1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,960 --> 00:00:15,560 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along 3 00:00:15,600 --> 00:00:18,960 Speaker 2: with Paul Sweeney. Join us each day for insight from 4 00:00:18,960 --> 00:00:23,160 Speaker 2: the best in economics, finance, investment, and international relations. You 5 00:00:23,160 --> 00:00:26,520 Speaker 2: can also watch the show live on YouTube. Visit the 6 00:00:26,520 --> 00:00:31,280 Speaker 2: Bloomberg Podcast channel on YouTube to see the show weekday 7 00:00:31,280 --> 00:00:34,320 Speaker 2: mornings from seven to ten am Eastern from our global 8 00:00:34,360 --> 00:00:39,000 Speaker 2: headquarters in New York City. Subscribe to the podcast on Apple, Spotify, 9 00:00:39,360 --> 00:00:42,920 Speaker 2: or anywhere else you listen, and always on Bloomberg Radio, 10 00:00:43,080 --> 00:00:47,800 Speaker 2: the Bloomberg Terminal, and the Bloomberg Business App. I will 11 00:00:47,800 --> 00:00:51,879 Speaker 2: not mince words on Global Wall Street. With great respect 12 00:00:51,880 --> 00:00:55,160 Speaker 2: to Cliff Astness and a few other worthies, there is 13 00:00:55,320 --> 00:00:58,840 Speaker 2: no one that does the math like way lead at Blackrock. 14 00:00:58,960 --> 00:01:02,440 Speaker 2: She joins us this morning, partiers from Cambridge, but far 15 00:01:02,480 --> 00:01:05,640 Speaker 2: more acclaim in her China. Wait thrilled to have you 16 00:01:05,720 --> 00:01:09,440 Speaker 2: on right now. I look really at where we are, 17 00:01:09,840 --> 00:01:15,600 Speaker 2: and my question to you is, when you correlate equities, bonds, currencies, commodities, 18 00:01:15,959 --> 00:01:19,360 Speaker 2: do you see a stable global system or is there 19 00:01:19,480 --> 00:01:21,920 Speaker 2: enough instability out there to give you concern? 20 00:01:23,760 --> 00:01:27,000 Speaker 1: Good morning, Thank you so much for having me. So 21 00:01:27,080 --> 00:01:30,399 Speaker 1: when we look at cross asset correlation, you look at 22 00:01:30,600 --> 00:01:33,959 Speaker 1: apply bond correlation in the US, you look at apply 23 00:01:34,000 --> 00:01:40,000 Speaker 1: bond correlation in Europe, they have been going steadily from negative. 24 00:01:40,160 --> 00:01:44,200 Speaker 1: It's a very chan for portfolio diversification. We have gone 25 00:01:44,240 --> 00:01:48,000 Speaker 1: from the period of this inflation and our environment for 26 00:01:48,120 --> 00:01:53,680 Speaker 1: a period of persistent inflationary environment. And as such, duration 27 00:01:54,080 --> 00:01:57,040 Speaker 1: and the role of duration as balanced in your portfolio 28 00:01:57,040 --> 00:02:00,760 Speaker 1: construction is severely challenged, which is why we need to 29 00:02:00,800 --> 00:02:04,440 Speaker 1: really rethinkful for your construction in his current environment, right 30 00:02:04,600 --> 00:02:07,520 Speaker 1: to really kind of think about diversifying your diversifiers. 31 00:02:07,520 --> 00:02:10,640 Speaker 2: Well, let's diversify the diversifiers, because we know Waylee bought 32 00:02:10,639 --> 00:02:14,040 Speaker 2: in video three years ago when I did not spell it. Wait, 33 00:02:14,120 --> 00:02:18,480 Speaker 2: how do you diversify the diversifiers with big tech again 34 00:02:18,600 --> 00:02:20,560 Speaker 2: on this Thursday moonshot? 35 00:02:21,960 --> 00:02:26,040 Speaker 1: Yeah. Actually, it has been a very concentrated actuality market 36 00:02:26,120 --> 00:02:27,400 Speaker 1: already in the US. 37 00:02:27,880 --> 00:02:30,480 Speaker 2: I need to interrupt, and I need to interrupt and 38 00:02:30,480 --> 00:02:32,840 Speaker 2: say way Lee has said just shut up and own 39 00:02:32,880 --> 00:02:34,880 Speaker 2: it and say thank you. I want to say that 40 00:02:34,919 --> 00:02:37,600 Speaker 2: she's been onboard. Let's continue doctually. 41 00:02:37,919 --> 00:02:43,520 Speaker 1: We still like, we still like the magnificent world, not 42 00:02:43,680 --> 00:02:45,720 Speaker 1: seven maybe it's six, maybe it's five. 43 00:02:46,000 --> 00:02:46,919 Speaker 3: But if you look at. 44 00:02:46,800 --> 00:02:49,280 Speaker 1: Their earnings right like, so, yes, the media has done 45 00:02:49,280 --> 00:02:55,120 Speaker 1: extraordinarily well, up five hundred percent and more since last year, 46 00:02:55,360 --> 00:02:58,760 Speaker 1: but it's forward earnings has gone up just as much, 47 00:02:58,840 --> 00:03:04,480 Speaker 1: and they're beating those very high levels of earning expectations. 48 00:03:05,040 --> 00:03:07,079 Speaker 1: And it's not just in media, right you look at 49 00:03:07,400 --> 00:03:11,359 Speaker 1: tech sectors as a whole, it's really carrying the earnings 50 00:03:11,360 --> 00:03:14,359 Speaker 1: momentum in the US. So we're still very comfortable with 51 00:03:14,440 --> 00:03:18,760 Speaker 1: our Nvidia call, with our tech sector call, but we 52 00:03:18,880 --> 00:03:22,359 Speaker 1: also see kind of momentum broadening out. If you look 53 00:03:22,360 --> 00:03:26,040 Speaker 1: at kind of margin expansion in the US ACTE market, 54 00:03:26,200 --> 00:03:30,320 Speaker 1: eight out of eleven sectors managed to grow their margins 55 00:03:30,480 --> 00:03:34,200 Speaker 1: the last earning season, which gives us confidence behind our 56 00:03:35,000 --> 00:03:38,240 Speaker 1: US actly overweight. But the AI theme in our review 57 00:03:38,680 --> 00:03:41,800 Speaker 1: has a significant runway to play out as we think 58 00:03:41,800 --> 00:03:45,760 Speaker 1: about other sectors kind of starting to extract profitability and 59 00:03:45,800 --> 00:03:46,600 Speaker 1: benefit from that. 60 00:03:47,600 --> 00:03:48,000 Speaker 4: Willie. 61 00:03:48,000 --> 00:03:51,440 Speaker 5: We had some central bank movement recently, the Swiss National 62 00:03:51,520 --> 00:03:53,600 Speaker 5: Bank cutting their interest rates, the Bank of England holding 63 00:03:53,640 --> 00:03:56,880 Speaker 5: their rate steady. How do you get you handicapped? The 64 00:03:57,080 --> 00:04:01,040 Speaker 5: US Federal Reserve here is maybe behind the curve a 65 00:04:01,080 --> 00:04:04,440 Speaker 5: little bit in cutting rates here or do you think 66 00:04:04,440 --> 00:04:05,880 Speaker 5: they should in fact hold study. 67 00:04:07,480 --> 00:04:11,240 Speaker 1: I think this environment where the FED is later than 68 00:04:11,360 --> 00:04:14,880 Speaker 1: the other central banks is highly unusual, right, So the 69 00:04:15,000 --> 00:04:20,839 Speaker 1: Easy be going before the Fed, and BOE likely going 70 00:04:21,120 --> 00:04:23,760 Speaker 1: before the Fed as well. I think this is highly unusual. 71 00:04:23,800 --> 00:04:27,520 Speaker 1: It's also highly unusual because we're talking about an environment 72 00:04:27,560 --> 00:04:31,560 Speaker 1: where central banks are looking to cut rates when inflation 73 00:04:32,120 --> 00:04:35,880 Speaker 1: is way above target, when growth is not really tittering 74 00:04:36,720 --> 00:04:37,839 Speaker 1: around recession. 75 00:04:37,920 --> 00:04:38,080 Speaker 4: Right. 76 00:04:38,120 --> 00:04:40,599 Speaker 1: So this is all very very extraordinary in terms of 77 00:04:40,600 --> 00:04:44,120 Speaker 1: the environment for central banks, which is why we are 78 00:04:44,320 --> 00:04:47,799 Speaker 1: of the view that even when the FED starts cutting 79 00:04:47,960 --> 00:04:51,279 Speaker 1: later this year, which is our expectation, one or two 80 00:04:51,320 --> 00:04:55,560 Speaker 1: cuts for twenty twenty four, which is not really contrariant. 81 00:04:55,800 --> 00:04:58,400 Speaker 1: But even when they start cutting, we're talking about an 82 00:04:58,440 --> 00:05:00,640 Speaker 1: environment of high for longer, not going to be able 83 00:05:00,640 --> 00:05:04,080 Speaker 1: to cut as much as before to come to the 84 00:05:04,120 --> 00:05:09,120 Speaker 1: rescue of the economy because of the broadly inflationary environment 85 00:05:09,279 --> 00:05:14,360 Speaker 1: given structural forces such as the low carbon transitions such 86 00:05:14,400 --> 00:05:18,880 Speaker 1: as aging population pushing inflation higher. But even AI, you know, 87 00:05:18,920 --> 00:05:22,960 Speaker 1: people think about AI as deflationary because of the productivity 88 00:05:23,000 --> 00:05:26,360 Speaker 1: boost that we are all hoping for. The market to 89 00:05:26,360 --> 00:05:32,279 Speaker 1: some extent pricing in but before it becomes deflationary through 90 00:05:32,320 --> 00:05:37,719 Speaker 1: productivity boost the copex spent, the enormous copex spent actually 91 00:05:37,760 --> 00:05:41,480 Speaker 1: means that AI will have to be inflationary first before 92 00:05:41,520 --> 00:05:43,719 Speaker 1: it can be deflationary. Right, So, because of all of this, 93 00:05:44,000 --> 00:05:46,039 Speaker 1: we're talking about high for longer for central banks. That 94 00:05:46,080 --> 00:05:48,760 Speaker 1: applies to the fact that applies to the BOE, that 95 00:05:48,800 --> 00:05:50,520 Speaker 1: applies to the ECB as. 96 00:05:50,440 --> 00:05:53,159 Speaker 2: Wet Wellie, thank you so much and thank you for 97 00:05:53,600 --> 00:06:07,719 Speaker 2: being in the market and explaining it to us. Joining 98 00:06:07,800 --> 00:06:11,480 Speaker 2: us right now. Turston Slock of Polyglobal Management, hugely read 99 00:06:11,520 --> 00:06:14,200 Speaker 2: on Wall Street. Of course, off of is a kind 100 00:06:14,240 --> 00:06:18,080 Speaker 2: of work at Deutsche Bank, is well Turston. Twelve months forward, 101 00:06:18,520 --> 00:06:20,080 Speaker 2: where's real GDP. 102 00:06:21,320 --> 00:06:25,400 Speaker 6: With still mildly hot economy, mildly hot weather, but with 103 00:06:25,480 --> 00:06:28,599 Speaker 6: a risk that we may have some slow down coming 104 00:06:28,800 --> 00:06:31,280 Speaker 6: maybe twelve months, but more eighteen months into the future. 105 00:06:31,640 --> 00:06:33,880 Speaker 6: The fear you can have is that higher for longer 106 00:06:34,000 --> 00:06:38,240 Speaker 6: ultimately begins to bite harder on LeVert balance sheets for consumers, 107 00:06:38,440 --> 00:06:41,160 Speaker 6: on LeVert balance sheets for firms, and LeVert balancets in 108 00:06:41,200 --> 00:06:44,159 Speaker 6: the banking sector, and that could potentially create that dreaded 109 00:06:44,200 --> 00:06:46,599 Speaker 6: recession that we've been worrying about for so long, but 110 00:06:46,760 --> 00:06:49,360 Speaker 6: so far for the next seven quarters, we still think 111 00:06:49,440 --> 00:06:52,000 Speaker 6: that the tailwinds to growth are very strong from fiscal 112 00:06:52,040 --> 00:06:54,200 Speaker 6: policy and from easy financial conditions. 113 00:06:54,880 --> 00:06:57,200 Speaker 5: Torsten, you've been pretty consistent here in your call that 114 00:06:57,520 --> 00:07:00,400 Speaker 5: this federal Reserve doesn't really have to cut rates in 115 00:07:00,400 --> 00:07:06,000 Speaker 5: twenty twenty four. Do you still believe that, and if so, why. 116 00:07:04,720 --> 00:07:06,680 Speaker 4: I still believe that because of what I think. I mean. 117 00:07:06,800 --> 00:07:08,440 Speaker 4: The first test is, well. 118 00:07:08,279 --> 00:07:10,240 Speaker 6: If we literally just a quote unquote look out of 119 00:07:10,240 --> 00:07:12,480 Speaker 6: the window and see how things going in the incoming data, 120 00:07:13,040 --> 00:07:15,440 Speaker 6: non farm payrolls at two hundred and seventy two thousand, 121 00:07:15,880 --> 00:07:17,240 Speaker 6: that's a really strong number. 122 00:07:17,440 --> 00:07:19,280 Speaker 4: There's some debate about whether. 123 00:07:19,160 --> 00:07:22,040 Speaker 6: Some of that maybe is driven higher because of immigration, 124 00:07:22,360 --> 00:07:25,160 Speaker 6: when the Edelburgh and Tara Watson at the Brookings Institute 125 00:07:25,160 --> 00:07:29,240 Speaker 6: wrote a very important paper suggesting that maybe the equilibrium 126 00:07:29,360 --> 00:07:32,040 Speaker 6: growth in non farm payrolls is about one hundred thousand 127 00:07:32,120 --> 00:07:35,760 Speaker 6: higher than normal because of immigration. But I still think 128 00:07:35,800 --> 00:07:38,640 Speaker 6: that strength in the numbers across the board, where a 129 00:07:38,680 --> 00:07:40,720 Speaker 6: little bit of weakness may be in retail sales earlier 130 00:07:40,760 --> 00:07:42,560 Speaker 6: this week, but at the same day we also had 131 00:07:42,560 --> 00:07:46,480 Speaker 6: industrial production was very strong, so jobless claims also looking good. 132 00:07:46,760 --> 00:07:48,840 Speaker 6: It's just hard to see where that slowdown is that 133 00:07:48,880 --> 00:07:50,800 Speaker 6: so many people are worried about. So because of that, 134 00:07:51,080 --> 00:07:53,600 Speaker 6: we just don't see the urgency for the FAT having 135 00:07:53,600 --> 00:07:54,480 Speaker 6: to cut rates. 136 00:07:54,800 --> 00:07:58,200 Speaker 5: Are you surprised that the higher rates haven't impacted the 137 00:07:58,240 --> 00:08:01,400 Speaker 5: consumer more? I mean, it's it's tough to get a 138 00:08:01,400 --> 00:08:02,880 Speaker 5: plane seat, it's tough to get a seat on a 139 00:08:02,920 --> 00:08:05,360 Speaker 5: cruise ship, it's tough to get a seat at a restaurant. 140 00:08:05,640 --> 00:08:07,240 Speaker 5: Talk to just about how the consumers reacting. 141 00:08:07,960 --> 00:08:09,160 Speaker 4: Yeah, this is very important pole. 142 00:08:09,200 --> 00:08:11,400 Speaker 6: So I think it's very critical in that discussion is 143 00:08:11,400 --> 00:08:15,480 Speaker 6: that the transmission mechanism of mortary policy was actually working 144 00:08:15,600 --> 00:08:19,080 Speaker 6: last year, exactly as the textbook would have predicted. The 145 00:08:19,120 --> 00:08:21,960 Speaker 6: FED raise rates in March of twenty twenty two, and 146 00:08:22,040 --> 00:08:25,760 Speaker 6: the most highly leveled consumers started responding because you saw 147 00:08:25,760 --> 00:08:27,400 Speaker 6: the Linguagy rates go up on credit cards. 148 00:08:27,440 --> 00:08:30,560 Speaker 4: The Linguagy rate codes about auto loans, especially. 149 00:08:30,200 --> 00:08:33,040 Speaker 6: For consumers that have more debt, which generally are consumers 150 00:08:33,080 --> 00:08:35,160 Speaker 6: that are younger also and consumers that have lower five 151 00:08:35,160 --> 00:08:38,080 Speaker 6: coats goals. Same thing for corporates. You began to see 152 00:08:38,120 --> 00:08:40,600 Speaker 6: the four rates go up for high yield, the fall rates. 153 00:08:40,360 --> 00:08:41,160 Speaker 4: Go up for loans. 154 00:08:41,320 --> 00:08:43,679 Speaker 6: So in other words, balance sheets that had a lot 155 00:08:43,679 --> 00:08:47,200 Speaker 6: of debt were first hit by the Fed raising rates. 156 00:08:47,320 --> 00:08:49,960 Speaker 4: But what really is unique at the moment, that's. 157 00:08:49,840 --> 00:08:52,480 Speaker 6: Just the answer to your question, Paul, is that for consumers, 158 00:08:52,880 --> 00:08:55,959 Speaker 6: they have locked in during the pandemic. Mortgage rates, as 159 00:08:56,000 --> 00:08:58,160 Speaker 6: we all know, ninety five percent are thirty year fixed 160 00:08:58,360 --> 00:09:01,560 Speaker 6: at very low levels. Like Wise, for corporates, the vast 161 00:09:01,640 --> 00:09:05,480 Speaker 6: majority of credit markets is IG and IT companies locked 162 00:09:05,480 --> 00:09:07,959 Speaker 6: in and termed out also very low interest rates. 163 00:09:08,000 --> 00:09:10,240 Speaker 4: And as a result of that, the transmission maganism has 164 00:09:10,280 --> 00:09:12,200 Speaker 4: just been weaker than what it normally is. 165 00:09:12,440 --> 00:09:15,080 Speaker 6: And that changed with a fit pivoting to Duvish because 166 00:09:15,080 --> 00:09:17,040 Speaker 6: then on top of that, not only was the transmission 167 00:09:17,040 --> 00:09:19,800 Speaker 6: making week, but we also got a tailwind from easy 168 00:09:19,800 --> 00:09:22,360 Speaker 6: financial conditions with S and p up as much as 169 00:09:22,360 --> 00:09:23,000 Speaker 6: we have seen. 170 00:09:22,920 --> 00:09:25,320 Speaker 2: Turstan, you've led on this and it's your best chart 171 00:09:25,480 --> 00:09:28,840 Speaker 2: of the many charts you put out ten years ago. Folks, 172 00:09:29,559 --> 00:09:34,160 Speaker 2: the share of mortgages below four percent, Paul, was thirty percent, 173 00:09:34,880 --> 00:09:38,160 Speaker 2: is it for the conversation is doubled. I mean, I 174 00:09:38,200 --> 00:09:40,920 Speaker 2: mean the number of mortgages below four percent is doubled 175 00:09:41,600 --> 00:09:45,080 Speaker 2: in ten eleven years and Turston. That goes directly into 176 00:09:45,120 --> 00:09:49,439 Speaker 2: the transmission mechanism. You know, I'm very negative on the dots. 177 00:09:49,760 --> 00:09:55,280 Speaker 2: Do the dots of the FED have they adjusted to 178 00:09:55,400 --> 00:09:58,600 Speaker 2: the slock slower transmission mechanism. 179 00:10:00,520 --> 00:10:02,520 Speaker 6: Well, I do think what is very important in the 180 00:10:02,600 --> 00:10:04,760 Speaker 6: last if I'm seeing meeting, and you have also talked 181 00:10:04,760 --> 00:10:08,960 Speaker 6: about that on a surveillance radio, because what we saw was, 182 00:10:09,000 --> 00:10:11,440 Speaker 6: of course that the FED went from instead saying three 183 00:10:11,480 --> 00:10:14,880 Speaker 6: cuts in twenty twenty four to now saying one cut. 184 00:10:15,200 --> 00:10:18,440 Speaker 6: That on its own is an admission that we were 185 00:10:18,480 --> 00:10:20,680 Speaker 6: wrong at the FED. We thought that we would have 186 00:10:20,720 --> 00:10:22,600 Speaker 6: three cuts. Now we think we're to have one cut. 187 00:10:22,760 --> 00:10:25,400 Speaker 6: So in some sense, the FED is coming quote unquote 188 00:10:25,440 --> 00:10:28,560 Speaker 6: back to the view that maybe there is no strong 189 00:10:28,800 --> 00:10:32,679 Speaker 6: arguments for being in this urgent drag pace having two 190 00:10:32,760 --> 00:10:33,560 Speaker 6: cut rates. 191 00:10:33,320 --> 00:10:35,480 Speaker 4: As quickly as they thought just six months ago. 192 00:10:35,520 --> 00:10:37,520 Speaker 2: We're thrilled you with us for the entire half our 193 00:10:37,600 --> 00:10:40,559 Speaker 2: Turst and Slock. You know, We're gonna go to Michael 194 00:10:40,559 --> 00:10:42,520 Speaker 2: barn News, but I'm gonna really come up on beating 195 00:10:42,559 --> 00:10:45,120 Speaker 2: his folks. I haven't mentioned this on area yet, but 196 00:10:45,240 --> 00:10:48,640 Speaker 2: it's a symptotic twenty twenty four. 197 00:10:48,840 --> 00:10:50,160 Speaker 4: What is he talking about? 198 00:10:50,760 --> 00:10:55,480 Speaker 2: Come on Tourston all the assim Tote discussion. Ethan Harris 199 00:10:55,520 --> 00:10:58,679 Speaker 2: retired from Bank of America leading the charge on this. 200 00:10:58,840 --> 00:11:02,160 Speaker 2: A few others as well. Well, they're lost and they're 201 00:11:02,200 --> 00:11:06,160 Speaker 2: extending out the axis as far as they can. It's 202 00:11:06,200 --> 00:11:09,000 Speaker 2: that simple, right, I agree. 203 00:11:09,200 --> 00:11:11,520 Speaker 6: I think that what is very important here is that 204 00:11:11,559 --> 00:11:16,079 Speaker 6: we have unleashed some fairly significant powers with inflation going up. 205 00:11:16,280 --> 00:11:18,800 Speaker 6: And one point that's also very critical in this discussion 206 00:11:18,840 --> 00:11:21,320 Speaker 6: is that if you look at Michigan five to tenure 207 00:11:21,400 --> 00:11:23,840 Speaker 6: inflation long term inspectations. 208 00:11:23,520 --> 00:11:26,040 Speaker 4: The median is still very well behaved. 209 00:11:26,040 --> 00:11:29,280 Speaker 6: So the median household still thinks inflation will be three 210 00:11:29,320 --> 00:11:31,400 Speaker 6: point one, which is where it's been for the. 211 00:11:31,360 --> 00:11:32,120 Speaker 4: Last several years. 212 00:11:32,320 --> 00:11:34,640 Speaker 6: But if you look at the mean, you will see 213 00:11:34,720 --> 00:11:38,920 Speaker 6: a significant increase in one half of the population expecting 214 00:11:39,040 --> 00:11:40,120 Speaker 6: that inflation is going. 215 00:11:40,000 --> 00:11:42,480 Speaker 4: To be dramatically higher than the other half. 216 00:11:42,679 --> 00:11:44,120 Speaker 6: And if you look at the sub questions in the 217 00:11:44,200 --> 00:11:47,120 Speaker 6: University of Michigan, who is it that's expecting inflation to 218 00:11:47,200 --> 00:11:49,959 Speaker 6: be higher, it is generally speaking, the bottom thirty three 219 00:11:50,000 --> 00:11:53,080 Speaker 6: percent of household incomes, meaning low income households to expect 220 00:11:53,240 --> 00:11:55,480 Speaker 6: much higher inflation than high income households. 221 00:11:55,559 --> 00:11:57,480 Speaker 4: And it's generally also people with high. 222 00:11:57,360 --> 00:12:00,440 Speaker 6: School or less education that expects inflation to be a 223 00:12:00,440 --> 00:12:03,160 Speaker 6: lot higher. So you're beginning to see some divergence in 224 00:12:03,160 --> 00:12:04,160 Speaker 6: inflation expectations. 225 00:12:04,200 --> 00:12:06,400 Speaker 4: And this is opening up a very important. 226 00:12:06,000 --> 00:12:08,120 Speaker 6: Debate in the Phillips curve that you and I, Tom 227 00:12:08,160 --> 00:12:10,840 Speaker 6: and I talked about for years, where if inflation expectations 228 00:12:11,040 --> 00:12:14,000 Speaker 6: for half of the population are very very high, what 229 00:12:14,040 --> 00:12:15,520 Speaker 6: does that mean for when. 230 00:12:15,320 --> 00:12:17,840 Speaker 4: The fits is that inflation expectations are under control. 231 00:12:17,960 --> 00:12:20,000 Speaker 6: Yes, the media may be under control, but there's a 232 00:12:20,000 --> 00:12:22,680 Speaker 6: significant part of the population they're still worry about inflation. 233 00:12:22,840 --> 00:12:26,040 Speaker 5: To us and talk to us about what concern do 234 00:12:26,080 --> 00:12:28,800 Speaker 5: you have about this? Maybe the commercial real estate market 235 00:12:28,920 --> 00:12:31,600 Speaker 5: in this country. It feels like it's there's still a 236 00:12:31,640 --> 00:12:35,560 Speaker 5: big shoe or two or three to drop, but maybe not. 237 00:12:35,720 --> 00:12:37,480 Speaker 5: How do you think about that risk here as we 238 00:12:37,679 --> 00:12:39,280 Speaker 5: look around to some of these big cities and see 239 00:12:39,280 --> 00:12:40,480 Speaker 5: a lot of vacant office space. 240 00:12:41,480 --> 00:12:43,800 Speaker 6: I think the important data point first to keep in 241 00:12:43,800 --> 00:12:46,679 Speaker 6: mind is that the price per square foot for office 242 00:12:46,760 --> 00:12:50,400 Speaker 6: nationwide is down more than forty percent from the peak. 243 00:12:51,360 --> 00:12:53,920 Speaker 6: So if we think about what that means, that of course, 244 00:12:54,000 --> 00:12:56,240 Speaker 6: means that there's a lot of office that has been 245 00:12:56,320 --> 00:12:59,800 Speaker 6: reset at a lower level. Now, there's an important differences 246 00:12:59,800 --> 00:13:03,280 Speaker 6: as the country, of course, with the Sun Belt, with 247 00:13:03,679 --> 00:13:07,120 Speaker 6: the West Coast relative to East Coast, relative to metropolitan areas. 248 00:13:07,440 --> 00:13:10,559 Speaker 6: But the bottom line is really that well, when an 249 00:13:10,600 --> 00:13:13,480 Speaker 6: act price goes down more than forty percent, and in 250 00:13:13,520 --> 00:13:16,560 Speaker 6: particularly when the financing of that asset price is something 251 00:13:16,640 --> 00:13:20,280 Speaker 6: that normally is reset every five years, then we still 252 00:13:20,280 --> 00:13:22,520 Speaker 6: have a maturity wall in commercial real estate, in particular 253 00:13:22,520 --> 00:13:26,640 Speaker 6: in office that is really really steep. For other types 254 00:13:26,679 --> 00:13:29,640 Speaker 6: of commercial real estate, things look a lot better. So 255 00:13:29,800 --> 00:13:33,800 Speaker 6: of course you have warehouses, industrial, you have apartments, multi family, 256 00:13:34,880 --> 00:13:38,560 Speaker 6: shopping malls of course, also have data centers. There's some 257 00:13:38,679 --> 00:13:42,360 Speaker 6: very idiosyncratic stories across the different types of commercial real estate. 258 00:13:42,440 --> 00:13:44,880 Speaker 6: But the main issue still that we should all be 259 00:13:44,920 --> 00:13:48,760 Speaker 6: watching is office because that is just still where most 260 00:13:48,800 --> 00:13:49,960 Speaker 6: of the downward drift. 261 00:13:49,760 --> 00:13:53,599 Speaker 5: Is towards another economic issue that's really been or I 262 00:13:53,640 --> 00:13:56,679 Speaker 5: guess this discussion point over the last eighteen months as 263 00:13:56,720 --> 00:13:59,480 Speaker 5: we look around the world as this concept of American 264 00:13:59,520 --> 00:14:03,439 Speaker 5: exception from an economic perspective, you know, the commercial rule 265 00:14:03,480 --> 00:14:07,640 Speaker 5: state issue. Notwithstanding, how real is that the US economy 266 00:14:07,679 --> 00:14:09,320 Speaker 5: strength vis to be the rest of the world, or 267 00:14:10,360 --> 00:14:11,240 Speaker 5: how do you explain that. 268 00:14:12,120 --> 00:14:13,400 Speaker 4: Yeah, this is really important. 269 00:14:13,440 --> 00:14:17,320 Speaker 6: So there is a structural discussion exactly about is the 270 00:14:17,400 --> 00:14:20,400 Speaker 6: US exceptional and the US, its course is exceptional because 271 00:14:20,440 --> 00:14:24,480 Speaker 6: of large capital markets, much more spending and broadly speaking 272 00:14:25,000 --> 00:14:29,520 Speaker 6: across the board, in including on defense, including also on 273 00:14:29,600 --> 00:14:30,960 Speaker 6: the role of. 274 00:14:30,840 --> 00:14:31,760 Speaker 4: The US consumer. 275 00:14:32,440 --> 00:14:35,160 Speaker 6: So simply because the US as the biggest economy in 276 00:14:35,200 --> 00:14:38,600 Speaker 6: the world, playing this very substantial role, it does generally 277 00:14:38,600 --> 00:14:41,400 Speaker 6: speaking attract capital. On top of that comes the most 278 00:14:41,400 --> 00:14:45,240 Speaker 6: cygnical arguments, namely that the US business cycle just happens 279 00:14:45,280 --> 00:14:48,080 Speaker 6: to be a lot stronger than the business cycle in Europe, 280 00:14:48,120 --> 00:14:51,760 Speaker 6: the business cycle in Japan, Canada, Australia, emerging markets, and 281 00:14:51,800 --> 00:14:52,720 Speaker 6: of course also China. 282 00:14:53,080 --> 00:14:55,480 Speaker 4: And when the US is stronger, then that. 283 00:14:55,480 --> 00:14:57,920 Speaker 6: Means, of course, as we're seeing and as we're talking about, 284 00:14:58,080 --> 00:14:59,960 Speaker 6: then breaks will be higher for longer in the USA 285 00:15:00,120 --> 00:15:02,480 Speaker 6: that elsewhere. That's of course what we saw with EACV 286 00:15:02,600 --> 00:15:04,800 Speaker 6: cutting rates. They being in today is staying at hold, 287 00:15:04,800 --> 00:15:07,600 Speaker 6: but now signaling clearly the rate cuts are coming. All 288 00:15:07,640 --> 00:15:10,040 Speaker 6: that argues for still more upward pressure on the dollar. 289 00:15:10,240 --> 00:15:14,600 Speaker 6: Because the US is exceptional not only from a structural perspective, 290 00:15:14,800 --> 00:15:17,800 Speaker 6: but also at the moment exceptional from a cyclical perspective. 291 00:15:18,040 --> 00:15:20,560 Speaker 6: So with that background, when will that exceptionalism from the 292 00:15:20,600 --> 00:15:23,680 Speaker 6: cyclical perspective change? When the fat begins to cut rates, 293 00:15:23,880 --> 00:15:26,440 Speaker 6: then we could begin to see the dollar begin to 294 00:15:26,520 --> 00:15:28,880 Speaker 6: turn really south in a most more substantial way. But 295 00:15:28,920 --> 00:15:32,200 Speaker 6: given that's still now being pushed out repeatedly, then I 296 00:15:32,200 --> 00:15:33,760 Speaker 6: still think the dollar will be going up, and the 297 00:15:33,800 --> 00:15:36,280 Speaker 6: exceptionalism does play a very important role, both on the 298 00:15:36,280 --> 00:15:38,160 Speaker 6: structural side and on the cyclical side. 299 00:15:38,320 --> 00:15:39,960 Speaker 2: Tourst then one more question. We've got to go to 300 00:15:40,000 --> 00:15:42,520 Speaker 2: breaking news. But I think this is too too important. 301 00:15:43,160 --> 00:15:45,800 Speaker 2: Back to the idea of an x exis it goes 302 00:15:45,840 --> 00:15:50,880 Speaker 2: out forever in the new idea percolating of an assim tote, 303 00:15:50,920 --> 00:15:54,240 Speaker 2: I guess down to two percent? Is the assump tote 304 00:15:54,240 --> 00:15:56,960 Speaker 2: a smooth lide path down to two percent out there 305 00:15:57,000 --> 00:15:59,680 Speaker 2: somewhere or is it two point x percent? 306 00:16:01,240 --> 00:16:03,880 Speaker 6: So if you mean inflation, of course, then the issue 307 00:16:03,920 --> 00:16:06,040 Speaker 6: is that inflation at the moment, as you know, is 308 00:16:06,080 --> 00:16:08,680 Speaker 6: three point three. The FEDS target is that it should 309 00:16:08,720 --> 00:16:11,520 Speaker 6: be two. Three point three is not two. So that's 310 00:16:11,520 --> 00:16:14,120 Speaker 6: why if I'm seeing members repeatedly talk about, well, maybe 311 00:16:14,160 --> 00:16:16,160 Speaker 6: we do need to wait a little while longer before 312 00:16:16,160 --> 00:16:18,520 Speaker 6: we start cutting rates. And to your question, will we 313 00:16:18,560 --> 00:16:21,040 Speaker 6: have an asymptotic move down from three point three to 314 00:16:21,080 --> 00:16:22,040 Speaker 6: two points zero? 315 00:16:22,360 --> 00:16:24,160 Speaker 4: I think that the answer to that is absolutely not. 316 00:16:24,680 --> 00:16:25,400 Speaker 4: We still have. 317 00:16:25,480 --> 00:16:29,160 Speaker 6: Significant tailwinds from fiscal policy, the Chips Act, the Inflation Reduction, 318 00:16:29,240 --> 00:16:33,800 Speaker 6: infrastructure and all policies that designed to lift growth over 319 00:16:33,800 --> 00:16:36,200 Speaker 6: the next several years. Likewise, we have a very strong 320 00:16:36,200 --> 00:16:38,320 Speaker 6: tail wind from easy financial conditions. As long as the 321 00:16:38,360 --> 00:16:40,560 Speaker 6: AI story and the stock mirk goes up, we still 322 00:16:40,560 --> 00:16:43,240 Speaker 6: will have, like we saw this early season, strong demand 323 00:16:43,280 --> 00:16:47,400 Speaker 6: for airlines, hotels, restaurants, concerts, sporting events. So the short 324 00:16:47,440 --> 00:16:49,400 Speaker 6: answer to your question is I worry that inflation is 325 00:16:49,440 --> 00:16:51,200 Speaker 6: not going to come down in a straight line to 326 00:16:51,280 --> 00:16:53,840 Speaker 6: two percent from the three point three percent where we 327 00:16:53,840 --> 00:16:54,240 Speaker 6: are today. 328 00:16:54,320 --> 00:17:08,160 Speaker 2: Ristin Sluk, thank you so much. Okay, what we're supposed 329 00:17:08,160 --> 00:17:12,359 Speaker 2: to do here is give Anastasia Ameroso of IICAP a 330 00:17:12,520 --> 00:17:16,320 Speaker 2: massive victory lap nine months ago. Whatever, just shut up 331 00:17:16,320 --> 00:17:18,720 Speaker 2: and get in the market and buy big tech. She 332 00:17:19,040 --> 00:17:23,000 Speaker 2: absolutely nailed the twenty twenty four We were talking about 333 00:17:23,040 --> 00:17:27,119 Speaker 2: AI and you are the chat GPT queen. I mean, 334 00:17:27,200 --> 00:17:29,520 Speaker 2: let's be honest here, you're glued to it. How do 335 00:17:29,640 --> 00:17:33,440 Speaker 2: you use chat GPT for our entire audience? 336 00:17:33,440 --> 00:17:35,800 Speaker 3: It's like what, Well, it. 337 00:17:35,840 --> 00:17:38,040 Speaker 7: Is a game changer, and I think it's a huge 338 00:17:38,040 --> 00:17:40,560 Speaker 7: productivity boost. And if you haven't used, not to make 339 00:17:40,560 --> 00:17:42,720 Speaker 7: any product endorsements here, but if you haven't used the 340 00:17:42,760 --> 00:17:46,360 Speaker 7: Microsoft Copilot, I think you're really missing out the next 341 00:17:46,440 --> 00:17:48,600 Speaker 7: wave of how search is going to be done, and 342 00:17:48,680 --> 00:17:52,239 Speaker 7: whether it's preparing for an interview, whether it's preparing for 343 00:17:52,280 --> 00:17:55,240 Speaker 7: a client meeting, whether it's needing a quick synopsis of 344 00:17:55,280 --> 00:17:56,320 Speaker 7: a particular topic. 345 00:17:56,720 --> 00:17:59,320 Speaker 3: It is amazing what you can do with about five seconds. 346 00:17:59,119 --> 00:18:04,960 Speaker 2: Or need seven pages of I capitol brilliance. You're at O'Hare, 347 00:18:05,520 --> 00:18:09,320 Speaker 2: you're planes delayed two hours, You're on a laptop with 348 00:18:09,440 --> 00:18:13,960 Speaker 2: chet GPT. How does it help you create that research note? 349 00:18:14,680 --> 00:18:17,320 Speaker 3: Well, you know, first of all, it's a quick prompt. 350 00:18:17,400 --> 00:18:20,480 Speaker 7: It's a question that you ask, please generate five hundred words, 351 00:18:20,520 --> 00:18:22,080 Speaker 7: and here they are. And by the way I have 352 00:18:22,200 --> 00:18:25,160 Speaker 7: done this, I do not publish the chat GIPT as 353 00:18:25,200 --> 00:18:28,239 Speaker 7: the research. But if I need a quick synopsis of 354 00:18:28,280 --> 00:18:32,080 Speaker 7: a particular topic, that's the perfect way. I also do 355 00:18:32,200 --> 00:18:35,240 Speaker 7: happen to do a lot of interviews with a lot 356 00:18:35,280 --> 00:18:38,520 Speaker 7: of our asset managers, and what a great way to 357 00:18:38,600 --> 00:18:42,040 Speaker 7: prepare and know the key points going into it, whether 358 00:18:42,440 --> 00:18:46,439 Speaker 7: it's about the firm, about the investment strategies. So I 359 00:18:46,480 --> 00:18:52,320 Speaker 7: think you can use a qu across. 360 00:18:50,160 --> 00:18:52,800 Speaker 2: What's great Paul when in the stage is at O'Hare, 361 00:18:53,280 --> 00:18:57,960 Speaker 2: she's at Stanley's Blackhawk kitchen and tap she's chat GPT 362 00:18:58,119 --> 00:18:59,720 Speaker 2: to get the correct craft. 363 00:19:00,600 --> 00:19:03,000 Speaker 5: So a station. How do we bring that into our 364 00:19:03,040 --> 00:19:05,880 Speaker 5: investment thought here? I mean because for really eighteen months 365 00:19:05,960 --> 00:19:07,919 Speaker 5: AI has been one of the key themes driving this 366 00:19:08,040 --> 00:19:11,359 Speaker 5: market higher. Is that justified in your minds? Are you 367 00:19:11,440 --> 00:19:14,119 Speaker 5: kind of as an investor all into that story and 368 00:19:14,200 --> 00:19:15,280 Speaker 5: looking for ways to play it? 369 00:19:15,359 --> 00:19:15,560 Speaker 2: Yeah? 370 00:19:15,560 --> 00:19:17,760 Speaker 7: I think it's one hundred percent justified. And I know 371 00:19:17,840 --> 00:19:19,480 Speaker 7: a little bit before we came on ere we were 372 00:19:19,480 --> 00:19:22,040 Speaker 7: talking that maybe not a lot of people are actually 373 00:19:22,280 --> 00:19:25,439 Speaker 7: using this across their functions right now, but I think. 374 00:19:25,320 --> 00:19:26,840 Speaker 3: A lot of people will in the future. 375 00:19:27,080 --> 00:19:28,919 Speaker 7: I think what's happening right now is the race to 376 00:19:29,000 --> 00:19:34,159 Speaker 7: invest in artificial intelligence by hyperscalers, but also by other companies, 377 00:19:34,240 --> 00:19:36,520 Speaker 7: you know, across different industry verticals. 378 00:19:36,640 --> 00:19:38,520 Speaker 3: I think there's a grave realization. 379 00:19:38,119 --> 00:19:40,720 Speaker 7: By companies if you're not going to focus on investing 380 00:19:40,720 --> 00:19:43,200 Speaker 7: in AI now, you are going to be left behind. 381 00:19:43,359 --> 00:19:46,960 Speaker 7: So why would you continue to hire the same amount 382 00:19:47,320 --> 00:19:51,240 Speaker 7: of you know, workforce when you can automate certain tasks 383 00:19:51,320 --> 00:19:55,760 Speaker 7: and boost your margins. So I think that's a universal 384 00:19:55,880 --> 00:19:59,720 Speaker 7: sort of understanding right now, you know, from corporate development departments. 385 00:20:00,040 --> 00:20:02,639 Speaker 7: That's what's driving the investment cycle and artificial intelligence. 386 00:20:02,800 --> 00:20:03,760 Speaker 3: That's why I don't. 387 00:20:03,560 --> 00:20:06,560 Speaker 7: Think it's a coincidence that the likes of Nvidia and 388 00:20:06,640 --> 00:20:09,560 Speaker 7: Broadcom and you know, actually a whole suite of semiconductors 389 00:20:09,640 --> 00:20:12,520 Speaker 7: are benefiting from the build out of the backbone of 390 00:20:12,640 --> 00:20:13,800 Speaker 7: artificial intelligence. 391 00:20:14,000 --> 00:20:14,720 Speaker 3: You know, do I. 392 00:20:14,600 --> 00:20:17,200 Speaker 7: Think the momentum is a little bit stretched at this 393 00:20:17,320 --> 00:20:17,840 Speaker 7: very point? 394 00:20:17,960 --> 00:20:18,119 Speaker 4: You know? 395 00:20:18,200 --> 00:20:22,640 Speaker 7: Do I think some exuberants crept into a stock like Nvidia. Yes, 396 00:20:22,920 --> 00:20:25,920 Speaker 7: But at the same time, if the data center sales 397 00:20:26,000 --> 00:20:30,320 Speaker 7: are growing four hundred percent plus year over year, that's fundamentals. 398 00:20:30,720 --> 00:20:33,640 Speaker 5: So all right, so in Nvidia, check I got that. 399 00:20:34,200 --> 00:20:37,320 Speaker 5: How else are you suggesting to your clients that they 400 00:20:37,680 --> 00:20:39,800 Speaker 5: maybe get some exposure to this It is, in fact 401 00:20:39,800 --> 00:20:40,720 Speaker 5: a long term trend. 402 00:20:40,920 --> 00:20:42,359 Speaker 3: Yeah, it's a huge trend. 403 00:20:42,520 --> 00:20:45,399 Speaker 7: And in fact, the total adressable market for AI is 404 00:20:45,440 --> 00:20:48,800 Speaker 7: going to double in the next several years, and it's 405 00:20:48,880 --> 00:20:52,160 Speaker 7: comprised of, you know, a couple of different pillars, which 406 00:20:52,200 --> 00:20:54,880 Speaker 7: is of course the hardware, the semiconductors, but actually the 407 00:20:54,920 --> 00:20:59,200 Speaker 7: biggest chunk of who's going to benefit from AI is software. 408 00:20:59,600 --> 00:21:03,080 Speaker 7: And it makes sense why everybody is chasing the semiconductor 409 00:21:03,119 --> 00:21:05,160 Speaker 7: trade because you have to have the chips in place 410 00:21:05,200 --> 00:21:07,119 Speaker 7: in order to trade the algorithms. 411 00:21:07,240 --> 00:21:07,720 Speaker 2: We get that. 412 00:21:07,800 --> 00:21:10,560 Speaker 7: Well, once you do, Tom, you know, what are the 413 00:21:10,600 --> 00:21:14,120 Speaker 7: applications going to be beyond the copilot that are leveraging 414 00:21:14,160 --> 00:21:15,880 Speaker 7: AI to boost your Okay, So. 415 00:21:15,840 --> 00:21:18,199 Speaker 2: I know this is brilliant. I know you're not going 416 00:21:18,240 --> 00:21:21,640 Speaker 2: to talk about individual stocks, so I'll bring up Adobe 417 00:21:21,840 --> 00:21:25,639 Speaker 2: is the kind of software mix as well. Take the 418 00:21:25,800 --> 00:21:29,800 Speaker 2: fifty adobees out there, where do you see their income 419 00:21:29,920 --> 00:21:31,720 Speaker 2: statements in five years? 420 00:21:32,160 --> 00:21:36,040 Speaker 7: Well, I think they're going to reflect the benefit of 421 00:21:36,119 --> 00:21:39,119 Speaker 7: artificial intelligence. One thing Tom, that has recently happened to software. 422 00:21:39,160 --> 00:21:41,680 Speaker 7: It was everyone's favorite sector just you know, a bit ago, 423 00:21:41,760 --> 00:21:44,040 Speaker 7: but now that's not the case. For example, you have 424 00:21:44,119 --> 00:21:47,239 Speaker 7: seen software revenues grow at twenty twenty five percent per 425 00:21:47,359 --> 00:21:51,000 Speaker 7: year back during COVID times that is decelerated to about 426 00:21:51,000 --> 00:21:56,119 Speaker 7: ten percent today, and valuations have derated very meaningfully. But 427 00:21:56,480 --> 00:21:58,800 Speaker 7: I think that's an excellent entry point into a lot 428 00:21:58,840 --> 00:22:01,800 Speaker 7: of these software stocks. To your point, five years from now, 429 00:22:02,119 --> 00:22:05,800 Speaker 7: they should That's what's going to catalyze the next growth 430 00:22:05,840 --> 00:22:09,240 Speaker 7: wave in software is monetizing AI A. 431 00:22:09,240 --> 00:22:14,320 Speaker 2: Derating Paul is Anastasias speak for south south. The stacks 432 00:22:14,359 --> 00:22:16,360 Speaker 2: have gone south, they've. 433 00:22:16,040 --> 00:22:21,719 Speaker 7: Derated well well, well, to be fair, some of them 434 00:22:21,720 --> 00:22:23,639 Speaker 7: have gone side where some have gone south. But if 435 00:22:23,680 --> 00:22:25,840 Speaker 7: you look at the multiple when from twenty times to 436 00:22:25,960 --> 00:22:30,479 Speaker 7: five and that's back to those pre COVID normalized levels. 437 00:22:30,480 --> 00:22:32,800 Speaker 7: So that's why I like that as an enter point. 438 00:22:32,960 --> 00:22:35,240 Speaker 2: Adobe growth twenty two percent in the heart of the 439 00:22:35,320 --> 00:22:38,680 Speaker 2: pandemic revenue growth right now eleven. 440 00:22:38,280 --> 00:22:41,879 Speaker 5: Percent, yes, cut absolutely all right, So what I hear 441 00:22:41,920 --> 00:22:44,680 Speaker 5: a lot is US versus non US, big cap versus 442 00:22:45,040 --> 00:22:48,920 Speaker 5: smaller cap. But still some of the valuations in Europe 443 00:22:49,280 --> 00:22:51,960 Speaker 5: still seem so attractive. But you know, I guess the 444 00:22:51,960 --> 00:22:53,240 Speaker 5: concern is you just don't want to get in that 445 00:22:53,320 --> 00:22:55,439 Speaker 5: value trapped there. How do you think about Europe and 446 00:22:55,560 --> 00:22:56,440 Speaker 5: opportunities there? 447 00:22:56,840 --> 00:22:59,000 Speaker 7: Well, I think you have to look at the valuation 448 00:22:59,040 --> 00:23:01,199 Speaker 7: but we also have to realize what the catalyst might be. 449 00:23:01,520 --> 00:23:03,800 Speaker 7: And for the last couple of years has been really 450 00:23:03,800 --> 00:23:06,800 Speaker 7: tough in Europe because you've got higher electricity costs, you've 451 00:23:06,840 --> 00:23:09,600 Speaker 7: got meaningful of higher mortgage expenses. 452 00:23:10,119 --> 00:23:12,120 Speaker 3: And now I actually think the peak. 453 00:23:11,880 --> 00:23:15,160 Speaker 7: Pain of high mortgage rates is behind us in Europe. 454 00:23:15,240 --> 00:23:17,080 Speaker 7: And I don't just mean because the ECB is cutting 455 00:23:17,080 --> 00:23:19,600 Speaker 7: interest rates. I mean a lot of mortgages in Europe 456 00:23:19,640 --> 00:23:22,800 Speaker 7: were floating rate mortgages or floating ray mortgages depending on 457 00:23:22,840 --> 00:23:25,000 Speaker 7: the country, seventy or eighty percent of them. So that's 458 00:23:25,040 --> 00:23:28,280 Speaker 7: a lot of you know, pain that the consumer had 459 00:23:28,320 --> 00:23:30,200 Speaker 7: to absorb. But that's turning the. 460 00:23:30,200 --> 00:23:31,160 Speaker 3: Other way around. 461 00:23:31,359 --> 00:23:34,280 Speaker 7: And so I now think the real disposable income for 462 00:23:34,320 --> 00:23:37,560 Speaker 7: the European consumer is likely to grow in this year 463 00:23:37,600 --> 00:23:41,880 Speaker 7: and next, and business confidence, you know, French elections now 464 00:23:41,880 --> 00:23:45,040 Speaker 7: with Stanley, has recovered quite a bit. So I like 465 00:23:45,119 --> 00:23:47,880 Speaker 7: the valuation, I like the positioning, and now I think 466 00:23:47,920 --> 00:23:50,080 Speaker 7: we have the Summer of Europe catalyst. 467 00:23:50,280 --> 00:23:54,960 Speaker 2: So what is the capital new money allocation right now 468 00:23:54,960 --> 00:23:56,160 Speaker 2: in the American. 469 00:23:55,760 --> 00:24:00,000 Speaker 7: Market, Well, for the public markets, what I would say is, 470 00:24:00,080 --> 00:24:03,040 Speaker 7: I don't chase the AI trade right here, right now, 471 00:24:03,240 --> 00:24:04,800 Speaker 7: let's see a little bit of a pullback, but I 472 00:24:04,840 --> 00:24:06,840 Speaker 7: would be reallocating to parts of the market they have 473 00:24:06,840 --> 00:24:10,440 Speaker 7: seen some consolidation top and that's consumer finance for example. 474 00:24:10,520 --> 00:24:13,560 Speaker 7: I think the consumer is just fine as an aggregate. 475 00:24:13,760 --> 00:24:16,680 Speaker 7: I would be looking at consumatist questioning financials as well 476 00:24:16,680 --> 00:24:19,879 Speaker 7: as industrials. That's the public market side of it. But 477 00:24:20,240 --> 00:24:22,960 Speaker 7: to your point, the other big part of the allocation 478 00:24:23,080 --> 00:24:26,560 Speaker 7: is within the private markets and looking at things like 479 00:24:26,600 --> 00:24:31,600 Speaker 7: growth equity, buyout, private equity, private credit, and of course infrastructure. 480 00:24:31,800 --> 00:24:33,840 Speaker 3: That's where we see some of the flows going. 481 00:24:34,119 --> 00:24:35,679 Speaker 2: This has been great. Thank you so much for the 482 00:24:35,760 --> 00:24:37,760 Speaker 2: ch GPT. I've never used it. 483 00:24:38,760 --> 00:24:41,000 Speaker 3: Try the copilot, that's the game. 484 00:24:41,840 --> 00:24:45,880 Speaker 2: I'm signed up for it, but I never used it. 485 00:24:46,480 --> 00:24:49,880 Speaker 2: Chat GPT how to get afterthought to empty the dishwasher? 486 00:24:50,040 --> 00:24:50,240 Speaker 4: Right? 487 00:24:50,840 --> 00:24:52,639 Speaker 2: What are they going to say? Anastation? Thank you so 488 00:24:52,720 --> 00:24:53,600 Speaker 2: much for right capital. 489 00:25:04,640 --> 00:25:06,040 Speaker 3: Ah, Yes, I love this. 490 00:25:06,160 --> 00:25:09,840 Speaker 8: It's because it's about the finance bros. They're not six five, 491 00:25:09,840 --> 00:25:10,119 Speaker 8: are they? 492 00:25:10,200 --> 00:25:10,760 Speaker 3: Blue Eyes? 493 00:25:10,840 --> 00:25:15,399 Speaker 8: But they are sparking a popular dish specifically made for 494 00:25:15,480 --> 00:25:19,919 Speaker 8: them at Chipotle. Okay, it's called the Chipotle Boy Bowl. 495 00:25:20,000 --> 00:25:23,200 Speaker 8: It's double chicken, and it's white rice. Okay, and it's 496 00:25:23,280 --> 00:25:26,360 Speaker 8: Chipotle says it's specifically for them because they put out 497 00:25:26,359 --> 00:25:30,200 Speaker 8: this post and guys, yes, it's for finance guys. It's 498 00:25:30,200 --> 00:25:33,320 Speaker 8: called the Chipotle Boys Starter Pack because they showed a 499 00:25:33,320 --> 00:25:37,080 Speaker 8: picture of it on X and it had aviators, AirPods, MacBook, 500 00:25:37,359 --> 00:25:39,760 Speaker 8: a glove box full of Chipotle napkins, and yes, the 501 00:25:39,800 --> 00:25:45,760 Speaker 8: popular puffy vests that apparently they all wear. 502 00:25:44,080 --> 00:25:48,440 Speaker 2: That it's July, it's like a heat wave, and Damien's 503 00:25:48,440 --> 00:25:50,200 Speaker 2: in the Patagonian puffy vest. 504 00:25:50,480 --> 00:25:53,360 Speaker 8: So they're saying, these guys have sparked an interest in 505 00:25:53,440 --> 00:25:56,200 Speaker 8: this particular bowl with the double chicken and the white rice, 506 00:25:56,440 --> 00:26:00,360 Speaker 8: so they decided to make this limited time edition just them. 507 00:26:00,520 --> 00:26:01,960 Speaker 8: But you have to go to the app to get it. 508 00:26:01,960 --> 00:26:04,200 Speaker 8: It's a place you can get it. 509 00:26:04,280 --> 00:26:05,400 Speaker 2: You have to be digital to. 510 00:26:05,359 --> 00:26:06,720 Speaker 3: Get it, Yes you have. You can't. 511 00:26:06,920 --> 00:26:09,360 Speaker 8: It's not on the menu post in the restaurant. Nope, Nope, 512 00:26:09,359 --> 00:26:11,720 Speaker 8: you got to go in the app. It's called the 513 00:26:11,800 --> 00:26:15,280 Speaker 8: Chipotle Boy Bowl. The Finance broke. 514 00:26:15,359 --> 00:26:17,639 Speaker 2: They didn't call it the Trust because that's what you 515 00:26:17,640 --> 00:26:20,320 Speaker 2: have to go. You go to Sweet Grease to get 516 00:26:20,359 --> 00:26:21,840 Speaker 2: like four meals for the kids. 517 00:26:22,560 --> 00:26:24,200 Speaker 4: Right to Trust fund yep. Exactly. 518 00:26:24,320 --> 00:26:26,040 Speaker 2: Check out next for that. 519 00:26:26,320 --> 00:26:27,840 Speaker 4: This one's the deal. I like your music. 520 00:26:27,960 --> 00:26:32,760 Speaker 2: Do that more often. I know it. 521 00:26:33,320 --> 00:26:33,840 Speaker 4: He likes it. 522 00:26:34,160 --> 00:26:38,640 Speaker 8: It's a good like little all right. Personality hires. This 523 00:26:38,720 --> 00:26:42,240 Speaker 8: is the latest workplace trent. So they're they're going away 524 00:26:42,240 --> 00:26:46,440 Speaker 8: from skills and they're going to personality. So what we're 525 00:26:46,480 --> 00:26:48,879 Speaker 8: talking about with personality hires, those are have like that 526 00:26:49,200 --> 00:26:52,359 Speaker 8: certain charm that juno sequa. You know, they they know 527 00:26:52,400 --> 00:26:55,720 Speaker 8: how to talk to people. Yes, they they're they're warm 528 00:26:55,720 --> 00:26:58,879 Speaker 8: and fuzzy. They're saying because camaraderie is hard because of 529 00:26:58,920 --> 00:27:01,560 Speaker 8: the hybrid schedule. So what's happening is that it's causing 530 00:27:01,600 --> 00:27:04,719 Speaker 8: this animosity with the coworkers because they're saying they have 531 00:27:04,760 --> 00:27:08,639 Speaker 8: to pick up the slack for these personality hires because 532 00:27:08,640 --> 00:27:11,360 Speaker 8: they're not doing enough work. So it's this tension now 533 00:27:11,400 --> 00:27:15,560 Speaker 8: in the workplace that's happening. 534 00:27:16,960 --> 00:27:24,399 Speaker 2: Trying show next week from HR it's sensitive. 535 00:27:23,880 --> 00:27:26,280 Speaker 3: Time correct correct. 536 00:27:26,400 --> 00:27:28,879 Speaker 2: I would say it's out in the literature. It's amazing 537 00:27:29,000 --> 00:27:32,640 Speaker 2: how there's a lot of major shot at the Stanford 538 00:27:32,720 --> 00:27:35,520 Speaker 2: University who's really thinking about this. But there are many 539 00:27:35,560 --> 00:27:38,920 Speaker 2: many others. I mean, there's a lot of cross currents here. 540 00:27:39,600 --> 00:27:42,560 Speaker 2: In the dead of summer as we go to the 541 00:27:42,760 --> 00:27:47,360 Speaker 2: launch of the business seasons. You're killing me. Here can 542 00:27:47,400 --> 00:27:50,359 Speaker 2: I remote? Like, if I'm up on HR, can we 543 00:27:50,400 --> 00:27:53,200 Speaker 2: do a zoom remote for the show? Lisa go away? 544 00:27:53,240 --> 00:27:54,040 Speaker 2: What do you got next? 545 00:27:54,240 --> 00:27:54,560 Speaker 3: Okay? 546 00:27:55,359 --> 00:27:58,720 Speaker 8: Taylor Swift, you know, she sparked you know everything. You 547 00:27:58,720 --> 00:28:00,639 Speaker 8: know when she's at football games, you know, the ratings 548 00:28:00,640 --> 00:28:03,679 Speaker 8: go up where she's everywhere, everything sells out. She's helping 549 00:28:03,680 --> 00:28:07,440 Speaker 8: out the economy in certain countries. Okay, So now the 550 00:28:07,520 --> 00:28:10,919 Speaker 8: Washington Post is saying TikTok is building this entire like 551 00:28:11,080 --> 00:28:15,480 Speaker 8: InApp experience around Taylor Swifts so users they can get 552 00:28:15,480 --> 00:28:19,280 Speaker 8: these digital profile frames. They have these in app friendship 553 00:28:19,359 --> 00:28:23,720 Speaker 8: bracelets and if you complete like certain tasks, you get 554 00:28:23,760 --> 00:28:28,560 Speaker 8: the all limited edition Swift themed profile frame that everyone 555 00:28:28,600 --> 00:28:29,840 Speaker 8: wants from your prism. 556 00:28:30,080 --> 00:28:32,479 Speaker 2: And we cover this, I think on Tuesday as well, 557 00:28:33,040 --> 00:28:36,520 Speaker 2: where the social influencer thing sort of is off the 558 00:28:36,560 --> 00:28:41,479 Speaker 2: bloom are the kids is glued the social influencers like 559 00:28:41,960 --> 00:28:42,440 Speaker 2: they were. 560 00:28:42,680 --> 00:28:44,400 Speaker 3: Oh yeah, oh most definitely. 561 00:28:44,480 --> 00:28:46,680 Speaker 8: I mean that's how I hate to say, but that's 562 00:28:46,680 --> 00:28:49,120 Speaker 8: how my daughter gets all her beauty products from watching 563 00:28:49,160 --> 00:28:52,280 Speaker 8: what these other people post. But it just goes to 564 00:28:52,280 --> 00:28:55,040 Speaker 8: show you that they have the influence, like Swift has 565 00:28:55,080 --> 00:28:57,520 Speaker 8: more than thirty two million followers on her TikTok account, right, 566 00:28:58,240 --> 00:29:02,240 Speaker 8: But it does spark this this cause for other people 567 00:29:02,280 --> 00:29:05,160 Speaker 8: to buy products or to want things that they want. 568 00:29:05,400 --> 00:29:07,200 Speaker 8: But here the thing you have music producers who are 569 00:29:07,200 --> 00:29:10,640 Speaker 8: saying that it's taking away from the emerging artists who 570 00:29:10,680 --> 00:29:13,240 Speaker 8: were trying to get on take care. But I mean 571 00:29:13,800 --> 00:29:17,840 Speaker 8: emerging artist Taylor Swift, it's hard. 572 00:29:16,680 --> 00:29:21,360 Speaker 2: I had the clearest memory when she was an emerging artist, 573 00:29:21,600 --> 00:29:25,200 Speaker 2: and people forget that she was there. She did a thing. 574 00:29:25,320 --> 00:29:28,480 Speaker 2: She was Paul I think sixteen years old and came 575 00:29:28,480 --> 00:29:32,040 Speaker 2: out def Leppard's playing and this tall blonde girl comes 576 00:29:32,080 --> 00:29:35,040 Speaker 2: out from the back. No one knew who she was, 577 00:29:35,200 --> 00:29:37,920 Speaker 2: Who is this? And she had like one country hit 578 00:29:38,000 --> 00:29:41,320 Speaker 2: or whatever, and she was literally I think sixteen, and 579 00:29:41,680 --> 00:29:45,880 Speaker 2: it was to see her and Joe Elliott work and 580 00:29:45,920 --> 00:29:48,320 Speaker 2: the rest of def Leppard, it was like, who is this? 581 00:29:48,320 --> 00:29:52,800 Speaker 2: This person is different. That's it the newspapers today, Lisa, 582 00:29:53,160 --> 00:29:55,320 Speaker 2: I'm going to tell you there. This is a Bloomberg 583 00:29:55,400 --> 00:29:59,800 Speaker 2: Surveillance podcast bringing you the best in economics, finance, investment, 584 00:30:00,040 --> 00:30:03,600 Speaker 2: and international relations. You can also watch the show live 585 00:30:03,840 --> 00:30:08,160 Speaker 2: on YouTube. Visit the Bloomberg Podcast channel on YouTube to 586 00:30:08,320 --> 00:30:11,640 Speaker 2: see the show weekday mornings from seven to ten am 587 00:30:11,720 --> 00:30:15,760 Speaker 2: Eastern from our global headquarters in New York City. Subscribe 588 00:30:15,760 --> 00:30:19,120 Speaker 2: to the podcast on Apple, Spotify, or anywhere else you 589 00:30:19,240 --> 00:30:23,360 Speaker 2: listen and always on Bloomberg Radio, the Bloomberg Terminal, and 590 00:30:23,440 --> 00:30:25,080 Speaker 2: the Bloomberg Business app.