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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: No one more steve than the path to this diplomacy

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Speaker 2: than Alexis Crow Partner, Chief Economist PWS. I'm not going

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Speaker 2: to go through the resume right now, but I'll just

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Speaker 2: say she wandered by the London School of Economics to

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Speaker 2: figure out what diplomacy is completely off the remit is

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Speaker 2: this diplomacy we're witnessing. It's absolutely unusual. And do you

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Speaker 2: think after Trump we get back to some kind of

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Speaker 2: diplomacy that we used to know that we used to

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Speaker 2: grow up with.

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Speaker 3: Thanks Tom for having me here. I would say what

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Speaker 3: we've seen in in the sort of impromature that Trump

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Speaker 3: one point zero left is a preference for minilateralism and

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Speaker 3: bilateral deals with the emphasis on deal rather than some

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Speaker 3: of the maxilateral agreements that we had right the architecture

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Speaker 3: of the WTO, etc. And so we've seen this ponchon

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Speaker 3: for the president really come to life. And the second

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Speaker 3: term of this preference to make deals that are of

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Speaker 3: mutual benefit but of maximum benefit for the American people.

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Speaker 3: So I think that's still the narrative that he's couching

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Speaker 3: this in. Of course, this is taking place against the

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Speaker 3: backdrop of the G seven. So of course our traditional

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Speaker 3: allies that are present there be it Europeans, be at

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Speaker 3: Japan are also going to be wondering the extent to

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Speaker 3: which this diplomatic round will lead to lasting peace and

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Speaker 3: therefore a cessation to inflation for these economies.

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Speaker 4: Given that back, given the black swan that has been

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Speaker 4: dealt to the global economy with this warner, I wran,

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Speaker 4: the US economy seems better than good, doesn't it.

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Speaker 5: It seems like.

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Speaker 4: People have jobs, they're spending money. I don't know, inflation

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Speaker 4: is an issue, but most people are dealing with it.

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Speaker 4: How do you think about that.

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Speaker 3: Well, Paul, thanks, I would say black swan maybe not.

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Speaker 3: If you go back to Donald Rumsfeld.

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Speaker 5: Okay, you know, there are no unknowns.

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Speaker 3: There are unknown unknowns, and this was probably a no

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Speaker 3: unknown right. We called this last summer after Operation Hammer,

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Speaker 3: and I think probably some people in the United States

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Speaker 3: underestimated the extent to which oil could be held at the.

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Speaker 5: Price where it is.

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Speaker 3: So presuming that you have a full cessation of conflict

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Speaker 3: and a full opening of the straits of Hormus, you'll

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Speaker 3: still see elevated energy price price costs, and that like

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Speaker 3: that has led to just an energy price shock for

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Speaker 3: the American consumer, namely in gasoline and airfares. And so

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Speaker 3: we are coming into the summer driving season. We know

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Speaker 3: the extent to which US consumers are sensitive when it

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Speaker 3: comes to the price they pay at the pump. We

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Speaker 3: know the share of wallet that has had to go

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Speaker 3: to basic goods like electricity, gasoline. Nevertheless, demand is strong, right,

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Speaker 3: Demand is still strong for consumers. We've talked about that before.

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Speaker 3: And there are no holes barred for corporate investment when

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Speaker 3: it comes to AI.

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Speaker 4: If you peel back, AI is our economy, okay, because

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Speaker 4: it seems like AI has been just pumping up almost

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Speaker 4: every part of it.

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Speaker 3: And I would say it's really the wealth effect attributed

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Speaker 3: to those mag seven too, right, And we've talked about

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Speaker 3: this in the past, but you've got a record number

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Speaker 3: of US households invested in the stock market, So more

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Speaker 3: than just the top two KIN titles that are participating

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Speaker 3: in that wealth effect. But then one would ask, what

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Speaker 3: would just happen to that wealth effect? Should the mag

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Speaker 3: seven tumble? I think that's the other shoe that we

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Speaker 3: have to focus on.

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Speaker 2: I look at this path I'm looking at. You have

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Speaker 2: your beautiful note, Alexis Crow. Folks looking at the japan

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Speaker 2: forty year bond. The yield just come in. If they

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Speaker 2: raise rates, whatever the answer is, they're going to job

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Speaker 2: in their yield. Is what we're missing here, and particularly

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Speaker 2: looking at the analogs of history. Is it after any

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Speaker 2: given war, after any given military stimulus, you announce a

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Speaker 2: disinflation or dare I say almost the fear of deflation?

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Speaker 2: Is that in your mind?

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Speaker 3: Not what I see right now. I mean, I think

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Speaker 3: that those yields moving in tandem on the US thirty

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Speaker 3: year and the Japanese forty year notes are more related

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Speaker 3: to the record piles of government debt that we've been issuing,

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Speaker 3: both for Japan and the United States, and the fact

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Speaker 3: that you have seen multiple supply shocks translating into inflation

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Speaker 3: that's above target for both of these central banks. Added

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Speaker 3: to that, as we highlighted the weaker yen. So what

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Speaker 3: I see, Tom is just going back to this is

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Speaker 3: this you know, this concept that we bring forward is

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Speaker 3: like demand side geopolitics and supply side geopology.

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Speaker 2: I love that. Okay, great, but then once to act so.

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Speaker 3: Trump, So, well, here's the thing. What have we seen.

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Speaker 3: We've seen since twenty sixteen. We've seen a culture of

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Speaker 3: national insecurity that has been brought forward by advanced economies

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Speaker 3: as we navigate these supply shocks. Care back to the

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Speaker 3: trade war, going back to the pandemic Russia, Ukraine and

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Speaker 3: now Iran. So we're stockpiling, so we're doing reshoring on

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Speaker 3: showing all that will push rates up over the longer term.

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Speaker 2: Did you study under Hayek and lys that's a joke.

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Speaker 2: Alexis there's Alexis now in the studio.

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Speaker 5: I'm so confused during this entire interview.

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Speaker 4: Every time you say Alexis, I my ears perkop Alexis Crow.

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Speaker 2: What's important here is you know Haiak would say you

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Speaker 2: clear markets? How do we clear after Trump? To me,

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Speaker 2: that's the arch question.

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Speaker 3: Well, it's interesting just go back to Trump one point. Oh, right,

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Speaker 3: So we didn't clear after Trump one point?

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Speaker 6: Oh.

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Speaker 3: Biden kept on a lot of these same policies that

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Speaker 3: have led to an elevated natural rate of interest over

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Speaker 3: the longer term. Think about those relations between Washington and Beijing.

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Speaker 3: Arguably you could say more trade restrictions were put on

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Speaker 3: China the Biden administration, the decarbonization efforts. We became a

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Speaker 3: net oil exporter under Biden, So some of those same

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Speaker 3: policies were carried forward. And you think about where the

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Speaker 3: Democrats might go under a different administration, and you would

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Speaker 3: still say that there's probably going to be a focus

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Speaker 3: on reshoring supply chains, bolstering aerospace and defense, bolstering our

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Speaker 3: energy security grid, et cetera.

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Speaker 4: So FED chairman, mister Walsh, he's got his kickoff meeting tomorrow.

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Speaker 6: What does he do?

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Speaker 2: What are you expecting there?

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Speaker 5: Whole pause?

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Speaker 3: Okay, whole pause, which would be generous right in the

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Speaker 3: wake of what we've seen with the ECB last week,

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Speaker 3: boj today, and the other thing about that, I would say,

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Speaker 3: tom just on the rate side with Japan and the

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Speaker 3: US is the US is going to have to be

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Speaker 3: careful as those yields continue to move up in Japan,

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Speaker 3: not today but over the longer term. Because we are

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Speaker 3: the world central bank, right we are still not in

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Speaker 3: a small National Central Bank. So we saw that even

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Speaker 3: going back to the vault back in August twelfth three.

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Speaker 2: You're you're expert and the dialogue of central banks. Is

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Speaker 2: mister Worst going to lead to a fractures like Boe

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Speaker 2: Mervin King Central Bank? Is he going to go back

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Speaker 2: to the quiet and solitude of Ellen Greenspan? What are

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Speaker 2: we going to see tomorrow and into the foc future.

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Speaker 3: On the communication side, everybody's getting their bets out there

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Speaker 3: as to whether or not the SEP the Summary of

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Speaker 3: Economic Projections is kind of rest in peace and rip

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Speaker 3: and there you just have to go back to under

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Speaker 3: Chairman Martin. You know, the FED did not regularly issue communications, right,

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Speaker 3: You had staff starting to do econometric forecasts. Those were

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Speaker 3: mixed with judgment forecasts by FOMC members, but there wasn't

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Speaker 3: a lot of weight put to those staff forecasts. So

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Speaker 3: as we go forward, I don't think I don't think

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Speaker 3: that there's room for much communication under this war. She's

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Speaker 3: made it very clear, so markets will have to become

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Speaker 3: accustomed to this. The other side of it is are

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Speaker 3: markets actually rational in their expectations of some of the

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Speaker 3: statements that we receive.

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Speaker 2: From the Fed? Yeah, I don't think so. I think

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Speaker 2: they've overcommuted themselves. Yeah, into it's zany almost as the

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Speaker 2: word I would use, not to borrow from the economist

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Speaker 2: Alexis Crow. Thank you so much, partner Chief Economist DCW

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Speaker 2: Stay with us. More from Bloomberg Surveillance coming up after this.

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Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live

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Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on

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Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or

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Speaker 1: watch us live on YouTube.

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Speaker 2: Some of the market generations, we catch up with Emily Rowland,

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Speaker 2: co chief investor Strategis Manual Life and Johnah Hancock of Boston.

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Speaker 2: She was in with us recently and reaffirmed being in

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Speaker 2: the market. Emily, I see so many distractions now, including SpaceX,

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Speaker 2: that it just to me comes down to where are

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Speaker 2: we going to be June thirtieth, which is like Paul

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Speaker 2: next to tomorrow. I know, Emily, where are we going

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Speaker 2: to be in this earning season?

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Speaker 7: I mean, it's just amazing, tom You know, the market

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Speaker 7: is just loving this shiny new toy that it is

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Speaker 7: embracing right now, and it's almost like the market just

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Speaker 7: keeps giving you riskier and riskier options. You know, it's

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Speaker 7: hard to say if some of these price moves are

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Speaker 7: going to be sustainable, But the biggest risk right now

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Speaker 7: seems to be not having enough risk in portfolio. So

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Speaker 7: the appetite is insatiable right now. It's just a dip

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Speaker 7: buyers dream market. My prediction is that my grandchildren are

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Speaker 7: going to be writing about this in business school. Just really,

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Speaker 7: really remarkable dynamics permeating markets right now is.

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Speaker 4: I guess Emily, for a lot of folks, they feel

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Speaker 4: like they just have to be in this market, and

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Speaker 4: that's troubling to a lot of people. How do you

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Speaker 4: think about that?

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Speaker 7: Yeah, I mean the fomo is unbelievable. I walk around

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Speaker 7: the halls of Manulife John Hancock, and the most conservative

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Speaker 7: investors that I've known in my career are like, I

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Speaker 7: don't have enough risk in my portfolio, and so there's

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Speaker 7: a major fear of missing out in this market. And

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Speaker 7: the way we think about it is the way we

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Speaker 7: would think about a race car drafting the market. You know,

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Speaker 7: we don't want to call a top in this momentum

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Speaker 7: is an incredibly powerful force, but we want to think

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Speaker 7: about drafting. We don't want to be the lead race

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Speaker 7: car risking running into the wall, but we want to

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Speaker 7: participate in this. So it's about having quality and being

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Speaker 7: in the market.

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Speaker 2: Did you just define a bubble?

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Speaker 7: That is a definition that could certainly go with here,

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Speaker 7: But you know, bubbles can last a long time. Momentum

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Speaker 7: can last a long time. So again, you want to

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Speaker 7: be there, but you want to be careful here, Emily.

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Speaker 2: What are we doing in the bond market here?

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Speaker 4: I mean again, you can sit in a two year

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Speaker 4: and get four north of four percent in a two

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Speaker 4: year treasure.

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Speaker 2: How much credit risk do you want to take here?

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Speaker 7: Well, I'm excited you brought up bonds because there's nobody

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Speaker 7: that wants to talk about them right now, given the

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Speaker 7: fact that you've got these stocks that are up, you know,

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Speaker 7: five seven percent before the market even opens, So why

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Speaker 7: would anybody want to talk about boring old bonds. But

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Speaker 7: we think it's a really interesting time to think about

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Speaker 7: fixed income doing more heavy lifting in portfolios.

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Speaker 5: Yields are elevated.

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Speaker 7: It was just a few years ago that we had

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Speaker 7: a massive retirement income problem. If you want to know

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Speaker 7: anything about the subsequent five year returns, you're going to

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Speaker 7: earn in bonds. All you really need to know is

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Speaker 7: what the starting yield is. And as you talked about

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Speaker 7: four and a half five percent on high quality bonds.

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Speaker 7: Right now, we're embracing that and we think that you

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Speaker 7: can lean into that income build a return stream that's

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Speaker 7: going to last. Everybody still has a love affair with

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Speaker 7: cash money market funds. Getting that off the sidelines, redeploying

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Speaker 7: it to a mix of high quality bonds, we think

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Speaker 7: makes a lot of sense. Investors tend to hate bonds

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Speaker 7: right before they love them, and we want to think

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Speaker 7: about that today.

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Speaker 2: Okay, let's let's take something that's very ai Walmart. They

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Speaker 2: with two point one million employees Bentonville, Arkansas. Their present

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Speaker 2: pe on a Bloomberg rounded up is forty five. There's

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Speaker 2: no one listening to this who took a course Emily

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Speaker 2: that would say that's normal. How unnormal is the Emily

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Speaker 2: Roland space right now.

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Speaker 7: It's it's so hard to find anything that's on sale

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Speaker 7: right now, and I think that's the biggest challenge. We're

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Speaker 7: not at a great starting point. Think about the amount

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Speaker 7: of just the sheer size of the market right now.

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Speaker 7: The stock market's more than twice the size of the economy.

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Speaker 7: We've never experienced that before. And what it's resulting in

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Speaker 7: is the way we used to learn things, Tom is

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Speaker 7: that the economy would tell you a lot about what

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Speaker 7: was going to happen in the market. And today we're

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Speaker 7: in a position where the market is almost wagging the

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Speaker 7: tail of the economy because there's been this incredible amount

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Speaker 7: of wealth accumulation that's been built up. Consumers are feeling

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Speaker 7: great about their investments, and again this gets back to

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Speaker 7: the K shaped economy. It's the haves and have nots,

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Speaker 7: and the folks that have access to mutual funds other

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Speaker 7: wealth are funneling that back into the economy. So that's

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Speaker 7: the biggest challenge that we're looking at today.

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Speaker 2: I'm not going to mention the company because they don't

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Speaker 2: want to embarrass them, but their total mediocrity. I've met

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Speaker 2: with management blah blah blah, and they've done two percent

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Speaker 2: per year for the last ten years. They're modeled forward

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Speaker 2: at a twenty six pe yeah market and they're a

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Speaker 2: complete mediocrity. Everybody would agree that.

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Speaker 4: Yep, hey, Emily. To that point.

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Speaker 8: Here, we've got the SpaceX IPO, which is just extraordinary

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Speaker 8: event in and of itself for this stock market in

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Speaker 8: its entire history and anthropics also in the wings open

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Speaker 8: AI another jillion dollar IPOs.

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Speaker 7: What are some of these deals?

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Speaker 4: What are they telling me? Is this suggesting a top

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Speaker 4: to the market.

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Speaker 7: Well potentially, but what we really want to look at

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Speaker 7: is just the amount of liquidity that is at stake

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Speaker 7: here and that's needed. I mean, you have these trillion

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Speaker 7: plus market cab companies that are now tapping the equity

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Speaker 7: market for issuance.

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Speaker 5: This is really notable.

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Speaker 7: At the same time as this other tidal wave is

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Speaker 7: impacting markets, which is that central banks globally are staring

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Speaker 7: down the potential of tightening. So this flood of capital

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Speaker 7: has been helped by a somewhat lower cost of capital

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Speaker 7: coming into this. Now you've got these two forces converging,

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Speaker 7: where these IPOs are requiring massive amount of liquidity and

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Speaker 7: central banks are potentially tightening into that. So it's going

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Speaker 7: to be interesting to see how that plays out as

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Speaker 7: we approach the back half of the year.

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Speaker 2: So what are you telling manualife, John and Cook clients

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Speaker 2: and as to do should they be acquiring shares this morning?

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Speaker 7: Well, it's about participating, but having a plan B, so

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Speaker 7: we tom As you know, we've been overweight technology stocks

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Speaker 7: in the United States for over ten years. That is

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Speaker 7: still an overweight for US, but the concentration risk is

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Speaker 7: becoming even harder. Like I used to be able to

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Speaker 7: come on here and say buy international stocks, buy small

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Speaker 7: cap stocks, think about diversifying. Well, guess what forty two

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Speaker 7: percent of the Emerging Markets Index is now in tech stocks.

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Speaker 7: Twenty eight percent of it is just three stocks. You

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Speaker 7: look down in market caps, small and mid cap companies

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Speaker 7: in the United States, that's become an AI trade as well.

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Speaker 7: There are semiconductors in there. So where can you find

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Speaker 7: a plan B. You want to be there, but look

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Speaker 7: at things like industrials. They're benefiting from defense spending, CAPEC

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Speaker 7: spending one big beautiful bill. We're looking at the industrials

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Speaker 7: in mid caps. We're finding them in international growth stocks.

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Speaker 7: So it's just about having that plan be We talked

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Speaker 7: about fixed income as another part of that plan. Participate

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Speaker 7: and protect Emily.

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Speaker 2: Thank you so much, Emily Rowland from Boston. Johnny Ncot

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Speaker 2: stay with us. More from Bloomberg Surveillance coming up after this.

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Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch US live

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Speaker 1: weekday afternoons from seven to ten am Eastern Listen on

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Speaker 1: applecar Play and Android Otto with the Bloomberg Business app,

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Speaker 1: or watch US live on YouTube.

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Speaker 4: Young Brands to sell Pizza Hutt two point seven million dollars.

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Speaker 8: I just had my fortith.

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Speaker 4: Reunion down the University of Richmond. We live at the

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Speaker 4: Hut Patterson Abba.

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Speaker 2: Kim Dawson would like to step in. Did you work

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Speaker 2: at the Hut?

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Speaker 9: No? I never worked at the Hut, but I'm a

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Speaker 9: big fan of the Hut because they used to do

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Speaker 9: book it.

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Speaker 5: When I was a kid, and so you would go,

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Speaker 5: if you read books, you would get three personal pan pizza.

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Speaker 9: So maybe my love of reading is owed to Pizza Hut.

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Speaker 2: A security time, is anything of SpaceX in any books?

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Speaker 5: No, absolutely not.

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Speaker 9: I mean it's absolutely incredible that we are talking about

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Speaker 9: a company now almost to surpass the market cap of

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Speaker 9: Amazon this morning.

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Speaker 5: Amazon makes eight hundred and twenty.

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Speaker 9: Billion dollars in revenue on an annual basis. We're talking

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Speaker 9: about last year where SpaceX made nineteen billion. So we

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Speaker 9: are in new stratosphere's new galaxies of valuations. And I

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Speaker 9: think it's important to note that a lot of this

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Speaker 9: upside move was very much engineered by the staging of

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Speaker 9: how much supply would be released to SpaceX stock compared

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Speaker 9: to how much demand would be created because of the

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Speaker 9: index inclusion. So I'm not sure how much we can

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Speaker 9: read into this from evaluation side of things, but we

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Speaker 9: also have to appreciate that this is a very speculatively

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Speaker 9: driven market.

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Speaker 2: Okay, I'm going to introduce this right now. I could

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Speaker 2: do it with someone who sophisticated as cam DAWs on

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Speaker 2: a new edge. Leah kwat Ahmed won the Pulitzer Prize

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Speaker 2: a number of years ago for a profoundly important book

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Speaker 2: on central banks. A new two hundred sum pages eighteen

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Speaker 2: seventy three is a title The Rothschild's of First Great

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Speaker 2: Depression in the Making of the Modern World. I'm almost

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Speaker 2: done the book. The fact is, we've seen this before.

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Speaker 2: We do have analogs of effervescence, don't we.

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Speaker 5: Oh, we certainly do.

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Speaker 9: We go all the way back to Greenspan giving his irrational,

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Speaker 9: exuberant speech in nineteen ninety six.

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Speaker 5: Of course, he cuts rates.

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Speaker 9: In nineteen ninety eight in the face of LTCM starts

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Speaker 9: raising rates in nineteen ninety nine because of this effervescence.

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Speaker 9: And I think the important parallel there is that markets

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Speaker 9: ignored rate hikes from the FED in nineteen ninety nine

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Speaker 9: up until.

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Speaker 5: March of two thousand.

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Speaker 9: You eventually got a super hike at the end or

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Speaker 9: in the third quarter of two thousand, which eventually ended

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Speaker 9: up popping the overall bubble. So there is precedent for

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Speaker 9: markets to continue on rallying despite a hiking FED.

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Speaker 4: Are you nervous about these market?

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Speaker 2: Here?

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Speaker 4: A lot of folks feel like white, We're just all

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Speaker 4: time his all timelis altime. Heiz. Then we get this

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Speaker 4: SpaceX after you, we got anthropic, we got open AI frothiness.

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Speaker 4: How do you view it all?

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Speaker 2: Yeah?

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Speaker 9: Look, I think in every boom scenario there is always

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Speaker 9: an aspect of real earnings as well as speculation. And

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Speaker 9: I think a lot of people look at this market

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Speaker 9: and say, oh, no, no, this is not the nineteen nineties,

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Speaker 9: because look at the earnings of the semiconductor names, look

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Speaker 9: at the earnings coming out of AI infrastructure.

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Speaker 5: Well, there were earnings back in the nineties as well.

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Speaker 9: If you look at the earnings of names like Cisco

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Speaker 9: or names like Intel from ninety eight to two thousand,

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Speaker 9: they actually had over one hundred percent earnings growth, so

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Speaker 9: there were earnings that were backing it up. The key

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Speaker 9: difference is that those spending the money like our hyperscalers today,

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Speaker 9: back in the two thousands, that was people who didn't

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Speaker 9: have any earnings. It was all really driven by debt

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Speaker 9: and a lot of very low quality companies.

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Speaker 5: So the question is how much more room is there.

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Speaker 9: For hyperscalers to keep ratcheting up their capex forecasts, because

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Speaker 9: if there's anything that matters most for this market, it's

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Speaker 9: these companies still being willing to spend boatloads of money

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Speaker 9: in order to drive this virtuous circle of AI infrastructure capex.

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Speaker 4: Are you concerned that this AI spend, in this AI

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Speaker 4: halo is masking a weaker economy, maybe a weaker earning story.

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Speaker 9: Well, it's certainly propping up the economy and it's certainly

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Speaker 9: adding to strength that we would certainly not see. You

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Speaker 9: can look at in the economic forecast line if you

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Speaker 9: go the ECFC function within Bloomberg, what you can see

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Speaker 9: is that the forecast for household consumption have turned lower,

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Speaker 9: not surprising because of the pressure and consumers from higher

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Speaker 9: oil prices and inflation and negative real wage growth. But

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Speaker 9: the forecast for private fixed investment, which of course is

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Speaker 9: all this ai kapex investment, have moved higher within the

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Speaker 9: GDP forecast.

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Speaker 5: So that's that offset that you have.

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Speaker 2: Kemeron Dawson with his new edge. What we do at

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Speaker 2: Bloomberg is when we have reporting that moves markets, we

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Speaker 2: tell you about it. Priscilla Azevedo, Roca, Steven Stopinski and

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Speaker 2: Sama l Ordanie. Thank you Javier Blass for bringing this

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Speaker 2: to our attention. Cutter plans to rapidly restart LNG output

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Speaker 2: after ARMUS opens. This is original reporting first from Bloomberg,

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Speaker 2: and you see it move the oil markets. Brent crude

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Speaker 2: comes down under eighty one eighty dollars thirty six cents.

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Speaker 2: It'll be profound if we get a seventy nine handle

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Speaker 2: on Brent. Coude cut Our is planning to rapidly boost

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Speaker 2: liquefied natural gas production once as Straight reopens, aiming to

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Speaker 2: restore most of its export capacity within two months. Cam Dawson,

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Speaker 2: that's the kind of shock that keeps the story going,

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Speaker 2: the narrative going.

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Speaker 9: Yeah, certainly, because effectively you're able to draw a picture

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Speaker 9: forward to say we're going to get relief in oil prices,

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Speaker 9: that maybe we've seen a peak in headline inflation and

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Speaker 9: that some of the risks that inflation could metastasize or

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Speaker 9: spread throughout the rest of the economy has fallen as

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Speaker 9: a much lower probability. Now it suggests that there is

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Speaker 9: pressure taken off of the FED to hike rates, that

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Speaker 9: we're still somewhat in this whole situation simply because the

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Speaker 9: labor market's not falling off a cliff. So when you

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Speaker 9: put it all together, the risk of higher inflation is lower,

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Speaker 9: the risk of higher interest rates is lower, and the

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Speaker 9: risk of an adversarily hawkish FED is also lower.

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Speaker 4: Mentioned Fed, we're going to hear from the Fed tomorrow.

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Speaker 9: What do you expect, Yeah, well, not much as far

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Speaker 9: as policy, of course, there's no expectation of any policy action.

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Speaker 9: The statement could potentially change a lot. That will be fascinating.

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Speaker 9: We get a summary economic projections as well, which will

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Speaker 9: be really interesting.

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Speaker 5: If you look at the forecast.

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Speaker 9: For PCE and the SEP from March, they had it

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Speaker 9: at two point seven percent, so that's going to move higher,

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Speaker 9: And then look at the dot plot. There's all this

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Speaker 9: question of whether or not warsh will contribute a dot,

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Speaker 9: and I think it's important to note that myrons dot

439
00:23:27,119 --> 00:23:29,760
Speaker 9: will be removed simply because he's no longer on the

440
00:23:30,240 --> 00:23:33,520
Speaker 9: FED and so his dot was very low. So by definition,

441
00:23:33,600 --> 00:23:34,960
Speaker 9: the median is going to move higher.

442
00:23:35,000 --> 00:23:38,200
Speaker 2: I don't care well. Dan Tannerbaum writes it and says,

443
00:23:38,280 --> 00:23:41,280
Speaker 2: ask Cameron what she would do with cash this morning?

444
00:23:41,600 --> 00:23:44,600
Speaker 5: Oh goodness, Look, did you deploy it into equities?

445
00:23:45,080 --> 00:23:45,280
Speaker 6: Look?

446
00:23:45,320 --> 00:23:49,360
Speaker 9: I think that given the fact that you have high inflation,

447
00:23:49,880 --> 00:23:53,399
Speaker 9: the opportunity cost of cash and inflation eating into it

448
00:23:53,200 --> 00:23:56,440
Speaker 9: is certainly higher. We've seen a lot of underperformance of

449
00:23:56,520 --> 00:24:01,160
Speaker 9: high quality equities, and that underperformance has been incredibly pronounced.

450
00:24:01,440 --> 00:24:04,199
Speaker 9: So there is opportunity, we think, in order to deploy

451
00:24:04,280 --> 00:24:07,200
Speaker 9: into higher quality equities that have lagged in this very

452
00:24:07,359 --> 00:24:07,920
Speaker 9: narrow market.

453
00:24:07,960 --> 00:24:10,560
Speaker 2: Do you have any more media opportunities this morning?

454
00:24:11,040 --> 00:24:11,359
Speaker 5: Oh?

455
00:24:11,400 --> 00:24:14,840
Speaker 9: Well, your dear friend mister Lee Brody has has commandeered

456
00:24:14,880 --> 00:24:15,720
Speaker 9: me for a ten am.

457
00:24:15,880 --> 00:24:18,680
Speaker 2: Okay, between now and ten am, you can have an

458
00:24:18,680 --> 00:24:21,080
Speaker 2: Alexis CHRISTOPHERUS New York Knicks cookie.

459
00:24:21,119 --> 00:24:22,639
Speaker 5: Oh yes, yes, I earned it.

460
00:24:22,720 --> 00:24:25,399
Speaker 2: I think you earned it. Oh yeah, you can have too.

461
00:24:26,480 --> 00:24:28,840
Speaker 2: Make up will get just straightened out for Lee Brody

462
00:24:28,840 --> 00:24:32,280
Speaker 2: here at Cameron DAWs, who thank you so much. Stay

463
00:24:32,280 --> 00:24:36,160
Speaker 2: with us. More from Bloomberg Surveillance coming up after this.

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00:24:43,440 --> 00:24:47,000
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live

465
00:24:47,080 --> 00:24:50,240
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on

466
00:24:50,320 --> 00:24:53,960
Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or

467
00:24:54,119 --> 00:24:55,760
Speaker 1: watch us Live on YouTube.

468
00:24:56,200 --> 00:24:58,520
Speaker 2: We could do an hour today with Dan tanneb. I'm

469
00:24:58,560 --> 00:25:01,440
Speaker 2: surprised it's not an Envy and le Ba Yes, as

470
00:25:01,480 --> 00:25:04,760
Speaker 2: they say, lib Bent whateversus on the southern coast of

471
00:25:04,760 --> 00:25:08,560
Speaker 2: Geneva with Oliver Wyman, truly one of the nation's experts

472
00:25:08,640 --> 00:25:14,040
Speaker 2: on sanctions. What kind of money do we give to Iran?

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00:25:14,760 --> 00:25:20,200
Speaker 2: It's constructive, good money versus a bailout, versus something that

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00:25:20,600 --> 00:25:23,480
Speaker 2: harms our sanctions strategy.

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00:25:23,800 --> 00:25:27,400
Speaker 6: We don't know. I mean, that's the whole problem. When

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00:25:27,440 --> 00:25:32,480
Speaker 6: the JPOA was signed, before the JCPOA in twenty fifteen,

477
00:25:32,480 --> 00:25:36,359
Speaker 6: that text came out almost immediately. We don't really know

478
00:25:36,600 --> 00:25:39,800
Speaker 6: what's been agreed to. We've seen rumors of a three

479
00:25:39,920 --> 00:25:44,600
Speaker 6: hundred billion dollar reconstruction fund. We've seen messages about unfrozen

480
00:25:44,640 --> 00:25:47,080
Speaker 6: assets to the tune of tens of billions of dollars.

481
00:25:47,359 --> 00:25:50,600
Speaker 6: We don't really know what money is being offered to

482
00:25:50,640 --> 00:25:52,920
Speaker 6: Iran in the form of sanctions relief other than it's

483
00:25:53,040 --> 00:25:54,040
Speaker 6: performance based.

484
00:25:54,480 --> 00:25:56,800
Speaker 2: Unfair question, but I'm going to launch it at Oliver

485
00:25:56,880 --> 00:25:59,680
Speaker 2: Wyman's best Are We Better?

486
00:25:59,800 --> 00:26:04,600
Speaker 1: Of The Bloomberg Surveillance podcast available on Apples, Spotify, and

487
00:26:04,760 --> 00:26:08,719
Speaker 1: anywhere else you get your podcasts. Listen live eg Weekday

488
00:26:09,920 --> 00:26:14,239
Speaker 1: Easter and on Bloomberg dot Com, the iHeartRadio appum tune In,

489
00:26:14,520 --> 00:26:17,680
Speaker 1: and the Bloomberg Business After. You can also watch us

490
00:26:17,760 --> 00:26:21,240
Speaker 1: live every weekday on you Sign and always on the Bloomberg.

491
00:26:21,480 --> 00:26:22,919
Speaker 6: It's it's going to be any better than where we

492
00:26:23,000 --> 00:26:26,560
Speaker 6: were twenty fifteen. It will definitely be worse. For this reason.

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00:26:27,040 --> 00:26:29,560
Speaker 6: Aroan didn't know in twenty fifteen that they could even

494
00:26:29,600 --> 00:26:32,680
Speaker 6: close the straight afore moons. You can unring that bell.

495
00:26:32,840 --> 00:26:36,640
Speaker 6: They can do this again. No deal can stop them

496
00:26:36,840 --> 00:26:39,439
Speaker 6: permanently from doing that. And really they've been able to

497
00:26:39,440 --> 00:26:42,840
Speaker 6: hold the entire American military at bay with drones and

498
00:26:42,920 --> 00:26:45,960
Speaker 6: fast attack boats. So even if this deal brings back

499
00:26:46,000 --> 00:26:48,439
Speaker 6: a day time, you've got the same government in place.

500
00:26:48,480 --> 00:26:51,879
Speaker 6: You've got an angrier Supreme leader because his relatives have

501
00:26:51,960 --> 00:26:55,280
Speaker 6: been killed it's the same government, it's the same group

502
00:26:55,560 --> 00:26:58,360
Speaker 6: in charge, and they know they can do more damage

503
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Speaker 6: than they did in twenty fifteen.

504
00:27:00,440 --> 00:27:03,680
Speaker 4: So what is a what is a good scenario here?

505
00:27:03,720 --> 00:27:06,520
Speaker 4: I mean, it seems like we've broken this thing. I

506
00:27:06,520 --> 00:27:11,000
Speaker 4: guess we own it to some degree the US. I mean,

507
00:27:11,400 --> 00:27:12,479
Speaker 4: what's a good outcome?

508
00:27:12,720 --> 00:27:15,359
Speaker 6: The good outcome is a trade starts flowing again in

509
00:27:15,400 --> 00:27:17,560
Speaker 6: whatever form we can do it. I mean, you know,

510
00:27:17,640 --> 00:27:22,080
Speaker 6: in fairness to the present, and he did reinstate this

511
00:27:22,240 --> 00:27:23,560
Speaker 6: conflict in February.

512
00:27:24,280 --> 00:27:25,840
Speaker 2: We need to get trade moving again.

513
00:27:25,880 --> 00:27:30,320
Speaker 6: You've got such a significant swath of goods helium, sulfur,

514
00:27:30,440 --> 00:27:33,679
Speaker 6: not just energy that are transiting the straight or not

515
00:27:33,840 --> 00:27:36,840
Speaker 6: transitting the straight. You've got six hundred vessels that are

516
00:27:36,840 --> 00:27:39,520
Speaker 6: basically in a holding pattern. We need goods to start

517
00:27:39,560 --> 00:27:42,480
Speaker 6: moving again for the global economy. I mean, I saw

518
00:27:42,560 --> 00:27:45,560
Speaker 6: yesterday the US oil strategic reserves are as low as

519
00:27:45,560 --> 00:27:48,239
Speaker 6: they've been since Reagan. Ye, I mean, these are not

520
00:27:48,640 --> 00:27:51,920
Speaker 6: That's how the energy market is offset prices in the US.

521
00:27:52,040 --> 00:27:55,280
Speaker 6: Why the prices haven't gone higher is because the US

522
00:27:55,320 --> 00:27:58,600
Speaker 6: has allowed access to barrels out of the strategic reserves.

523
00:27:58,760 --> 00:28:01,800
Speaker 6: We need trade to start flowing again. That's the good outcome.

524
00:28:02,119 --> 00:28:04,360
Speaker 6: What happens next is the real question.

525
00:28:04,840 --> 00:28:08,280
Speaker 4: You mentioned trade, I mean tarris have gotten pushed to

526
00:28:08,320 --> 00:28:11,120
Speaker 4: the back burner here. I mean what is the state

527
00:28:11,160 --> 00:28:14,000
Speaker 4: of global trade here today? I mean is globalization still That's.

528
00:28:13,880 --> 00:28:18,479
Speaker 2: A really good question. Thank you for the setup.

529
00:28:19,000 --> 00:28:21,520
Speaker 6: We wrote a paper with the World Economic Forum a

530
00:28:21,560 --> 00:28:24,240
Speaker 6: couple of weeks ago where we actually calculated the cost

531
00:28:24,280 --> 00:28:28,320
Speaker 6: of global trade of all of these different disruptions, including

532
00:28:28,359 --> 00:28:31,359
Speaker 6: the Trump trade policy, what China has begun doing in kind,

533
00:28:31,359 --> 00:28:34,199
Speaker 6: and other nations as well. We've already cost the global

534
00:28:34,200 --> 00:28:39,240
Speaker 6: economy about three hundred billion dollars, with a possibility of

535
00:28:39,280 --> 00:28:42,680
Speaker 6: it costing the global economy seven trillion dollars if we

536
00:28:42,720 --> 00:28:46,400
Speaker 6: go back to those Liberation Day like environments where you've

537
00:28:46,480 --> 00:28:50,000
Speaker 6: essentially halted trade between countries like the US and China.

538
00:28:50,080 --> 00:28:54,560
Speaker 6: But you've now got a situation where fragmentation is somewhat permanent.

539
00:28:54,600 --> 00:28:59,400
Speaker 6: Countries are focused on safeguarding their own economic security, which

540
00:28:59,480 --> 00:29:02,840
Speaker 6: now we've heard it economic security is national security. That

541
00:29:02,960 --> 00:29:04,600
Speaker 6: is very much true at the moment.

542
00:29:05,280 --> 00:29:08,480
Speaker 2: What would you like to see out of this? We're

543
00:29:08,480 --> 00:29:11,840
Speaker 2: going to have some announcement here. Whatever the president does,

544
00:29:12,280 --> 00:29:16,239
Speaker 2: what's the damn tannebomb and then what next that is

545
00:29:16,280 --> 00:29:17,760
Speaker 2: constructive for America.

546
00:29:17,760 --> 00:29:20,120
Speaker 6: I mean, look, I want to see trade begin moving again.

547
00:29:20,280 --> 00:29:22,600
Speaker 6: I want to see that US tax dollars are not

548
00:29:23,320 --> 00:29:25,960
Speaker 6: paying for the reconstruction of Iran, and I really don't

549
00:29:25,960 --> 00:29:29,240
Speaker 6: believe that'll end up happening. Although there's a lot of

550
00:29:29,360 --> 00:29:33,040
Speaker 6: questions out there, Iran needs something in return. I mean

551
00:29:33,080 --> 00:29:36,240
Speaker 6: that they You can't just give them nothing and say

552
00:29:36,240 --> 00:29:38,560
Speaker 6: we're going to stop bombing you and that's enough. They're

553
00:29:38,600 --> 00:29:41,960
Speaker 6: going to get access to their immobilized and frozen assets,

554
00:29:42,000 --> 00:29:45,400
Speaker 6: there's no doubt about that. The question is how and

555
00:29:45,520 --> 00:29:49,000
Speaker 6: how much and how are we monitoring their performance with

556
00:29:49,080 --> 00:29:53,000
Speaker 6: the terms of this deal, which really, up until twenty eighteen,

557
00:29:53,040 --> 00:29:55,480
Speaker 6: in the last deal they were complying with. So they

558
00:29:55,520 --> 00:29:58,520
Speaker 6: have probably a bigger trust deficit than we might at

559
00:29:58,560 --> 00:30:00,920
Speaker 6: this point. Given they did agree to deal, they were

560
00:30:01,040 --> 00:30:04,120
Speaker 6: complying with it. It got ripped up, you know, eight years ago.

561
00:30:04,280 --> 00:30:07,360
Speaker 2: Dan Tannebum, thank you so much, d'An Tannebum, Oliver Well

562
00:30:07,360 --> 00:30:09,280
Speaker 2: Iaman appreciate it. This morning