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Speaker 2: Blackrock Wailey in studio. Thrilled to have you here, with
Speaker 2: immense respect for your profound accomplishments as a kid. And
Speaker 2: you were in China and then you went to Singapore,
Speaker 2: right it's somewhere. Did you go through the H one
Speaker 2: B visa process years ago?
Speaker 3: I didn't because I'm working. I'm based in London right now,
Speaker 3: I have a l one A. I think I need
Speaker 3: to remember that as against custom every time.
Speaker 2: What are your thoughts on this? You know it's the
Speaker 2: bar charts are India with a huge impact and then
Speaker 2: China is an impact away from the politics of it.
Speaker 2: What are your thoughts on it?
Speaker 3: I think that represents near tom uncertainty, especially facing I
Speaker 3: guess smaller companies. I think this is another example why
Speaker 3: we have to focus on fundamentals and pricing power of
Speaker 3: large companies as we think about being selective the zechist.
Speaker 2: This weekend, You're wonderful on LinkedIn pushing back against it
Speaker 2: is worry, worry AI, worry more worry, worry, worry AI.
Speaker 2: That's normal in a bull market.
Speaker 4: Isn't it. I think so.
Speaker 3: I think so, and I think it's worth remembering that
Speaker 3: bull markets do not die from valuation. And even if
Speaker 3: there is more focus around valuations right now, our study
Speaker 3: shows that it's not really as stretched as you would
Speaker 3: have expected looking at price appreciation. You look at magnificent
Speaker 3: seven right now, at thirty two times, PE is actually
Speaker 3: lower than the level at the beginning of the year
Speaker 3: because of the very strong earnings delivery and earnings upgrade,
Speaker 3: so we think that there is more to go.
Speaker 5: Our study shows that for US Tech.
Speaker 3: More broadly, if they deliver earning in the region from
Speaker 3: fifteen percent to twenty percent, their current multiple is maybe
Speaker 3: even higher than that can be very well supported. And
Speaker 3: now you may ask, you know, fifteen twenty that sounds
Speaker 3: like a lot, but looking back thirty years, a quarter
Speaker 3: of those period actually have seen US Tech growing earnings
Speaker 3: that strongly, right, so you know it's doable.
Speaker 4: That's doable.
Speaker 6: I think that the AI believers are firm believers in
Speaker 6: AI how about the rest of the world, the four
Speaker 6: hundred and ninety three other stocks in the S and
Speaker 6: P five hundred, how do you guys approach those names?
Speaker 3: You know, right now we're in this let's quite lucky
Speaker 3: juncture where we have the FED restarting raycut cycle and
Speaker 3: the labor market is supporting that rate cut direction of
Speaker 3: travel without it then becoming a big political debate in
Speaker 3: terms of fat independence, but also then what it means
Speaker 3: for long end of the curve and term premiere. So
Speaker 3: right now, the FAT is starting restarting fat rate cuts
Speaker 3: and growth is holding up. Okay, we're looking at one
Speaker 3: point five percent for your economy this year. It's very
Speaker 3: far from recession. Earnings a strong so it's a good
Speaker 3: mix that can continue to support risk assets. Now the
Speaker 3: question is just for how long this lucky combination will last.
Speaker 3: So we're very much paying attention to you know, if
Speaker 3: labor market deterioration is a precursor of something worse to
Speaker 3: come on a growth front, it's not our expectation, but
Speaker 3: you know, lots of uncertainty.
Speaker 6: You say you're staying risk on, how does that apply
Speaker 6: to the fixed income market? Are you are you staying
Speaker 6: with it in the treasury market where you can get more,
Speaker 6: you can get four percent for change on a tenure,
Speaker 6: or do it take some credit risk our credit.
Speaker 3: We have had the preference for credit over long duration
Speaker 3: for a while, and you look at how ig spread
Speaker 3: is at close to multi decades low will actually add
Speaker 3: multi decay load. That has been a good call. But
Speaker 3: at this juncture, at this particular juncture, we do think
Speaker 3: that there is room to extend out duration exposure a
Speaker 3: little bit because we see this lucky mix of labor
Speaker 3: market supporting fact cuts and just generally markets are focusing
Speaker 3: on that. So we want to lock in some of
Speaker 3: the attractive long duration radios in the US.
Speaker 2: In the technology juggernaut that you've let on, where is
Speaker 2: use of cash? Obviously they're doing a capex. Does Blackrock
Speaker 2: see evidence of a return and invest in capital from
Speaker 2: this capex balloon or does that wait?
Speaker 3: We have seen significant growth in our cash business because
Speaker 3: there is a huge amount of cash on the sizeline
Speaker 3: from an investment portfolio perspective. But to your point about
Speaker 3: return on investment for copex deployment, that's actually one thing
Speaker 3: that we're paying close attention to to understand if momentum
Speaker 3: of the AI trade could potentially shift, you know, as
Speaker 3: we think about sectors outside of technology also kind of
Speaker 3: getting very focused around AI adoption as we go from
Speaker 3: capital lights to capital intensive kind of deployment. It has
Speaker 3: significant impact on return on equity. So we're paying attention
Speaker 3: to return on all this copex spend, but it would
Speaker 3: take time, and right now, what exes look like the
Speaker 3: axis axis is twenty seven nine. You mean intensive return
Speaker 3: on investment?
Speaker 2: When are we going to find out why Facebook is
Speaker 2: spending all that jillions? And it's going to be an
Speaker 2: ability to do an excess spreadsheet at black Rock to
Speaker 2: figure out what the return is.
Speaker 3: I would say that actually it's remarkably hard to get
Speaker 3: present a number you've written an investment for these capex
Speaker 3: because it's quite well hidden and they're not obligated to
Speaker 3: report them in a very precise form. But I would
Speaker 3: make the general observation that markets are letting them off
Speaker 3: the hook right now because it's really an existential build
Speaker 3: out race. You're either spending and overspending to stay in
Speaker 3: the game and stay on the table, or you will
Speaker 3: be viewed as well. You won't be part of the
Speaker 3: future mix, right so I think markets are giving the
Speaker 3: tech companies some leeway to spend and overspend. We pay
Speaker 3: attention to free cash flow as a percentage of free
Speaker 3: cash flow. It's gone up quite a bit in terms
Speaker 3: of the kapex SU spent, but not to a level
Speaker 3: that they can't afford, not to mention, they can always
Speaker 3: tap into funding market public and private to raise additional
Speaker 3: cash to spend. Right So, you know, like right now,
Speaker 3: it's still early in this journey and we see all
Speaker 3: systems go when it comes to AI build out.
Speaker 6: How do you, guys as chief investment strategies, what screens
Speaker 6: well for you these days? Are you screening on industries, factors?
Speaker 6: How are you kind of looking at markets and opportunities
Speaker 6: these days broadly?
Speaker 3: Well, we have liked we have like growthy type of
Speaker 3: names because we want to focus on companies that can
Speaker 3: really give exposure to exponential growth opportunities related to AI.
Speaker 3: But we also just think broader market given the lucky
Speaker 3: combination of fact cuts growth holding up. Okay, earnings are
Speaker 3: reasonably well delivered so far as opposed to broader market. Yeah,
Speaker 3: we focus on the TAG and the EI complex, but
Speaker 3: generally we have an overweight to the broader US acquity
Speaker 3: market that includes the smaller caps compared to the mega
Speaker 3: tech companies in the international market. We're more selective, right, Like,
Speaker 3: so you're in Europe, we like defense, we like we
Speaker 3: like financials, we like industrials as a sector pick rather
Speaker 3: than across the across the board. Do you look to
Speaker 3: the emergent market? You know, like being selective would have
Speaker 3: paid off well so far this year as well. You know,
Speaker 3: the hands and healthcare indexes up more than one hundred percent.
Speaker 2: Are you flying into Heathrow today.
Speaker 3: On Thursday or maybe even over the weekend?
Speaker 2: Traffic congestion or something? So some software went down.
Speaker 4: I came you over the weekend.
Speaker 3: It was actually quite smooth.
Speaker 2: We'll see mischic think you just go, Larry, can I
Speaker 2: get the golf stream.
Speaker 5: When you ask?
Speaker 3: On my behalf greatly?
Speaker 2: Thank you so much. It is with Blackrock. Can't say
Speaker 2: enough about her contribution to the zeitgeist on LinkedIn. She
Speaker 2: had a beautiful Bard shirt piecing together showing this huge
Speaker 2: technology investment. Uh that's out there and you know it's
Speaker 2: interesting to see, Uh, to say the least. Stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after.
Speaker 1: This you're listening to the Bloomberg Surveillance Podcast. Catch us
Speaker 1: live weekday afternoons from seven to ten am Eastern Listen
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Speaker 2: A good time now with Yen's Nordvig of ACCENTI data
Speaker 2: all of his experience, including with Namur and goldn Sachs
Speaker 2: over the years, and it can be on foreign exchange.
Speaker 2: But you know, folks, of the one hundred and forty
Speaker 2: two books that came out out of the crisis, they
Speaker 2: are like five or six that had traction. Shout out
Speaker 2: Andrew ros Serkin's book of seven I thought was really good,
Speaker 2: as he launches a new one here. The follow of
Speaker 2: the euro reinventing the Euros on YenS Nordvig was absolutely
Speaker 2: I called it a primal scream. It was just it
Speaker 2: was so visceral. You have to be from Denmark to
Speaker 2: do that. If you're from America, you're too polite. It
Speaker 2: was so visceral. If you were to rewrite a book
Speaker 2: in the euro now, what would you title it?
Speaker 5: The challenges are still there. This challenge is still there.
Speaker 2: Zurosclerousa is still in place.
Speaker 5: We still have a weak growth done and we've had
Speaker 5: we've had a wake up call this year. Right, So
Speaker 5: we've had deflationary forces in Europe for the last ten years,
Speaker 5: as we spoke about, and then we had the COVID
Speaker 5: shock and all of that change, so that's gone. And
Speaker 5: then Germany have done something pretty dramatic right in terms
Speaker 5: of escaping the fiscal rules, so that was triggered by
Speaker 5: triggered by the US. Pauls have changed as well.
Speaker 6: So it seems like Europe is trying to spend its
Speaker 6: way out of its malaise, whether it's induced by the
Speaker 6: US change in policy. But I think there's questions about,
Speaker 6: all right, maybe Germany can get it done, maybe even
Speaker 6: Poland can get it done, because I point the right
Speaker 6: in the backyard of Russia it's in their best interest, But.
Speaker 4: How about everybody else?
Speaker 2: What's the rest of you are.
Speaker 6: Going to do in terms of trying to lift their
Speaker 6: they're spending levels.
Speaker 5: Yeah, Like the fundamental issue is that we used to
Speaker 5: in Europe for many decades to always have like the
Speaker 5: center of the politics was driving what was happening. So
Speaker 5: you had social democratic parties like a little bit to
Speaker 5: the left of center, and and then you had another
Speaker 5: centrist party a little bit to the right of the center,
Speaker 5: but they more or less did the same type of
Speaker 5: policies and they agreed on most things. And now you
Speaker 5: don't have that anymore. You can see in France like
Speaker 5: the center has like been annihilated, right, mess, Yeah, and
Speaker 5: it's in many different countries.
Speaker 2: Is it just another mess or is there something original
Speaker 2: this time about more protesting?
Speaker 5: I think we'll we're waiting for an election result where
Speaker 5: there's actually going to be one of these far right,
Speaker 5: far left parties coming to power. Like at the moment,
Speaker 5: the center is getting small and smaller, but still staying
Speaker 5: in power and almost all countries, right, So the real
Speaker 5: test this will be when these non centrist forties actually
Speaker 5: get into power and they have to decide what they
Speaker 5: what they do. And I think in relation to your
Speaker 5: question right about military spending, right, so it's clearly going
Speaker 5: up across the whole of the EU, Germany leading, and
Speaker 5: the fear of Russia is driving that, but it's not
Speaker 5: every country like Spain is not doing much like so
Speaker 5: so if you average it out, it's certainly not as
Speaker 5: dramatic as if you just look at Germany alone the
Speaker 5: US dollar.
Speaker 6: We had the FX annals from City City in your
Speaker 6: street just probably a half hour ago saying he's polished
Speaker 6: on the US dollar and he feels pretty empty alone
Speaker 6: out there, pretty lonely out there. What's your view of
Speaker 6: the dollar? He does not bounce back like everything else
Speaker 6: seems to bounce back.
Speaker 5: Yeah. So there's a huge debate going on at the
Speaker 5: moment about, Okay, what's happening with dollar hedging? Right? So
Speaker 5: on our data platform, we have a whole section that's
Speaker 5: dedicated to this specifically, right, because you can track it
Speaker 5: in many ways. There's been a lot of writing, including
Speaker 5: on Bloomberg in the last couple of weeks, about oh,
Speaker 5: if you look at the ETF flows, they show a
Speaker 5: lot of people are buying US acid but with a
Speaker 5: hedge on top. I think that's it's very tricky to
Speaker 5: just use the ETFs because a lot of institutional flow
Speaker 5: don't happen in ETF space, right, So you can have
Speaker 5: pension funds that do big changes and you will not
Speaker 5: see anything in ETF. So I think the big picture
Speaker 5: is the following. We've been through, you know, three phases
Speaker 5: in terms of like dollar flows, where we came into
Speaker 5: this year, people still believed in US exceptionalism, still bought
Speaker 5: US stocks. Tech was the dominant theme. Then we had
Speaker 5: all the policy uncertainty, reciprocal tariffs. We also had the
Speaker 5: German fiscal stimulus that people saw, okay, maybe there's an alternative, right,
Speaker 5: And we had a period where actually inflows into the
Speaker 5: US where smaller than inflows into other international competitors. And
Speaker 5: then in the last couple of months it's like kind
Speaker 5: of like a gray song. We're not back to US exceptionalism,
Speaker 5: but the US is recovering. There is a bit more
Speaker 5: flow coming in, so it's it's sort of a gray song.
Speaker 5: So in my forecast for the dollar, I now put
Speaker 5: less weight on sort of very negative flows as a
Speaker 5: drive of the dollar. I put more weight on the FED. Again,
Speaker 5: so since my company specialized in the flow, maybe I'm
Speaker 5: being kind of like under budding. But we also do
Speaker 5: some FED analysis and and that's really been the key.
Speaker 5: You can see it in the correlations like the dollar
Speaker 5: and US interest rates super highly correlated. Again, there was
Speaker 5: no correlation at all in April May.
Speaker 2: Okay, I got I gotta get quickly because i'mnna do
Speaker 2: an audible. What's your what's your euro call? Here?
Speaker 5: At twelve months, I think we're going to be grinding higher.
Speaker 5: I think we're going to be stronger. I think the
Speaker 5: euro can be grinding high differ.
Speaker 2: Yeah, it's great, Okay, we're doing audio against Nordvik with
Speaker 2: us right now. And again his book was just absolutely fabulous.
Speaker 2: I learned this the hard way. Patrick O'Brien wrote a
Speaker 2: book called The Surgeon's Mate. In America, most people study
Speaker 2: the Baltic Sea for two days in ninth grade, and
Speaker 2: that's a combined knowledge. We don't have any understanding of
Speaker 2: the world. You grew up in Copenhagen by boat, sixteen
Speaker 2: hundred miles from Russia, Saint Petersburg, the Baltic States. We've
Speaker 2: got testing of Russian planes in Estonia right now. It
Speaker 2: bare barely moves the needle here in America. I want
Speaker 2: you to explain to our American audience here that this
Speaker 2: ginormous brackish Baltic Sea with Denmark at the isthmus of it,
Speaker 2: where you come out the importance of that to the
Speaker 2: Western Alliance.
Speaker 5: Well, maybe i'll give you a one minute.
Speaker 4: History lesson, please, So all the.
Speaker 5: Traffic that comes by ship from Russia, Poland Baltic nations,
Speaker 5: so for what have to go through a tiny little
Speaker 5: gap between Sweden and Denmark. The reason why Copenhagen used
Speaker 5: to be a very wealthy city was that they collected
Speaker 5: taxi taxes from all those ships and they had a
Speaker 5: cannon in place, so if they didn't pay the tax,
Speaker 5: they would just shoot this ship down. And that's literally
Speaker 5: the reason why Copenhagen was a wealthy city very early on.
Speaker 5: And obviously now we have tension in the Baltic Sea
Speaker 5: right because we have you knowlitary military aircraft doing things
Speaker 5: they're not supposed to do, so there's a lot of
Speaker 5: tension in that area. Like one card that Western nations
Speaker 5: could play was to actually control if they really wanted
Speaker 5: to control that waters, like logistically they used to do
Speaker 5: with one cannon, so it could be done. I think
Speaker 5: part of the problem we have in the EU in
Speaker 5: relation to Russia is that the EU and the European
Speaker 5: are so afraid to escalate, right that those cards that
Speaker 5: they actually have that could be very powerful cards are
Speaker 5: just not not they're not being played, but they're not
Speaker 5: even being talked about. So that was a that was
Speaker 5: a more than one minute, but they gave you a
Speaker 5: little bit of because we got there.
Speaker 2: We got the Greenland distraction. Who's winning in Greenland today
Speaker 2: is the US or Denmark? I mean, you've got this
Speaker 2: whole Greenland distraction. Meanwhile, we have jets over NATO countries.
Speaker 2: I mean it is bizarre. Right now, Denmark is building
Speaker 2: up their military capabilities, right.
Speaker 5: That's right, that's just an investment into air defense system,
Speaker 5: like multimillion investments, right. And the interesting part about that
Speaker 5: was that it was announced as an investment that also
Speaker 5: had offensive capability, right, because the Prime Minister essentially said, like,
Speaker 5: there's no point in only having If you only have defenses,
Speaker 5: then how you're going to scare the aggressive on that.
Speaker 2: Line with the technology of Stockholm and you know no
Speaker 2: key years ago in that. Are you a believer that
Speaker 2: Europe can get their technology act together?
Speaker 5: I think you're seeing some signs of hope in countries
Speaker 5: like Germany, where there's actually a bunch of AI startups
Speaker 5: in robotics, AI robotics some people call the real world AI, right,
Speaker 5: not just in a digital domain. So I think the
Speaker 5: resource that Europe still has is that we have an
Speaker 5: education system that still delivers a lot of well educated engineers,
Speaker 5: computer sciences and so forth, so the human resource materials there,
Speaker 5: maybe it will matter a few of those people go
Speaker 5: to the United States and get an age one bbs. Right,
Speaker 5: So there's all these different things happening right now where
Speaker 5: the sort of relative force of the different labor market
Speaker 5: is shifting.
Speaker 2: Did you have an H and B visa when you
Speaker 2: first came here?
Speaker 5: I did not know.
Speaker 2: I did.
Speaker 5: I was with Goldvin Sacks in London and I did
Speaker 5: a transfer with Goldman Sachs, So that's a different visus.
Speaker 2: Excuse me, the embassy of Goldman Sachs picks up a.
Speaker 4: Phone and it's done.
Speaker 2: Yes, talk to us.
Speaker 4: From when you're talking to your clients globally.
Speaker 6: What's the level of concern, if any, about the independence
Speaker 6: of the US fedter Reserve these days?
Speaker 5: Well, very very elevated concern. I have a lot of
Speaker 5: clients around the world right that invest in macro assets
Speaker 5: on a very broad basis, including emergen market assets, and
Speaker 5: those investors have a lot of experience and a lot
Speaker 5: of you know, lessons that they drawn from being involved
Speaker 5: in countries where central bank independence was a real problem
Speaker 5: and it caused massive, massive asm moves when when essentially
Speaker 5: the government took over the central bank or forced the
Speaker 5: central bank to do certain things. We've seen that in Turkey, right,
Speaker 5: where the government has pushed through certain to easy monetary policy, right,
Speaker 5: and the currency has seen disastrous depreciation. So people have
Speaker 5: those lessons in the back of the head, right, And
Speaker 5: then it's a matter of Okay, what degree are we
Speaker 5: going down? There's a path. We've certainly already taken a
Speaker 5: step down this path.
Speaker 2: Right.
Speaker 5: You can see it in the dot plot. Right, you
Speaker 5: had you had a new governor, right that had a
Speaker 5: dot that was totally out of whack with all the
Speaker 5: other dots. Right. So it's it's very clear that we're
Speaker 5: going in that direction. But the question is whether it's
Speaker 5: really dry policy.
Speaker 2: Right.
Speaker 5: You also saw that we only had one descent. So
Speaker 5: it's all almost like the voting members of the f
Speaker 5: m C decided mostly to say, Okay, we're actually going
Speaker 5: to try to show a degree of consensus. There's one
Speaker 5: dot we cannot do anything about, but we're trying to
Speaker 5: do a degree of consensus about that audible.
Speaker 2: We got to get this in before we go to
Speaker 2: Michael Byron. One quick question, bestent of the Treasuries out
Speaker 2: with a wide set of headlines. US is ready to
Speaker 2: do what's needed to support Argentina. In a tweet, the
Speaker 2: Secretary said, they want to make Argentina great again. Okay,
Speaker 2: are you lying the Argentinian paeso because we're going to
Speaker 2: bail out Argentina.
Speaker 5: This is really interesting. We have a situation right where
Speaker 5: the United States kind of has a fight with Brazil,
Speaker 5: including terror, very elevated channel from Brazil that are mostly
Speaker 5: based on a political tension with what is haptable scenarow right,
Speaker 5: and now we have a situation where Argentina potentially might
Speaker 5: get very favorable toreat and something that really has potentially
Speaker 5: not happened since the Clinton bailout of Mexico, so very rare,
Speaker 5: and it's happening because they like the leadership in Argentina playoffs,
Speaker 5: So it's it becomes a situation where it's the relationships
Speaker 5: at the highest level in government, including internationally, that might
Speaker 5: determine really who gets tariffed, who gets support. And this
Speaker 5: is a new regime we're in. This would have not
Speaker 5: happen like this a couple of months ago, what should
Speaker 5: we say, seven months ago? So new, new, new regime.
Speaker 2: Don't be strange. He has Nord. Thank you so much.
Speaker 2: Excity Data can't see enough of out his book of
Speaker 2: a decade ago plus in the euro We looked for
Speaker 2: another one out here. If missus Nordvigil to write volume four,
Speaker 2: whatever it is, stay with us. More from Bloomberg Surveillance
Speaker 2: coming up after this.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto
Speaker 1: with the Bloomberg Business app. You can also listen live
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Speaker 1: say Alexa Play Bloomberg eleven thirty.
Speaker 2: Michelle Meyer with us the master Card. It's a first
Speaker 2: look at the holiday season. I'm going to round up
Speaker 2: the numbers because it's Monday. Online shopping up eight percent,
Speaker 2: store shopping up two percent. Is that because the technology
Speaker 2: and we like our Amazon boxes or is there a
Speaker 2: backstory to that at MasterCard?
Speaker 7: I mean, I think the technology and the digitalization of
Speaker 7: the retail space has been happening for years and that
Speaker 7: has been driving e commerce to see.
Speaker 4: Faster growth rate to the last years.
Speaker 7: But I do think there also is a specific story
Speaker 7: this year which is around tariffs, and they need to
Speaker 7: have even greater price discovery for consumers that are facing
Speaker 7: varied prices depending on that sensitivity to tariffs, they're going
Speaker 7: to want to be able to get the best deal
Speaker 7: that's out there and find that value. And you can
Speaker 7: do a lot more of that online.
Speaker 6: So how is the consumer here? We had some retail
Speaker 6: sales that look pretty darn solid.
Speaker 4: So how do you feel the consumer these days?
Speaker 7: I mean, I think the data is speaking really loudly
Speaker 7: right now, which is that consumers are still engaged in spending.
Speaker 7: You see it, as you just noted in the.
Speaker 5: Censuspure of retail sales reports the last.
Speaker 7: Few months showing some real healthy spend trends, and we
Speaker 7: see it in our own insights as well with our
Speaker 7: spending pool data that showed acceleration throughout the summer. So yes,
Speaker 7: consumers are making choices in how they're using their purchasing power,
Speaker 7: and I think a lot of that has to do
Speaker 7: with where, again, they find the most value. They're trying
Speaker 7: to navigate the tariff environment to the best of their ability,
Speaker 7: and the sales numbers that we're looking at are of
Speaker 7: course nominal sales, and we are still to see a
Speaker 7: little bit higher goods inflation than certainly we saw this
Speaker 7: time last year.
Speaker 2: Will you break it down in your special MasterCard report
Speaker 2: with smiling people on the cover because they're happy to
Speaker 2: start shopping in September. Artificial Christmas trees, the tariff is
Speaker 2: twenty seven yea percent. You're like the budget lab at Yale,
Speaker 2: I mean, what is the calculation of tariff impact right now?
Speaker 7: Absolutely, so we looked at just the data that the
Speaker 7: Census Bear reports in terms of the teriff freight by
Speaker 7: really granular category, because that's what we like to do.
Speaker 7: We like to go really deep in terms of understanding
Speaker 7: consumer spending by different categories. And certainly you are seeing
Speaker 7: some like artificial trees stood out as one where tariffs
Speaker 7: are significantly high than this time last year. So consumers
Speaker 7: have to make decisions if they do indeed see some
Speaker 7: of those tariff increases passed on to them, and that's
Speaker 7: a question of if. Because retailers are also trying to
Speaker 7: navigate this, then they'll have to decide if they want
Speaker 7: to allocate more of their dollars to get that Christmas
Speaker 7: tree or do something different. So there's going to be
Speaker 7: a certain amount of substitution, where, when and where it's
Speaker 7: possible to do that based off of where tariffs are
Speaker 7: kicking it and showing up in the data.
Speaker 6: So your forecast, how do you think the holiday season
Speaker 6: will shape up?
Speaker 4: How do you think spending will be this holiday?
Speaker 7: So Tom gave the breakdown between e commerce and in store,
Speaker 7: but to give the overall numbers, we're looking for three
Speaker 7: point six percent retail sales ex autos, which is measured
Speaker 7: good from Yeah, it's November first, the December twenty fourth,
Speaker 7: knowing that, of course the holiday season starts even earlier.
Speaker 7: We think it's kicking off now, but it just.
Speaker 2: For scraz You should start Friday after Thanksgiving.
Speaker 5: Yes, things have changed, that's still a big day.
Speaker 7: Of course, Black Friday period is super important and we'll
Speaker 7: be monitoring it really closely to understand the trends for
Speaker 7: the season.
Speaker 4: All right, Michelle, thank you so much. Appreciate that.
Speaker 6: Michelle mayor joining us here in our studio. Michelle Mayer's
Speaker 6: a chief economist North America for Massacart Economics Institute.
Speaker 4: Well, if they don't get up, if they don't have a.
Speaker 6: Finger on the pulse of spending on who doesn't I
Speaker 6: mean I'll be throwing down the carton.
Speaker 2: Do you get to go to Formula one? Like McLaren,
Speaker 2: do you get to go like? Are you going to Austin?
Speaker 4: I went to Vegas?
Speaker 2: You're going to Austin?
Speaker 4: You are kidding here?
Speaker 2: No McLaren, Lando and Oscar? Yes, yes, yes? Who do
Speaker 2: you root for?
Speaker 5: All of these?
Speaker 2: Scott? Who do you root for? Sharaison is Gaga over Oscar?
Speaker 2: Come on, Oscar Orlando? We need to know.
Speaker 7: Maybe Lando a little bit more, but Oscar's great to
Speaker 7: I don't want to you know anybody wearing THO McLaren
Speaker 7: colors on the.
Speaker 2: Bottle it Michelle Meyer, Orlando crush. That's what I learned
Speaker 2: today is the chief ecotomist. I'll carry your bags, the
Speaker 2: Lewis Street luggage. You've got to Austin. I'll carry your bags.
Speaker 2: Michell Meyer, Thank you so much. Stay with us. More
Speaker 2: from Bloomberg Surveillance coming up after this.
Speaker 1: This is the Bloomberg Surveillance podcast. Listen live each weekday
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Speaker 2: What a great set of conversations today in this H
Speaker 2: one V up forth. Thank you Josh Wingrove and our
Speaker 2: team in Washington who broke that story. Huge impact by
Speaker 2: Bloomberg News in our White House correspondence over the weekend.
Speaker 2: We continue strong with god A mcinda joining us from
Speaker 2: Bloomberg Opinion and also Yale School of Management. Okay, you
Speaker 2: grew up in America, but you know the entire H
Speaker 2: one B Malsterman in all that one hundred and fifty
Speaker 2: thousand engineering graduates in America ten times, at eight times,
Speaker 2: at whatever in India. I get the people that want
Speaker 2: Americans to have jobs. But in your study, is there
Speaker 2: anyway American engineering talent can make what percent of the
Speaker 2: present H one B pool?
Speaker 4: So it's not even close.
Speaker 8: So H one b's are a huge supplement, and because
Speaker 8: they're so hard to get, they're particularly sort of value added.
Speaker 2: Right.
Speaker 8: Well, what we actually see from H one b's is
Speaker 8: they create jobs for American engineers because of right, because
Speaker 8: that makes it easier to create companies, It makes it
Speaker 8: easier to dumb it to lead in high skilled industries,
Speaker 8: and so it's not a zero sum game. They don't
Speaker 8: push out American engineers.
Speaker 2: Okay, but help our audience. If there's one hundred jobs created,
Speaker 2: how many can be people from Georgia Tech, Texas A
Speaker 2: and m cal Tech. Is it like twenty thirty? Is
Speaker 2: it eighty nine out of one hundred?
Speaker 4: So in the US, So your thing as the proportion
Speaker 4: of the h one d's.
Speaker 2: If we eliminate H one B, how many of those
Speaker 2: one hundred h one B jobs are going to be
Speaker 2: taken by American engineers?
Speaker 8: Oh so till we run out of engineers? Yes, so
Speaker 8: it's one as we've run out of engineers. So the
Speaker 8: problem isn't just that, it's that, you know, maybe twenty
Speaker 8: or thirty of those were taken. It's that twenty or thirty,
Speaker 8: But then we would lose fifty or sixty other American
Speaker 8: engineering jobs from companies that aren't created, that don't grow
Speaker 8: because they don't have access to this engineering count. The
Speaker 8: total number of engineering of the total employment for American
Speaker 8: engineers in the United States will go down, not up,
Speaker 8: because of this.
Speaker 6: Presumably the tech industry is one of the ones, if
Speaker 6: not the most impacted here. Yet I don't hear much
Speaker 6: from technology leaders. In fact, I see them accompanying the
Speaker 6: President at various events, including over in London last week for.
Speaker 4: His state visit.
Speaker 6: Are you surprised that we haven't seen pushback from maybe
Speaker 6: some corporate leadership or just some other business entities.
Speaker 4: No, for two reasons.
Speaker 8: The first is fear, right, Like, if you talk to
Speaker 8: corporate leaders and you'll start starting to see people that
Speaker 8: was the l CEO Sunit recently, where this was just
Speaker 8: the consensus.
Speaker 4: In the room.
Speaker 8: Everybody is unhappy and no one wants to see say
Speaker 8: anything about it because they think the president will come
Speaker 8: after them if they do.
Speaker 3: So.
Speaker 8: Fear is a real company here. But the second is
Speaker 8: the way this is structured is interesting in the way
Speaker 8: it's done right. So there's this one hundred thousand dollars
Speaker 8: fee which can be waived at the president's discretion for
Speaker 8: any reason.
Speaker 4: So in a real sense.
Speaker 8: What this does is just create a huge, you know,
Speaker 8: a huge incentive to cultivate the president. And it also
Speaker 8: really helps sort of big incumbent companies over small scrappy ones.
Speaker 4: Both of those.
Speaker 8: If you're a major CEO leader, you might decide your
Speaker 8: interests are go along tariffs.
Speaker 6: I'm not sure where we are. I think the courts
Speaker 6: are taking a look at these things. What's your view
Speaker 6: of kind of where we are here, because I think
Speaker 6: the Supreme Court's going to have some type of say here.
Speaker 4: It's absolutely going to have some type of say.
Speaker 8: And the Supreme Court has sort of to an unprecedented
Speaker 8: extent and given deference to the Trump administration a way
Speaker 8: that we just haven't seen this before in the modern era,
Speaker 8: in ways that are pretty surprising that even other judges
Speaker 8: are starving to call out as this is inappropriate. So
Speaker 8: we don't know what they will do, and anyone's guess
Speaker 8: has good on that. I think the law, most legal
Speaker 8: analysts think that the law says that these terrors are
Speaker 8: going to be overturned, but we don't know. But even
Speaker 8: if they are, the Trump administration has ways to reimpose them.
Speaker 8: So unfortunately, the Court is actually increasing the level of
Speaker 8: uncertainty that's attached to the terrorist's not decreasing.
Speaker 2: Gotta macunda with this Yale University a great set of
Speaker 2: books out in presidential politics. Here on our talent, I
Speaker 2: take immense umbrage about a huge body of Americans don't
Speaker 2: understand the engineering heritage of many of our schools. How
Speaker 2: many people actually know there's Yale engineering with all of
Speaker 2: that nineteenth century heritage. So if I'm taking physics for
Speaker 2: twenty thermodynamics and statistical mechanics, this is not an easy a,
Speaker 2: is it? No? It's not? Okay? Fine, So if I'm
Speaker 2: doing entropy at Yale, is the Indian education superior and
Speaker 2: more rigorous than across America engineering?
Speaker 8: So the median Indian education isn't. But there are a
Speaker 8: lot of Indians. There are one point four billion of them.
Speaker 8: If you're talking about the people who are going to
Speaker 8: the its and places like that. My mother was both
Speaker 8: her undergrad and her PhD.
Speaker 4: It was from it compore.
Speaker 2: Did she come here in an H one B?
Speaker 4: She came here. She did not come here on an
Speaker 4: H one B. She came here in the early seventies Maria.
Speaker 2: But she got off an airplane somewhere. Did she take
Speaker 2: an American job when she came here?
Speaker 8: So she took a job in the United States, But
Speaker 8: she did not take an American job because her skill
Speaker 8: set was such that she was essentially the only person
Speaker 8: in the world who was able to do the work
Speaker 8: that she did for NASA, And so every single program,
Speaker 8: every single American spacecraft that involved nuclear power and space
Speaker 8: went through her at some point over the course of
Speaker 8: her forty year career.
Speaker 2: It literally, did she think we could use nuclear propulsion
Speaker 2: to go to Mars? This was a raging dinner table.
Speaker 2: Copper like buns and rolls were thrown over. This is
Speaker 2: it her fault that we were supposed to develop nuclear
Speaker 2: miss or rocketry rather to go to March.
Speaker 4: It's not. It's actually a treaty problem.
Speaker 8: But I will say when The Martian came out, exactly
Speaker 8: one of the probes in the Martian is actually the
Speaker 8: last mission she helped design. And so when she saw it,
Speaker 8: I got a four page technical analysis of the movie
Speaker 8: from her.
Speaker 2: Read it. I loved it.
Speaker 4: I thought it was great, Bud, thanks for setting this
Speaker 4: to it.
Speaker 8: But this is actually a key thing, right, This is
Speaker 8: taking a skill set from India. Right, So, India, at
Speaker 8: the time, one of the world's poorest countries, at ruinous expense,
Speaker 8: educated America's finest scientist and engineers and let's sent them here.
Speaker 8: This is a phenomenal deal for the United States. The
Speaker 8: idea of every country in the world would kill to
Speaker 8: get the best graduates of the Iets there that right,
Speaker 8: like that is an asset of uncalculable value, and in
Speaker 8: staid we seem to be throwing it away. It is
Speaker 8: a decision that makes no sense on any level of
Speaker 8: the national interest.
Speaker 6: So what do you think, How do you think this
Speaker 6: is going to play out? I mean, I'm sure it's
Speaker 6: a topic of conversation at Yale, at Harvard and all
Speaker 6: the places you hang your head.
Speaker 4: How do you think this is going to play So.
Speaker 8: One is there's going to be a lot of pushback.
Speaker 8: For example, a lot of these people are like surgical residents.
Speaker 8: We already have a.
Speaker 4: Doctor's shortage in the United States.
Speaker 8: People don't know this, but the United States has fewer
Speaker 8: doctors per capita than any other industrial We got.
Speaker 2: To cut to thee This is brilliant.
Speaker 3: You know.
Speaker 2: I have to have you back again. Got them just
Speaker 2: on this. If the president does this, how does it
Speaker 2: change in American's life at Georgia Tech Engineering or el Engineering.
Speaker 8: So one is these schools will these schools become less
Speaker 8: attractive to foreign students because a lot of them come
Speaker 8: in in the expectation they will be able to stay
Speaker 8: in the United States with an H one BBS, which
Speaker 8: they find an incredibly attractive prospect. So first American schools,
Speaker 8: which have historically gotten the best talent in the world,
Speaker 8: are going to find it harder to do that. And
Speaker 8: that's a big problem because those schools are the ones
Speaker 8: that produce the new technologies that are the foundation for
Speaker 8: new for new industries and new companies. So you want
Speaker 8: them to keep spilling out that. You want them to
Speaker 8: have the best global talent. So second, companies are going
Speaker 8: to be more likely, not less likely, they're going to
Speaker 8: be more likely to outsource American technology jobs outside of
Speaker 8: the United States, because if they can't get the labor here,
Speaker 8: they can get it in India. So you're going to
Speaker 8: see more outsourcing and more offshoring for the sorts of
Speaker 8: jobs that we actually desperately want.
Speaker 2: For Microsoft setting up more in the United Kingdom with
Speaker 2: that's the president's visit. Yeah, this is brilliant gun, Thank
Speaker 2: you so much. With the Yale University. Can't say enough
Speaker 2: about it. We'll do this, We'll do this again. That's
Speaker 2: a nerd fest.
Speaker 4: Did you watch some Marsha Yeah, awesome.
Speaker 2: My mother said my father was literally crying during the movie. Yep,
Speaker 2: they got so many things right.
Speaker 1: This is the Bloomberg Surveillance podcast available on Apple, Spotify,
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Speaker 6: Yeh