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 --> 00:00:27,040
Speaker 1: us live on YouTube.

6
00:00:27,240 --> 00:00:28,320
Speaker 2: Incredibly important.

7
00:00:28,480 --> 00:00:32,640
Speaker 3: Somebody said, like ten billion dollars or some ginormous NUMBERD

8
00:00:33,080 --> 00:00:36,600
Speaker 3: is a ginormous excellence. Julian Emmanuel joins as chief Equity

9
00:00:36,640 --> 00:00:40,640
Speaker 3: and quand strategist Evercore ISI with a definitive note. What's

10
00:00:40,720 --> 00:00:44,440
Speaker 3: distinctive about your daily research note that your team writes

11
00:00:44,479 --> 00:00:46,920
Speaker 3: for you? We know you don't write it, But what's

12
00:00:47,000 --> 00:00:50,320
Speaker 3: distinctive about the note now versus the other previous quarters?

13
00:00:50,560 --> 00:00:52,560
Speaker 3: OMG earnings are better than we thought.

14
00:00:53,800 --> 00:00:57,440
Speaker 4: That's the headline, Tom, and the reality is it's broader

15
00:00:57,480 --> 00:01:01,160
Speaker 4: than you might have thought. I'm balance right. We know

16
00:01:01,320 --> 00:01:04,280
Speaker 4: Tech's going to beat. Tech has beaten, it will continue

17
00:01:04,280 --> 00:01:08,840
Speaker 4: to beat. But one of the more malign sectors, energy

18
00:01:09,280 --> 00:01:14,119
Speaker 4: is also showing very consistent beats, as is financials, which

19
00:01:14,200 --> 00:01:16,640
Speaker 4: was the story that started us off on what is

20
00:01:16,720 --> 00:01:18,119
Speaker 4: likely to be double digit earning.

21
00:01:18,120 --> 00:01:20,680
Speaker 3: Squirrel, you bring it over all. The heritage of Edheimen.

22
00:01:21,120 --> 00:01:25,600
Speaker 3: Evercorn Frankly, you know Isi and frankly, Evercore.

23
00:01:25,760 --> 00:01:28,480
Speaker 2: Is this just because GDP was better than we expected?

24
00:01:28,520 --> 00:01:31,240
Speaker 3: I mean, is this just a real or even nominal

25
00:01:31,280 --> 00:01:34,319
Speaker 3: GDP pop is helping out broad earnings?

26
00:01:34,520 --> 00:01:36,560
Speaker 5: Well, that's certainly part of it.

27
00:01:36,560 --> 00:01:40,920
Speaker 4: It's also this idea that the stress from tariffs has

28
00:01:41,040 --> 00:01:44,960
Speaker 4: sort of dissipated through the system in unseen ways. But again,

29
00:01:45,480 --> 00:01:48,680
Speaker 4: it is the story of what it's been, certainly the

30
00:01:48,760 --> 00:01:51,320
Speaker 4: three years of this bull market, and going back further

31
00:01:51,360 --> 00:01:54,680
Speaker 4: than that, is that every time you think the corporate

32
00:01:54,720 --> 00:01:58,800
Speaker 4: America can't find a way to make margins you know

33
00:01:59,040 --> 00:02:03,240
Speaker 4: better or at least stable at these high levels, productivity

34
00:02:03,320 --> 00:02:04,120
Speaker 4: tends to happen.

35
00:02:05,080 --> 00:02:05,800
Speaker 6: It tends to happen.

36
00:02:05,840 --> 00:02:09,560
Speaker 7: You're right, I mean, don't underestimate the corporate entity out

37
00:02:09,600 --> 00:02:11,720
Speaker 7: there or the consumer. Where do we go here from

38
00:02:11,919 --> 00:02:14,480
Speaker 7: the stock market? I'm guessing a lot of the questions

39
00:02:14,480 --> 00:02:17,160
Speaker 7: you get from your clients is, boy, it feels rich here.

40
00:02:17,919 --> 00:02:19,160
Speaker 6: How do we think about it? Where do we go

41
00:02:19,200 --> 00:02:19,520
Speaker 6: from here?

42
00:02:19,680 --> 00:02:20,760
Speaker 2: So it does.

43
00:02:21,360 --> 00:02:24,640
Speaker 4: And frankly, when you think about the wall of worry,

44
00:02:25,040 --> 00:02:27,840
Speaker 4: we like that because that means there is.

45
00:02:27,760 --> 00:02:30,280
Speaker 5: A wall of worry. I will say in the last

46
00:02:30,280 --> 00:02:30,919
Speaker 5: week or so.

47
00:02:31,400 --> 00:02:35,160
Speaker 4: The fact that September and October were as positive as

48
00:02:35,200 --> 00:02:39,240
Speaker 4: they were have gotten people very, very bullish, and almost

49
00:02:39,360 --> 00:02:42,320
Speaker 4: rightly so, because seasonality tends to be good in November

50
00:02:42,600 --> 00:02:47,160
Speaker 4: and December. But when you think about all this event risk, geopolitical,

51
00:02:47,600 --> 00:02:55,080
Speaker 4: monetary earnings, elections, etc. There may be a step back

52
00:02:55,200 --> 00:03:00,680
Speaker 4: in here. But again, the story of the long time story,

53
00:03:00,880 --> 00:03:03,760
Speaker 4: the AI driven bull market, as we've seen by the

54
00:03:03,760 --> 00:03:06,520
Speaker 4: news flow in the last twenty four hours, is largely

55
00:03:06,560 --> 00:03:07,079
Speaker 4: on track.

56
00:03:07,919 --> 00:03:10,520
Speaker 6: What do you make of gold? What a run that was?

57
00:03:10,800 --> 00:03:12,720
Speaker 6: Is pullback that was?

58
00:03:12,800 --> 00:03:13,240
Speaker 3: That is?

59
00:03:13,600 --> 00:03:14,720
Speaker 6: I don't know? What do you make of gold?

60
00:03:14,919 --> 00:03:18,800
Speaker 4: We think, actually so a lot of our conversations this

61
00:03:18,919 --> 00:03:22,160
Speaker 4: summer in the fall have been about bubbles in the market,

62
00:03:22,680 --> 00:03:24,920
Speaker 4: in the stock market. We think you're a long way

63
00:03:24,960 --> 00:03:28,680
Speaker 4: from that in the s and P. Five hundred and

64
00:03:28,760 --> 00:03:33,200
Speaker 4: in the AI story. But gold could be the bubble

65
00:03:33,400 --> 00:03:36,120
Speaker 4: that has burst in our view, because if you think

66
00:03:36,160 --> 00:03:39,680
Speaker 4: about it, the same reasons that people were buying gold,

67
00:03:40,320 --> 00:03:44,080
Speaker 4: fear of inflation being more permanent, that is not coming

68
00:03:44,120 --> 00:03:46,600
Speaker 4: to roost. It it's still too high, but it is

69
00:03:46,640 --> 00:03:49,680
Speaker 4: on track to come down in twenty twenty six. And

70
00:03:49,720 --> 00:03:52,400
Speaker 4: then this whole idea of the debasement trade. Ye, the

71
00:03:52,520 --> 00:03:57,040
Speaker 4: quote unquote debasement trade. We'll call bunk on that because

72
00:03:57,080 --> 00:03:59,320
Speaker 4: if you think about it, A the dollar has been

73
00:03:59,440 --> 00:04:01,160
Speaker 4: very stable the last several months.

74
00:04:01,600 --> 00:04:04,080
Speaker 5: B yields our law.

75
00:04:04,960 --> 00:04:07,000
Speaker 3: That's right, we're going to go Julian Emmanuel with this,

76
00:04:07,080 --> 00:04:10,160
Speaker 3: folks at evercore Isi here to set up the earning season.

77
00:04:10,240 --> 00:04:13,160
Speaker 3: Let me take the sixty thousand macro view. I'm looking

78
00:04:13,200 --> 00:04:15,520
Speaker 3: to the screen this morning and I see a jump condition,

79
00:04:15,960 --> 00:04:19,680
Speaker 3: and it's because of Donald Trump. He's over in Asia,

80
00:04:20,080 --> 00:04:23,160
Speaker 3: he's getting, as he would say, deals done. I have

81
00:04:23,200 --> 00:04:27,080
Speaker 3: a three day jump condition in ren Minby's strength. I

82
00:04:27,120 --> 00:04:30,760
Speaker 3: got Sterling flat on their back as well. Some of

83
00:04:30,839 --> 00:04:35,679
Speaker 3: the evercore Isi view into your earnings belief for Q

84
00:04:35,800 --> 00:04:39,560
Speaker 3: one of next year, for Q two, does this every

85
00:04:39,640 --> 00:04:43,799
Speaker 3: ninety day idiocy olmng earnings. We thought they'd be terrible,

86
00:04:43,960 --> 00:04:47,000
Speaker 3: they're doing phenomenal. Do we just continue this bad habit?

87
00:04:48,520 --> 00:04:52,280
Speaker 4: Look, we think high single digit earnings growth is in

88
00:04:52,320 --> 00:04:56,320
Speaker 4: our future for twenty twenty six. And you know, frankly

89
00:04:56,400 --> 00:04:59,640
Speaker 4: again to your point this morning in Asia, go back

90
00:04:59,680 --> 00:05:02,119
Speaker 4: to w when the President was in the Middle East,

91
00:05:02,600 --> 00:05:06,919
Speaker 4: deals were getting done, Deals are the lifeblood of what's

92
00:05:07,080 --> 00:05:11,039
Speaker 4: powering the economy and specifically the AI shop.

93
00:05:11,279 --> 00:05:13,800
Speaker 2: So do you take your terminal value out farther? What

94
00:05:13,880 --> 00:05:15,200
Speaker 2: are the rooms today? Google?

95
00:05:15,839 --> 00:05:21,279
Speaker 3: Meta, Facebook, Facebook, Ye Facebook? Do you take your terminal

96
00:05:21,360 --> 00:05:24,400
Speaker 3: value out for Fortress Zuck? Do you take it out

97
00:05:24,440 --> 00:05:27,800
Speaker 3: instead of three years? Find your study? Are you because

98
00:05:28,160 --> 00:05:30,880
Speaker 3: of this juggernaut economy? Do you take it up to

99
00:05:30,960 --> 00:05:31,640
Speaker 3: seven years?

100
00:05:31,880 --> 00:05:34,960
Speaker 4: Well, you have to be careful because the counter veil

101
00:05:35,080 --> 00:05:39,799
Speaker 4: here is again we remember twenty twenty was a low

102
00:05:39,920 --> 00:05:43,719
Speaker 4: in global bond yields, and likely at some point we

103
00:05:43,880 --> 00:05:48,080
Speaker 4: are going to move higher in global bond yields, particularly

104
00:05:48,120 --> 00:05:53,239
Speaker 4: since deficits around the world continue to expand. So that's

105
00:05:53,960 --> 00:05:57,160
Speaker 4: that's part of the offset. But on balance, when you

106
00:05:57,200 --> 00:06:02,400
Speaker 4: think about it, you hear the potential for productivity you're

107
00:06:02,760 --> 00:06:06,080
Speaker 4: gains from AI. You're only starting to see it, but

108
00:06:06,360 --> 00:06:09,919
Speaker 4: that is part of the long term story that causes us.

109
00:06:10,000 --> 00:06:13,200
Speaker 4: In our view, you don't get full AI adoption until

110
00:06:13,240 --> 00:06:17,600
Speaker 4: twenty twenty eight, so we're certainly looking out to there.

111
00:06:18,080 --> 00:06:21,000
Speaker 7: We got lots of obviously earnings today, but we also

112
00:06:21,040 --> 00:06:21,960
Speaker 7: have to fit today here.

113
00:06:22,000 --> 00:06:23,720
Speaker 6: What are you going to be listening for?

114
00:06:24,160 --> 00:06:28,040
Speaker 4: From our chairman so this one seems kind of easy,

115
00:06:27,839 --> 00:06:30,880
Speaker 4: and you know, we're going to get the twenty five cut.

116
00:06:31,240 --> 00:06:34,760
Speaker 4: We're going to get a sort of no promises data

117
00:06:34,800 --> 00:06:39,960
Speaker 4: dependency or lack of data dependency for December. But the

118
00:06:39,960 --> 00:06:43,320
Speaker 4: bottom line is is that the burden of proof is

119
00:06:43,440 --> 00:06:46,680
Speaker 4: on the data to be either too hot in inflation

120
00:06:47,360 --> 00:06:51,640
Speaker 4: or you know, too hot in terms of job growth

121
00:06:51,920 --> 00:06:54,320
Speaker 4: to not cut another twenty five And.

122
00:06:54,360 --> 00:06:55,920
Speaker 5: You know, maybe we're not even going to get any

123
00:06:55,920 --> 00:06:56,400
Speaker 5: more data.

124
00:06:57,560 --> 00:07:01,159
Speaker 6: So I don't know, maybe it's just recency bias. With

125
00:07:01,200 --> 00:07:03,120
Speaker 6: the headlines. It seems like they've seen a lot of

126
00:07:03,200 --> 00:07:04,080
Speaker 6: job cuts out there.

127
00:07:04,320 --> 00:07:07,440
Speaker 7: Don't if it's material, I don't know, if it's yeah,

128
00:07:07,520 --> 00:07:10,160
Speaker 7: yesterday was a wow day. I mean, I don't know

129
00:07:10,200 --> 00:07:12,880
Speaker 7: if this is AI related, if this is just seasonal,

130
00:07:13,080 --> 00:07:15,360
Speaker 7: or if this is anecdotal. How do you guys think

131
00:07:15,400 --> 00:07:16,680
Speaker 7: about the labor market or how do you think the

132
00:07:16,720 --> 00:07:18,000
Speaker 7: Fed thinks about the libor market?

133
00:07:18,040 --> 00:07:20,040
Speaker 5: So it's incredibly challenging.

134
00:07:20,120 --> 00:07:23,000
Speaker 4: You know, first of all, if you go to immigration policy,

135
00:07:23,280 --> 00:07:26,200
Speaker 4: we don't know what the break even monthly payroll adds

136
00:07:26,280 --> 00:07:29,720
Speaker 4: is to keep the unemployment rates steady. It was one

137
00:07:29,760 --> 00:07:32,800
Speaker 4: hundred and twenty thousand last year. Our people think it's

138
00:07:32,800 --> 00:07:35,800
Speaker 4: closer to sixty thousand. But if you assume that migration

139
00:07:36,000 --> 00:07:38,640
Speaker 4: is actually that negative, that number might be twenty or

140
00:07:38,640 --> 00:07:39,360
Speaker 4: thirty thousand.

141
00:07:39,560 --> 00:07:41,880
Speaker 5: So that alone is an incredible problem.

142
00:07:41,960 --> 00:07:44,320
Speaker 3: I mean, folding yesterday, what was it, Paul, we had

143
00:07:44,480 --> 00:07:46,680
Speaker 3: thirty four thousand and fourteen thousand.

144
00:07:46,760 --> 00:07:50,200
Speaker 2: I can there's at math matth is old news.

145
00:07:50,280 --> 00:07:53,520
Speaker 3: If we have AI layoffs at these big companies, how

146
00:07:53,520 --> 00:07:57,200
Speaker 3: does that change something as prosaic is given the shutdown,

147
00:07:57,240 --> 00:08:00,600
Speaker 3: we don't know non farm payrolls or the un deployment rate.

148
00:08:00,720 --> 00:08:03,920
Speaker 4: So here's the flip side of this. Tom and David

149
00:08:03,920 --> 00:08:07,640
Speaker 4: Weston did an amazing interview a few days ago with

150
00:08:07,720 --> 00:08:11,680
Speaker 4: the head of Arizona State University. Is that the transformative

151
00:08:11,720 --> 00:08:16,720
Speaker 4: power of AI in the education field. Imagine this. We

152
00:08:16,760 --> 00:08:19,880
Speaker 4: have a chronic shortage of doctors, the chronic shortage of

153
00:08:19,960 --> 00:08:23,640
Speaker 4: healthcare professionals because half the time they just don't want

154
00:08:23,680 --> 00:08:26,760
Speaker 4: to commit to the payback period that it takes. Could

155
00:08:26,800 --> 00:08:29,400
Speaker 4: AI actually shorten that payback period?

156
00:08:29,480 --> 00:08:30,120
Speaker 5: Absolutely?

157
00:08:30,400 --> 00:08:34,000
Speaker 4: Could AI make it more enticing for teachers where the

158
00:08:34,040 --> 00:08:37,839
Speaker 4: attrition rate has been enormous in recent years, to go

159
00:08:37,920 --> 00:08:41,880
Speaker 4: back into those areas. It's the economy transforming, you know,

160
00:08:41,960 --> 00:08:45,599
Speaker 4: creative destruction, and you don't want to be on the

161
00:08:45,960 --> 00:08:49,040
Speaker 4: destruction side. But it is how economies advanced.

162
00:08:49,120 --> 00:08:51,920
Speaker 3: Get one more in here, folks. So you know Lisa Matteo,

163
00:08:52,120 --> 00:08:56,120
Speaker 3: Paul Sweeney yesterday at BAM mutual Oh yeah, driven by AI,

164
00:08:56,400 --> 00:08:57,680
Speaker 3: exactly right, Julian.

165
00:08:57,760 --> 00:09:00,400
Speaker 6: Is there something that screens well for you guys right now,

166
00:09:00,440 --> 00:09:03,800
Speaker 6: whether it's sectors or factors, what do you, guys, what

167
00:09:03,920 --> 00:09:05,080
Speaker 6: gets your attention these days?

168
00:09:05,120 --> 00:09:06,640
Speaker 5: So we actually think that.

169
00:09:08,240 --> 00:09:11,040
Speaker 4: This is the week where you're seeing the end of

170
00:09:11,520 --> 00:09:15,560
Speaker 4: mutual fun, tax laws selling, and from our point of view,

171
00:09:15,840 --> 00:09:19,559
Speaker 4: when you think it is particularly in a year this strong,

172
00:09:19,760 --> 00:09:22,280
Speaker 4: but there are lots and lots of stocks that are

173
00:09:22,320 --> 00:09:24,520
Speaker 4: down on the year. A number of them are in

174
00:09:24,760 --> 00:09:29,240
Speaker 4: the healthcare sector. Healthcare is at very depressed valuations, and

175
00:09:29,360 --> 00:09:32,280
Speaker 4: healthcare is the focus of the shutdown.

176
00:09:33,200 --> 00:09:41,360
Speaker 3: Twenty seconds ed Iiman and your team their recession call.

177
00:09:39,360 --> 00:09:43,199
Speaker 4: No recession, that they were firm about it during February,

178
00:09:43,280 --> 00:09:46,040
Speaker 4: March and April. They continue to be firm about it.

179
00:09:46,280 --> 00:09:48,640
Speaker 4: The call is for one and a half percent growth

180
00:09:48,679 --> 00:09:51,560
Speaker 4: next year. In my mind, that risk es to the upside.

181
00:09:51,640 --> 00:09:54,160
Speaker 3: Julian, Manuel, don't be stranger we'll see you Monday morning,

182
00:09:54,240 --> 00:09:57,400
Speaker 3: seven am as well. He's with Evercore i EI, their

183
00:09:57,480 --> 00:10:01,160
Speaker 3: chief equity and quantitative strategists. He lifts some market futures

184
00:10:01,240 --> 00:10:04,320
Speaker 3: up nineteen with our news.

185
00:10:05,080 --> 00:10:05,800
Speaker 2: Stay with us.

186
00:10:06,040 --> 00:10:09,280
Speaker 3: More from Bloomberg Surveillance coming up after this.

187
00:10:16,520 --> 00:10:20,080
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live

188
00:10:20,160 --> 00:10:23,320
Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on

189
00:10:23,400 --> 00:10:26,800
Speaker 1: Apple Karplay and Android Auto with the Bloomberg Business app,

190
00:10:26,960 --> 00:10:28,800
Speaker 1: or watch US live on YouTube.

191
00:10:28,920 --> 00:10:30,199
Speaker 2: We need to get brief right now.

192
00:10:30,280 --> 00:10:33,000
Speaker 3: Thomas Simmons joins US now chief feel as Economists at

193
00:10:33,040 --> 00:10:35,319
Speaker 3: Jeffries as well. I love the bottom of your note

194
00:10:35,360 --> 00:10:39,199
Speaker 3: where AIAI and all this caught to the chase and

195
00:10:39,320 --> 00:10:41,240
Speaker 3: Jeffries is you know, there's sort of like a hip ferm.

196
00:10:41,280 --> 00:10:43,520
Speaker 2: They're like involved in all this texture.

197
00:10:43,840 --> 00:10:48,840
Speaker 3: How much is AI scaring the young kids or the

198
00:10:48,920 --> 00:10:51,760
Speaker 3: older kids as well, the sixty year olds. Is it

199
00:10:51,840 --> 00:10:54,840
Speaker 3: a revolution like nineteen ninety five in the Internet.

200
00:10:55,200 --> 00:10:58,440
Speaker 8: I think eventually will be, although I'm not particularly sure

201
00:10:58,480 --> 00:11:00,840
Speaker 8: that it's there just yet. I think that it's an

202
00:11:00,920 --> 00:11:03,920
Speaker 8: easy kind of scapegoat to look at AI and say, oh,

203
00:11:04,080 --> 00:11:06,240
Speaker 8: all of these firms are probably not hiring young college

204
00:11:06,240 --> 00:11:09,000
Speaker 8: graduates because they have chatbots that do their job, or

205
00:11:09,000 --> 00:11:12,520
Speaker 8: they have coding resources that you know, replace all of

206
00:11:12,520 --> 00:11:16,520
Speaker 8: these IT focused majors and whatnot. I think it's actually

207
00:11:16,520 --> 00:11:19,200
Speaker 8: significantly more risky for older folks, right, So, like if

208
00:11:19,240 --> 00:11:21,319
Speaker 8: you were, for instance, a professional who did a lot

209
00:11:21,320 --> 00:11:24,760
Speaker 8: of photo editing. I mean that's been a pretty democratized

210
00:11:24,800 --> 00:11:27,000
Speaker 8: technology in terms of how AI has been kind of

211
00:11:27,000 --> 00:11:28,439
Speaker 8: put in your pocket with your cell phone. So I

212
00:11:28,480 --> 00:11:30,600
Speaker 8: think it's more in terms of like consumption of services

213
00:11:30,600 --> 00:11:34,199
Speaker 8: on the consumer end, we see less demand for very

214
00:11:34,240 --> 00:11:37,000
Speaker 8: specialized services. And I imagine that you know, as people

215
00:11:37,440 --> 00:11:39,480
Speaker 8: progress through their careers and they get kind of close

216
00:11:39,520 --> 00:11:41,319
Speaker 8: to the end of them, then the issue is more

217
00:11:41,360 --> 00:11:43,640
Speaker 8: so that they kind of, you know, they're runways a

218
00:11:43,679 --> 00:11:45,880
Speaker 8: lot shorter in terms of whether when you know, sort

219
00:11:45,880 --> 00:11:48,200
Speaker 8: of how much more big time they thought they had

220
00:11:48,240 --> 00:11:49,719
Speaker 8: before retirement and that sort of thing.

221
00:11:50,000 --> 00:11:52,480
Speaker 7: So given that background, they're on the labor market, there

222
00:11:52,520 --> 00:11:55,520
Speaker 7: are obviously FED focuses on the labor market, focuses on

223
00:11:55,600 --> 00:11:56,760
Speaker 7: price stability, inflation.

224
00:11:57,480 --> 00:11:58,719
Speaker 6: How do you think they're going to proceed here?

225
00:11:58,920 --> 00:12:01,320
Speaker 7: What do you think the message FED Chairman JPAW would

226
00:12:01,320 --> 00:12:01,920
Speaker 7: like to get across.

227
00:12:01,960 --> 00:12:05,400
Speaker 8: Today, I think that the message is pretty much unchanged

228
00:12:05,440 --> 00:12:07,760
Speaker 8: really from where it was after Jackson Hole. I mean,

229
00:12:08,000 --> 00:12:09,720
Speaker 8: I think that there was a c change in the

230
00:12:09,760 --> 00:12:12,280
Speaker 8: sort of perception of how healthy the labor market was.

231
00:12:12,600 --> 00:12:15,800
Speaker 8: You know, you refer to this curious balance of how

232
00:12:15,840 --> 00:12:17,880
Speaker 8: surprising it is that sort of demand and supply and

233
00:12:17,920 --> 00:12:20,280
Speaker 8: the labor market come down at the same time, and

234
00:12:20,320 --> 00:12:22,960
Speaker 8: then very shortly afterwards you see data that suggests that, well,

235
00:12:23,080 --> 00:12:25,600
Speaker 8: maybe it isn't quite as imbalanced as it maybe appeared

236
00:12:25,640 --> 00:12:28,439
Speaker 8: to be earlier in the year, And nothing that we've

237
00:12:28,440 --> 00:12:31,559
Speaker 8: seen since then has really, you know, kind of challenged

238
00:12:31,559 --> 00:12:32,160
Speaker 8: that narrative.

239
00:12:32,800 --> 00:12:33,000
Speaker 2: You know.

240
00:12:33,200 --> 00:12:34,600
Speaker 8: I think that it's one thing to kind of look

241
00:12:34,600 --> 00:12:37,400
Speaker 8: at the labor market and say, well, we're not in

242
00:12:37,440 --> 00:12:39,280
Speaker 8: the midst of some sort of collapse, some sort of

243
00:12:39,280 --> 00:12:43,840
Speaker 8: like really you know, spiraling weakness. However, I do think

244
00:12:43,880 --> 00:12:46,240
Speaker 8: that if you look at the history of labor market data,

245
00:12:46,520 --> 00:12:50,720
Speaker 8: economic data in general, equilibria tend not to last forever, right, So,

246
00:12:50,880 --> 00:12:53,360
Speaker 8: like it's nice that we're at this balance point. Is

247
00:12:53,400 --> 00:12:56,200
Speaker 8: the risk that from a very balanced point you reaccelerate

248
00:12:56,240 --> 00:12:58,720
Speaker 8: to something quite strong or is it probably more balance

249
00:12:58,800 --> 00:13:01,160
Speaker 8: towards the downside where things kind of start to sling.

250
00:13:01,160 --> 00:13:03,760
Speaker 3: We Robert Kaplan and yesterday of Harvard Business School, of

251
00:13:03,760 --> 00:13:05,480
Speaker 3: gold and Sax the former president of the FED, and

252
00:13:05,559 --> 00:13:09,839
Speaker 3: we spent a good amount of time talking about retraining

253
00:13:10,040 --> 00:13:14,679
Speaker 3: in this bargain that we blew it on clothing industry,

254
00:13:14,679 --> 00:13:19,040
Speaker 3: the clothing industry the Carolinas decades and decades ago at Jeffries.

255
00:13:19,160 --> 00:13:25,720
Speaker 3: Do you see a dislocation of labor now and coming forward?

256
00:13:26,120 --> 00:13:27,600
Speaker 2: Jeffrey's sensor run pretty lean.

257
00:13:27,800 --> 00:13:30,880
Speaker 8: So fortunately, I think that our you know, kind of

258
00:13:30,920 --> 00:13:34,360
Speaker 8: corporate culture is aimed at making sure everybody is kind

259
00:13:34,360 --> 00:13:38,520
Speaker 8: of utilizing technology as much as possible. We're pretty careful

260
00:13:38,520 --> 00:13:41,400
Speaker 8: about it, I imagined most other competitors of ours are

261
00:13:41,440 --> 00:13:44,840
Speaker 8: as well. You know, obviously there's information security issues that

262
00:13:45,240 --> 00:13:46,880
Speaker 8: you want to make sure you have buttoned up before

263
00:13:46,880 --> 00:13:49,120
Speaker 8: you just kind of dump out this technology to everybody.

264
00:13:49,160 --> 00:13:51,839
Speaker 8: But you know, it's it's always a risk, right, I mean,

265
00:13:52,080 --> 00:13:57,280
Speaker 8: whenever we've had relatively or you know, revolutionary changes in technology,

266
00:13:57,600 --> 00:13:59,360
Speaker 8: part of the problem is that it looks like it's

267
00:13:59,400 --> 00:14:01,920
Speaker 8: going to be this huge productivity boom that you get

268
00:14:01,960 --> 00:14:04,319
Speaker 8: from it. Eventually, in the long run, you more or

269
00:14:04,400 --> 00:14:05,920
Speaker 8: less do get that, But in the meantime you have

270
00:14:06,000 --> 00:14:08,120
Speaker 8: this kind of messy period where people waste a lot

271
00:14:08,160 --> 00:14:09,560
Speaker 8: of time kind of trying to figure out how to

272
00:14:09,640 --> 00:14:11,400
Speaker 8: use it, and it ends up being kind of an

273
00:14:11,480 --> 00:14:14,880
Speaker 8: investment in productivity, whereas down for a little bit before

274
00:14:14,920 --> 00:14:17,080
Speaker 8: it comes up. So I don't get the sense that

275
00:14:17,120 --> 00:14:20,280
Speaker 8: we're necessarily looking at this as like, oh, we will

276
00:14:20,320 --> 00:14:23,320
Speaker 8: never need to hire more people. I think that that's

277
00:14:23,360 --> 00:14:26,200
Speaker 8: going to be a monstrous mistake if businesses actually do that,

278
00:14:26,280 --> 00:14:29,600
Speaker 8: because you know, it's just a kind of law of

279
00:14:29,600 --> 00:14:32,360
Speaker 8: the universe that your labor force ages every day and

280
00:14:32,560 --> 00:14:34,960
Speaker 8: you need a talent pipeline to continue to fill in

281
00:14:35,040 --> 00:14:36,960
Speaker 8: for people who are moving on for all sorts of

282
00:14:36,960 --> 00:14:41,000
Speaker 8: different reasons, whether that's retirements or pivots to other things.

283
00:14:42,480 --> 00:14:44,240
Speaker 7: How are you viewing inflation out there? I think a

284
00:14:44,280 --> 00:14:47,480
Speaker 7: lot of folks, myself included, are pleasant surprise that we

285
00:14:48,240 --> 00:14:51,640
Speaker 7: haven't seen higher level inflation that may have resulted from terrorists.

286
00:14:51,680 --> 00:14:53,920
Speaker 6: Right, I haven't really seen it in the numbers here.

287
00:14:54,400 --> 00:14:56,960
Speaker 8: How do you guys view that, I, you know, early

288
00:14:57,000 --> 00:14:59,880
Speaker 8: on was really confused about how to interpret the whole tarif.

289
00:15:00,240 --> 00:15:02,120
Speaker 8: I think that you know, most of folks in my

290
00:15:02,200 --> 00:15:06,240
Speaker 8: profession were you know, either suffering for some righteous indignation

291
00:15:06,320 --> 00:15:10,160
Speaker 8: about how silly and kind of you know, misdirected the

292
00:15:10,200 --> 00:15:12,800
Speaker 8: policy is. But that's not for us to debate or

293
00:15:12,840 --> 00:15:14,720
Speaker 8: really it's just trying to figure out what the what

294
00:15:14,760 --> 00:15:17,440
Speaker 8: the impact is. And you know, we've seen a lot

295
00:15:17,480 --> 00:15:19,400
Speaker 8: of price increases in a lot of different goods and

296
00:15:19,440 --> 00:15:22,400
Speaker 8: services for many years. I think a great example of

297
00:15:22,840 --> 00:15:25,880
Speaker 8: something that's really kind of illustrative of the whole situation

298
00:15:25,960 --> 00:15:28,320
Speaker 8: is in auto and home insurance. Right, if your auto

299
00:15:28,360 --> 00:15:32,080
Speaker 8: insurance rates rise, you are pretty much immediately going to switch.

300
00:15:32,120 --> 00:15:33,640
Speaker 2: You don't get utility.

301
00:15:33,200 --> 00:15:35,400
Speaker 8: From like the service that one of these you know,

302
00:15:35,480 --> 00:15:37,880
Speaker 8: insurers provides you on a day to day basis. You

303
00:15:37,920 --> 00:15:39,600
Speaker 8: need them maybe three or four times in your life,

304
00:15:39,640 --> 00:15:43,960
Speaker 8: hopefully fewer than that. So there's a first mover disadvantage

305
00:15:44,000 --> 00:15:46,840
Speaker 8: amongst the insurers to raise their rates, right, like they

306
00:15:46,880 --> 00:15:49,560
Speaker 8: would say, we'll try to capture market share from people

307
00:15:49,840 --> 00:15:52,800
Speaker 8: who are getting away from the companies that are kind

308
00:15:52,800 --> 00:15:55,000
Speaker 8: of forced to move with prices. I think that we're

309
00:15:55,000 --> 00:15:56,520
Speaker 8: going to see that with goods too. I mean, like

310
00:15:56,520 --> 00:16:00,480
Speaker 8: they're very substitutable across a number of different vectors and

311
00:16:00,720 --> 00:16:02,600
Speaker 8: you know, to this point, we haven't really seen much

312
00:16:02,600 --> 00:16:06,200
Speaker 8: in the inflation data that's shown that prices have risen significantly.

313
00:16:06,480 --> 00:16:08,040
Speaker 8: I think it's kind of crazy to look at one

314
00:16:08,120 --> 00:16:10,640
Speaker 8: hundred plus percent tariff rates on China and then say

315
00:16:10,840 --> 00:16:13,320
Speaker 8: a nine tenths increase in like window coverings is the

316
00:16:13,360 --> 00:16:14,760
Speaker 8: result of of that.

317
00:16:14,920 --> 00:16:17,760
Speaker 3: The heart of the matter is, are we in the

318
00:16:17,800 --> 00:16:19,520
Speaker 3: phrase that I'm using more and more now is a

319
00:16:19,560 --> 00:16:23,120
Speaker 3: decline in purchasing power among a huge body of Americans?

320
00:16:23,120 --> 00:16:24,400
Speaker 2: Okay?

321
00:16:24,440 --> 00:16:29,800
Speaker 3: Within the tariffs and the debate, how do we withstand prices?

322
00:16:29,840 --> 00:16:35,120
Speaker 3: And the research so far is we're accepting higher prices, right.

323
00:16:35,560 --> 00:16:38,440
Speaker 8: I think there is enough of the consumer base that

324
00:16:38,560 --> 00:16:41,680
Speaker 8: is accepting higher prices, right. I think that we focus

325
00:16:41,720 --> 00:16:44,840
Speaker 8: a lot of people who are struggling appropriately, so there's

326
00:16:44,880 --> 00:16:47,200
Speaker 8: policy action needs to be taken to try to help

327
00:16:47,240 --> 00:16:49,800
Speaker 8: people out. But like anyone who bought a home or

328
00:16:49,840 --> 00:16:53,840
Speaker 8: refinance their mortgage before twenty twenty has not suffered any

329
00:16:53,920 --> 00:16:57,160
Speaker 8: shelter inflation in five years, right, They've actually had their

330
00:16:57,160 --> 00:16:58,160
Speaker 8: purchasing power.

331
00:16:57,920 --> 00:16:59,080
Speaker 6: Increase over that whole time.

332
00:16:59,120 --> 00:17:00,520
Speaker 8: And I think that that's one of the key reasons

333
00:17:00,520 --> 00:17:04,119
Speaker 8: why we've seen the consumer writ large done so well here,

334
00:17:04,320 --> 00:17:06,919
Speaker 8: And I think that businesses will probably focus on that

335
00:17:06,960 --> 00:17:10,119
Speaker 8: and say, hey, if I'm charging a lot for a

336
00:17:10,160 --> 00:17:12,560
Speaker 8: frivolous option on a car, for instance, maybe I can

337
00:17:12,600 --> 00:17:14,520
Speaker 8: bump the price of that quite a lot while keeping

338
00:17:14,520 --> 00:17:17,879
Speaker 8: the base price lower so the broad consumer doesn't suffer

339
00:17:17,920 --> 00:17:19,880
Speaker 8: the same kind of inflation pressure as the ones who

340
00:17:19,880 --> 00:17:22,000
Speaker 8: are sort of better able to accept this price.

341
00:17:22,119 --> 00:17:23,600
Speaker 2: How much of.

342
00:17:23,480 --> 00:17:27,040
Speaker 3: This consumer boom that we have, you know, I don't

343
00:17:27,040 --> 00:17:29,760
Speaker 3: even know if they're doing Atlanta GDP now, but let's

344
00:17:29,760 --> 00:17:33,040
Speaker 3: call it two point five percent plus real GDP now

345
00:17:33,119 --> 00:17:37,400
Speaker 3: almost four four point four, four point eight, whatever it is.

346
00:17:37,800 --> 00:17:40,320
Speaker 3: How much of that do you calculate as a wealth effect?

347
00:17:40,760 --> 00:17:41,200
Speaker 6: A lot?

348
00:17:41,800 --> 00:17:45,040
Speaker 2: I do think that it's Lisa, A lot doesn't cut it.

349
00:17:45,160 --> 00:17:49,280
Speaker 8: I don't want a number eighty five ninety Yeah, No,

350
00:17:49,359 --> 00:17:52,159
Speaker 8: I pop is wealth effect. When folks ask me what

351
00:17:52,280 --> 00:17:54,880
Speaker 8: my biggest sort of concern downside risk thing that keeps

352
00:17:54,920 --> 00:17:57,320
Speaker 8: me up at night sort of thing, is my concern

353
00:17:57,520 --> 00:17:59,080
Speaker 8: is that we're going to get some sort of big

354
00:17:59,119 --> 00:18:02,119
Speaker 8: decline in asset prices that I think will crush the

355
00:18:02,200 --> 00:18:06,120
Speaker 8: consumer in the aggregate overnight. Right Like, I do think

356
00:18:06,119 --> 00:18:10,160
Speaker 8: that there's reasons why we see kind of weakening participation

357
00:18:10,200 --> 00:18:12,199
Speaker 8: amongst different groups in the labor market. Part of that

358
00:18:12,240 --> 00:18:14,320
Speaker 8: is because they've made enough money or they have enough

359
00:18:14,320 --> 00:18:17,080
Speaker 8: assets that they can retire early or reduce their work

360
00:18:17,440 --> 00:18:20,639
Speaker 8: load or that sort of thing that changes very quickly

361
00:18:20,720 --> 00:18:23,359
Speaker 8: if prices kind of you know, enter into a very

362
00:18:23,520 --> 00:18:27,120
Speaker 8: nasty sort of negative spiral. So it's not so much

363
00:18:27,119 --> 00:18:29,800
Speaker 8: that I think people are saying like, oh, my portfolio

364
00:18:29,800 --> 00:18:32,240
Speaker 8: went up x percent overnight, I can spend that much more.

365
00:18:32,400 --> 00:18:35,919
Speaker 8: It's more so like, how comfortable am I such that

366
00:18:35,960 --> 00:18:38,439
Speaker 8: I can make some more? You know, I have more

367
00:18:38,480 --> 00:18:41,520
Speaker 8: flexibility in my spending choices because of how well I'm

368
00:18:41,560 --> 00:18:42,520
Speaker 8: doing with my assets.

369
00:18:42,760 --> 00:18:45,920
Speaker 3: What's your GDP twelve months for real GDP?

370
00:18:46,480 --> 00:18:48,680
Speaker 8: Turish, I'm a little higher than that. I think we're

371
00:18:48,680 --> 00:18:51,439
Speaker 8: closer to like two and a half. I think that, yeah, well,

372
00:18:51,680 --> 00:18:52,280
Speaker 8: I mean, have.

373
00:18:52,280 --> 00:18:56,360
Speaker 2: We ever seen apatanism from Jefferies? I've always been an optimist.

374
00:18:56,560 --> 00:19:00,840
Speaker 8: I've am more amongst the most optimist economists mystic economists

375
00:19:00,840 --> 00:19:03,080
Speaker 8: out there, I would say, but I think that it's

376
00:19:03,119 --> 00:19:07,160
Speaker 8: underappreciated on a couple of different fronts. One, wealthier households

377
00:19:07,160 --> 00:19:08,720
Speaker 8: are actually going to get a tax break with the

378
00:19:08,720 --> 00:19:12,160
Speaker 8: big increase in salt deductions. Yeah, everybody in this room,

379
00:19:12,200 --> 00:19:14,720
Speaker 8: I think, is you know, kind of aware of that.

380
00:19:15,080 --> 00:19:17,800
Speaker 8: But I also think it's underappreciated that we actually have

381
00:19:17,960 --> 00:19:21,160
Speaker 8: much more certainty on fiscal policy now than we would

382
00:19:21,200 --> 00:19:24,560
Speaker 8: in previous years. Oh, tariffs are Yeah, they're kind of

383
00:19:24,560 --> 00:19:26,239
Speaker 8: in the rear view mirror, like I think the kind

384
00:19:26,280 --> 00:19:29,479
Speaker 8: of range of outcomes is narrower. But also just the

385
00:19:29,520 --> 00:19:33,000
Speaker 8: investment incentives and the tax structure. It's not that long

386
00:19:33,040 --> 00:19:35,960
Speaker 8: ago several years in the recent past where the IRS

387
00:19:36,040 --> 00:19:40,400
Speaker 8: was like reprinting tax forms on New Year's Eve because

388
00:19:40,440 --> 00:19:43,280
Speaker 8: some tax law had just been passed at the eleventh hour.

389
00:19:43,640 --> 00:19:45,480
Speaker 8: We've known the kind of broad strokes of what the

390
00:19:45,520 --> 00:19:48,240
Speaker 8: policy is going to look like since Independence Day, and

391
00:19:48,560 --> 00:19:50,520
Speaker 8: that's I can't remember the last year we've had something

392
00:19:50,560 --> 00:19:52,840
Speaker 8: like that where there's been enough time for business planning

393
00:19:53,440 --> 00:19:55,720
Speaker 8: for next year. So I think that we'll get some

394
00:19:55,880 --> 00:19:58,800
Speaker 8: dovetailing between stronger consumer and also business investment.

395
00:19:58,920 --> 00:19:59,879
Speaker 2: Thank you, Thomas Simms.

396
00:20:00,000 --> 00:20:02,040
Speaker 3: I really appreciate the break with Jeffreys aer or real

397
00:20:02,080 --> 00:20:05,480
Speaker 3: Dosa optimism moving forward, and we do that on this

398
00:20:05,640 --> 00:20:11,359
Speaker 3: FED day as well. Stay with us more from Bloomberg

399
00:20:11,480 --> 00:20:20,560
Speaker 3: Surveillance coming up after this.

400
00:20:20,560 --> 00:20:24,480
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

401
00:20:24,520 --> 00:20:27,919
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

402
00:20:27,960 --> 00:20:30,920
Speaker 1: with the Bloomberg Business app. You can also listen live

403
00:20:31,000 --> 00:20:34,560
Speaker 1: on Amazon Alexa from our flagship New York station, Just

404
00:20:34,600 --> 00:20:36,400
Speaker 1: say Alexa Play Bloomberg.

405
00:20:36,440 --> 00:20:38,399
Speaker 9: Eleven thirty is John Murray.

406
00:20:38,480 --> 00:20:41,000
Speaker 3: The last time he was in was really interesting about

407
00:20:41,000 --> 00:20:44,600
Speaker 3: his Texas and you know, just the boom that's out

408
00:20:44,600 --> 00:20:48,440
Speaker 3: there as well. How do you respond to people who

409
00:20:48,520 --> 00:20:53,480
Speaker 3: say it's not a boom, it's not a technological productivity

410
00:20:53,640 --> 00:20:56,119
Speaker 3: driven moment that we're in in.

411
00:20:56,520 --> 00:20:58,920
Speaker 10: Are you talking about Texas or are we talking about

412
00:20:58,920 --> 00:21:00,960
Speaker 10: the stuff mona Texas?

413
00:21:01,440 --> 00:21:02,359
Speaker 2: Right, don't New Jersey.

414
00:21:02,440 --> 00:21:04,880
Speaker 3: I mean to me, there's a lot of people out

415
00:21:04,920 --> 00:21:06,399
Speaker 3: there doubting what we're living.

416
00:21:06,800 --> 00:21:07,119
Speaker 2: Well.

417
00:21:07,280 --> 00:21:08,880
Speaker 10: I think that, you know, if you look at what's

418
00:21:08,920 --> 00:21:10,520
Speaker 10: going on in the markets, a lot of things are

419
00:21:10,560 --> 00:21:14,760
Speaker 10: being driven by earnings and that creates stability. I think

420
00:21:14,760 --> 00:21:17,399
Speaker 10: that's been one of the biggest reasons we've seen some

421
00:21:17,440 --> 00:21:20,879
Speaker 10: of these mega compounders continue in the marketplace today. And

422
00:21:20,880 --> 00:21:24,040
Speaker 10: I think that China is a really interesting component of

423
00:21:24,040 --> 00:21:27,639
Speaker 10: this because it has a lot of these mega compounder

424
00:21:27,640 --> 00:21:31,000
Speaker 10: companies trading at much lower multiples. And fun fact, we're

425
00:21:31,000 --> 00:21:34,120
Speaker 10: almost at Halloween. Since Halloween of twenty twenty two when

426
00:21:34,119 --> 00:21:37,240
Speaker 10: the market bottomed, the Chinese index is beating the S

427
00:21:37,280 --> 00:21:40,520
Speaker 10: and P five hundred. That's within Nvidia doing everything it's done.

428
00:21:40,560 --> 00:21:43,440
Speaker 10: So I think there's some really interesting opportunities out there,

429
00:21:44,880 --> 00:21:46,359
Speaker 10: and I want to talk about a handful of them.

430
00:21:46,400 --> 00:21:47,800
Speaker 9: But I also want to talk a little.

431
00:21:47,600 --> 00:21:49,639
Speaker 10: Bit about a QT at some point today, because that's

432
00:21:49,680 --> 00:21:50,680
Speaker 10: a literaryropical.

433
00:21:51,119 --> 00:21:52,960
Speaker 7: I mean, that's something all I care about is what

434
00:21:53,080 --> 00:21:54,920
Speaker 7: the FED is going to do with rates, but it

435
00:21:54,960 --> 00:21:57,320
Speaker 7: is what are they doing with their balance sheet as well?

436
00:21:57,480 --> 00:21:58,520
Speaker 6: How are you thinking about it?

437
00:21:58,680 --> 00:22:02,000
Speaker 10: Yeah, let me say I was actually thinking about coming

438
00:22:02,000 --> 00:22:05,760
Speaker 10: on air today and I was going through things I

439
00:22:05,760 --> 00:22:08,160
Speaker 10: wanted to discuss, and it occurred to me that we

440
00:22:08,240 --> 00:22:12,960
Speaker 10: have a third mandate for the FED, and the first

441
00:22:12,960 --> 00:22:17,600
Speaker 10: two unemployment and inflation. But the third mandate is inherited,

442
00:22:17,680 --> 00:22:22,159
Speaker 10: and that is managing balance sheet liquidity. Post the GFC,

443
00:22:22,720 --> 00:22:25,520
Speaker 10: they entered into this new world era where they have

444
00:22:25,600 --> 00:22:29,399
Speaker 10: to continually monitor what they're doing on their balance sheet,

445
00:22:29,640 --> 00:22:31,600
Speaker 10: and this is really a new mandate for them. And

446
00:22:31,680 --> 00:22:34,520
Speaker 10: if you look at what happened in nineteen, those reserves

447
00:22:34,520 --> 00:22:38,440
Speaker 10: on the federal balance sheet dipped lower below that three

448
00:22:38,440 --> 00:22:41,480
Speaker 10: trillion mark, and that created real scares in the repo market.

449
00:22:41,920 --> 00:22:45,240
Speaker 10: We're seeing the similar thing today. Why is the Fed

450
00:22:45,240 --> 00:22:48,480
Speaker 10: all of a sudden stopping QT. What is the reason

451
00:22:48,520 --> 00:22:50,760
Speaker 10: for that? Well, it has to do with the ability

452
00:22:50,760 --> 00:22:54,800
Speaker 10: for banks to lend money in that repo market, and

453
00:22:54,840 --> 00:22:57,400
Speaker 10: that reserves on their balance sheet close to that three

454
00:22:57,440 --> 00:23:00,119
Speaker 10: trillion mark is a big deal. So the reason I

455
00:23:00,160 --> 00:23:02,560
Speaker 10: say this is because because we live in a world

456
00:23:02,560 --> 00:23:06,280
Speaker 10: now where defense always going to be focused on what

457
00:23:06,440 --> 00:23:08,520
Speaker 10: is on their balance sheet and how much and if

458
00:23:08,520 --> 00:23:11,080
Speaker 10: they're doing q E or QT, I think that creates

459
00:23:11,119 --> 00:23:14,119
Speaker 10: a real dynamic at play in the financial plumbing and

460
00:23:14,160 --> 00:23:17,080
Speaker 10: in the financial markets. And one reason I like regional

461
00:23:17,119 --> 00:23:21,920
Speaker 10: banks they will benefit with QT coming to an end

462
00:23:21,960 --> 00:23:24,520
Speaker 10: because that will make it easier for them to lend

463
00:23:24,640 --> 00:23:28,920
Speaker 10: money and that will produce a pop in their nims.

464
00:23:29,240 --> 00:23:32,560
Speaker 3: It is a general statement the banks are behind, right,

465
00:23:32,640 --> 00:23:34,600
Speaker 3: and this melt up the banks.

466
00:23:34,280 --> 00:23:37,560
Speaker 2: Oh yeah or behind? Oh yeah? How behind is behind?

467
00:23:37,600 --> 00:23:40,439
Speaker 9: They're really behind? They're flager date the.

468
00:23:40,800 --> 00:23:43,560
Speaker 3: I know, but on a p or book price to book,

469
00:23:43,640 --> 00:23:47,000
Speaker 3: you know, the stuff you look at, measure the behind

470
00:23:47,080 --> 00:23:47,680
Speaker 3: that they are.

471
00:23:48,680 --> 00:23:49,000
Speaker 2: Tom.

472
00:23:49,040 --> 00:23:52,000
Speaker 10: You can get regional banks on a price to book

473
00:23:52,040 --> 00:23:55,880
Speaker 10: basis at the same level that they were in May

474
00:23:55,960 --> 00:24:01,000
Speaker 10: of twenty twenty three when you had the SVB and our.

475
00:24:00,840 --> 00:24:02,840
Speaker 9: First public blow up. They're cheap.

476
00:24:02,880 --> 00:24:06,280
Speaker 2: So what's the catalyst to make that look in video like?

477
00:24:06,600 --> 00:24:08,320
Speaker 9: Aha? Well, three things.

478
00:24:08,760 --> 00:24:11,200
Speaker 10: The first I would mention, I think that the stopping

479
00:24:11,200 --> 00:24:13,400
Speaker 10: of QT is a real tailwind.

480
00:24:14,119 --> 00:24:14,879
Speaker 9: Deregulation.

481
00:24:15,400 --> 00:24:17,760
Speaker 10: That's a big component with what's going on with the

482
00:24:17,800 --> 00:24:20,600
Speaker 10: Trump administration, so they want to continue that. We're seeing

483
00:24:20,640 --> 00:24:23,040
Speaker 10: him in the activity already. So you know, you've seen

484
00:24:23,160 --> 00:24:27,040
Speaker 10: Cadence get purchased recently so by Huntingdon Bank shares, so

485
00:24:27,080 --> 00:24:28,680
Speaker 10: I think they'll see more M and A. But I

486
00:24:28,720 --> 00:24:33,719
Speaker 10: think the main driver is two big pieces valuation and

487
00:24:33,800 --> 00:24:36,000
Speaker 10: earnings growth. You've got earnings growth coming out of these

488
00:24:36,040 --> 00:24:39,879
Speaker 10: banks in the high teens sometimes even twenty percent, so

489
00:24:39,960 --> 00:24:44,040
Speaker 10: stepergield curve, low valuations, fast earnings, deregulation and then the

490
00:24:44,040 --> 00:24:47,040
Speaker 10: stopping of QT. All those things coalesce into a pretty

491
00:24:47,040 --> 00:24:47,840
Speaker 10: interesting basket.

492
00:24:48,160 --> 00:24:50,959
Speaker 3: Jack Murray with his chief investment officer at NFJA. We

493
00:24:50,960 --> 00:24:53,720
Speaker 3: welcome all of you across America. We welcome at you

494
00:24:53,840 --> 00:24:57,880
Speaker 3: in Texas where he is from, and we say good

495
00:24:57,920 --> 00:24:59,680
Speaker 3: morning on YouTube as well worldwide.

496
00:24:59,680 --> 00:24:59,919
Speaker 2: Good one.

497
00:25:00,000 --> 00:25:03,440
Speaker 3: We're on the Pacific Rim where Tyler Kendall is in Korea,

498
00:25:03,480 --> 00:25:06,280
Speaker 3: good morning and good night, I should say, in India

499
00:25:06,280 --> 00:25:10,000
Speaker 3: as well. Thanks for your attendance on a daily basis

500
00:25:10,040 --> 00:25:13,320
Speaker 3: on YouTube. Subscribe to Bloomberg Podcast.

501
00:25:13,240 --> 00:25:15,600
Speaker 7: Paul Sweet Johnny, you mentioned China here, and we've got

502
00:25:15,600 --> 00:25:20,440
Speaker 7: President Trump meeting with President She tomorrow, presumably in South Korea.

503
00:25:20,520 --> 00:25:23,280
Speaker 7: What is your China call here? So we've been very

504
00:25:23,280 --> 00:25:25,520
Speaker 7: bullish on China. We got very bullish, as I mentioned

505
00:25:25,520 --> 00:25:28,040
Speaker 7: back in twenty twenty two. We've stayed long China.

506
00:25:28,320 --> 00:25:30,800
Speaker 10: I think actually in our international and our Emerging market funds,

507
00:25:30,800 --> 00:25:33,600
Speaker 10: we might be the top allocators within that region in

508
00:25:33,760 --> 00:25:36,359
Speaker 10: China gues, So we're really bullish there. You know, what

509
00:25:36,400 --> 00:25:39,240
Speaker 10: I would say is that the fact that they're meeting

510
00:25:39,600 --> 00:25:42,280
Speaker 10: is a real positive. There's definitely been you know, some

511
00:25:42,359 --> 00:25:45,280
Speaker 10: hand gar and aids thrown back and forth between the two.

512
00:25:47,040 --> 00:25:49,160
Speaker 10: I think that the last time they met was back

513
00:25:49,200 --> 00:25:51,800
Speaker 10: in two thousand and nineteen. That was for a brief

514
00:25:51,840 --> 00:25:54,959
Speaker 10: period in Japan. And before that it was at mar Lago.

515
00:25:55,640 --> 00:25:59,320
Speaker 10: They're not going to meet in Korea without some positives

516
00:25:59,359 --> 00:26:02,280
Speaker 10: to share for the market. The reality is President she

517
00:26:03,040 --> 00:26:06,119
Speaker 10: knows that he needs to continue the strength in his economy.

518
00:26:06,359 --> 00:26:10,159
Speaker 10: He wants to open up some of the pathways for communication.

519
00:26:10,320 --> 00:26:12,120
Speaker 10: So I think that there are real positives that could

520
00:26:12,160 --> 00:26:14,040
Speaker 10: come out of this EVS or one thing they're going

521
00:26:14,119 --> 00:26:14,520
Speaker 10: to tackle.

522
00:26:14,640 --> 00:26:15,600
Speaker 9: Rare earths are another.

523
00:26:16,160 --> 00:26:19,119
Speaker 10: The rare earth thing is funny because they're actually not

524
00:26:19,280 --> 00:26:20,000
Speaker 10: rare as we know.

525
00:26:20,160 --> 00:26:22,840
Speaker 9: They're just refined in China.

526
00:26:22,880 --> 00:26:24,959
Speaker 10: But these are real levers and the reality is we

527
00:26:25,040 --> 00:26:28,720
Speaker 10: need the two superpowers to work together. So I think

528
00:26:28,720 --> 00:26:31,480
Speaker 10: this could be a real catalyst. But to be quite candid,

529
00:26:31,520 --> 00:26:33,879
Speaker 10: I think the main catalyst is you've got a lot

530
00:26:33,920 --> 00:26:36,760
Speaker 10: of earnings growth coming out of China, really low valuation,

531
00:26:37,240 --> 00:26:39,320
Speaker 10: and they're a sleeper in the AI trade.

532
00:26:39,680 --> 00:26:40,480
Speaker 9: And if you look at.

533
00:26:40,440 --> 00:26:42,320
Speaker 10: What's going on in the US, I mean, Jensen Wand

534
00:26:42,359 --> 00:26:44,640
Speaker 10: came out this summer and said that Deep Seek and

535
00:26:44,880 --> 00:26:46,840
Speaker 10: Tencent and Bobby he said their models are as good

536
00:26:46,840 --> 00:26:49,280
Speaker 10: as ours. And I don't really think that Americans are

537
00:26:49,280 --> 00:26:52,520
Speaker 10: fully pricing that in and I think there was a

538
00:26:52,600 --> 00:26:54,880
Speaker 10: lot of scare you know, maybe several months back about

539
00:26:54,920 --> 00:26:57,840
Speaker 10: delisting at eight RS. You know that has not come

540
00:26:57,880 --> 00:26:59,960
Speaker 10: to fruition. I do not think that would be good

541
00:27:00,400 --> 00:27:04,720
Speaker 10: for either country. The reality is China wants capital. She

542
00:27:04,920 --> 00:27:08,320
Speaker 10: wants money to flow into China, and he wants investment

543
00:27:08,400 --> 00:27:11,159
Speaker 10: from the US. And Trump knows that he needs to

544
00:27:11,240 --> 00:27:13,960
Speaker 10: work with you to find a path here. Finanall is

545
00:27:14,000 --> 00:27:16,040
Speaker 10: the big wild card. If they find a way to

546
00:27:16,080 --> 00:27:18,520
Speaker 10: talk about that and restrict some of that coming to

547
00:27:18,520 --> 00:27:20,399
Speaker 10: the US, that'd be a big win. So this is

548
00:27:20,400 --> 00:27:23,639
Speaker 10: probably the beginning of meetings. I would expect they meet again,

549
00:27:24,040 --> 00:27:27,399
Speaker 10: hopefully around Christmas time, maybe mar Lago. Maybe we get

550
00:27:27,440 --> 00:27:29,560
Speaker 10: another meeting in Florida between g and Trump.

551
00:27:29,680 --> 00:27:32,160
Speaker 3: Do you model and the prison here for John Murray

552
00:27:32,240 --> 00:27:34,440
Speaker 3: folks is Texas, which we all agree is it's a

553
00:27:34,640 --> 00:27:38,240
Speaker 3: unique separate and I mean I needed a passport to

554
00:27:38,240 --> 00:27:41,040
Speaker 3: get through the George Bush Airport in Houston.

555
00:27:41,359 --> 00:27:43,480
Speaker 10: Yeah sure, yeah, you know, customers, I think it's the

556
00:27:43,600 --> 00:27:45,480
Speaker 10: ninth largest economy in the world.

557
00:27:45,320 --> 00:27:46,639
Speaker 2: Is thank you.

558
00:27:46,720 --> 00:27:48,480
Speaker 9: Yeah, yeah, it's really big.

559
00:27:48,680 --> 00:27:51,199
Speaker 3: So if we do this China Ai thing and all

560
00:27:51,240 --> 00:27:53,960
Speaker 3: the happy talking Trump and G and all, that, does

561
00:27:53,960 --> 00:27:57,520
Speaker 3: that mean the Chinese economy actually lifts up and they

562
00:27:57,520 --> 00:27:59,919
Speaker 3: get back to a real consumption that's been missing.

563
00:28:00,640 --> 00:28:02,880
Speaker 9: I think it's very possible. I really do.

564
00:28:02,960 --> 00:28:04,680
Speaker 10: I think that if you look at what's going on,

565
00:28:05,480 --> 00:28:07,680
Speaker 10: you know, Jack maw coming back was a big deal.

566
00:28:08,200 --> 00:28:11,960
Speaker 10: Pony Moss come out, he's the CEO of Tencent in

567
00:28:12,040 --> 00:28:14,960
Speaker 10: support of some of the moves that G is making.

568
00:28:15,040 --> 00:28:17,680
Speaker 10: So I think that she can take a page from

569
00:28:17,680 --> 00:28:20,600
Speaker 10: the playbook of Trump that you need to be working

570
00:28:20,720 --> 00:28:24,159
Speaker 10: with your top leaders of the biggest companies, the biggest

571
00:28:24,160 --> 00:28:28,159
Speaker 10: employers in order for the country to thrive. So I

572
00:28:28,200 --> 00:28:31,160
Speaker 10: think that G is doing that. He did clean house

573
00:28:31,200 --> 00:28:34,400
Speaker 10: in his cabinet recently. That's an interesting move that he made,

574
00:28:34,440 --> 00:28:36,760
Speaker 10: so he definitely has stacked it with people that are

575
00:28:36,760 --> 00:28:38,800
Speaker 10: aligned with him. But if I'm being honest, it's no

576
00:28:38,840 --> 00:28:40,720
Speaker 10: different than generally what we see here in the US,

577
00:28:40,720 --> 00:28:42,720
Speaker 10: people trying to put people around them that they think

578
00:28:42,720 --> 00:28:43,520
Speaker 10: are aligned with them.

579
00:28:43,600 --> 00:28:45,959
Speaker 9: So I do think that we have some upside here.

580
00:28:46,040 --> 00:28:48,520
Speaker 6: Well, now, emmy learning China, well program.

581
00:28:48,120 --> 00:28:51,840
Speaker 3: Note on that Elizabeth Economy with us here recently, and

582
00:28:51,960 --> 00:28:53,080
Speaker 3: you know she's so subtle.

583
00:28:53,560 --> 00:28:56,040
Speaker 2: Time shut up and read this book. Sure, I mean,

584
00:28:56,080 --> 00:28:57,320
Speaker 2: she's so gentle about it.

585
00:28:57,400 --> 00:28:59,720
Speaker 3: Yep, And I'm actually reading a book on the Chinese

586
00:28:59,760 --> 00:29:03,920
Speaker 3: milllitary because doctor Economy said a stupid read it. Absolutely,

587
00:29:04,040 --> 00:29:06,280
Speaker 3: I don't have a report on it yet, but you know,

588
00:29:06,360 --> 00:29:08,680
Speaker 3: like you say, they replaced generals.

589
00:29:08,160 --> 00:29:09,800
Speaker 2: And yeah, aderals as.

590
00:29:09,760 --> 00:29:12,480
Speaker 7: Such, Mike proxy for China has always been Ali Baba

591
00:29:12,480 --> 00:29:14,360
Speaker 7: and the stocks up one hundred and ten percent a

592
00:29:14,560 --> 00:29:16,560
Speaker 7: year to date. So my boy Joe Sai getting it

593
00:29:16,600 --> 00:29:19,440
Speaker 7: done there at Ali Baba. You guys are value investors.

594
00:29:19,480 --> 00:29:21,960
Speaker 7: How do you define value? So we look at value

595
00:29:22,160 --> 00:29:25,600
Speaker 7: through a few dimensions. The first is based on evaluation

596
00:29:25,680 --> 00:29:29,640
Speaker 7: relative to a company's history, the market, and peers. But

597
00:29:29,680 --> 00:29:31,560
Speaker 7: I will tell you that the peer group is the

598
00:29:31,600 --> 00:29:35,640
Speaker 7: real crown jewel of our research because peers are not homogeneous.

599
00:29:35,800 --> 00:29:37,760
Speaker 7: Think about the housing market, for example, if you look

600
00:29:37,800 --> 00:29:41,080
Speaker 7: at homes you know in New York or California, you

601
00:29:41,120 --> 00:29:45,160
Speaker 7: really have to create homogeneous peer sets to determine if

602
00:29:45,200 --> 00:29:47,440
Speaker 7: a house is expensive or cheap. It's not just you know,

603
00:29:47,440 --> 00:29:49,120
Speaker 7: every house on your block is not a comp. So

604
00:29:49,120 --> 00:29:51,200
Speaker 7: if we take regional banks, you can't say that they're

605
00:29:51,240 --> 00:29:53,680
Speaker 7: all comps because some have wealth management, some are tied

606
00:29:53,680 --> 00:29:56,400
Speaker 7: to interest rates. So you need to really have a

607
00:29:56,440 --> 00:29:59,040
Speaker 7: statistically tight group and.

608
00:30:00,120 --> 00:30:02,440
Speaker 3: Single best buy. Are you allowed to say like this

609
00:30:02,480 --> 00:30:03,800
Speaker 3: is our single best buy.

610
00:30:03,920 --> 00:30:05,760
Speaker 10: Well, that would be if I do the single best

611
00:30:05,760 --> 00:30:07,360
Speaker 10: buy it. I have a one stock portfolio, so we

612
00:30:07,440 --> 00:30:11,120
Speaker 10: run diversified. But I will tell you that Ali Baba

613
00:30:11,160 --> 00:30:14,280
Speaker 10: is our top weight in our international So it's nice.

614
00:30:14,680 --> 00:30:18,400
Speaker 3: Paul's really on top of this. Well, give us twenty seconds,

615
00:30:18,680 --> 00:30:19,720
Speaker 3: Ali Baba.

616
00:30:19,520 --> 00:30:21,120
Speaker 9: Go okay, So Ali Baba.

617
00:30:21,240 --> 00:30:23,480
Speaker 10: First thing I'll say is they have they have made

618
00:30:23,480 --> 00:30:26,800
Speaker 10: a commitment to do over fifty two billion in cloud

619
00:30:26,880 --> 00:30:30,040
Speaker 10: infrastructure over the next three years. That's an enormous commitment

620
00:30:30,080 --> 00:30:33,200
Speaker 10: to AI. You're trading at some of the lowest valuations

621
00:30:33,200 --> 00:30:36,120
Speaker 10: on EVA to EBITDA basis over the last decade. We

622
00:30:36,200 --> 00:30:37,760
Speaker 10: have a long way to go. They've been increasing their

623
00:30:37,760 --> 00:30:40,280
Speaker 10: dividend and they now pay a dividend. Ali Baba went

624
00:30:40,280 --> 00:30:43,160
Speaker 10: from a growth stock to a value stock. So you've

625
00:30:43,160 --> 00:30:45,640
Speaker 10: got dividing growth, You've got tons of cash in the

626
00:30:45,640 --> 00:30:49,080
Speaker 10: balance sheet, big investments in AI. I think the future

627
00:30:49,160 --> 00:30:51,920
Speaker 10: is really bright for these guys. This is a combination

628
00:30:52,120 --> 00:30:56,440
Speaker 10: of Amazon in VideA. You have all these components tied

629
00:30:56,440 --> 00:31:03,880
Speaker 10: together within the Baba infrastructure. Cloud infrastructure Chips Models Retails

630
00:31:03,920 --> 00:31:04,840
Speaker 10: that covers it.

631
00:31:05,440 --> 00:31:08,560
Speaker 2: You guys, I see you. You're on with Robin Hood

632
00:31:08,640 --> 00:31:09,880
Speaker 2: right now. Absolutely.

633
00:31:12,280 --> 00:31:14,280
Speaker 6: I belong to Joe Sigh for a long time.

634
00:31:14,320 --> 00:31:17,480
Speaker 10: Tell me one thing about quick qick quick. Taiwan is

635
00:31:17,520 --> 00:31:20,280
Speaker 10: the big wildcard. What is going to happen with Taiwan?

636
00:31:21,520 --> 00:31:24,160
Speaker 10: If we looked at the playbook for Hong Kong, they

637
00:31:24,360 --> 00:31:26,520
Speaker 10: took it back, and they did it slowly, but they

638
00:31:26,520 --> 00:31:28,720
Speaker 10: did take it back. I think that that's going to

639
00:31:28,760 --> 00:31:30,000
Speaker 10: be the play very slowly.

640
00:31:30,240 --> 00:31:32,760
Speaker 3: John, Thank you John Mowery with his Chief Investment Officer

641
00:31:32,880 --> 00:31:33,760
Speaker 3: NFJ there.

642
00:31:35,320 --> 00:31:36,240
Speaker 2: Stay with us.

643
00:31:36,280 --> 00:31:46,920
Speaker 3: More from Bloomberg Surveillance coming up after this.

644
00:31:46,920 --> 00:31:50,840
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

645
00:31:50,880 --> 00:31:54,160
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

646
00:31:54,280 --> 00:31:57,280
Speaker 1: with the Bloomberg Business app. You can also listen live

647
00:31:57,320 --> 00:32:01,160
Speaker 1: on Amazon Alexa from our flagship New York's Just Say

648
00:32:01,320 --> 00:32:03,520
Speaker 1: Alexa play Bloomberg eleven thirty.

649
00:32:03,760 --> 00:32:08,240
Speaker 3: In two thousand and six, they found a tree which

650
00:32:08,280 --> 00:32:11,440
Speaker 3: is growing to the sky. It's out in California. It's

651
00:32:11,440 --> 00:32:13,280
Speaker 3: a redwood. It's a secret where it is. They want

652
00:32:13,280 --> 00:32:16,120
Speaker 3: to keep the idiots away from it. It's over a

653
00:32:16,120 --> 00:32:21,320
Speaker 3: football field tall, which is nuts. It's our example of

654
00:32:21,440 --> 00:32:26,880
Speaker 3: trees to the sky. Alicia Levine knows that earnings revenues

655
00:32:26,920 --> 00:32:30,560
Speaker 3: the stock market in Nvidia, it doesn't grow into the sky.

656
00:32:31,040 --> 00:32:34,600
Speaker 3: Head of Investment Strategy and Forest Wisdom at BNY Wealth

657
00:32:34,960 --> 00:32:38,360
Speaker 3: joins us this morning, how close are we to redwood

658
00:32:38,480 --> 00:32:40,080
Speaker 3: height in this stock market?

659
00:32:40,320 --> 00:32:43,240
Speaker 11: So I don't think we're at redwood height, because I

660
00:32:43,280 --> 00:32:46,800
Speaker 11: do think the earnings are delivering and coming in better

661
00:32:46,840 --> 00:32:49,160
Speaker 11: than expected. And the multiple that we're at today now

662
00:32:49,160 --> 00:32:50,960
Speaker 11: we're at twenty three times, but for most of the

663
00:32:51,040 --> 00:32:54,680
Speaker 11: year we were at twenty two times forward earnings, which

664
00:32:54,720 --> 00:32:57,440
Speaker 11: is where we were a year ago when we worried

665
00:32:57,520 --> 00:33:02,520
Speaker 11: about expensive markets. It's the earning that are driving this market.

666
00:33:02,840 --> 00:33:06,520
Speaker 11: And so I don't see redwood to the sky. I

667
00:33:06,720 --> 00:33:10,160
Speaker 11: see a very careful path upward, climbing that tree.

668
00:33:10,320 --> 00:33:13,360
Speaker 3: And now the fedor doing differential equations today, Okay, let's

669
00:33:13,360 --> 00:33:16,800
Speaker 3: look at a quadratic glide path. Sure, we're spending all

670
00:33:16,880 --> 00:33:21,320
Speaker 3: this money on CAPEX. There's another curve line which is

671
00:33:21,360 --> 00:33:24,320
Speaker 3: someday it's going to pay off as well. Where in

672
00:33:24,440 --> 00:33:28,240
Speaker 3: the X access do we learn if AI pays off?

673
00:33:28,640 --> 00:33:32,560
Speaker 3: If you've got quadratic glide pass crossing at some point.

674
00:33:32,840 --> 00:33:35,480
Speaker 11: Look, it's a great question, I would say as a

675
00:33:35,520 --> 00:33:38,400
Speaker 11: market matter, I'd say I'd say you need to have

676
00:33:38,520 --> 00:33:42,000
Speaker 11: visibility into the next eighteen to twenty four months here, right,

677
00:33:42,080 --> 00:33:42,760
Speaker 11: Like it can't.

678
00:33:42,600 --> 00:33:43,200
Speaker 6: Be five years.

679
00:33:43,280 --> 00:33:43,440
Speaker 3: Right.

680
00:33:43,680 --> 00:33:45,480
Speaker 6: If it's five years, you're.

681
00:33:45,320 --> 00:33:47,920
Speaker 11: Going to wind up with a market that's going to

682
00:33:48,000 --> 00:33:50,880
Speaker 11: reset at the top here. So I think it has

683
00:33:50,920 --> 00:33:53,080
Speaker 11: to be eighteen to twenty four months. This is how

684
00:33:53,080 --> 00:33:55,480
Speaker 11: we invest our client capital. We do twelve to eighteen

685
00:33:55,480 --> 00:33:59,160
Speaker 11: months forward. That's probably the right time horizon. That's why

686
00:33:59,320 --> 00:34:01,480
Speaker 11: we use far forward earnings on the S and P,

687
00:34:02,160 --> 00:34:04,680
Speaker 11: not the trailing. I think the trailing is irrelevant. It's

688
00:34:04,720 --> 00:34:07,600
Speaker 11: the forward. It's always looking forward. So if you have

689
00:34:08,280 --> 00:34:13,040
Speaker 11: a monetization of the cap X within the next eighteen

690
00:34:13,080 --> 00:34:16,800
Speaker 11: months or so, then the market's fine. Then you're opening.

691
00:34:16,920 --> 00:34:20,800
Speaker 3: You don't hear that in the conference calls, Yeah, Carol

692
00:34:20,800 --> 00:34:24,319
Speaker 3: on timblebeyond, like do we go down on down?

693
00:34:24,400 --> 00:34:26,360
Speaker 2: Do we go down four thousand points?

694
00:34:26,560 --> 00:34:29,520
Speaker 11: So it's no, I mean it's I don't think it's today.

695
00:34:30,120 --> 00:34:32,799
Speaker 11: I don't think it's the earnings call. It's forty eight

696
00:34:32,840 --> 00:34:35,879
Speaker 11: hours is so let's call it rich. It's a rich

697
00:34:35,960 --> 00:34:38,040
Speaker 11: forty eight hours, it can be up for two days

698
00:34:38,080 --> 00:34:41,240
Speaker 11: straight just on what could affect the markets. It's not today,

699
00:34:41,239 --> 00:34:43,759
Speaker 11: but it has to be some visibility. And as you know,

700
00:34:43,880 --> 00:34:46,880
Speaker 11: some of the companies that have actually shown to monetize

701
00:34:46,920 --> 00:34:50,000
Speaker 11: some of their investments earlier have done better than others,

702
00:34:50,440 --> 00:34:53,200
Speaker 11: and where there was a question about it. I can't

703
00:34:53,239 --> 00:34:56,720
Speaker 11: talk about specific names, but you saw the stocks languish

704
00:34:56,800 --> 00:35:00,080
Speaker 11: for a year or eighteen months because there's investment with

705
00:35:00,160 --> 00:35:03,080
Speaker 11: no payoffs. So it is very clear that there has.

706
00:35:02,960 --> 00:35:03,800
Speaker 6: To be some.

707
00:35:05,239 --> 00:35:06,120
Speaker 11: ROI here.

708
00:35:06,480 --> 00:35:09,120
Speaker 9: Coming down to the bottom line, how do you.

709
00:35:09,120 --> 00:35:11,239
Speaker 6: Think about the one Big Beautiful bill.

710
00:35:11,280 --> 00:35:12,600
Speaker 7: A lot of folks are saying that's going to be

711
00:35:12,600 --> 00:35:16,760
Speaker 7: a real driver for growth in twenty twenty six.

712
00:35:16,960 --> 00:35:18,880
Speaker 6: We're worried about tariffs in the short.

713
00:35:18,719 --> 00:35:20,799
Speaker 7: Term, but how about in twenty twenty six with some

714
00:35:20,880 --> 00:35:22,360
Speaker 7: of the legislation that has passed.

715
00:35:22,400 --> 00:35:26,879
Speaker 11: So I think it's a huge driver. It largely offset

716
00:35:27,640 --> 00:35:32,120
Speaker 11: the drags for tariffs on the corporate sector in the aggregate.

717
00:35:32,640 --> 00:35:37,080
Speaker 11: And I'm saying that slowly and clearly because not every company,

718
00:35:37,480 --> 00:35:41,080
Speaker 11: for instance, a furniture company, is going to feel the

719
00:35:41,120 --> 00:35:45,600
Speaker 11: effects of the One Big Beautiful bill. But overall, the

720
00:35:46,600 --> 00:35:54,120
Speaker 11: tax consequences and the cash flow nature of investing offsets

721
00:35:54,600 --> 00:35:58,640
Speaker 11: the drag for tariffs. It's enormous on the corporate sector,

722
00:35:58,680 --> 00:36:02,640
Speaker 11: which is this year, which is why earnings are so strong.

723
00:36:03,120 --> 00:36:05,840
Speaker 11: We don't see the effects of tariffs. And in the

724
00:36:05,840 --> 00:36:08,279
Speaker 11: first quarter of twenty twenty six you have the consumer

725
00:36:08,360 --> 00:36:12,400
Speaker 11: support coming from the tax code, so refunds from the

726
00:36:12,440 --> 00:36:17,040
Speaker 11: IRS February, March, and April. So you're supporting the lower

727
00:36:17,120 --> 00:36:20,200
Speaker 11: end of the consumer that are available to get these

728
00:36:20,280 --> 00:36:22,320
Speaker 11: refunds while you're supporting corporates.

729
00:36:22,360 --> 00:36:22,920
Speaker 9: It's huge.

730
00:36:23,000 --> 00:36:24,960
Speaker 2: Well, Paul, to me, that's the question of the day

731
00:36:25,000 --> 00:36:25,520
Speaker 2: that you asked.

732
00:36:25,520 --> 00:36:29,120
Speaker 3: I mean, to me, it's been underanalyzed. Yep, it's been

733
00:36:29,239 --> 00:36:32,960
Speaker 3: under It's not in the zeitgeist here as well. And

734
00:36:33,000 --> 00:36:35,359
Speaker 3: you just look at it as one big stimulus, I mean,

735
00:36:35,400 --> 00:36:37,520
Speaker 3: the big beautiful stimulus.

736
00:36:36,960 --> 00:36:40,200
Speaker 11: I think is I think the more important point here

737
00:36:40,320 --> 00:36:45,280
Speaker 11: is when you think about modeling this, it's been very univariable.

738
00:36:45,560 --> 00:36:49,160
Speaker 11: What are the effects of tariffs on an economy? Well,

739
00:36:49,160 --> 00:36:51,960
Speaker 11: that's fine, everything else being equal, but everything else is

740
00:36:52,000 --> 00:36:57,280
Speaker 11: not equal. It's a dynamic model. There's fiscal policy as well,

741
00:36:57,640 --> 00:37:01,319
Speaker 11: coming with the unusual trade policy for the country, and

742
00:37:01,480 --> 00:37:05,880
Speaker 11: actually it's offsetting it and encouraging capex twenty seconds.

743
00:37:05,920 --> 00:37:09,360
Speaker 3: If we get lower interest rates, there's a univariable ambiguity there.

744
00:37:10,080 --> 00:37:13,600
Speaker 3: We can have a positive construct with lower rates.

745
00:37:13,600 --> 00:37:15,920
Speaker 11: Camera absolutely, absolutely, I do.

746
00:37:16,000 --> 00:37:19,160
Speaker 3: Okay there, I'm pretty I'm just reading Forbozi here, trying

747
00:37:19,160 --> 00:37:19,600
Speaker 3: to keep up.

748
00:37:21,080 --> 00:37:25,440
Speaker 11: Look, you know we are lower rates, higher market, everything

749
00:37:25,440 --> 00:37:27,799
Speaker 11: else being equal, as long as inflation doesn't get to

750
00:37:27,840 --> 00:37:32,400
Speaker 11: four percent. Okay, so the market's accepting three. The Feds

751
00:37:32,440 --> 00:37:35,240
Speaker 11: restarted the cutting cycle at inflation at three percent.

752
00:37:35,560 --> 00:37:38,160
Speaker 3: Michael Barr's taking notes. Alicia Levine, thank you so much.

753
00:37:38,200 --> 00:37:40,480
Speaker 3: With Bny there on the lift in the market.

754
00:37:40,560 --> 00:37:44,839
Speaker 2: Let us make notes. She has said participate in equities.

755
00:37:45,040 --> 00:37:46,400
Speaker 2: She has been correct.

756
00:37:46,840 --> 00:37:51,680
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,

757
00:37:51,800 --> 00:37:55,600
Speaker 1: and anywhere else you get your podcasts. Listen live each

758
00:37:55,600 --> 00:37:59,440
Speaker 1: weekday seven to ten am Eastern on Bloomberg dot Com,

759
00:38:00,040 --> 00:38:03,799
Speaker 1: Heeartradio app, tune In, and the Bloomberg Business App. You

760
00:38:03,840 --> 00:38:07,200
Speaker 1: can also watch us live every weekday on YouTube and

761
00:38:07,400 --> 00:38:09,120
Speaker 1: always on the Bloomberg terminal