1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,840 --> 00:00:17,920 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:22,000 Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App. 4 00:00:22,360 --> 00:00:25,680 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:25,760 --> 00:00:27,000 Speaker 1: US live on YouTube. 6 00:00:27,040 --> 00:00:28,160 Speaker 2: Stuart Kaiser joins us. 7 00:00:28,200 --> 00:00:33,320 Speaker 3: He's head of US equity trading strategy at City Global Markets. Stuart, 8 00:00:33,320 --> 00:00:35,000 Speaker 3: what do you hear on your desk? What are your 9 00:00:35,040 --> 00:00:37,760 Speaker 3: traders telling you? What are your clients telling you about? 10 00:00:37,760 --> 00:00:40,639 Speaker 3: What was at its trough at a ten percent pullback 11 00:00:40,840 --> 00:00:43,440 Speaker 3: in the market, healthy step in an otherwise okay market 12 00:00:43,479 --> 00:00:44,160 Speaker 3: or something different? 13 00:00:44,479 --> 00:00:46,800 Speaker 4: Well, Matth, I think most pms would rather not have that, 14 00:00:46,840 --> 00:00:48,920 Speaker 4: have that type of healthy step, But yes, I think 15 00:00:49,320 --> 00:00:52,839 Speaker 4: look at position dee risking, I think is the discussion 16 00:00:52,880 --> 00:00:54,680 Speaker 4: point you know, around Wall Street over the course of 17 00:00:54,680 --> 00:00:57,120 Speaker 4: the last month or so. It does seem like that's 18 00:00:57,200 --> 00:01:00,960 Speaker 4: later innings. You know, clearly there were policy and uncertainty 19 00:01:01,040 --> 00:01:04,000 Speaker 4: things that triggered that, but the big pullback I think 20 00:01:04,040 --> 00:01:06,240 Speaker 4: had much more to do about de risking that it 21 00:01:06,280 --> 00:01:07,560 Speaker 4: had to do or anything sort of. 22 00:01:07,520 --> 00:01:12,320 Speaker 5: On the data side necessarily, And one can say that, boy, 23 00:01:11,640 --> 00:01:15,200 Speaker 5: you insert any kind of uncertainty into a market that 24 00:01:15,319 --> 00:01:17,480 Speaker 5: was as richly valued as we were at its peak, 25 00:01:18,280 --> 00:01:20,440 Speaker 5: then a pullback should not be that surprising. 26 00:01:21,440 --> 00:01:22,120 Speaker 2: Do we have more to go? 27 00:01:22,200 --> 00:01:22,560 Speaker 6: Do you think? 28 00:01:22,920 --> 00:01:24,360 Speaker 4: I mean, look, I agree with you one hundred percent. 29 00:01:24,360 --> 00:01:26,039 Speaker 4: I think coming into the year you would have said, yeah, 30 00:01:26,040 --> 00:01:29,039 Speaker 4: fundamentals underlying the market pretty solid, but risk reward around 31 00:01:29,040 --> 00:01:32,560 Speaker 4: those fundamentals pretty poor. So having a pullback of that 32 00:01:32,640 --> 00:01:34,800 Speaker 4: nature probably not surprising. 33 00:01:34,959 --> 00:01:35,680 Speaker 2: Is there more to come? 34 00:01:35,880 --> 00:01:38,080 Speaker 4: I mean, I think if you're if you believe that 35 00:01:38,120 --> 00:01:39,800 Speaker 4: a lot of this was driven by policy out of 36 00:01:39,880 --> 00:01:42,640 Speaker 4: Washington and the key administrators down there are telling you 37 00:01:42,680 --> 00:01:44,640 Speaker 4: basically to hedge and that there is more to come, 38 00:01:44,680 --> 00:01:47,000 Speaker 4: and that they're willing to tolerate some short term pain 39 00:01:47,400 --> 00:01:50,440 Speaker 4: for these longer term structural reforms, then yeah, it does 40 00:01:50,480 --> 00:01:53,480 Speaker 4: feel like there's potentially more more behind this. Obviously we've 41 00:01:53,520 --> 00:01:55,480 Speaker 4: gotten a couple of days of calm here, which is welcome, 42 00:01:55,600 --> 00:01:58,680 Speaker 4: but it's hard to think that the headlines that have 43 00:01:58,760 --> 00:02:00,000 Speaker 4: driven this are are finished. 44 00:02:00,360 --> 00:02:04,640 Speaker 6: Within your vast experience, which goes back to the McKinley presidency, 45 00:02:05,200 --> 00:02:09,760 Speaker 6: Stuart Kaiser, if you have a drawdown like this, juicy, 46 00:02:09,800 --> 00:02:12,280 Speaker 6: excuse me? Do you see a snap back like in 47 00:02:12,360 --> 00:02:16,480 Speaker 6: nineteen eighty seven, or is it a more protracted recovery. 48 00:02:17,000 --> 00:02:18,120 Speaker 2: Yeah, it's a good question time. 49 00:02:18,160 --> 00:02:19,880 Speaker 4: I think a lot of people are citing the late 50 00:02:19,919 --> 00:02:22,519 Speaker 4: twenty eighteen period where you kind of had to draw down. 51 00:02:22,520 --> 00:02:24,800 Speaker 4: Then you had a couple weeks of a bit of 52 00:02:25,080 --> 00:02:27,520 Speaker 4: rally in stability, and then in December of twenty eighteen 53 00:02:27,560 --> 00:02:29,920 Speaker 4: we sold off again. So that would be your barecase, 54 00:02:30,040 --> 00:02:33,640 Speaker 4: I think, or your bad outcome, because back then you 55 00:02:33,680 --> 00:02:35,520 Speaker 4: had a growth scare and you had concerns about a 56 00:02:35,520 --> 00:02:37,959 Speaker 4: policy ere from the FED. If you just swapped out 57 00:02:37,960 --> 00:02:40,919 Speaker 4: FED for White House, you'd be a kind of simblard 58 00:02:40,919 --> 00:02:41,640 Speaker 4: situation right now. 59 00:02:41,919 --> 00:02:44,519 Speaker 6: This is brilliant because then Ben Laidler when he was 60 00:02:44,560 --> 00:02:48,040 Speaker 6: at HSBC called the bottom of the market Christmas even 61 00:02:48,520 --> 00:02:52,639 Speaker 6: of twenty eighteen. How do you know when to step in? 62 00:02:54,639 --> 00:02:56,720 Speaker 4: It's a great question. I think the early stages of 63 00:02:56,800 --> 00:02:58,400 Speaker 4: when to step in. I think in this case we're 64 00:02:58,400 --> 00:03:01,040 Speaker 4: going to be driven by price action more about positioning. 65 00:03:01,720 --> 00:03:03,960 Speaker 4: If you were being very positive, I think you would 66 00:03:04,000 --> 00:03:06,320 Speaker 4: have said last Tuesday was the data step in because 67 00:03:06,360 --> 00:03:09,720 Speaker 4: you had tech stocks up in a down SMP tape. 68 00:03:10,600 --> 00:03:12,359 Speaker 4: Bigger picture, though, I look I think you need to 69 00:03:12,400 --> 00:03:15,200 Speaker 4: get through the budget and tax negotiations over the course 70 00:03:15,240 --> 00:03:17,200 Speaker 4: of the next two or three weeks to really be 71 00:03:17,240 --> 00:03:18,240 Speaker 4: out on Morsolo football. 72 00:03:18,240 --> 00:03:21,600 Speaker 6: Well, the thing I'm missing here, remember Stuart Kreiss Kaiser 73 00:03:21,919 --> 00:03:25,920 Speaker 6: in season two, episode four of Industry, Stuart Kaiser was 74 00:03:26,000 --> 00:03:31,280 Speaker 6: yelling at the troops and industry, we need, we need. 75 00:03:31,960 --> 00:03:34,280 Speaker 3: Actually, yeah, I'm not sure we've seen it, Stuart. I'm 76 00:03:34,320 --> 00:03:35,760 Speaker 3: looking at the earnings outlook for the S and P 77 00:03:35,840 --> 00:03:38,240 Speaker 3: five hundred. It's kind of like nine ten eleven percent 78 00:03:38,320 --> 00:03:40,120 Speaker 3: kind of earnings growth for the next couple of years. 79 00:03:40,560 --> 00:03:42,360 Speaker 2: Are you guys comfortable with that? Or is a risk 80 00:03:42,400 --> 00:03:42,960 Speaker 2: to that? Do you think? 81 00:03:43,280 --> 00:03:45,880 Speaker 4: You know, Scott Cronin on our equity strategy side, you'll 82 00:03:45,920 --> 00:03:47,640 Speaker 4: see some risk over the next few weeks of some 83 00:03:47,720 --> 00:03:50,640 Speaker 4: downward revisions going into earning season. I would say this, 84 00:03:50,800 --> 00:03:53,720 Speaker 4: if Corporate America, given all the uncertainty and everything that's 85 00:03:53,720 --> 00:03:56,240 Speaker 4: happened over the last three weeks, comes out and defends numbers, 86 00:03:56,360 --> 00:03:59,440 Speaker 4: that's going to read read very very positive. But particularly 87 00:03:59,520 --> 00:04:01,320 Speaker 4: the part of the market that have a little bit 88 00:04:01,320 --> 00:04:03,280 Speaker 4: more of a China supply chain. You know, Scott and 89 00:04:03,280 --> 00:04:06,600 Speaker 4: team do see some downward pressure on numbers there, so 90 00:04:06,800 --> 00:04:08,840 Speaker 4: we would expect to see estimates come a bit lower. 91 00:04:08,960 --> 00:04:12,120 Speaker 4: To your point, very solid growth and very little negative 92 00:04:12,160 --> 00:04:14,520 Speaker 4: revisions to begin the year. So I think, you know, 93 00:04:14,560 --> 00:04:16,800 Speaker 4: one keyworness is going to be interesting. If Corporate America 94 00:04:16,839 --> 00:04:19,560 Speaker 4: steps in defense, then that's very positive. If they kind 95 00:04:19,560 --> 00:04:22,120 Speaker 4: of kitchen sink this just just to get any bad 96 00:04:22,160 --> 00:04:24,240 Speaker 4: news out there, then the market is clearly going to 97 00:04:24,279 --> 00:04:25,800 Speaker 4: be under a little pressure during earning season. 98 00:04:26,000 --> 00:04:27,839 Speaker 3: I knew Scott Coroner when he had an honest job 99 00:04:27,880 --> 00:04:29,000 Speaker 3: selling my research. 100 00:04:28,680 --> 00:04:31,680 Speaker 2: On the West Coast exactly exactly. 101 00:04:32,040 --> 00:04:36,039 Speaker 3: So, Stewart, are you finding your clients are kind of 102 00:04:36,080 --> 00:04:38,800 Speaker 3: going they'd love to buy the mag seven or to 103 00:04:38,880 --> 00:04:41,320 Speaker 3: the tech socks on a sell off or are they 104 00:04:41,440 --> 00:04:44,839 Speaker 3: rotating into financials or industrials or something that may be 105 00:04:44,960 --> 00:04:48,600 Speaker 3: a little bit more safer just from evaluation perspective, Well, 106 00:04:48,680 --> 00:04:49,080 Speaker 3: I think. 107 00:04:48,960 --> 00:04:51,080 Speaker 4: In terms of like the cherry picking or the bottom picking, 108 00:04:51,160 --> 00:04:52,799 Speaker 4: the focus has a bit more on tech just because 109 00:04:52,839 --> 00:04:55,640 Speaker 4: that's the stuff that's sold off the most. You know, 110 00:04:55,720 --> 00:04:57,760 Speaker 4: big picture, do you want to broaden out this market? 111 00:04:57,839 --> 00:04:58,119 Speaker 2: Yes? 112 00:04:58,360 --> 00:04:59,680 Speaker 4: Are you going to do that at a time when 113 00:04:59,720 --> 00:05:01,880 Speaker 4: you US economic growth looks a little wobbly you know, 114 00:05:02,279 --> 00:05:05,359 Speaker 4: perhaps not so I would say the bottom picking or 115 00:05:05,360 --> 00:05:07,520 Speaker 4: the buying the dip we've seen has been much more 116 00:05:07,560 --> 00:05:10,360 Speaker 4: in the tech growth and momentum stocks that have sold 117 00:05:10,400 --> 00:05:12,800 Speaker 4: off the most, because that's where the valuation is rebased, 118 00:05:12,839 --> 00:05:14,800 Speaker 4: you know. I mean, if you liked you know, Tesla 119 00:05:14,839 --> 00:05:17,159 Speaker 4: down twenty five percent, you probably love it down fifty. So, 120 00:05:17,320 --> 00:05:19,840 Speaker 4: you know, I think people are sort of focused on 121 00:05:19,880 --> 00:05:21,560 Speaker 4: that part of the market right now. 122 00:05:21,400 --> 00:05:24,680 Speaker 2: For the by the dip mentality, How do you fold. 123 00:05:24,440 --> 00:05:27,680 Speaker 6: An economics now, like if I've got nominal GDP coming in, 124 00:05:27,760 --> 00:05:30,880 Speaker 6: if i got real GDP coming in, that affects the 125 00:05:30,960 --> 00:05:32,720 Speaker 6: Stewart kinds of world, doesn't it. 126 00:05:33,160 --> 00:05:33,839 Speaker 2: One hundred percent? 127 00:05:33,880 --> 00:05:36,120 Speaker 4: And I would say the risks on that side to 128 00:05:36,200 --> 00:05:38,359 Speaker 4: us are all on the labor side of the economy, 129 00:05:38,440 --> 00:05:39,680 Speaker 4: you know, I think, Okay, so where do. 130 00:05:39,640 --> 00:05:41,440 Speaker 6: You go on a sector basis? I'm running out of 131 00:05:41,520 --> 00:05:43,599 Speaker 6: times Steward, and I think people want to know, how 132 00:05:43,600 --> 00:05:48,599 Speaker 6: do you shift your sector trading analysis given that diminished GDP. 133 00:05:49,080 --> 00:05:51,240 Speaker 4: Yeah, Look, if you're slowing the economy, then you want 134 00:05:51,240 --> 00:05:53,880 Speaker 4: to be not in the consumer facing parts of the 135 00:05:53,920 --> 00:05:56,080 Speaker 4: market in our view. So I think if you're trying 136 00:05:56,080 --> 00:05:58,600 Speaker 4: to expose their consumer exposed, which a lot of retelling 137 00:05:58,720 --> 00:06:00,440 Speaker 4: is that's the part of the market want to be 138 00:06:00,520 --> 00:06:04,120 Speaker 4: the most careful about. Without a doubt, I think US 139 00:06:04,160 --> 00:06:06,280 Speaker 4: consumer has been the white night of the global economy 140 00:06:06,320 --> 00:06:08,760 Speaker 4: for years. If we start to see cracks there, which 141 00:06:08,800 --> 00:06:10,960 Speaker 4: we are seeing on the confidence side of things, then 142 00:06:10,960 --> 00:06:12,279 Speaker 4: that to me is the part you want to be 143 00:06:12,400 --> 00:06:13,279 Speaker 4: the most careful with. 144 00:06:13,560 --> 00:06:15,760 Speaker 6: Stuart Keiser, thank you so much, greatly appreciate it. 145 00:06:15,800 --> 00:06:19,440 Speaker 1: With City Group, this is the Bloomberg Surveillance Podcast. Listen 146 00:06:19,560 --> 00:06:22,960 Speaker 1: live each weekday starting at seven am Eastern on Applecarplay 147 00:06:23,000 --> 00:06:25,800 Speaker 1: and Android Auto with the Bloomberg Business app. You can 148 00:06:25,839 --> 00:06:29,320 Speaker 1: also listen live on Amazon Alexa from our flagship New 149 00:06:29,400 --> 00:06:33,000 Speaker 1: York station. Just say Alexa play Bloomberg eleven thirty. 150 00:06:33,040 --> 00:06:34,880 Speaker 6: We're going to go to Dubai right now. Jaman Ebersch 151 00:06:35,040 --> 00:06:38,080 Speaker 6: joins us now with a great overview of a view 152 00:06:38,120 --> 00:06:41,039 Speaker 6: from sixty thousand feet on all going on in Gaza, 153 00:06:41,720 --> 00:06:45,440 Speaker 6: in Yemen, and of course the effect upon her Middle East. Jamina, 154 00:06:45,520 --> 00:06:48,440 Speaker 6: thank you so much in your evening for spending time 155 00:06:48,560 --> 00:06:51,520 Speaker 6: with us. I believe in a three day period I 156 00:06:51,640 --> 00:06:57,560 Speaker 6: have attacks on Yemen, attacks on Gaza. How do the 157 00:06:57,600 --> 00:07:01,919 Speaker 6: major Middle Eastern powers adapt what does Saudi Arabia do 158 00:07:02,400 --> 00:07:03,720 Speaker 6: in others? 159 00:07:04,240 --> 00:07:08,040 Speaker 7: Yeah, and you're also missing attacks on Lebanon and Syria 160 00:07:08,080 --> 00:07:10,880 Speaker 7: as well, in addition to skirmishes on the Syrian borders. 161 00:07:10,960 --> 00:07:13,720 Speaker 7: So yes, there's been plenty going on in the Middle 162 00:07:13,720 --> 00:07:16,640 Speaker 7: East in the last few days, a real escalation of 163 00:07:16,720 --> 00:07:19,720 Speaker 7: things since where we were in January nineteen, which is 164 00:07:19,720 --> 00:07:22,120 Speaker 7: when that seasfire and Gaza kicked in Phase one of 165 00:07:22,120 --> 00:07:24,360 Speaker 7: the Seasfire. I think it's safe to say at this 166 00:07:24,440 --> 00:07:29,880 Speaker 7: point that the seasefire is pretty much dead. There is 167 00:07:30,480 --> 00:07:35,000 Speaker 7: no evident commitment either from the part of Israelis or 168 00:07:35,040 --> 00:07:38,800 Speaker 7: from Hamas at this point to want to continue with 169 00:07:39,080 --> 00:07:42,000 Speaker 7: the seasfire and its current format, and that came to 170 00:07:42,080 --> 00:07:43,600 Speaker 7: light in the last twenty four hours. 171 00:07:43,640 --> 00:07:45,200 Speaker 8: The death toll obviously climbing. 172 00:07:45,680 --> 00:07:48,480 Speaker 7: The latest figures from Gaza Health Ministry is showing that 173 00:07:48,520 --> 00:07:50,360 Speaker 7: more than four hundred people were killed in. 174 00:07:50,400 --> 00:07:51,560 Speaker 8: Yesterday's air strikes. 175 00:07:51,880 --> 00:07:55,120 Speaker 7: But you did ask about the broader Arab region, and 176 00:07:55,160 --> 00:07:57,560 Speaker 7: the thing is, let me also just rewind it back 177 00:07:57,640 --> 00:08:00,560 Speaker 7: to not just discussions that were taking place vis a 178 00:08:00,640 --> 00:08:02,680 Speaker 7: vis how you move from phase one of Seasfire to 179 00:08:02,680 --> 00:08:06,320 Speaker 7: phase two, but also those broader discussions amongst the Arab 180 00:08:06,400 --> 00:08:10,000 Speaker 7: league around the eventual reconstruction of Gaza, and that was 181 00:08:10,040 --> 00:08:13,800 Speaker 7: in response, you may recall to Trump's Riviera proposal, where 182 00:08:13,800 --> 00:08:16,720 Speaker 7: the US administration essentially said to Arab states, if you 183 00:08:16,760 --> 00:08:19,520 Speaker 7: want to be involved in Gaza, give us your counterproposal. 184 00:08:19,960 --> 00:08:23,240 Speaker 7: And now it appears to be the case that this 185 00:08:23,320 --> 00:08:26,240 Speaker 7: is such a remote possibility you can't even think about 186 00:08:26,320 --> 00:08:31,440 Speaker 7: reconstructing when airstrikes are still a daily feature of the 187 00:08:31,480 --> 00:08:35,480 Speaker 7: lives of Palestinians, and where Israeli hostages are still being 188 00:08:35,520 --> 00:08:39,600 Speaker 7: held in captivity by Hamas. So we really seem to 189 00:08:39,640 --> 00:08:42,120 Speaker 7: have gone back to square zero again with the events 190 00:08:42,120 --> 00:08:43,400 Speaker 7: of the last twenty four hours and. 191 00:08:43,440 --> 00:08:46,480 Speaker 3: Dromana the You know, during the seasefire, the exchange of 192 00:08:46,520 --> 00:08:49,600 Speaker 3: hostages was taking place, maybe at a slower pace than 193 00:08:49,600 --> 00:08:52,600 Speaker 3: people would have liked. What happened from the perspective of 194 00:08:52,640 --> 00:08:55,520 Speaker 3: Hamas to refuse to release the remaining hostages. 195 00:08:55,600 --> 00:08:56,200 Speaker 2: What changed? 196 00:08:57,000 --> 00:09:00,840 Speaker 7: Yeah, So the initial ceasefire was composed of three phases. 197 00:09:00,880 --> 00:09:05,760 Speaker 7: The first phase entailed the release of around thirty hostages 198 00:09:05,800 --> 00:09:10,360 Speaker 7: in exchange for Palestinian prisoners, and that part of the 199 00:09:10,400 --> 00:09:13,440 Speaker 7: seasfire actually expired a couple of weeks ago, so exactly 200 00:09:13,480 --> 00:09:16,960 Speaker 7: seventeen days ago. One of the other preconditions was for 201 00:09:17,000 --> 00:09:20,720 Speaker 7: the IDF to withdraw away from populated areas in the 202 00:09:20,760 --> 00:09:24,040 Speaker 7: Gaza Strip, but to maintain a buffer zone, and there 203 00:09:24,080 --> 00:09:26,360 Speaker 7: was also an understanding that they would start within the 204 00:09:26,360 --> 00:09:29,280 Speaker 7: middle of Phase one talks around progress to Phase two, 205 00:09:29,440 --> 00:09:30,480 Speaker 7: where Hamas would. 206 00:09:30,320 --> 00:09:32,160 Speaker 8: Release the rest of the hostages. 207 00:09:32,480 --> 00:09:35,559 Speaker 7: It is estimated that sixty hostages are still told with Hamas, 208 00:09:35,600 --> 00:09:38,720 Speaker 7: about half of them still alive, and that Israel would 209 00:09:38,880 --> 00:09:45,200 Speaker 7: fully retreat from the Gaza Strip. Now, the US said 210 00:09:45,320 --> 00:09:48,440 Speaker 7: that the discussions between the two sides were not yielding 211 00:09:48,480 --> 00:09:51,199 Speaker 7: any fruit, so they put forward this bridging proposal which 212 00:09:51,240 --> 00:09:53,439 Speaker 7: would allow for an extension of Phase one. 213 00:09:53,720 --> 00:09:55,680 Speaker 8: While they worked out the details of Phase two. 214 00:09:55,679 --> 00:09:59,720 Speaker 7: But the sticking point is that Israel wanted the full 215 00:10:00,040 --> 00:10:06,280 Speaker 7: militarization and to completely decapitate Tamasi's capabilities in the Gaza Strip. 216 00:10:06,320 --> 00:10:08,680 Speaker 8: They didn't want to allow that to happen. To be 217 00:10:08,720 --> 00:10:10,559 Speaker 8: held back for. 218 00:10:10,520 --> 00:10:13,520 Speaker 6: Our audience, particularly waking up in America, good morning, on 219 00:10:13,559 --> 00:10:17,600 Speaker 6: your commute across America this morning. The fundamental issue whether 220 00:10:17,640 --> 00:10:21,240 Speaker 6: someone's vision is back to nineteen sixty seven or dare 221 00:10:21,280 --> 00:10:24,680 Speaker 6: i say back to nineteen forty eight is a completely 222 00:10:24,800 --> 00:10:29,640 Speaker 6: intractable situation. And the heart of the matter is, I 223 00:10:29,679 --> 00:10:32,959 Speaker 6: guess I'm speaking as an amateur. You're the pro Where 224 00:10:33,000 --> 00:10:37,520 Speaker 6: do the Palestinians go? Where would the Middle East like 225 00:10:38,160 --> 00:10:40,120 Speaker 6: the Palestinians to go? 226 00:10:41,240 --> 00:10:44,680 Speaker 7: Well, the Middle East would like the Palestinians to live 227 00:10:44,920 --> 00:10:49,000 Speaker 7: and thrive within ultimately what would be defined as a 228 00:10:49,040 --> 00:10:53,200 Speaker 7: Palestinian state. So remember the position from all of the 229 00:10:53,240 --> 00:10:55,680 Speaker 7: Arab states is that there needs to be a credible 230 00:10:55,760 --> 00:11:00,240 Speaker 7: path towards a two state solution. The last carrot in 231 00:11:00,280 --> 00:11:02,760 Speaker 7: the region is Saudi Arabia, and we've talked about this 232 00:11:02,800 --> 00:11:08,360 Speaker 7: in the past. About before October seven, there were talks 233 00:11:08,360 --> 00:11:11,880 Speaker 7: going on behind the scenes about a potential normalization deal 234 00:11:11,920 --> 00:11:14,880 Speaker 7: between Saudi Arabia and Israel. But given the events of 235 00:11:14,920 --> 00:11:17,400 Speaker 7: the last eighteen months, Saudi Arabia have held back now 236 00:11:17,440 --> 00:11:20,400 Speaker 7: and said we're not going to sign on anything unless 237 00:11:20,400 --> 00:11:22,520 Speaker 7: there is an actual credible plan to get to that 238 00:11:23,080 --> 00:11:26,000 Speaker 7: two state solution. And even in the response of the 239 00:11:26,040 --> 00:11:29,680 Speaker 7: Arab community after Trump's Riviera proposal, which I think was 240 00:11:29,760 --> 00:11:33,360 Speaker 7: quite telling in itself, and that they reconfirmed that they 241 00:11:33,480 --> 00:11:36,839 Speaker 7: there should be no force displacements of Palestinians out of 242 00:11:36,840 --> 00:11:39,599 Speaker 7: the Palestinian territory under no conditions. There has to be 243 00:11:39,679 --> 00:11:42,880 Speaker 7: a credible reconstruction plan. But then many more moderate Arab 244 00:11:42,920 --> 00:11:45,480 Speaker 7: states in the region will say they also don't want 245 00:11:45,480 --> 00:11:49,240 Speaker 7: to see Hamas in a governing position in the Gaza 246 00:11:49,280 --> 00:11:51,520 Speaker 7: strip as well, So there also is a matter of 247 00:11:51,559 --> 00:11:55,000 Speaker 7: governance in order for the money and the reconstruction appetite 248 00:11:55,040 --> 00:11:55,440 Speaker 7: to come in. 249 00:11:55,920 --> 00:11:58,160 Speaker 6: Jimta, thank you so much for the time. Today, Jamin 250 00:11:58,240 --> 00:12:01,920 Speaker 6: and Bartecci're leading all of our Middle Eastern coverage from Dubai. 251 00:12:07,520 --> 00:12:11,120 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 252 00:12:11,200 --> 00:12:14,360 Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on 253 00:12:14,440 --> 00:12:18,120 Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or 254 00:12:18,240 --> 00:12:19,679 Speaker 1: watch us live on YouTube. 255 00:12:19,760 --> 00:12:21,839 Speaker 3: Dam Harvey Joints is Professor of Finance at a Fugal 256 00:12:21,880 --> 00:12:24,680 Speaker 3: School of Business at Duke University cam One of the 257 00:12:24,679 --> 00:12:27,199 Speaker 3: things we're noticing here in this world of the last 258 00:12:27,679 --> 00:12:29,640 Speaker 3: I don't know a couple of months and the uncertainty 259 00:12:29,679 --> 00:12:34,200 Speaker 3: that's been injected into this marketplaces, people still flock to 260 00:12:34,360 --> 00:12:38,359 Speaker 3: gold here as I guess a safe haven. Three thirty 261 00:12:38,440 --> 00:12:41,440 Speaker 3: seven dollars per ounce here. What do you make of 262 00:12:42,040 --> 00:12:44,280 Speaker 3: our friends buying gold here? 263 00:12:45,800 --> 00:12:49,400 Speaker 9: Yeah, So this is the subject of my research, and 264 00:12:49,440 --> 00:12:53,440 Speaker 9: it's kind of interesting that there are two factors. There's 265 00:12:53,520 --> 00:12:56,680 Speaker 9: kind of a medium term factor and a short term factor. 266 00:12:57,000 --> 00:13:01,080 Speaker 9: So the short term is the increase in uncertain The 267 00:13:01,360 --> 00:13:07,800 Speaker 9: medium term factor was what happened after Russia invaded Ukraine 268 00:13:07,960 --> 00:13:13,280 Speaker 9: and essentially the US dollar was weaponized, so with the 269 00:13:13,400 --> 00:13:16,800 Speaker 9: sanctions that made it very difficult for Russia to do 270 00:13:16,960 --> 00:13:21,840 Speaker 9: business because the numerar currency in the world is the 271 00:13:22,000 --> 00:13:27,720 Speaker 9: US dollar, and China took notice of this. So China 272 00:13:27,880 --> 00:13:33,960 Speaker 9: strategically wants to de risk, meaning that they need their 273 00:13:34,040 --> 00:13:39,040 Speaker 9: own currency to be credible. They cannot continue to rely 274 00:13:39,600 --> 00:13:43,160 Speaker 9: as they have been on the US dollar. So to 275 00:13:43,480 --> 00:13:47,800 Speaker 9: ensure or to build the credibility of the Chinese currency, 276 00:13:48,280 --> 00:13:51,920 Speaker 9: they've been buying gold. And given that there's a limited 277 00:13:52,000 --> 00:13:55,800 Speaker 9: production of gold every year, like last year was three 278 00:13:55,880 --> 00:14:01,000 Speaker 9: three hundred metric tons, that increase in demand has been 279 00:14:01,200 --> 00:14:04,120 Speaker 9: driving the gold price up. So that is factor number 280 00:14:04,120 --> 00:14:08,800 Speaker 9: one in factor number two is unraveling today given the 281 00:14:08,960 --> 00:14:14,400 Speaker 9: uncertainty that has been induced by this new administration, that 282 00:14:14,720 --> 00:14:18,760 Speaker 9: people are looking for a safe haven, and there's a 283 00:14:18,880 --> 00:14:22,600 Speaker 9: strong perception the gold is a safe haven investment. 284 00:14:22,680 --> 00:14:25,800 Speaker 6: Can you have normal stock markets a bit at an 285 00:14:25,920 --> 00:14:29,560 Speaker 6: ask with the tumult that we see right now. 286 00:14:31,200 --> 00:14:36,760 Speaker 9: Yeah, So it's very interesting. So we are in like 287 00:14:36,800 --> 00:14:40,760 Speaker 9: a minor draw down. But my research looks at major 288 00:14:41,000 --> 00:14:46,880 Speaker 9: drawdowns historically and identify nine major draw downs. So these 289 00:14:46,920 --> 00:14:49,680 Speaker 9: are drawdowns where the market goes down by more than 290 00:14:49,760 --> 00:14:53,840 Speaker 9: twenty five percent from pete to trough. And it's interesting 291 00:14:54,280 --> 00:15:00,680 Speaker 9: that in seven of the nine negative episodes historically that 292 00:15:00,840 --> 00:15:05,320 Speaker 9: gold actually has a positive return. In the other two, 293 00:15:05,480 --> 00:15:10,240 Speaker 9: gold has a small negative return. So think about that 294 00:15:10,240 --> 00:15:13,520 Speaker 9: that the market's down forty percent, gold's down two percent. 295 00:15:13,720 --> 00:15:17,360 Speaker 9: That's pretty good. So even in the times where it 296 00:15:17,440 --> 00:15:22,000 Speaker 9: doesn't produce like a positive return, it does far better. 297 00:15:22,120 --> 00:15:27,920 Speaker 9: So historically it has been a diversifier. However, and this 298 00:15:28,080 --> 00:15:32,880 Speaker 9: is really important and most people don't fully appreciate the 299 00:15:32,920 --> 00:15:37,720 Speaker 9: following point. Gold is volatile. So gold is as volatile 300 00:15:38,000 --> 00:15:40,840 Speaker 9: as the S and P five hundred, So that means 301 00:15:41,120 --> 00:15:44,520 Speaker 9: it can have very large straw downs. Also, it means 302 00:15:44,560 --> 00:15:47,280 Speaker 9: that it's not a safe haven. 303 00:15:47,400 --> 00:15:47,920 Speaker 2: For sure. 304 00:15:48,760 --> 00:15:52,960 Speaker 9: It is historically a safe haven, but it can have 305 00:15:53,560 --> 00:15:54,920 Speaker 9: very sharp draw. 306 00:15:54,720 --> 00:15:59,120 Speaker 2: Downs is gold? Should gold be a part of the 307 00:15:59,200 --> 00:16:00,800 Speaker 2: average person portfolio? 308 00:16:00,840 --> 00:16:02,920 Speaker 3: We think about the sixty to forty portfolio, and now 309 00:16:02,920 --> 00:16:05,520 Speaker 3: people talk about alternatives need to be a meaningful percentage 310 00:16:05,520 --> 00:16:05,760 Speaker 3: of that. 311 00:16:06,280 --> 00:16:07,840 Speaker 2: Where's gold in an average portfolio? 312 00:16:07,920 --> 00:16:08,320 Speaker 10: Do you think? 313 00:16:09,480 --> 00:16:09,720 Speaker 8: Yeah? 314 00:16:09,880 --> 00:16:14,080 Speaker 9: So I get this question a lot. So to have 315 00:16:14,120 --> 00:16:18,160 Speaker 9: a diversified portfolio, you'd have more than stocks and bonds. 316 00:16:19,040 --> 00:16:22,840 Speaker 9: That's kind of obvious. And if you look at major 317 00:16:22,960 --> 00:16:29,880 Speaker 9: institutional investors, they almost always have what they call kind 318 00:16:29,920 --> 00:16:35,240 Speaker 9: of a bucket that protects them from the downside. And 319 00:16:35,960 --> 00:16:41,040 Speaker 9: that kind of downside protect bucket often includes gold, but 320 00:16:41,120 --> 00:16:46,520 Speaker 9: it's not just gold, so it's often a diversified set 321 00:16:46,520 --> 00:16:51,920 Speaker 9: of commodities. It will include treasuries that are inflation protected, 322 00:16:52,280 --> 00:16:57,400 Speaker 9: that's important, and perhaps some other real assets. So yes, 323 00:16:57,480 --> 00:17:02,680 Speaker 9: I think that the average investor, just like the institutional investor, 324 00:17:03,040 --> 00:17:06,880 Speaker 9: should have a diversified portfolio, and gold certainly does play 325 00:17:06,920 --> 00:17:09,200 Speaker 9: a role in the diversified portfolio. 326 00:17:09,359 --> 00:17:12,359 Speaker 6: Professor Harvey with is Campbell Harvey with us from Duke University. 327 00:17:12,359 --> 00:17:15,320 Speaker 6: This morning. We welcome all of you on your commute. 328 00:17:15,440 --> 00:17:18,560 Speaker 6: We welcome all of you Brackodology, and that is it 329 00:17:18,560 --> 00:17:23,720 Speaker 6: eleven miles between you NC and Duke this Morning on YouTube. 330 00:17:24,320 --> 00:17:27,880 Speaker 6: Subscribe to Bloomberg Podcast. It's our new digital experiment. We're 331 00:17:27,960 --> 00:17:31,520 Speaker 6: humbled by the international reach of this. I featured the 332 00:17:31,640 --> 00:17:36,400 Speaker 6: Mumbai Financial District today and their evening listening as well. 333 00:17:36,480 --> 00:17:39,720 Speaker 6: But with Cam Harvey, he's looking at gold here. We 334 00:17:39,760 --> 00:17:43,200 Speaker 6: should point out as we speak, gold at a number 335 00:17:43,400 --> 00:17:48,320 Speaker 6: none of us have ever seen before. It's so I 336 00:17:48,359 --> 00:17:50,280 Speaker 6: can't even find it on the screen. It's so lofty. 337 00:17:50,320 --> 00:17:54,520 Speaker 6: Are you ready? Three thousand and thirty nine dollars? It's 338 00:17:54,600 --> 00:17:56,600 Speaker 6: up a pop and thirty three dollars this. 339 00:17:56,600 --> 00:17:57,720 Speaker 2: Morning, Kim. 340 00:17:58,480 --> 00:18:00,480 Speaker 3: I guess really, over the last couple of months, what's 341 00:18:00,480 --> 00:18:04,159 Speaker 3: been the key issue driving these markets has been just 342 00:18:04,200 --> 00:18:06,680 Speaker 3: the talks of tariffs. You get in front of your students, 343 00:18:06,680 --> 00:18:09,880 Speaker 3: down to Duke, how do you frame out tariffs as 344 00:18:09,880 --> 00:18:13,320 Speaker 3: an economic policy? 345 00:18:13,400 --> 00:18:18,760 Speaker 9: So the first thing to realize is that the US 346 00:18:18,800 --> 00:18:23,919 Speaker 9: exposure to kind of trade is small. And what I 347 00:18:24,000 --> 00:18:28,120 Speaker 9: do in my class is like a quiz question if 348 00:18:28,160 --> 00:18:33,040 Speaker 9: we if we look at trade exposure as exports plus 349 00:18:33,080 --> 00:18:38,199 Speaker 9: imports divided by GDP, how does the US rank in 350 00:18:38,280 --> 00:18:42,040 Speaker 9: terms of like one hundred and seventy nine countries in 351 00:18:42,080 --> 00:18:46,520 Speaker 9: the world, And it turns out that US ranks, you know, 352 00:18:46,560 --> 00:18:51,520 Speaker 9: one seventy seven, so it's got very low trade exposure. 353 00:18:51,720 --> 00:18:56,360 Speaker 9: So think of imports as being only fourteen percent of GDP. 354 00:18:57,520 --> 00:19:01,600 Speaker 9: So it turns out that other countries have much more 355 00:19:01,840 --> 00:19:07,040 Speaker 9: serious exposure to the US policy than the US. So 356 00:19:07,520 --> 00:19:12,159 Speaker 9: the issue, I think is not just the tariffs, but 357 00:19:12,240 --> 00:19:16,840 Speaker 9: the uncertainty about how the tariffs are going to be applied. 358 00:19:17,320 --> 00:19:20,280 Speaker 9: So if we knew what the policy was like twenty 359 00:19:20,320 --> 00:19:23,720 Speaker 9: five percent across the board, we could actually figure out 360 00:19:24,080 --> 00:19:27,919 Speaker 9: the hit in inflation and the hit and GDP. And 361 00:19:27,960 --> 00:19:31,920 Speaker 9: it is a hit. It is a negative, but it's 362 00:19:32,000 --> 00:19:34,720 Speaker 9: not a large negative. And I think a lot of 363 00:19:34,720 --> 00:19:39,520 Speaker 9: the problems are the tariffs on, tariffs off and different 364 00:19:39,600 --> 00:19:43,800 Speaker 9: numbers being thrown out. We just don't know. That creates uncertainty. 365 00:19:44,440 --> 00:19:46,680 Speaker 9: Investors like uncertainty. 366 00:19:47,119 --> 00:19:49,600 Speaker 6: Kim, You've lived in the heart of the collapse of 367 00:19:49,600 --> 00:19:53,119 Speaker 6: the American textile industry, I mean in the caroline is 368 00:19:53,160 --> 00:19:56,479 Speaker 6: Maybe I'd also put it into the furniture industry as well. 369 00:19:57,119 --> 00:19:59,480 Speaker 6: What do you say to the fancy elites at Duke 370 00:19:59,600 --> 00:20:05,240 Speaker 6: Universe City about all those jobs we lost to Asia? 371 00:20:06,920 --> 00:20:12,320 Speaker 9: Yeah, that's so this is globalization, And I think that 372 00:20:12,840 --> 00:20:17,800 Speaker 9: a number of mistakes were made in the push for globalization, 373 00:20:18,560 --> 00:20:23,639 Speaker 9: and now we're reversing some of those mistakes. So we 374 00:20:23,720 --> 00:20:30,200 Speaker 9: have let other countries hold US hostage to critical minerals. 375 00:20:30,760 --> 00:20:34,280 Speaker 9: So that's the sort of thing that you should not offshore. 376 00:20:35,080 --> 00:20:43,400 Speaker 9: So we will be reshoring repatriating certain key industries that 377 00:20:43,480 --> 00:20:50,439 Speaker 9: we cannot afford to let adversaries have influence over us. 378 00:20:50,160 --> 00:20:54,760 Speaker 9: So I think that the sort of laysafe, they're blind 379 00:20:55,560 --> 00:20:59,400 Speaker 9: sort of push to globalization didn't take one critical thing 380 00:20:59,720 --> 00:21:03,360 Speaker 9: into account that we think about all the time in business, 381 00:21:03,600 --> 00:21:05,480 Speaker 9: and that is risk management. 382 00:21:06,240 --> 00:21:07,240 Speaker 2: So a lot of this. 383 00:21:07,280 --> 00:21:11,280 Speaker 9: Restoring is going to be expensive. So it means that 384 00:21:11,680 --> 00:21:13,399 Speaker 9: to produce it in the US is going to be 385 00:21:13,440 --> 00:21:17,360 Speaker 9: more expensive, and what that will do in the medium 386 00:21:17,440 --> 00:21:22,440 Speaker 9: term is be pressure on inflation. But that extra expense 387 00:21:22,920 --> 00:21:26,800 Speaker 9: is an insurance premium that we should be willing to 388 00:21:26,840 --> 00:21:30,960 Speaker 9: pay to have these things produced within the US. 389 00:21:31,280 --> 00:21:34,080 Speaker 6: What does Mark Karney need to do for your Canada, 390 00:21:34,320 --> 00:21:35,600 Speaker 6: Professor Harvey. 391 00:21:36,800 --> 00:21:43,000 Speaker 9: Well, obviously Carney is highly experienced in terms of both 392 00:21:43,040 --> 00:21:50,800 Speaker 9: business experience and central banking experience. My country, Canada has 393 00:21:50,880 --> 00:21:54,840 Speaker 9: effectively been in a recession for the last three years 394 00:21:55,440 --> 00:21:59,919 Speaker 9: and I say that not because of the headline GDP NUM, 395 00:22:00,720 --> 00:22:03,560 Speaker 9: but if you calculate, and this is what people should do, 396 00:22:04,119 --> 00:22:09,520 Speaker 9: calculate GDP on a per capita basis, and given the 397 00:22:09,560 --> 00:22:14,719 Speaker 9: growth and population in Canada, we've had negative GDP growth. 398 00:22:15,080 --> 00:22:18,560 Speaker 9: So we need somebody to come in and change the 399 00:22:18,680 --> 00:22:23,960 Speaker 9: course because nobody wants to be in recession for years. 400 00:22:24,240 --> 00:22:28,040 Speaker 3: So how serious and how much risk do the US 401 00:22:28,119 --> 00:22:33,600 Speaker 3: tariffs as current currently talked about? What's the impact on Canada? 402 00:22:33,600 --> 00:22:35,240 Speaker 3: How big of an impact could that be on Canada? 403 00:22:35,320 --> 00:22:36,640 Speaker 3: How concerned is Canada? 404 00:22:38,040 --> 00:22:42,439 Speaker 9: Yeah, so again it's interesting. I said that the US 405 00:22:42,480 --> 00:22:47,400 Speaker 9: has very little trade exposure overall with imports at fourteen 406 00:22:47,440 --> 00:22:53,080 Speaker 9: percent of GDP. I also did that calculation where I 407 00:22:53,200 --> 00:22:57,119 Speaker 9: took the area so Canada, Mexico, and the US put together, 408 00:22:57,680 --> 00:23:02,280 Speaker 9: and it's amazingly self sufficient. And I think that a 409 00:23:02,320 --> 00:23:05,840 Speaker 9: better idea for the US would be to kind of 410 00:23:05,880 --> 00:23:11,639 Speaker 9: strengthen the bond between Mexico and Canada and truly be 411 00:23:12,640 --> 00:23:18,480 Speaker 9: sort of an area that is resilient to fluctuations that 412 00:23:18,560 --> 00:23:23,080 Speaker 9: might happen across the world. For some reason, that is 413 00:23:23,200 --> 00:23:28,200 Speaker 9: not the policy, and that's unfortunate. So that's going to 414 00:23:28,280 --> 00:23:32,520 Speaker 9: cost to some extent US growth and Canadian growth. But 415 00:23:32,600 --> 00:23:36,840 Speaker 9: I do think that many Americans are not aware of 416 00:23:36,960 --> 00:23:41,160 Speaker 9: the amount of business that the US does with Canada, 417 00:23:41,600 --> 00:23:44,920 Speaker 9: and it will be painful if those tariffs are imposed. 418 00:23:45,080 --> 00:23:47,600 Speaker 6: KEM. Hervey, thank you so much with Duke University in 419 00:23:47,640 --> 00:23:53,440 Speaker 6: those comments on his at Canada this morning. 420 00:23:56,720 --> 00:24:00,600 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 421 00:24:00,640 --> 00:24:03,639 Speaker 1: starting at seven am Eastern on Apple, Corplay and Android 422 00:24:03,680 --> 00:24:06,720 Speaker 1: Auto with the Bloomberg Business app. You can also watch 423 00:24:06,760 --> 00:24:09,720 Speaker 1: us live every weekday on YouTube and always on the 424 00:24:09,720 --> 00:24:10,840 Speaker 1: Bloomberg terminal. 425 00:24:11,119 --> 00:24:14,960 Speaker 6: Right now, A Skyler Montgomery counting with us with Barclays Skyler, 426 00:24:15,200 --> 00:24:22,720 Speaker 6: is foreign exchange useful now in gleaning tariff dynamics, Like 427 00:24:22,760 --> 00:24:25,639 Speaker 6: when you look at Looney or you look at pay 428 00:24:25,640 --> 00:24:29,480 Speaker 6: so Max, can you learn something there. 429 00:24:30,080 --> 00:24:32,720 Speaker 11: I think there's very very little to learn in FCS markets. 430 00:24:32,720 --> 00:24:35,199 Speaker 11: I think there's very little price in terms of tariff premium. 431 00:24:35,240 --> 00:24:36,720 Speaker 11: And there are a couple of ways you can see that. 432 00:24:36,880 --> 00:24:39,200 Speaker 11: So one is we have a fair value model for 433 00:24:39,240 --> 00:24:41,040 Speaker 11: your dollar. We're pretty much. 434 00:24:40,920 --> 00:24:42,320 Speaker 8: At fair value on your dollar. 435 00:24:42,359 --> 00:24:45,000 Speaker 11: And you could say tariff premium is leaking into rates market, 436 00:24:45,080 --> 00:24:47,200 Speaker 11: and so it's reflected in some way through fair value 437 00:24:47,520 --> 00:24:50,440 Speaker 11: through that mechanism, but I still think there's very little 438 00:24:50,440 --> 00:24:53,080 Speaker 11: price And I'll actually say I think we're the most 439 00:24:53,119 --> 00:24:56,000 Speaker 11: concern about terra s feeding to growth as prices in 440 00:24:56,040 --> 00:24:57,520 Speaker 11: the US, So. 441 00:24:58,320 --> 00:25:00,960 Speaker 3: I would think i'd see more streams the US dollar 442 00:25:01,080 --> 00:25:04,080 Speaker 3: given all this uncertainty, But the Bloomberg dollar in next 443 00:25:04,119 --> 00:25:06,000 Speaker 3: is kind of down like four to zo point two 444 00:25:06,000 --> 00:25:08,480 Speaker 3: percent from that of early January peak. 445 00:25:09,040 --> 00:25:09,800 Speaker 2: What am I missing? 446 00:25:10,359 --> 00:25:13,000 Speaker 11: I think this is the issue is that the market 447 00:25:13,040 --> 00:25:15,320 Speaker 11: doesn't really believe tariffs are coming in in the full 448 00:25:15,359 --> 00:25:18,480 Speaker 11: forest that Okay, Trump is threatened, and that's totally reasonable assume, 449 00:25:18,520 --> 00:25:22,000 Speaker 11: but we're pricing very little in general. But teriff risk 450 00:25:22,080 --> 00:25:24,800 Speaker 11: and the uncertainty has creeped into the US data. So 451 00:25:24,800 --> 00:25:27,680 Speaker 11: if you look at US economic surprises, they've turned over, 452 00:25:27,720 --> 00:25:30,879 Speaker 11: they're negative. That's largely because of the soft data, and 453 00:25:30,920 --> 00:25:32,920 Speaker 11: that soft data is reflective of the fact that there's 454 00:25:33,000 --> 00:25:36,120 Speaker 11: uncertainty that tariffs are downtrend on growth in the US, 455 00:25:36,160 --> 00:25:37,879 Speaker 11: and that is showing up in the dollar in a 456 00:25:37,920 --> 00:25:42,080 Speaker 11: weaker dollar because we start from such low sentiment elsewhere. 457 00:25:42,160 --> 00:25:44,719 Speaker 11: So Europe, for example, confidences been low for a while. 458 00:25:45,080 --> 00:25:47,639 Speaker 11: It's harder to have that uncertainty reflected there. So I 459 00:25:47,680 --> 00:25:49,560 Speaker 11: think it's priced much more in the US than. 460 00:25:49,440 --> 00:25:50,120 Speaker 8: It is elsewhere. 461 00:25:50,240 --> 00:25:52,320 Speaker 3: We're trying to get the dollar to parody for Tom 462 00:25:52,400 --> 00:25:54,840 Speaker 3: Keen and all his European travelers. That did not happen. 463 00:25:54,880 --> 00:25:58,520 Speaker 3: We're sitting here at euro one spot zero nine. How 464 00:25:58,560 --> 00:25:59,320 Speaker 3: high can a euro go? 465 00:25:59,440 --> 00:25:59,880 Speaker 2: Do you think? 466 00:26:00,080 --> 00:26:01,800 Speaker 11: I think you're very limited in how hard you can 467 00:26:01,880 --> 00:26:03,680 Speaker 11: go from here. I think part of that is fiscal 468 00:26:03,800 --> 00:26:07,360 Speaker 11: is definitely a game changer, particularly from Germany, but it's 469 00:26:07,440 --> 00:26:11,080 Speaker 11: largely been priced right as a very you know, quick rule. 470 00:26:11,240 --> 00:26:13,480 Speaker 11: You can get twenty five to thirty basis points on 471 00:26:13,560 --> 00:26:17,280 Speaker 11: yields from a one percent GDP fiscal expansion. We're up 472 00:26:17,320 --> 00:26:20,280 Speaker 11: forty to fifty basis points in European yields, and that's 473 00:26:20,440 --> 00:26:21,720 Speaker 11: really reflected in your dollars. 474 00:26:21,840 --> 00:26:27,520 Speaker 6: Well. The in traditional analysis, do we get Canadian strength 475 00:26:27,720 --> 00:26:32,560 Speaker 6: or Mexican Peso strength, mech strength it impinges their trade 476 00:26:32,640 --> 00:26:36,720 Speaker 6: dynamics or is that like micro analysis where it doesn't 477 00:26:36,760 --> 00:26:37,680 Speaker 6: play it anymore. 478 00:26:38,080 --> 00:26:42,680 Speaker 11: I think tariff's overwhelmingly because Canada and Mexico primarily trade 479 00:26:42,680 --> 00:26:45,160 Speaker 11: with the US. The tariff overwhelms any kind of currency 480 00:26:45,160 --> 00:26:48,919 Speaker 11: impact you have right, because it very much makes Canadian 481 00:26:49,119 --> 00:26:50,800 Speaker 11: imports less appealing to us. 482 00:26:50,920 --> 00:26:53,040 Speaker 6: So where's your trade this morning? What's your single best 483 00:26:53,080 --> 00:26:59,399 Speaker 6: idea on a currency peer? I need something aesoteric. 484 00:26:57,240 --> 00:26:59,560 Speaker 11: Okay, I think something that I quite like is the yen. 485 00:27:00,160 --> 00:27:03,800 Speaker 11: The pound as well, but the yen in particular, if 486 00:27:03,840 --> 00:27:05,720 Speaker 11: there's a number of cross currents that go quite well 487 00:27:05,760 --> 00:27:05,960 Speaker 11: for it. 488 00:27:06,200 --> 00:27:08,320 Speaker 6: Let's mention when there's no one, it's only forty two 489 00:27:08,320 --> 00:27:11,359 Speaker 6: people listening. Good morning, excuse me, forty four people? Good morning, 490 00:27:11,640 --> 00:27:14,280 Speaker 6: ninety nine one FM and Washington Yen? 491 00:27:14,400 --> 00:27:17,840 Speaker 11: What yen I think versus Swiss or versus the euro? 492 00:27:19,440 --> 00:27:22,159 Speaker 2: So why what is going on with Japan? 493 00:27:22,160 --> 00:27:25,560 Speaker 3: We didn't talk about Japan forever, Yes, like longer than 494 00:27:25,600 --> 00:27:29,159 Speaker 3: you've been around. We'd never talked about Japan. Now it's 495 00:27:29,200 --> 00:27:30,960 Speaker 3: I got Warren Buffett talking about it. I got you 496 00:27:31,000 --> 00:27:32,520 Speaker 3: people telling them about the yen and all this kind 497 00:27:32,520 --> 00:27:34,320 Speaker 3: of stuff. What's going on in Japan from your perspective? 498 00:27:34,359 --> 00:27:37,200 Speaker 11: So it's both domestic and international. On the domestic front, 499 00:27:37,240 --> 00:27:39,720 Speaker 11: you have growth that will come in above potential this year, 500 00:27:40,000 --> 00:27:41,960 Speaker 11: and actually it has one of the highest growth rates 501 00:27:41,960 --> 00:27:44,359 Speaker 11: we anticipate in G ten. At the same time, you're 502 00:27:44,400 --> 00:27:46,359 Speaker 11: getting more inflationary pressure, so that means you're going to 503 00:27:46,400 --> 00:27:48,800 Speaker 11: have a hawkish Bank of Japan. We see them hiking 504 00:27:48,800 --> 00:27:51,240 Speaker 11: to one twenty five. At the same time, it's less 505 00:27:51,280 --> 00:27:54,000 Speaker 11: exposed to tariffs and will also benefit from the risk 506 00:27:54,040 --> 00:27:57,240 Speaker 11: conversion associated with the uncertainty around tariffs and other US policies. 507 00:27:57,240 --> 00:27:59,639 Speaker 6: Skyler, thank you so much for joining us. We're in 508 00:27:59,680 --> 00:28:01,359 Speaker 6: sky Montgomery Connor Withburg. 509 00:28:01,880 --> 00:28:05,800 Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday 510 00:28:05,800 --> 00:28:08,800 Speaker 1: starting at seven am Eastern on Apple Corplay and Android 511 00:28:08,840 --> 00:28:11,879 Speaker 1: Auto with the Bloomberg Business app. You can also listen 512 00:28:11,960 --> 00:28:15,240 Speaker 1: live on Amazon Alexa from our flagship New York station. 513 00:28:15,800 --> 00:28:18,439 Speaker 1: Just say Alexa play Bloomberg eleven thirty. 514 00:28:18,600 --> 00:28:21,159 Speaker 6: Let's go to the newspapers right now. Lisa Mateo with 515 00:28:21,280 --> 00:28:22,879 Speaker 6: some chestnuts this morning. 516 00:28:23,000 --> 00:28:25,320 Speaker 10: Oh Paul, you're not gonna like this story, but okay, 517 00:28:25,359 --> 00:28:27,760 Speaker 10: bear with me. Okay. The experts are saying, when it 518 00:28:27,760 --> 00:28:30,560 Speaker 10: comes to setting up your brackets, do not do not 519 00:28:31,040 --> 00:28:35,760 Speaker 10: pick duke to win. Okay. The reason why, okay, this 520 00:28:35,840 --> 00:28:37,840 Speaker 10: is within the Wall Street Journal, and the two writers 521 00:28:37,840 --> 00:28:39,960 Speaker 10: of the article actually do graduates. I just want to 522 00:28:40,000 --> 00:28:42,040 Speaker 10: put that out there. They said, you should bet against them, 523 00:28:42,240 --> 00:28:45,600 Speaker 10: they say, undervalued teams. That's who you should pick instead. 524 00:28:46,000 --> 00:28:47,920 Speaker 10: Like they say, think like a value investor, right, you 525 00:28:47,920 --> 00:28:50,360 Speaker 10: bet on the best least popular team against the most 526 00:28:50,360 --> 00:28:54,240 Speaker 10: popular team. Pick teams like here you go number one 527 00:28:54,240 --> 00:28:58,280 Speaker 10: seed Houston, another number one seed also value in, number 528 00:28:58,360 --> 00:29:02,560 Speaker 10: two seed Tennessee and number three received Texas Tech. Really, 529 00:29:02,600 --> 00:29:04,600 Speaker 10: so that's what they're going with. So I don't know 530 00:29:04,600 --> 00:29:05,360 Speaker 10: what's on your brath? 531 00:29:06,400 --> 00:29:10,560 Speaker 6: Does anybody know? I mean that can be r KT go. Yeah, 532 00:29:10,720 --> 00:29:13,200 Speaker 6: there's like four people to get it. It's sort of 533 00:29:13,240 --> 00:29:15,720 Speaker 6: like a Monte Carlo random kind of thing, isn't it? 534 00:29:16,040 --> 00:29:16,840 Speaker 2: Just for penciling. 535 00:29:16,920 --> 00:29:18,960 Speaker 3: That is what I've done since nineteen eighty ninety. Pencilan 536 00:29:19,040 --> 00:29:21,200 Speaker 3: duke to win it all and you work back from there, 537 00:29:21,520 --> 00:29:22,640 Speaker 3: and that's how you do your bracket. 538 00:29:22,680 --> 00:29:25,720 Speaker 2: The strategy works five It's worked five times. 539 00:29:25,840 --> 00:29:27,719 Speaker 6: I haven't revisited my last morning. 540 00:29:28,480 --> 00:29:29,040 Speaker 8: But you never know. 541 00:29:29,040 --> 00:29:30,920 Speaker 10: I mean, who won last year? Was it was a repeat? 542 00:29:31,000 --> 00:29:34,800 Speaker 10: No Connecticut sk Yukon scarlet food killed it? 543 00:29:35,240 --> 00:29:37,160 Speaker 6: Yeah, killed it? What do you got? 544 00:29:37,240 --> 00:29:38,719 Speaker 10: You never know what can happen? Okay, So I'm going 545 00:29:38,800 --> 00:29:41,760 Speaker 10: to stick with this March madness theme. Okay, I didn't 546 00:29:41,760 --> 00:29:44,680 Speaker 10: even realize this. But Warren Buffett's Berkshire Hathaway has this 547 00:29:44,800 --> 00:29:48,920 Speaker 10: big bracket competition where the winner can get one million dollars. 548 00:29:49,840 --> 00:29:52,200 Speaker 6: Okay, well, really setting up right now. 549 00:29:52,440 --> 00:29:55,720 Speaker 10: The problem is that no one's won it. But he's 550 00:29:55,760 --> 00:29:58,000 Speaker 10: trying for nearly a decade to give away this big price. 551 00:29:58,040 --> 00:29:59,640 Speaker 10: So the Wall Street Journal says that he wants to 552 00:29:59,640 --> 00:30:02,160 Speaker 10: improve the odds, right, because he says he's getting older 553 00:30:02,160 --> 00:30:04,120 Speaker 10: and he wants to win, to see a winner when 554 00:30:04,120 --> 00:30:06,920 Speaker 10: he's still chairman. So he's making it easier to win 555 00:30:07,520 --> 00:30:09,800 Speaker 10: because in the past you had to you know, be like, 556 00:30:10,400 --> 00:30:13,120 Speaker 10: had to call the first round perfectly. But now he's 557 00:30:13,240 --> 00:30:15,240 Speaker 10: changing it up a little bit. Okay, so this year 558 00:30:15,360 --> 00:30:17,800 Speaker 10: it can go to someone who correctly picks the winners 559 00:30:17,800 --> 00:30:21,280 Speaker 10: of at least thirty of the thirty two first round games, 560 00:30:21,320 --> 00:30:23,680 Speaker 10: so you kind of have a better chance. You know, 561 00:30:23,720 --> 00:30:25,880 Speaker 10: he's an odds guy, so the odds. 562 00:30:25,560 --> 00:30:26,400 Speaker 4: Are a little bit better. 563 00:30:27,160 --> 00:30:29,360 Speaker 10: The person with the most correct games can win. You 564 00:30:29,360 --> 00:30:31,440 Speaker 10: have tie breakers too, the runner up can get one 565 00:30:31,480 --> 00:30:32,640 Speaker 10: hundred thousand dollars. 566 00:30:33,160 --> 00:30:38,040 Speaker 6: So this is like Damien Sah, he's almost like something Damien, Yeah, exactly, 567 00:30:38,120 --> 00:30:39,240 Speaker 6: he's a player. 568 00:30:38,920 --> 00:30:41,040 Speaker 10: But that's it's a big, big, big price. 569 00:30:41,120 --> 00:30:42,440 Speaker 8: So I didn't realize it. 570 00:30:42,680 --> 00:30:43,959 Speaker 10: It's been doing this for years. 571 00:30:45,040 --> 00:30:45,880 Speaker 6: I don't get it. 572 00:30:46,080 --> 00:30:47,120 Speaker 2: Next next one. 573 00:30:47,160 --> 00:30:50,840 Speaker 10: Okay, sticking with gambling because you see the theme of today, Yes, 574 00:30:51,000 --> 00:30:53,800 Speaker 10: here we go. Business insider saying, Fan Duel launching a 575 00:30:53,840 --> 00:30:57,840 Speaker 10: new show about gambling addiction. It's actually called The Comeback 576 00:30:58,160 --> 00:31:02,480 Speaker 10: with Craig Carton. He's recovering Gamble Addicts airs on YouTube channel. 577 00:31:02,480 --> 00:31:04,240 Speaker 10: It's streaming network Fan Dual TV. 578 00:31:04,400 --> 00:31:04,760 Speaker 4: Extra. 579 00:31:05,120 --> 00:31:07,400 Speaker 10: Didn't even know they had that, but they're gonna be 580 00:31:07,440 --> 00:31:09,760 Speaker 10: talking about their struggles with sports betting. So the company 581 00:31:09,880 --> 00:31:11,640 Speaker 10: is saying it kind of adds to this mission of 582 00:31:11,680 --> 00:31:15,200 Speaker 10: promoting safe gambling, you know, with all the news and 583 00:31:15,240 --> 00:31:17,600 Speaker 10: the headlines for it. But this is something well. 584 00:31:17,520 --> 00:31:19,440 Speaker 6: I mean, you're close to this and I am. Don't. 585 00:31:19,440 --> 00:31:21,520 Speaker 6: They just have to shut down the attics. I mean, 586 00:31:21,520 --> 00:31:25,240 Speaker 6: that's what you do. They see in their computers that 587 00:31:25,680 --> 00:31:28,520 Speaker 6: you know, young potatos on the couch addicted to this, 588 00:31:29,080 --> 00:31:30,360 Speaker 6: and they shut them down. 589 00:31:30,160 --> 00:31:31,400 Speaker 2: I don't know how that works. 590 00:31:31,440 --> 00:31:33,120 Speaker 3: I don't know how that works, but I mean, just now, 591 00:31:33,680 --> 00:31:36,720 Speaker 3: all I know is I was having breakfast past Saturday, 592 00:31:36,760 --> 00:31:39,040 Speaker 3: the local luncheon at and there was a table of 593 00:31:39,040 --> 00:31:43,640 Speaker 3: maybe four sixteen year old boys and they're talking gambling, 594 00:31:43,960 --> 00:31:44,760 Speaker 3: what bets their. 595 00:31:46,480 --> 00:31:49,560 Speaker 2: That was disturbing to me. Yeah, and I don't know, 596 00:31:49,680 --> 00:31:50,120 Speaker 2: I don't know. 597 00:31:50,320 --> 00:31:52,760 Speaker 3: And they were speaking as if they were pros. They 598 00:31:52,800 --> 00:31:55,880 Speaker 3: can overhear, they underhear the point that spreads. I'm buying 599 00:31:55,920 --> 00:31:57,040 Speaker 3: these odds I'm doing you. 600 00:31:56,960 --> 00:31:58,080 Speaker 2: Know, Yeah, I don't know. 601 00:31:58,160 --> 00:31:58,360 Speaker 4: Yeah. 602 00:31:58,360 --> 00:32:01,440 Speaker 10: My daughter's saying they're doing like during class plays bad. 603 00:32:01,440 --> 00:32:02,960 Speaker 10: I'm like, what's going on. 604 00:32:02,920 --> 00:32:03,120 Speaker 6: In the. 605 00:32:04,680 --> 00:32:06,960 Speaker 2: Don't it's another level. Yeah, it's a thing. 606 00:32:07,000 --> 00:32:08,320 Speaker 3: I don't know how many states have it, you know, 607 00:32:08,360 --> 00:32:10,280 Speaker 3: thirty eight states or something like twenty eight states. 608 00:32:10,440 --> 00:32:10,880 Speaker 1: It's off you. 609 00:32:10,920 --> 00:32:15,680 Speaker 6: See update Lisa Mateo. The newspapers thank you so much, 610 00:32:15,720 --> 00:32:16,680 Speaker 6: greatly appreciate that. 611 00:32:17,120 --> 00:32:21,920 Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify, 612 00:32:22,040 --> 00:32:25,840 Speaker 1: and anywhere else you get your podcasts. Listen live each 613 00:32:25,880 --> 00:32:29,720 Speaker 1: weekday seven to ten am Easter and on Bloomberg dot Com, 614 00:32:29,840 --> 00:32:33,640 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app. 615 00:32:33,960 --> 00:32:37,080 Speaker 1: You can also watch us live every weekday on YouTube 616 00:32:37,360 --> 00:32:39,360 Speaker 1: and always on the Bloomberg terminal