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Speaker 2: Stuart Kaiser joins us.
Speaker 3: He's head of US equity trading strategy at City Global Markets. Stuart,
Speaker 3: what do you hear on your desk? What are your
Speaker 3: traders telling you? What are your clients telling you about?
Speaker 3: What was at its trough at a ten percent pullback
Speaker 3: in the market, healthy step in an otherwise okay market
Speaker 3: or something different?
Speaker 4: Well, Matth, I think most pms would rather not have that,
Speaker 4: have that type of healthy step, But yes, I think
Speaker 4: look at position dee risking, I think is the discussion
Speaker 4: point you know, around Wall Street over the course of
Speaker 4: the last month or so. It does seem like that's
Speaker 4: later innings. You know, clearly there were policy and uncertainty
Speaker 4: things that triggered that, but the big pullback I think
Speaker 4: had much more to do about de risking that it
Speaker 4: had to do or anything sort of.
Speaker 5: On the data side necessarily, And one can say that, boy,
Speaker 5: you insert any kind of uncertainty into a market that
Speaker 5: was as richly valued as we were at its peak,
Speaker 5: then a pullback should not be that surprising.
Speaker 2: Do we have more to go?
Speaker 6: Do you think?
Speaker 4: I mean, look, I agree with you one hundred percent.
Speaker 4: I think coming into the year you would have said, yeah,
Speaker 4: fundamentals underlying the market pretty solid, but risk reward around
Speaker 4: those fundamentals pretty poor. So having a pullback of that
Speaker 4: nature probably not surprising.
Speaker 2: Is there more to come?
Speaker 4: I mean, I think if you're if you believe that
Speaker 4: a lot of this was driven by policy out of
Speaker 4: Washington and the key administrators down there are telling you
Speaker 4: basically to hedge and that there is more to come,
Speaker 4: and that they're willing to tolerate some short term pain
Speaker 4: for these longer term structural reforms, then yeah, it does
Speaker 4: feel like there's potentially more more behind this. Obviously we've
Speaker 4: gotten a couple of days of calm here, which is welcome,
Speaker 4: but it's hard to think that the headlines that have
Speaker 4: driven this are are finished.
Speaker 6: Within your vast experience, which goes back to the McKinley presidency,
Speaker 6: Stuart Kaiser, if you have a drawdown like this, juicy,
Speaker 6: excuse me? Do you see a snap back like in
Speaker 6: nineteen eighty seven, or is it a more protracted recovery.
Speaker 2: Yeah, it's a good question time.
Speaker 4: I think a lot of people are citing the late
Speaker 4: twenty eighteen period where you kind of had to draw down.
Speaker 4: Then you had a couple weeks of a bit of
Speaker 4: rally in stability, and then in December of twenty eighteen
Speaker 4: we sold off again. So that would be your barecase,
Speaker 4: I think, or your bad outcome, because back then you
Speaker 4: had a growth scare and you had concerns about a
Speaker 4: policy ere from the FED. If you just swapped out
Speaker 4: FED for White House, you'd be a kind of simblard
Speaker 4: situation right now.
Speaker 6: This is brilliant because then Ben Laidler when he was
Speaker 6: at HSBC called the bottom of the market Christmas even
Speaker 6: of twenty eighteen. How do you know when to step in?
Speaker 4: It's a great question. I think the early stages of
Speaker 4: when to step in. I think in this case we're
Speaker 4: going to be driven by price action more about positioning.
Speaker 4: If you were being very positive, I think you would
Speaker 4: have said last Tuesday was the data step in because
Speaker 4: you had tech stocks up in a down SMP tape.
Speaker 4: Bigger picture, though, I look I think you need to
Speaker 4: get through the budget and tax negotiations over the course
Speaker 4: of the next two or three weeks to really be
Speaker 4: out on Morsolo football.
Speaker 6: Well, the thing I'm missing here, remember Stuart Kreiss Kaiser
Speaker 6: in season two, episode four of Industry, Stuart Kaiser was
Speaker 6: yelling at the troops and industry, we need, we need.
Speaker 3: Actually, yeah, I'm not sure we've seen it, Stuart. I'm
Speaker 3: looking at the earnings outlook for the S and P
Speaker 3: five hundred. It's kind of like nine ten eleven percent
Speaker 3: kind of earnings growth for the next couple of years.
Speaker 2: Are you guys comfortable with that? Or is a risk
Speaker 2: to that? Do you think?
Speaker 4: You know, Scott Cronin on our equity strategy side, you'll
Speaker 4: see some risk over the next few weeks of some
Speaker 4: downward revisions going into earning season. I would say this,
Speaker 4: if Corporate America, given all the uncertainty and everything that's
Speaker 4: happened over the last three weeks, comes out and defends numbers,
Speaker 4: that's going to read read very very positive. But particularly
Speaker 4: the part of the market that have a little bit
Speaker 4: more of a China supply chain. You know, Scott and
Speaker 4: team do see some downward pressure on numbers there, so
Speaker 4: we would expect to see estimates come a bit lower.
Speaker 4: To your point, very solid growth and very little negative
Speaker 4: revisions to begin the year. So I think, you know,
Speaker 4: one keyworness is going to be interesting. If Corporate America
Speaker 4: steps in defense, then that's very positive. If they kind
Speaker 4: of kitchen sink this just just to get any bad
Speaker 4: news out there, then the market is clearly going to
Speaker 4: be under a little pressure during earning season.
Speaker 3: I knew Scott Coroner when he had an honest job
Speaker 3: selling my research.
Speaker 2: On the West Coast exactly exactly.
Speaker 3: So, Stewart, are you finding your clients are kind of
Speaker 3: going they'd love to buy the mag seven or to
Speaker 3: the tech socks on a sell off or are they
Speaker 3: rotating into financials or industrials or something that may be
Speaker 3: a little bit more safer just from evaluation perspective, Well,
Speaker 3: I think.
Speaker 4: In terms of like the cherry picking or the bottom picking,
Speaker 4: the focus has a bit more on tech just because
Speaker 4: that's the stuff that's sold off the most. You know,
Speaker 4: big picture, do you want to broaden out this market?
Speaker 2: Yes?
Speaker 4: Are you going to do that at a time when
Speaker 4: you US economic growth looks a little wobbly you know,
Speaker 4: perhaps not so I would say the bottom picking or
Speaker 4: the buying the dip we've seen has been much more
Speaker 4: in the tech growth and momentum stocks that have sold
Speaker 4: off the most, because that's where the valuation is rebased,
Speaker 4: you know. I mean, if you liked you know, Tesla
Speaker 4: down twenty five percent, you probably love it down fifty. So,
Speaker 4: you know, I think people are sort of focused on
Speaker 4: that part of the market right now.
Speaker 2: For the by the dip mentality, How do you fold.
Speaker 6: An economics now, like if I've got nominal GDP coming in,
Speaker 6: if i got real GDP coming in, that affects the
Speaker 6: Stewart kinds of world, doesn't it.
Speaker 2: One hundred percent?
Speaker 4: And I would say the risks on that side to
Speaker 4: us are all on the labor side of the economy,
Speaker 4: you know, I think, Okay, so where do.
Speaker 6: You go on a sector basis? I'm running out of
Speaker 6: times Steward, and I think people want to know, how
Speaker 6: do you shift your sector trading analysis given that diminished GDP.
Speaker 4: Yeah, Look, if you're slowing the economy, then you want
Speaker 4: to be not in the consumer facing parts of the
Speaker 4: market in our view. So I think if you're trying
Speaker 4: to expose their consumer exposed, which a lot of retelling
Speaker 4: is that's the part of the market want to be
Speaker 4: the most careful about. Without a doubt, I think US
Speaker 4: consumer has been the white night of the global economy
Speaker 4: for years. If we start to see cracks there, which
Speaker 4: we are seeing on the confidence side of things, then
Speaker 4: that to me is the part you want to be
Speaker 4: the most careful with.
Speaker 6: Stuart Keiser, thank you so much, greatly appreciate it.
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Speaker 6: We're going to go to Dubai right now. Jaman Ebersch
Speaker 6: joins us now with a great overview of a view
Speaker 6: from sixty thousand feet on all going on in Gaza,
Speaker 6: in Yemen, and of course the effect upon her Middle East. Jamina,
Speaker 6: thank you so much in your evening for spending time
Speaker 6: with us. I believe in a three day period I
Speaker 6: have attacks on Yemen, attacks on Gaza. How do the
Speaker 6: major Middle Eastern powers adapt what does Saudi Arabia do
Speaker 6: in others?
Speaker 7: Yeah, and you're also missing attacks on Lebanon and Syria
Speaker 7: as well, in addition to skirmishes on the Syrian borders.
Speaker 7: So yes, there's been plenty going on in the Middle
Speaker 7: East in the last few days, a real escalation of
Speaker 7: things since where we were in January nineteen, which is
Speaker 7: when that seasfire and Gaza kicked in Phase one of
Speaker 7: the Seasfire. I think it's safe to say at this
Speaker 7: point that the seasefire is pretty much dead. There is
Speaker 7: no evident commitment either from the part of Israelis or
Speaker 7: from Hamas at this point to want to continue with
Speaker 7: the seasfire and its current format, and that came to
Speaker 7: light in the last twenty four hours.
Speaker 8: The death toll obviously climbing.
Speaker 7: The latest figures from Gaza Health Ministry is showing that
Speaker 7: more than four hundred people were killed in.
Speaker 8: Yesterday's air strikes.
Speaker 7: But you did ask about the broader Arab region, and
Speaker 7: the thing is, let me also just rewind it back
Speaker 7: to not just discussions that were taking place vis a
Speaker 7: vis how you move from phase one of Seasfire to
Speaker 7: phase two, but also those broader discussions amongst the Arab
Speaker 7: league around the eventual reconstruction of Gaza, and that was
Speaker 7: in response, you may recall to Trump's Riviera proposal, where
Speaker 7: the US administration essentially said to Arab states, if you
Speaker 7: want to be involved in Gaza, give us your counterproposal.
Speaker 7: And now it appears to be the case that this
Speaker 7: is such a remote possibility you can't even think about
Speaker 7: reconstructing when airstrikes are still a daily feature of the
Speaker 7: lives of Palestinians, and where Israeli hostages are still being
Speaker 7: held in captivity by Hamas. So we really seem to
Speaker 7: have gone back to square zero again with the events
Speaker 7: of the last twenty four hours and.
Speaker 3: Dromana the You know, during the seasefire, the exchange of
Speaker 3: hostages was taking place, maybe at a slower pace than
Speaker 3: people would have liked. What happened from the perspective of
Speaker 3: Hamas to refuse to release the remaining hostages.
Speaker 2: What changed?
Speaker 7: Yeah, So the initial ceasefire was composed of three phases.
Speaker 7: The first phase entailed the release of around thirty hostages
Speaker 7: in exchange for Palestinian prisoners, and that part of the
Speaker 7: seasfire actually expired a couple of weeks ago, so exactly
Speaker 7: seventeen days ago. One of the other preconditions was for
Speaker 7: the IDF to withdraw away from populated areas in the
Speaker 7: Gaza Strip, but to maintain a buffer zone, and there
Speaker 7: was also an understanding that they would start within the
Speaker 7: middle of Phase one talks around progress to Phase two,
Speaker 7: where Hamas would.
Speaker 8: Release the rest of the hostages.
Speaker 7: It is estimated that sixty hostages are still told with Hamas,
Speaker 7: about half of them still alive, and that Israel would
Speaker 7: fully retreat from the Gaza Strip. Now, the US said
Speaker 7: that the discussions between the two sides were not yielding
Speaker 7: any fruit, so they put forward this bridging proposal which
Speaker 7: would allow for an extension of Phase one.
Speaker 8: While they worked out the details of Phase two.
Speaker 7: But the sticking point is that Israel wanted the full
Speaker 7: militarization and to completely decapitate Tamasi's capabilities in the Gaza Strip.
Speaker 8: They didn't want to allow that to happen. To be
Speaker 8: held back for.
Speaker 6: Our audience, particularly waking up in America, good morning, on
Speaker 6: your commute across America this morning. The fundamental issue whether
Speaker 6: someone's vision is back to nineteen sixty seven or dare
Speaker 6: i say back to nineteen forty eight is a completely
Speaker 6: intractable situation. And the heart of the matter is, I
Speaker 6: guess I'm speaking as an amateur. You're the pro Where
Speaker 6: do the Palestinians go? Where would the Middle East like
Speaker 6: the Palestinians to go?
Speaker 7: Well, the Middle East would like the Palestinians to live
Speaker 7: and thrive within ultimately what would be defined as a
Speaker 7: Palestinian state. So remember the position from all of the
Speaker 7: Arab states is that there needs to be a credible
Speaker 7: path towards a two state solution. The last carrot in
Speaker 7: the region is Saudi Arabia, and we've talked about this
Speaker 7: in the past. About before October seven, there were talks
Speaker 7: going on behind the scenes about a potential normalization deal
Speaker 7: between Saudi Arabia and Israel. But given the events of
Speaker 7: the last eighteen months, Saudi Arabia have held back now
Speaker 7: and said we're not going to sign on anything unless
Speaker 7: there is an actual credible plan to get to that
Speaker 7: two state solution. And even in the response of the
Speaker 7: Arab community after Trump's Riviera proposal, which I think was
Speaker 7: quite telling in itself, and that they reconfirmed that they
Speaker 7: there should be no force displacements of Palestinians out of
Speaker 7: the Palestinian territory under no conditions. There has to be
Speaker 7: a credible reconstruction plan. But then many more moderate Arab
Speaker 7: states in the region will say they also don't want
Speaker 7: to see Hamas in a governing position in the Gaza
Speaker 7: strip as well, So there also is a matter of
Speaker 7: governance in order for the money and the reconstruction appetite
Speaker 7: to come in.
Speaker 6: Jimta, thank you so much for the time. Today, Jamin
Speaker 6: and Bartecci're leading all of our Middle Eastern coverage from Dubai.
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Speaker 3: Dam Harvey Joints is Professor of Finance at a Fugal
Speaker 3: School of Business at Duke University cam One of the
Speaker 3: things we're noticing here in this world of the last
Speaker 3: I don't know a couple of months and the uncertainty
Speaker 3: that's been injected into this marketplaces, people still flock to
Speaker 3: gold here as I guess a safe haven. Three thirty
Speaker 3: seven dollars per ounce here. What do you make of
Speaker 3: our friends buying gold here?
Speaker 9: Yeah, So this is the subject of my research, and
Speaker 9: it's kind of interesting that there are two factors. There's
Speaker 9: kind of a medium term factor and a short term factor.
Speaker 9: So the short term is the increase in uncertain The
Speaker 9: medium term factor was what happened after Russia invaded Ukraine
Speaker 9: and essentially the US dollar was weaponized, so with the
Speaker 9: sanctions that made it very difficult for Russia to do
Speaker 9: business because the numerar currency in the world is the
Speaker 9: US dollar, and China took notice of this. So China
Speaker 9: strategically wants to de risk, meaning that they need their
Speaker 9: own currency to be credible. They cannot continue to rely
Speaker 9: as they have been on the US dollar. So to
Speaker 9: ensure or to build the credibility of the Chinese currency,
Speaker 9: they've been buying gold. And given that there's a limited
Speaker 9: production of gold every year, like last year was three
Speaker 9: three hundred metric tons, that increase in demand has been
Speaker 9: driving the gold price up. So that is factor number
Speaker 9: one in factor number two is unraveling today given the
Speaker 9: uncertainty that has been induced by this new administration, that
Speaker 9: people are looking for a safe haven, and there's a
Speaker 9: strong perception the gold is a safe haven investment.
Speaker 6: Can you have normal stock markets a bit at an
Speaker 6: ask with the tumult that we see right now.
Speaker 9: Yeah, So it's very interesting. So we are in like
Speaker 9: a minor draw down. But my research looks at major
Speaker 9: drawdowns historically and identify nine major draw downs. So these
Speaker 9: are drawdowns where the market goes down by more than
Speaker 9: twenty five percent from pete to trough. And it's interesting
Speaker 9: that in seven of the nine negative episodes historically that
Speaker 9: gold actually has a positive return. In the other two,
Speaker 9: gold has a small negative return. So think about that
Speaker 9: that the market's down forty percent, gold's down two percent.
Speaker 9: That's pretty good. So even in the times where it
Speaker 9: doesn't produce like a positive return, it does far better.
Speaker 9: So historically it has been a diversifier. However, and this
Speaker 9: is really important and most people don't fully appreciate the
Speaker 9: following point. Gold is volatile. So gold is as volatile
Speaker 9: as the S and P five hundred, So that means
Speaker 9: it can have very large straw downs. Also, it means
Speaker 9: that it's not a safe haven.
Speaker 2: For sure.
Speaker 9: It is historically a safe haven, but it can have
Speaker 9: very sharp draw.
Speaker 2: Downs is gold? Should gold be a part of the
Speaker 2: average person portfolio?
Speaker 3: We think about the sixty to forty portfolio, and now
Speaker 3: people talk about alternatives need to be a meaningful percentage
Speaker 3: of that.
Speaker 2: Where's gold in an average portfolio?
Speaker 10: Do you think?
Speaker 8: Yeah?
Speaker 9: So I get this question a lot. So to have
Speaker 9: a diversified portfolio, you'd have more than stocks and bonds.
Speaker 9: That's kind of obvious. And if you look at major
Speaker 9: institutional investors, they almost always have what they call kind
Speaker 9: of a bucket that protects them from the downside. And
Speaker 9: that kind of downside protect bucket often includes gold, but
Speaker 9: it's not just gold, so it's often a diversified set
Speaker 9: of commodities. It will include treasuries that are inflation protected,
Speaker 9: that's important, and perhaps some other real assets. So yes,
Speaker 9: I think that the average investor, just like the institutional investor,
Speaker 9: should have a diversified portfolio, and gold certainly does play
Speaker 9: a role in the diversified portfolio.
Speaker 6: Professor Harvey with is Campbell Harvey with us from Duke University.
Speaker 6: This morning. We welcome all of you on your commute.
Speaker 6: We welcome all of you Brackodology, and that is it
Speaker 6: eleven miles between you NC and Duke this Morning on YouTube.
Speaker 6: Subscribe to Bloomberg Podcast. It's our new digital experiment. We're
Speaker 6: humbled by the international reach of this. I featured the
Speaker 6: Mumbai Financial District today and their evening listening as well.
Speaker 6: But with Cam Harvey, he's looking at gold here. We
Speaker 6: should point out as we speak, gold at a number
Speaker 6: none of us have ever seen before. It's so I
Speaker 6: can't even find it on the screen. It's so lofty.
Speaker 6: Are you ready? Three thousand and thirty nine dollars? It's
Speaker 6: up a pop and thirty three dollars this.
Speaker 2: Morning, Kim.
Speaker 3: I guess really, over the last couple of months, what's
Speaker 3: been the key issue driving these markets has been just
Speaker 3: the talks of tariffs. You get in front of your students,
Speaker 3: down to Duke, how do you frame out tariffs as
Speaker 3: an economic policy?
Speaker 9: So the first thing to realize is that the US
Speaker 9: exposure to kind of trade is small. And what I
Speaker 9: do in my class is like a quiz question if
Speaker 9: we if we look at trade exposure as exports plus
Speaker 9: imports divided by GDP, how does the US rank in
Speaker 9: terms of like one hundred and seventy nine countries in
Speaker 9: the world, And it turns out that US ranks, you know,
Speaker 9: one seventy seven, so it's got very low trade exposure.
Speaker 9: So think of imports as being only fourteen percent of GDP.
Speaker 9: So it turns out that other countries have much more
Speaker 9: serious exposure to the US policy than the US. So
Speaker 9: the issue, I think is not just the tariffs, but
Speaker 9: the uncertainty about how the tariffs are going to be applied.
Speaker 9: So if we knew what the policy was like twenty
Speaker 9: five percent across the board, we could actually figure out
Speaker 9: the hit in inflation and the hit and GDP. And
Speaker 9: it is a hit. It is a negative, but it's
Speaker 9: not a large negative. And I think a lot of
Speaker 9: the problems are the tariffs on, tariffs off and different
Speaker 9: numbers being thrown out. We just don't know. That creates uncertainty.
Speaker 9: Investors like uncertainty.
Speaker 6: Kim, You've lived in the heart of the collapse of
Speaker 6: the American textile industry, I mean in the caroline is
Speaker 6: Maybe I'd also put it into the furniture industry as well.
Speaker 6: What do you say to the fancy elites at Duke
Speaker 6: Universe City about all those jobs we lost to Asia?
Speaker 9: Yeah, that's so this is globalization, And I think that
Speaker 9: a number of mistakes were made in the push for globalization,
Speaker 9: and now we're reversing some of those mistakes. So we
Speaker 9: have let other countries hold US hostage to critical minerals.
Speaker 9: So that's the sort of thing that you should not offshore.
Speaker 9: So we will be reshoring repatriating certain key industries that
Speaker 9: we cannot afford to let adversaries have influence over us.
Speaker 9: So I think that the sort of laysafe, they're blind
Speaker 9: sort of push to globalization didn't take one critical thing
Speaker 9: into account that we think about all the time in business,
Speaker 9: and that is risk management.
Speaker 2: So a lot of this.
Speaker 9: Restoring is going to be expensive. So it means that
Speaker 9: to produce it in the US is going to be
Speaker 9: more expensive, and what that will do in the medium
Speaker 9: term is be pressure on inflation. But that extra expense
Speaker 9: is an insurance premium that we should be willing to
Speaker 9: pay to have these things produced within the US.
Speaker 6: What does Mark Karney need to do for your Canada,
Speaker 6: Professor Harvey.
Speaker 9: Well, obviously Carney is highly experienced in terms of both
Speaker 9: business experience and central banking experience. My country, Canada has
Speaker 9: effectively been in a recession for the last three years
Speaker 9: and I say that not because of the headline GDP NUM,
Speaker 9: but if you calculate, and this is what people should do,
Speaker 9: calculate GDP on a per capita basis, and given the
Speaker 9: growth and population in Canada, we've had negative GDP growth.
Speaker 9: So we need somebody to come in and change the
Speaker 9: course because nobody wants to be in recession for years.
Speaker 3: So how serious and how much risk do the US
Speaker 3: tariffs as current currently talked about? What's the impact on Canada?
Speaker 3: How big of an impact could that be on Canada?
Speaker 3: How concerned is Canada?
Speaker 9: Yeah, so again it's interesting. I said that the US
Speaker 9: has very little trade exposure overall with imports at fourteen
Speaker 9: percent of GDP. I also did that calculation where I
Speaker 9: took the area so Canada, Mexico, and the US put together,
Speaker 9: and it's amazingly self sufficient. And I think that a
Speaker 9: better idea for the US would be to kind of
Speaker 9: strengthen the bond between Mexico and Canada and truly be
Speaker 9: sort of an area that is resilient to fluctuations that
Speaker 9: might happen across the world. For some reason, that is
Speaker 9: not the policy, and that's unfortunate. So that's going to
Speaker 9: cost to some extent US growth and Canadian growth. But
Speaker 9: I do think that many Americans are not aware of
Speaker 9: the amount of business that the US does with Canada,
Speaker 9: and it will be painful if those tariffs are imposed.
Speaker 6: KEM. Hervey, thank you so much with Duke University in
Speaker 6: those comments on his at Canada this morning.
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Speaker 6: Right now, A Skyler Montgomery counting with us with Barclays Skyler,
Speaker 6: is foreign exchange useful now in gleaning tariff dynamics, Like
Speaker 6: when you look at Looney or you look at pay
Speaker 6: so Max, can you learn something there.
Speaker 11: I think there's very very little to learn in FCS markets.
Speaker 11: I think there's very little price in terms of tariff premium.
Speaker 11: And there are a couple of ways you can see that.
Speaker 11: So one is we have a fair value model for
Speaker 11: your dollar. We're pretty much.
Speaker 8: At fair value on your dollar.
Speaker 11: And you could say tariff premium is leaking into rates market,
Speaker 11: and so it's reflected in some way through fair value
Speaker 11: through that mechanism, but I still think there's very little
Speaker 11: price And I'll actually say I think we're the most
Speaker 11: concern about terra s feeding to growth as prices in
Speaker 11: the US, So.
Speaker 3: I would think i'd see more streams the US dollar
Speaker 3: given all this uncertainty, But the Bloomberg dollar in next
Speaker 3: is kind of down like four to zo point two
Speaker 3: percent from that of early January peak.
Speaker 2: What am I missing?
Speaker 11: I think this is the issue is that the market
Speaker 11: doesn't really believe tariffs are coming in in the full
Speaker 11: forest that Okay, Trump is threatened, and that's totally reasonable assume,
Speaker 11: but we're pricing very little in general. But teriff risk
Speaker 11: and the uncertainty has creeped into the US data. So
Speaker 11: if you look at US economic surprises, they've turned over,
Speaker 11: they're negative. That's largely because of the soft data, and
Speaker 11: that soft data is reflective of the fact that there's
Speaker 11: uncertainty that tariffs are downtrend on growth in the US,
Speaker 11: and that is showing up in the dollar in a
Speaker 11: weaker dollar because we start from such low sentiment elsewhere.
Speaker 11: So Europe, for example, confidences been low for a while.
Speaker 11: It's harder to have that uncertainty reflected there. So I
Speaker 11: think it's priced much more in the US than.
Speaker 8: It is elsewhere.
Speaker 3: We're trying to get the dollar to parody for Tom
Speaker 3: Keen and all his European travelers. That did not happen.
Speaker 3: We're sitting here at euro one spot zero nine. How
Speaker 3: high can a euro go?
Speaker 2: Do you think?
Speaker 11: I think you're very limited in how hard you can
Speaker 11: go from here. I think part of that is fiscal
Speaker 11: is definitely a game changer, particularly from Germany, but it's
Speaker 11: largely been priced right as a very you know, quick rule.
Speaker 11: You can get twenty five to thirty basis points on
Speaker 11: yields from a one percent GDP fiscal expansion. We're up
Speaker 11: forty to fifty basis points in European yields, and that's
Speaker 11: really reflected in your dollars.
Speaker 6: Well. The in traditional analysis, do we get Canadian strength
Speaker 6: or Mexican Peso strength, mech strength it impinges their trade
Speaker 6: dynamics or is that like micro analysis where it doesn't
Speaker 6: play it anymore.
Speaker 11: I think tariff's overwhelmingly because Canada and Mexico primarily trade
Speaker 11: with the US. The tariff overwhelms any kind of currency
Speaker 11: impact you have right, because it very much makes Canadian
Speaker 11: imports less appealing to us.
Speaker 6: So where's your trade this morning? What's your single best
Speaker 6: idea on a currency peer? I need something aesoteric.
Speaker 11: Okay, I think something that I quite like is the yen.
Speaker 11: The pound as well, but the yen in particular, if
Speaker 11: there's a number of cross currents that go quite well
Speaker 11: for it.
Speaker 6: Let's mention when there's no one, it's only forty two
Speaker 6: people listening. Good morning, excuse me, forty four people? Good morning,
Speaker 6: ninety nine one FM and Washington Yen?
Speaker 11: What yen I think versus Swiss or versus the euro?
Speaker 2: So why what is going on with Japan?
Speaker 3: We didn't talk about Japan forever, Yes, like longer than
Speaker 3: you've been around. We'd never talked about Japan. Now it's
Speaker 3: I got Warren Buffett talking about it. I got you
Speaker 3: people telling them about the yen and all this kind
Speaker 3: of stuff. What's going on in Japan from your perspective?
Speaker 11: So it's both domestic and international. On the domestic front,
Speaker 11: you have growth that will come in above potential this year,
Speaker 11: and actually it has one of the highest growth rates
Speaker 11: we anticipate in G ten. At the same time, you're
Speaker 11: getting more inflationary pressure, so that means you're going to
Speaker 11: have a hawkish Bank of Japan. We see them hiking
Speaker 11: to one twenty five. At the same time, it's less
Speaker 11: exposed to tariffs and will also benefit from the risk
Speaker 11: conversion associated with the uncertainty around tariffs and other US policies.
Speaker 6: Skyler, thank you so much for joining us. We're in
Speaker 6: sky Montgomery Connor Withburg.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 1: Just say Alexa play Bloomberg eleven thirty.
Speaker 6: Let's go to the newspapers right now. Lisa Mateo with
Speaker 6: some chestnuts this morning.
Speaker 10: Oh Paul, you're not gonna like this story, but okay,
Speaker 10: bear with me. Okay. The experts are saying, when it
Speaker 10: comes to setting up your brackets, do not do not
Speaker 10: pick duke to win. Okay. The reason why, okay, this
Speaker 10: is within the Wall Street Journal, and the two writers
Speaker 10: of the article actually do graduates. I just want to
Speaker 10: put that out there. They said, you should bet against them,
Speaker 10: they say, undervalued teams. That's who you should pick instead.
Speaker 10: Like they say, think like a value investor, right, you
Speaker 10: bet on the best least popular team against the most
Speaker 10: popular team. Pick teams like here you go number one
Speaker 10: seed Houston, another number one seed also value in, number
Speaker 10: two seed Tennessee and number three received Texas Tech. Really,
Speaker 10: so that's what they're going with. So I don't know
Speaker 10: what's on your brath?
Speaker 6: Does anybody know? I mean that can be r KT go. Yeah,
Speaker 6: there's like four people to get it. It's sort of
Speaker 6: like a Monte Carlo random kind of thing, isn't it?
Speaker 2: Just for penciling.
Speaker 3: That is what I've done since nineteen eighty ninety. Pencilan
Speaker 3: duke to win it all and you work back from there,
Speaker 3: and that's how you do your bracket.
Speaker 2: The strategy works five It's worked five times.
Speaker 6: I haven't revisited my last morning.
Speaker 8: But you never know.
Speaker 10: I mean, who won last year? Was it was a repeat?
Speaker 10: No Connecticut sk Yukon scarlet food killed it?
Speaker 6: Yeah, killed it? What do you got?
Speaker 10: You never know what can happen? Okay, So I'm going
Speaker 10: to stick with this March madness theme. Okay, I didn't
Speaker 10: even realize this. But Warren Buffett's Berkshire Hathaway has this
Speaker 10: big bracket competition where the winner can get one million dollars.
Speaker 6: Okay, well, really setting up right now.
Speaker 10: The problem is that no one's won it. But he's
Speaker 10: trying for nearly a decade to give away this big price.
Speaker 10: So the Wall Street Journal says that he wants to
Speaker 10: improve the odds, right, because he says he's getting older
Speaker 10: and he wants to win, to see a winner when
Speaker 10: he's still chairman. So he's making it easier to win
Speaker 10: because in the past you had to you know, be like,
Speaker 10: had to call the first round perfectly. But now he's
Speaker 10: changing it up a little bit. Okay, so this year
Speaker 10: it can go to someone who correctly picks the winners
Speaker 10: of at least thirty of the thirty two first round games,
Speaker 10: so you kind of have a better chance. You know,
Speaker 10: he's an odds guy, so the odds.
Speaker 4: Are a little bit better.
Speaker 10: The person with the most correct games can win. You
Speaker 10: have tie breakers too, the runner up can get one
Speaker 10: hundred thousand dollars.
Speaker 6: So this is like Damien Sah, he's almost like something Damien, Yeah, exactly,
Speaker 6: he's a player.
Speaker 10: But that's it's a big, big, big price.
Speaker 8: So I didn't realize it.
Speaker 10: It's been doing this for years.
Speaker 6: I don't get it.
Speaker 2: Next next one.
Speaker 10: Okay, sticking with gambling because you see the theme of today, Yes,
Speaker 10: here we go. Business insider saying, Fan Duel launching a
Speaker 10: new show about gambling addiction. It's actually called The Comeback
Speaker 10: with Craig Carton. He's recovering Gamble Addicts airs on YouTube channel.
Speaker 10: It's streaming network Fan Dual TV.
Speaker 4: Extra.
Speaker 10: Didn't even know they had that, but they're gonna be
Speaker 10: talking about their struggles with sports betting. So the company
Speaker 10: is saying it kind of adds to this mission of
Speaker 10: promoting safe gambling, you know, with all the news and
Speaker 10: the headlines for it. But this is something well.
Speaker 6: I mean, you're close to this and I am. Don't.
Speaker 6: They just have to shut down the attics. I mean,
Speaker 6: that's what you do. They see in their computers that
Speaker 6: you know, young potatos on the couch addicted to this,
Speaker 6: and they shut them down.
Speaker 2: I don't know how that works.
Speaker 3: I don't know how that works, but I mean, just now,
Speaker 3: all I know is I was having breakfast past Saturday,
Speaker 3: the local luncheon at and there was a table of
Speaker 3: maybe four sixteen year old boys and they're talking gambling,
Speaker 3: what bets their.
Speaker 2: That was disturbing to me. Yeah, and I don't know,
Speaker 2: I don't know.
Speaker 3: And they were speaking as if they were pros. They
Speaker 3: can overhear, they underhear the point that spreads. I'm buying
Speaker 3: these odds I'm doing you.
Speaker 2: Know, Yeah, I don't know.
Speaker 4: Yeah.
Speaker 10: My daughter's saying they're doing like during class plays bad.
Speaker 10: I'm like, what's going on.
Speaker 6: In the.
Speaker 2: Don't it's another level. Yeah, it's a thing.
Speaker 3: I don't know how many states have it, you know,
Speaker 3: thirty eight states or something like twenty eight states.
Speaker 1: It's off you.
Speaker 6: See update Lisa Mateo. The newspapers thank you so much,
Speaker 6: greatly appreciate that.
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