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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern

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Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business app.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: Earning seemed to be coming in pretty solid. Is it

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Speaker 2: enough to support this market? Lori Cavacina joins us. She's

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Speaker 2: had a US equity strategy at RBC Capital Market.

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Speaker 3: She's usually on the road.

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Speaker 2: When she's back in New York week Reverence see if

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Speaker 2: she can come into the studio, and we appreciate that. Y.

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Speaker 2: What are the conversations you're having with your clients these

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Speaker 2: days as you do travel around to see them.

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Speaker 4: Everyone's nervous, everyone's jittery. I wouldn't say that people are

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Speaker 4: super bearish, you know. And maybe one good example is

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Speaker 4: I was in London a few weeks back, and I'd

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Speaker 4: been there in December, and in December everyone was parish.

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Speaker 4: This time it was more wary, cautious concern. I got

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Speaker 4: back to the States and started running around a whole

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Speaker 4: bunch of different cities, same kind of vibe.

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Speaker 5: So jittery, of course, there's a lot of uncertainty, so

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Speaker 5: I want to dig into why, what's driving this jittery

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Speaker 5: ness from them. I mean, of course, we have the

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Speaker 5: SP five hundred up about fifteen percent year today, looking

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Speaker 5: at the VIS index hanging around the sixteen handle right now,

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Speaker 5: Where are people feeling? Why are they feeling this?

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Speaker 4: So I think valuations are at the end of the day.

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Speaker 4: The one thing I hear in just about every meeting,

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Speaker 4: and what we see in our own data, is that

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Speaker 4: we're not at tech bubble extreme. So I know there's

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Speaker 4: lots of talk of a bubble, but we are. Whether

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Speaker 4: you're looking at SMP top ten names, SMP market cap

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Speaker 4: weighted NASDAQ one hundred, kind of the workhorses of the

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Speaker 4: market from the earnings perspective, they're bumping up against the

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Speaker 4: ceilings of kind of the pre and post COVID era

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Speaker 4: and they're not breaking through. We haven't seen any expansion

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Speaker 4: on the PE multiples if you look broadly across the

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Speaker 4: indexes since August. So I think people are feeling that.

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Speaker 4: You know, some clients who have been really bullish on

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Speaker 4: CAPEX back in the summer, saying like it's just not

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Speaker 4: quite as strong as we thought.

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Speaker 6: It would be.

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Speaker 4: You know, I've had a number of conversations on rate cuts,

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Speaker 4: and we were really hearing a lot about that in

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Speaker 4: June and July, and now I've had some people say

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Speaker 4: to me, well, yeah, rate cuts are bullish, but we

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Speaker 4: already pulled all that forward. So I think it's a

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Speaker 4: sense of you know, valuation whiplash. And then of course,

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Speaker 4: you know, the AI of related stocks are doing well now,

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Speaker 4: but they have had some difficult days and there's been

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Speaker 4: a lot of jitteriness on those not from people who

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Speaker 4: are bearish on the theme, people who have bought into

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Speaker 4: the theme but have seen how far it's run and

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Speaker 4: now concerned it's hitting some speed bumps.

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Speaker 2: Do you think earnings are going to be strong enough

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Speaker 2: this quarter? And then the guidance into the to the

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Speaker 2: last couple months of the year then into next year,

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Speaker 2: are earnings gonna be enough for this market?

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Speaker 4: So I think earnings are a solid foundation, but I

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Speaker 4: think the sentiment around earnings has also gotten overdone.

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Speaker 6: And what I mean by that.

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Speaker 4: Is if you look at the rate of upward revisions,

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Speaker 4: it hit twenty eight percent for the S and P

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Speaker 4: five hundred in late April. That's typical of a trough

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Speaker 4: and a decline outside of a big crisis. Fast forward

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Speaker 4: to mid August, we had rallied into the mid sixties

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Speaker 4: on that stat, and that's about as good as it

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Speaker 4: gets if you're not recovering off a big crisis. And

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Speaker 4: now that stat has been decelerating, and it was I

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Speaker 4: think abound fifty two percent in our update we took

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Speaker 4: late last week, so you're not quite a negative revision territory.

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Speaker 4: We're seeing basically every sector to clerate except tech, which

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Speaker 4: is kind of stalled around all time highs. So the

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Speaker 4: big question is is tech going to join the rest

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Speaker 4: of the crowd and start to decelerate or is it

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Speaker 4: just going to stick around at all time highs. The

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Speaker 4: only sort of industry or sector I can really remember

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Speaker 4: staying at all time highs for an extended period of

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Speaker 4: time was home building pregfc Ah.

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Speaker 5: Yeah, I used to cover homebuilders for your Equity scene,

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Speaker 5: and it's interesting to watch the rally that we saw there.

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Speaker 7: But I want to dig back into tech.

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Speaker 5: As we've been spelling out here, We're going to hear

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Speaker 5: from a lot of the big names this week. The

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Speaker 5: conversation has really been in are we in a tech bubble.

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Speaker 7: What do you make of that?

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Speaker 6: So, you know, I started in two thousand.

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Speaker 4: I literally got my job in March of two thousand

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Speaker 4: when they were out they were giving out finance jobs

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Speaker 4: to polysym majors. But you know, I saw the implosion.

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Speaker 4: I didn't see the build up. But what I see

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Speaker 4: in my data today, again, the valuations are not back

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Speaker 4: to where they were at that point in time. Yes,

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Speaker 4: they're extended. They're also extended for the rest of the market,

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Speaker 4: So I don't think it. I think it's a broader

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Speaker 4: valuation problem. We have some charts where we look at

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Speaker 4: net income share of the top ten market cap names

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Speaker 4: against the market.

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Speaker 6: Cap share, and there is a gap. But there has

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Speaker 6: been a.

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Speaker 4: Gap where kind of the market cap share has exceeded

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Speaker 4: the net income share, you know, for you know, the

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Speaker 4: better part of the past decade. I think there's more

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Speaker 4: earning support to this trade than there was in the past.

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Speaker 4: Is it maybe a little too exuberant? Probably?

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Speaker 6: But is it a bubble? I don't think so.

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Speaker 2: So what sectors or factors are screening well for you now?

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Speaker 2: I'm guessing it's kind of few and far between, given

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Speaker 2: how the lift we had.

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Speaker 4: Yeah, I mean, anything AI related looks expensive, so that's

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Speaker 4: going to be industrials utilities, you know.

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Speaker 6: And also the tech sector.

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Speaker 4: Had been looking more neutral on our models, but now

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Speaker 4: it's looking elevated again. Consumer discretionary also looks expensive. That's

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Speaker 4: our one underweight sector. We're neutral those others I mentioned.

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Speaker 6: We're still overweight.

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Speaker 4: Financial is definitely more nervous in the in the wake

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Speaker 4: of sort of the private credit issues, but our bank's

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Speaker 4: analysts have thought that pain was overdone, so we're sticking

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Speaker 4: with that.

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Speaker 6: Overweight.

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Speaker 4: Materials we've liked, and then we haven't upgraded the healthcare sector,

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Speaker 4: but we have written in some of our weeklies that

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Speaker 4: on a tactical basis, if you're worried about a pullback

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Speaker 4: in the market, which we are, it looks like the

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Speaker 4: best defensive option. We've generally been market weight the defensive sectors.

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Speaker 4: But we've got nice flows, nice valuations, good earnings revision

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Speaker 4: trends that are decelerating but are not as decelerating as

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Speaker 4: much as say industrials and materials. Got policy risk, but

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Speaker 4: maybe the worst of that's behind us.

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Speaker 7: So moving and learn into the macro.

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Speaker 5: What did you take away from the Ladist CPI report,

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Speaker 5: especially given the fact that we have the SPED meeting

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Speaker 5: coming up on Wednesday, well get it.

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Speaker 4: So you know, what our economists have said was they

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Speaker 4: were not so worried about, you know, kind of this

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Speaker 4: inflation report right that, you know, they thought this was

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Speaker 4: going to be a pretty reliable report.

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Speaker 6: They also said that you got a lot of help.

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Speaker 4: From owner's equivalent rent and they don't expect that to

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Speaker 4: continue that sort of the pressures on goods are you know,

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Speaker 4: on goods pricing is persisting. They're seeing some pressure on services.

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Speaker 4: So they're still worried about inflation and core terms hitting

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Speaker 4: about three and a half percent in the middle of

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Speaker 4: next year. Our rates team has said we get the

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Speaker 4: cut this week, but they think there's a pause in December.

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Speaker 4: They think we get two more cuts next year. But

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Speaker 4: I would say as a house view, I think RBC

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Speaker 4: has been a little bit more concerned about inflation and

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Speaker 4: it's reverberations on the FED than maybe some other shops.

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Speaker 2: Laurie, as you know as well as anybody, a good

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Speaker 2: solid bull market needs some healthy pullbacks from time to

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Speaker 2: time for some sustainable period of time. We haven't really

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Speaker 2: had that in this market.

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Speaker 6: We haven't I think the worst we got.

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Speaker 4: You know, we've had some big rumblings in some of

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Speaker 4: the tech names. We've had the momentum trade breakdown, you know,

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Speaker 4: briefly in both the Russell and the SMP. You know

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Speaker 4: it has been enough damage. You've also seen the gyrations

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Speaker 4: and gold retail passive flows are starting to deteriorate. I

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Speaker 4: see a lot of signs of fatigues and that things

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Speaker 4: are not necessarily completely healthy under the surface. We've been

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Speaker 4: looking for a five to ten percent draw down. If

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Speaker 4: it gets postponed, we don't think that it's derailed that pullback.

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Speaker 4: It's possible it's going to get delayed, but I think

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Speaker 4: at these valuation levels it's inevitable.

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Speaker 5: So some people have been talking a lot about market froth.

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Speaker 5: The you're here, how much further do you see equities rallying?

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Speaker 5: I mean, it has been a really relentless year, especially

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Speaker 5: if you think about two years previously, we were seeing

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Speaker 5: more than twenty percent returns on the S and P

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Speaker 5: five hundred, and going into this year, there was a

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Speaker 5: conversation about whether or not we might not even reach

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Speaker 5: close to that, But here we are sitting at fifteen

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Speaker 5: percent gain on the year.

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Speaker 4: I think We're going to have to, you know, keep

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Speaker 4: a very close eye on the technicals. And here my

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Speaker 4: year end target is actually below where we are now.

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Speaker 4: We do have a second half of twenty twenty six

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Speaker 4: target up around seventy one hundred, and some of our modeling,

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Speaker 4: frankly can get you seventy four seventy five hundred. That's

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Speaker 4: our sentiment and cross asset work, which were the most

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Speaker 4: bullish models for this year. So you know, I think

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Speaker 4: that you can only really get there if you have

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Speaker 4: the pause that refreshes.

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Speaker 6: But we'll see how it goes.

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Speaker 2: Laurie, thank you so much for joining us. We always

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Speaker 2: appreciate getting a few minutes of your time.

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Speaker 3: You know how busy you are.

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Speaker 2: Lori Cavacina, she's head of US Equity strategy at RBC

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Speaker 2: Capital Markets.

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Speaker 3: To stay with us from Bloomberg Surveillance. Coming up after this.

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Speaker 1: This is the Bloomberg Surveillance podcast. Listen live each weekday

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Speaker 1: starting at seven am Eastern on Apple Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business app. You can also listen

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Speaker 1: live on Amazon Alexa from our flagship New York station,

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Speaker 1: Just Say Alexa, Play Bloomberg eleven thirty with the President

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Speaker 1: in Asia.

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Speaker 2: It kind of feels like that's where the focus is

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Speaker 2: right everyone you know in Washington. And maybe that's a

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Speaker 2: good thing because Washington still closed. You're not pretty quiet,

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Speaker 2: they're not open for business. And we were down there

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Speaker 2: a couple of weeks ago for a remote broadcast and boy,

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Speaker 2: you can go to any monument outside you know, you know,

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Speaker 2: the Lincoln Memorial my favorite.

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Speaker 3: Not a lot of people there, not a lot of tours.

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Speaker 2: I mean, it's just and the buses are not going around,

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Speaker 2: parking spots available.

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Speaker 3: On the street.

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Speaker 7: A little different, a little.

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Speaker 3: Bit different there.

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Speaker 2: Henrietta trust Jads is here, co founder managing partner of

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Speaker 2: Veda Partners, Henriette. As we go into week I don't

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Speaker 2: know four here coming up for this closure. What's the

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Speaker 2: feeling in DC these days? Is this a is this

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Speaker 2: good for anybody? Is there lasting damage for anybody? Or

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Speaker 2: is just nobody really paying attention here?

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Speaker 8: It's really kind of a surreal, suspended animation kind of

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Speaker 8: place right now. The House Republican Conference is not even

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Speaker 8: in session, so they're not in DC. So the temperature

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Speaker 8: on the Republican side, from my perspective, is a lot

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Speaker 8: more calm.

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Speaker 7: They just are you.

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Speaker 8: Know, the president doesn't care about this or voters don't

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Speaker 8: care about this, so therefore we don't care about this.

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Speaker 7: And then on the Democratic side, there's a little bit

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Speaker 7: more action.

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Speaker 8: A keem Jeffries is calling the entire Democratic Conference back

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Speaker 8: to DC this week, so they will be there, they'll

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Speaker 8: be press briefings, they'll be talking about the ACA subsidies,

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Speaker 8: and they'll be trying to generate some sort of momentum

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Speaker 8: in one direction or another. But as you just pointed out,

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Speaker 8: as long as the president is not engaged, there's not

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Speaker 8: going to be any forward progress. So the government will

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Speaker 8: should be shut down for at least another probably ten

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Speaker 8: days at a minimum.

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Speaker 5: So are there any sort of long term consequences that

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Speaker 5: you should expect coming out of a government shutdown? Of course,

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Speaker 5: this is the second longest, the longest government shut down

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Speaker 5: being about thirty five days.

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Speaker 8: Right, Not even is there a long term impact in

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Speaker 8: terms of just what the government can do. They'll all

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Speaker 8: get back up and running and the same employees will

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Speaker 8: still be there. All these firings that russ Bott has

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Speaker 8: done will be overruled by the legal courts, as has

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Speaker 8: been the case in Stone Started and we'll get back

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Speaker 8: to business. And there's not even really an impact from

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Speaker 8: the voter's perspective. When they have shut down in the past,

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Speaker 8: Republicans haven't paid a price for it in elections. The

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Speaker 8: next cycle, it's it's a full year away from the

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Speaker 8: twenty twenty six midterms, so voters are going to forget

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Speaker 8: about this. Move on, we'll reopen. The one thing we

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Speaker 8: don't want is a rolling stream of shutdowns. So hopefully

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Speaker 8: they'll reach a deal to reopen and then they'll keep

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Speaker 8: it open for at least a year, for six or

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Speaker 8: seven months.

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Speaker 2: All right, all right, let's leave that word is. We've

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Speaker 2: got I live in the state of New Jersey. We

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Speaker 2: have a governor's election there. I did my early voting

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Speaker 2: this weekend. There's one also in Virginia. How are the

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Speaker 2: How's the Democratic Party, how's the Republican Party?

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Speaker 3: Looking at those two states, you know, I think.

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Speaker 8: It's interesting to have a conversation about those elections in

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Speaker 8: the context of the shutdown, because one party or the

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Speaker 8: other could generate some momentum based off of what happens on.

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Speaker 7: The Tuesday election.

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Speaker 8: So if Democrats pick up both races in Virginia and

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Speaker 8: New Jersey, which is what the polling is currently suggesting.

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Speaker 8: I think Dems are head by five in Jersey and

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Speaker 8: by twelve in Virginia. Then you'll see at least a

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Speaker 8: media narrative or you know, a talking point for the

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Speaker 8: Democratic Party. The voters are turning away from Trump, they're

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Speaker 8: turning towards the Democratic Party, and if it goes to

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Speaker 8: the other direction, the reverse and it would probably be

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Speaker 8: even more extreme for the Republican since that's not consensus

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Speaker 8: and expectations from the polls.

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Speaker 7: So I think it could generate some.

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Speaker 8: Momentum right when Trump is returning to d C, right

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Speaker 8: as we're heading into what should be a Veterans Day

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Speaker 8: recess starting on Friday, November seventh, and that could move

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Speaker 8: some things around on the shutdown front.

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Speaker 7: Where are your eyes most fixed story?

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Speaker 4: Now?

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Speaker 7: Are any of these races expected to be close? Not really.

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Speaker 8: I think that, you know, we constantly see New Jersey

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Speaker 8: as the great white whale for the Republican Party, So

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Speaker 8: there's a possibility of some sort of movement there. People

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Speaker 8: will be looking at margins, but pretty much we're expecting

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Speaker 8: a Democratic win in Jersey. In Virginia, it should be.

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Speaker 7: A sort of blockbuster year four.

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Speaker 8: Democrats as the minority party going into twenty twenty six,

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Speaker 8: So there's Supreme court cases and judges elections in Pennsylvania,

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Speaker 8: fifty in California. There's a lot of things to watch,

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Speaker 8: but it should all generally go in the Democrats' direction,

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Speaker 8: as it would in the reverse if Democrats controlled everything

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Speaker 8: right now. So not expecting anything major to come out

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Speaker 8: except for that potential momentum play and media narrative to

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Speaker 8: come out of this.

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Speaker 3: Henrietta, I can give you some local color here.

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Speaker 2: Being in the Greater New York, New Jersey metro market,

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Speaker 2: we were just getting crushed with TV political ads. It's

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Speaker 2: just brutal what mister Cindarelli, the Republican candidate for governor,

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Speaker 2: is not doing. He is not running on the cotails

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Speaker 2: of President Trump. He's not invoking Trump and trump Ism

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Speaker 2: and magat at all. Does that surprise you or what

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Speaker 2: does that tell you?

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Speaker 8: Well, voters tend to vote in sort of a swing.

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Speaker 8: They go in one direction one year, and then they

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Speaker 8: decide they don't like what they just did and they

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Speaker 8: go backwards, Especially when one administration is being really proactive.

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Speaker 8: We're really active, passing a lot of legislation very much

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Speaker 8: in the news all the time.

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Speaker 7: Voter send a not like that.

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Speaker 8: So it makes a lot of sense for Republicans, especially

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Speaker 8: a state like New Jersey, to run away from MAGA,

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Speaker 8: to run away from Trump, because Trump's approve all rating,

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Speaker 8: especially on his core issue of the economy and inflation,

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Speaker 8: is seriously underwater. I believe the worst he's had in

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Speaker 8: both of his terms is standing with voters on the

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Speaker 8: economy and inflation.

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Speaker 7: And that's, of course due to the tariffs. Voters don't like.

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Speaker 8: The one big, beautiful bell, so I'd be running away

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Speaker 8: from it too.

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Speaker 2: All right, We'll see Henrietta Trees, co founder managing partner

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Speaker 2: Vida Partners, to stay with us from Bloomberg Surveillance coming

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Speaker 2: up after this.

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Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

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Speaker 1: starting at seven am Eastern on Apple Coarclay, and Android

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Speaker 1: Auto with the Bloomberg Business app. You can also listen

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Speaker 1: live on Amazon Alexa from our flagship New York station,

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Speaker 1: Just say Alexa Play Bloomberg eleven thirty.

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Speaker 2: We continue to face a dearth of economic data with

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Speaker 2: the government shut down here. We did get some CPI

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Speaker 2: data last week you know, a little bit higher than

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Speaker 2: I think the Fed wants to see it, stubbornly a

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Speaker 2: little bit higher than where they want to see it.

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Speaker 3: So what does that mean for our Freder Reserve.

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Speaker 2: Let's check in with David Rosenberg, he's founder and president

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Speaker 2: Rosenberg Research and Associates. And David, we actually did get

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Speaker 2: a piece of government inflation data last week. I love

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Speaker 2: to get your thoughts on it here and how you

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Speaker 2: think the inflation outlok may influence how our Freder Reserve

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Speaker 2: looks at the interest rate scenario.

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Speaker 9: Well, as far as the CPR reports concerned that came

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Speaker 9: out on Friday, it's really not a case of inflation

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Speaker 9: still being above the Fed's target. The Fed can't be

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Speaker 9: focused on lagging indicator. It has to before focused on

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Speaker 9: where inflation is going to be a year from now

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Speaker 9: and two years from now, because it's policy moves influenced

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Speaker 9: the economy and with a lag. So when I hear

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Speaker 9: well inflation is still well above the Fed's target, my

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Speaker 9: eyes just rolled. It's really a meaningless comment.

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Speaker 3: It's where instlation is going right.

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Speaker 9: Well, if the Fed rolls that way, then they wouldn't

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Speaker 9: be nudging the market towards a view that they're going

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Speaker 9: to be cutting this week and probably cutting one more

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Speaker 9: time between now and the end of the year. So

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Speaker 9: I think that the bottom line is that when you

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Speaker 9: look at Friday's number standalone, the headline in the core

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Speaker 9: came infractionally below expected. And we're finally starting to get

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Speaker 9: some help out of the dominant rent and OEER metrics,

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Speaker 9: which have lagged well behind the actual deflation that we've

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Speaker 9: seen in residential rents in real time. But there are

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Speaker 9: inherent lags that are built in. And the other part

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Speaker 9: of this is that you know, when you're taking a

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Speaker 9: look at the core good CPI, you know it's no

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Speaker 9: longer deflating, it's inflating. But the terraff impact so far

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Speaker 9: in the good sector has actually been fairly mild. If

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Speaker 9: I was it the FED, I'd be encouraged by that.

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Speaker 5: So how exactly are you expecting them to interpret this?

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Speaker 5: I mean, of course, all eyes are on this upcoming meeting,

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Speaker 5: and in the midst of the fact that we do

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Speaker 5: have a major absence of data here.

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Speaker 9: Well as it comes to, you know, the inflation side,

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Speaker 9: you know what the FED should really be consumed with

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Speaker 9: is where inflation expectations are, and when you look at

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Speaker 9: the broad array of inflation expectation metrics, they're running at

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Speaker 9: the oh my lord, two point three percent. We look

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Speaker 9: at five year and ten year tips break evens, they're

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Speaker 9: not that far ahead of where the feds the facto

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Speaker 9: target is. And yet the FED funds rate is at

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Speaker 9: least one hundred basis points above neutral. So that's ry

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Speaker 9: line up. And of course the Fed's got a duel

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Speaker 9: Man date, not a single mandate. And the labor market

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Speaker 9: is showing signs of cracking. There's no doubt that the

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Speaker 9: firing rate is low, you know, heading into the government shutdown,

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Speaker 9: looking at initial job as claims they weren't really doing

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Speaker 9: anything more than just stabilizing. So companies are still hoarding labor.

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Speaker 9: But the problem is that the hiring rate has you know,

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Speaker 9: fallen dramatically and to a point now where employment is contracting.

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Speaker 9: We don't have the nonfim pyial numbers, but we have

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Speaker 9: the ADP private sector employment numbers, and they've declined in

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Speaker 9: two of the past three months, so we're building up

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Speaker 9: slacking the labor market. Cracks are emerging. They can't ignore that.

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Speaker 9: At the same time, you could argue that inflation has

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Speaker 9: been stubborn.

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Speaker 3: But you know, there was a.

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Speaker 9: Time when inflation was nine percent, you know, back in

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Speaker 9: twenty twenty two, and people were saying we'll never see

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Speaker 9: three percent again, let alone getting to two percent. Well

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Speaker 9: we're at three percent, So I would still say the

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Speaker 9: trend is down when I hear about sticky sticky sticky,

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Speaker 9: the overall trend is still towards disinflation. I think we've

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Speaker 9: got to be amazed that we're still roughly around three

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Speaker 9: percent even with the tariff impact. And if we get

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Speaker 9: some more news out of residential rents, which I think

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Speaker 9: are going to be this disinflating further. And remember that's

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Speaker 9: the dominant force. You know, the teriff impact on the

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Speaker 9: good side, is really a small share of the CPI.

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Speaker 9: We continue to see the rental disinflation in the CPI

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Speaker 9: DA that people will be surprised by this time next

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Speaker 9: year how low it's going to be.

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Speaker 2: So follow up on that, David, because this is a

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Speaker 2: market that we've been told for years and years and years,

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Speaker 2: the housing market. We have a housing shortage, and rents

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Speaker 2: been reflected in rents and the high cost of housing

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Speaker 2: and the housing affordabilities just out of reach for so

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Speaker 2: many consumers out there. Talk to us about the real

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Speaker 2: estate market, and how do you think that may impact

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Speaker 2: the economy?

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Speaker 9: Well, Housing affordability has begun to improve, actually because of

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Speaker 9: two factors. One, of course, is the bond induced mortgage

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Speaker 9: market reliefs that we've seen, but are also coming off

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Speaker 9: five consecutive months of home price deflation. And the gold

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Speaker 9: standard for home prices quality adjusted is the case Shiller

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Speaker 9: Home Price Index. It's down five months in a row.

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Speaker 9: That's not a blip on the screen. That is a pattern.

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Speaker 9: So you know, when I hear about that there's a

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Speaker 9: supply shortage of housing, how do you explain that in

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Speaker 9: the context of five straight months of negative readings on

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Speaker 9: the case Shiller Home Price Index. The problem is that

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Speaker 9: demand has fallen below what you can argue is a

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Speaker 9: tight supply. You can only get negative pricing in anything

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Speaker 9: if demand is faltering relative to the supply curve, no

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Speaker 9: matter what that supply curve looks like. And so the

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Speaker 9: other part of this equation, of course, that nobody looks

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Speaker 9: that because we talk about the stock market all the

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Speaker 9: time being underpinned by you know, ten percent growth and

439
00:21:05,320 --> 00:21:10,879
Speaker 9: corporate profits, is that is that personal incomes are actually deflating.

440
00:21:11,960 --> 00:21:14,800
Speaker 9: We have this unusual circumstance because of the equity wealth

441
00:21:14,840 --> 00:21:18,400
Speaker 9: effect on spending. That consumer spending in real terms since

442
00:21:18,480 --> 00:21:21,520
Speaker 9: April is up two point six percent at an annual

443
00:21:21,600 --> 00:21:25,479
Speaker 9: rate against the backdrop of negative one point two percent

444
00:21:25,640 --> 00:21:30,480
Speaker 9: in real disposable income. So the problem even though affordability

445
00:21:30,600 --> 00:21:33,320
Speaker 9: has begun to improve at the margin, remember that the

446
00:21:33,400 --> 00:21:39,800
Speaker 9: denominator is income. And because the stock market, the labor

447
00:21:39,840 --> 00:21:44,160
Speaker 9: market is showing cracks, personal incomes are starting to actually

448
00:21:44,280 --> 00:21:48,200
Speaker 9: contract in real terms. And if I'm sitting at the FED,

449
00:21:48,440 --> 00:21:52,280
Speaker 9: that that is that's an alarm bell because personal incomes

450
00:21:53,160 --> 00:21:56,840
Speaker 9: represents seventy percent of total labor income and drives seventy

451
00:21:56,880 --> 00:22:00,520
Speaker 9: percent of the economy ultimately, which is the con The

452
00:22:00,600 --> 00:22:04,399
Speaker 9: question is how long can the energizer bunny last because

453
00:22:04,400 --> 00:22:06,960
Speaker 9: of the equity wealth effect of declining savings rates when

454
00:22:07,000 --> 00:22:09,119
Speaker 9: personal income in real terms is contracting. You know when

455
00:22:09,119 --> 00:22:12,960
Speaker 9: I mentioned that negative one point two percent trended in

456
00:22:13,359 --> 00:22:16,760
Speaker 9: real personal supposed to incomes since April. Nobody believes me

457
00:22:16,840 --> 00:22:19,880
Speaker 9: until I show them the data. And you know you're

458
00:22:19,880 --> 00:22:22,240
Speaker 9: talking before about are we heading into recession? Wellg news

459
00:22:22,280 --> 00:22:25,320
Speaker 9: for you when it comes to real personal incomes. Not profits,

460
00:22:25,359 --> 00:22:28,080
Speaker 9: mind you, but real personal supposed to income already is

461
00:22:28,080 --> 00:22:28,760
Speaker 9: in a recession.

462
00:22:30,600 --> 00:22:33,040
Speaker 5: Well, David, you did mention markets here, and of course

463
00:22:33,080 --> 00:22:35,919
Speaker 5: we know markets closed at a record high last week.

464
00:22:35,920 --> 00:22:37,679
Speaker 5: When we look at the equity market, even with all

465
00:22:37,760 --> 00:22:41,160
Speaker 5: the disruptions of the year, whether it be geopolitical tensions, terrorffs,

466
00:22:41,280 --> 00:22:45,880
Speaker 5: inflation concerns, we're still seeing markets rallying here. How far

467
00:22:46,000 --> 00:22:49,600
Speaker 5: do you expect this rally to continue? Is the optimism

468
00:22:50,160 --> 00:22:51,080
Speaker 5: already baked in?

469
00:22:53,280 --> 00:22:55,320
Speaker 9: Well, I've been saying that for a while. But you know,

470
00:22:55,400 --> 00:23:01,480
Speaker 9: as Bob Ferrell, my hero and mentor famously posited, exponentially

471
00:23:01,600 --> 00:23:04,600
Speaker 9: rising markets can go further than you think, but they

472
00:23:04,600 --> 00:23:06,840
Speaker 9: don't correct by going sideways. And we are in the

473
00:23:06,880 --> 00:23:11,800
Speaker 9: further than you think zone of the stock market. So

474
00:23:12,119 --> 00:23:14,360
Speaker 9: I think we're an extra innings. But you know, only

475
00:23:15,760 --> 00:23:17,959
Speaker 9: a brazen full would say to you that you know

476
00:23:18,000 --> 00:23:20,440
Speaker 9: this is going to end, you know, tomorrow, next week

477
00:23:20,560 --> 00:23:23,639
Speaker 9: or next month. The momentum and the sentiment is just

478
00:23:23,720 --> 00:23:26,639
Speaker 9: overwhelmingly strong. You know, I was saying these same things

479
00:23:26,680 --> 00:23:29,200
Speaker 9: back in nineteen ninety nine. The market didn't peak until,

480
00:23:29,280 --> 00:23:32,920
Speaker 9: you know, March two thousand, So could it go even

481
00:23:32,960 --> 00:23:35,760
Speaker 9: further than we think? Absolutely, We're we're in a two

482
00:23:35,840 --> 00:23:39,399
Speaker 9: stand aviation event when it comes to the multiples in

483
00:23:39,440 --> 00:23:43,360
Speaker 9: the stock market, and we've been there for several months now.

484
00:23:44,119 --> 00:23:46,879
Speaker 9: But you know, bubbles can typically last, I mean on average,

485
00:23:46,920 --> 00:23:49,000
Speaker 9: when you talk about what is a bubble, A bubble

486
00:23:49,080 --> 00:23:53,119
Speaker 9: is anything north of two cent reviations above the historical norm.

487
00:23:53,760 --> 00:23:56,480
Speaker 9: And we've been there for some time, but you can

488
00:23:56,520 --> 00:24:00,000
Speaker 9: actually be there for you know, eighteen to twenty four months.

489
00:24:00,359 --> 00:24:02,119
Speaker 9: So the clock is ticking. But I'm not going to

490
00:24:02,200 --> 00:24:04,440
Speaker 9: tell you that it can't go on further over the

491
00:24:04,520 --> 00:24:06,160
Speaker 9: here tournament. It probably will.

492
00:24:06,800 --> 00:24:08,960
Speaker 2: David, thanks so much for joining us. Always appreciate getting

493
00:24:08,960 --> 00:24:09,760
Speaker 2: a few minutes of your time.

494
00:24:09,840 --> 00:24:10,480
Speaker 3: David Rosenberg.

495
00:24:10,480 --> 00:24:14,439
Speaker 2: He's a founder and president of Rosenberg Research and associate to.

496
00:24:19,320 --> 00:24:25,960
Speaker 7: Do this.

497
00:24:25,960 --> 00:24:29,880
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

498
00:24:29,920 --> 00:24:32,920
Speaker 1: starting at seven am Eastern on applecar Play and Android

499
00:24:32,960 --> 00:24:35,960
Speaker 1: Auto with the Bloomberg Business app. You can also listen

500
00:24:36,080 --> 00:24:39,320
Speaker 1: live on Amazon Alexa from our flagship New York station.

501
00:24:39,880 --> 00:24:42,880
Speaker 1: Just say Alexa, play Bloomberg eleven thirty.

502
00:24:43,000 --> 00:24:44,880
Speaker 2: Let's check came Alis mttail and see what she's got

503
00:24:44,880 --> 00:24:46,240
Speaker 2: with her newspaper segment.

504
00:24:46,280 --> 00:24:48,080
Speaker 10: All right, I thought of this one with you, Paul, Okay.

505
00:24:48,080 --> 00:24:49,280
Speaker 10: I know you're a Landman fan.

506
00:24:49,320 --> 00:24:51,600
Speaker 3: Okay, So a Yellowstone.

507
00:24:51,000 --> 00:24:52,280
Speaker 11: And yellow exactly.

508
00:24:52,520 --> 00:24:55,199
Speaker 10: So it's the guy behind it, right, Taylor Sheridan, So

509
00:24:55,240 --> 00:24:57,359
Speaker 10: the Wall Street Journal sources are telling them.

510
00:24:58,040 --> 00:24:59,680
Speaker 11: Also Tulsa King too. That's another one.

511
00:25:00,240 --> 00:25:02,840
Speaker 10: He signed a deal to join NBC Universal when his

512
00:25:02,960 --> 00:25:06,520
Speaker 10: contract with Paramount expires in twenty twenty nine. And this

513
00:25:06,600 --> 00:25:08,520
Speaker 10: is a huge deal because he's one of the biggest

514
00:25:08,520 --> 00:25:12,680
Speaker 10: providers of shows at paramounth Plust. So the difference at

515
00:25:12,800 --> 00:25:15,960
Speaker 10: NBC Universal. They're saying he's going to create films for

516
00:25:16,000 --> 00:25:18,920
Speaker 10: the movie studio Universal Pictures in addition to the TV

517
00:25:19,040 --> 00:25:22,520
Speaker 10: content for NBC and the Peacock streaming. But the timing

518
00:25:22,560 --> 00:25:24,280
Speaker 10: of it, I mean, think about it. It comes less

519
00:25:24,280 --> 00:25:27,199
Speaker 10: than three months after David Ellison's sky Dance acquired control,

520
00:25:27,400 --> 00:25:29,399
Speaker 10: and Ellison was saying that, you know, he wanted to

521
00:25:29,480 --> 00:25:32,320
Speaker 10: keep Sheridan on board. So this is like some interesting

522
00:25:32,359 --> 00:25:33,639
Speaker 10: news behind Yeah, all the.

523
00:25:33,960 --> 00:25:37,280
Speaker 2: Really tapped into a vein of kind of programming that

524
00:25:37,400 --> 00:25:39,879
Speaker 2: some people like to really see and like the and

525
00:25:40,040 --> 00:25:40,520
Speaker 2: play it up.

526
00:25:40,520 --> 00:25:41,840
Speaker 3: And he's pretty done good at it.

527
00:25:42,520 --> 00:25:42,800
Speaker 1: You know what.

528
00:25:42,840 --> 00:25:45,840
Speaker 2: It's interesting he said he was an actor and he

529
00:25:45,960 --> 00:25:48,159
Speaker 2: was tired. I think his term was I was tired

530
00:25:48,280 --> 00:25:50,679
Speaker 2: being on the fifth page of the call list right

531
00:25:50,760 --> 00:25:53,360
Speaker 2: for actors, and so I just said, I'm gonna start

532
00:25:53,359 --> 00:25:55,359
Speaker 2: writing my own stuff and producing my own stuff.

533
00:25:55,359 --> 00:25:57,680
Speaker 3: And that's and now which created this empire?

534
00:25:57,800 --> 00:25:58,200
Speaker 6: Really are?

535
00:25:58,280 --> 00:25:59,840
Speaker 7: I've never seen you aloseing I have.

536
00:26:00,000 --> 00:26:02,040
Speaker 11: I've seen either of them. I hope Tulsa King was

537
00:26:02,040 --> 00:26:02,480
Speaker 11: pretty good.

538
00:26:03,200 --> 00:26:04,760
Speaker 2: Is another one that that he does. So he's just

539
00:26:04,880 --> 00:26:07,640
Speaker 2: he's on a crazy hot streak. It's a great win

540
00:26:07,680 --> 00:26:09,720
Speaker 2: for NBC Universal and it's a big, big loss for

541
00:26:09,720 --> 00:26:13,960
Speaker 2: paramunt because Paramount Plus has really relied heavily on his

542
00:26:14,080 --> 00:26:17,520
Speaker 2: programming to kind of launch that Paramount Plus. So that's

543
00:26:17,560 --> 00:26:18,560
Speaker 2: a that's a big loss.

544
00:26:18,840 --> 00:26:21,880
Speaker 10: It is definitely Okay, So Halloween season, right, we got

545
00:26:21,920 --> 00:26:24,560
Speaker 10: fall fever in the air. We're talking pumpkin lattes, right,

546
00:26:24,680 --> 00:26:28,120
Speaker 10: apple picking, love it, love it. But some people are

547
00:26:28,119 --> 00:26:33,399
Speaker 10: going all in. They're paying stylists hundreds, sometimes thousands of

548
00:26:33,440 --> 00:26:36,680
Speaker 10: dollars to decorate their porches. Okay, wow, I just put

549
00:26:36,720 --> 00:26:38,119
Speaker 10: a reef on my door and I call it today,

550
00:26:38,160 --> 00:26:40,359
Speaker 10: like with a scarecrow and that's it. But these people,

551
00:26:40,760 --> 00:26:42,919
Speaker 10: and what the Wall Street Journal is saying, which is interesting,

552
00:26:42,960 --> 00:26:45,439
Speaker 10: is that they're like Insta porches, right, because it's all

553
00:26:45,440 --> 00:26:47,480
Speaker 10: about the Instagram and what you post, and if you're

554
00:26:47,480 --> 00:26:50,760
Speaker 10: having family over, you have to impress. So it's sparking

555
00:26:50,800 --> 00:26:54,960
Speaker 10: this like micro economy, the senior little micro economy for

556
00:26:55,000 --> 00:26:57,800
Speaker 10: the season where people are paying a lot of money.

557
00:26:57,880 --> 00:27:00,720
Speaker 10: So they have like jack O lanterns, corn stock moms,

558
00:27:01,320 --> 00:27:04,960
Speaker 10: Halloween decorations, all this on their porches, some of them.

559
00:27:05,000 --> 00:27:08,240
Speaker 10: There's one company, it's actually called Porch Pumpkins in Texas.

560
00:27:08,400 --> 00:27:11,440
Speaker 10: They say they're going to decorate about thirteen hundred households

561
00:27:11,480 --> 00:27:14,840
Speaker 10: throughout the area and people pay like big money for this.

562
00:27:15,320 --> 00:27:17,440
Speaker 10: It's it's crazy.

563
00:27:16,880 --> 00:27:18,520
Speaker 3: I don't know.

564
00:27:18,680 --> 00:27:21,119
Speaker 2: I look down a Jersey short town where in the

565
00:27:21,119 --> 00:27:23,960
Speaker 2: winter time there's like nobody there. Yeah, but they still

566
00:27:24,600 --> 00:27:27,680
Speaker 2: decorate their house to the nines and it's completely dark,

567
00:27:27,720 --> 00:27:31,520
Speaker 2: there's nobody there. It's like a competition sometimes like he

568
00:27:31,720 --> 00:27:33,280
Speaker 2: has the better port. It's not like they went out

569
00:27:33,320 --> 00:27:35,280
Speaker 2: to the local store and got a couple of pumpkins.

570
00:27:35,359 --> 00:27:36,600
Speaker 2: No no, no, no, no.

571
00:27:36,640 --> 00:27:38,280
Speaker 3: They hired something they get they went professional.

572
00:27:38,320 --> 00:27:42,000
Speaker 7: They had people like Halloween this time is flying My goodness.

573
00:27:41,800 --> 00:27:44,600
Speaker 2: Well there's people are really nuts about Halloween, Like sure

574
00:27:44,680 --> 00:27:46,600
Speaker 2: it's big, but skeleton a lot of people.

575
00:27:46,600 --> 00:27:48,399
Speaker 3: It's like as bigger, bigger than Christmas. I was going

576
00:27:48,440 --> 00:27:48,880
Speaker 3: to say, a.

577
00:27:48,840 --> 00:27:49,960
Speaker 7: Major US holiday.

578
00:27:50,080 --> 00:27:51,800
Speaker 3: Yes, yeah, well that's what they're saying.

579
00:27:51,840 --> 00:27:54,800
Speaker 10: This is becoming like the charismas like and they say

580
00:27:54,840 --> 00:27:56,560
Speaker 10: they get more bang for their book because they get

581
00:27:56,560 --> 00:27:58,120
Speaker 10: Halloween and Thanksgiving in one.

582
00:27:58,560 --> 00:28:00,119
Speaker 3: They seem let's see.

583
00:28:00,400 --> 00:28:03,760
Speaker 10: Okay, So this last one, it's about Apple's iPad pro.

584
00:28:04,080 --> 00:28:06,159
Speaker 10: I don't have them, but users are saying that that

585
00:28:06,240 --> 00:28:08,200
Speaker 10: it heats up and that's the problem with it. So

586
00:28:08,280 --> 00:28:11,159
Speaker 10: Apple says they have a fix. This is from Mark German.

587
00:28:11,200 --> 00:28:13,760
Speaker 10: He says they're working on a vaper chamber yet to

588
00:28:13,840 --> 00:28:16,760
Speaker 10: improve cooling performance on the gadget as early as twenty

589
00:28:16,800 --> 00:28:19,160
Speaker 10: twenty seven. Now I don't know if either of you

590
00:28:19,200 --> 00:28:23,000
Speaker 10: had the iPhone seventeen promise fourteen.

591
00:28:22,640 --> 00:28:23,520
Speaker 11: No, no, not yet.

592
00:28:23,640 --> 00:28:27,520
Speaker 10: Okay, well, this technology is actually in that new iPhone,

593
00:28:27,880 --> 00:28:29,520
Speaker 10: so they're going to bring it to the iPad.

594
00:28:29,920 --> 00:28:30,720
Speaker 11: But what they're.

595
00:28:30,560 --> 00:28:32,639
Speaker 10: Saying is that, you know, it's a good chance to

596
00:28:32,680 --> 00:28:35,120
Speaker 10: like get people to upsell, like that's why they put it.

597
00:28:35,000 --> 00:28:37,320
Speaker 11: In the iPhone seventeen. So now more people.

598
00:28:37,119 --> 00:28:39,200
Speaker 10: Will spend because they're like, I don't want my hand

599
00:28:39,240 --> 00:28:40,720
Speaker 10: heating up, because that was the issue with it, the

600
00:28:40,760 --> 00:28:43,200
Speaker 10: titanium case. Little hand will heat up if you were

601
00:28:43,240 --> 00:28:43,960
Speaker 10: on it for too long.

602
00:28:45,320 --> 00:28:45,720
Speaker 3: I don't know.

603
00:28:45,840 --> 00:28:48,720
Speaker 2: Just sitting out on the beach like I'm app to

604
00:28:48,760 --> 00:28:51,440
Speaker 2: do in the summertime, I can go ten minutes and

605
00:28:51,480 --> 00:28:53,200
Speaker 2: then my phone just goes dark because.

606
00:28:52,960 --> 00:28:54,080
Speaker 3: It's too hot. Oh it, he's up.

607
00:28:54,200 --> 00:28:55,000
Speaker 11: Yes, yeah, and.

608
00:28:54,960 --> 00:28:56,640
Speaker 3: We got to fix that or somebody's got to fix that.

609
00:28:56,960 --> 00:28:58,720
Speaker 11: See see, well maybe you have to go for the

610
00:28:58,760 --> 00:28:59,400
Speaker 11: iPhone seven.

611
00:28:59,480 --> 00:29:03,480
Speaker 7: No, you know, anyways to make us upgrade always.

612
00:29:03,240 --> 00:29:05,880
Speaker 2: Exactly all right, John Tucker still got the clip phone,

613
00:29:05,920 --> 00:29:07,600
Speaker 2: So please miss say I thank you so much. That

614
00:29:07,760 --> 00:29:10,400
Speaker 2: is the world famous newspaper segment. You know what you

615
00:29:10,480 --> 00:29:13,640
Speaker 2: love it here on the Bloomberg Surveillance program.

616
00:29:13,720 --> 00:29:18,520
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,

617
00:29:18,640 --> 00:29:22,400
Speaker 1: and anywhere else you get your podcasts. Listen live each

618
00:29:22,440 --> 00:29:26,280
Speaker 1: weekday seven to ten am Eastern on Bloomberg dot Com,

619
00:29:26,440 --> 00:29:30,240
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app.

620
00:29:30,520 --> 00:29:33,640
Speaker 1: You can also watch us live every weekday on YouTube

621
00:29:33,920 --> 00:29:35,960
Speaker 1: and always on the Bloomberg Terminal