Does this repricing make sense to you, Guarrev. 0:15:50.040 --> 0:15:51.560 I wouldn't say that it makes sense. 0:15:51.600 --> 0:15:53.560 I mean it's it's hard to make much sense of 0:15:53.600 --> 0:15:56.400 the markets these days, with a lot being driven by sentiment. 0:15:57.000 --> 0:15:59.280 I think if you look at fundamentals from our standpoint 0:15:59.280 --> 0:16:02.040 from November five till now, in terms of actually what 0:16:02.080 --> 0:16:05.480 has occurred, nothing much has changed. I think we still 0:16:05.520 --> 0:16:07.880 expect that we're going to see a pretty solid Q 0:16:08.080 --> 0:16:12.440 four earning season. We remain excited about earnings for twenty 0:16:12.440 --> 0:16:16.080 twenty five. I think the places where most investors taking 0:16:16.120 --> 0:16:20.320 pause is really what's the action the incoming Trim administration 0:16:20.400 --> 0:16:22.440 is going to take on the policy front. So in 0:16:22.480 --> 0:16:24.040 some areas, I would say, yeah, a bit of a 0:16:24.080 --> 0:16:26.720 surprise to see the uprally and then the downtrended markets. 0:16:26.760 --> 0:16:30.360 But from a fundamental standpoint, I think for stocks and earnings, 0:16:30.400 --> 0:16:31.640 we haven't seen much change. 0:16:31.920 --> 0:16:35.960 So even after Friday's jobs report and the moves that 0:16:36.000 --> 0:16:40.680 we've seen in treasury rates, you're still optimistic and it 0:16:40.720 --> 0:16:43.640 sounds like on the outlook for stocks for twenty twenty 0:16:43.680 --> 0:16:45.320 five we are. 0:16:45.480 --> 0:16:47.920 I think that, you know, as we look at the 0:16:47.960 --> 0:16:51.840 fundamental drivers, which from a macro level we think about 0:16:51.920 --> 0:16:54.280 what's going to occur with GDP growth, I think that 0:16:54.320 --> 0:16:58.760 looks pretty solid when we think about company's own projections, 0:16:58.800 --> 0:17:00.280 and again as we get through Q four, see some 0:17:00.320 --> 0:17:01.960 will get a sense of how they're advising as we 0:17:02.000 --> 0:17:06.080 look at twenty twenty five, but again, expectation of about 0:17:06.080 --> 0:17:09.760 five to six percent revenue growth. Margins for the S 0:17:09.800 --> 0:17:13.119 and P are at all time highs, which justifies, frankly, 0:17:13.200 --> 0:17:16.840 the multiple we're seeing at twenty one. So many things 0:17:16.880 --> 0:17:19.640 I would say that don't worry us too much. I 0:17:19.680 --> 0:17:26.280 think yes, on inflation and yields, A bit more surprised 0:17:26.359 --> 0:17:28.960 on that front since November. I mean again, you know, 0:17:29.000 --> 0:17:32.040 but the market has been so volatile with incoming macro 0:17:32.119 --> 0:17:35.000 data that you know, in the morning, I was talking 0:17:35.040 --> 0:17:37.679 with our investment team. We're talking about what's the projection 0:17:37.760 --> 0:17:38.879 for the end of the year, and I said, you know, 0:17:38.960 --> 0:17:42.440 I'm just nervous about making a projection because the economic 0:17:42.520 --> 0:17:44.560 data that has been coming in and bond voltarty, frankly, 0:17:44.600 --> 0:17:45.440 has been in so high. 0:17:46.040 --> 0:17:49.960 What about if we were to get I'm not making 0:17:49.960 --> 0:17:53.919 a prediction here, but a FED hike, because when you 0:17:53.920 --> 0:17:56.119 look at to your yields, that is certainly what some 0:17:56.320 --> 0:18:01.159 bond investors are expecting to come. Do we need a 0:18:01.400 --> 0:18:05.760 cut for your kind of optimistic view to continue to 0:18:05.800 --> 0:18:08.880 play out, or if we were to get a hike, 0:18:09.200 --> 0:18:11.360 could we still see stock staying resilient? 0:18:12.480 --> 0:18:16.240 So hike seems something that would shock markets frankly, right, 0:18:16.359 --> 0:18:19.520 So now you're talking about a slightly different way to 0:18:19.600 --> 0:18:21.920 view that situation. That would indicate to us that the 0:18:21.960 --> 0:18:24.359 fact doesn't know what they're doing. Right so far, they 0:18:24.440 --> 0:18:27.320 mean guiding us towards this fact that, Okay, we think 0:18:27.359 --> 0:18:29.560 infation is going to be under control. Now again that's 0:18:29.560 --> 0:18:31.720 been pushed off a little bit. Perhaps we're expecting a 0:18:31.720 --> 0:18:34.360 two percent number would have showed up by twenty twenty five, 0:18:34.359 --> 0:18:37.320 and I think that's looking more like twenty twenty six expectations. 0:18:37.760 --> 0:18:41.360 But direction is indicating that they're still in a mode 0:18:41.640 --> 0:18:43.919 where monetary policy is tight and they're going to keep 0:18:43.960 --> 0:18:47.760 it at that level. So a change in direction on 0:18:47.800 --> 0:18:50.040 that side to say we're going to certainly start doing 0:18:50.119 --> 0:18:53.520 hikes to tighten it even more, I think that would 0:18:53.600 --> 0:18:55.800 send a signal marketplace the fact doesn't know what it's doing, 0:18:55.880 --> 0:18:59.600 and then you're looking certainly at a spiraling effect on 0:18:59.640 --> 0:19:00.320 stock market. 0:19:00.480 --> 0:19:02.120 So I think that would be very concerning. 0:19:02.760 --> 0:19:04.960 So, I mean, we get a couple of data points 0:19:04.960 --> 0:19:06.639 over the next couple of days that are going to 0:19:07.000 --> 0:19:09.520 mean a lot to the Federal Reserve, at least they 0:19:09.760 --> 0:19:12.480 mean a lot to how markets forecast what the Fed 0:19:12.520 --> 0:19:16.200 is going to do. We get PPI tomorrow and we're 0:19:16.200 --> 0:19:19.760 looking for three point eight percent on the core year 0:19:19.840 --> 0:19:23.520 over year. It's pretty high, right, And we get CPI 0:19:23.720 --> 0:19:26.440 on Wednesday and there we're still looking for three point 0:19:26.480 --> 0:19:27.640 three percent. 0:19:28.720 --> 0:19:30.200 On the core number year over year. 0:19:30.280 --> 0:19:33.720 The Fed wants these numbers to be two, so they're 0:19:33.800 --> 0:19:38.359 still pretty far away. Don't rates need to be restrictive. 0:19:40.080 --> 0:19:42.199 Rates do need to be restrictive, But again, you know, 0:19:42.280 --> 0:19:46.200 when you think about the lagged effect of policy changes, 0:19:46.240 --> 0:19:49.959 both on the up and the down, still maintaining rates 0:19:50.000 --> 0:19:52.240 at a four point two five four point five handle 0:19:53.160 --> 0:19:54.800 for the Fed is still tight. 0:19:55.440 --> 0:19:57.359 So maybe that isn't room for one more. 0:19:57.320 --> 0:20:01.200 Rate thought, which clearly market is also icing in at 0:20:01.240 --> 0:20:03.120 most one rate cutting out of the end of the year. 0:20:03.359 --> 0:20:05.280 I think that's still in restrictive territory. 0:20:06.440 --> 0:20:06.800 Now. 0:20:07.040 --> 0:20:10.080 The inflation picture is also sort of clouded by the 0:20:10.080 --> 0:20:12.080 fact that there's a huge difference between what's occurring on 0:20:12.119 --> 0:20:14.399 the services side and on the good side. You know, 0:20:14.480 --> 0:20:18.040 on the good side, we're saying disinflation. We're seeing disinflation 0:20:18.080 --> 0:20:19.760 occurring in most of the post of the world. On 0:20:19.800 --> 0:20:21.960 the good side, right, that's going to flow through to 0:20:22.040 --> 0:20:25.160 some extent, again, notwithstanding what's the bard that trumped regetation 0:20:25.320 --> 0:20:29.959 takes on datifs. But again that's an effect that is disinflationary. 0:20:30.040 --> 0:20:32.000 So the real question that leaves us where there is 0:20:32.240 --> 0:20:34.879 what's going to court on the services side. And I 0:20:34.920 --> 0:20:37.320 think at a four point two five four point five 0:20:38.040 --> 0:20:40.960 level policy is restrictive enough that we will see a 0:20:41.040 --> 0:20:44.560 lack of effect showed through in inflation numbers. Now again, 0:20:44.680 --> 0:20:46.679 not to say that we'll get to just retrading the 0:20:46.680 --> 0:20:48.320 fact that, not to say we'll get to a two 0:20:48.320 --> 0:20:50.159 handle in twenty twenty five, I think that's not in 0:20:50.200 --> 0:20:52.359 the cards, that we don't see that occurring, but I 0:20:52.400 --> 0:20:54.520 think it gives us some confidence to say that two 0:20:54.640 --> 0:20:57.040 is a number that's possible when you look out at 0:20:57.080 --> 0:20:58.480 the end of twenty twenty six. 0:20:59.200 --> 0:21:00.879 All right, g thanks so much for joining us. 0:21:00.920 --> 0:21:05.080 Appreciate your Insightguarov Malik there is the chief investment officer 0:21:05.200 --> 0:21:07.520 at Palace Capital Advisors. 0:21:08.000 --> 0:21:12.679 This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, 0:21:12.880 --> 0:21:16.360 and anywhere else you get your podcasts. Listen live each 0:21:16.359 --> 0:21:20.120