Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Tom Keene along
Speaker 2: with Paul Sweeney. Join us each day for insight from
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Speaker 2: not mince words on Global Wall Street. With great respect
Speaker 2: to Cliff Astness and a few other worthies, there is
Speaker 2: no one that does the math like way lead at Blackrock.
Speaker 2: She joins us this morning, partiers from Cambridge, but far
Speaker 2: more acclaim in her China. Wait thrilled to have you
Speaker 2: on right now. I look really at where we are,
Speaker 2: and my question to you is, when you correlate equities, bonds, currencies, commodities,
Speaker 2: do you see a stable global system or is there
Speaker 2: enough instability out there to give you concern?
Speaker 1: Good morning, Thank you so much for having me. So
Speaker 1: when we look at cross asset correlation, you look at
Speaker 1: apply bond correlation in the US, you look at apply
Speaker 1: bond correlation in Europe, they have been going steadily from negative.
Speaker 1: It's a very chan for portfolio diversification. We have gone
Speaker 1: from the period of this inflation and our environment for
Speaker 1: a period of persistent inflationary environment. And as such, duration
Speaker 1: and the role of duration as balanced in your portfolio
Speaker 1: construction is severely challenged, which is why we need to
Speaker 1: really rethinkful for your construction in his current environment, right
Speaker 1: to really kind of think about diversifying your diversifiers.
Speaker 2: Well, let's diversify the diversifiers, because we know Waylee bought
Speaker 2: in video three years ago when I did not spell it. Wait,
Speaker 2: how do you diversify the diversifiers with big tech again
Speaker 2: on this Thursday moonshot?
Speaker 1: Yeah. Actually, it has been a very concentrated actuality market
Speaker 1: already in the US.
Speaker 2: I need to interrupt, and I need to interrupt and
Speaker 2: say way Lee has said just shut up and own
Speaker 2: it and say thank you. I want to say that
Speaker 2: she's been onboard. Let's continue doctually.
Speaker 1: We still like, we still like the magnificent world, not
Speaker 1: seven maybe it's six, maybe it's five.
Speaker 3: But if you look at.
Speaker 1: Their earnings right like, so, yes, the media has done
Speaker 1: extraordinarily well, up five hundred percent and more since last year,
Speaker 1: but it's forward earnings has gone up just as much,
Speaker 1: and they're beating those very high levels of earning expectations.
Speaker 1: And it's not just in media, right you look at
Speaker 1: tech sectors as a whole, it's really carrying the earnings
Speaker 1: momentum in the US. So we're still very comfortable with
Speaker 1: our Nvidia call, with our tech sector call, but we
Speaker 1: also see kind of momentum broadening out. If you look
Speaker 1: at kind of margin expansion in the US ACTE market,
Speaker 1: eight out of eleven sectors managed to grow their margins
Speaker 1: the last earning season, which gives us confidence behind our
Speaker 1: US actly overweight. But the AI theme in our review
Speaker 1: has a significant runway to play out as we think
Speaker 1: about other sectors kind of starting to extract profitability and
Speaker 1: benefit from that.
Speaker 4: Willie.
Speaker 5: We had some central bank movement recently, the Swiss National
Speaker 5: Bank cutting their interest rates, the Bank of England holding
Speaker 5: their rate steady. How do you get you handicapped? The
Speaker 5: US Federal Reserve here is maybe behind the curve a
Speaker 5: little bit in cutting rates here or do you think
Speaker 5: they should in fact hold study.
Speaker 1: I think this environment where the FED is later than
Speaker 1: the other central banks is highly unusual, right, So the
Speaker 1: Easy be going before the Fed, and BOE likely going
Speaker 1: before the Fed as well. I think this is highly unusual.
Speaker 1: It's also highly unusual because we're talking about an environment
Speaker 1: where central banks are looking to cut rates when inflation
Speaker 1: is way above target, when growth is not really tittering
Speaker 1: around recession.
Speaker 4: Right.
Speaker 1: So this is all very very extraordinary in terms of
Speaker 1: the environment for central banks, which is why we are
Speaker 1: of the view that even when the FED starts cutting
Speaker 1: later this year, which is our expectation, one or two
Speaker 1: cuts for twenty twenty four, which is not really contrariant.
Speaker 1: But even when they start cutting, we're talking about an
Speaker 1: environment of high for longer, not going to be able
Speaker 1: to cut as much as before to come to the
Speaker 1: rescue of the economy because of the broadly inflationary environment
Speaker 1: given structural forces such as the low carbon transitions such
Speaker 1: as aging population pushing inflation higher. But even AI, you know,
Speaker 1: people think about AI as deflationary because of the productivity
Speaker 1: boost that we are all hoping for. The market to
Speaker 1: some extent pricing in but before it becomes deflationary through
Speaker 1: productivity boost the copex spent, the enormous copex spent actually
Speaker 1: means that AI will have to be inflationary first before
Speaker 1: it can be deflationary. Right, So, because of all of this,
Speaker 1: we're talking about high for longer for central banks. That
Speaker 1: applies to the fact that applies to the BOE, that
Speaker 1: applies to the ECB as.
Speaker 2: Wet Wellie, thank you so much and thank you for
Speaker 2: being in the market and explaining it to us. Joining
Speaker 2: us right now. Turston Slock of Polyglobal Management, hugely read
Speaker 2: on Wall Street. Of course, off of is a kind
Speaker 2: of work at Deutsche Bank, is well Turston. Twelve months forward,
Speaker 2: where's real GDP.
Speaker 6: With still mildly hot economy, mildly hot weather, but with
Speaker 6: a risk that we may have some slow down coming
Speaker 6: maybe twelve months, but more eighteen months into the future.
Speaker 6: The fear you can have is that higher for longer
Speaker 6: ultimately begins to bite harder on LeVert balance sheets for consumers,
Speaker 6: on LeVert balance sheets for firms, and LeVert balancets in
Speaker 6: the banking sector, and that could potentially create that dreaded
Speaker 6: recession that we've been worrying about for so long, but
Speaker 6: so far for the next seven quarters, we still think
Speaker 6: that the tailwinds to growth are very strong from fiscal
Speaker 6: policy and from easy financial conditions.
Speaker 5: Torsten, you've been pretty consistent here in your call that
Speaker 5: this federal Reserve doesn't really have to cut rates in
Speaker 5: twenty twenty four. Do you still believe that, and if so, why.
Speaker 4: I still believe that because of what I think. I mean.
Speaker 4: The first test is, well.
Speaker 6: If we literally just a quote unquote look out of
Speaker 6: the window and see how things going in the incoming data,
Speaker 6: non farm payrolls at two hundred and seventy two thousand,
Speaker 6: that's a really strong number.
Speaker 4: There's some debate about whether.
Speaker 6: Some of that maybe is driven higher because of immigration,
Speaker 6: when the Edelburgh and Tara Watson at the Brookings Institute
Speaker 6: wrote a very important paper suggesting that maybe the equilibrium
Speaker 6: growth in non farm payrolls is about one hundred thousand
Speaker 6: higher than normal because of immigration. But I still think
Speaker 6: that strength in the numbers across the board, where a
Speaker 6: little bit of weakness may be in retail sales earlier
Speaker 6: this week, but at the same day we also had
Speaker 6: industrial production was very strong, so jobless claims also looking good.
Speaker 6: It's just hard to see where that slowdown is that
Speaker 6: so many people are worried about. So because of that,
Speaker 6: we just don't see the urgency for the FAT having
Speaker 6: to cut rates.
Speaker 5: Are you surprised that the higher rates haven't impacted the
Speaker 5: consumer more? I mean, it's it's tough to get a
Speaker 5: plane seat, it's tough to get a seat on a
Speaker 5: cruise ship, it's tough to get a seat at a restaurant.
Speaker 5: Talk to just about how the consumers reacting.
Speaker 4: Yeah, this is very important pole.
Speaker 6: So I think it's very critical in that discussion is
Speaker 6: that the transmission mechanism of mortary policy was actually working
Speaker 6: last year, exactly as the textbook would have predicted. The
Speaker 6: FED raise rates in March of twenty twenty two, and
Speaker 6: the most highly leveled consumers started responding because you saw
Speaker 6: the Linguagy rates go up on credit cards.
Speaker 4: The Linguagy rate codes about auto loans, especially.
Speaker 6: For consumers that have more debt, which generally are consumers
Speaker 6: that are younger also and consumers that have lower five
Speaker 6: coats goals. Same thing for corporates. You began to see
Speaker 6: the four rates go up for high yield, the fall rates.
Speaker 4: Go up for loans.
Speaker 6: So in other words, balance sheets that had a lot
Speaker 6: of debt were first hit by the Fed raising rates.
Speaker 4: But what really is unique at the moment, that's.
Speaker 6: Just the answer to your question, Paul, is that for consumers,
Speaker 6: they have locked in during the pandemic. Mortgage rates, as
Speaker 6: we all know, ninety five percent are thirty year fixed
Speaker 6: at very low levels. Like Wise, for corporates, the vast
Speaker 6: majority of credit markets is IG and IT companies locked
Speaker 6: in and termed out also very low interest rates.
Speaker 4: And as a result of that, the transmission maganism has
Speaker 4: just been weaker than what it normally is.
Speaker 6: And that changed with a fit pivoting to Duvish because
Speaker 6: then on top of that, not only was the transmission
Speaker 6: making week, but we also got a tailwind from easy
Speaker 6: financial conditions with S and p up as much as
Speaker 6: we have seen.
Speaker 2: Turstan, you've led on this and it's your best chart
Speaker 2: of the many charts you put out ten years ago. Folks,
Speaker 2: the share of mortgages below four percent, Paul, was thirty percent,
Speaker 2: is it for the conversation is doubled. I mean, I
Speaker 2: mean the number of mortgages below four percent is doubled
Speaker 2: in ten eleven years and Turston. That goes directly into
Speaker 2: the transmission mechanism. You know, I'm very negative on the dots.
Speaker 2: Do the dots of the FED have they adjusted to
Speaker 2: the slock slower transmission mechanism.
Speaker 6: Well, I do think what is very important in the
Speaker 6: last if I'm seeing meeting, and you have also talked
Speaker 6: about that on a surveillance radio, because what we saw was,
Speaker 6: of course that the FED went from instead saying three
Speaker 6: cuts in twenty twenty four to now saying one cut.
Speaker 6: That on its own is an admission that we were
Speaker 6: wrong at the FED. We thought that we would have
Speaker 6: three cuts. Now we think we're to have one cut.
Speaker 6: So in some sense, the FED is coming quote unquote
Speaker 6: back to the view that maybe there is no strong
Speaker 6: arguments for being in this urgent drag pace having two
Speaker 6: cut rates.
Speaker 4: As quickly as they thought just six months ago.
Speaker 2: We're thrilled you with us for the entire half our
Speaker 2: Turst and Slock. You know, We're gonna go to Michael
Speaker 2: barn News, but I'm gonna really come up on beating
Speaker 2: his folks. I haven't mentioned this on area yet, but
Speaker 2: it's a symptotic twenty twenty four.
Speaker 4: What is he talking about?
Speaker 2: Come on Tourston all the assim Tote discussion. Ethan Harris
Speaker 2: retired from Bank of America leading the charge on this.
Speaker 2: A few others as well. Well, they're lost and they're
Speaker 2: extending out the axis as far as they can. It's
Speaker 2: that simple, right, I agree.
Speaker 6: I think that what is very important here is that
Speaker 6: we have unleashed some fairly significant powers with inflation going up.
Speaker 6: And one point that's also very critical in this discussion
Speaker 6: is that if you look at Michigan five to tenure
Speaker 6: inflation long term inspectations.
Speaker 4: The median is still very well behaved.
Speaker 6: So the median household still thinks inflation will be three
Speaker 6: point one, which is where it's been for the.
Speaker 4: Last several years.
Speaker 6: But if you look at the mean, you will see
Speaker 6: a significant increase in one half of the population expecting
Speaker 6: that inflation is going.
Speaker 4: To be dramatically higher than the other half.
Speaker 6: And if you look at the sub questions in the
Speaker 6: University of Michigan, who is it that's expecting inflation to
Speaker 6: be higher, it is generally speaking, the bottom thirty three
Speaker 6: percent of household incomes, meaning low income households to expect
Speaker 6: much higher inflation than high income households.
Speaker 4: And it's generally also people with high.
Speaker 6: School or less education that expects inflation to be a
Speaker 6: lot higher. So you're beginning to see some divergence in
Speaker 6: inflation expectations.
Speaker 4: And this is opening up a very important.
Speaker 6: Debate in the Phillips curve that you and I, Tom
Speaker 6: and I talked about for years, where if inflation expectations
Speaker 6: for half of the population are very very high, what
Speaker 6: does that mean for when.
Speaker 4: The fits is that inflation expectations are under control.
Speaker 6: Yes, the media may be under control, but there's a
Speaker 6: significant part of the population they're still worry about inflation.
Speaker 5: To us and talk to us about what concern do
Speaker 5: you have about this? Maybe the commercial real estate market
Speaker 5: in this country. It feels like it's there's still a
Speaker 5: big shoe or two or three to drop, but maybe not.
Speaker 5: How do you think about that risk here as we
Speaker 5: look around to some of these big cities and see
Speaker 5: a lot of vacant office space.
Speaker 6: I think the important data point first to keep in
Speaker 6: mind is that the price per square foot for office
Speaker 6: nationwide is down more than forty percent from the peak.
Speaker 6: So if we think about what that means, that of course,
Speaker 6: means that there's a lot of office that has been
Speaker 6: reset at a lower level. Now, there's an important differences
Speaker 6: as the country, of course, with the Sun Belt, with
Speaker 6: the West Coast relative to East Coast, relative to metropolitan areas.
Speaker 6: But the bottom line is really that well, when an
Speaker 6: act price goes down more than forty percent, and in
Speaker 6: particularly when the financing of that asset price is something
Speaker 6: that normally is reset every five years, then we still
Speaker 6: have a maturity wall in commercial real estate, in particular
Speaker 6: in office that is really really steep. For other types
Speaker 6: of commercial real estate, things look a lot better. So
Speaker 6: of course you have warehouses, industrial, you have apartments, multi family,
Speaker 6: shopping malls of course, also have data centers. There's some
Speaker 6: very idiosyncratic stories across the different types of commercial real estate.
Speaker 6: But the main issue still that we should all be
Speaker 6: watching is office because that is just still where most
Speaker 6: of the downward drift.
Speaker 5: Is towards another economic issue that's really been or I
Speaker 5: guess this discussion point over the last eighteen months as
Speaker 5: we look around the world as this concept of American
Speaker 5: exception from an economic perspective, you know, the commercial rule
Speaker 5: state issue. Notwithstanding, how real is that the US economy
Speaker 5: strength vis to be the rest of the world, or
Speaker 5: how do you explain that.
Speaker 4: Yeah, this is really important.
Speaker 6: So there is a structural discussion exactly about is the
Speaker 6: US exceptional and the US, its course is exceptional because
Speaker 6: of large capital markets, much more spending and broadly speaking
Speaker 6: across the board, in including on defense, including also on
Speaker 6: the role of.
Speaker 4: The US consumer.
Speaker 6: So simply because the US as the biggest economy in
Speaker 6: the world, playing this very substantial role, it does generally
Speaker 6: speaking attract capital. On top of that comes the most
Speaker 6: cygnical arguments, namely that the US business cycle just happens
Speaker 6: to be a lot stronger than the business cycle in Europe,
Speaker 6: the business cycle in Japan, Canada, Australia, emerging markets, and
Speaker 6: of course also China.
Speaker 4: And when the US is stronger, then that.
Speaker 6: Means, of course, as we're seeing and as we're talking about,
Speaker 6: then breaks will be higher for longer in the USA
Speaker 6: that elsewhere. That's of course what we saw with EACV
Speaker 6: cutting rates. They being in today is staying at hold,
Speaker 6: but now signaling clearly the rate cuts are coming. All
Speaker 6: that argues for still more upward pressure on the dollar.
Speaker 6: Because the US is exceptional not only from a structural perspective,
Speaker 6: but also at the moment exceptional from a cyclical perspective.
Speaker 6: So with that background, when will that exceptionalism from the
Speaker 6: cyclical perspective change? When the fat begins to cut rates,
Speaker 6: then we could begin to see the dollar begin to
Speaker 6: turn really south in a most more substantial way. But
Speaker 6: given that's still now being pushed out repeatedly, then I
Speaker 6: still think the dollar will be going up, and the
Speaker 6: exceptionalism does play a very important role, both on the
Speaker 6: structural side and on the cyclical side.
Speaker 2: Tourst then one more question. We've got to go to
Speaker 2: breaking news. But I think this is too too important.
Speaker 2: Back to the idea of an x exis it goes
Speaker 2: out forever in the new idea percolating of an assim tote,
Speaker 2: I guess down to two percent? Is the assump tote
Speaker 2: a smooth lide path down to two percent out there
Speaker 2: somewhere or is it two point x percent?
Speaker 6: So if you mean inflation, of course, then the issue
Speaker 6: is that inflation at the moment, as you know, is
Speaker 6: three point three. The FEDS target is that it should
Speaker 6: be two. Three point three is not two. So that's
Speaker 6: why if I'm seeing members repeatedly talk about, well, maybe
Speaker 6: we do need to wait a little while longer before
Speaker 6: we start cutting rates. And to your question, will we
Speaker 6: have an asymptotic move down from three point three to
Speaker 6: two points zero?
Speaker 4: I think that the answer to that is absolutely not.
Speaker 4: We still have.
Speaker 6: Significant tailwinds from fiscal policy, the Chips Act, the Inflation Reduction,
Speaker 6: infrastructure and all policies that designed to lift growth over
Speaker 6: the next several years. Likewise, we have a very strong
Speaker 6: tail wind from easy financial conditions. As long as the
Speaker 6: AI story and the stock mirk goes up, we still
Speaker 6: will have, like we saw this early season, strong demand
Speaker 6: for airlines, hotels, restaurants, concerts, sporting events. So the short
Speaker 6: answer to your question is I worry that inflation is
Speaker 6: not going to come down in a straight line to
Speaker 6: two percent from the three point three percent where we
Speaker 6: are today.
Speaker 2: Ristin Sluk, thank you so much. Okay, what we're supposed
Speaker 2: to do here is give Anastasia Ameroso of IICAP a
Speaker 2: massive victory lap nine months ago. Whatever, just shut up
Speaker 2: and get in the market and buy big tech. She
Speaker 2: absolutely nailed the twenty twenty four We were talking about
Speaker 2: AI and you are the chat GPT queen. I mean,
Speaker 2: let's be honest here, you're glued to it. How do
Speaker 2: you use chat GPT for our entire audience?
Speaker 3: It's like what, Well, it.
Speaker 7: Is a game changer, and I think it's a huge
Speaker 7: productivity boost. And if you haven't used, not to make
Speaker 7: any product endorsements here, but if you haven't used the
Speaker 7: Microsoft Copilot, I think you're really missing out the next
Speaker 7: wave of how search is going to be done, and
Speaker 7: whether it's preparing for an interview, whether it's preparing for
Speaker 7: a client meeting, whether it's needing a quick synopsis of
Speaker 7: a particular topic.
Speaker 3: It is amazing what you can do with about five seconds.
Speaker 2: Or need seven pages of I capitol brilliance. You're at O'Hare,
Speaker 2: you're planes delayed two hours, You're on a laptop with
Speaker 2: chet GPT. How does it help you create that research note?
Speaker 3: Well, you know, first of all, it's a quick prompt.
Speaker 7: It's a question that you ask, please generate five hundred words,
Speaker 7: and here they are. And by the way I have
Speaker 7: done this, I do not publish the chat GIPT as
Speaker 7: the research. But if I need a quick synopsis of
Speaker 7: a particular topic, that's the perfect way. I also do
Speaker 7: happen to do a lot of interviews with a lot
Speaker 7: of our asset managers, and what a great way to
Speaker 7: prepare and know the key points going into it, whether
Speaker 7: it's about the firm, about the investment strategies. So I
Speaker 7: think you can use a qu across.
Speaker 2: What's great Paul when in the stage is at O'Hare,
Speaker 2: she's at Stanley's Blackhawk kitchen and tap she's chat GPT
Speaker 2: to get the correct craft.
Speaker 5: So a station. How do we bring that into our
Speaker 5: investment thought here? I mean because for really eighteen months
Speaker 5: AI has been one of the key themes driving this
Speaker 5: market higher. Is that justified in your minds? Are you
Speaker 5: kind of as an investor all into that story and
Speaker 5: looking for ways to play it?
Speaker 2: Yeah?
Speaker 7: I think it's one hundred percent justified. And I know
Speaker 7: a little bit before we came on ere we were
Speaker 7: talking that maybe not a lot of people are actually
Speaker 7: using this across their functions right now, but I think.
Speaker 3: A lot of people will in the future.
Speaker 7: I think what's happening right now is the race to
Speaker 7: invest in artificial intelligence by hyperscalers, but also by other companies,
Speaker 7: you know, across different industry verticals.
Speaker 3: I think there's a grave realization.
Speaker 7: By companies if you're not going to focus on investing
Speaker 7: in AI now, you are going to be left behind.
Speaker 7: So why would you continue to hire the same amount
Speaker 7: of you know, workforce when you can automate certain tasks
Speaker 7: and boost your margins. So I think that's a universal
Speaker 7: sort of understanding right now, you know, from corporate development departments.
Speaker 7: That's what's driving the investment cycle and artificial intelligence.
Speaker 3: That's why I don't.
Speaker 7: Think it's a coincidence that the likes of Nvidia and
Speaker 7: Broadcom and you know, actually a whole suite of semiconductors
Speaker 7: are benefiting from the build out of the backbone of
Speaker 7: artificial intelligence.
Speaker 3: You know, do I.
Speaker 7: Think the momentum is a little bit stretched at this
Speaker 7: very point?
Speaker 4: You know?
Speaker 7: Do I think some exuberants crept into a stock like Nvidia. Yes,
Speaker 7: But at the same time, if the data center sales
Speaker 7: are growing four hundred percent plus year over year, that's fundamentals.
Speaker 5: So all right, so in Nvidia, check I got that.
Speaker 5: How else are you suggesting to your clients that they
Speaker 5: maybe get some exposure to this It is, in fact
Speaker 5: a long term trend.
Speaker 3: Yeah, it's a huge trend.
Speaker 7: And in fact, the total adressable market for AI is
Speaker 7: going to double in the next several years, and it's
Speaker 7: comprised of, you know, a couple of different pillars, which
Speaker 7: is of course the hardware, the semiconductors, but actually the
Speaker 7: biggest chunk of who's going to benefit from AI is software.
Speaker 7: And it makes sense why everybody is chasing the semiconductor
Speaker 7: trade because you have to have the chips in place
Speaker 7: in order to trade the algorithms.
Speaker 2: We get that.
Speaker 7: Well, once you do, Tom, you know, what are the
Speaker 7: applications going to be beyond the copilot that are leveraging
Speaker 7: AI to boost your Okay, So.
Speaker 2: I know this is brilliant. I know you're not going
Speaker 2: to talk about individual stocks, so I'll bring up Adobe
Speaker 2: is the kind of software mix as well. Take the
Speaker 2: fifty adobees out there, where do you see their income
Speaker 2: statements in five years?
Speaker 7: Well, I think they're going to reflect the benefit of
Speaker 7: artificial intelligence. One thing Tom, that has recently happened to software.
Speaker 7: It was everyone's favorite sector just you know, a bit ago,
Speaker 7: but now that's not the case. For example, you have
Speaker 7: seen software revenues grow at twenty twenty five percent per
Speaker 7: year back during COVID times that is decelerated to about
Speaker 7: ten percent today, and valuations have derated very meaningfully. But
Speaker 7: I think that's an excellent entry point into a lot
Speaker 7: of these software stocks. To your point, five years from now,
Speaker 7: they should That's what's going to catalyze the next growth
Speaker 7: wave in software is monetizing AI A.
Speaker 2: Derating Paul is Anastasias speak for south south. The stacks
Speaker 2: have gone south, they've.
Speaker 7: Derated well well, well, to be fair, some of them
Speaker 7: have gone side where some have gone south. But if
Speaker 7: you look at the multiple when from twenty times to
Speaker 7: five and that's back to those pre COVID normalized levels.
Speaker 7: So that's why I like that as an enter point.
Speaker 2: Adobe growth twenty two percent in the heart of the
Speaker 2: pandemic revenue growth right now eleven.
Speaker 5: Percent, yes, cut absolutely all right, So what I hear
Speaker 5: a lot is US versus non US, big cap versus
Speaker 5: smaller cap. But still some of the valuations in Europe
Speaker 5: still seem so attractive. But you know, I guess the
Speaker 5: concern is you just don't want to get in that
Speaker 5: value trapped there. How do you think about Europe and
Speaker 5: opportunities there?
Speaker 7: Well, I think you have to look at the valuation
Speaker 7: but we also have to realize what the catalyst might be.
Speaker 7: And for the last couple of years has been really
Speaker 7: tough in Europe because you've got higher electricity costs, you've
Speaker 7: got meaningful of higher mortgage expenses.
Speaker 3: And now I actually think the peak.
Speaker 7: Pain of high mortgage rates is behind us in Europe.
Speaker 7: And I don't just mean because the ECB is cutting
Speaker 7: interest rates. I mean a lot of mortgages in Europe
Speaker 7: were floating rate mortgages or floating ray mortgages depending on
Speaker 7: the country, seventy or eighty percent of them. So that's
Speaker 7: a lot of you know, pain that the consumer had
Speaker 7: to absorb. But that's turning the.
Speaker 3: Other way around.
Speaker 7: And so I now think the real disposable income for
Speaker 7: the European consumer is likely to grow in this year
Speaker 7: and next, and business confidence, you know, French elections now
Speaker 7: with Stanley, has recovered quite a bit. So I like
Speaker 7: the valuation, I like the positioning, and now I think
Speaker 7: we have the Summer of Europe catalyst.
Speaker 2: So what is the capital new money allocation right now
Speaker 2: in the American.
Speaker 7: Market, Well, for the public markets, what I would say is,
Speaker 7: I don't chase the AI trade right here, right now,
Speaker 7: let's see a little bit of a pullback, but I
Speaker 7: would be reallocating to parts of the market they have
Speaker 7: seen some consolidation top and that's consumer finance for example.
Speaker 7: I think the consumer is just fine as an aggregate.
Speaker 7: I would be looking at consumatist questioning financials as well
Speaker 7: as industrials. That's the public market side of it. But
Speaker 7: to your point, the other big part of the allocation
Speaker 7: is within the private markets and looking at things like
Speaker 7: growth equity, buyout, private equity, private credit, and of course infrastructure.
Speaker 3: That's where we see some of the flows going.
Speaker 2: This has been great. Thank you so much for the
Speaker 2: ch GPT. I've never used it.
Speaker 3: Try the copilot, that's the game.
Speaker 2: I'm signed up for it, but I never used it.
Speaker 2: Chat GPT how to get afterthought to empty the dishwasher?
Speaker 4: Right?
Speaker 2: What are they going to say? Anastation? Thank you so
Speaker 2: much for right capital.
Speaker 3: Ah, Yes, I love this.
Speaker 8: It's because it's about the finance bros. They're not six five,
Speaker 8: are they?
Speaker 3: Blue Eyes?
Speaker 8: But they are sparking a popular dish specifically made for
Speaker 8: them at Chipotle. Okay, it's called the Chipotle Boy Bowl.
Speaker 8: It's double chicken, and it's white rice. Okay, and it's
Speaker 8: Chipotle says it's specifically for them because they put out
Speaker 8: this post and guys, yes, it's for finance guys. It's
Speaker 8: called the Chipotle Boys Starter Pack because they showed a
Speaker 8: picture of it on X and it had aviators, AirPods, MacBook,
Speaker 8: a glove box full of Chipotle napkins, and yes, the
Speaker 8: popular puffy vests that apparently they all wear.
Speaker 2: That it's July, it's like a heat wave, and Damien's
Speaker 2: in the Patagonian puffy vest.
Speaker 8: So they're saying, these guys have sparked an interest in
Speaker 8: this particular bowl with the double chicken and the white rice,
Speaker 8: so they decided to make this limited time edition just them.
Speaker 8: But you have to go to the app to get it.
Speaker 8: It's a place you can get it.
Speaker 2: You have to be digital to.
Speaker 3: Get it, Yes you have. You can't.
Speaker 8: It's not on the menu post in the restaurant. Nope, Nope,
Speaker 8: you got to go in the app. It's called the
Speaker 8: Chipotle Boy Bowl. The Finance broke.
Speaker 2: They didn't call it the Trust because that's what you
Speaker 2: have to go. You go to Sweet Grease to get
Speaker 2: like four meals for the kids.
Speaker 4: Right to Trust fund yep. Exactly.
Speaker 2: Check out next for that.
Speaker 4: This one's the deal. I like your music.
Speaker 2: Do that more often. I know it.
Speaker 4: He likes it.
Speaker 8: It's a good like little all right. Personality hires. This
Speaker 8: is the latest workplace trent. So they're they're going away
Speaker 8: from skills and they're going to personality. So what we're
Speaker 8: talking about with personality hires, those are have like that
Speaker 8: certain charm that juno sequa. You know, they they know
Speaker 8: how to talk to people. Yes, they they're they're warm
Speaker 8: and fuzzy. They're saying because camaraderie is hard because of
Speaker 8: the hybrid schedule. So what's happening is that it's causing
Speaker 8: this animosity with the coworkers because they're saying they have
Speaker 8: to pick up the slack for these personality hires because
Speaker 8: they're not doing enough work. So it's this tension now
Speaker 8: in the workplace that's happening.
Speaker 2: Trying show next week from HR it's sensitive.
Speaker 3: Time correct correct.
Speaker 2: I would say it's out in the literature. It's amazing
Speaker 2: how there's a lot of major shot at the Stanford
Speaker 2: University who's really thinking about this. But there are many
Speaker 2: many others. I mean, there's a lot of cross currents here.
Speaker 2: In the dead of summer as we go to the
Speaker 2: launch of the business seasons. You're killing me. Here can
Speaker 2: I remote? Like, if I'm up on HR, can we
Speaker 2: do a zoom remote for the show? Lisa go away?
Speaker 2: What do you got next?
Speaker 3: Okay?
Speaker 8: Taylor Swift, you know, she sparked you know everything. You
Speaker 8: know when she's at football games, you know, the ratings
Speaker 8: go up where she's everywhere, everything sells out. She's helping
Speaker 8: out the economy in certain countries. Okay, So now the
Speaker 8: Washington Post is saying TikTok is building this entire like
Speaker 8: InApp experience around Taylor Swifts so users they can get
Speaker 8: these digital profile frames. They have these in app friendship
Speaker 8: bracelets and if you complete like certain tasks, you get
Speaker 8: the all limited edition Swift themed profile frame that everyone
Speaker 8: wants from your prism.
Speaker 2: And we cover this, I think on Tuesday as well,
Speaker 2: where the social influencer thing sort of is off the
Speaker 2: bloom are the kids is glued the social influencers like
Speaker 2: they were.
Speaker 3: Oh yeah, oh most definitely.
Speaker 8: I mean that's how I hate to say, but that's
Speaker 8: how my daughter gets all her beauty products from watching
Speaker 8: what these other people post. But it just goes to
Speaker 8: show you that they have the influence, like Swift has
Speaker 8: more than thirty two million followers on her TikTok account, right,
Speaker 8: But it does spark this this cause for other people
Speaker 8: to buy products or to want things that they want.
Speaker 8: But here the thing you have music producers who are
Speaker 8: saying that it's taking away from the emerging artists who
Speaker 8: were trying to get on take care. But I mean
Speaker 8: emerging artist Taylor Swift, it's hard.
Speaker 2: I had the clearest memory when she was an emerging artist,
Speaker 2: and people forget that she was there. She did a thing.
Speaker 2: She was Paul I think sixteen years old and came
Speaker 2: out def Leppard's playing and this tall blonde girl comes
Speaker 2: out from the back. No one knew who she was,
Speaker 2: Who is this? And she had like one country hit
Speaker 2: or whatever, and she was literally I think sixteen, and
Speaker 2: it was to see her and Joe Elliott work and
Speaker 2: the rest of def Leppard, it was like, who is this?
Speaker 2: This person is different. That's it the newspapers today, Lisa,
Speaker 2: I'm going to tell you there. This is a Bloomberg
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