WEBVTT - Trudeau Resigns, Barr to Step Down 0:00:02.720 --> 0:00:10.520 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.560 --> 0:00:14.480 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:14.560 --> 0:00:17.800 Eastern on Apple Coarclay, and Android Auto with the Bloomberg 0:00:17.880 --> 0:00:21.000 Business App. Listen on demand wherever you get your podcasts, 0:00:21.320 --> 0:00:23.960 or watch us live on YouTube. 0:00:24.480 --> 0:00:26.640 So let's get to the news out of Canada. Prime 0:00:26.680 --> 0:00:29.920 Minister Justin Trudeau resigning as Liberal Party leader and Prime Minister, 0:00:30.000 --> 0:00:33.720 suspending the Canadian Parliament until March twenty fourth. Trudeau said 0:00:33.760 --> 0:00:37.879 in a press conference and speech in Ottawa that parliament 0:00:37.920 --> 0:00:40.839 needs a reset and needs to calm down. Want to 0:00:40.840 --> 0:00:43.680 just get the latest with Laura Kane, Ottawa Bureau Chief, 0:00:43.760 --> 0:00:46.400 joining us. Hey, Laura, what was unexpected? What did you 0:00:46.520 --> 0:00:47.040 learn from this? 0:00:48.320 --> 0:00:51.559 Well, one thing that was unexpected was his reflection on 0:00:52.280 --> 0:00:56.880 Christian Freeland, his Finance minister, who resigned in mid December 0:00:56.920 --> 0:01:00.440 and really kicked off this crisis for his leadership. You know, 0:01:00.800 --> 0:01:03.160 calls had been growing for him to resign leading up 0:01:03.160 --> 0:01:05.520 to that point, but it was really her issuing that 0:01:05.680 --> 0:01:10.600 scathing resignation letter that accused him of costly political gimmicks 0:01:10.640 --> 0:01:13.400 and failing to keep the fiscal powder dry in advance 0:01:13.400 --> 0:01:16.480 of Trump's presidency that really, you know, led to his 0:01:16.560 --> 0:01:19.440 demise as Liberal leader. And so when he was asked 0:01:19.440 --> 0:01:22.240 to reflect on his side of that story, he said 0:01:22.280 --> 0:01:24.880 that when he called her in to offer her a 0:01:24.880 --> 0:01:27.959 different job than finance minister, he hoped that she would 0:01:27.959 --> 0:01:30.520 take it and believed that she would. He expected that 0:01:30.640 --> 0:01:33.440 she would stay on in cabinet in that position that 0:01:33.480 --> 0:01:37.000 he offered her of managing US relations, and he did 0:01:37.040 --> 0:01:41.319 not anticipate that she would, you resign as Finance minister 0:01:41.480 --> 0:01:44.920 very publicly and trigger this crisis. And so it was 0:01:44.959 --> 0:01:46.880 interesting to hear that. And he also said that he 0:01:46.920 --> 0:01:49.440 had hoped she'd stay on as his deputy prime minister 0:01:49.600 --> 0:01:53.560 as well, which was something we didn't necessarily know before. 0:01:53.640 --> 0:01:56.440 So I did find that surprising. But apart from that, 0:01:56.640 --> 0:02:00.240 it did sort of unfold as we expected. And I'll 0:02:00.240 --> 0:02:03.240 just add that he did confirm that a confidence vote 0:02:03.280 --> 0:02:05.840 on his government would be held in March, when the 0:02:05.880 --> 0:02:09.079 parliament resumes March twenty fourth, and so that would mean 0:02:09.120 --> 0:02:12.280 Canada goes to an election pretty soon after that, potentially 0:02:12.360 --> 0:02:16.080 with an election day in late April or early May. 0:02:16.320 --> 0:02:19.000 That is, assuming that the opposition parties keep their word 0:02:19.160 --> 0:02:21.960 and do as they've told Canadians they would and bring 0:02:22.040 --> 0:02:23.000 down this government. 0:02:23.440 --> 0:02:25.120 All right, Laurn, thank you so much for your reporting. 0:02:25.120 --> 0:02:28.200 Really appreciate that. Lara Kaine, she is Ottawa Bureau Chief. 0:02:28.960 --> 0:02:32.040 Justin Trudeau news today that he'll be stepping down as 0:02:32.160 --> 0:02:36.079 leader of the Liberal Party in Canada. 0:02:36.240 --> 0:02:40.120 You're listening to the Bloomberg Intelligence Podcast. Catch the program 0:02:40.240 --> 0:02:43.280 live weekdays at ten am Eastern on Apple Corplay and 0:02:43.280 --> 0:02:46.280 Android Auto with the Bloomberg Business app. You can also 0:02:46.400 --> 0:02:50.040 listen live on Amazon Alexa from our flagship New York station, 0:02:50.600 --> 0:02:53.240 Just Say Alexa Play Bloomberg eleven thirty. 0:02:54.040 --> 0:02:56.360 Michael Barr of the FED stepped down. I called him 0:02:56.360 --> 0:02:58.760 William Barr when I wrote the news, My bad, Michael Barr. 0:02:58.800 --> 0:03:02.400 Michael Barr stepping down on his FED Vice chair for supervision. 0:03:02.760 --> 0:03:05.200 He's going to hold onto his post in the FED. 0:03:05.280 --> 0:03:07.520 Just stepping down his FED Vice chair for supervision. He's 0:03:07.560 --> 0:03:10.840 going to depart on February twenty eighth, unless a successor 0:03:11.240 --> 0:03:15.160 is confirmed earlier. So guess who's here. Michael McKeith, Bloomberg 0:03:15.200 --> 0:03:16.920 International Economics Policy. 0:03:16.520 --> 0:03:19.400 Correspondents, who does the news for it. 0:03:19.440 --> 0:03:21.160 Was like Michael Barr, Wait, no, it's got to be 0:03:21.200 --> 0:03:24.400 William my bad. Okay, So why is he resigning for 0:03:24.480 --> 0:03:26.760 this specific post. 0:03:27.520 --> 0:03:29.320 You know, this post is relatively new. 0:03:29.360 --> 0:03:31.400 It came in after Dodd Frank, and there have really 0:03:31.440 --> 0:03:33.839 been only well, there's been two people. 0:03:33.560 --> 0:03:36.000 Basically who have had the job in the past. 0:03:35.760 --> 0:03:35.920 And. 0:03:37.840 --> 0:03:43.400 The tradition sort of started in the last administration with 0:03:43.560 --> 0:03:46.920 the vice chair resigning at the time, and now you've 0:03:46.960 --> 0:03:50.760 got Michael Barr following through because basically, you get a 0:03:50.800 --> 0:03:54.000 new administration like this with a big philosophical change, and 0:03:54.040 --> 0:03:57.000 it's going to be a big philosophical change in regulation. 0:03:57.560 --> 0:04:01.640 And so Barr in his in his statement said the 0:04:01.760 --> 0:04:06.200 risk over a dispute over the position would distract the 0:04:06.280 --> 0:04:09.680 FED from its mission. So he's decided to resign as 0:04:10.080 --> 0:04:15.240 Vice chair for Supervision, which has big implications for banks. 0:04:16.600 --> 0:04:19.120 Keep an eye on bank stocks because basically what this 0:04:19.240 --> 0:04:22.560 tells you the FED says it won't make any new 0:04:23.480 --> 0:04:27.719 major bank regulations until a successor is in place, and 0:04:27.839 --> 0:04:30.320 with bar leaving, that probably means that Basil three, the 0:04:30.400 --> 0:04:34.160 Bosle three endgame proposal, is on life support at this point, 0:04:34.360 --> 0:04:37.000 if it even has a breath left. And so that's 0:04:37.080 --> 0:04:40.680 major news for financial firms because the Trump administration would 0:04:40.720 --> 0:04:43.960 be expected to sort of junk that. But the interesting 0:04:44.000 --> 0:04:47.760 thing is he's not resigning as governor, and there are 0:04:47.800 --> 0:04:51.040 no openings on the FED at least not until January 0:04:51.040 --> 0:04:55.599 of twenty twenty six, and so the incoming administration cannot 0:04:55.720 --> 0:05:00.000 name a new person to the job. They could elevate 0:05:00.520 --> 0:05:02.960 one of the current governors to the job. 0:05:03.600 --> 0:05:06.240 Interesting. So again, I'm just looking at the banks, you know, 0:05:06.279 --> 0:05:08.720 over the past year. You know, they're all up kind 0:05:08.720 --> 0:05:11.280 of thirty forty percent, kind of the big banks, JPMorgan, 0:05:11.320 --> 0:05:14.000 Bank of America. So it feels like, you know, I 0:05:14.000 --> 0:05:17.160 guess since the election, people said banks are one of 0:05:17.200 --> 0:05:19.080 the places you have to be, and I guess this 0:05:19.200 --> 0:05:21.320 is just another example of how things are changing. 0:05:21.360 --> 0:05:25.200 Yeah, there's been a feeling that the incoming administration would 0:05:25.320 --> 0:05:28.760 pull back on the Basil three requirements, the additional capital 0:05:28.839 --> 0:05:31.200 that the big banks would have to hold, and so 0:05:31.360 --> 0:05:33.719 this is going to be seen as good news for them, 0:05:33.760 --> 0:05:36.200 and this is just sort of confirmed the idea that 0:05:36.200 --> 0:05:37.679 that's probably what's going to happen. 0:05:37.960 --> 0:05:41.360 So endgame BOSL three endgame is the endgame. 0:05:41.800 --> 0:05:45.040 Yeah, unless this is like the Marvel movie series where 0:05:45.120 --> 0:05:50.160 the the you know, the The Avengers Endgame was followed 0:05:50.160 --> 0:05:51.760 by another dozen sequels. 0:05:51.800 --> 0:05:53.600 Okay, but to be fair, let's get into it. They 0:05:53.600 --> 0:05:57.360 wound up killing off the main characters, right like Captain America, 0:05:57.600 --> 0:06:01.600 iron Man and Black Widow, the new generation that took 0:06:01.600 --> 0:06:02.280 one after. 0:06:02.080 --> 0:06:05.360 It, and now Michael barr it goes with iron Man. 0:06:06.440 --> 0:06:09.440 But the position could still exist. He just won't do it. 0:06:09.440 --> 0:06:11.960 The position a position. 0:06:11.680 --> 0:06:14.960 Theory would have to be filled. The only one I 0:06:15.000 --> 0:06:16.760 can think of on the board right now who might 0:06:16.839 --> 0:06:20.680 take that job would be Mickey Bowman. She's the essentially 0:06:20.720 --> 0:06:24.040 the small bank representative on the community bank representative on 0:06:24.080 --> 0:06:25.200 the FED Board of Governors. 0:06:25.480 --> 0:06:27.239 She's been heavily involved. 0:06:26.920 --> 0:06:31.280 In the regulatory efforts of the FED and has been 0:06:31.360 --> 0:06:34.080 a big opponent of a lot of what we've seen 0:06:34.200 --> 0:06:38.880 in the basle proposals, and so she might be the choice. 0:06:38.880 --> 0:06:42.680 She is a Republican, and people had thought she might 0:06:42.720 --> 0:06:44.479 be a candidate for that job or one of the 0:06:44.480 --> 0:06:48.359 other bank regulation jobs. But at this point, you know, 0:06:48.480 --> 0:06:50.320 she'd be about the only one I could think of 0:06:50.400 --> 0:06:54.480 that would take the job because it's less of monetary 0:06:54.520 --> 0:06:56.560 policy and much more regulation. 0:06:57.360 --> 0:06:59.800 So there's also so that's the Bossle three. 0:06:59.839 --> 0:07:02.359 Now there's also a broader narrative in the marketplace, Michael, 0:07:02.440 --> 0:07:04.920 that Trump administration would be depositive for M and A 0:07:04.920 --> 0:07:07.560 activity just in general, and me from a regulatory perspective 0:07:07.560 --> 0:07:10.679 that nothing else, an easier, lighter touch from the Federal 0:07:10.680 --> 0:07:13.720 Trade Commission in the Department of Justice. What are you 0:07:13.720 --> 0:07:16.200 hearing about that type of narratives? That's something because I'm 0:07:16.200 --> 0:07:18.880 hearing bankers lawyers putting that out there. 0:07:19.400 --> 0:07:23.480 Well, it makes logical sense put it that way, and 0:07:23.920 --> 0:07:27.200 there is some pent up M and A demand out there. 0:07:27.400 --> 0:07:29.520 How much there is in the banking sector, I don't know. 0:07:29.960 --> 0:07:32.880 That's a question for some of the bank analysts that 0:07:32.960 --> 0:07:36.160 you have on because we saw a lot of consolidation 0:07:36.280 --> 0:07:39.440 in the past following the financial crisis. But there are 0:07:39.520 --> 0:07:41.480 always mid sized banks that are looking to get a 0:07:41.520 --> 0:07:44.360 little bit bigger, and so I would imagine in that 0:07:44.480 --> 0:07:46.920 space there is going to be some business for those 0:07:47.000 --> 0:07:51.000 lawyers and lenders. I'm not sure that we'll see a 0:07:51.000 --> 0:07:54.080 big well, we won't see a big impact in the megabanks, 0:07:54.600 --> 0:07:58.760 except as lenders perhaps because they're already at their limit 0:07:58.880 --> 0:08:01.400 for how many deposit customers they can have. 0:08:01.920 --> 0:08:03.800 But it is going to be a new era. 0:08:04.360 --> 0:08:07.520 A new era in terms of the Fed speak. We've 0:08:07.520 --> 0:08:10.000 heard of them last day, three days. Have you taken 0:08:10.040 --> 0:08:13.160 anything away from it? The notes that I read tend 0:08:13.200 --> 0:08:16.240 to think like, oh, maybe we want to just roll 0:08:16.320 --> 0:08:18.320 back on these cuts, maybe we don't want to go 0:08:18.360 --> 0:08:21.720 to aggressively, we're still really worried about inflation, etc. Is 0:08:21.720 --> 0:08:22.560 that your take. 0:08:22.800 --> 0:08:25.720 Yeah, they're basically reaffirming what Jay Pole said in his 0:08:25.840 --> 0:08:30.040 news conference that the FED is close enough to pausing 0:08:30.160 --> 0:08:33.440 that they would consider pausing because the risks are sort 0:08:33.440 --> 0:08:35.800 of even at this point, and they want to move 0:08:35.840 --> 0:08:40.080 slowly and make sure that inflation doesn't come back while 0:08:40.120 --> 0:08:42.840 making sure that unemployment doesn't rise too much. So they're 0:08:42.840 --> 0:08:45.400 all kind of setting the stage at this point for 0:08:45.559 --> 0:08:49.440 a pause in January, and we'll see what the conditions 0:08:49.440 --> 0:08:53.560 are when we get there, because obviously, if you've slapped 0:08:53.640 --> 0:08:55.840 tariffs on right away, there might be an immediate market 0:08:55.840 --> 0:08:57.120 reaction or something like that. 0:08:57.559 --> 0:08:59.280 But right now it looks like a. 0:08:59.240 --> 0:09:01.640 Pause in January, and then we'll see what happens by 0:09:01.640 --> 0:09:02.640 the time they get to March. 0:09:03.200 --> 0:09:05.400 Pretty busy week here with you look at the economic 0:09:05.440 --> 0:09:08.000 data calendar, what are you going to be focusing on it. 0:09:08.200 --> 0:09:10.559 I guess it's kind of Friday with the change in 0:09:10.600 --> 0:09:11.840 non farm payrolls is a big one. 0:09:12.160 --> 0:09:14.640 How are you prioritizing that's going to be the big one. 0:09:14.679 --> 0:09:17.880 It's an interesting situation because on Thursday in Washington you 0:09:18.000 --> 0:09:20.960 have the Jimmy Carter Memorial and that's pushed a lot 0:09:21.000 --> 0:09:24.240 of stuff into Wednesday, like jobless claims will be out Wednesday, 0:09:24.400 --> 0:09:28.160 and also it's moved up the calendar for treasury auctions 0:09:28.720 --> 0:09:31.559 to Tuesday and Wednesday. So at this point it looks 0:09:31.600 --> 0:09:35.280 like by the time you get to Thursday, there will 0:09:35.320 --> 0:09:38.160 have been a sort of data and information void for 0:09:38.240 --> 0:09:41.520 the markets. So it may have a bigger impact than 0:09:41.559 --> 0:09:44.679 it usually does, just because traders always have to trade 0:09:44.679 --> 0:09:48.520 on something, and this will be news in more of 0:09:48.559 --> 0:09:49.280 a vacuum. 0:09:50.160 --> 0:09:52.120 When we take a look at the jobs number real quick, 0:09:52.200 --> 0:09:54.680 does that mean that if we get a strong jobs number, 0:09:54.800 --> 0:09:57.480 does that really wipe out the case for cuts? Like 0:09:57.559 --> 0:09:59.840 is that really going to be the barometer here? 0:10:00.400 --> 0:10:03.160 Well, it will have that impact immediately in the markets. 0:10:03.240 --> 0:10:05.960 Then I think people will take a look at where 0:10:05.960 --> 0:10:08.600 we are. As I say, when we get past I 0:10:08.600 --> 0:10:10.760 mean the next big meeting is January twenty ninth, So 0:10:10.800 --> 0:10:14.600 when we get to that period, we'll have a little 0:10:14.640 --> 0:10:17.600 bit better feel for the economy than we do immediately, 0:10:17.640 --> 0:10:22.680 which is because it's December numbers, but a strong jobs 0:10:22.720 --> 0:10:25.679 report and Bloomberg Economics thinks we're going to get two 0:10:25.760 --> 0:10:30.920 hundred and sixty eight thousand jobs and sixty so they're 0:10:30.960 --> 0:10:33.040 out right on a very long limit and we'll see 0:10:33.080 --> 0:10:34.920 how they do with that. But if we got something 0:10:35.000 --> 0:10:40.760 like that, it would certainly cement a pause for January, 0:10:40.760 --> 0:10:44.160 and then we'll see what Trump policies do to you know, 0:10:44.520 --> 0:10:45.520 the march outlook. 0:10:45.960 --> 0:10:48.000 Hence the thirty year yield at the highest in November 0:10:48.080 --> 0:10:48.760 twenty twenty three. 0:10:48.920 --> 0:10:49.160 Yep. 0:10:49.280 --> 0:10:51.360 Yeah, and you talk to some of the bond analysts 0:10:51.360 --> 0:10:55.160 and they say, we're kind of there now. You would 0:10:55.200 --> 0:10:58.400 need something else to push us above the levels we're 0:10:58.440 --> 0:11:01.679 at for the long end, because it's steepened enough at 0:11:01.679 --> 0:11:05.440 this point. So if anybody could do that, though. 0:11:05.440 --> 0:11:08.480 Yep, it's stop one Trump, right. Michael McKee, thank you 0:11:08.559 --> 0:11:11.560 so much for joinings. Michael McKee covers all the economics here, 0:11:11.679 --> 0:11:15.920 force the markets trading kind of at their intra day high, Seria, 0:11:15.920 --> 0:11:17.720 the S and P five hundreds, up one point two percent, 0:11:17.720 --> 0:11:21.240 the nastacs up one point eight percent. Here the vis 0:11:21.840 --> 0:11:24.240 it's below sixteen. I'll call that after Tom Keen. And 0:11:24.280 --> 0:11:26.040 again we were just talking about the treasure market. Ten 0:11:26.080 --> 0:11:28.560 year treasure is up another couple basis points here four 0:11:28.600 --> 0:11:31.439 point sixty one percent. And why is your WTI crude 0:11:31.440 --> 0:11:33.080 oil over seventy four dollars a hourrow? 0:11:33.320 --> 0:11:35.480 I mean, maybe it's a demand thing. You no, Actually 0:11:35.760 --> 0:11:36.960 a big part of it's going to be a storm 0:11:36.960 --> 0:11:39.160 if it's going to disrupt oil and gas production, so 0:11:39.200 --> 0:11:42.400 that's like a weather impact. But in actuality, many are 0:11:42.400 --> 0:11:44.080 thinking that a President Trump is going to be more 0:11:44.080 --> 0:11:46.120 hawkish when it comes to Iran, and does that actually 0:11:46.120 --> 0:11:48.720 remove some barrels and tightened sanctions because there's been a 0:11:48.720 --> 0:11:53.160 lot of oil exported surreptitiously at the end of the day, 0:11:53.200 --> 0:11:55.720 so thank you. So if that changes, then that could 0:11:55.720 --> 0:11:58.240 actually have a material impact. But it's really hard to 0:11:58.440 --> 0:12:01.000 play the geopolitical risks in this world. 0:12:02.720 --> 0:12:06.439 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:12:06.520 --> 0:12:09.560 weekdays at ten am Eastern on Apple, Cocklay and Android 0:12:09.600 --> 0:12:12.920 Auto with the Bloomberg Business app. Listen on demand wherever 0:12:12.960 --> 0:12:16.520 you get your podcasts or watch us live on YouTube. 0:12:17.559 --> 0:12:19.720 Alex deal here alongside Paul swe Need. This the Bloomberg 0:12:19.760 --> 0:12:22.360 Intelligence Radio. We bring you all the top news and business, 0:12:22.400 --> 0:12:25.760 economics and finance through a lens of our Bloomberg Intelligence folks. 0:12:25.760 --> 0:12:27.760 They cover two thousand companies and one hundred and thirty 0:12:27.760 --> 0:12:30.440 industries all around the world. We also tap our great 0:12:30.480 --> 0:12:32.800 experts outside of Bloomberg for their take on the market, 0:12:32.840 --> 0:12:34.880 and we go to one now. Shana Sissel is president 0:12:34.920 --> 0:12:38.480 and CEO of Benriyon Capital Management and she joins us. 0:12:38.640 --> 0:12:41.199 So usually January is like one of the best months 0:12:41.200 --> 0:12:44.360 for inflows, right, like, do we buy the January effect here? 0:12:46.640 --> 0:12:49.240 I don't know if I buy the January effect this year. 0:12:49.559 --> 0:12:52.000 We also normally get a Santa claus rally that we 0:12:52.040 --> 0:12:53.520 didn't get through this year either. 0:12:53.720 --> 0:12:57.040 So I think we have a new administration coming in. 0:12:57.120 --> 0:13:02.079 There's some uncertainty there, but overall positives for the markets. 0:13:02.880 --> 0:13:05.120 Inflation, though remains a headwind. 0:13:05.360 --> 0:13:08.480 The FED is more hawkish than they were, so there's 0:13:08.720 --> 0:13:12.840 there's certainly some things to be concerned about. 0:13:13.360 --> 0:13:15.760 But that doesn't mean I wouldn't put money into the market. 0:13:15.840 --> 0:13:18.440 I'd just be really selective on where I do put 0:13:18.480 --> 0:13:19.280 money in the market. 0:13:20.080 --> 0:13:23.280 So Shanna a Bloomberg News m Live is out with 0:13:23.960 --> 0:13:27.360 a survey with we do with a third party. People 0:13:27.440 --> 0:13:29.640 are still buying this Trump trade. I mean, sixty one 0:13:29.679 --> 0:13:32.200 percent of the responds feel like risk assets are going 0:13:32.280 --> 0:13:34.640 to move higher. Is that what you're still hearing from 0:13:34.760 --> 0:13:37.960 your clients? Is there still that type of trade out there? 0:13:39.679 --> 0:13:41.720 Well, I think it's more of a mindset of the 0:13:41.840 --> 0:13:43.680 last you know, fifteen years. 0:13:43.720 --> 0:13:46.240 If you think about it, I think we. 0:13:46.240 --> 0:13:51.120 Are largely more optimistic because there's an entire generation of 0:13:51.160 --> 0:13:54.760 investors that don't know what it's like to have a 0:13:54.760 --> 0:13:58.960 flat to down to volatile market, and there's an expectation 0:13:59.120 --> 0:14:02.800 that what we've been seeing, which is double digit returns 0:14:02.880 --> 0:14:08.040 on average since the financial crisis bottomed, and that I 0:14:08.080 --> 0:14:12.120 think is kind of coloring the expectations of the average investor. 0:14:13.320 --> 0:14:16.560 I do think that overall, the Trump tated is positive 0:14:16.559 --> 0:14:18.600 for equities, but I do think we need to temper 0:14:18.679 --> 0:14:22.840 our expectations and the fact that you know, twenty percent 0:14:23.000 --> 0:14:25.800 plus returns of the S and P five hundred for 0:14:25.920 --> 0:14:29.200 multiple years is not normal, and there is going to 0:14:29.240 --> 0:14:33.120 be a return to normalcy at some point when that 0:14:33.240 --> 0:14:36.160 is I don't know, but there are certainly reasons to 0:14:36.240 --> 0:14:38.840 think that twenty twenty five could be the year we 0:14:38.920 --> 0:14:39.840 returned to normalcy. 0:14:39.960 --> 0:14:42.880 And god forbid, get eight to ten percent returns on. 0:14:42.880 --> 0:14:45.600 The S and P five hundred, right, it's like normalcy. 0:14:45.680 --> 0:14:47.960 But it's not like you're getting negative return or anything. 0:14:48.400 --> 0:14:51.840 What's interesting is that FED official Lisa Cook said that 0:14:51.920 --> 0:14:57.080 AI and private credit are among financial stability risks. That 0:14:57.120 --> 0:14:59.480 was in a speech earlier this morning. That kind of 0:14:59.520 --> 0:15:03.400 touches your area of expertise, right, the alternative landscape. What 0:15:03.400 --> 0:15:05.200 do you think about that kind of sentence. 0:15:05.560 --> 0:15:07.040 Well, you know AI. 0:15:07.320 --> 0:15:09.640 I think is interesting that that was thrown in there 0:15:09.640 --> 0:15:13.600 because that doesn't necessarily impact the capital markets per se. 0:15:13.720 --> 0:15:15.640 I think it's more the whole you. 0:15:15.520 --> 0:15:19.360 Know, trends around it and all of the FOMO that 0:15:19.400 --> 0:15:22.200 goes into wanting to be involved with the AI trade. 0:15:22.560 --> 0:15:25.600 But it's not necessarily specific to how the structure of 0:15:25.640 --> 0:15:28.800 capital markets work. But private credit is. And I think 0:15:28.840 --> 0:15:31.200 that's an interesting comment. You know, if you think about 0:15:31.640 --> 0:15:34.560 the explosion of private credit, it happened during and after 0:15:34.600 --> 0:15:38.520 the Financial crisis as traditional banks became less able and 0:15:38.600 --> 0:15:44.200 less willing to provide capital to small businesses to lower credit, 0:15:44.560 --> 0:15:47.120 that kind of thing, and there was this need for 0:15:47.160 --> 0:15:51.800 this secondary non bank financial lending market, which is where 0:15:51.800 --> 0:15:54.480 private credit kind of exploded. It's always existed, but that's 0:15:54.520 --> 0:15:57.960 where it really became a much bigger part of overall 0:15:58.000 --> 0:16:02.040 capital market structure. And you know, the same risks that 0:16:02.160 --> 0:16:07.400 existed prior to that, in terms of lower quality lending, 0:16:08.400 --> 0:16:13.480 lending to non traditional types of businesses, things of that nature. 0:16:13.480 --> 0:16:18.520 Those risks still exist, right and AI is part of that. 0:16:18.600 --> 0:16:20.760 Crypto is part of that. And when and when I 0:16:20.840 --> 0:16:24.120 mean AI and crypto, I don't necessarily mean actual crypto 0:16:24.160 --> 0:16:27.200 and AI as an investment, but companies related to that 0:16:27.680 --> 0:16:32.720 ancillary that need capital. And so I do think that 0:16:32.880 --> 0:16:36.040 private credit, because so much money has rushed into it, 0:16:36.520 --> 0:16:40.360 that tends to push folks to make loans and to 0:16:40.960 --> 0:16:43.360 provide capital at a higher risk. 0:16:43.440 --> 0:16:45.440 And so I can see why she would have mentioned 0:16:45.480 --> 0:16:46.160 private credit. 0:16:46.960 --> 0:16:50.760 So CES kicks off in earnest tomorrow out Las Vegas, 0:16:51.160 --> 0:16:53.480 and we heard from Dan E's Woodbush Securities this morning 0:16:53.520 --> 0:16:57.160 that once again AI is going to be front and center. 0:16:57.480 --> 0:17:00.880 From your perspective on Gal Turner's front, do you feel 0:17:00.880 --> 0:17:03.600 like there's a lot more to go with this AI story, 0:17:03.640 --> 0:17:06.320 it feels like it's a long term trend, not a 0:17:06.359 --> 0:17:07.480 short term issue at all. 0:17:08.480 --> 0:17:11.240 I agree it is a long term trend. But what 0:17:11.359 --> 0:17:13.440 happens when we have these long term trends? And let's 0:17:13.480 --> 0:17:16.719 think about Like, I know, it feels like AI has 0:17:16.760 --> 0:17:18.600 been all we've talked about for a really long time, 0:17:18.600 --> 0:17:21.600 but let's think about what the last hottest trend was. 0:17:21.960 --> 0:17:24.840 Where all the money, especially in the private markets like 0:17:24.920 --> 0:17:27.400 venture capital and private equity, was just throwing money at 0:17:27.440 --> 0:17:30.119 anything that had the word blockchain or crypto in it. 0:17:31.320 --> 0:17:32.600 And what happens is. 0:17:32.760 --> 0:17:37.320 All the money runs and there's people who probably shouldn't 0:17:37.359 --> 0:17:41.159 have gotten capital, did not have great business models or 0:17:41.200 --> 0:17:44.600 business plans, but because they had those two really really 0:17:45.000 --> 0:17:48.600 important buzzwords in their pitch decks, they were able to 0:17:48.760 --> 0:17:52.800 capture assets and capital as a result. And then what 0:17:52.960 --> 0:17:55.800 happens is you find out who the winners and losers 0:17:55.800 --> 0:17:57.920 are going to be, and there's always things that blow 0:17:58.000 --> 0:18:00.160 up on you. And I think AI is kind of 0:18:00.200 --> 0:18:02.679 in that trend right now, and as we get a 0:18:02.680 --> 0:18:04.840 little bit further into the AI. 0:18:06.119 --> 0:18:08.720 Development, you will see. 0:18:08.760 --> 0:18:12.040 Similar things happen there because so much money run into 0:18:12.080 --> 0:18:15.920 it all the vcs wanted to have anything and anything 0:18:15.960 --> 0:18:18.919 that had AI associated with it, and there are going 0:18:19.000 --> 0:18:21.560 to be things that just don't work but blow up 0:18:21.600 --> 0:18:25.320 in spectacular fashion as a result. So I think AI 0:18:25.440 --> 0:18:27.560 as a trend is a big deal. Just like when 0:18:27.640 --> 0:18:30.040 we had the tech bubble, the same thing. 0:18:30.560 --> 0:18:31.720 It was a game. 0:18:31.600 --> 0:18:36.880 Changing type of technology, type of trend, but as a result, 0:18:36.960 --> 0:18:39.000 a lot of money runs after it and goes into 0:18:39.040 --> 0:18:39.560 bad things. 0:18:40.400 --> 0:18:42.879 Channa, always going to get your perspective. Thank you so 0:18:42.880 --> 0:18:45.720 so much. Happy New Year. Shanna Sisoul, President and CEO 0:18:45.760 --> 0:18:48.520 of benry On Capital Management, Joining us. 0:18:50.240 --> 0:18:53.960 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:18:54.040 --> 0:18:57.080 weekdays at ten am Eastern on Apple, Cocklay and Android 0:18:57.119 --> 0:19:00.439 Auto with the Bloomberg Business app. Listen on demand wherever 0:19:00.520 --> 0:19:04.040 you get your podcasts, or watch us live on YouTube. 0:19:05.320 --> 0:19:08.520 All right, s and P five hundred, up mid twenty percent, 0:19:08.800 --> 0:19:11.360 twenty twenty three, up mid twenty percent and twenty twenty four. 0:19:12.480 --> 0:19:14.719 Can you top it in twenty twenty five? That's what 0:19:14.720 --> 0:19:17.520 the pros have to figure out here. Brian Vendick joins 0:19:17.600 --> 0:19:20.680 us here. He is a Chief investment Officer at MJP 0:19:21.320 --> 0:19:24.560 Wealth Advisors. Brian I'm sure you're out there with your 0:19:24.720 --> 0:19:28.320 look ahead letter recently telling your clients kind of what 0:19:28.359 --> 0:19:31.720 you're looking for for twenty twenty five. What'd you tell them? 0:19:32.080 --> 0:19:34.280 Yeah, thanks, Paul, and great to be with you. 0:19:34.440 --> 0:19:34.600 Well. 0:19:34.640 --> 0:19:37.600 I think we're still constructive on the markets over the 0:19:37.640 --> 0:19:39.520 balance of the year, but I think it's going to 0:19:39.560 --> 0:19:42.359 be the tale of two cities, as we've seen in 0:19:42.400 --> 0:19:44.440 some other years in the past, where we have the 0:19:45.320 --> 0:19:48.600 policy uncertainties. These policy pieces I think that need to 0:19:48.640 --> 0:19:52.080 come together, as we've seen in recent headlines this morning 0:19:52.560 --> 0:19:54.919 with the new administration coming to town and what's going 0:19:55.000 --> 0:20:02.080 to happen with tariffs, spending, taxes, immigration, paired with are 0:20:02.080 --> 0:20:04.240 we still going to have earnings growth for the SMP 0:20:04.760 --> 0:20:05.320 and other. 0:20:05.160 --> 0:20:06.760 Parts of the cyclical parts. 0:20:06.480 --> 0:20:08.240 Of the economy over the balance of the year, And 0:20:08.280 --> 0:20:11.480 I think a two we get through this policy uncertainty 0:20:11.480 --> 0:20:13.679 and also uncertainty that the FED gave us back on 0:20:13.720 --> 0:20:18.400 December eighteenth regarding monetary policy. In twenty twenty five, it's 0:20:18.440 --> 0:20:20.040 going to be chopping in the markets. I think it's 0:20:20.040 --> 0:20:22.639 easy for me to forecast Paul on alex but I 0:20:22.680 --> 0:20:25.720 think if earnings is there, and we've heard from some 0:20:25.760 --> 0:20:29.760 FED officials some FED speak this morning. As you mentioned, 0:20:30.000 --> 0:20:33.680 the economy is unstable footing inflation probably will be sticky 0:20:33.720 --> 0:20:38.160 over the course of the year due to housing pricing 0:20:38.880 --> 0:20:41.240 and some seasonal adjustments there. But at the end of 0:20:41.280 --> 0:20:45.040 the day, if consumers have a job, consumers will spend. 0:20:45.440 --> 0:20:48.199