WEBVTT - Markets Price in Trump Policies 0:00:02.400 --> 0:00:07.520 Bloomberg Audio Studios, podcasts, radio news. 0:00:11.920 --> 0:00:16.320 This is the Bloomberg Surveillance Podcast. Catch us live weekdays 0:00:16.360 --> 0:00:19.720 at seven am Eastern on Apple car Player, Android Auto 0:00:19.760 --> 0:00:23.080 with the Bloomberg Business App. Listen on demand wherever you 0:00:23.120 --> 0:00:26.200 get your podcasts, or watch us live on YouTube. 0:00:26.520 --> 0:00:28.520 Joining us right now with the worst job on Wall 0:00:28.520 --> 0:00:32.160 Street seventy row with this chief economist at Wolf Research. 0:00:32.720 --> 0:00:36.240 Uh well, I got to do the flash first. Excuse me, I'd. 0:00:36.080 --> 0:00:39.639 Said this contract it is, and I you know, we. 0:00:39.640 --> 0:00:42.440 Covered equities, but we didn't do bonds and currencies with 0:00:42.479 --> 0:00:44.199 a better day to check than I could do with 0:00:44.280 --> 0:00:48.640 our interactive brokers. Bloomberg Business Flash, el Matale. 0:00:48.280 --> 0:00:48.839 You got it. 0:00:48.880 --> 0:00:51.920 And we've got futures mixed. Nazac Future is actually leading 0:00:51.960 --> 0:00:54.120 the games right now, up about three tens of percent 0:00:54.560 --> 0:00:57.120 sixty eight points. A big part of that Tesla shares. 0:00:57.120 --> 0:00:59.760 They're up about six percent sources. A president like Donald 0:00:59.800 --> 0:01:02.520 Trump seemed looking to push the development of fully self 0:01:02.600 --> 0:01:05.319 driving vehicles. That's the reason for that. Now we go 0:01:05.360 --> 0:01:07.920 to down futures little change down about forty one points. 0:01:07.920 --> 0:01:11.039 We have SMP futures little changed, up about four We 0:01:11.080 --> 0:01:13.319 have the two year yield at four point two nine percent. 0:01:13.360 --> 0:01:15.320 That's little change they yield on the ten year full 0:01:15.319 --> 0:01:18.280 point four six percent, and that's up about one basis 0:01:18.319 --> 0:01:21.280 point to currency is the Bloomberg Dollars Spot Index right 0:01:21.319 --> 0:01:23.440 now down about a tenth of a percent. We have 0:01:23.480 --> 0:01:26.880 the Japanese yenweeker, euro British pound stronger. We have Bitcoin 0:01:27.000 --> 0:01:30.200 up about seven tens of percent around eighty nine thousand, 0:01:30.280 --> 0:01:33.800 recovering from that biggest two day retreat since the US vote. 0:01:34.080 --> 0:01:37.080 Shares of Nvidia falling down two percent. That's following that 0:01:37.160 --> 0:01:40.520 report over its Blackwell chips. It's led to concerns about delays. 0:01:40.959 --> 0:01:43.440 And finally another company making news that would be Spirit 0:01:43.560 --> 0:01:47.040 Airlines filed for bankruptcy in New York, listing assets and 0:01:47.080 --> 0:01:50.560 liabilities between one billion and ten billion dollars. That is 0:01:50.560 --> 0:01:53.520 your Bloomberg Business Flash, Tom and Paul Lisa, thanks so much. 0:01:53.600 --> 0:01:57.520 Avic sixteen point five seven. Sephany Ross with us with 0:01:57.640 --> 0:02:01.400 Wolf sefas O excited because you're in the process now 0:02:01.840 --> 0:02:05.040 of putting together your year ahead view at Wolf Research, 0:02:05.600 --> 0:02:08.760 to be published December ish, maybe or before or after 0:02:08.840 --> 0:02:13.680 around the jobs report of December sixth. I believe it is. 0:02:14.080 --> 0:02:17.920 How do you do that, knowing the uncertainty of our politics, 0:02:18.000 --> 0:02:20.920 knowing the uncertainty of our economy, do you rewrite it 0:02:21.000 --> 0:02:21.760 in January? 0:02:22.919 --> 0:02:25.000 One important thing to think about is a lot of 0:02:25.040 --> 0:02:27.240 what the policies that Trump might put in place are 0:02:27.240 --> 0:02:29.600 going to be relative or important for twenty twenty six. 0:02:30.040 --> 0:02:31.639 So twenty twenty five, in a way, it's going to 0:02:31.680 --> 0:02:33.800 be about animal spirits, and it's going to be about 0:02:34.520 --> 0:02:36.760 immigration to some extent, but that's going to be the 0:02:36.800 --> 0:02:38.720 bulk of what we see for twenty twenty five, which 0:02:38.760 --> 0:02:42.680 for US is actually a decent economy. An immigration, you know, 0:02:43.240 --> 0:02:45.079 it's probably not going to have as big an impact 0:02:45.120 --> 0:02:47.519 as many thing from an inflation perspective, because the labor 0:02:47.560 --> 0:02:50.160 market's now back in better balance, so we don't necessarily 0:02:50.200 --> 0:02:51.920 need the influx of people the way we did two 0:02:52.000 --> 0:02:54.919 years ago. Now, when we're talking about twenty twenty six, 0:02:54.960 --> 0:02:58.000 then it becomes all about tariffs and the uncertainty that creates. 0:02:58.040 --> 0:03:00.000 But this is probably not a twenty twenty five story. 0:03:00.919 --> 0:03:03.240 How about the deficit is that it seems like a 0:03:03.280 --> 0:03:06.720 story that's every year. So and you know, I've been 0:03:06.760 --> 0:03:10.240 seeing some numbers. We were just talking to someone earlier 0:03:10.280 --> 0:03:13.359 as talking about, you know, the concrease the deficit by 0:03:13.520 --> 0:03:17.280 trillions of dollars? Are you how concerned are you, if 0:03:17.320 --> 0:03:18.000 at all, about that? 0:03:18.280 --> 0:03:20.960 Sure Trump has thrown out eleven trillion dollars worth of 0:03:20.960 --> 0:03:22.800 tax cuts. Is he gonna get that all done? No, 0:03:23.440 --> 0:03:26.239 So we're looking for, you know, yes, a tax cut 0:03:26.280 --> 0:03:29.200 that could be a couple trillion dollars, something like a 0:03:29.240 --> 0:03:32.760 net of three. But that's not that different from what 0:03:32.840 --> 0:03:35.360 Harris was proposing. So the market, the bond market should 0:03:35.360 --> 0:03:37.960 be okay with that. And by the way, we're looking 0:03:37.960 --> 0:03:41.320 for something that's gonna extend TCJA. And then beyond that, 0:03:41.360 --> 0:03:44.480 we're forecasting about five hundred billion dollars of additional net 0:03:44.480 --> 0:03:47.040 tax increases, which is tax cuts, which is really not 0:03:47.080 --> 0:03:47.520 that impact. 0:03:47.720 --> 0:03:51.760 I mentioned December. I think it's six's it's the jobs report. 0:03:52.240 --> 0:03:56.080 Do you look at the negative statistic with revisions last time? 0:03:56.240 --> 0:03:59.640 Is truly hurricane induced or is there more going on 0:03:59.800 --> 0:04:01.400 right now in the labor economy. 0:04:01.560 --> 0:04:04.120 It's very likely hurricane and so we're going to learn 0:04:04.120 --> 0:04:05.680 a lot more about that in state when we get 0:04:05.720 --> 0:04:07.200 state employment tomorrow at ten am. 0:04:07.360 --> 0:04:10.800 That's one of those who stop the show, take no 0:04:10.960 --> 0:04:11.720 date employment. 0:04:13.160 --> 0:04:14.440 So this is this is going to be the most 0:04:14.440 --> 0:04:16.839 important data point from an economic perspective this week. 0:04:17.000 --> 0:04:19.279 What are you doing tomorrow at ten am? Sweet and 0:04:19.320 --> 0:04:20.160 Alex want to. 0:04:20.120 --> 0:04:23.120 Know state unemployment? So what do we learn from that 0:04:23.200 --> 0:04:23.680 kind of data? 0:04:23.720 --> 0:04:25.279 So we're going to get this helped us in a 0:04:25.279 --> 0:04:28.480 big way look at Texas after Beryl because we got 0:04:28.520 --> 0:04:31.040 a sense of the the extent of the hurricane impact 0:04:31.040 --> 0:04:32.360 on the data and then we could assume, well, you 0:04:32.400 --> 0:04:33.880 get that back the next month. And this is gonna 0:04:33.880 --> 0:04:35.839 be the same thing. We're going to look at Florida 0:04:35.839 --> 0:04:38.320 most importantly to see to what extent did Florida drag 0:04:38.360 --> 0:04:40.680 down the overall payrols and if it was significant, then 0:04:40.680 --> 0:04:42.080 we know we should be able to add that back. 0:04:42.440 --> 0:04:46.200 Okay, so this is state reports. What do they go 0:04:46.360 --> 0:04:49.679 into that we normally report. 0:04:49.240 --> 0:04:51.400 So what they're going to it's it's it's bls, it's 0:04:51.440 --> 0:04:53.640 it's just telling you, basically what happened from a state 0:04:53.720 --> 0:04:57.040 perspective from employment the last week ago, last month, in 0:04:57.080 --> 0:05:00.120 the last month, so from the last payroll reading we 0:05:00.200 --> 0:05:01.719 got that twelve number, which was terrible. 0:05:01.880 --> 0:05:04.200 You're gonna look at North Carolina exactly. 0:05:04.560 --> 0:05:07.000 We're gonna look at the Carolina. We're gonna look at Florida, Georgia, 0:05:07.440 --> 0:05:10.440 and if we see a notable decline, then we can 0:05:10.480 --> 0:05:12.920 know that that's probably hurricane related and the next month 0:05:12.960 --> 0:05:15.279 you'll get paid back in a positive way. 0:05:15.480 --> 0:05:17.480 How's the consumer out there? From your perspective, we had 0:05:17.480 --> 0:05:21.200 some retail sales recently. How do you think about that? 0:05:21.400 --> 0:05:23.880 So the retail sales print was suit was very funky, 0:05:24.200 --> 0:05:26.960 so it was it was negative on core, but then 0:05:27.000 --> 0:05:29.200 when you dig into it, you had pretty big revisions 0:05:29.200 --> 0:05:31.200 for the month prior. So we when we take a 0:05:31.240 --> 0:05:33.480 three month average, you're looking at one point two nine 0:05:33.520 --> 0:05:35.880 percent month on month, which is annualized about three and 0:05:35.880 --> 0:05:39.159 a half percent. Not great, but not terrible. And we 0:05:39.240 --> 0:05:40.880 have to kind of look at it into perspective. It's 0:05:40.920 --> 0:05:43.880 probably you didn't have an incredibly strong September and incredibly 0:05:43.920 --> 0:05:45.840 week October. You probably have to think of some sort 0:05:45.880 --> 0:05:48.520 of average between the two, and it was likely related 0:05:48.560 --> 0:05:54.719 to a stronger a better weather forecast or betther sort 0:05:54.720 --> 0:05:57.960 of seasonably strong weather in terms of September that boosted 0:05:58.000 --> 0:06:00.520 the print and one reason why we got the significant 0:06:00.520 --> 0:06:02.960 positive revisions in September. You also had an early back 0:06:02.960 --> 0:06:06.080 to school season so the combination of these things lifted 0:06:06.120 --> 0:06:08.880 September and dragged October because you've got a bit of 0:06:08.920 --> 0:06:09.720 a payback from that. 0:06:09.920 --> 0:06:14.880 What's your real GDP? A nominal GDP call twelve months forward? 0:06:15.080 --> 0:06:17.600 Twelve months forward, we're looking for something like two and 0:06:17.640 --> 0:06:21.960 a half percent real GDP, solid solid GDP and something 0:06:22.000 --> 0:06:25.400 inflation that's two point two fourish. Yeah, two point four 0:06:25.440 --> 0:06:28.040 is so something almost five percent in terms of nominal. 0:06:29.080 --> 0:06:31.080 So how do they react to that at the FED? 0:06:31.200 --> 0:06:34.120 I mean, that's that's solid solid. 0:06:34.480 --> 0:06:36.600 It's complicated for the FED, right because they don't want 0:06:36.600 --> 0:06:40.680 to forecast any of the fiscal stuff, so they're going 0:06:40.760 --> 0:06:42.320 to probably want to cut a couple more times. They 0:06:42.320 --> 0:06:44.200 told us that what they really should be doing is 0:06:44.240 --> 0:06:48.000 saying we want to cut to something like four percent, 0:06:48.040 --> 0:06:49.599 and then we're going to see where the economy is. 0:06:49.640 --> 0:06:52.720 Because that's that's the message that we're getting from them. 0:06:52.880 --> 0:06:55.080 They say they're data dependent, but they continue to want 0:06:55.120 --> 0:06:56.960 to cut even though the data has been stronger and 0:06:57.000 --> 0:06:58.240 inflation a little bit stickier. 0:06:58.360 --> 0:07:01.840 So quickly, here do you use suggests that the December 0:07:02.560 --> 0:07:07.679 meeting December eighteen and then over into the next meeting. 0:07:07.800 --> 0:07:10.440 I can't believe I'm saying twenty twenty five, I'm such 0:07:10.440 --> 0:07:14.840 a fossil January twenty nine. Those two meetings give them 0:07:14.840 --> 0:07:16.520 still a lot of wiggle room to cut. 0:07:17.400 --> 0:07:19.040 I think they have wiggle room to cut at one 0:07:19.040 --> 0:07:21.000 of the next two, probably not as both. 0:07:22.480 --> 0:07:24.640 It's as close as I get the fed chat. That's good, 0:07:24.680 --> 0:07:24.880 I do. 0:07:24.960 --> 0:07:27.800 Okay, yeah right, They'll probably want to cut it at 0:07:27.840 --> 0:07:30.040 one of the two and then cut it some sort 0:07:30.040 --> 0:07:32.160 of quarterly cadence until the middle part of next year. 0:07:32.240 --> 0:07:34.320 This is like talking to Henrie out a trace. I 0:07:34.320 --> 0:07:36.800 didn't know anything about the state report tomorrow? Did you 0:07:37.120 --> 0:07:39.320 not barely do the lista? Did you keep it from us? 0:07:39.560 --> 0:07:39.760 Yes? 0:07:41.840 --> 0:07:44.920 Brilliant, Stephanie. We're a huge value had there from Woolf Research. 0:07:50.360 --> 0:07:54.239 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:07:54.320 --> 0:07:57.640 weekday afternoons from seven to ten am. Easter Listen on 0:07:57.680 --> 0:08:00.600 Apple car Play and Android Auto with a bloom Business 0:08:01.040 --> 0:08:02.720 or want us live on YouTube. 0:08:02.880 --> 0:08:04.680 The last time she was with us, we've got a 0:08:04.800 --> 0:08:10.280 huge response. I think it's the mathewness maths. That's how 0:08:10.320 --> 0:08:14.680 they say they do they do. It's different equations for 0:08:14.760 --> 0:08:18.640 sort of different equations. Amanda Robello joins us. Now she's 0:08:18.640 --> 0:08:21.680 a DWS and before we get to all this fancy 0:08:21.760 --> 0:08:28.000 mumble jumbo in the quintuple leveraged artificial intelligence big data ETF, 0:08:28.080 --> 0:08:31.720 are you kidding me? Just what are your thoughts on 0:08:31.880 --> 0:08:37.640 the magnitude of the money in the bitcoin ETFs? I mean, 0:08:37.679 --> 0:08:40.280 if I if I talk to somebody Blackrock, I get 0:08:40.320 --> 0:08:43.559 a song and dance. What do you think at DWS 0:08:43.559 --> 0:08:44.559 of this moment? 0:08:45.600 --> 0:08:48.680 I think it's really interesting. We have laun judicial assets 0:08:49.040 --> 0:08:53.280 etcs in our European platform. We definitely think that there 0:08:53.360 --> 0:08:55.360 is a place for them. But I think that one 0:08:55.360 --> 0:08:57.840 thing that's important, not just with Bitcoin, but with all 0:08:58.200 --> 0:09:00.640 exposures that can be wrapped in an ETF. Do you 0:09:00.720 --> 0:09:04.120 understand the underlying right? And so I think that at 0:09:04.120 --> 0:09:06.040 the end of the day, this is an access vehicle. 0:09:06.120 --> 0:09:10.280 But Mathe, we just came back from the Boston FED. 0:09:10.880 --> 0:09:15.280 We had the number one payments guy in America, Emeritis 0:09:15.280 --> 0:09:20.079 Illinois professor Khan say, bitcoin is basically the new beanie babies? 0:09:20.200 --> 0:09:23.600 Do you know what a beanie Okay, okay, okay, that's 0:09:23.679 --> 0:09:26.400 the where's the underlying in bitcoin? 0:09:26.520 --> 0:09:29.880 Yeah? Or is it a beanie baby? Is Professor kanss I. 0:09:29.840 --> 0:09:32.760 Think I completely understand what Professor Khan is saying. We 0:09:32.800 --> 0:09:35.679 always think about you know, in your CFA textbook, you're 0:09:35.679 --> 0:09:38.160 always thinking about valuation of an asset, But how do 0:09:38.200 --> 0:09:39.120 we value bitcoin? 0:09:39.240 --> 0:09:39.440 Right? 0:09:39.559 --> 0:09:41.959 So, I think you know, at the end of the 0:09:42.040 --> 0:09:44.400 day there is some degree of speculation which is driving 0:09:44.440 --> 0:09:46.080 a lot of the volumes at the end of the day, 0:09:46.080 --> 0:09:47.160 probably more more. 0:09:47.080 --> 0:09:47.880 Rather than less. 0:09:48.200 --> 0:09:50.439 So that's definitely something I think all investors need to 0:09:50.480 --> 0:09:50.920 be aware of. 0:09:51.559 --> 0:09:55.080 On the technology front, where at DWUS heard you've seeing 0:09:55.160 --> 0:09:57.920 the flows. Is it still AI? 0:09:58.679 --> 0:10:01.520 It is still AI. So we've launched a number of 0:10:01.520 --> 0:10:07.040 different technology focused ets, so we have cybersecurity semiconductors. We 0:10:07.080 --> 0:10:10.760 also have US national critical technologies, but XAI x is 0:10:10.760 --> 0:10:12.599 the one that we're seeing flows going in on the 0:10:12.679 --> 0:10:14.319 daily basis on our US. 0:10:14.200 --> 0:10:15.720 Site AI x XAI. 0:10:16.240 --> 0:10:18.120 We also have a European version as well. It's the 0:10:18.240 --> 0:10:22.720 largest artificial intelligence ETF in the world as of last Friday. 0:10:23.120 --> 0:10:26.600 Cybersecurity, Lisa, here's the here's the ticker for you for 0:10:26.600 --> 0:10:32.680 the cybersecurity ETF PSWD password. How cool is that? How 0:10:33.200 --> 0:10:36.160 that so cybersecurity in addition to it, before there was 0:10:36.160 --> 0:10:39.520 an AI. I always told my kids cybersecurity that's like 0:10:39.559 --> 0:10:42.120 the new plastics. It's going to be. They're going to 0:10:42.200 --> 0:10:45.600 be spending money on cybersecurity forever, right, So is that 0:10:46.400 --> 0:10:48.880 What are you seeing in that side of the text trade? 0:10:48.960 --> 0:10:52.599 Cybersecurity? We've seen it become much more important. I think beforehand, 0:10:52.600 --> 0:10:54.360 a lot of people were thinking about it in the 0:10:54.360 --> 0:10:58.960 earlier days of cybersecurity, you know, as a theme, that 0:10:59.000 --> 0:11:02.600 it was more of a consume kind of topic. But 0:11:02.640 --> 0:11:05.400 I think, you know, with the Russia Ukraine War, a 0:11:05.440 --> 0:11:08.200 lot of people have now seen that cybersecurity is really 0:11:08.240 --> 0:11:10.360 a defense topic, much more than it has been in 0:11:10.400 --> 0:11:13.520 the past. We also know about you know, hackers in 0:11:13.600 --> 0:11:16.920 different geographies. You know, this is their attempt at warfare. 0:11:16.960 --> 0:11:20.240 Basically it's easier to build or quicker to build than 0:11:20.240 --> 0:11:23.720 you know, building an army or a navy. Also different 0:11:23.760 --> 0:11:26.560 spends which are required as well. So I think everyone 0:11:26.640 --> 0:11:30.320 is understanding now that cybersecurity is important in a different 0:11:30.400 --> 0:11:33.480 dimension than just your McAfee or you're you know, having 0:11:33.520 --> 0:11:34.400 a personal. 0:11:34.160 --> 0:11:37.600 VPM, a meta rebella with a sexpert on ETFs. We 0:11:37.640 --> 0:11:40.480 have built tunas today as well. Yeah, it's just too much. 0:11:40.480 --> 0:11:45.160 I got goosebumps DWS group here. I had a white 0:11:45.240 --> 0:11:48.440 paper thirty years ago that tried to model out not 0:11:48.559 --> 0:11:51.600 twenty to one hedge fund blow it up leverage, but 0:11:51.640 --> 0:11:55.720 we're non linearly from one to one out to a 0:11:55.760 --> 0:11:58.559 little bit of leverage, out to a little bit more leverage. 0:11:58.760 --> 0:12:03.920 Do you run into problem whre's fidelities propaganda for professional investors, 0:12:04.040 --> 0:12:09.440 Leverage gtfs are useful in statistical arbitrage, short term technical strategies, 0:12:09.640 --> 0:12:12.760 et cetera. Most people are buying them just a goose 0:12:12.840 --> 0:12:16.400 to return. Where's the tip point for you? And where 0:12:16.480 --> 0:12:18.480 leverage is a really tough game to win it. 0:12:19.080 --> 0:12:21.559 Yeah, the thing about the leverage gtfs is that it's 0:12:21.600 --> 0:12:24.440 not you know, two times on a long term basis 0:12:24.520 --> 0:12:25.880 or three times on a long term basis. 0:12:25.920 --> 0:12:27.080 People need to understand this. 0:12:26.960 --> 0:12:30.880 Is a volatility resetting strategy, be it in an ETF 0:12:30.920 --> 0:12:34.640 and ETN instructured products. So I think when we start 0:12:34.679 --> 0:12:38.760 to see volatility increasing quite significantly, we're not at the 0:12:38.840 --> 0:12:42.240 highs of the market, but we are kind of teetering upwards. 0:12:43.040 --> 0:12:44.960 Then you start to see that the payoff doesn't work 0:12:44.960 --> 0:12:47.199 in the way that a lot of the investors have. 0:12:47.160 --> 0:12:49.440 A ratio where that payoff doesn't work as a two 0:12:49.440 --> 0:12:54.160 to one, three to one the quintupple, tws X track 0:12:54.280 --> 0:12:55.400 or tech fund. 0:12:56.280 --> 0:12:59.120 We do not, and we've decided we've made a conscious 0:12:59.160 --> 0:13:01.959 decision to not be in the levered space here in 0:13:02.000 --> 0:13:02.400 the US. 0:13:02.520 --> 0:13:04.320 Oh no, I offer the triple. 0:13:05.400 --> 0:13:07.600 Why is that? I mean, it seems to be popular products, 0:13:07.679 --> 0:13:08.840 it would be, but I think. 0:13:08.679 --> 0:13:11.320 That you know, there are some fantastic you know, competitor 0:13:11.440 --> 0:13:14.320 peers that we have in the market, like who already 0:13:14.320 --> 0:13:16.760 owned that space, So we don't need to be there. 0:13:17.080 --> 0:13:19.320 All right, The fetch cutting interest rates even though the 0:13:19.360 --> 0:13:21.320 bond yields are going higher. I don't know how that 0:13:21.360 --> 0:13:24.520 all works. What do you guys deal from the ETF 0:13:24.559 --> 0:13:27.400 front to take advantage of a feeder reserve that peers 0:13:27.400 --> 0:13:29.920 should be on a pretty significant path of grade cutting. 0:13:30.120 --> 0:13:32.600 Yeah, so I think that you know, for the past 0:13:33.040 --> 0:13:35.480 couple of years or y're in a bit, cash has 0:13:35.559 --> 0:13:39.079 yielded enough and it's you know, effectively risk free, that 0:13:39.559 --> 0:13:42.600 rotating into cash could have made sense all of us. 0:13:42.640 --> 0:13:45.800 You know, when we think about income requirements within portfolios. 0:13:45.840 --> 0:13:48.199 You know, now five became the new normal, little bit, 0:13:48.240 --> 0:13:49.800 and so we need to think about how we're still 0:13:49.800 --> 0:13:53.600 going to generate that five So we like international dividends 0:13:53.600 --> 0:13:57.680 a lot. HF is our international high dividend strategy. We're 0:13:57.720 --> 0:14:00.480 known very much for international equities more broad just as 0:14:00.520 --> 0:14:04.680 a Frankfurt headquartered entity, but then that one has like 0:14:04.920 --> 0:14:09.240 kind of around a five percent yield on average. Then 0:14:09.320 --> 0:14:11.560 we also think that international real estate can make sense 0:14:11.600 --> 0:14:14.600 as well, so houses the ticker and rates we always know, 0:14:15.160 --> 0:14:19.360 yes HAUC exactly, and then we usually feel that rates, 0:14:19.400 --> 0:14:23.880 you know, are income generator, same as infrastructure securities as well, 0:14:24.120 --> 0:14:25.680 So if you want to think about these as well 0:14:25.720 --> 0:14:27.400 as a way to generate kind of four or five 0:14:27.400 --> 0:14:30.400 percent yield, that makes sense. On the fixed income side, 0:14:31.040 --> 0:14:33.160 we really like high yield at the moment. Actually there's 0:14:33.160 --> 0:14:35.600 more of a quality component than there has been historically. 0:14:36.000 --> 0:14:40.040 So default rates have pretty much halved in the last 0:14:40.080 --> 0:14:43.640 eighteen months, so much stronger, much more stable than historically. 0:14:43.960 --> 0:14:46.200 But then also you can now slice and dice high 0:14:46.280 --> 0:14:48.880 yield much more than you could do before. So thinking 0:14:48.880 --> 0:14:52.360 about the higher credit ratings within high yield, things like 0:14:52.440 --> 0:14:56.760 BHYB which is our double B single B exponentials. Also 0:14:56.800 --> 0:14:59.360 thinking about hy DOWN, which is our low beta high 0:14:59.440 --> 0:15:02.160 yield product, which is kind of better than a fallen 0:15:02.240 --> 0:15:06.520 Angels product because you're looking at the market already pricing 0:15:06.520 --> 0:15:09.160 in better credit quality with yield rather than waiting for 0:15:09.200 --> 0:15:11.440 the credit rating agencies to then make that call. 0:15:12.240 --> 0:15:14.800 Fascinating stuff. I mean Torston Slock from Apollos out with 0:15:15.120 --> 0:15:19.040 this weekend saying, hey, interest rates are higher for longer here, 0:15:19.800 --> 0:15:23.240 So the top of the high yield space is probably okay, 0:15:23.240 --> 0:15:25.760 but the lower end, yeah, probably at risk. We use 0:15:25.840 --> 0:15:27.880 calling on interest coverage and all those types of things. 0:15:28.040 --> 0:15:31.000 Exactly are you seeing that in your your investors? Do 0:15:31.080 --> 0:15:32.240 they want to take that lower end. 0:15:32.280 --> 0:15:35.080 Risk or now they're not brave enough yet. And it's 0:15:35.120 --> 0:15:37.120 great to hear from torlst In, one of our former 0:15:37.160 --> 0:15:41.200 dear colleagues. You know, we think that really segmenting how 0:15:41.280 --> 0:15:43.880 yield is making sense, that kind of crossover space is 0:15:43.920 --> 0:15:46.080 where you need to be. But I think that in 0:15:46.120 --> 0:15:49.640 certain sectors they're still uncertainty in terms of possibility of 0:15:49.680 --> 0:15:52.840 repaying debt, So stay away from the finite. 0:15:52.920 --> 0:15:55.880 Amanda think Amanda Rabella with this head of Extracker Sales 0:15:56.520 --> 0:15:57.520 DWS group. 0:15:57.960 --> 0:16:01.720 This is the Bloomberg Surveillance Park Cast. Listen live each 0:16:01.800 --> 0:16:05.000 weekday starting at seven am Eastern on applecar Play and 0:16:05.120 --> 0:16:08.040 Android Auto with the Bloomberg Business app. You can also 0:16:08.160 --> 0:16:11.640 listen live on Amazon Alexa from our flagship New York station, 0:16:12.040 --> 0:16:14.720 Just say Alexa Play Bloomberg eleven thirty. 0:16:15.000 --> 0:16:18.520 Henrietta Trees she's with Beda Partners, and I'm lucky that 0:16:18.640 --> 0:16:21.560 she joins us right now and informs us about the 0:16:21.640 --> 0:16:27.360 great debate. Henrietta, I see different threads here. But can 0:16:27.440 --> 0:16:31.840 the new Senate Majority leader excuse me, yes, the Senate 0:16:33.240 --> 0:16:38.239 Majority Leader Thuon of the Dakotas, the President Leader McConnell 0:16:38.560 --> 0:16:45.600 of the Kentuckys, or whoever can they delay, distress, distract 0:16:46.240 --> 0:16:49.840 the march president elect Trump wants with his appointees. 0:16:51.400 --> 0:16:51.800 They can. 0:16:52.240 --> 0:16:56.200 I think that there is a real undercurrent of focus 0:16:56.480 --> 0:16:59.520 on both the House and set it side around President 0:16:59.560 --> 0:17:03.560 electro seriousness about some of the nominees that he has 0:17:03.760 --> 0:17:06.280 announced so far, and so there is this sort of 0:17:06.359 --> 0:17:08.840 wariness that the President elect might do things that have 0:17:08.960 --> 0:17:11.880 not been done before in American history, such as sort 0:17:11.880 --> 0:17:14.080 of tell the House and Senate to go on recess 0:17:14.119 --> 0:17:15.040 so that he can nominate. 0:17:15.440 --> 0:17:16.080 Can we do that? 0:17:17.400 --> 0:17:19.520 There is a clause in the Constitution that allows the 0:17:19.600 --> 0:17:21.920 president elect to do that, I think it would be 0:17:22.119 --> 0:17:27.439 extraordinarily explosive. And I think what I state to clients 0:17:28.000 --> 0:17:31.959 is basically the autonomy that senators feel, the seniority they 0:17:32.000 --> 0:17:34.240 feel is having six year terms versus four year terms 0:17:34.320 --> 0:17:36.120 is a very real thing. You don't want to get 0:17:36.160 --> 0:17:41.600 between them and their incredible sense of importance in DC. 0:17:41.960 --> 0:17:46.280 To Republicans, and particularly Republicans in name only, with that 0:17:46.480 --> 0:17:50.440 six year tenure coming in, do they look at the 0:17:50.560 --> 0:17:52.680 president elect is lame duck. 0:17:54.200 --> 0:17:54.240 No? 0:17:54.440 --> 0:17:55.159 I don't think so. 0:17:55.960 --> 0:17:58.120 I think, especially because there's going to be so many 0:17:58.200 --> 0:18:01.720 freshmen senators, not just the turnover from the election, but 0:18:01.840 --> 0:18:04.360 all the senators that I expect the president elected tap 0:18:04.680 --> 0:18:06.480 to go into the administration. There could be as many 0:18:06.520 --> 0:18:09.400 as nine freshman senators. And it's worth bearing in mind 0:18:09.600 --> 0:18:12.080 that over seventy five percent of the House has only 0:18:12.160 --> 0:18:15.520 ever had Donald Trump as their Republican president. So there 0:18:15.720 --> 0:18:19.479 is this very real deference. Certainly it's held so far. 0:18:19.600 --> 0:18:21.879 It's only been two weeks, of course, but this very 0:18:22.000 --> 0:18:25.000 real deference. And I'd add on just one more layer 0:18:25.080 --> 0:18:27.280 here that the president is so much more popular than 0:18:27.320 --> 0:18:29.800 the down ballot Republicans. In some of these states, there 0:18:29.840 --> 0:18:32.520 were as many as forty seven thousand Republican voters who 0:18:32.520 --> 0:18:34.399 went in and pulled a lever for Trump and then 0:18:34.560 --> 0:18:37.360 left the ballot box. They did not vote Republican down 0:18:37.400 --> 0:18:40.120 the ticket. So a lot of those Republican members from 0:18:40.160 --> 0:18:43.440 specific swing states need to be deferential to Trump because 0:18:43.480 --> 0:18:44.720 that's what their voters want them to be. 0:18:45.440 --> 0:18:48.919 So in effect, Henriette, is there in fact a Senate 0:18:49.359 --> 0:18:52.800 opportunity to challenge some of these Trump appointees or they 0:18:52.960 --> 0:18:55.359 de facto like the Matt Gates or the world. Are 0:18:55.400 --> 0:18:56.080 they going to happen? 0:18:56.960 --> 0:18:58.640 No, I don't think they're going to happen. I think 0:18:58.720 --> 0:19:01.200 that the Senate is going to see itself as a 0:19:01.520 --> 0:19:05.639 temper of some of Trump's more aggressive instincts. So, for example, 0:19:05.680 --> 0:19:08.120 there's a very real effort right now from the Senate 0:19:08.160 --> 0:19:10.840 Republicans to see the ethics report on Matt Gates, which 0:19:10.880 --> 0:19:14.080 has allegations of drug use or sexual abuse, things like that. 0:19:14.440 --> 0:19:16.760 They want to know exactly what the Ethics Committee found, 0:19:16.960 --> 0:19:18.960 and so while we might not see that released into 0:19:19.000 --> 0:19:22.040 the public, they do want to see it internally as senators, 0:19:22.080 --> 0:19:23.480 and they are going to pull rank to try to 0:19:23.480 --> 0:19:24.240 get access to that. 0:19:25.080 --> 0:19:28.359 I guess the next pick of note, particularly for Global 0:19:28.400 --> 0:19:31.600 Wall Street, is a Treasury secretary, and there's I guess 0:19:31.640 --> 0:19:33.639 some a little bit of confusion there about where the 0:19:34.320 --> 0:19:37.520 camp or the Trump administration, the Trump camp, what they'd 0:19:37.600 --> 0:19:38.760 like to see. What do you think is going to 0:19:38.800 --> 0:19:39.159 happen there? 0:19:40.320 --> 0:19:42.879 Well, I think Scott Besset has been the leader for 0:19:43.000 --> 0:19:45.280 the last couple months. I think that's probably still the case, 0:19:45.320 --> 0:19:47.199 although I do know that the Trump transition team has 0:19:47.200 --> 0:19:50.720