1 00:00:02,400 --> 00:00:07,520 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:11,920 --> 00:00:16,320 Speaker 2: This is the Bloomberg Surveillance Podcast. Catch us live weekdays 3 00:00:16,360 --> 00:00:19,720 Speaker 2: at seven am Eastern on Apple car Player, Android Auto 4 00:00:19,760 --> 00:00:23,080 Speaker 2: with the Bloomberg Business App. Listen on demand wherever you 5 00:00:23,120 --> 00:00:26,200 Speaker 2: get your podcasts, or watch us live on YouTube. 6 00:00:26,520 --> 00:00:28,520 Speaker 3: Joining us right now with the worst job on Wall 7 00:00:28,520 --> 00:00:32,160 Speaker 3: Street seventy row with this chief economist at Wolf Research. 8 00:00:32,720 --> 00:00:36,240 Speaker 3: Uh well, I got to do the flash first. Excuse me, I'd. 9 00:00:36,080 --> 00:00:39,639 Speaker 4: Said this contract it is, and I you know, we. 10 00:00:39,640 --> 00:00:42,440 Speaker 3: Covered equities, but we didn't do bonds and currencies with 11 00:00:42,479 --> 00:00:44,199 Speaker 3: a better day to check than I could do with 12 00:00:44,280 --> 00:00:48,640 Speaker 3: our interactive brokers. Bloomberg Business Flash, el Matale. 13 00:00:48,280 --> 00:00:48,839 Speaker 5: You got it. 14 00:00:48,880 --> 00:00:51,920 Speaker 6: And we've got futures mixed. Nazac Future is actually leading 15 00:00:51,960 --> 00:00:54,120 Speaker 6: the games right now, up about three tens of percent 16 00:00:54,560 --> 00:00:57,120 Speaker 6: sixty eight points. A big part of that Tesla shares. 17 00:00:57,120 --> 00:00:59,760 Speaker 6: They're up about six percent sources. A president like Donald 18 00:00:59,800 --> 00:01:02,520 Speaker 6: Trump seemed looking to push the development of fully self 19 00:01:02,600 --> 00:01:05,319 Speaker 6: driving vehicles. That's the reason for that. Now we go 20 00:01:05,360 --> 00:01:07,920 Speaker 6: to down futures little change down about forty one points. 21 00:01:07,920 --> 00:01:11,039 Speaker 6: We have SMP futures little changed, up about four We 22 00:01:11,080 --> 00:01:13,319 Speaker 6: have the two year yield at four point two nine percent. 23 00:01:13,360 --> 00:01:15,320 Speaker 6: That's little change they yield on the ten year full 24 00:01:15,319 --> 00:01:18,280 Speaker 6: point four six percent, and that's up about one basis 25 00:01:18,319 --> 00:01:21,280 Speaker 6: point to currency is the Bloomberg Dollars Spot Index right 26 00:01:21,319 --> 00:01:23,440 Speaker 6: now down about a tenth of a percent. We have 27 00:01:23,480 --> 00:01:26,880 Speaker 6: the Japanese yenweeker, euro British pound stronger. We have Bitcoin 28 00:01:27,000 --> 00:01:30,200 Speaker 6: up about seven tens of percent around eighty nine thousand, 29 00:01:30,280 --> 00:01:33,800 Speaker 6: recovering from that biggest two day retreat since the US vote. 30 00:01:34,080 --> 00:01:37,080 Speaker 6: Shares of Nvidia falling down two percent. That's following that 31 00:01:37,160 --> 00:01:40,520 Speaker 6: report over its Blackwell chips. It's led to concerns about delays. 32 00:01:40,959 --> 00:01:43,440 Speaker 6: And finally another company making news that would be Spirit 33 00:01:43,560 --> 00:01:47,040 Speaker 6: Airlines filed for bankruptcy in New York, listing assets and 34 00:01:47,080 --> 00:01:50,560 Speaker 6: liabilities between one billion and ten billion dollars. That is 35 00:01:50,560 --> 00:01:53,520 Speaker 6: your Bloomberg Business Flash, Tom and Paul Lisa, thanks so much. 36 00:01:53,600 --> 00:01:57,520 Speaker 3: Avic sixteen point five seven. Sephany Ross with us with 37 00:01:57,640 --> 00:02:01,400 Speaker 3: Wolf sefas O excited because you're in the process now 38 00:02:01,840 --> 00:02:05,040 Speaker 3: of putting together your year ahead view at Wolf Research, 39 00:02:05,600 --> 00:02:08,760 Speaker 3: to be published December ish, maybe or before or after 40 00:02:08,840 --> 00:02:13,680 Speaker 3: around the jobs report of December sixth. I believe it is. 41 00:02:14,080 --> 00:02:17,920 Speaker 3: How do you do that, knowing the uncertainty of our politics, 42 00:02:18,000 --> 00:02:20,920 Speaker 3: knowing the uncertainty of our economy, do you rewrite it 43 00:02:21,000 --> 00:02:21,760 Speaker 3: in January? 44 00:02:22,919 --> 00:02:25,000 Speaker 7: One important thing to think about is a lot of 45 00:02:25,040 --> 00:02:27,240 Speaker 7: what the policies that Trump might put in place are 46 00:02:27,240 --> 00:02:29,600 Speaker 7: going to be relative or important for twenty twenty six. 47 00:02:30,040 --> 00:02:31,639 Speaker 7: So twenty twenty five, in a way, it's going to 48 00:02:31,680 --> 00:02:33,800 Speaker 7: be about animal spirits, and it's going to be about 49 00:02:34,520 --> 00:02:36,760 Speaker 7: immigration to some extent, but that's going to be the 50 00:02:36,800 --> 00:02:38,720 Speaker 7: bulk of what we see for twenty twenty five, which 51 00:02:38,760 --> 00:02:42,680 Speaker 7: for US is actually a decent economy. An immigration, you know, 52 00:02:43,240 --> 00:02:45,079 Speaker 7: it's probably not going to have as big an impact 53 00:02:45,120 --> 00:02:47,519 Speaker 7: as many thing from an inflation perspective, because the labor 54 00:02:47,560 --> 00:02:50,160 Speaker 7: market's now back in better balance, so we don't necessarily 55 00:02:50,200 --> 00:02:51,920 Speaker 7: need the influx of people the way we did two 56 00:02:52,000 --> 00:02:54,919 Speaker 7: years ago. Now, when we're talking about twenty twenty six, 57 00:02:54,960 --> 00:02:58,000 Speaker 7: then it becomes all about tariffs and the uncertainty that creates. 58 00:02:58,040 --> 00:03:00,000 Speaker 7: But this is probably not a twenty twenty five story. 59 00:03:00,919 --> 00:03:03,240 Speaker 4: How about the deficit is that it seems like a 60 00:03:03,280 --> 00:03:06,720 Speaker 4: story that's every year. So and you know, I've been 61 00:03:06,760 --> 00:03:10,240 Speaker 4: seeing some numbers. We were just talking to someone earlier 62 00:03:10,280 --> 00:03:13,359 Speaker 4: as talking about, you know, the concrease the deficit by 63 00:03:13,520 --> 00:03:17,280 Speaker 4: trillions of dollars? Are you how concerned are you, if 64 00:03:17,320 --> 00:03:18,000 Speaker 4: at all, about that? 65 00:03:18,280 --> 00:03:20,960 Speaker 7: Sure Trump has thrown out eleven trillion dollars worth of 66 00:03:20,960 --> 00:03:22,800 Speaker 7: tax cuts. Is he gonna get that all done? No, 67 00:03:23,440 --> 00:03:26,239 Speaker 7: So we're looking for, you know, yes, a tax cut 68 00:03:26,280 --> 00:03:29,200 Speaker 7: that could be a couple trillion dollars, something like a 69 00:03:29,240 --> 00:03:32,760 Speaker 7: net of three. But that's not that different from what 70 00:03:32,840 --> 00:03:35,360 Speaker 7: Harris was proposing. So the market, the bond market should 71 00:03:35,360 --> 00:03:37,960 Speaker 7: be okay with that. And by the way, we're looking 72 00:03:37,960 --> 00:03:41,320 Speaker 7: for something that's gonna extend TCJA. And then beyond that, 73 00:03:41,360 --> 00:03:44,480 Speaker 7: we're forecasting about five hundred billion dollars of additional net 74 00:03:44,480 --> 00:03:47,040 Speaker 7: tax increases, which is tax cuts, which is really not 75 00:03:47,080 --> 00:03:47,520 Speaker 7: that impact. 76 00:03:47,720 --> 00:03:51,760 Speaker 3: I mentioned December. I think it's six's it's the jobs report. 77 00:03:52,240 --> 00:03:56,080 Speaker 3: Do you look at the negative statistic with revisions last time? 78 00:03:56,240 --> 00:03:59,640 Speaker 3: Is truly hurricane induced or is there more going on 79 00:03:59,800 --> 00:04:01,400 Speaker 3: right now in the labor economy. 80 00:04:01,560 --> 00:04:04,120 Speaker 7: It's very likely hurricane and so we're going to learn 81 00:04:04,120 --> 00:04:05,680 Speaker 7: a lot more about that in state when we get 82 00:04:05,720 --> 00:04:07,200 Speaker 7: state employment tomorrow at ten am. 83 00:04:07,360 --> 00:04:10,800 Speaker 3: That's one of those who stop the show, take no 84 00:04:10,960 --> 00:04:11,720 Speaker 3: date employment. 85 00:04:13,160 --> 00:04:14,440 Speaker 7: So this is this is going to be the most 86 00:04:14,440 --> 00:04:16,839 Speaker 7: important data point from an economic perspective this week. 87 00:04:17,000 --> 00:04:19,279 Speaker 3: What are you doing tomorrow at ten am? Sweet and 88 00:04:19,320 --> 00:04:20,160 Speaker 3: Alex want to. 89 00:04:20,120 --> 00:04:23,120 Speaker 4: Know state unemployment? So what do we learn from that 90 00:04:23,200 --> 00:04:23,680 Speaker 4: kind of data? 91 00:04:23,720 --> 00:04:25,279 Speaker 7: So we're going to get this helped us in a 92 00:04:25,279 --> 00:04:28,480 Speaker 7: big way look at Texas after Beryl because we got 93 00:04:28,520 --> 00:04:31,040 Speaker 7: a sense of the the extent of the hurricane impact 94 00:04:31,040 --> 00:04:32,360 Speaker 7: on the data and then we could assume, well, you 95 00:04:32,400 --> 00:04:33,880 Speaker 7: get that back the next month. And this is gonna 96 00:04:33,880 --> 00:04:35,839 Speaker 7: be the same thing. We're going to look at Florida 97 00:04:35,839 --> 00:04:38,320 Speaker 7: most importantly to see to what extent did Florida drag 98 00:04:38,360 --> 00:04:40,680 Speaker 7: down the overall payrols and if it was significant, then 99 00:04:40,680 --> 00:04:42,080 Speaker 7: we know we should be able to add that back. 100 00:04:42,440 --> 00:04:46,200 Speaker 3: Okay, so this is state reports. What do they go 101 00:04:46,360 --> 00:04:49,679 Speaker 3: into that we normally report. 102 00:04:49,240 --> 00:04:51,400 Speaker 7: So what they're going to it's it's it's bls, it's 103 00:04:51,440 --> 00:04:53,640 Speaker 7: it's just telling you, basically what happened from a state 104 00:04:53,720 --> 00:04:57,040 Speaker 7: perspective from employment the last week ago, last month, in 105 00:04:57,080 --> 00:05:00,120 Speaker 7: the last month, so from the last payroll reading we 106 00:05:00,200 --> 00:05:01,719 Speaker 7: got that twelve number, which was terrible. 107 00:05:01,880 --> 00:05:04,200 Speaker 3: You're gonna look at North Carolina exactly. 108 00:05:04,560 --> 00:05:07,000 Speaker 7: We're gonna look at the Carolina. We're gonna look at Florida, Georgia, 109 00:05:07,440 --> 00:05:10,440 Speaker 7: and if we see a notable decline, then we can 110 00:05:10,480 --> 00:05:12,920 Speaker 7: know that that's probably hurricane related and the next month 111 00:05:12,960 --> 00:05:15,279 Speaker 7: you'll get paid back in a positive way. 112 00:05:15,480 --> 00:05:17,480 Speaker 4: How's the consumer out there? From your perspective, we had 113 00:05:17,480 --> 00:05:21,200 Speaker 4: some retail sales recently. How do you think about that? 114 00:05:21,400 --> 00:05:23,880 Speaker 7: So the retail sales print was suit was very funky, 115 00:05:24,200 --> 00:05:26,960 Speaker 7: so it was it was negative on core, but then 116 00:05:27,000 --> 00:05:29,200 Speaker 7: when you dig into it, you had pretty big revisions 117 00:05:29,200 --> 00:05:31,200 Speaker 7: for the month prior. So we when we take a 118 00:05:31,240 --> 00:05:33,480 Speaker 7: three month average, you're looking at one point two nine 119 00:05:33,520 --> 00:05:35,880 Speaker 7: percent month on month, which is annualized about three and 120 00:05:35,880 --> 00:05:39,159 Speaker 7: a half percent. Not great, but not terrible. And we 121 00:05:39,240 --> 00:05:40,880 Speaker 7: have to kind of look at it into perspective. It's 122 00:05:40,920 --> 00:05:43,880 Speaker 7: probably you didn't have an incredibly strong September and incredibly 123 00:05:43,920 --> 00:05:45,840 Speaker 7: week October. You probably have to think of some sort 124 00:05:45,880 --> 00:05:48,520 Speaker 7: of average between the two, and it was likely related 125 00:05:48,560 --> 00:05:54,719 Speaker 7: to a stronger a better weather forecast or betther sort 126 00:05:54,720 --> 00:05:57,960 Speaker 7: of seasonably strong weather in terms of September that boosted 127 00:05:58,000 --> 00:06:00,520 Speaker 7: the print and one reason why we got the significant 128 00:06:00,520 --> 00:06:02,960 Speaker 7: positive revisions in September. You also had an early back 129 00:06:02,960 --> 00:06:06,080 Speaker 7: to school season so the combination of these things lifted 130 00:06:06,120 --> 00:06:08,880 Speaker 7: September and dragged October because you've got a bit of 131 00:06:08,920 --> 00:06:09,720 Speaker 7: a payback from that. 132 00:06:09,920 --> 00:06:14,880 Speaker 3: What's your real GDP? A nominal GDP call twelve months forward? 133 00:06:15,080 --> 00:06:17,600 Speaker 7: Twelve months forward, we're looking for something like two and 134 00:06:17,640 --> 00:06:21,960 Speaker 7: a half percent real GDP, solid solid GDP and something 135 00:06:22,000 --> 00:06:25,400 Speaker 7: inflation that's two point two fourish. Yeah, two point four 136 00:06:25,440 --> 00:06:28,040 Speaker 7: is so something almost five percent in terms of nominal. 137 00:06:29,080 --> 00:06:31,080 Speaker 3: So how do they react to that at the FED? 138 00:06:31,200 --> 00:06:34,120 Speaker 3: I mean, that's that's solid solid. 139 00:06:34,480 --> 00:06:36,600 Speaker 7: It's complicated for the FED, right because they don't want 140 00:06:36,600 --> 00:06:40,680 Speaker 7: to forecast any of the fiscal stuff, so they're going 141 00:06:40,760 --> 00:06:42,320 Speaker 7: to probably want to cut a couple more times. They 142 00:06:42,320 --> 00:06:44,200 Speaker 7: told us that what they really should be doing is 143 00:06:44,240 --> 00:06:48,000 Speaker 7: saying we want to cut to something like four percent, 144 00:06:48,040 --> 00:06:49,599 Speaker 7: and then we're going to see where the economy is. 145 00:06:49,640 --> 00:06:52,720 Speaker 7: Because that's that's the message that we're getting from them. 146 00:06:52,880 --> 00:06:55,080 Speaker 7: They say they're data dependent, but they continue to want 147 00:06:55,120 --> 00:06:56,960 Speaker 7: to cut even though the data has been stronger and 148 00:06:57,000 --> 00:06:58,240 Speaker 7: inflation a little bit stickier. 149 00:06:58,360 --> 00:07:01,840 Speaker 3: So quickly, here do you use suggests that the December 150 00:07:02,560 --> 00:07:07,679 Speaker 3: meeting December eighteen and then over into the next meeting. 151 00:07:07,800 --> 00:07:10,440 Speaker 3: I can't believe I'm saying twenty twenty five, I'm such 152 00:07:10,440 --> 00:07:14,840 Speaker 3: a fossil January twenty nine. Those two meetings give them 153 00:07:14,840 --> 00:07:16,520 Speaker 3: still a lot of wiggle room to cut. 154 00:07:17,400 --> 00:07:19,040 Speaker 7: I think they have wiggle room to cut at one 155 00:07:19,040 --> 00:07:21,000 Speaker 7: of the next two, probably not as both. 156 00:07:22,480 --> 00:07:24,640 Speaker 3: It's as close as I get the fed chat. That's good, 157 00:07:24,680 --> 00:07:24,880 Speaker 3: I do. 158 00:07:24,960 --> 00:07:27,800 Speaker 7: Okay, yeah right, They'll probably want to cut it at 159 00:07:27,840 --> 00:07:30,040 Speaker 7: one of the two and then cut it some sort 160 00:07:30,040 --> 00:07:32,160 Speaker 7: of quarterly cadence until the middle part of next year. 161 00:07:32,240 --> 00:07:34,320 Speaker 3: This is like talking to Henrie out a trace. I 162 00:07:34,320 --> 00:07:36,800 Speaker 3: didn't know anything about the state report tomorrow? Did you 163 00:07:37,120 --> 00:07:39,320 Speaker 3: not barely do the lista? Did you keep it from us? 164 00:07:39,560 --> 00:07:39,760 Speaker 6: Yes? 165 00:07:41,840 --> 00:07:44,920 Speaker 3: Brilliant, Stephanie. We're a huge value had there from Woolf Research. 166 00:07:50,360 --> 00:07:54,239 Speaker 2: You're listening to the Bloomberg Surveillance podcast. Catch us live 167 00:07:54,320 --> 00:07:57,640 Speaker 2: weekday afternoons from seven to ten am. Easter Listen on 168 00:07:57,680 --> 00:08:00,600 Speaker 2: Apple car Play and Android Auto with a bloom Business 169 00:08:01,040 --> 00:08:02,720 Speaker 2: or want us live on YouTube. 170 00:08:02,880 --> 00:08:04,680 Speaker 3: The last time she was with us, we've got a 171 00:08:04,800 --> 00:08:10,280 Speaker 3: huge response. I think it's the mathewness maths. That's how 172 00:08:10,320 --> 00:08:14,680 Speaker 3: they say they do they do. It's different equations for 173 00:08:14,760 --> 00:08:18,640 Speaker 3: sort of different equations. Amanda Robello joins us. Now she's 174 00:08:18,640 --> 00:08:21,680 Speaker 3: a DWS and before we get to all this fancy 175 00:08:21,760 --> 00:08:28,000 Speaker 3: mumble jumbo in the quintuple leveraged artificial intelligence big data ETF, 176 00:08:28,080 --> 00:08:31,720 Speaker 3: are you kidding me? Just what are your thoughts on 177 00:08:31,880 --> 00:08:37,640 Speaker 3: the magnitude of the money in the bitcoin ETFs? I mean, 178 00:08:37,679 --> 00:08:40,280 Speaker 3: if I if I talk to somebody Blackrock, I get 179 00:08:40,320 --> 00:08:43,559 Speaker 3: a song and dance. What do you think at DWS 180 00:08:43,559 --> 00:08:44,559 Speaker 3: of this moment? 181 00:08:45,600 --> 00:08:48,680 Speaker 8: I think it's really interesting. We have laun judicial assets 182 00:08:49,040 --> 00:08:53,280 Speaker 8: etcs in our European platform. We definitely think that there 183 00:08:53,360 --> 00:08:55,360 Speaker 8: is a place for them. But I think that one 184 00:08:55,360 --> 00:08:57,840 Speaker 8: thing that's important, not just with Bitcoin, but with all 185 00:08:58,200 --> 00:09:00,640 Speaker 8: exposures that can be wrapped in an ETF. Do you 186 00:09:00,720 --> 00:09:04,120 Speaker 8: understand the underlying right? And so I think that at 187 00:09:04,120 --> 00:09:06,040 Speaker 8: the end of the day, this is an access vehicle. 188 00:09:06,120 --> 00:09:10,280 Speaker 3: But Mathe, we just came back from the Boston FED. 189 00:09:10,880 --> 00:09:15,280 Speaker 1: We had the number one payments guy in America, Emeritis 190 00:09:15,280 --> 00:09:20,079 Speaker 1: Illinois professor Khan say, bitcoin is basically the new beanie babies? 191 00:09:20,200 --> 00:09:23,600 Speaker 1: Do you know what a beanie Okay, okay, okay, that's 192 00:09:23,679 --> 00:09:26,400 Speaker 1: the where's the underlying in bitcoin? 193 00:09:26,520 --> 00:09:29,880 Speaker 3: Yeah? Or is it a beanie baby? Is Professor kanss I. 194 00:09:29,840 --> 00:09:32,760 Speaker 8: Think I completely understand what Professor Khan is saying. We 195 00:09:32,800 --> 00:09:35,679 Speaker 8: always think about you know, in your CFA textbook, you're 196 00:09:35,679 --> 00:09:38,160 Speaker 8: always thinking about valuation of an asset, But how do 197 00:09:38,200 --> 00:09:39,120 Speaker 8: we value bitcoin? 198 00:09:39,240 --> 00:09:39,440 Speaker 7: Right? 199 00:09:39,559 --> 00:09:41,959 Speaker 8: So, I think you know, at the end of the 200 00:09:42,040 --> 00:09:44,400 Speaker 8: day there is some degree of speculation which is driving 201 00:09:44,440 --> 00:09:46,080 Speaker 8: a lot of the volumes at the end of the day, 202 00:09:46,080 --> 00:09:47,160 Speaker 8: probably more more. 203 00:09:47,080 --> 00:09:47,880 Speaker 4: Rather than less. 204 00:09:48,200 --> 00:09:50,439 Speaker 8: So that's definitely something I think all investors need to 205 00:09:50,480 --> 00:09:50,920 Speaker 8: be aware of. 206 00:09:51,559 --> 00:09:55,080 Speaker 4: On the technology front, where at DWUS heard you've seeing 207 00:09:55,160 --> 00:09:57,920 Speaker 4: the flows. Is it still AI? 208 00:09:58,679 --> 00:10:01,520 Speaker 8: It is still AI. So we've launched a number of 209 00:10:01,520 --> 00:10:07,040 Speaker 8: different technology focused ets, so we have cybersecurity semiconductors. We 210 00:10:07,080 --> 00:10:10,760 Speaker 8: also have US national critical technologies, but XAI x is 211 00:10:10,760 --> 00:10:12,599 Speaker 8: the one that we're seeing flows going in on the 212 00:10:12,679 --> 00:10:14,319 Speaker 8: daily basis on our US. 213 00:10:14,200 --> 00:10:15,720 Speaker 4: Site AI x XAI. 214 00:10:16,240 --> 00:10:18,120 Speaker 8: We also have a European version as well. It's the 215 00:10:18,240 --> 00:10:22,720 Speaker 8: largest artificial intelligence ETF in the world as of last Friday. 216 00:10:23,120 --> 00:10:26,600 Speaker 4: Cybersecurity, Lisa, here's the here's the ticker for you for 217 00:10:26,600 --> 00:10:32,680 Speaker 4: the cybersecurity ETF PSWD password. How cool is that? How 218 00:10:33,200 --> 00:10:36,160 Speaker 4: that so cybersecurity in addition to it, before there was 219 00:10:36,160 --> 00:10:39,520 Speaker 4: an AI. I always told my kids cybersecurity that's like 220 00:10:39,559 --> 00:10:42,120 Speaker 4: the new plastics. It's going to be. They're going to 221 00:10:42,200 --> 00:10:45,600 Speaker 4: be spending money on cybersecurity forever, right, So is that 222 00:10:46,400 --> 00:10:48,880 Speaker 4: What are you seeing in that side of the text trade? 223 00:10:48,960 --> 00:10:52,599 Speaker 8: Cybersecurity? We've seen it become much more important. I think beforehand, 224 00:10:52,600 --> 00:10:54,360 Speaker 8: a lot of people were thinking about it in the 225 00:10:54,360 --> 00:10:58,960 Speaker 8: earlier days of cybersecurity, you know, as a theme, that 226 00:10:59,000 --> 00:11:02,600 Speaker 8: it was more of a consume kind of topic. But 227 00:11:02,640 --> 00:11:05,400 Speaker 8: I think, you know, with the Russia Ukraine War, a 228 00:11:05,440 --> 00:11:08,200 Speaker 8: lot of people have now seen that cybersecurity is really 229 00:11:08,240 --> 00:11:10,360 Speaker 8: a defense topic, much more than it has been in 230 00:11:10,400 --> 00:11:13,520 Speaker 8: the past. We also know about you know, hackers in 231 00:11:13,600 --> 00:11:16,920 Speaker 8: different geographies. You know, this is their attempt at warfare. 232 00:11:16,960 --> 00:11:20,240 Speaker 8: Basically it's easier to build or quicker to build than 233 00:11:20,240 --> 00:11:23,720 Speaker 8: you know, building an army or a navy. Also different 234 00:11:23,760 --> 00:11:26,560 Speaker 8: spends which are required as well. So I think everyone 235 00:11:26,640 --> 00:11:30,320 Speaker 8: is understanding now that cybersecurity is important in a different 236 00:11:30,400 --> 00:11:33,480 Speaker 8: dimension than just your McAfee or you're you know, having 237 00:11:33,520 --> 00:11:34,400 Speaker 8: a personal. 238 00:11:34,160 --> 00:11:37,600 Speaker 3: VPM, a meta rebella with a sexpert on ETFs. We 239 00:11:37,640 --> 00:11:40,480 Speaker 3: have built tunas today as well. Yeah, it's just too much. 240 00:11:40,480 --> 00:11:45,160 Speaker 3: I got goosebumps DWS group here. I had a white 241 00:11:45,240 --> 00:11:48,440 Speaker 3: paper thirty years ago that tried to model out not 242 00:11:48,559 --> 00:11:51,600 Speaker 3: twenty to one hedge fund blow it up leverage, but 243 00:11:51,640 --> 00:11:55,720 Speaker 3: we're non linearly from one to one out to a 244 00:11:55,760 --> 00:11:58,559 Speaker 3: little bit of leverage, out to a little bit more leverage. 245 00:11:58,760 --> 00:12:03,920 Speaker 3: Do you run into problem whre's fidelities propaganda for professional investors, 246 00:12:04,040 --> 00:12:09,440 Speaker 3: Leverage gtfs are useful in statistical arbitrage, short term technical strategies, 247 00:12:09,640 --> 00:12:12,760 Speaker 3: et cetera. Most people are buying them just a goose 248 00:12:12,840 --> 00:12:16,400 Speaker 3: to return. Where's the tip point for you? And where 249 00:12:16,480 --> 00:12:18,480 Speaker 3: leverage is a really tough game to win it. 250 00:12:19,080 --> 00:12:21,559 Speaker 8: Yeah, the thing about the leverage gtfs is that it's 251 00:12:21,600 --> 00:12:24,440 Speaker 8: not you know, two times on a long term basis 252 00:12:24,520 --> 00:12:25,880 Speaker 8: or three times on a long term basis. 253 00:12:25,920 --> 00:12:27,080 Speaker 3: People need to understand this. 254 00:12:26,960 --> 00:12:30,880 Speaker 8: Is a volatility resetting strategy, be it in an ETF 255 00:12:30,920 --> 00:12:34,640 Speaker 8: and ETN instructured products. So I think when we start 256 00:12:34,679 --> 00:12:38,760 Speaker 8: to see volatility increasing quite significantly, we're not at the 257 00:12:38,840 --> 00:12:42,240 Speaker 8: highs of the market, but we are kind of teetering upwards. 258 00:12:43,040 --> 00:12:44,960 Speaker 8: Then you start to see that the payoff doesn't work 259 00:12:44,960 --> 00:12:47,199 Speaker 8: in the way that a lot of the investors have. 260 00:12:47,160 --> 00:12:49,440 Speaker 3: A ratio where that payoff doesn't work as a two 261 00:12:49,440 --> 00:12:54,160 Speaker 3: to one, three to one the quintupple, tws X track 262 00:12:54,280 --> 00:12:55,400 Speaker 3: or tech fund. 263 00:12:56,280 --> 00:12:59,120 Speaker 8: We do not, and we've decided we've made a conscious 264 00:12:59,160 --> 00:13:01,959 Speaker 8: decision to not be in the levered space here in 265 00:13:02,000 --> 00:13:02,400 Speaker 8: the US. 266 00:13:02,520 --> 00:13:04,320 Speaker 3: Oh no, I offer the triple. 267 00:13:05,400 --> 00:13:07,600 Speaker 4: Why is that? I mean, it seems to be popular products, 268 00:13:07,679 --> 00:13:08,840 Speaker 4: it would be, but I think. 269 00:13:08,679 --> 00:13:11,320 Speaker 8: That you know, there are some fantastic you know, competitor 270 00:13:11,440 --> 00:13:14,320 Speaker 8: peers that we have in the market, like who already 271 00:13:14,320 --> 00:13:16,760 Speaker 8: owned that space, So we don't need to be there. 272 00:13:17,080 --> 00:13:19,320 Speaker 4: All right, The fetch cutting interest rates even though the 273 00:13:19,360 --> 00:13:21,320 Speaker 4: bond yields are going higher. I don't know how that 274 00:13:21,360 --> 00:13:24,520 Speaker 4: all works. What do you guys deal from the ETF 275 00:13:24,559 --> 00:13:27,400 Speaker 4: front to take advantage of a feeder reserve that peers 276 00:13:27,400 --> 00:13:29,920 Speaker 4: should be on a pretty significant path of grade cutting. 277 00:13:30,120 --> 00:13:32,600 Speaker 8: Yeah, so I think that you know, for the past 278 00:13:33,040 --> 00:13:35,480 Speaker 8: couple of years or y're in a bit, cash has 279 00:13:35,559 --> 00:13:39,079 Speaker 8: yielded enough and it's you know, effectively risk free, that 280 00:13:39,559 --> 00:13:42,600 Speaker 8: rotating into cash could have made sense all of us. 281 00:13:42,640 --> 00:13:45,800 Speaker 8: You know, when we think about income requirements within portfolios. 282 00:13:45,840 --> 00:13:48,199 Speaker 8: You know, now five became the new normal, little bit, 283 00:13:48,240 --> 00:13:49,800 Speaker 8: and so we need to think about how we're still 284 00:13:49,800 --> 00:13:53,600 Speaker 8: going to generate that five So we like international dividends 285 00:13:53,600 --> 00:13:57,680 Speaker 8: a lot. HF is our international high dividend strategy. We're 286 00:13:57,720 --> 00:14:00,480 Speaker 8: known very much for international equities more broad just as 287 00:14:00,520 --> 00:14:04,680 Speaker 8: a Frankfurt headquartered entity, but then that one has like 288 00:14:04,920 --> 00:14:09,240 Speaker 8: kind of around a five percent yield on average. Then 289 00:14:09,320 --> 00:14:11,560 Speaker 8: we also think that international real estate can make sense 290 00:14:11,600 --> 00:14:14,600 Speaker 8: as well, so houses the ticker and rates we always know, 291 00:14:15,160 --> 00:14:19,360 Speaker 8: yes HAUC exactly, and then we usually feel that rates, 292 00:14:19,400 --> 00:14:23,880 Speaker 8: you know, are income generator, same as infrastructure securities as well, 293 00:14:24,120 --> 00:14:25,680 Speaker 8: So if you want to think about these as well 294 00:14:25,720 --> 00:14:27,400 Speaker 8: as a way to generate kind of four or five 295 00:14:27,400 --> 00:14:30,400 Speaker 8: percent yield, that makes sense. On the fixed income side, 296 00:14:31,040 --> 00:14:33,160 Speaker 8: we really like high yield at the moment. Actually there's 297 00:14:33,160 --> 00:14:35,600 Speaker 8: more of a quality component than there has been historically. 298 00:14:36,000 --> 00:14:40,040 Speaker 8: So default rates have pretty much halved in the last 299 00:14:40,080 --> 00:14:43,640 Speaker 8: eighteen months, so much stronger, much more stable than historically. 300 00:14:43,960 --> 00:14:46,200 Speaker 8: But then also you can now slice and dice high 301 00:14:46,280 --> 00:14:48,880 Speaker 8: yield much more than you could do before. So thinking 302 00:14:48,880 --> 00:14:52,360 Speaker 8: about the higher credit ratings within high yield, things like 303 00:14:52,440 --> 00:14:56,760 Speaker 8: BHYB which is our double B single B exponentials. Also 304 00:14:56,800 --> 00:14:59,360 Speaker 8: thinking about hy DOWN, which is our low beta high 305 00:14:59,440 --> 00:15:02,160 Speaker 8: yield product, which is kind of better than a fallen 306 00:15:02,240 --> 00:15:06,520 Speaker 8: Angels product because you're looking at the market already pricing 307 00:15:06,520 --> 00:15:09,160 Speaker 8: in better credit quality with yield rather than waiting for 308 00:15:09,200 --> 00:15:11,440 Speaker 8: the credit rating agencies to then make that call. 309 00:15:12,240 --> 00:15:14,800 Speaker 4: Fascinating stuff. I mean Torston Slock from Apollos out with 310 00:15:15,120 --> 00:15:19,040 Speaker 4: this weekend saying, hey, interest rates are higher for longer here, 311 00:15:19,800 --> 00:15:23,240 Speaker 4: So the top of the high yield space is probably okay, 312 00:15:23,240 --> 00:15:25,760 Speaker 4: but the lower end, yeah, probably at risk. We use 313 00:15:25,840 --> 00:15:27,880 Speaker 4: calling on interest coverage and all those types of things. 314 00:15:28,040 --> 00:15:31,000 Speaker 4: Exactly are you seeing that in your your investors? Do 315 00:15:31,080 --> 00:15:32,240 Speaker 4: they want to take that lower end. 316 00:15:32,280 --> 00:15:35,080 Speaker 8: Risk or now they're not brave enough yet. And it's 317 00:15:35,120 --> 00:15:37,120 Speaker 8: great to hear from torlst In, one of our former 318 00:15:37,160 --> 00:15:41,200 Speaker 8: dear colleagues. You know, we think that really segmenting how 319 00:15:41,280 --> 00:15:43,880 Speaker 8: yield is making sense, that kind of crossover space is 320 00:15:43,920 --> 00:15:46,080 Speaker 8: where you need to be. But I think that in 321 00:15:46,120 --> 00:15:49,640 Speaker 8: certain sectors they're still uncertainty in terms of possibility of 322 00:15:49,680 --> 00:15:52,840 Speaker 8: repaying debt, So stay away from the finite. 323 00:15:52,920 --> 00:15:55,880 Speaker 3: Amanda think Amanda Rabella with this head of Extracker Sales 324 00:15:56,520 --> 00:15:57,520 Speaker 3: DWS group. 325 00:15:57,960 --> 00:16:01,720 Speaker 2: This is the Bloomberg Surveillance Park Cast. Listen live each 326 00:16:01,800 --> 00:16:05,000 Speaker 2: weekday starting at seven am Eastern on applecar Play and 327 00:16:05,120 --> 00:16:08,040 Speaker 2: Android Auto with the Bloomberg Business app. You can also 328 00:16:08,160 --> 00:16:11,640 Speaker 2: listen live on Amazon Alexa from our flagship New York station, 329 00:16:12,040 --> 00:16:14,720 Speaker 2: Just say Alexa Play Bloomberg eleven thirty. 330 00:16:15,000 --> 00:16:18,520 Speaker 3: Henrietta Trees she's with Beda Partners, and I'm lucky that 331 00:16:18,640 --> 00:16:21,560 Speaker 3: she joins us right now and informs us about the 332 00:16:21,640 --> 00:16:27,360 Speaker 3: great debate. Henrietta, I see different threads here. But can 333 00:16:27,440 --> 00:16:31,840 Speaker 3: the new Senate Majority leader excuse me, yes, the Senate 334 00:16:33,240 --> 00:16:38,239 Speaker 3: Majority Leader Thuon of the Dakotas, the President Leader McConnell 335 00:16:38,560 --> 00:16:45,600 Speaker 3: of the Kentuckys, or whoever can they delay, distress, distract 336 00:16:46,240 --> 00:16:49,840 Speaker 3: the march president elect Trump wants with his appointees. 337 00:16:51,400 --> 00:16:51,800 Speaker 7: They can. 338 00:16:52,240 --> 00:16:56,200 Speaker 5: I think that there is a real undercurrent of focus 339 00:16:56,480 --> 00:16:59,520 Speaker 5: on both the House and set it side around President 340 00:16:59,560 --> 00:17:03,560 Speaker 5: electro seriousness about some of the nominees that he has 341 00:17:03,760 --> 00:17:06,280 Speaker 5: announced so far, and so there is this sort of 342 00:17:06,359 --> 00:17:08,840 Speaker 5: wariness that the President elect might do things that have 343 00:17:08,960 --> 00:17:11,880 Speaker 5: not been done before in American history, such as sort 344 00:17:11,880 --> 00:17:14,080 Speaker 5: of tell the House and Senate to go on recess 345 00:17:14,119 --> 00:17:15,040 Speaker 5: so that he can nominate. 346 00:17:15,440 --> 00:17:16,080 Speaker 3: Can we do that? 347 00:17:17,400 --> 00:17:19,520 Speaker 5: There is a clause in the Constitution that allows the 348 00:17:19,600 --> 00:17:21,920 Speaker 5: president elect to do that, I think it would be 349 00:17:22,119 --> 00:17:27,439 Speaker 5: extraordinarily explosive. And I think what I state to clients 350 00:17:28,000 --> 00:17:31,959 Speaker 5: is basically the autonomy that senators feel, the seniority they 351 00:17:32,000 --> 00:17:34,240 Speaker 5: feel is having six year terms versus four year terms 352 00:17:34,320 --> 00:17:36,120 Speaker 5: is a very real thing. You don't want to get 353 00:17:36,160 --> 00:17:41,600 Speaker 5: between them and their incredible sense of importance in DC. 354 00:17:41,960 --> 00:17:46,280 Speaker 3: To Republicans, and particularly Republicans in name only, with that 355 00:17:46,480 --> 00:17:50,440 Speaker 3: six year tenure coming in, do they look at the 356 00:17:50,560 --> 00:17:52,680 Speaker 3: president elect is lame duck. 357 00:17:54,200 --> 00:17:54,240 Speaker 5: No? 358 00:17:54,440 --> 00:17:55,159 Speaker 3: I don't think so. 359 00:17:55,960 --> 00:17:58,120 Speaker 5: I think, especially because there's going to be so many 360 00:17:58,200 --> 00:18:01,720 Speaker 5: freshmen senators, not just the turnover from the election, but 361 00:18:01,840 --> 00:18:04,360 Speaker 5: all the senators that I expect the president elected tap 362 00:18:04,680 --> 00:18:06,480 Speaker 5: to go into the administration. There could be as many 363 00:18:06,520 --> 00:18:09,400 Speaker 5: as nine freshman senators. And it's worth bearing in mind 364 00:18:09,600 --> 00:18:12,080 Speaker 5: that over seventy five percent of the House has only 365 00:18:12,160 --> 00:18:15,520 Speaker 5: ever had Donald Trump as their Republican president. So there 366 00:18:15,720 --> 00:18:19,479 Speaker 5: is this very real deference. Certainly it's held so far. 367 00:18:19,600 --> 00:18:21,879 Speaker 5: It's only been two weeks, of course, but this very 368 00:18:22,000 --> 00:18:25,000 Speaker 5: real deference. And I'd add on just one more layer 369 00:18:25,080 --> 00:18:27,280 Speaker 5: here that the president is so much more popular than 370 00:18:27,320 --> 00:18:29,800 Speaker 5: the down ballot Republicans. In some of these states, there 371 00:18:29,840 --> 00:18:32,520 Speaker 5: were as many as forty seven thousand Republican voters who 372 00:18:32,520 --> 00:18:34,399 Speaker 5: went in and pulled a lever for Trump and then 373 00:18:34,560 --> 00:18:37,360 Speaker 5: left the ballot box. They did not vote Republican down 374 00:18:37,400 --> 00:18:40,120 Speaker 5: the ticket. So a lot of those Republican members from 375 00:18:40,160 --> 00:18:43,440 Speaker 5: specific swing states need to be deferential to Trump because 376 00:18:43,480 --> 00:18:44,720 Speaker 5: that's what their voters want them to be. 377 00:18:45,440 --> 00:18:48,919 Speaker 4: So in effect, Henriette, is there in fact a Senate 378 00:18:49,359 --> 00:18:52,800 Speaker 4: opportunity to challenge some of these Trump appointees or they 379 00:18:52,960 --> 00:18:55,359 Speaker 4: de facto like the Matt Gates or the world. Are 380 00:18:55,400 --> 00:18:56,080 Speaker 4: they going to happen? 381 00:18:56,960 --> 00:18:58,640 Speaker 5: No, I don't think they're going to happen. I think 382 00:18:58,720 --> 00:19:01,200 Speaker 5: that the Senate is going to see itself as a 383 00:19:01,520 --> 00:19:05,639 Speaker 5: temper of some of Trump's more aggressive instincts. So, for example, 384 00:19:05,680 --> 00:19:08,120 Speaker 5: there's a very real effort right now from the Senate 385 00:19:08,160 --> 00:19:10,840 Speaker 5: Republicans to see the ethics report on Matt Gates, which 386 00:19:10,880 --> 00:19:14,080 Speaker 5: has allegations of drug use or sexual abuse, things like that. 387 00:19:14,440 --> 00:19:16,760 Speaker 5: They want to know exactly what the Ethics Committee found, 388 00:19:16,960 --> 00:19:18,960 Speaker 5: and so while we might not see that released into 389 00:19:19,000 --> 00:19:22,040 Speaker 5: the public, they do want to see it internally as senators, 390 00:19:22,080 --> 00:19:23,480 Speaker 5: and they are going to pull rank to try to 391 00:19:23,480 --> 00:19:24,240 Speaker 5: get access to that. 392 00:19:25,080 --> 00:19:28,359 Speaker 4: I guess the next pick of note, particularly for Global 393 00:19:28,400 --> 00:19:31,600 Speaker 4: Wall Street, is a Treasury secretary, and there's I guess 394 00:19:31,640 --> 00:19:33,639 Speaker 4: some a little bit of confusion there about where the 395 00:19:34,320 --> 00:19:37,520 Speaker 4: camp or the Trump administration, the Trump camp, what they'd 396 00:19:37,600 --> 00:19:38,760 Speaker 4: like to see. What do you think is going to 397 00:19:38,800 --> 00:19:39,159 Speaker 4: happen there? 398 00:19:40,320 --> 00:19:42,879 Speaker 5: Well, I think Scott Besset has been the leader for 399 00:19:43,000 --> 00:19:45,280 Speaker 5: the last couple months. I think that's probably still the case, 400 00:19:45,320 --> 00:19:47,199 Speaker 5: although I do know that the Trump transition team has 401 00:19:47,200 --> 00:19:50,720 Speaker 5: been trying to audition additional CEOs from Wall Street, from 402 00:19:51,160 --> 00:19:54,080 Speaker 5: Corporate America to try to get somebody with staff that 403 00:19:54,200 --> 00:19:56,040 Speaker 5: they can sort of plug and play right into the 404 00:19:56,119 --> 00:19:59,200 Speaker 5: agency themselves. That component wanted to have a lot of 405 00:19:59,240 --> 00:20:02,200 Speaker 5: staff to bring with is a really big deal. I'm 406 00:20:02,359 --> 00:20:05,480 Speaker 5: really more interested in Bob Leiinthheiser and where he might go. 407 00:20:05,800 --> 00:20:08,639 Speaker 5: I don't expect that to be a Treasury pick, but 408 00:20:09,040 --> 00:20:11,359 Speaker 5: I do think that he'll be sort of a roving czar, 409 00:20:11,680 --> 00:20:15,040 Speaker 5: which is something that we've seen the Trump transition team 410 00:20:15,160 --> 00:20:19,800 Speaker 5: already attach onto as a good policy idea or governing idea. 411 00:20:20,320 --> 00:20:22,560 Speaker 5: So seeing where Bob Leidheiser land, I think is probably 412 00:20:22,600 --> 00:20:25,399 Speaker 5: the most important thing, particularly because he's so competent and 413 00:20:25,480 --> 00:20:27,360 Speaker 5: whatever he wants done on the tirefront is I think 414 00:20:27,400 --> 00:20:28,080 Speaker 5: what we're going to see. 415 00:20:28,600 --> 00:20:32,280 Speaker 3: And to get back to the recess issue, which I'm 416 00:20:32,359 --> 00:20:36,120 Speaker 3: assuming this is like immediate, it's like the now. Can 417 00:20:36,200 --> 00:20:39,359 Speaker 3: one scenario be the Senate says we're not going to recess, 418 00:20:40,440 --> 00:20:44,400 Speaker 3: but then the House votes to recess, and that gives 419 00:20:44,440 --> 00:20:48,520 Speaker 3: a president elect a window to put Thune in his place? 420 00:20:48,920 --> 00:20:51,040 Speaker 3: Do I have that right? Yeah? 421 00:20:51,080 --> 00:20:53,120 Speaker 5: I think that's roughly correct. I mean, as I said, 422 00:20:53,119 --> 00:20:55,280 Speaker 5: we've never seen this done before. But if there's a 423 00:20:55,359 --> 00:20:57,719 Speaker 5: disagreement between the House and the Senate, the president has 424 00:20:57,760 --> 00:20:59,840 Speaker 5: the authority to step in and say, y'all can't plain 425 00:21:00,080 --> 00:21:02,119 Speaker 5: slay together. I'm going to disband you for a period 426 00:21:02,160 --> 00:21:04,440 Speaker 5: of time, and so long as it's more than ten days, 427 00:21:04,560 --> 00:21:07,520 Speaker 5: then he can start nominating recess appointments and those people 428 00:21:07,560 --> 00:21:10,760 Speaker 5: will be in for a specific period of time, probably 429 00:21:10,800 --> 00:21:14,160 Speaker 5: like two years before the next turnover and the next 430 00:21:14,200 --> 00:21:18,400 Speaker 5: Congress starts. But that's the dynamic that they would try. 431 00:21:18,760 --> 00:21:21,159 Speaker 5: The disruption associated with that. I mean, ten days is 432 00:21:21,240 --> 00:21:23,640 Speaker 5: a really long time for your first one hundred days 433 00:21:23,640 --> 00:21:26,520 Speaker 5: agenda to just disband the House and Senate. That means, 434 00:21:26,640 --> 00:21:28,359 Speaker 5: you know, first and foremost, we're going to have the 435 00:21:28,400 --> 00:21:30,720 Speaker 5: debt ceiling that's due January one in terms of the 436 00:21:30,760 --> 00:21:33,240 Speaker 5: suspension expiring, so that clock is going to be ticking. 437 00:21:33,760 --> 00:21:36,720 Speaker 5: We'll have other cabinet official appointments that they'll want to confirm, 438 00:21:37,520 --> 00:21:39,560 Speaker 5: and then obviously the tax bill that you need to 439 00:21:39,560 --> 00:21:40,840 Speaker 5: get to writing and will not be able to do 440 00:21:40,880 --> 00:21:43,080 Speaker 5: a budget, which is due the first Monday in February. 441 00:21:43,880 --> 00:21:45,800 Speaker 5: There's a lot of stuff to be done. In ten 442 00:21:45,880 --> 00:21:46,480 Speaker 5: days is a very. 443 00:21:46,480 --> 00:21:48,480 Speaker 3: Long time, and paul I saw that there's like four 444 00:21:48,600 --> 00:21:52,600 Speaker 3: thousand positions to fill in eight hundred one thoy or 445 00:21:52,680 --> 00:21:56,879 Speaker 3: twelve hundred of them involved the president working with the 446 00:21:57,000 --> 00:22:01,320 Speaker 3: legislative branch. It's not like forty two people, right exactly. 447 00:22:01,440 --> 00:22:05,840 Speaker 4: That's the US government. So, Henrietta, between now and inauguration day, 448 00:22:05,880 --> 00:22:08,159 Speaker 4: what are some of the key things you're looking for, 449 00:22:08,240 --> 00:22:10,040 Speaker 4: the mileposts that you're looking at that we should be 450 00:22:10,080 --> 00:22:10,480 Speaker 4: focused on. 451 00:22:12,320 --> 00:22:16,960 Speaker 5: I am watching the Senate Finance Committee. What we're expecting 452 00:22:17,119 --> 00:22:20,040 Speaker 5: there is for Mike Crapo, the incoming chair of the 453 00:22:20,119 --> 00:22:22,119 Speaker 5: set of Finance Committee, and who I expect will be 454 00:22:22,200 --> 00:22:25,000 Speaker 5: the Budget Committee chair. Lindsay Graham. They need to huddle 455 00:22:25,040 --> 00:22:28,080 Speaker 5: and get together to figure out what the scope of 456 00:22:28,160 --> 00:22:30,600 Speaker 5: the tax bill is going to be, and therefore what 457 00:22:30,680 --> 00:22:33,920 Speaker 5: the magnitude of deficit increases need to be. And those 458 00:22:34,000 --> 00:22:36,320 Speaker 5: two gentlemen need to work together. Those committees have to 459 00:22:36,359 --> 00:22:38,200 Speaker 5: work together because in order for the tax bill to 460 00:22:38,280 --> 00:22:40,960 Speaker 5: pass late next year, you have to have the budget first. 461 00:22:41,200 --> 00:22:43,080 Speaker 5: So they effectively need to know the parameters of the 462 00:22:43,160 --> 00:22:46,080 Speaker 5: tax bill right now. And so that is the process 463 00:22:46,160 --> 00:22:48,199 Speaker 5: that is underway. They are going to be working groups 464 00:22:48,400 --> 00:22:53,040 Speaker 5: formed to break out energy tax policy, international tax policy, 465 00:22:53,040 --> 00:22:55,320 Speaker 5: et cetera. And then they'll get with Lindsay Graham and say, 466 00:22:55,359 --> 00:22:58,120 Speaker 5: this is the appetitive deficit increase that we need. Can 467 00:22:58,160 --> 00:23:01,200 Speaker 5: you get this through your committee? Suld know that information 468 00:23:01,680 --> 00:23:04,760 Speaker 5: before January twentieth. The goal is to get some paper 469 00:23:04,800 --> 00:23:06,040 Speaker 5: out to members by December. 470 00:23:06,160 --> 00:23:11,399 Speaker 3: We'll bring a senator from South Carolina back probably had 471 00:23:11,480 --> 00:23:14,439 Speaker 3: no idea for twenty one years he's been in the Senate, 472 00:23:15,200 --> 00:23:19,000 Speaker 3: Senator Graham. Is he going to provide? Is he going 473 00:23:19,040 --> 00:23:22,159 Speaker 3: to be deferential to the executive branch? Or is he 474 00:23:22,359 --> 00:23:26,160 Speaker 3: going to be you know? Is President Trump says Republicans 475 00:23:26,200 --> 00:23:29,240 Speaker 3: in name only? Is Senator Graham going to join other 476 00:23:29,400 --> 00:23:31,600 Speaker 3: senators and say, no, you're not doing this to us. 477 00:23:32,640 --> 00:23:33,240 Speaker 3: I don't think so. 478 00:23:33,560 --> 00:23:37,800 Speaker 5: And indeed, the Senate Budget Committee has gotten less obstructionists, 479 00:23:37,880 --> 00:23:41,080 Speaker 5: less rhino in the last couple of weeks since the election, 480 00:23:41,200 --> 00:23:43,720 Speaker 5: even than it was before. Mitt Rodney, for example, is 481 00:23:43,760 --> 00:23:45,720 Speaker 5: no longer going to be on the committee, Chuck Rastley's 482 00:23:45,720 --> 00:23:47,840 Speaker 5: not going to be on the committee, and I think 483 00:23:47,840 --> 00:23:49,719 Speaker 5: you're probably going to see some of the freshman senators 484 00:23:49,760 --> 00:23:52,440 Speaker 5: who just won their races rise up to those ranks. 485 00:23:52,480 --> 00:23:54,960 Speaker 5: So the deferential part or the part where you would 486 00:23:55,000 --> 00:23:57,119 Speaker 5: stand up to the president in this realm, exists with 487 00:23:57,200 --> 00:24:00,600 Speaker 5: deficit increases. I'd say the most proprie arry piece of 488 00:24:00,640 --> 00:24:02,879 Speaker 5: information in my brain is the understanding I have of 489 00:24:03,000 --> 00:24:05,800 Speaker 5: what can get fifty one votes from the Senate Republican conference. 490 00:24:06,080 --> 00:24:08,359 Speaker 5: I believe it will be the biggest reconciliation bill that 491 00:24:08,400 --> 00:24:11,240 Speaker 5: we have ever passed in America, somewhere in the range 492 00:24:11,280 --> 00:24:13,000 Speaker 5: of two to two and a half trillion dollars worth 493 00:24:13,000 --> 00:24:14,000 Speaker 5: of deficit appetite. 494 00:24:14,200 --> 00:24:15,920 Speaker 3: So in terms of that old school. 495 00:24:15,880 --> 00:24:18,800 Speaker 5: Hey, Republicans are concerned about fiscal spending, that's not going 496 00:24:18,880 --> 00:24:20,280 Speaker 5: to be the case next year. There's going to be 497 00:24:20,359 --> 00:24:23,080 Speaker 5: massive deficit increases and we will know that number from 498 00:24:23,160 --> 00:24:25,359 Speaker 5: Lindsay Graham with the Budget Committee votes, which is a 499 00:24:25,520 --> 00:24:26,120 Speaker 5: very big deal. 500 00:24:26,600 --> 00:24:29,080 Speaker 3: Well, can we agree we learn more from Henriette to 501 00:24:29,280 --> 00:24:34,760 Speaker 3: race in seven minutes than all the weekend blathershin, Wow, Henrietta. 502 00:24:34,840 --> 00:24:42,800 Speaker 3: That was a clinic Withveda Partners. This is the. 503 00:24:42,880 --> 00:24:47,280 Speaker 2: Bloomberg Surveillance Podcast. Listen live each weekday starting at seven 504 00:24:47,320 --> 00:24:50,320 Speaker 2: am Eastern on applecar Play and Android Auto with the 505 00:24:50,359 --> 00:24:53,800 Speaker 2: Bloomberg Business app. You can also watch us live every 506 00:24:53,880 --> 00:24:57,040 Speaker 2: weekday on YouTube and always on the Bloomberg terminal. 507 00:24:57,400 --> 00:25:01,720 Speaker 3: Joining us now from Rio from the Copa Caabana Beach, 508 00:25:02,720 --> 00:25:06,280 Speaker 3: and he's not at the Copa Cabana Palace. He's at 509 00:25:06,320 --> 00:25:11,080 Speaker 3: some boutiki thing with a balcony, and you know, you know, 510 00:25:11,160 --> 00:25:13,439 Speaker 3: it's the way rolls. David Gera joins us right now 511 00:25:13,520 --> 00:25:16,280 Speaker 3: from the G twenty meetings. David, I have the recollection 512 00:25:16,680 --> 00:25:19,640 Speaker 3: of a G twenty meeting in Pittsburgh. You didn't cover 513 00:25:19,760 --> 00:25:22,359 Speaker 3: that because there wasn't a beach. There was a Pittsburgh 514 00:25:22,440 --> 00:25:26,440 Speaker 3: G twenty meeting with President Obama years ago that had substance. 515 00:25:26,920 --> 00:25:30,240 Speaker 3: Will this G twenty frolic have substance. 516 00:25:33,320 --> 00:25:35,359 Speaker 9: Well, there's plenty on the agenda tom a lot of 517 00:25:35,400 --> 00:25:38,200 Speaker 9: talk about climate and development financing and things that you'd 518 00:25:38,240 --> 00:25:40,600 Speaker 9: find in any number of G twenty summits in the past. 519 00:25:41,280 --> 00:25:43,080 Speaker 9: But the real action at this one is on the 520 00:25:43,200 --> 00:25:45,600 Speaker 9: sidelines where these one on one meetings are happening among 521 00:25:46,200 --> 00:25:49,280 Speaker 9: world leaders, and of course President Biden is here on 522 00:25:49,320 --> 00:25:51,600 Speaker 9: the heels of his trip to Peru for the APEC Summit. 523 00:25:52,119 --> 00:25:55,600 Speaker 9: He's on this kind of swan song trip through South America, 524 00:25:55,840 --> 00:25:57,840 Speaker 9: taking stock of what he's accomplished so far, but also 525 00:25:57,880 --> 00:25:59,960 Speaker 9: reckoning with the fact as you know that his day 526 00:26:00,119 --> 00:26:02,800 Speaker 9: a numbered as president. He's got fewer than two months left, 527 00:26:03,200 --> 00:26:05,000 Speaker 9: and he's trying to offer some assurance to those other 528 00:26:05,040 --> 00:26:07,239 Speaker 9: world leaders as they kind of look to each other 529 00:26:07,320 --> 00:26:08,760 Speaker 9: and wonder about what the future is gonna bring. 530 00:26:08,960 --> 00:26:12,320 Speaker 3: In the photo op, are they gonna align President Biden 531 00:26:12,480 --> 00:26:16,800 Speaker 3: up under you for United States next to Vietnam? Or 532 00:26:16,880 --> 00:26:19,160 Speaker 3: does he get does he stand in the front row? 533 00:26:19,240 --> 00:26:21,280 Speaker 3: As President Trump would assist. 534 00:26:23,920 --> 00:26:26,679 Speaker 9: Well, you're hitting on something really crucial here. We make 535 00:26:26,760 --> 00:26:28,560 Speaker 9: fun of these photo ops, but so much goes into 536 00:26:28,600 --> 00:26:30,680 Speaker 9: them about who's standing where and who's next to whom. 537 00:26:31,600 --> 00:26:32,000 Speaker 3: At this one. 538 00:26:32,000 --> 00:26:34,359 Speaker 9: There's an element of awkwardness because the G twenty includes 539 00:26:34,400 --> 00:26:38,320 Speaker 9: not just US allies, but adversaries as well. The Russian 540 00:26:38,320 --> 00:26:41,480 Speaker 9: President Vladimir Putin isn't here, Sergey Lavrov, his foreign minister is. 541 00:26:41,920 --> 00:26:44,399 Speaker 9: And the way that they're getting around any awkwardness about 542 00:26:44,480 --> 00:26:47,440 Speaker 9: President Biden's placement Visavi, mister Lavrov or any others is 543 00:26:47,480 --> 00:26:49,240 Speaker 9: they're going to do this photo op at kind of 544 00:26:49,320 --> 00:26:52,679 Speaker 9: a broader development conversation that's going to take place earlier. 545 00:26:52,880 --> 00:26:55,240 Speaker 9: So it's not gonna have like a standard twenty leaders 546 00:26:55,280 --> 00:26:57,159 Speaker 9: next to each other. It's going to be a wider 547 00:26:57,520 --> 00:26:59,399 Speaker 9: group of people who are invited to that photograph. So 548 00:26:59,520 --> 00:27:01,520 Speaker 9: something different about this this summit as well, Paul. 549 00:27:01,520 --> 00:27:04,439 Speaker 3: I've stood twenty feet, not even twenty fifteen feet from 550 00:27:04,520 --> 00:27:07,280 Speaker 3: the IMF photo op, and you'd think it was like 551 00:27:07,359 --> 00:27:08,520 Speaker 3: your high school photos. 552 00:27:08,600 --> 00:27:08,719 Speaker 4: Right. 553 00:27:09,040 --> 00:27:11,919 Speaker 3: Why do the football players have to you know, come 554 00:27:12,040 --> 00:27:13,040 Speaker 3: forward exactly? 555 00:27:13,680 --> 00:27:16,879 Speaker 4: Hey, David, to what extent, if any, does President like 556 00:27:16,960 --> 00:27:19,399 Speaker 4: Trump loom over this G twenty. 557 00:27:22,359 --> 00:27:22,679 Speaker 3: Huge? 558 00:27:22,840 --> 00:27:24,479 Speaker 9: I mean, I don't know that everyone's talking about him 559 00:27:24,480 --> 00:27:26,400 Speaker 9: in specific, but everybody's wondering what's going to happen. 560 00:27:26,520 --> 00:27:26,639 Speaker 5: You know. 561 00:27:26,720 --> 00:27:29,359 Speaker 9: Tom brings up that summit that took place in Pittsburgh 562 00:27:29,400 --> 00:27:31,200 Speaker 9: at the tail end of President Obama's tenure in the 563 00:27:31,240 --> 00:27:34,520 Speaker 9: White House. You know, when he was leaving and Donald 564 00:27:34,520 --> 00:27:36,399 Speaker 9: Trump was coming in. There was a lot of uncertainty, 565 00:27:36,720 --> 00:27:38,680 Speaker 9: a lot of questions among world leaders about what the 566 00:27:38,720 --> 00:27:41,040 Speaker 9: next four years would hold. They didn't know how Donald 567 00:27:41,040 --> 00:27:42,920 Speaker 9: Trump was going to lead, or what his relationship was 568 00:27:42,960 --> 00:27:46,000 Speaker 9: going to be like with other countries or these multilateral institutions. 569 00:27:46,600 --> 00:27:48,440 Speaker 9: Something else that's different about this summit is people know 570 00:27:48,520 --> 00:27:50,440 Speaker 9: what Donald Trump is like and how he governs. And 571 00:27:50,520 --> 00:27:52,439 Speaker 9: so I was kind of counseled going into this summit 572 00:27:52,680 --> 00:27:55,280 Speaker 9: by Ben Rhodes, who is an advisor to President Obama. 573 00:27:55,880 --> 00:27:58,119 Speaker 9: Don't look at how they're thinking about their relationship with 574 00:27:58,200 --> 00:28:00,960 Speaker 9: Donald Trump. They largely have that figured out, and it 575 00:28:01,040 --> 00:28:03,280 Speaker 9: may be, you know, variation on a theme slightly different 576 00:28:03,320 --> 00:28:06,000 Speaker 9: than it was back in twenty sixteen. What's more interesting 577 00:28:06,080 --> 00:28:08,440 Speaker 9: and more important is to look at their relationship to China. 578 00:28:08,520 --> 00:28:11,240 Speaker 9: And so walking around here in Rio and Brazil, you 579 00:28:11,359 --> 00:28:13,520 Speaker 9: see the influence that Brazil has on this country, on 580 00:28:13,600 --> 00:28:16,640 Speaker 9: Latin America broadly, the inroads that China has made. We're 581 00:28:16,720 --> 00:28:18,680 Speaker 9: seeing just a real shift in the winds here, and 582 00:28:18,720 --> 00:28:20,080 Speaker 9: I think that you see that kind of in stark 583 00:28:20,160 --> 00:28:22,560 Speaker 9: relief as the summit gets under way. Paul, just the 584 00:28:22,680 --> 00:28:24,960 Speaker 9: role that China's playing, the number of meetings that President 585 00:28:25,040 --> 00:28:27,320 Speaker 9: She's expected to have with other world leaders, and how 586 00:28:27,400 --> 00:28:29,639 Speaker 9: few relative to that President Biden's going to have. 587 00:28:30,400 --> 00:28:33,320 Speaker 4: Interesting, So what is the extent there of the interaction 588 00:28:33,440 --> 00:28:36,520 Speaker 4: between on the sidelines They were seeing some reporting between 589 00:28:37,160 --> 00:28:39,040 Speaker 4: g and President Biden here. 590 00:28:42,280 --> 00:28:44,280 Speaker 9: So they had a meeting over the weekend in Peru 591 00:28:44,400 --> 00:28:46,120 Speaker 9: at that Apec summit, and it was a moment for 592 00:28:46,840 --> 00:28:49,000 Speaker 9: them to talk for two hours. They hadn't spoken since April, 593 00:28:49,040 --> 00:28:51,960 Speaker 9: and that was a telephone conversation. So widely agree this 594 00:28:52,040 --> 00:28:53,640 Speaker 9: is the last time they're going to talk while Joe 595 00:28:53,680 --> 00:28:56,040 Speaker 9: Biden's in the in the White House. And again it 596 00:28:56,160 --> 00:28:59,560 Speaker 9: was a moment for President Biden to acknowledge the fact 597 00:28:59,560 --> 00:29:01,560 Speaker 9: that the relationship is markedly better than the one that 598 00:29:01,600 --> 00:29:04,120 Speaker 9: he inherited. They do talk with some frequency, even if 599 00:29:04,160 --> 00:29:06,680 Speaker 9: it's not regularly. The lines of communication are open between 600 00:29:06,760 --> 00:29:11,520 Speaker 9: Washington and Beijing. But you know, I mentioned President She 601 00:29:11,680 --> 00:29:13,640 Speaker 9: being here. You have a lot of new faces who 602 00:29:13,680 --> 00:29:15,840 Speaker 9: are just trying to introduce themselves to other folks cure 603 00:29:15,880 --> 00:29:17,880 Speaker 9: Starmer's here and that was the first meeting on his agenda. 604 00:29:17,960 --> 00:29:19,720 Speaker 9: This morning was with President She and that and it 605 00:29:19,840 --> 00:29:22,640 Speaker 9: Selda's revelatory. You haven't had a prime minister sitting down 606 00:29:22,680 --> 00:29:25,760 Speaker 9: with the Chinese premiere since twenty eighteen when Teresa made it. 607 00:29:25,800 --> 00:29:27,960 Speaker 9: It so a reset of that relationship on that side 608 00:29:27,960 --> 00:29:28,280 Speaker 9: as well. 609 00:29:28,800 --> 00:29:32,280 Speaker 3: David Rio report, Please were you at the Boteca Savado 610 00:29:32,440 --> 00:29:35,680 Speaker 3: last night? Neighborhood bar seat six? Or do you hold 611 00:29:35,760 --> 00:29:38,240 Speaker 3: court at Belmont Copacabana Palace. 612 00:29:41,080 --> 00:29:43,600 Speaker 9: Look, I've walked by the palace. I'm angling to get 613 00:29:43,640 --> 00:29:45,800 Speaker 9: a Kaiperini there a little later today. But I will 614 00:29:45,840 --> 00:29:49,840 Speaker 9: say the food has been extremely good, the seafood very fresh. 615 00:29:50,160 --> 00:29:52,160 Speaker 9: There is octopus on the menu last night. I veiled 616 00:29:52,200 --> 00:29:54,600 Speaker 9: myself of that. Oh and I mentioned that the kaiperini 617 00:29:54,680 --> 00:29:59,840 Speaker 9: is the cachasa, the cane liquor involved in those extremely smooth. 618 00:30:00,080 --> 00:30:02,560 Speaker 9: I enjoyed a beverage or two of my choice last night. 619 00:30:02,600 --> 00:30:05,080 Speaker 3: Time. I'm on an island off Mexico a million years 620 00:30:05,120 --> 00:30:07,800 Speaker 3: ago and they're playing Fleetwood Mac. I'm like, are you 621 00:30:08,040 --> 00:30:11,640 Speaker 3: killing me? That's on American? Do they play Barry Manilo's 622 00:30:11,680 --> 00:30:14,800 Speaker 3: Copa Cabana in Rio. Tell me they don't. 623 00:30:17,400 --> 00:30:20,760 Speaker 9: I've heard some Tchuell Gilbertto, but not not Barry Manilo yet. 624 00:30:20,760 --> 00:30:22,160 Speaker 9: I will lend an ear to it tonight. As you 625 00:30:22,200 --> 00:30:26,080 Speaker 9: can see behind me, the famous Copa Cabana Beach music 626 00:30:26,160 --> 00:30:28,720 Speaker 9: is playing constantly throughout the day. I've wandered a little 627 00:30:28,720 --> 00:30:30,480 Speaker 9: bit around hope to get into the water. The sun 628 00:30:30,560 --> 00:30:32,880 Speaker 9: rises at five am here, which is such a relief. 629 00:30:32,880 --> 00:30:35,720 Speaker 9: I'm hoping to take take a pre surveillance dip tomorrow 630 00:30:35,800 --> 00:30:36,880 Speaker 9: tom and I'll report back on that. 631 00:30:37,080 --> 00:30:39,560 Speaker 3: There we go. David gerrow a team coverage from Coca 632 00:30:39,760 --> 00:30:42,800 Speaker 3: Copa Cabana Beach Radio for those are Rio. For those 633 00:30:42,840 --> 00:30:46,480 Speaker 3: of you on radio not seeing Rio, it is what 634 00:30:46,680 --> 00:30:49,920 Speaker 3: a what a view? I mean, it makes me shot. 635 00:30:50,080 --> 00:30:52,240 Speaker 4: I mean, you know, but I mean, he hasn't seen 636 00:30:52,240 --> 00:30:54,280 Speaker 4: a ray of light, sunlight in his lifetime. I don't 637 00:30:54,320 --> 00:30:55,840 Speaker 4: think the guy's got no color. 638 00:30:56,440 --> 00:30:58,240 Speaker 3: He's just he's like Washington Nerd. 639 00:30:58,400 --> 00:30:59,600 Speaker 4: Yeah, Washington Nerd. 640 00:30:59,760 --> 00:31:02,480 Speaker 3: You know, you'll probably get in the water, Brooklyn. You know, 641 00:31:02,840 --> 00:31:05,080 Speaker 3: maybe I'll take the tram up to the rock. And 642 00:31:06,280 --> 00:31:06,760 Speaker 3: at least I. 643 00:31:08,440 --> 00:31:08,640 Speaker 5: Have not. 644 00:31:08,760 --> 00:31:09,560 Speaker 4: But I've always wanted. 645 00:31:09,840 --> 00:31:12,320 Speaker 3: I've always wanted to go. I was scheduled once or 646 00:31:12,360 --> 00:31:13,160 Speaker 3: twice to go and. 647 00:31:13,800 --> 00:31:15,320 Speaker 4: You know, surveillance road trip. 648 00:31:15,560 --> 00:31:19,040 Speaker 3: Yes, okay, so long ways away. I mean it's okay, 649 00:31:19,560 --> 00:31:22,120 Speaker 3: it's like south yeah, and it's it's not. 650 00:31:22,360 --> 00:31:25,280 Speaker 4: Eighty two degrees and sunny there today. I just kind 651 00:31:25,280 --> 00:31:26,240 Speaker 4: of google, yeah, so they're good. 652 00:31:26,400 --> 00:31:30,000 Speaker 3: Well, they're they're under the equator. Tell me right, this 653 00:31:30,120 --> 00:31:31,280 Speaker 3: is how am well. 654 00:31:31,160 --> 00:31:32,320 Speaker 4: They're going into their summer. 655 00:31:32,400 --> 00:31:35,040 Speaker 3: I think, yeah, they're Yeah, it's a whole southern tin 656 00:31:35,120 --> 00:31:37,120 Speaker 3: coverage David Girl on top of it. 657 00:31:37,720 --> 00:31:42,120 Speaker 2: This is the Bloomberg Surveillance podcast, available on Apple, Spotify, 658 00:31:42,320 --> 00:31:46,400 Speaker 2: and anywhere else you get your podcasts. Listen live each weekday, 659 00:31:46,560 --> 00:31:49,600 Speaker 2: seven to ten am Eastern on Bloomberg dot com, the 660 00:31:49,680 --> 00:31:53,480 Speaker 2: iHeartRadio app, tune In, and the Bloomberg Business app. You 661 00:31:53,560 --> 00:31:56,800 Speaker 2: can also watch us live every weekday on YouTube and 662 00:31:57,000 --> 00:31:58,520 Speaker 2: always on the Bloomberg terminal