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Speaker 1: Bloomberg, Audio studios, podcasts, radio news.

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Speaker 2: Stocks just about snapping a two day losing street because

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Speaker 2: Chairpal sticks the script. John Balvan of Black Rock remaining

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Speaker 2: bullish writing this, We think upbeat risk appetite can broaden

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Speaker 2: out beyond tech as more sectors adopt AI more broadly.

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Speaker 2: Rising of volatile yields have not disrupted the push hire

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Speaker 2: and developed market equities. That's consistent with our view the

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Speaker 2: mega forces such as AI are key drivers of returns. Now,

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Speaker 2: John and police to say, join us now for more. John,

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Speaker 2: We'll get to the stock market in just a moment.

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Speaker 2: I just want your views on Chairman Powell yesterday. Given

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Speaker 2: the economic data we've seen so far, would you describe

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Speaker 2: some of those data points it just bumps in the road,

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Speaker 2: and the same way the Chairman has.

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Speaker 3: Well, I think this is a long road.

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Speaker 4: So if I look at the first stretch of that road,

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Speaker 4: I think it's a bump.

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Speaker 3: So we think inflation is going to be showing progress

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Speaker 3: towards two over the next few months. The Fed ist

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Speaker 3: data dependent.

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Speaker 4: They're not forward looking, so they're going to be into

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Speaker 4: we've sold inflation.

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Speaker 3: That's going to be the story.

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Speaker 4: That's part of the reason why we're kind of constructive

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Speaker 4: on risk for now, and I think that's gonna be

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Speaker 4: the story of the will cut. This is a fact

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Speaker 4: that is boxed himself in December to be to cut

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Speaker 4: at some point.

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Speaker 3: This year, some point soon.

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Speaker 4: I think the bar not to do that is pretty high.

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Speaker 4: I mean, we can debate whether this is the right stance,

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Speaker 4: but it is a stance. So as a result, a

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Speaker 4: bit of protest inflation will cut the narrative for them

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Speaker 4: that there's bumps, and they'll they'll be in a position

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Speaker 4: to cut. So I think that's the story for the

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Speaker 4: next few months, and that's why risk assets are set

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Speaker 4: to continue to perform.

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Speaker 2: It's on the story we've had over the last few

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Speaker 2: days really is how to interpret the moves and bonds,

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Speaker 2: the moves in commodities with regards to equities. How are

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Speaker 2: you interpreting those moves?

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Speaker 4: Yeah, I think the Well, the first point to make

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Speaker 4: is you we very much believe we're in a new

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Speaker 4: regime right so we're pro risk right now. I think

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Speaker 4: that's has room to continue, room to run, but it's

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Speaker 4: it's a very different environment. The idea that we're going

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Speaker 4: back to through immaculate discinflation to the great moderation of

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Speaker 4: pre pandemic.

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Speaker 3: I think is not happening. And I think when you

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Speaker 3: look at the bond volatility that.

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Speaker 4: We're saying it continues. That was clearly the case of

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Speaker 4: twenty twenty three, but like even this week massive. I

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Speaker 4: think that's the biggest evidence we have that this is not, you.

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Speaker 3: Know, back to the old regime.

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Speaker 4: So I think we're saying, you know, a lot of

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Speaker 4: val the macro narrative. It takes a little bit of

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Speaker 4: infra data to come in to lead to very significant reactions,

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Speaker 4: as we've seen, and then lo and behold, we're at

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Speaker 4: the same point as we were like a week ago

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Speaker 4: before the PCEE in terms of FED expectations. The only

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Speaker 4: thing that has really changed is long term rates that

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Speaker 4: are set at a higher level now. So I think

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Speaker 4: it speaks to this environment where we can very much

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Speaker 4: see the FED starting to cut, but at the same

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Speaker 4: time don't expect long term rates to follow suit and

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Speaker 4: move down. I think we can very much see, you know,

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Speaker 4: a FED that starts to cut rates, it's going to

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Speaker 4: be only a couple anyway, and then we're gonna have

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Speaker 4: the same time see rates that are stable long term

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Speaker 4: rates with our stable or even go higher from here.

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Speaker 1: Which is the reason why you've been focusing on the

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Speaker 1: short end of the yield curve. We had John Sofas

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Speaker 1: earlier this morning on who said that Staska continued to

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Speaker 1: rally as long as ten year treasure yields didn't reach

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Speaker 1: six percent. Do you agree with that that if we

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Speaker 1: had ten year treasure yields north of ten percent, that

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Speaker 1: would not be a north of five percent excuse me

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Speaker 1: that that would not be a problem for equity valuations.

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Speaker 4: No, I wish just the case, But I find it

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Speaker 4: hard to relax about this.

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Speaker 3: So I think if we were really of the view

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Speaker 3: that we're going.

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Speaker 4: To six in the short order, like over the next year,

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Speaker 4: six percent ten yure very difficult to see equity that

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Speaker 4: sailed through this, and I think we've seen some evidence

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Speaker 4: of that right that go back to October of last

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Speaker 4: twenty twenty three. Last year we went down north of

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Speaker 4: five percent, and that was a very different narrative, felt

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Speaker 4: very different. So I mean, over a course of ten years,

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Speaker 4: we might reset to a high rate environment and realize.

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Speaker 3: That we can live with that.

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Speaker 4: But I think the journey there will be one where

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Speaker 4: equities will will will feel more than bumpy.

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Speaker 1: When people talk about a new regime. A lot of

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Speaker 1: guests who come on surveillance talk about their investments in

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Speaker 1: the energy sector as well as just commodities in general.

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Speaker 1: That any AI adoption has to come with hard infrastructure

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Speaker 1: investments that have not been fully accounted for. How much

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Speaker 1: is blackrock kind of adhering to that and really overweighting

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Speaker 1: a host of commodities.

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Speaker 4: So there is a massive restructuring of the economy that

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Speaker 4: is happening. We think there's there's AI is one big

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Speaker 4: piece of it, but we see five.

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Speaker 3: Big mega forces.

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Speaker 4: Demographics is going to lead to a big change in

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Speaker 4: spending pattern and developed economies. The rewarding of geopolitics means

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Speaker 4: that we have a different organization.

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Speaker 3: Bill believe that requires adjustment.

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Speaker 4: Infrastructure, we have the transition, the transition, and we take

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Speaker 4: finance is restructuring itself as well. So big, big trends,

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Speaker 4: all of them require adjustment and need adjustment that they

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Speaker 4: have to involve some kind of very significant investment. I mean,

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Speaker 4: if you only take the transition, the energy transition, that's

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Speaker 4: by itself, you know a huge amount of investment.

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Speaker 3: I think AI is in the middle and interacting with that.

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Speaker 4: So yeah, I think infrastructure is a huge part of

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Speaker 4: the year, the story.

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Speaker 3: Of the year to come.

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Speaker 4: Even if you don't have like very you know, bullish

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Speaker 4: growth expectations, we still need a lot of investment. And

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Speaker 4: for such an investment, so and yes, that's going to

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Speaker 4: support commodities. I think it's harder to draw a link

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Speaker 4: to this need for investment and what is going to

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Speaker 4: mean for commodities. I think it's a much more complex story,

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Speaker 4: but there is Ultimately we're going to be drawing more

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Speaker 4: in commodities as as we deliver on these investments.

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Speaker 3: You mentioned this changing to a political map.

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Speaker 1: We have the secretary of a Treasury over in China

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Speaker 1: and she's talking about that they don't want to completely

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Speaker 1: decouple from China. It's just about diversifying.

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Speaker 3: Do you buy that?

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Speaker 1: And if it was to be a decouple, how does

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Speaker 1: that change your thesis?

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Speaker 4: Well, I think the coupling, complete decoupling is is even

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Speaker 4: even if that was the objective, is not realistic, right,

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Speaker 4: I mean, we're we're intertwined very fundamental ways globally.

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Speaker 3: Uh And so you know, fully decoupling will will not

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Speaker 3: will not even be on the table. So I think

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Speaker 3: I don't.

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Speaker 4: See necessarily a lot of information in the comment like this, right.

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Speaker 4: I mean, it's it's kind of a straw mand that

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Speaker 4: is unachievable.

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Speaker 3: But there is a trend.

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Speaker 4: I think the most important thing for me is that

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Speaker 4: we are fragmenting. There is a there's a distansation that

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Speaker 4: is happening. Uh The question is how is it going

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Speaker 4: to be negated?

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Speaker 3: But in the.

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Speaker 4: Meantime, aside from the politics and those trips, I think

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Speaker 4: investors are investors and companies globally are adjusting and making

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Speaker 4: plans that are accounting for the fact that the world

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Speaker 4: will be more fragmented than it was. And I think

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Speaker 4: that's a big that's one of the big mega forces

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Speaker 4: that is happening.

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Speaker 2: Uh.

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Speaker 3: In is affecting decision even as we speak.

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Speaker 2: Does John In that's the case? Do I want to

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Speaker 2: have a buas towards small caps away from multicamp multinational

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Speaker 2: big caps.

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Speaker 4: I mean you could you could eventually see, uh see

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Speaker 4: that that that.

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Speaker 3: Logic playing out.

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Speaker 4: I think for now, we still think that you know,

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Speaker 4: more from a technical basis, UH that you would need

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Speaker 4: to have a more conviction on on you know, a

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Speaker 4: growth spur that is lasting more than a few months

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Speaker 4: to start to broaden your views on small caps. I

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Speaker 4: think there's going to be more of a story about

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Speaker 4: the near term growth than it is about fermentation. But

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Speaker 4: if you think on a ten year basis, then I

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Speaker 4: can very well see, uh, you know, a story where

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Speaker 4: you see more localized companies, smaller caps small caps being

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Speaker 4: beneficiaries of this duo political mega course.

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Speaker 2: I just want to watch, John, You're one of the best.

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Speaker 2: Thank you. Jean of black Rock