WEBVTT - Market Sentiment and Rate Cut Outlook 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:21.240 on Apple car Play or Android Auto with the Bloomberg 0:00:21.320 --> 0:00:24.840 Business App. Listen on demand wherever you get your podcasts, 0:00:25.280 --> 0:00:27.800 or watch us live on YouTube for this from. 0:00:27.600 --> 0:00:31.320 Blackrock Wailey in studio. Thrilled to have you here, with 0:00:31.440 --> 0:00:36.599 immense respect for your profound accomplishments as a kid. And 0:00:36.600 --> 0:00:38.880 you were in China and then you went to Singapore, 0:00:39.000 --> 0:00:42.920 right it's somewhere. Did you go through the H one 0:00:43.120 --> 0:00:46.280 B visa process years ago? 0:00:46.880 --> 0:00:52.040 I didn't because I'm working. I'm based in London right now, 0:00:52.040 --> 0:00:54.520 I have a l one A. I think I need 0:00:54.520 --> 0:00:57.480 to remember that as against custom every time. 0:00:57.920 --> 0:01:01.760 What are your thoughts on this? You know it's the 0:01:01.840 --> 0:01:05.360 bar charts are India with a huge impact and then 0:01:05.480 --> 0:01:09.039 China is an impact away from the politics of it. 0:01:09.080 --> 0:01:10.480 What are your thoughts on it? 0:01:10.560 --> 0:01:14.480 I think that represents near tom uncertainty, especially facing I 0:01:14.480 --> 0:01:20.039 guess smaller companies. I think this is another example why 0:01:20.120 --> 0:01:24.399 we have to focus on fundamentals and pricing power of 0:01:24.520 --> 0:01:28.720 large companies as we think about being selective the zechist. 0:01:28.760 --> 0:01:32.919 This weekend, You're wonderful on LinkedIn pushing back against it 0:01:32.959 --> 0:01:37.759 is worry, worry AI, worry more worry, worry, worry AI. 0:01:38.080 --> 0:01:39.920 That's normal in a bull market. 0:01:39.760 --> 0:01:41.200 Isn't it. I think so. 0:01:41.520 --> 0:01:44.320 I think so, and I think it's worth remembering that 0:01:44.760 --> 0:01:49.880 bull markets do not die from valuation. And even if 0:01:49.920 --> 0:01:53.240 there is more focus around valuations right now, our study 0:01:53.280 --> 0:01:55.960 shows that it's not really as stretched as you would 0:01:56.000 --> 0:01:59.320 have expected looking at price appreciation. You look at magnificent 0:01:59.360 --> 0:02:03.360 seven right now, at thirty two times, PE is actually 0:02:03.400 --> 0:02:05.280 lower than the level at the beginning of the year 0:02:05.320 --> 0:02:09.280 because of the very strong earnings delivery and earnings upgrade, 0:02:09.360 --> 0:02:11.240 so we think that there is more to go. 0:02:11.440 --> 0:02:14.200 Our study shows that for US Tech. 0:02:14.080 --> 0:02:17.399 More broadly, if they deliver earning in the region from 0:02:17.480 --> 0:02:20.640 fifteen percent to twenty percent, their current multiple is maybe 0:02:20.639 --> 0:02:24.000 even higher than that can be very well supported. And 0:02:24.040 --> 0:02:26.560 now you may ask, you know, fifteen twenty that sounds 0:02:26.600 --> 0:02:29.440 like a lot, but looking back thirty years, a quarter 0:02:29.560 --> 0:02:33.320 of those period actually have seen US Tech growing earnings 0:02:33.760 --> 0:02:36.040 that strongly, right, so you know it's doable. 0:02:36.840 --> 0:02:37.520 That's doable. 0:02:37.960 --> 0:02:40.600 I think that the AI believers are firm believers in 0:02:40.680 --> 0:02:42.480 AI how about the rest of the world, the four 0:02:42.560 --> 0:02:44.120 hundred and ninety three other stocks in the S and 0:02:44.160 --> 0:02:46.280 P five hundred, how do you guys approach those names? 0:02:46.800 --> 0:02:50.240 You know, right now we're in this let's quite lucky 0:02:50.600 --> 0:02:56.639 juncture where we have the FED restarting raycut cycle and 0:02:56.880 --> 0:03:00.880 the labor market is supporting that rate cut direction of 0:03:00.919 --> 0:03:05.440 travel without it then becoming a big political debate in 0:03:05.520 --> 0:03:08.560 terms of fat independence, but also then what it means 0:03:08.560 --> 0:03:10.400 for long end of the curve and term premiere. So 0:03:10.480 --> 0:03:15.800 right now, the FAT is starting restarting fat rate cuts 0:03:16.040 --> 0:03:19.200 and growth is holding up. Okay, we're looking at one 0:03:19.240 --> 0:03:22.360 point five percent for your economy this year. It's very 0:03:22.440 --> 0:03:25.880 far from recession. Earnings a strong so it's a good 0:03:25.960 --> 0:03:28.840 mix that can continue to support risk assets. Now the 0:03:28.919 --> 0:03:33.680 question is just for how long this lucky combination will last. 0:03:33.880 --> 0:03:36.680 So we're very much paying attention to you know, if 0:03:36.760 --> 0:03:41.080 labor market deterioration is a precursor of something worse to 0:03:41.160 --> 0:03:43.320 come on a growth front, it's not our expectation, but 0:03:43.520 --> 0:03:45.640 you know, lots of uncertainty. 0:03:45.840 --> 0:03:48.360 You say you're staying risk on, how does that apply 0:03:48.440 --> 0:03:51.200 to the fixed income market? Are you are you staying 0:03:51.240 --> 0:03:53.000 with it in the treasury market where you can get more, 0:03:53.000 --> 0:03:55.400 you can get four percent for change on a tenure, 0:03:55.520 --> 0:03:58.320 or do it take some credit risk our credit. 0:03:58.640 --> 0:04:02.680 We have had the preference for credit over long duration 0:04:03.200 --> 0:04:06.480 for a while, and you look at how ig spread 0:04:06.760 --> 0:04:10.320 is at close to multi decades low will actually add 0:04:10.400 --> 0:04:12.720 multi decay load. That has been a good call. But 0:04:12.880 --> 0:04:15.720 at this juncture, at this particular juncture, we do think 0:04:15.760 --> 0:04:20.200 that there is room to extend out duration exposure a 0:04:20.240 --> 0:04:24.760 little bit because we see this lucky mix of labor 0:04:24.800 --> 0:04:29.440 market supporting fact cuts and just generally markets are focusing 0:04:29.480 --> 0:04:31.400 on that. So we want to lock in some of 0:04:31.440 --> 0:04:34.960 the attractive long duration radios in the US. 0:04:34.960 --> 0:04:39.080 In the technology juggernaut that you've let on, where is 0:04:39.279 --> 0:04:43.560 use of cash? Obviously they're doing a capex. Does Blackrock 0:04:43.680 --> 0:04:47.920 see evidence of a return and invest in capital from 0:04:47.960 --> 0:04:50.240 this capex balloon or does that wait? 0:04:51.680 --> 0:04:56.040 We have seen significant growth in our cash business because 0:04:56.080 --> 0:04:58.440 there is a huge amount of cash on the sizeline 0:04:58.520 --> 0:05:02.119 from an investment portfolio perspective. But to your point about 0:05:02.440 --> 0:05:06.960 return on investment for copex deployment, that's actually one thing 0:05:06.960 --> 0:05:10.360 that we're paying close attention to to understand if momentum 0:05:10.360 --> 0:05:13.320 of the AI trade could potentially shift, you know, as 0:05:13.360 --> 0:05:17.320 we think about sectors outside of technology also kind of 0:05:17.360 --> 0:05:21.200 getting very focused around AI adoption as we go from 0:05:21.480 --> 0:05:26.080 capital lights to capital intensive kind of deployment. It has 0:05:26.120 --> 0:05:29.560 significant impact on return on equity. So we're paying attention 0:05:29.720 --> 0:05:33.760 to return on all this copex spend, but it would 0:05:33.760 --> 0:05:36.800 take time, and right now, what exes look like the 0:05:37.000 --> 0:05:44.320 axis axis is twenty seven nine. You mean intensive return 0:05:44.400 --> 0:05:45.160 on investment? 0:05:45.200 --> 0:05:48.120 When are we going to find out why Facebook is 0:05:48.160 --> 0:05:51.320 spending all that jillions? And it's going to be an 0:05:51.440 --> 0:05:54.719 ability to do an excess spreadsheet at black Rock to 0:05:54.760 --> 0:05:56.080 figure out what the return is. 0:05:56.480 --> 0:05:59.600 I would say that actually it's remarkably hard to get 0:05:59.640 --> 0:06:02.800 present a number you've written an investment for these capex 0:06:02.880 --> 0:06:05.760 because it's quite well hidden and they're not obligated to 0:06:05.760 --> 0:06:09.479 report them in a very precise form. But I would 0:06:09.600 --> 0:06:13.160 make the general observation that markets are letting them off 0:06:13.240 --> 0:06:17.080 the hook right now because it's really an existential build 0:06:17.120 --> 0:06:21.040 out race. You're either spending and overspending to stay in 0:06:21.080 --> 0:06:24.400 the game and stay on the table, or you will 0:06:24.440 --> 0:06:26.480 be viewed as well. You won't be part of the 0:06:26.880 --> 0:06:29.240 future mix, right so I think markets are giving the 0:06:29.440 --> 0:06:34.120 tech companies some leeway to spend and overspend. We pay 0:06:34.120 --> 0:06:36.320 attention to free cash flow as a percentage of free 0:06:36.360 --> 0:06:38.440 cash flow. It's gone up quite a bit in terms 0:06:38.440 --> 0:06:40.760 of the kapex SU spent, but not to a level 0:06:40.800 --> 0:06:42.880 that they can't afford, not to mention, they can always 0:06:42.920 --> 0:06:47.400 tap into funding market public and private to raise additional 0:06:48.360 --> 0:06:50.800 cash to spend. Right So, you know, like right now, 0:06:50.839 --> 0:06:54.160 it's still early in this journey and we see all 0:06:55.240 --> 0:06:57.680 systems go when it comes to AI build out. 0:06:58.080 --> 0:07:01.279 How do you, guys as chief investment strategies, what screens 0:07:01.520 --> 0:07:06.640 well for you these days? Are you screening on industries, factors? 0:07:06.839 --> 0:07:09.120 How are you kind of looking at markets and opportunities 0:07:09.160 --> 0:07:09.840 these days broadly? 0:07:10.440 --> 0:07:15.160 Well, we have liked we have like growthy type of 0:07:15.280 --> 0:07:18.400 names because we want to focus on companies that can 0:07:18.440 --> 0:07:22.800 really give exposure to exponential growth opportunities related to AI. 0:07:23.280 --> 0:07:27.720 But we also just think broader market given the lucky 0:07:27.800 --> 0:07:31.080 combination of fact cuts growth holding up. Okay, earnings are 0:07:31.120 --> 0:07:36.160 reasonably well delivered so far as opposed to broader market. Yeah, 0:07:36.200 --> 0:07:38.280 we focus on the TAG and the EI complex, but 0:07:38.360 --> 0:07:41.280 generally we have an overweight to the broader US acquity 0:07:41.360 --> 0:07:45.680 market that includes the smaller caps compared to the mega 0:07:45.760 --> 0:07:50.640 tech companies in the international market. We're more selective, right, Like, 0:07:50.760 --> 0:07:54.240 so you're in Europe, we like defense, we like we 0:07:54.360 --> 0:07:57.680 like financials, we like industrials as a sector pick rather 0:07:57.720 --> 0:08:00.200 than across the across the board. Do you look to 0:08:00.280 --> 0:08:03.240 the emergent market? You know, like being selective would have 0:08:03.600 --> 0:08:06.080 paid off well so far this year as well. You know, 0:08:06.120 --> 0:08:09.440 the hands and healthcare indexes up more than one hundred percent. 0:08:10.040 --> 0:08:11.840 Are you flying into Heathrow today. 0:08:12.760 --> 0:08:17.880 On Thursday or maybe even over the weekend? 0:08:18.120 --> 0:08:21.280 Traffic congestion or something? So some software went down. 0:08:21.960 --> 0:08:23.080 I came you over the weekend. 0:08:23.080 --> 0:08:24.760 It was actually quite smooth. 0:08:24.840 --> 0:08:27.920 We'll see mischic think you just go, Larry, can I 0:08:27.960 --> 0:08:29.160 get the golf stream. 0:08:30.800 --> 0:08:31.320 When you ask? 0:08:31.400 --> 0:08:33.280 On my behalf greatly? 0:08:33.360 --> 0:08:36.000 Thank you so much. It is with Blackrock. Can't say 0:08:36.080 --> 0:08:39.280 enough about her contribution to the zeitgeist on LinkedIn. She 0:08:39.320 --> 0:08:43.880 had a beautiful Bard shirt piecing together showing this huge 0:08:44.280 --> 0:08:48.839 technology investment. Uh that's out there and you know it's 0:08:48.920 --> 0:08:53.440 interesting to see, Uh, to say the least. Stay with us. 0:08:53.440 --> 0:08:56.760 More from Bloomberg Surveillance coming up after. 0:08:56.520 --> 0:09:07.200 This you're listening to the Bloomberg Surveillance Podcast. Catch us 0:09:07.280 --> 0:09:10.600 live weekday afternoons from seven to ten am Eastern Listen 0:09:10.640 --> 0:09:14.200 on Applecarplay and Android Otto with the Bloomberg Business app, 0:09:14.400 --> 0:09:15.960 or watch us live on YouTube. 0:09:16.080 --> 0:09:19.319 A good time now with Yen's Nordvig of ACCENTI data 0:09:19.480 --> 0:09:22.839 all of his experience, including with Namur and goldn Sachs 0:09:22.920 --> 0:09:25.719 over the years, and it can be on foreign exchange. 0:09:25.760 --> 0:09:28.040 But you know, folks, of the one hundred and forty 0:09:28.040 --> 0:09:31.000 two books that came out out of the crisis, they 0:09:31.040 --> 0:09:34.040 are like five or six that had traction. Shout out 0:09:34.080 --> 0:09:37.319 Andrew ros Serkin's book of seven I thought was really good, 0:09:37.320 --> 0:09:40.160 as he launches a new one here. The follow of 0:09:40.240 --> 0:09:44.280 the euro reinventing the Euros on YenS Nordvig was absolutely 0:09:44.600 --> 0:09:47.319 I called it a primal scream. It was just it 0:09:47.400 --> 0:09:50.520 was so visceral. You have to be from Denmark to 0:09:50.559 --> 0:09:53.400 do that. If you're from America, you're too polite. It 0:09:53.480 --> 0:09:56.880 was so visceral. If you were to rewrite a book 0:09:56.920 --> 0:09:58.760 in the euro now, what would you title it? 0:10:01.559 --> 0:10:03.960 The challenges are still there. This challenge is still there. 0:10:04.120 --> 0:10:05.880 Zurosclerousa is still in place. 0:10:07.160 --> 0:10:09.760 We still have a weak growth done and we've had 0:10:10.000 --> 0:10:12.160 we've had a wake up call this year. Right, So 0:10:13.120 --> 0:10:18.240 we've had deflationary forces in Europe for the last ten years, 0:10:18.240 --> 0:10:20.320 as we spoke about, and then we had the COVID 0:10:20.320 --> 0:10:23.440 shock and all of that change, so that's gone. And 0:10:23.480 --> 0:10:28.760 then Germany have done something pretty dramatic right in terms 0:10:28.800 --> 0:10:34.200 of escaping the fiscal rules, so that was triggered by 0:10:34.679 --> 0:10:36.840 triggered by the US. Pauls have changed as well. 0:10:37.120 --> 0:10:41.040 So it seems like Europe is trying to spend its 0:10:41.040 --> 0:10:43.960 way out of its malaise, whether it's induced by the 0:10:44.040 --> 0:10:48.000 US change in policy. But I think there's questions about, 0:10:48.000 --> 0:10:50.040 all right, maybe Germany can get it done, maybe even 0:10:50.120 --> 0:10:52.040 Poland can get it done, because I point the right 0:10:52.040 --> 0:10:54.520 in the backyard of Russia it's in their best interest, But. 0:10:54.720 --> 0:10:55.760 How about everybody else? 0:10:56.160 --> 0:10:57.040 What's the rest of you are. 0:10:57.040 --> 0:10:59.559 Going to do in terms of trying to lift their 0:11:00.120 --> 0:11:01.640 they're spending levels. 0:11:01.840 --> 0:11:07.000 Yeah, Like the fundamental issue is that we used to 0:11:07.440 --> 0:11:11.720 in Europe for many decades to always have like the 0:11:11.720 --> 0:11:15.440 center of the politics was driving what was happening. So 0:11:15.559 --> 0:11:19.160 you had social democratic parties like a little bit to 0:11:19.240 --> 0:11:22.080 the left of center, and and then you had another 0:11:22.240 --> 0:11:24.280 centrist party a little bit to the right of the center, 0:11:24.320 --> 0:11:25.959 but they more or less did the same type of 0:11:26.000 --> 0:11:28.160 policies and they agreed on most things. And now you 0:11:28.200 --> 0:11:31.120 don't have that anymore. You can see in France like 0:11:31.160 --> 0:11:35.240 the center has like been annihilated, right, mess, Yeah, and 0:11:35.280 --> 0:11:36.480 it's in many different countries. 0:11:36.559 --> 0:11:38.960 Is it just another mess or is there something original 0:11:39.000 --> 0:11:41.160 this time about more protesting? 0:11:41.280 --> 0:11:45.240 I think we'll we're waiting for an election result where 0:11:45.240 --> 0:11:49.320 there's actually going to be one of these far right, 0:11:49.440 --> 0:11:53.480 far left parties coming to power. Like at the moment, 0:11:53.600 --> 0:11:56.360 the center is getting small and smaller, but still staying 0:11:56.360 --> 0:11:59.720 in power and almost all countries, right, So the real 0:11:59.760 --> 0:12:02.559 test this will be when these non centrist forties actually 0:12:02.559 --> 0:12:04.960 get into power and they have to decide what they 0:12:05.280 --> 0:12:09.360 what they do. And I think in relation to your 0:12:09.440 --> 0:12:13.320 question right about military spending, right, so it's clearly going 0:12:13.400 --> 0:12:17.720 up across the whole of the EU, Germany leading, and 0:12:17.760 --> 0:12:22.640 the fear of Russia is driving that, but it's not 0:12:22.679 --> 0:12:26.480 every country like Spain is not doing much like so 0:12:26.480 --> 0:12:29.679 so if you average it out, it's certainly not as 0:12:29.760 --> 0:12:32.920 dramatic as if you just look at Germany alone the 0:12:33.040 --> 0:12:33.600 US dollar. 0:12:33.640 --> 0:12:37.360 We had the FX annals from City City in your 0:12:37.400 --> 0:12:41.520 street just probably a half hour ago saying he's polished 0:12:41.559 --> 0:12:44.400 on the US dollar and he feels pretty empty alone 0:12:44.440 --> 0:12:46.760 out there, pretty lonely out there. What's your view of 0:12:46.800 --> 0:12:48.920 the dollar? He does not bounce back like everything else 0:12:48.960 --> 0:12:50.000 seems to bounce back. 0:12:50.120 --> 0:12:55.960 Yeah. So there's a huge debate going on at the 0:12:56.000 --> 0:13:00.520 moment about, Okay, what's happening with dollar hedging? Right? So 0:13:00.880 --> 0:13:04.600 on our data platform, we have a whole section that's 0:13:04.640 --> 0:13:08.040 dedicated to this specifically, right, because you can track it 0:13:08.040 --> 0:13:10.920 in many ways. There's been a lot of writing, including 0:13:10.960 --> 0:13:12.720 on Bloomberg in the last couple of weeks, about oh, 0:13:12.760 --> 0:13:14.800 if you look at the ETF flows, they show a 0:13:14.840 --> 0:13:17.360 lot of people are buying US acid but with a 0:13:17.400 --> 0:13:21.760 hedge on top. I think that's it's very tricky to 0:13:21.920 --> 0:13:24.920 just use the ETFs because a lot of institutional flow 0:13:24.960 --> 0:13:27.960 don't happen in ETF space, right, So you can have 0:13:28.040 --> 0:13:30.320 pension funds that do big changes and you will not 0:13:30.400 --> 0:13:32.480 see anything in ETF. So I think the big picture 0:13:32.520 --> 0:13:38.000 is the following. We've been through, you know, three phases 0:13:38.040 --> 0:13:41.120 in terms of like dollar flows, where we came into 0:13:41.160 --> 0:13:44.839 this year, people still believed in US exceptionalism, still bought 0:13:44.960 --> 0:13:48.520 US stocks. Tech was the dominant theme. Then we had 0:13:48.640 --> 0:13:52.480 all the policy uncertainty, reciprocal tariffs. We also had the 0:13:52.520 --> 0:13:55.880 German fiscal stimulus that people saw, okay, maybe there's an alternative, right, 0:13:55.920 --> 0:13:59.040 And we had a period where actually inflows into the 0:13:59.160 --> 0:14:04.800 US where smaller than inflows into other international competitors. And 0:14:04.840 --> 0:14:06.680 then in the last couple of months it's like kind 0:14:06.679 --> 0:14:10.360 of like a gray song. We're not back to US exceptionalism, 0:14:10.440 --> 0:14:13.320 but the US is recovering. There is a bit more 0:14:13.320 --> 0:14:15.760 flow coming in, so it's it's sort of a gray song. 0:14:16.360 --> 0:14:19.800 So in my forecast for the dollar, I now put 0:14:19.920 --> 0:14:23.280 less weight on sort of very negative flows as a 0:14:23.360 --> 0:14:25.880 drive of the dollar. I put more weight on the FED. Again, 0:14:26.400 --> 0:14:29.640 so since my company specialized in the flow, maybe I'm 0:14:29.640 --> 0:14:34.320 being kind of like under budding. But we also do 0:14:34.400 --> 0:14:36.960 some FED analysis and and that's really been the key. 0:14:37.000 --> 0:14:39.360 You can see it in the correlations like the dollar 0:14:39.840 --> 0:14:43.480 and US interest rates super highly correlated. Again, there was 0:14:43.560 --> 0:14:45.680 no correlation at all in April May. 0:14:46.280 --> 0:14:48.160 Okay, I got I gotta get quickly because i'mnna do 0:14:48.200 --> 0:14:50.720 an audible. What's your what's your euro call? Here? 0:14:50.880 --> 0:14:54.080 At twelve months, I think we're going to be grinding higher. 0:14:54.240 --> 0:14:56.600 I think we're going to be stronger. I think the 0:14:56.640 --> 0:14:58.520 euro can be grinding high differ. 0:14:58.920 --> 0:15:01.720 Yeah, it's great, Okay, we're doing audio against Nordvik with 0:15:01.840 --> 0:15:05.280 us right now. And again his book was just absolutely fabulous. 0:15:05.800 --> 0:15:08.680 I learned this the hard way. Patrick O'Brien wrote a 0:15:08.680 --> 0:15:13.680 book called The Surgeon's Mate. In America, most people study 0:15:13.720 --> 0:15:17.440 the Baltic Sea for two days in ninth grade, and 0:15:17.480 --> 0:15:21.520 that's a combined knowledge. We don't have any understanding of 0:15:21.560 --> 0:15:25.240 the world. You grew up in Copenhagen by boat, sixteen 0:15:25.360 --> 0:15:30.080 hundred miles from Russia, Saint Petersburg, the Baltic States. We've 0:15:30.080 --> 0:15:34.680 got testing of Russian planes in Estonia right now. It 0:15:34.800 --> 0:15:38.800 bare barely moves the needle here in America. I want 0:15:38.840 --> 0:15:42.600 you to explain to our American audience here that this 0:15:42.920 --> 0:15:48.920 ginormous brackish Baltic Sea with Denmark at the isthmus of it, 0:15:48.960 --> 0:15:52.160 where you come out the importance of that to the 0:15:52.200 --> 0:15:53.160 Western Alliance. 0:15:53.400 --> 0:15:56.040 Well, maybe i'll give you a one minute. 0:15:55.760 --> 0:15:58.640 History lesson, please, So all the. 0:15:58.680 --> 0:16:04.240 Traffic that comes by ship from Russia, Poland Baltic nations, 0:16:04.240 --> 0:16:06.200 so for what have to go through a tiny little 0:16:06.240 --> 0:16:13.080 gap between Sweden and Denmark. The reason why Copenhagen used 0:16:13.120 --> 0:16:15.560 to be a very wealthy city was that they collected 0:16:15.640 --> 0:16:19.280 taxi taxes from all those ships and they had a 0:16:19.320 --> 0:16:21.240 cannon in place, so if they didn't pay the tax, 0:16:21.280 --> 0:16:23.960 they would just shoot this ship down. And that's literally 0:16:23.960 --> 0:16:28.720 the reason why Copenhagen was a wealthy city very early on. 0:16:29.440 --> 0:16:32.320 And obviously now we have tension in the Baltic Sea 0:16:32.520 --> 0:16:40.080 right because we have you knowlitary military aircraft doing things 0:16:40.120 --> 0:16:42.200 they're not supposed to do, so there's a lot of 0:16:42.200 --> 0:16:46.080 tension in that area. Like one card that Western nations 0:16:46.240 --> 0:16:49.720 could play was to actually control if they really wanted 0:16:49.720 --> 0:16:54.000 to control that waters, like logistically they used to do 0:16:54.320 --> 0:16:59.080 with one cannon, so it could be done. I think 0:16:59.240 --> 0:17:01.200 part of the problem we have in the EU in 0:17:01.240 --> 0:17:04.320 relation to Russia is that the EU and the European 0:17:04.560 --> 0:17:07.040 are so afraid to escalate, right that those cards that 0:17:07.040 --> 0:17:10.520 they actually have that could be very powerful cards are 0:17:10.600 --> 0:17:12.520 just not not they're not being played, but they're not 0:17:12.560 --> 0:17:16.560 even being talked about. So that was a that was 0:17:16.600 --> 0:17:18.600 a more than one minute, but they gave you a 0:17:18.640 --> 0:17:20.440 little bit of because we got there. 0:17:20.680 --> 0:17:24.240 We got the Greenland distraction. Who's winning in Greenland today 0:17:24.320 --> 0:17:26.560 is the US or Denmark? I mean, you've got this 0:17:26.640 --> 0:17:32.639 whole Greenland distraction. Meanwhile, we have jets over NATO countries. 0:17:32.680 --> 0:17:36.159 I mean it is bizarre. Right now, Denmark is building 0:17:36.200 --> 0:17:38.320 up their military capabilities, right. 0:17:38.640 --> 0:17:44.680 That's right, that's just an investment into air defense system, 0:17:44.920 --> 0:17:50.040 like multimillion investments, right. And the interesting part about that 0:17:50.240 --> 0:17:52.639 was that it was announced as an investment that also 0:17:52.760 --> 0:18:00.359 had offensive capability, right, because the Prime Minister essentially said, like, 0:18:00.359 --> 0:18:03.400 there's no point in only having If you only have defenses, 0:18:03.520 --> 0:18:07.159 then how you're going to scare the aggressive on that. 0:18:07.280 --> 0:18:11.439 Line with the technology of Stockholm and you know no 0:18:11.600 --> 0:18:14.080 key years ago in that. Are you a believer that 0:18:14.160 --> 0:18:16.439 Europe can get their technology act together? 0:18:18.920 --> 0:18:23.520 I think you're seeing some signs of hope in countries 0:18:23.600 --> 0:18:26.920 like Germany, where there's actually a bunch of AI startups 0:18:26.960 --> 0:18:33.760 in robotics, AI robotics some people call the real world AI, right, 0:18:33.920 --> 0:18:38.520 not just in a digital domain. So I think the 0:18:39.080 --> 0:18:42.919 resource that Europe still has is that we have an 0:18:43.040 --> 0:18:48.480 education system that still delivers a lot of well educated engineers, 0:18:48.560 --> 0:18:52.280 computer sciences and so forth, so the human resource materials there, 0:18:53.200 --> 0:18:56.400 maybe it will matter a few of those people go 0:18:56.600 --> 0:18:59.400 to the United States and get an age one bbs. Right, 0:18:59.440 --> 0:19:03.280 So there's all these different things happening right now where 0:19:03.080 --> 0:19:06.240 the sort of relative force of the different labor market 0:19:06.280 --> 0:19:06.719 is shifting. 0:19:06.800 --> 0:19:08.359 Did you have an H and B visa when you 0:19:08.440 --> 0:19:09.120 first came here? 0:19:09.280 --> 0:19:10.000 I did not know. 0:19:10.119 --> 0:19:10.840 I did. 0:19:11.760 --> 0:19:14.720 I was with Goldvin Sacks in London and I did 0:19:14.720 --> 0:19:19.120 a transfer with Goldman Sachs, So that's a different visus. 0:19:19.800 --> 0:19:23.760 Excuse me, the embassy of Goldman Sachs picks up a. 0:19:23.800 --> 0:19:24.960 Phone and it's done. 0:19:25.880 --> 0:19:26.600 Yes, talk to us. 0:19:26.640 --> 0:19:28.760 From when you're talking to your clients globally. 0:19:29.960 --> 0:19:32.679 What's the level of concern, if any, about the independence 0:19:32.680 --> 0:19:34.240 of the US fedter Reserve these days? 0:19:34.720 --> 0:19:42.560 Well, very very elevated concern. I have a lot of 0:19:42.720 --> 0:19:47.280 clients around the world right that invest in macro assets 0:19:47.280 --> 0:19:52.080 on a very broad basis, including emergen market assets, and 0:19:52.680 --> 0:19:56.000 those investors have a lot of experience and a lot 0:19:56.000 --> 0:20:01.840 of you know, lessons that they drawn from being involved 0:20:01.920 --> 0:20:05.160 in countries where central bank independence was a real problem 0:20:05.400 --> 0:20:10.800 and it caused massive, massive asm moves when when essentially 0:20:10.880 --> 0:20:13.240 the government took over the central bank or forced the 0:20:13.240 --> 0:20:15.800 central bank to do certain things. We've seen that in Turkey, right, 0:20:15.880 --> 0:20:24.840 where the government has pushed through certain to easy monetary policy, right, 0:20:24.880 --> 0:20:30.679 and the currency has seen disastrous depreciation. So people have 0:20:30.760 --> 0:20:32.679 those lessons in the back of the head, right, And 0:20:32.760 --> 0:20:36.080 then it's a matter of Okay, what degree are we 0:20:36.119 --> 0:20:39.119 going down? There's a path. We've certainly already taken a 0:20:39.119 --> 0:20:40.080 step down this path. 0:20:40.160 --> 0:20:40.280 Right. 0:20:40.320 --> 0:20:42.000 You can see it in the dot plot. Right, you 0:20:42.080 --> 0:20:46.679 had you had a new governor, right that had a 0:20:46.760 --> 0:20:48.679 dot that was totally out of whack with all the 0:20:48.680 --> 0:20:51.320 other dots. Right. So it's it's very clear that we're 0:20:51.320 --> 0:20:55.240 going in that direction. But the question is whether it's 0:20:55.440 --> 0:20:56.560 really dry policy. 0:20:56.640 --> 0:20:56.800 Right. 0:20:56.880 --> 0:20:59.639 You also saw that we only had one descent. So 0:20:59.680 --> 0:21:04.000 it's all almost like the voting members of the f 0:21:04.160 --> 0:21:07.760 m C decided mostly to say, Okay, we're actually going 0:21:07.800 --> 0:21:10.480 to try to show a degree of consensus. There's one 0:21:10.520 --> 0:21:12.919 dot we cannot do anything about, but we're trying to 0:21:12.960 --> 0:21:16.440 do a degree of consensus about that audible. 0:21:16.600 --> 0:21:18.639 We got to get this in before we go to 0:21:18.680 --> 0:21:22.560 Michael Byron. One quick question, bestent of the Treasuries out 0:21:22.560 --> 0:21:26.199 with a wide set of headlines. US is ready to 0:21:26.240 --> 0:21:29.879 do what's needed to support Argentina. In a tweet, the 0:21:29.920 --> 0:21:33.520 Secretary said, they want to make Argentina great again. Okay, 0:21:33.640 --> 0:21:36.200 are you lying the Argentinian paeso because we're going to 0:21:36.280 --> 0:21:37.960 bail out Argentina. 0:21:38.960 --> 0:21:42.439 This is really interesting. We have a situation right where 0:21:43.720 --> 0:21:47.240 the United States kind of has a fight with Brazil, 0:21:48.520 --> 0:21:53.640 including terror, very elevated channel from Brazil that are mostly 0:21:53.720 --> 0:22:00.600 based on a political tension with what is haptable scenarow right, 0:22:00.640 --> 0:22:04.680 and now we have a situation where Argentina potentially might 0:22:04.720 --> 0:22:10.240 get very favorable toreat and something that really has potentially 0:22:10.240 --> 0:22:15.840 not happened since the Clinton bailout of Mexico, so very rare, 0:22:16.000 --> 0:22:20.560 and it's happening because they like the leadership in Argentina playoffs, 0:22:21.000 --> 0:22:26.800 So it's it becomes a situation where it's the relationships 0:22:27.640 --> 0:22:31.640 at the highest level in government, including internationally, that might 0:22:31.680 --> 0:22:37.600 determine really who gets tariffed, who gets support. And this 0:22:37.640 --> 0:22:40.520 is a new regime we're in. This would have not 0:22:40.720 --> 0:22:44.000 happen like this a couple of months ago, what should 0:22:44.000 --> 0:22:48.359 we say, seven months ago? So new, new, new regime. 0:22:48.520 --> 0:22:50.680 Don't be strange. He has Nord. Thank you so much. 0:22:50.680 --> 0:22:54.080 Excity Data can't see enough of out his book of 0:22:54.160 --> 0:22:57.080 a decade ago plus in the euro We looked for 0:22:57.119 --> 0:23:01.600 another one out here. If missus Nordvigil to write volume four, 0:23:01.920 --> 0:23:06.080 whatever it is, stay with us. More from Bloomberg Surveillance 0:23:06.160 --> 0:23:14.560 coming up after this. 0:23:14.560 --> 0:23:18.480 This is the Bloomberg Surveillance Podcast. Listen live each weekday 0:23:18.520 --> 0:23:21.919 starting at seven am Eastern on Applecarplay and Android Auto 0:23:21.960 --> 0:23:24.920