WEBVTT - Goldman Profit Surges, Trump Shooting 0:00:02.960 --> 0:00:07.280 Bloomberg Audio Studios, Podcasts, radio news. 0:00:09.960 --> 0:00:13.840 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:00:13.920 --> 0:00:16.599 weekdays at ten am Eastern on Apple car Play and 0:00:16.600 --> 0:00:19.600 Android Auto with the Bloomberg Business App. Listen on demand 0:00:19.680 --> 0:00:23.320 wherever you get your podcasts, or watch us live on YouTube. 0:00:24.880 --> 0:00:26.239 I'm Alex Thee alongside pauls. 0:00:26.239 --> 0:00:26.480 We need. 0:00:26.520 --> 0:00:28.480 This is the Bloomberg Intelligence Radio. We bring you all 0:00:28.480 --> 0:00:30.800 the top news and business, economics and finance. Threugh are 0:00:30.800 --> 0:00:33.440 a lens of our Bloomberg Intelligence analysts because they cover 0:00:33.680 --> 0:00:37.239 two thousand companies and one hundred and thirty industries worldwide, 0:00:37.280 --> 0:00:38.559 and we're going to check in with one of them 0:00:38.560 --> 0:00:41.879 now on Goldman Sachs sitting at a record high and 0:00:41.920 --> 0:00:45.120 this was all thanks to the traditional old school Goldman 0:00:45.159 --> 0:00:49.040 Sacks business FIC and equity trading, just crushing analyst estimates. 0:00:49.520 --> 0:00:52.000 For that, we want to go to Alison Williams, Boomberg Intelligence, 0:00:52.000 --> 0:00:55.920 senior analysts for global banks and asset managers. Alison the 0:00:56.000 --> 0:00:58.680 highlights and is it worth the record high on Goldman stock? 0:00:59.120 --> 0:01:02.040 Goldman Sachs stock, that is hard. That is hard to say. 0:01:03.440 --> 0:01:06.399 Well, as you know, we don't make stock calls, but 0:01:06.440 --> 0:01:09.880 I can tell you that the fundamentals are strong and 0:01:10.120 --> 0:01:13.280 Goldman is really, you know, showing that it made the 0:01:13.319 --> 0:01:16.120 right decision in the last couple of years to focus 0:01:16.160 --> 0:01:19.440 back on its core institutional businesses. Out of all the 0:01:19.440 --> 0:01:22.440 global banks, they have been the most focused on this business. 0:01:22.480 --> 0:01:26.840 They earn the most from trading, and they're definitely showing 0:01:26.920 --> 0:01:32.000 progress in different aspects of the business that they've focused on. 0:01:32.040 --> 0:01:35.760 So for example, fixed income trading up fifteen to twenty percent, 0:01:37.600 --> 0:01:40.800 doing a lot of financing assets in that business. Equity 0:01:40.840 --> 0:01:44.360 trading also up strong. The one area that was a 0:01:44.400 --> 0:01:46.800 little bit weak was the M and A fee side. 0:01:46.840 --> 0:01:50.880 They are typically the global leader in fees, but JP 0:01:51.000 --> 0:01:55.680 Morten really sort of leapfrogging them this quarter. But the 0:01:55.800 --> 0:01:58.680 positive thing is that they talked about the investment banking 0:01:58.720 --> 0:02:04.320 feed pipeline increasing sequentially. That looks good for the third quarter. 0:02:04.880 --> 0:02:07.400 On the expense side of things, also showing some good 0:02:07.440 --> 0:02:10.880 cost control on the non compensation expenses, but on the 0:02:10.919 --> 0:02:15.919 compensation expenses the ratio they're actually going up a little bit. 0:02:16.480 --> 0:02:20.600 Ah interesting Okay. Also, what kind of returns do the 0:02:20.639 --> 0:02:23.560 Goldman Saxes of the world earn on their their global 0:02:23.560 --> 0:02:26.440 trading businesses today. I know that you with coming down 0:02:26.480 --> 0:02:29.120 a great financial crisis, lots of regulations, lots of limits. 0:02:29.680 --> 0:02:32.080 Where is Goldman in some of their big peers. 0:02:33.120 --> 0:02:36.320 So certainly, I mean the returns are not what they 0:02:36.400 --> 0:02:39.600 used to be, and it depends on the specific vertical. 0:02:40.080 --> 0:02:41.519 I think if you look at fixed. 0:02:41.360 --> 0:02:44.400 Income trading, it tends to have sort of a higher 0:02:44.440 --> 0:02:48.040 pretax margin, but the returns on equity tend to be 0:02:48.120 --> 0:02:50.680 lower because it's a little bit capital intensive. But for 0:02:50.760 --> 0:02:54.560 the bank overall turning in double digit return, so I 0:02:54.600 --> 0:02:57.440 think showing a good return overall. 0:02:57.560 --> 0:03:01.560 Do you think that Goldman Sacks has left behind it? 0:03:01.560 --> 0:03:05.000 It's Marcus fiasco. It's pushed into consumer banking. Is that 0:03:05.080 --> 0:03:07.200 is that chapter officially closed? 0:03:08.440 --> 0:03:11.799 That chapter is closed. Keep in mind that they are 0:03:12.880 --> 0:03:17.560 still focusing on gathering deposits, right, So what they've closed 0:03:17.919 --> 0:03:20.440 is you know, saying we're going to expand into all 0:03:20.520 --> 0:03:25.600 these businesses incrementally add to something that they've never had 0:03:25.639 --> 0:03:28.760 a leadership position in and sort of you know, making 0:03:28.840 --> 0:03:32.240 an entry a new market, changing the business model, if 0:03:32.280 --> 0:03:35.240 you will. Instead, they said they're going to go back to, 0:03:35.920 --> 0:03:37.760 you know, focusing on what they're good at. 0:03:38.080 --> 0:03:38.920 They do have the. 0:03:38.880 --> 0:03:42.280 Transaction banking business, which is something that they've entered into 0:03:42.760 --> 0:03:46.080 recent years. But we think that business makes sense for them. 0:03:46.120 --> 0:03:48.400 I think it helps them to serve their corporate clients 0:03:49.240 --> 0:03:52.520 and on the consumer side stepping away from lending. So 0:03:52.560 --> 0:03:55.120 they still have a couple of lending products left. But 0:03:55.120 --> 0:03:58.160 I'm sure everyone has seen the headlines related to Apple 0:03:58.320 --> 0:04:01.680 and know that those are probably going away too. They're 0:04:01.680 --> 0:04:04.440 really just sticking to the deposit side of things as 0:04:04.440 --> 0:04:06.280 sort of diversification of funding. 0:04:07.120 --> 0:04:09.760 So talk to us about their asset and wealth management business. 0:04:09.800 --> 0:04:12.400 I know it's about thirty percent of their revenue these days. 0:04:13.240 --> 0:04:15.600 What's their focus for that going forward. 0:04:16.920 --> 0:04:19.880 Yeah, that's a good question, Paul, and really highlights one 0:04:19.880 --> 0:04:23.080 of the areas of strength this quarter, which is raising 0:04:23.120 --> 0:04:26.839 money in their alternatives business. This has been a strategy, 0:04:27.839 --> 0:04:32.000 you know, several years ago they embarked on shifting from 0:04:31.880 --> 0:04:35.080 the Goldman that we know for decades and decades of 0:04:35.120 --> 0:04:39.400 investing their own money, using that expertise to really invest 0:04:39.480 --> 0:04:42.960 more for clients and making those revenues sort of more 0:04:42.960 --> 0:04:45.760 of a fee based revenue management money for clients versus 0:04:45.800 --> 0:04:48.640 just the proprietary gains that they would get on those 0:04:48.680 --> 0:04:51.000 types of assets, and they are doing really well in 0:04:51.120 --> 0:04:55.040 terms of exceeding their targets for raising money there and 0:04:55.600 --> 0:04:58.280 at the end of the day, these are that's sort 0:04:58.279 --> 0:05:01.800 of a better proposition to to investors in the stock 0:05:02.560 --> 0:05:06.400 because investors generally tend to like to have more recurring, 0:05:06.440 --> 0:05:09.520 revenue based businesses and capital light businesses. 0:05:10.240 --> 0:05:13.200 Okay, so tomorrow we get Bank of America, which is 0:05:13.200 --> 0:05:15.600 currently in a fifty two week high, and Morgan Stanley. 0:05:16.240 --> 0:05:17.800 How are they going to do? Knowing what we know 0:05:17.880 --> 0:05:19.520 from City, JP and Goldman. 0:05:20.440 --> 0:05:22.800 Sure, so a couple of different stories. I mean, the 0:05:22.880 --> 0:05:25.960 read through is really positive for Morgan Stanley in terms 0:05:26.000 --> 0:05:30.479 of the institutional business, but certainly they need to jump 0:05:30.520 --> 0:05:33.680 over that higher bar because according to consensus right now, 0:05:34.120 --> 0:05:37.520 JP Morgan moving into the number two spot for equities 0:05:37.520 --> 0:05:41.000 trading revenue. Keep in mind that Morgan Stanley was number 0:05:41.000 --> 0:05:44.039 one for several years, Goldman's number one now and JP 0:05:44.120 --> 0:05:47.920 Morgan moving up. But equities trading should be good, fees 0:05:47.960 --> 0:05:50.560 should be good. I think people will be watching on 0:05:50.600 --> 0:05:53.280 the wealth management side of things just due to some 0:05:53.320 --> 0:05:56.320 pricing changes that we saw at Wells. So I think 0:05:56.320 --> 0:05:58.239 that's what people are going to be watching there also 0:05:58.279 --> 0:06:02.600 the compensation ratio to see what's happening across the industry. 0:06:03.000 --> 0:06:06.920 Bank of America on that interest income again, we had 0:06:06.960 --> 0:06:09.320 sort of that negative surprise from Wells Fargo related to 0:06:09.360 --> 0:06:11.960 their wealth management business. What are we going to hear 0:06:11.960 --> 0:06:15.120 from Bank America with regard to that. We do expect 0:06:15.160 --> 0:06:18.320 that we'll see the same capital market strength. We're also 0:06:18.360 --> 0:06:22.479 wondering on the commercial loan side of things. Disappointing loan 0:06:22.520 --> 0:06:26.080 balances hurt Wells Fargo. In the industry. Data looks like 0:06:26.080 --> 0:06:27.840 there was a little bit of a pickup in commercial 0:06:27.839 --> 0:06:28.520 balances at the. 0:06:28.560 --> 0:06:29.240 End of the quarter. 0:06:29.760 --> 0:06:32.000 We don't know if that's just something funky with the 0:06:32.080 --> 0:06:34.840 data or if there might be more to it. 0:06:34.920 --> 0:06:36.960 So that's what we'll be looking to hear about from 0:06:36.960 --> 0:06:37.680 Bank America. 0:06:38.240 --> 0:06:40.840 All right, great stuff as always. Alison Williams is the 0:06:40.880 --> 0:06:43.880 senior financials Banks Global all that kind of stuff for 0:06:43.920 --> 0:06:46.640 Bloomberg Intelligence. She's been doing that for decades, first on 0:06:46.680 --> 0:06:49.600 the buyside at Morgan Stanley Investment Management and then for 0:06:49.640 --> 0:06:54.720 the last close to fifteen years with Bloomberg Intelligence. So 0:06:55.279 --> 0:06:56.839 good numbers coming out of Golden Sachs. 0:06:58.279 --> 0:07:01.840 You're listening to the Bloomberg and Intelligence Podcast. Catch us 0:07:01.920 --> 0:07:05.280 live weekdays at ten am Eastern on applecar Play and 0:07:05.279 --> 0:07:08.159 Android Auto with a Bloomberg Business app. You can also 0:07:08.279 --> 0:07:11.480 listen live on Amazon Alexa from our flagship New York 0:07:11.520 --> 0:07:14.920 station Just Say Alexa, playing Bloomberg eleven thirty. 0:07:16.560 --> 0:07:18.680 I'm Alex Steel alongside Paul Sweeney. This is a Bloomberg 0:07:18.760 --> 0:07:21.400 Intelligence Radio. We'll bring you all the top news and 0:07:21.480 --> 0:07:24.280 analysis and business and economics through our lens of our 0:07:24.280 --> 0:07:26.720 Bloomberg Intelligence folks. They cover two thousand companies and one 0:07:26.760 --> 0:07:29.440 hundred and thirty industries worldwide. We also follow all the 0:07:29.480 --> 0:07:31.800 news for you also outside of Bloomberg and joining us 0:07:31.800 --> 0:07:36.080 now as Henry Natrice, Managing partner and director of Economic Policy. 0:07:36.640 --> 0:07:39.200 She joins us. Now, Okay, there is a lot to 0:07:39.280 --> 0:07:42.320 get through here. You cover all of this for Vada Partners. 0:07:43.480 --> 0:07:45.320 There's a lot to pick cherry pick from. But let's 0:07:45.320 --> 0:07:47.960 go to the breaking headline here. According to Fox News, 0:07:47.960 --> 0:07:51.560 and this was according to a post on X President 0:07:51.600 --> 0:07:54.520 Trump will be making his vice president announcement today. Who 0:07:54.520 --> 0:07:55.560 do you think that's going to be? 0:07:57.040 --> 0:07:59.440 Well, I think the base case should be JD. Bay 0:07:59.520 --> 0:08:03.520 Its Ohio is obviously a pretty safe read state right now, 0:08:03.560 --> 0:08:05.200 but I think the two of them have a mutually 0:08:05.240 --> 0:08:10.480 compatible outlook. It really suits the theme of his campaign, 0:08:10.880 --> 0:08:14.440 which is a very sort of robrust, sort of aggressive 0:08:14.920 --> 0:08:19.720 America First campaign. The speculation, obviously, and the real exciting 0:08:19.720 --> 0:08:22.160 component would be if he were to choose Nikki Haley, 0:08:23.080 --> 0:08:25.920 coming off of a twenty two percent when in Indiana 0:08:26.000 --> 0:08:28.440 in the primaries just a couple of weeks ago, she 0:08:28.560 --> 0:08:30.720 has shown that she has a real lock on a 0:08:30.800 --> 0:08:34.400 totally different demographic that Trump has struggled with for many 0:08:34.480 --> 0:08:36.760 years and specifically in the last couple of months, which 0:08:36.800 --> 0:08:42.360 is a female demographic, specifically suburban, married educated women, that 0:08:42.400 --> 0:08:45.680 would make his potential path to an electoral college win 0:08:45.760 --> 0:08:48.480 on part with Obama's in two thousand and eight a 0:08:48.559 --> 0:08:49.479 real possibility. 0:08:50.320 --> 0:08:53.760 So, Henrietta on the VP pick when do you think 0:08:53.800 --> 0:08:56.680 we're going to hear when? Who could it possibly be? 0:08:56.679 --> 0:08:58.360 Because that seems to be maybe at the top of 0:08:58.360 --> 0:09:00.920 the agenda here today, right. 0:09:01.000 --> 0:09:03.320 Yeah, So my understanding is it could happen as early 0:09:03.360 --> 0:09:06.360 as tonight. But I've seen quite a bit of speculation 0:09:06.520 --> 0:09:10.920 and roles changes within the RNC delegation and their committees 0:09:11.200 --> 0:09:13.200 that it could be as late as Wednesday. So while 0:09:13.559 --> 0:09:16.600 I recognize that the administrator of the Trump team is 0:09:16.640 --> 0:09:18.840 saying that it could be tonight, I wouldn't be surprised 0:09:18.840 --> 0:09:20.640 if there were some fastballs thrown in here at the 0:09:20.720 --> 0:09:24.559 last minute. But my base case expectation is for JD. Vance, 0:09:24.600 --> 0:09:26.920 and I'd be pretty alarmed and surprised if it were 0:09:26.960 --> 0:09:30.640 Nicki Haley. The difference between the two campaigns and internally 0:09:30.679 --> 0:09:33.960 within the Trump campaign, I think is probably insurmountable. But 0:09:34.040 --> 0:09:37.840 it would be a very rational sort of strategic move 0:09:38.320 --> 0:09:40.360 to Trump for Trump to move to the middle and 0:09:40.440 --> 0:09:42.280 try to say, you know, this really is a unity ticket. 0:09:42.360 --> 0:09:44.400 Let me show you how and put Meikay Haley on 0:09:44.400 --> 0:09:44.760 the top. 0:09:45.320 --> 0:09:46.800 If you go to JD. Vans for a moment. What 0:09:46.880 --> 0:09:49.080 was striking though, is how he really came out and 0:09:49.120 --> 0:09:53.440 was wimming Democrats for the assassination attempt on President Trump. 0:09:53.800 --> 0:09:56.240 What we've heard so far from former President Trump is 0:09:56.280 --> 0:09:58.480 more of a message of unity. Do you think that 0:09:58.480 --> 0:10:01.280 the unity message prevails here on the ticket or do 0:10:01.320 --> 0:10:04.520 you think that the fracturing prevails on the ticket. 0:10:05.120 --> 0:10:07.720 I think fracturing is where Trump feels most comfortable. I 0:10:07.720 --> 0:10:11.440 think he likes being, you know, sort of the aggressor, 0:10:11.600 --> 0:10:14.840 and a unity ticket is not in keeping with anything 0:10:14.880 --> 0:10:18.520 we've seen from the Trump campaign since twenty sixteen, so 0:10:18.559 --> 0:10:21.600 I'd be pretty surprised if it were Nicki Haley. Again, 0:10:21.679 --> 0:10:24.120 I do think that makes the most political sense for him, 0:10:24.160 --> 0:10:26.319 just in terms of trying to win the electoral College 0:10:26.920 --> 0:10:29.800 and winning the popular vote as well, which could be 0:10:30.080 --> 0:10:34.000 massively helpful to him in twenty twenty five as Republicans 0:10:34.000 --> 0:10:38.120 try to pass get four point six trillion dollar tax bill. 0:10:38.440 --> 0:10:43.199 So there is a lot of strategic benefit to choosing 0:10:43.200 --> 0:10:45.120 in Nicki Haley. I don't know if it's compatible with 0:10:45.160 --> 0:10:47.360 his actual campaign, though my default is going to be 0:10:47.400 --> 0:10:50.959 a gdvanced style candidate. Mark Rubio is another one I'd 0:10:51.000 --> 0:10:53.600 put up there and roughly the same category. 0:10:53.760 --> 0:10:56.240 So, and you know, what do you think, or let's 0:10:56.240 --> 0:10:58.720 put it this way, do you think the message from 0:10:59.120 --> 0:11:02.200 former President Trump and his campaign will it change it all? 0:11:02.200 --> 0:11:07.040 Given the events of Saturday, I think. 0:11:06.880 --> 0:11:10.880 The agenda of the campaign and the campaign in general 0:11:10.960 --> 0:11:12.840 needs to just get through the next couple of months. 0:11:13.559 --> 0:11:16.520 We are, you know, in the very early days in July. 0:11:16.679 --> 0:11:19.000 I mean, this should be something that we are expecting 0:11:19.080 --> 0:11:21.800 is a shakeup in October. And it's only July, and 0:11:21.840 --> 0:11:24.840 we've had two massive shakeups in just the last week, 0:11:24.920 --> 0:11:28.679 you know, with the disastrous presidential debates for Joe Biden 0:11:28.920 --> 0:11:32.760 and the dramatic rise we've seen in calls for Biden 0:11:32.800 --> 0:11:35.600 to get off the ticket, and then an assassination attempt. 0:11:35.640 --> 0:11:38.720 So for my CNY, there's a lot of whiplash and 0:11:38.760 --> 0:11:41.280 we still have four months to go till actual election. Deck. 0:11:42.160 --> 0:11:46.319 Part of the Biden campaign has truly been talking about 0:11:46.320 --> 0:11:48.920 how President Trump will fracture democracy and what a big 0:11:49.000 --> 0:11:52.760 risk is big Do you think the Biden campaign can 0:11:52.840 --> 0:11:55.839 continue with that? Now they've already pulled some campaign ads. 0:11:55.880 --> 0:11:57.520 How does that narrative evolve? 0:11:58.720 --> 0:11:59.560 No, I don't think that. 0:11:59.440 --> 0:12:02.120 That's going to hold the idea of staying as a 0:12:02.200 --> 0:12:06.760 unity tickets to spending campaign donations, suspending fundraising, suspending ads. 0:12:07.080 --> 0:12:09.000 That's all going to wrap up. I think in the 0:12:09.000 --> 0:12:11.600 next couple of hours. You're already seeing some policy papers 0:12:11.640 --> 0:12:13.720 come out from the White House. There was one release 0:12:13.800 --> 0:12:16.560 just moments ago on the impact of Trump's potential tariffs 0:12:16.800 --> 0:12:19.320 and replacing the federal income tax with tariffs, which would 0:12:19.360 --> 0:12:22.680 drive drive tariffs up. It would have to be seventy 0:12:22.720 --> 0:12:26.320 percent or higher in order to compensate for the lost 0:12:26.400 --> 0:12:28.960 revenue to treasury if they were to abolish the federal 0:12:29.040 --> 0:12:31.560 income tax. So there's stuff barkolating behind the scenes. And 0:12:31.559 --> 0:12:34.560 then let's be mindful that the Biden team is really 0:12:34.600 --> 0:12:40.480 trying to beat back the base of the Democratic Party 0:12:40.480 --> 0:12:43.839 that's hoping he will step aside. So a whole bunch 0:12:43.840 --> 0:12:48.360 of things went in Biden's favor ironically since the shooting, 0:12:48.800 --> 0:12:52.319 and it is really just that it has taken Democratic 0:12:52.320 --> 0:12:55.680 concerns about his ability to run for another four years 0:12:55.760 --> 0:12:59.200 off the table. I think that's only temporary. In the background, 0:12:59.280 --> 0:13:02.720 you still have from members of the DNC and from 0:13:02.760 --> 0:13:07.760 donors to either suspend donations, not continue contributing to the campaign, 0:13:08.240 --> 0:13:11.000 and to move forward with something akin to a mini 0:13:11.400 --> 0:13:15.480 primary in late July. So all that is percolating in 0:13:15.520 --> 0:13:17.360 the background, and I think Biden's going to have to 0:13:17.400 --> 0:13:20.760 go out in force. The one area he really succeeds 0:13:20.840 --> 0:13:24.880 in beating Republican messaging on aside from things along the 0:13:24.960 --> 0:13:29.079 lines of abortion, is really who has the better state 0:13:29.120 --> 0:13:32.199 of play with regards to maintaining democracy. He pulls ahead 0:13:32.200 --> 0:13:34.280 of Trump by seven points there, we really want to 0:13:34.320 --> 0:13:36.880 watch and see how that plays with voters in the 0:13:36.880 --> 0:13:38.040 week of Saturday shooting. 0:13:38.640 --> 0:13:42.679 So when do you think the Democrats will make any 0:13:42.800 --> 0:13:45.640 kind of moves as relates to their candidate, if at all? 0:13:45.960 --> 0:13:48.560 Here is this something that they have to just see 0:13:48.600 --> 0:13:52.600 how the recent news of the failed assassination, how that 0:13:52.600 --> 0:13:54.720 plays out in the public's mind. Maybe get some polling. 0:13:55.040 --> 0:13:56.280 What's the timing there, do you think? 0:13:57.080 --> 0:13:59.920 Yeah, because we had a tremendous amount of pulling. I mean, 0:14:00.280 --> 0:14:03.040 everybody was interested in seeing how Biden and Trump would 0:14:03.040 --> 0:14:06.280 fare in the wake of the disastrous debate, and in 0:14:06.400 --> 0:14:10.440 the uproar about Democrats potentially replacing Biden, that has all 0:14:10.480 --> 0:14:12.080 taken a back seat. I don't think it's going to 0:14:12.080 --> 0:14:15.800 go away, though there are I think the view in 0:14:15.840 --> 0:14:19.320 the Democratic Party with everybody that's not you know, Team Biden, 0:14:19.760 --> 0:14:22.640 is really that Republicans are on a trajectory to win 0:14:22.760 --> 0:14:25.040 right now, and if Biden stays at the top of 0:14:25.080 --> 0:14:28.120 the ticket, Democrats could get wiped out in the House 0:14:28.200 --> 0:14:31.880 and the Senate and give Republicans not just a statistical majority, 0:14:32.160 --> 0:14:35.520 but a mandate level majority fifty five fifty six fifty 0:14:35.520 --> 0:14:37.880 seven seats in the Senate. So I think there's a 0:14:37.880 --> 0:14:41.800 tremendous amount of focus in the background of getting Biden 0:14:41.880 --> 0:14:45.000 to step aside. Sixty percent of war of Democratic voters 0:14:45.000 --> 0:14:46.640 want someone else at the top of the ticket. They're 0:14:46.680 --> 0:14:48.520 going to need to shake things up. I don't think 0:14:48.560 --> 0:14:49.560 that that's going to go away. 0:14:49.920 --> 0:14:52.160 I'm about thirty forty seconds left. The Trump trade is 0:14:52.160 --> 0:14:55.600 in full effect right now in the market. It is 0:14:55.640 --> 0:14:57.520 that legit for the long term. 0:14:58.760 --> 0:15:01.600 Absolutely. I mean, at this point, the Democrats have a 0:15:01.640 --> 0:15:04.080 candidate that sixty two percent of Democrats would prefer not 0:15:04.160 --> 0:15:07.080 on the ballot. In that scenario, coupled with the resurgence 0:15:07.120 --> 0:15:10.320 and massive galvanization of Trump voters, you really need to 0:15:10.520 --> 0:15:13.280 have another shake up at the Democratic front in order 0:15:13.320 --> 0:15:16.040 for this not to be a Republican win election. The 0:15:16.120 --> 0:15:19.360 two are second neck nationally, but Trump leads by four 0:15:19.440 --> 0:15:21.720 or five points in most of the swing states, and 0:15:21.760 --> 0:15:23.720 that's how you get elected in the electoral college. 0:15:24.240 --> 0:15:26.400 All right, Henrietta, thank you so much. We do appreciate 0:15:26.400 --> 0:15:28.240 you and know it's been a busy of seventy two 0:15:28.240 --> 0:15:30.760 hours for you. Henry A. Trece, Managing Partner and director 0:15:30.800 --> 0:15:34.600 of Economic Policy over at VATA Partners. 0:15:36.400 --> 0:15:40.280 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:15:40.360 --> 0:15:43.040 weekdays at ten am Eastern on Apple car Play and 0:15:43.040 --> 0:15:45.640 and broyd Otto with the Bloomberg Business app. Listen on 0:15:45.720 --> 0:15:49.000 demand wherever you get your podcasts, or watch us live 0:15:49.080 --> 0:15:50.440 on YouTube. 0:15:51.480 --> 0:15:54.160 We are broadcasting two live from Interactive Broker Studio right 0:15:54.160 --> 0:15:57.880 here in midtown Manhattan. There're two very interesting things evolving 0:15:57.880 --> 0:16:00.280 in the market. One is earnings, that would we do 0:16:00.280 --> 0:16:02.120 with a value trade? What do we do with small caps? 0:16:02.120 --> 0:16:04.880 And the other is the Trump trade effect that if 0:16:04.880 --> 0:16:07.240 Trump wins the presidency, after the events over the weekend, 0:16:07.720 --> 0:16:09.400 what that winds up looking like for the market. So 0:16:09.400 --> 0:16:11.320 there's lots of different stuff to dissect. We want to 0:16:11.320 --> 0:16:14.360 go to Shana Sizzle, President and CEO of banry On 0:16:14.480 --> 0:16:18.520 Capital Management. She joins us from Chicago, Illinois. Shana, let's 0:16:18.520 --> 0:16:21.000 start off with the events over the weekend, the attempted 0:16:21.000 --> 0:16:25.960 assassination attempt from by to President Trump. There is a 0:16:26.000 --> 0:16:28.920 Trump trade in the market. Do you buy it? 0:16:29.040 --> 0:16:29.160 Like? 0:16:29.520 --> 0:16:31.720 Is it real? I mean, typically if you wind up 0:16:31.720 --> 0:16:33.480 trading stocks around who you think is going to be 0:16:33.520 --> 0:16:35.760 the president, that actually hasn't really paid off for you. 0:16:37.440 --> 0:16:41.120 Well, I do think the Trump trade is real. I 0:16:41.160 --> 0:16:43.920 do think it's warranted. I think the events of the 0:16:43.960 --> 0:16:51.680 weekend actually bolster president former president Trump's already uh the 0:16:51.800 --> 0:16:55.840 lead that he has. I think just you know, if 0:16:55.880 --> 0:16:59.200 you look across social media, a lot of folks who 0:16:59.200 --> 0:17:03.560 are not really Trump fans saw the events of this 0:17:03.640 --> 0:17:05.840 weekend as a reason to. 0:17:05.840 --> 0:17:07.480 Vote for him in a way. 0:17:07.840 --> 0:17:10.520 That photo that came out is going to be iconic, 0:17:11.320 --> 0:17:14.800 and people saw it as like America, and you know, 0:17:14.840 --> 0:17:16.760 look at the way he handled this, And I think 0:17:17.359 --> 0:17:20.240 all of those things play into market sentiment, and you're 0:17:20.280 --> 0:17:21.560 seeing that in the Trump trade. 0:17:22.080 --> 0:17:25.840 All Right, Shanon, let's maybe step back from that kind 0:17:25.840 --> 0:17:29.120 of prior to this weekend. What was your market call 0:17:29.200 --> 0:17:30.280 and has anything changed? 0:17:31.960 --> 0:17:34.480 My market call was that we're in a period of 0:17:34.520 --> 0:17:38.240 slowing economic growth, that the FED rate hikes have done 0:17:38.280 --> 0:17:43.560 their job in many respects. We're clearly seeing the economy slow. 0:17:43.880 --> 0:17:47.359 The Fed has made it clear that there's a likelihood that. 0:17:47.240 --> 0:17:49.000 There will be a rate cut in September. 0:17:49.680 --> 0:17:52.639 And I don't think any of that has changed in 0:17:52.680 --> 0:17:57.399 my opinion. I think we still have a slowing economic conditions, 0:17:57.440 --> 0:18:00.520 and we still have probability high probabilities of fad will 0:18:00.560 --> 0:18:01.879 make its first cut in September. 0:18:02.200 --> 0:18:04.960 So the headline to that over the last three trading 0:18:05.040 --> 0:18:07.000 days has been by small caps. Do you buy that? 0:18:08.160 --> 0:18:11.920 Not necessarily. I am very encouraged by the small cap rally. 0:18:11.960 --> 0:18:15.040 Small caps have done horribly for like two years. 0:18:15.160 --> 0:18:17.320 And behaved in a way that. 0:18:17.560 --> 0:18:21.359 We don't really have any like historical reference point for 0:18:21.840 --> 0:18:24.440 Typically small caps behave in a certain way technically, and 0:18:24.840 --> 0:18:25.920 they hadn't been doing that. 0:18:26.040 --> 0:18:28.040 So I'm encouraged by the small cap rally. 0:18:28.080 --> 0:18:30.520 We'd had a very long period of time where small 0:18:30.560 --> 0:18:33.439 caps did not make a new high, something like almost 0:18:33.480 --> 0:18:37.760 two years, I think, And so that is something I 0:18:37.800 --> 0:18:39.840 think is you. 0:18:39.800 --> 0:18:40.760 Know, a good thing. 0:18:40.920 --> 0:18:43.639 But I don't necessarily think small caps benefit in the 0:18:43.680 --> 0:18:47.520 current market environment for a number of reasons. Higher rates 0:18:47.680 --> 0:18:50.320 is just harder for them to tap into the capital markets. 0:18:50.960 --> 0:18:55.200 They're not necessarily the biggest beneficiaries of the hottest trends 0:18:55.240 --> 0:18:59.760 that are pushing earnings in growth like AI, and so 0:18:59.800 --> 0:19:01.880 for those reasons, I'm still cautious. 0:19:01.480 --> 0:19:02.359 On small caps. 0:19:03.400 --> 0:19:06.920 Conversely, how do you think about those magnificent six or 0:19:06.960 --> 0:19:09.520 seven stocks which have been, you know, such a driver 0:19:09.560 --> 0:19:12.399 of this market, accounting for you know, the large majority 0:19:12.440 --> 0:19:16.240 of performance. So one of the. 0:19:16.160 --> 0:19:18.440 Things that you can see in the market right now 0:19:18.520 --> 0:19:21.280 is we're seeing some dispersion of returns, starting to see 0:19:21.280 --> 0:19:24.600 a greater participation across the S and P five hundred 0:19:25.160 --> 0:19:28.520 outside of the magnificent seven, which is very positive. 0:19:28.560 --> 0:19:30.040 It's good for active managers. 0:19:30.960 --> 0:19:33.119 You know, we touched on small caps active management and 0:19:33.160 --> 0:19:36.840 small cap has done absolutely phenomenal and that's a perfect 0:19:36.840 --> 0:19:40.080 example of, you know, why active management can work in 0:19:40.119 --> 0:19:42.439 certain areas of the market. And I think we're starting 0:19:42.440 --> 0:19:45.359 to see that a little bit outside of small caps 0:19:45.359 --> 0:19:47.800 and in large caps as we start to see the 0:19:47.920 --> 0:19:50.960 mag seven kind of take a breather. I think there's 0:19:51.040 --> 0:19:54.480 lots of other opportunities in the market to benefit from 0:19:54.480 --> 0:19:56.200 some of the hottest trends that people just aren't paying 0:19:56.240 --> 0:19:56.760 attention to. 0:19:57.119 --> 0:19:59.120 So tell us you have some nice stock picks here, 0:19:59.440 --> 0:20:00.720 give us your tie right now. 0:20:01.920 --> 0:20:06.680 So I really like VRT. That's a second derivative player 0:20:06.720 --> 0:20:09.200 of the AI trade. So they do cooling systems for 0:20:09.320 --> 0:20:13.120 data centers. It's absolutely critical as we need more computing 0:20:13.160 --> 0:20:17.280 power for anything that is machine learning and artificial intelligence related, 0:20:17.920 --> 0:20:21.520 and they are the leading player with the top solutions 0:20:22.080 --> 0:20:24.280 when it comes to cooling, because a lot of computing 0:20:24.320 --> 0:20:27.680 power gets really hot and you certainly do not want 0:20:28.000 --> 0:20:31.800 things to overheat. So that's probably my favorite stock right now. 0:20:31.840 --> 0:20:34.480 It's a second derivative play of AI. And then I 0:20:34.800 --> 0:20:38.640 wanted to look outside of technology. You know, everybody kind 0:20:38.640 --> 0:20:41.960 of knows me as the in video girl, and you 0:20:42.000 --> 0:20:43.800 know there's other places in the market. 0:20:43.880 --> 0:20:46.920 So no of artists is a healthcare name. 0:20:47.000 --> 0:20:49.679 Healthcare has not done great this year, but this is 0:20:49.680 --> 0:20:52.119 an opportunity to get in with a player that is 0:20:52.160 --> 0:20:56.160 doing some really cutting edge things in oncology in particular. 0:20:57.440 --> 0:21:00.399