Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern
Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App.
Speaker 1: Listen on demand wherever you get your podcasts, or watch
Speaker 1: us live on YouTube.
Speaker 2: Listen to this.
Speaker 3: Let's jump to Tony Cascendi right now. We're really good.
Speaker 3: Join us. He's been definitive of all my work over
Speaker 3: the decades. To the Pacific Investment Management Company. There's now
Speaker 3: an executive vice president market strategy. I love this suit.
Speaker 3: What in God's name is a generalist portfolio managed?
Speaker 4: What means we can talk about that? You think, well,
Speaker 4: think of the Bloomberg aggregate index. It's a it's got
Speaker 4: it's a market as, it's got mostly treasuries forty percent,
Speaker 4: it's got mortgages around thirty percent. It's got corporates and
Speaker 4: the mid twenties or so. So generally will decide between
Speaker 4: moving between those sectors and perhaps also think about the.
Speaker 3: World moving for coupon or for total return.
Speaker 4: Well, today you just think of the starting yield and
Speaker 4: the starting yield today on the Bloomberg US aggregates four
Speaker 4: point nine one percent that's the highest of the past year,
Speaker 4: because yields have been rising lately, the starting yield, So
Speaker 4: think the year twenty thirty one. I could probably tell
Speaker 4: you in twenty thirty one, God Willing that the yield,
Speaker 4: the return that you had on bonds was in the
Speaker 4: US aggregate was four point nine percent ninety four percent
Speaker 4: correlation since nineteen seventy eight. So the starting yield is
Speaker 4: really important. It's the main determinant of your future returns.
Speaker 4: And so that's that's the thing I would focus on most,
Speaker 4: is just simply getting that return. The rising yields lately
Speaker 4: another bite provides another bite at the apple. Yields have
Speaker 4: been rising on and off for about four years, fluctuating.
Speaker 4: Some investors still stuck in care, still stuck in low
Speaker 4: yielding money marketing intruments in the mid threes or so,
Speaker 4: when you could get yields between five and seven percent
Speaker 4: in portfolios. Having an average credit quality is the key
Speaker 4: of double a minus, which is to say, ninety nine
Speaker 4: point nine eight percent chance of getting your money back
Speaker 4: according to historical statistics. So the starting yield is a
Speaker 4: really important story.
Speaker 5: Right now, look at the first job. I think for
Speaker 5: this guy, Tom trading assistant. Guess we're prudential Basin.
Speaker 4: Based Broadway, right next to Trinity Church. It was a
Speaker 4: wonderful place to be right near Wall Street. A room
Speaker 4: of stockbrokers, which today they call financial advisors, and I
Speaker 4: learned a lot from them, about thirty of them. And
Speaker 4: so today these days worldwide, I visit many financial advisors
Speaker 4: again that they once called stockbrokers working for commissions. Today
Speaker 4: it's a lot different. It's actually a good thing for
Speaker 4: investors in.
Speaker 5: Fixing the world today, Tony, Can I just clip coupons?
Speaker 5: That's that's a nice way to make a loosk.
Speaker 6: Yeah.
Speaker 4: And here's here's another statistic and looking at this yield
Speaker 4: where it is is where they are today and using
Speaker 4: the Bloomberg aggregate again as a gauge, and it can
Speaker 4: be mirrored worldwide in a one year period going back
Speaker 4: to nineteen seventy eight, investors one year later have made
Speaker 4: money ninety six percent of the time. In other words,
Speaker 4: a return a year for now probably will be positive.
Speaker 4: So even if yields rise further from here, and they've
Speaker 4: been rising lately, that means bond prices could fall. The
Speaker 4: coupon the income is poek.
Speaker 3: It in the coupon of the thirty year oat in France,
Speaker 3: the guilt in the UK, even in the United States
Speaker 3: gives pause. There's some superlatives like price back to where
Speaker 3: it was two thousand and seven, whatever. As you look
Speaker 3: at the global system, which you can do with pimcoh
Speaker 3: bring that over to US investors. Is it idiosyncratic or
Speaker 3: are they attached?
Speaker 4: It's radiosyncratic, and that's why at PIMCO we've been suggesting
Speaker 4: sourcing duration globally because the US story isn't great necessarily
Speaker 4: on the fiscal side. We know the US has a
Speaker 4: big budget deficit. It must continuously issue bonds and that
Speaker 4: could result in yields rising. So we decided lately to
Speaker 4: source our duration globally, including in the UK. For example,
Speaker 4: we yields are above that of the US. Australia for
Speaker 4: various reasons related to the macroeconomic situation. In the emerging
Speaker 4: markets where this year has been very fine, performance better
Speaker 4: than in the US, and it seems like the asset
Speaker 4: classes tending to fare better in the eyes of investors.
Speaker 4: So we think there are many idiosyncratic stories worth diversifying
Speaker 4: botfolio into.
Speaker 5: Michael writes in and says he thinks the Fed's going
Speaker 5: to raise next week.
Speaker 4: What do you think We do not think so. Of
Speaker 4: course Warsh isn't in the business of signaling things, but
Speaker 4: I think we think it would perhaps if he were imminent.
Speaker 4: We're in the camp of the Fed doing nothing this year.
Speaker 4: But even if it hikes rates, and I'm talking about
Speaker 4: this glorious bond market story, bond investing story, so what
Speaker 4: And I think of Alan Greenspand, who I had met
Speaker 4: years ago, very fortunate when he was an advisor at
Speaker 4: PENMC when I worked in Newport Beach. He raised rates
Speaker 4: aggressively in nineteen ninety four, battling the inflation fears of
Speaker 4: the late seventies, early eighties or late eighties, and he
Speaker 4: won as in his last two half point hikes the
Speaker 4: end of February of nineteen ninety four and then early
Speaker 4: ninety five, yields fell. So don't worry about hikes as
Speaker 4: a bond investa, because it actually it's it's medicine and
Speaker 4: it's tough life, and it's a good thing.
Speaker 3: Tell me here, generalist portfolio manager, somebody with a real
Speaker 3: job at the Pacific Investment Management Company, like Jerome Schneider
Speaker 3: is squizzing at the short term mark money market houses
Speaker 3: year going, and I mean Paul's talking about there's this
Speaker 3: wall of money. It is the wall of money moving
Speaker 3: out of money markets into the Jerome Schneider's space.
Speaker 4: It is I'd say we should you should run from
Speaker 4: cash to core. But of course cash has it's placed.
Speaker 4: But another statistic would show that on a three year
Speaker 4: rolling basis that core investments meaning in average maturity around
Speaker 4: five six years, or the Bloomberg aggregate around six years.
Speaker 4: Three year rolling bases meaning three years from now, should
Speaker 4: be able to tell you eighty five percent confidence that
Speaker 4: core beat cash. So it tends to beat cash, especially
Speaker 4: with yields and and cash high threes that get around
Speaker 4: five and high quality fixed income investments five to seven percent.
Speaker 4: So you probably better off shifting a bit from cash
Speaker 4: to course. So I'd say run, don't walk to that idea.
Speaker 4: Because here's one other point. Many Americans have, of course,
Speaker 4: locked in on a low mortgage rate, Americans should start
Speaker 4: thinking about joining what I call the double lock club.
Speaker 4: You locked in the low mortgage rate on your debt,
Speaker 4: why not lock in a high interest rate on your
Speaker 4: fixed income investments?
Speaker 5: How much creditis should investors be taken. I mean the
Speaker 5: year to day the high yield index on the Bloomberg
Speaker 5: almost forming the best.
Speaker 4: It's winning. But these yields are good enough, as I mentioned,
Speaker 4: w minus five to seven percent, so you needn't stretch
Speaker 4: out into and go down in the capitol.
Speaker 3: Chordy, thank you. You got a new book coming out.
Speaker 4: I'm contemplating a seventh a few different ideas. One is
Speaker 4: a novel called The Wall Street Tale, which we'll go
Speaker 4: back to my days I worked you mentioned potential base.
Speaker 4: After that, I worked at Lehman Brothers in the World
Speaker 4: Trade set of one hundred and fourth floor. Some good
Speaker 4: stories from an amazing view I had up there, Tony.
Speaker 3: Thank you so much. Thank you so much as well.
Speaker 3: Wonderful to Evan and studio. I should mention absolutely definitive
Speaker 3: effort and money market Funds a classic, all of twelve
Speaker 3: hundred pages. No I have not read it cover to cover.
Speaker 3: Stay with us more from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app or
Speaker 1: watch US live on YouTube.
Speaker 3: Joining US now, Tina Fordham. She has been absolutely on
Speaker 3: fire out on LinkedIn Fordum Global Foresight with all of
Speaker 3: the international relations, the fractured foreign policy that we're facing out, Tina,
Speaker 3: I've got to go to the single item overnight that
Speaker 3: I believe the President of the United States, going after
Speaker 3: the nuclear efforts of Iran, has decided to give nuclear
Speaker 3: to Saudi Arabia. What are we giving to Saudi Arabia?
Speaker 3: It's any different than Iran.
Speaker 2: Well, the Security Pact, the Nuclear Sharing Agreement is normally
Speaker 2: regarded in international affairs circles as being part of a
Speaker 2: proliferation of access to weapons of mass destruction.
Speaker 7: But I think for the White.
Speaker 2: House this is seen as a way to level the
Speaker 2: playing field in the region and give a loyal ally
Speaker 2: that is also an adversary of Iran some protection and
Speaker 2: some peace of mind, and that is probably much needed.
Speaker 3: Tina.
Speaker 5: We heard from a Secretary of Defense Hexith yesterday testifying
Speaker 5: before Congress.
Speaker 2: Here.
Speaker 5: I think a lot of people were trying to get
Speaker 5: a sense of how does the US pursue its war
Speaker 5: with Iran with an eye on getting out of there.
Speaker 5: I mean, a lot of folks are unsure why we
Speaker 5: were there in the first place. Now we're trying to
Speaker 5: figure out how we get out of there in a
Speaker 5: positive scenario. Do you have any view of how this
Speaker 5: might play out?
Speaker 2: I mean, this is a classic textbook escalation trap, right,
Speaker 2: And you know that I've been consistent about this from
Speaker 2: the beginning, whereby the.
Speaker 7: War aims weren't clear, the.
Speaker 2: Strength of the adversary in the case of Iran was underestimated.
Speaker 2: With the new leverage that Iran has with the Strait
Speaker 2: of Ormuz, going back to the original objective, which was
Speaker 2: mainly around depriving Iran of nuclear weapons capability has now
Speaker 2: moved further down the list, and Iran has gained out
Speaker 2: that it is more patient and more willing to you know,
Speaker 2: software cavities than the United States. And so we're trapped.
Speaker 2: This is the most expensive war in some time, but
Speaker 2: also the most unpopular. This is the least popular war
Speaker 2: I believe in US history.
Speaker 3: Help us just you know, within the myriad of themes, Tina,
Speaker 3: you're expert this with your decades as City Group as well.
Speaker 3: The Secretary Defense is talking a thirty forty billion dollar
Speaker 3: worse so far I was suggest no one on the
Speaker 3: planet believes that number. What is the Tina Fordham klan
Speaker 3: of the war.
Speaker 2: I haven't made an estimate, but it certainly is going
Speaker 2: to cost more than it's going to deliver in terms
Speaker 2: of geopolitical or economic.
Speaker 7: Benefits in normal circumstances.
Speaker 2: And I was talking to Bill Burns in London here yesterday,
Speaker 2: a former rector.
Speaker 7: Of the CIA.
Speaker 2: You'd be looking for off ramps in diplomatic terms. Trump
Speaker 2: tells us that the talks aren't happening, that there aren't
Speaker 2: even discussions going on, and so what is most likely
Speaker 2: is episodic use of violence and expansion of the target set.
Speaker 2: One of the risks is, you know that the United
Speaker 2: States decides to make it ron uninhabitable without putting boots
Speaker 2: on the ground, which I think would be too high costs,
Speaker 2: unbearable costs for the United States to contemplate.
Speaker 3: And you know this geography, folks. Here's an anecdote. I'm
Speaker 3: in London at Finsbury Square. It's where Bruckner wrote many
Speaker 3: of his symphonies, at the Bloomberg headquarters. There was just fame,
Speaker 3: famed headquarters, and Tina I was absolutely thunderstruck. How the
Speaker 3: United Kingdom media followed a soldier who died in Afghanistan
Speaker 3: and followed the casket home the entire way. Now, I'm
Speaker 3: not saying we're doing that right now with the dead
Speaker 3: and injured of America, but our reaction to this, these
Speaker 3: soldiers and sailors in harm's way doesn't seem to be
Speaker 3: like other American wards. Is there going to shift in
Speaker 3: America to the agony of war.
Speaker 7: Yeah, it's a it's a very deep question.
Speaker 2: And as you shared that anecdote, I would just add
Speaker 2: for for your viewers and listeners that not only is
Speaker 2: the casket followed here, but people line the streets strangers,
Speaker 2: people line the streets in a sign of respect.
Speaker 7: And it's a puzzle, really, isn't it.
Speaker 2: I mean, the US casualties currently are around eighteen You know,
Speaker 2: my father was a war orphan in World War two.
Speaker 2: To I know how these are all tragedies, and yet
Speaker 2: are we inured to the human costs of war, the
Speaker 2: economic costs of war? There is some pretty significant cognitive
Speaker 2: dissonance going on. But to bring it back to the markets,
Speaker 2: in a way, the markets are letting it happen by,
Speaker 2: you know, by not reacting. If you like, you know,
Speaker 2: we're still only at what ninety dollars a barrel?
Speaker 3: Yeah? Do you have a price in your head? To
Speaker 3: you one final question, do you have a Brent crude
Speaker 3: price in your head? Where things unravel for the West?
Speaker 2: I don't think that the hostilities will continue at a
Speaker 2: you know, sustained clip to get over one hundred. I
Speaker 2: think that that's the kind of magic number. Having said that,
Speaker 2: the White House didn't expect this war to be going
Speaker 2: on for as long as it has, and for the
Speaker 2: regime in Iran to still be in place, and for
Speaker 2: the people of Iran not to have risen up. It's
Speaker 2: the law of unintended consequences and you can never plan
Speaker 2: the perfect ideal scenario.
Speaker 3: Just wonderfully valuable, Tina Fordham. Thank you so much, Fordham
Speaker 3: Global Foresight with that one hundred dollars mark on oil.
Speaker 3: Stay with us. More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or
Speaker 1: watch US live on YouTube.
Speaker 3: Joining us right now rafaeld Thon. Is that correct? I
Speaker 3: want to get it right. It is good.
Speaker 6: Like Raphael Tuen joins us here at Tico Tiko capital,
Speaker 6: Tiko capital hugely out of massively prestigious derivatives in capital
Speaker 6: markets at suction years ago.
Speaker 3: Fact I read every word of the pre election in
Speaker 3: Lamonde two days ago into the chaos of twenty twenty seven.
Speaker 3: I got to back up, price down, yield up in
Speaker 3: French paper. Is it an opportunity or do you really
Speaker 3: see stress in the fixed in market in France?
Speaker 8: Yeah, if you take the front page of the newspapers
Speaker 8: in France, it's a lot of anxiety. We don't know
Speaker 8: what's going to happen. We know the deep Left and
Speaker 8: the deep Ride or potentially contenders there, and what's going
Speaker 8: to happen with deficits that yields on government dates is
Speaker 8: obviously a high anxiety. If you look back though and
Speaker 8: take a broader picture of what's happening, you're seeing actually
Speaker 8: deficits trending them. In France from six percent starting point,
Speaker 8: we're probably going to be ininearing five percent very soon.
Speaker 3: So that's good news.
Speaker 8: And there is somewhat of consensuous building now around the
Speaker 8: fact that yes, it's time to act, that it's probably
Speaker 8: gone too far, that you know, people have to raining
Speaker 8: spending and make sure that deficits can be manageable going forward.
Speaker 8: So obviously a lot of uncertainty, but maybe not as
Speaker 8: scary as it seems.
Speaker 5: How are just you know, when the tariffs came in,
Speaker 5: a lot of money left the US markets and went
Speaker 5: to other parts of the world, including Europe in particular.
Speaker 5: I'm not sure that trade's still there. How do you
Speaker 5: think about investing in Europe versus maybe the US or Asia.
Speaker 8: So it's interesting the big picture in Europe now that
Speaker 8: we're entering, as well as in the US, a massive
Speaker 8: capex cycle for.
Speaker 3: The years to come.
Speaker 8: When you look at the list of things we need
Speaker 8: to finance in Europe, it's und less. We need to
Speaker 8: finance defense after decades of underspending. We need to finance
Speaker 8: data centers and we're far behind compared to where we
Speaker 8: are in the US. We need to finance electrification, decarbonation, digitalization,
Speaker 8: you name it. And so against this backdrop of massive
Speaker 8: investment needed. When you look at the capacity of capital
Speaker 8: markets in Europe to sustain and finance those needs, those
Speaker 8: are extremely narrow, extremely stretched.
Speaker 3: Equality is very.
Speaker 8: Poor on capital markets in Europe, and here is really
Speaker 8: an opportunity. It's an opportunity for people with capital to
Speaker 8: bring capital take part of what are oftentimes mega trends
Speaker 8: in the making. And so that's what we're doing at TKO.
Speaker 8: But guess what this is what a lot of money
Speaker 8: managers across the world are doing. You're seeing, for instance,
Speaker 8: from the US a lot of internative asset managers flocking
Speaker 8: to Europe opening offices to bring that capital to Europe.
Speaker 3: Your heritage how to suck and with the immense derivative
Speaker 3: and mathematics background is to always be aware of what
Speaker 3: is the bead? What what the bet right now? On
Speaker 3: friends another friends in Europe? Excuse me, what's the bet
Speaker 3: that's being placed by finance in Europe right now?
Speaker 8: So the idea he has to say, well, it's a
Speaker 8: pretty good setup to invest in Europe if you take
Speaker 8: the broader picture. Earnings will be strong this year, double
Speaker 8: digit earnings growth, which in Europe is quite something. You
Speaker 8: will have potentially the impact of fiscal stimulus coming from Germany.
Speaker 8: You know, that's a pretty sizable stimulus coming. It was
Speaker 8: a bit on the disappointing side in H one some
Speaker 8: delays in implementing these stimulus, and that is a bet
Speaker 8: and the case to be made that in H two
Speaker 8: you will see the effect of the stimulus. You will
Speaker 8: start to see the effect in infra and defense and
Speaker 8: so on. That inflation compared to what we get in
Speaker 8: the US is somewhat a bit more content. I'm not
Speaker 8: talking about energy, but xCE energy co inflation, wage growth,
Speaker 8: service inflation, all of that is a bit more manageable.
Speaker 3: I got twenty seconds, mister King, thank you dear for
Speaker 3: listening today. Emails and then she says, would you ask
Speaker 3: Rafael what a god's name happened to France and the
Speaker 3: World Cup?
Speaker 8: Oh please don't stop with that. You know, we had
Speaker 8: a nice conversation and here.
Speaker 3: I'm sorry they were going to win it. It was
Speaker 3: like a layup in oops. But really that was sort
Speaker 3: of like the word copy was France in Spain was like.
Speaker 8: The the best team one and I think we can't
Speaker 8: say that.
Speaker 3: I don't know beans about soccer, but it was magical
Speaker 3: to say that Spain, can you come back? I wish
Speaker 3: I can. Okay, I'm going to work on my friends.
Speaker 3: Here we're just trying to get a remote here. We
Speaker 3: want to go get a remote with you as as
Speaker 3: we can. Raphael seeing with us here from Tico, capital
Speaker 3: of Paris. There, stay with us. More from Bloomberg Surveillance
Speaker 3: coming up after this.
Speaker 1: You're listen to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or
Speaker 1: watch us live on YouTube.
Speaker 3: This is incredibly well timed. I want imagine this wonderful
Speaker 3: work at Edward Jones tearing a pot the market, piecing
Speaker 3: them back together. She has really abrupt terse notes, which
Speaker 3: I love. Is part of it into earning season and
Speaker 3: I saw this today with Philip Morris as Switzerland not Eltria,
Speaker 3: but PMI a shocking revenue number. Are we going into
Speaker 3: this ballet where we don't understand the linkage of nominal
Speaker 3: GDP over the revenue pop?
Speaker 2: You know?
Speaker 9: Look, I think to your point, the consumer economy has
Speaker 9: held up really well and that is showing up in
Speaker 9: revenues across sectors. So yes, we are expecting tech to
Speaker 9: have an amazing pop this earning season. But we are
Speaker 9: also seeing this revenue gain across consumercrashary across I'm not.
Speaker 3: Hearing enough about this. I hear earnings this, and you
Speaker 3: know a lot of naval gazing and that. But Paul,
Speaker 3: I remember Honeywell years ago like four percent revenue growth,
Speaker 3: and all of a sudden they were doing six percent
Speaker 3: because of a spirited economy.
Speaker 5: So we've seen we've seen some rotation in the markets here,
Speaker 5: maybe add of some of the tech names into I
Speaker 5: don't know, cyclicals defenses. That is that a short term
Speaker 5: trade or is that the market telling me something?
Speaker 9: You know, it is interesting. I do like to see
Speaker 9: some of the most parabolic moves in the market take
Speaker 9: a breather here. So an area like semiconductors was up
Speaker 9: close to one hundred percent before we saw a little
Speaker 9: bit of a pullback twenty percent type of correction. But
Speaker 9: we thought that was healthy. It was a good reset.
Speaker 9: Semis are still up sixty seventy percent this year, so
Speaker 9: not a concerning year to date number by any means.
Speaker 9: The rotation, though we like to see it. We think
Speaker 9: it's a healthy sign as well in terms of broadening
Speaker 9: of market leadership. This you know, you're war of a
Speaker 9: bull market, does it have legs? Well, I think earning
Speaker 9: season will drive that. We're going to get alphabet tonight.
Speaker 9: That'll set the tone, and we think tech could potentially
Speaker 9: get some legs again here.
Speaker 5: So what is the AI story from your perspective these days?
Speaker 5: I mean, you just buy the chips? Do you try
Speaker 5: to bind what people call the picks and shovels utilities?
Speaker 5: How are you guys thinking about it?
Speaker 9: Yeah, you know, certainly what we've seen this year. Interestingly,
Speaker 9: the hyperscalers and the Magnificent seven have actually lacked the
Speaker 9: broader market. So they're up you know, one two percent,
Speaker 9: while the broader SMP is up nine ten percent. And
Speaker 9: so could we see an opportunity there, especially if we
Speaker 9: do here that not only are they spending more, but
Speaker 9: that spending is yielding some results. They're seeing better revenue growth,
Speaker 9: cloud revenue growth, potentially they talk about return on this investment.
Speaker 9: I think all of that would be a good signal
Speaker 9: that the AI trade not at its last innings, but
Speaker 9: maybe in even the middle innings of the cycle. And
Speaker 9: so we're hopeful that's the direct of travel and you
Speaker 9: get some opportunities in those lagging parts of the market.
Speaker 3: You have a wonderful vista, radically different folks. And this
Speaker 3: is all going back to the Edward Jones. So I
Speaker 3: never met. I regret they never met. I mean he
Speaker 3: lived to be a ripe old eighty nine, dying in
Speaker 3: the early eighties. You have fifteen thousand is Ish branch
Speaker 3: offices managing umptying gazillion dollars. The phrase here folks were
Speaker 3: TNT brokers. This is back to before World War Two,
Speaker 3: which is they traveled the countryside out of Missouri Saint
Speaker 3: Louis Tuesday through Thursday. It used to be the heritage. Okay,
Speaker 3: so now you're not TNT. But you people have a
Speaker 3: handle on the nation like nobody else. What's the mood
Speaker 3: out there?
Speaker 9: Yeah, and it's a great call out. Look, we have
Speaker 9: a client in every county in the US, So yeah,
Speaker 9: to your point, the retail investor base we have a
Speaker 9: strong handle on. And look, this investor base has been
Speaker 9: leading the way. Actually used to be institutions that ledd market.
Speaker 9: It's the retail audience we think is getting more savvy.
Speaker 9: And by the way, they're pretty optimistic. Now, are there
Speaker 9: worries out there? Yes, we're seeing a reacceleration or re
Speaker 9: escalation in the Iran War. Geopolitics never sits well with
Speaker 9: this audience, but there's some optimism that the end goal
Speaker 9: here is that neither side of this aisle will want
Speaker 9: you know, it's not great for either side of the isle,
Speaker 9: and so we want to make sure that there's some
Speaker 9: de escalation over time on the geopolitics. And by the way,
Speaker 9: innovation has been something that's captivating the retail audience. So
Speaker 9: the US has been hotbed for innovation. All the mag
Speaker 9: seven are housed here. I think there's a lot of
Speaker 9: optimism around that.
Speaker 5: We all like a this year, we're getting a lot
Speaker 5: of big IPOs. SpaceX obviously the largest what is your
Speaker 5: client base, the Edward Jones client base in every county
Speaker 5: in the country.
Speaker 3: Are they bringing up their.
Speaker 5: Advisers saying you got to get me into SpaceX or
Speaker 5: how do they view those things?
Speaker 9: Yeah, you know, there was a lot of enthusiasm around SpaceX.
Speaker 9: The space economy over time could be exciting. Here. We
Speaker 9: were very mindful that the IPO cycle tends to look
Speaker 9: very similar and it almost happened again this time identically
Speaker 9: in that there tends to be a pop up front,
Speaker 9: but over twelve month period IPOs tend to lag the
Speaker 9: broader S and P five hundred and so certainly SpaceX
Speaker 9: in particular is probably back at it's near its IPO levels.
Speaker 9: There's ways to play it. If you have any sort
Speaker 9: of Nasdaq index exposure or Russell Index exposure MSCI, you're
Speaker 9: getting exposure to SpaceX, and so I think that's the
Speaker 9: basket approach is still the right one there.
Speaker 3: Let's talk reversion to mean. We've got a lot of
Speaker 3: fancy people in today like you, and it's fine. It's
Speaker 3: an easy prep a pet phrase to say. But from
Speaker 3: a wannamahajen, what is reversion to mean? After a great
Speaker 3: bull market?
Speaker 7: Yeah?
Speaker 9: You know, look, I think bull markets tend to be
Speaker 9: longer and stronger than bear markets, and that's what we know.
Speaker 9: So on average, bull markets are five and a half years.
Speaker 9: We're probably four four and a half years into this
Speaker 9: bull market. They tend to be up over one hundred
Speaker 9: and twenty percent versus bear markets tend to be shorter lived,
Speaker 9: so you know, one one and a half years, maybe
Speaker 9: down twenty to thirty percent, but they really present opportunities.
Speaker 9: So you know, from our perspective, you want to think
Speaker 9: long term, you want to think you're twenty to thirty
Speaker 9: year horizon. And so while there could be some mean
Speaker 9: reversion after a bull market, if you're young enough, if
Speaker 9: you still have that horizon in front of you, there's
Speaker 9: your opportunity.
Speaker 5: I think it's something that's new in your career, my career.
Speaker 5: ETFs from such a big part. How does Edward Jones
Speaker 5: what's in type of Edward Jones client do with ETFs?
Speaker 7: Yeah?
Speaker 9: You know, look, ETFs are a great low cost way
Speaker 9: to access a broad set of stocks, a broad set
Speaker 9: of sectors, and we think at index exposure, and so
Speaker 9: you know, I think it was Warren Buffett who said
Speaker 9: there's not been any individual fund manager that has beat
Speaker 9: the S and P five hundred over a ten year period.
Speaker 9: And so getting that ETF and index exposure, in our view,
Speaker 9: is a great way to.
Speaker 3: With with the ETFs or just some running out of time.
Speaker 3: Oh yeah, with the ETFs. Are we over diversified today?
Speaker 2: You know?
Speaker 9: I think there's ways even in ETFs to have sector ETFs,
Speaker 9: to have thematic ETFs, so you could focus your investing.
Speaker 9: But in our in our mind, the only free lunch
Speaker 9: and investor we'll get is diversification. So there's no such
Speaker 9: thing as over divestication.
Speaker 3: Speaking in freelanch, stop the food Court, and thank you
Speaker 3: so much with Edward d at Johns.
Speaker 1: This is the Bloomberg Surveillance Podcast, available on Apple, Spotify,
Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,
Speaker 1: seven to ten am Easter and on Bloomberg dot Com,
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app.
Speaker 1: You can also watch us live every weekday on YouTube
Speaker 1: Tube and always on the Bloomberg Terminal
Speaker 9: MHM