Speaker 1: This is the Bloomberg Surveillance Podcast. I'm Paul Sweeney along
Speaker 1: with Tom Keene. Join us each day for insight from
Speaker 1: the best in economics, geopolitics, finance, and investment. You can
Speaker 1: also watch the show live on YouTube. Visit the Bloomberg
Speaker 1: Podcast channel on YouTube to see the show weekday mornings
Speaker 1: from seven to ten Eastern Remark Global Headquarters at New
Speaker 1: York City. Subscribe to the podcast on Apple, Spotify, or
Speaker 1: anywhere else you listen, and as always on Bloomberg Radio,
Speaker 1: the Bloomberg Terminal, and the Bloomberg Business App. I don't
Speaker 1: know what's happening here. This economy looks darnstrong. We got
Speaker 1: some data last week, particularly the jobs front, that just
Speaker 1: shows you how strong the economy is, and it just
Speaker 1: kind of getting people increasingly saying, maybe this feeder reserve
Speaker 1: does not have to.
Speaker 2: Rush too much.
Speaker 1: Let's check in with somebody who who knows this stuff
Speaker 1: better than we do. Jennifer Lee, Senior economist and Managing
Speaker 1: director at BIMO Capital Markets. Hey, Jennifer, we got some
Speaker 1: really strong economic data last week. I mean that jobs
Speaker 1: report just kind of blew out expectations, and then we
Speaker 1: have to fit chair. Last night before the Grammy's on
Speaker 1: sixty minutes saying there were no rush to really cut
Speaker 1: rates here? What do you think the Fed is kind
Speaker 1: of doing? Here is a digest a lot of this
Speaker 1: economic data we've been getting.
Speaker 3: Well, good morning, and thanks for having me on. I
Speaker 3: got to tell you, it's like, just a few minutes
Speaker 3: after that number came out on Friday, my first thought was,
Speaker 3: are we even talking about rate cuts anymore? I mean,
Speaker 3: do we even need to? I mean, that's I'm glad
Speaker 3: that I'm not the only one I was thinking that
Speaker 3: way because I thought, what am I missing? But I
Speaker 3: think it's it's the whole you know, those keywords of
Speaker 3: being patient and what was that where that he kept
Speaker 3: using over and over again after during his press conference
Speaker 3: was being confident and being confident that inflation is coming
Speaker 3: down to two percent, etcetera, etcetera. He needs, They need
Speaker 3: a lot more confidence that you know that that inflation
Speaker 3: again is coming back down to target before they actually
Speaker 3: start to raise rates and of course or start to
Speaker 3: cut rates. And of course this kind of number throws
Speaker 3: I think everyone off, you know, off completely, so you
Speaker 3: have to sort of, you know, read it, get this
Speaker 3: a little bit. Reading the communications a little bit, but
Speaker 3: sort of keep the story on path about rate cuts coming,
Speaker 3: but just not sooner rather than not, but later, of course,
Speaker 3: not rather than sooner.
Speaker 4: Yeah, Jennifer, recalibrating those rate cut expectations. When do you
Speaker 4: think the Fed start to pull the trigger. I'm just
Speaker 4: looking at the warp function WRP on the terminal pricing
Speaker 4: in right now, in June than July and September. What
Speaker 4: are you making of that?
Speaker 3: Yes, that sounds good to me. So we haven't you know,
Speaker 3: we were again, we were debating this on Friday as well,
Speaker 3: but we're going to stick to our July rate cut
Speaker 3: for the for the first move. You know, we had always,
Speaker 3: you know, wondered what we were missing, why the market
Speaker 3: was thinking about March. But you know, I'm glad, I'm
Speaker 3: actually quite glad that fencechair pell sort of put all
Speaker 3: those concerns to rest went by dismissing March last week.
Speaker 3: But we're going to stick with our July rate cut
Speaker 3: to be the first move, and then four moves in
Speaker 3: total during the years, so one hundred basis points in
Speaker 3: total for twenty twenty four.
Speaker 1: Hey, Jennifer, you're looking around the world and it seems
Speaker 1: like the US economy is kind of the exception.
Speaker 2: Here rather than a rule.
Speaker 1: We've got continued weakness in Europe, even including the you know,
Speaker 1: obviously the most important economy over there being Germany. China
Speaker 1: just well below expectations. Does this surprise you that maybe
Speaker 1: the US is doing as well as it is, giving
Speaker 1: that its main trading partners aren't.
Speaker 3: A little bit I'm gonna say, I'm gonna make that
Speaker 3: a little bit makes me a little bit concerned. At
Speaker 3: the same time, you know, again, I'm just always wondering,
Speaker 3: you know, what's what's going to come down next? Is
Speaker 3: going to throw everybody off. But you know, it gives
Speaker 3: support to the IMF last week and the OCD this morning,
Speaker 3: you know, raising their global growth prodcasts for this year
Speaker 3: and sort of study for twenty twenty five on the
Speaker 3: back of a strong resilient US economy. Remarkably resilient, I
Speaker 3: think was what the IMF called it. And meanwtime, you know,
Speaker 3: it's and it stands and start contrast with what we're
Speaker 3: seeing in China. But you know, roughly four and a
Speaker 3: half percent growth this year in Europe, which I think
Speaker 3: is just barely just struggling to even grow. You know,
Speaker 3: we're looking for about a half percentage point increase this year.
Speaker 3: And that also shows up when you're looking at the
Speaker 3: different central banks. You've got the FED who's still again
Speaker 3: talking about great cuts but being but sort of pushing
Speaker 3: it off the start date further off into the distance.
Speaker 3: You've got the ECB debating, you know, whether or not
Speaker 3: they're probably going to go in June, by the way,
Speaker 3: and then of course the Big of England who just
Speaker 3: ditched their tightening bias and Governor Bailey said that point blank,
Speaker 3: and now they're talking about when rates are going to
Speaker 3: come down. So it's a very much different discussion is
Speaker 3: taking place around the world among central banks.
Speaker 4: Jennifer ben Emmons just told us basically kind of reiterating
Speaker 4: j Powell's point that the bigger concern, biggest concern, if
Speaker 4: you will, is geopolitical risk. How are you taking that
Speaker 4: into account? Just given the continuing wars going on across
Speaker 4: the pond, that.
Speaker 3: Is probably one of those, you know, those big sources
Speaker 3: of uncertainty that you know that all the data in
Speaker 3: the world are not going to be able to predict.
Speaker 3: You know, you've got not only just like the actual
Speaker 3: war itself, but of course the economic impact in terms
Speaker 3: of inflationary impact. You know, it may not be what
Speaker 3: we saw back you know, in terms of supply chain issues,
Speaker 3: not what we saw back in the during the pandemic,
Speaker 3: but it's still having an impact, especially with you know,
Speaker 3: very few ships going through the Red Sea nowadays and
Speaker 3: going around Africa instead to get from Europe to China
Speaker 3: or around the other way around. So that's adding another
Speaker 3: ten days last time I checked. You know, all the
Speaker 3: ships are all using oil as well, so it's all
Speaker 3: it's not an ev it's not you know, they're not
Speaker 3: using battery batteries to runder ships. So this is all
Speaker 3: potentially inflationary, not as much as what we saw back
Speaker 3: in twenty twenty, of course, but this adds a lot
Speaker 3: of pressure I think on what center banks are watching again,
Speaker 3: not only just the word themselves, but the economic impact.
Speaker 1: Jennifer, I've seen the US dollars kind of rallying here
Speaker 1: a little bit in the last several weeks, I guess,
Speaker 1: expectations that maybe the FED won't be as aggressive as
Speaker 1: maybe we originally thought and cutting rates here. How do
Speaker 1: you think about the currency markets and the dollar here?
Speaker 3: So the current America has been like the one of
Speaker 3: the most toughest things to call over the past few years.
Speaker 3: It's it's been always, at least last few years, it
Speaker 3: has been very much of a strong US dollar story.
Speaker 3: Now this year, we're still looking for the US dollars
Speaker 3: to weekend some much just you know, in theory, when
Speaker 3: you know the Fed starting to cut rates, that should
Speaker 3: take some of the wind out of the US dollars sales.
Speaker 3: But you know, I think I said this before. I
Speaker 3: think it's all about perception. If all the economies around
Speaker 3: the world are slowing, but the US is slowing the
Speaker 3: leads or at the slowest pace, if you know what
Speaker 3: I mean. You know, I think that would actually give
Speaker 3: support to the US dollars. So even though it's going
Speaker 3: to you know, we look for the green back to
Speaker 3: weaken somewhat, I don't think it's gonna be weakening as
Speaker 3: much as we had originally anticipated, say a half a
Speaker 3: year ago.
Speaker 4: With payrolls out of the way, with as Paul pointed out,
Speaker 4: uh J. Powell kind of kicking off Grammy's Night, what's next?
Speaker 2: What is on? What are you looking forward to?
Speaker 4: What do you have in the days weeks ahead that
Speaker 4: can really drive this market.
Speaker 3: I think it's going to I mean, it's not like
Speaker 3: a work a record, but it's all going to be
Speaker 3: coming back down to data, all the keys, all the
Speaker 3: key numbers. We can't only just look at, just like
Speaker 3: with payrolls, you know, you can't just look at this
Speaker 3: one report on its own. But it's for the inflation
Speaker 3: data for sure. We're looking at CPI and even producer
Speaker 3: prices just as an indicator of prices coming through the pipeline,
Speaker 3: and certainly the PC de flavors, and of course consumer spending,
Speaker 3: the all important consumer spending numbers again not just retail sales,
Speaker 3: but the all inclusive PC report, just to see how
Speaker 3: broader spending patterns are. You know, I think overall, you
Speaker 3: as long as you have strong jobs, you're still going
Speaker 3: to see solid fundamentals below. The US consumer, you know,
Speaker 3: they don't have to spend spend all their all their
Speaker 3: hard ar and serving the savings right away. But at
Speaker 3: the same time, it gives them support that it puts
Speaker 3: them away for a rainy day, and that will help them,
Speaker 3: you know, that will actually help support the US economy
Speaker 3: going forward, as opposed to you know, just having everything
Speaker 3: spent all in one quarter.
Speaker 1: All right, Jennifer, thank you very much, As always, Jennifer Lee.
Speaker 1: She's a senior economist managing director of PEMO Capital Markets,
Speaker 1: located up there in Toronto. Nobody better to talk to
Speaker 1: geopolitics than Mick Molroy. He's a co founder of the
Speaker 1: Lobo Institute. The Lobo Institute consults, advisors and teachers on
Speaker 1: current and future conflicts.
Speaker 2: His resume is just extraordinary.
Speaker 1: Former Deputy Assistant Secretary of Defense for the Middle East
Speaker 1: at the US Department of Defense, former Paramilitary Operations officer
Speaker 1: at CIA, I've heard of them, and a former US
Speaker 1: Marine Infantry officer for like I know, twenty six years.
Speaker 1: We thank him very much for his military service. McK
Speaker 1: moulroy joins us. Hey, Mick, it's heating up. Perhaps. I
Speaker 1: think the risk for a lot of folks shares we
Speaker 1: think about the Middle East is seems like the scope
Speaker 1: heare might be expanding. Where are we right now and
Speaker 1: what are the risks do you think in that part
Speaker 1: of the world.
Speaker 5: Great to be with you, guys, and I just returned
Speaker 5: from Israel, where I was in a lot of discussions
Speaker 5: on these things, these topics, and of course Secretary Blanken
Speaker 5: is in the region right now and he's going to
Speaker 5: be pushed on several things. Of course, specifically to the
Speaker 5: war in Gaza. He's going to be talking about the
Speaker 5: needs of transition to a lower intensity combative situation, and
Speaker 5: of course Israel still has their strategic aim to military
Speaker 5: league defeat Hamas, but that is not going to be
Speaker 5: done anytime soon. He's going to be talking about the
Speaker 5: need for increasing umanitarian aid. And then to the point
Speaker 5: of her question, this is a conflict that has already
Speaker 5: expanded across the region with the Huthis attacks in the
Speaker 5: Red Sea, in the Gulf of Aden and the near
Speaker 5: continuous attacks on our forces in Syria and Iraq. That
Speaker 5: might continue and might have to be even more of
Speaker 5: a substantial response that we've seen in so far. So
Speaker 5: there is and then lastly, i'd say when it comes
Speaker 5: to expansion, there's always a concern of Hezbollah in Lebanon
Speaker 5: and expanding that to include two front war in Israel.
Speaker 5: So this is something that is it's a tinderbox. I
Speaker 5: would argue that it's already happening. The question is whether
Speaker 5: we can invent this from becoming a war that's directly
Speaker 5: between the United States in Iran, and that's to be determined.
Speaker 4: I would say, yeah, what canon should be done in
Speaker 4: your view to prevent that from happening.
Speaker 5: So there's a fine balance when it comes to our
Speaker 5: responses to these attacks, for example, both against commercial shipping
Speaker 5: and our very naval forces that are there, and then
Speaker 5: these continuous attacks against our positions in Iraq and Syria.
Speaker 5: I think the administration has now decided that they have
Speaker 5: to be more forceable because they're obviously not reaching the
Speaker 5: level deterrence that they wanted, and those attacks are now
Speaker 5: going after I think IRGC positions, that's the Iranian Special
Speaker 5: Operation Forces that works with the APPROXY forces in Syria
Speaker 5: and Iraq, but it might eventually include targets in Iran.
Speaker 5: And I think the non answer from National Security Advisor
Speaker 5: Sullivan recently on the television when he was asked that
Speaker 5: question is means to me that they are looking at
Speaker 5: that in the future if they cannot do deterrence any
Speaker 5: other way.
Speaker 1: In terms of deterrence, Mick, you know better than anybody
Speaker 1: kind of the assets the US has in that part
Speaker 1: of the world. Do we have the assets and capabilities
Speaker 1: to really deal a serious blow to the Huthis and
Speaker 1: try to get some control back in that part of
Speaker 1: the world, whether it's the Red Sea in other parts.
Speaker 5: Yes, we do. We have not only the assets that
Speaker 5: we've pushed to the region, but we have considerable assets
Speaker 5: for example in Ledade, in Qatar, in Baharain with our
Speaker 5: fifth Fleet of Central Command. And we of course have
Speaker 5: the ability to project power better than any country in
Speaker 5: the world, perhaps in history, so we can we have
Speaker 5: the assets that we can certainly surge to get more
Speaker 5: assets there. The question is what is the balance between
Speaker 5: responding forcefully enough to get Ran to change its calculation
Speaker 5: when it comes to their support for proxies. And yes,
Speaker 5: they have different levels of controls of each of these
Speaker 5: proxy forces, but ultimately they keep providing the very weapons
Speaker 5: that are being launched at our troops. So I think
Speaker 5: the indicator of whether we have reached deterrence is if
Speaker 5: that stops. And I also would say that if it continues,
Speaker 5: that means they intend these weapons to be used against
Speaker 5: our forces, which to me means they're complicit in these attacks.
Speaker 4: And Nick, we were talking to one of our DC
Speaker 4: editors a minute ago about some of the aids and
Speaker 4: hurdles that are going on on Capitol Hill. How does
Speaker 4: that impact what's going on with Israel, Ukraine, Taiwan and China.
Speaker 5: So they are tying of course, as you know, a
Speaker 5: lot of these security assistant packages together. So Ukraine absolutely
Speaker 5: need to continue to support Ukraine. They are decimating one
Speaker 5: of our most significant adversaries in Russia, right, So that
Speaker 5: is something that I think is clearly at the United
Speaker 5: States interest. It isn't charity. Obviously we should also support
Speaker 5: partners because that's what good partners do. But this is
Speaker 5: also on our interest and that shows, like Taiwan and China,
Speaker 5: that we are a good partner and we stick with
Speaker 5: our partners. So I think how we act with Ukraine
Speaker 5: will have an effect on China and a Taiwan situation.
Speaker 5: And of course the aid specifically for the Middle East,
Speaker 5: it's both for Israel and at last I've read is
Speaker 5: like a ten billion dollar ear mark for Gaza when
Speaker 5: it comes to humanitarian aid, and I would assume that
Speaker 5: it would also be for reconstruction after the end of
Speaker 5: combat operations. All of those things are incredibly important both
Speaker 5: to support a partner in Israel, but also to really
Speaker 5: recognize the level of a human crisis. That's going on
Speaker 5: in Gaza right now. There needs to be much more
Speaker 5: humanitarian aid going in there, and it's going to be
Speaker 5: needed for the foreseeable future. But there also needs to
Speaker 5: be a reconstruction effort, as Gaza itself has been essentially decimated.
Speaker 1: Heynck, I'm probably like a lot of people in that
Speaker 1: the news flow coming out of the Middle East has
Speaker 1: kind of pushed Ukraine on the.
Speaker 2: Back burner a little bit.
Speaker 1: Can you give us an updated assessment from you know,
Speaker 1: your sources about how this thing can play out here?
Speaker 1: I mean, are we gearing up for another spring offensive?
Speaker 1: I'll be back into that narrative. Is there any sense
Speaker 1: that there can be some movement? It's been such a
Speaker 1: long time now.
Speaker 5: Right so we are at somewhat of an impass, somewhat
Speaker 5: of a stalemate, if you will. But it's important to
Speaker 5: point out a stalemate doesn't mean that the fighting hasn't subsided.
Speaker 5: There's considerable fighting going on in Russia is losing a
Speaker 5: lot of soldiers and equipment every day. I think what
Speaker 5: Putin is looking at right now. President Putin's looking at
Speaker 5: our level of support and what if anything would change
Speaker 5: if they're in the presidential election. That is what he's
Speaker 5: hoping on that we cut our aid. Obviously, the European Union,
Speaker 5: our European allies have stepped up and need to continue
Speaker 5: to step up, but the United States also needs to
Speaker 5: match that. It's very imperative that I think the Ukrainians
Speaker 5: get these significant weapons systems like the F sixteen fighter jet,
Speaker 5: like long range artillery the attackers. That is really what's
Speaker 5: needed for them to have an effect, be able to
Speaker 5: go and continue on this counter offensive and take back
Speaker 5: to Rain. If they don't have that, it's essentially going
Speaker 5: to continue in this stalemate. It's going to be a
Speaker 5: tick to tack for a long time, which of course
Speaker 5: we don't want. We want them to start making gains.
Speaker 5: We want to help them start making gains so they
Speaker 5: push putin into a corner where he is looking for
Speaker 5: an exit ramp right now, he's waiting to see what
Speaker 5: we do.
Speaker 1: Yeah, all right, very good, Nick, Thanks so much for
Speaker 1: joining us. Always appreciate getting the benefit of your wisdom
Speaker 1: and experience. Mick Molroy, he's a co founder of the
Speaker 1: Lobo Institute, a career full of international experience here on geopolitics,
Speaker 1: and boy, there's a lot to talk about.
Speaker 2: Right now, Let's go to Laurie Cavacina or Cavasina.
Speaker 1: She's head of US equity strategy at OURBC Capital Markets
Speaker 1: Royal Bank at Canada.
Speaker 2: But we've got the Canadian banks covered today.
Speaker 1: Hey, Laurie, thanks so much for joining us here. You know,
Speaker 1: I'd love to get your perspective on the market snapshot
Speaker 1: right here. We had a really strong November December for
Speaker 1: risk guss at stocks, bonds ripping, a decent January. I mean,
Speaker 1: let's let's let's be honest. Do I just keep riding
Speaker 1: this thing? Do I just keep writing the big names
Speaker 1: that have worked for me?
Speaker 2: What do I do here?
Speaker 4: Right?
Speaker 6: So thanks for having me look. I think to some
Speaker 6: extent depends on your time horizon and your risk profile.
Speaker 6: I think the big move in November December was absolutely deserved.
Speaker 6: We baked in a lot of good news on twenty
Speaker 6: twenty four, including the idea that the FED is going
Speaker 6: to start cutting I think that January we saw, you know,
Speaker 6: sort of the markets do well for interesting reasons. We
Speaker 6: saw the bond yi old move back up if you
Speaker 6: look at the ten year and that really supported the
Speaker 6: growth side of the trade, which is the bigger you know,
Speaker 6: market cap weight in the index. So it kind of
Speaker 6: brought an end to the broadening out that had gotten
Speaker 6: people excited in November and December. But we went up
Speaker 6: for slightly different reasons, and I don't actually think that
Speaker 6: earnings has given us too much of a reason to
Speaker 6: go up. Nevertheless, the market has kind of muddled through.
Speaker 6: I think where we sit today is sentiments at a
Speaker 6: particularly sort of stretched point. That being said, my work
Speaker 6: does suggest that valuation should be supportive at the end
Speaker 6: of the year, that as inflation continues to moderate, if
Speaker 6: we get better economic data in the back half of
Speaker 6: the year and interest rates come down just a little bit,
Speaker 6: we can support a pretty robust pe multiple in the market.
Speaker 6: So I think we may have to ride out some volatility.
Speaker 6: I think we're going to pay the price for all
Speaker 6: that you know, big move that we had in November
Speaker 6: through January. But I think you wouldn't want to buy
Speaker 6: that dip. So again, are you going to try to
Speaker 6: play for every little tactical turn or you're just going
Speaker 6: to kind of, you know, ignore the noise. Most people
Speaker 6: I talked to you are probably in the latter camp, and.
Speaker 4: Laurier when you're looking at buying the dip is that
Speaker 4: on individual stocks, are we looking at buying? You know,
Speaker 4: the cues if we see the NASDAC come under some pressure.
Speaker 6: So you know, I've given edge to small caps and
Speaker 6: value on the year, and I do think that the
Speaker 6: Magnificent seven, I guess now we're talking about the top five.
Speaker 6: You know, I think they've outperformed for very good reasons.
Speaker 6: That being said, I think valuations are highly stretched. If
Speaker 6: you look at the top ten names in the S
Speaker 6: and P five hundred, we're sitting at peak valuation. If
Speaker 6: you look at positioning, crowding on the CFTC data, if
Speaker 6: you basically just look at what is owned in the
Speaker 6: Nasdaq futures in terms of byside positioning, we've actually broken
Speaker 6: above twenty thirteen twenty fifteen highs. So I think we
Speaker 6: look quite stretched. And I think you look at things
Speaker 6: like small caps where the valuations are about average, You've
Speaker 6: got positioned at three year highs but nowhere close to
Speaker 6: all time highs. I think you've got a lot more
Speaker 6: room there to run. I do think for that part
Speaker 6: of the market and this broadening out to really work,
Speaker 6: you've got to see economic expectations improved. So far, we're
Speaker 6: only seeing people really inch up one que numbers. We're
Speaker 6: not really seeing a broader improvement in twenty twenty four
Speaker 6: numbers as a whole, and you really need the ladder
Speaker 6: to get that broadening trade to work. I'm in the
Speaker 6: camp it probably can simply because I think economics xations
Speaker 6: have been consistently too low and I think we're in
Speaker 6: kind of a post crisis PTSD in the economics community.
Speaker 1: So, Laurier, when you screen this market here, are there
Speaker 1: any sectors that kind of jump out of you as
Speaker 1: either really attract them on a momentum basis of value
Speaker 1: basis kind of what are you talking to your clients
Speaker 1: about these days?
Speaker 6: So I think sectors are really tough. I think that
Speaker 6: you're more looking at opportunities in individual names and industries
Speaker 6: within sectors. That being said, I'm a strategist, so it's
Speaker 6: my job to pick sectors. I still think financials look
Speaker 6: really interesting here, and the reality is is that the
Speaker 6: market is not going to broaden out unless the financials participate.
Speaker 6: But I think you've got good valuations. You've actually started
Speaker 6: to see improving earning's revision trends, and this is also
Speaker 6: a sector that does well when the animal spirits are
Speaker 6: coming back in the economy. I would also point people
Speaker 6: to things like utilities and healthcare if we're really going
Speaker 6: to have start a shorter term pullback in the market.
Speaker 6: I think you've got pretty reasonable valuations there. And I
Speaker 6: also like energy as a hedge in my portfolio. It's
Speaker 6: a sector that really, you know, is a beneficiarrea of
Speaker 6: ramping inflation and ramping interest rates. We think those things
Speaker 6: are going to reverse this year, but if there's a
Speaker 6: risk that we're wrong, we love the valuations there and
Speaker 6: just kind of putting all macro aside. We love the
Speaker 6: dividend yields. We think there's a lot more discipline in
Speaker 6: that part of the market, and so there's a lot
Speaker 6: more interesting stuff at the stock level if you can
Speaker 6: kind of get away from some of the big macro trades.
Speaker 4: Well, looking at you're mentioning, you know, financials and energy,
Speaker 4: different kind of drivers there.
Speaker 2: Right.
Speaker 4: One of the things we were talking about was the
Speaker 4: exposure to China and how china kind of revamp could
Speaker 4: drive the likes of energy and some other parts of
Speaker 4: the market.
Speaker 2: How do you think about.
Speaker 4: Deploying capital here in the US with some of those
Speaker 4: geopolitical concerns and uncertainty still at hand.
Speaker 6: So I would say whenever China comes up as a
Speaker 6: big risk factor, it feels like tech is the first
Speaker 6: area people look at in terms of having some exposure
Speaker 6: in the risk and a second one, frankly is materials.
Speaker 6: And that's because if you run screens of companies with
Speaker 6: high exposure to China, there aren't a ton of you know,
Speaker 6: not every company discloses all their country level revenue, but
Speaker 6: we see we tend to see those sectors pop up
Speaker 6: quite a bit. So I would say those are two
Speaker 6: areas to think about. I think consumer staples is another
Speaker 6: one that you can think about. We often, you know,
Speaker 6: see greater disclosure on the geographical revenue in that space
Speaker 6: as well.
Speaker 1: We're about two hundred and thirty companies out of the
Speaker 1: S and P five hundred have reported here any any
Speaker 1: kind of themes you see here.
Speaker 2: LORII, so far.
Speaker 3: Sure.
Speaker 6: So we read a lot of transcripts. On my team,
Speaker 6: we've been writing up, you know, sort of what what
Speaker 6: we we think is going on, you know, at the
Speaker 6: end of each week, and we'll piece it all together
Speaker 6: at the end. But I would say the most interesting
Speaker 6: thing I've seen is number one commentary around the FED
Speaker 6: generally seems to be emphasizing the positives associated with the
Speaker 6: fed's pivot in the fall or or you know, the
Speaker 6: fourth quarter, or the benefits of just having greater certainty
Speaker 6: in the monetary policy outlooks. So that's one thing that's
Speaker 6: jumped out. The second thing that's hunt out is that
Speaker 6: all the macro backdrop outlook discussions there are kind of
Speaker 6: two camps, the people who are tilting positive and the
Speaker 6: people who are tilting negative. I was kind of surprised
Speaker 6: one company last week, actually, I mean, they just kind
Speaker 6: of went down the deep rabbit hole of all the
Speaker 6: risks we've got out there and used the word dismal
Speaker 6: to describe the whole thing, and that seemed a little
Speaker 6: extreme to me. I think things are a little bit
Speaker 6: more balanced, But I'll tell you at the beginning of
Speaker 6: last week, I was sort of struck by the fact
Speaker 6: that clients I was talking to seemed a little bit
Speaker 6: more in doubt on the soft landing thesis. And that's
Speaker 6: been a shift from what I've observed in recent months,
Speaker 6: where it felt like the soft landing crowd was really
Speaker 6: growing and I just sort of looked at all these
Speaker 6: comments that were coming in from the companies and saying, well,
Speaker 6: the fact that corporate America is not exactly on the
Speaker 6: same page and you're just getting such a murky, muddled
Speaker 6: outlook discussion. I felt like that was starting to take
Speaker 6: a toll on investors themselves. Then, of course, we got
Speaker 6: just a rash of positive economic data mid to late weeks,
Speaker 6: So we'll see what my conversations are like this week.
Speaker 6: But I do think it's had an impact, to be honest.
Speaker 1: You know, Laurie, just crossing the Bloomberg terminal right now
Speaker 1: is a headline SNAP plans to cut global headcount by
Speaker 1: about ten percent, And it seems like we've had, you know,
Speaker 1: more than a handful of these announcements over the last
Speaker 1: several weeks, and it kind of reminds me of this
Speaker 1: exact time last year, when we had some of these
Speaker 1: big tech companies announcing layoffs and then at the end
Speaker 1: of the day, the job market was just as strong
Speaker 1: as it's ever been. So when you see an headline
Speaker 1: like SNAP cutting global headcamp by ten percent, plus all
Speaker 1: the other headlines we've seen over the last several weeks,
Speaker 1: how do you kind of put that into context.
Speaker 6: It's a great question we did. We spend a lot
Speaker 6: of time looking at the challenger data, and I'll just
Speaker 6: give you the disclaimer, I'm not an economist, so don't
Speaker 6: hold my feet to the fire. But you know what
Speaker 6: we've kind of stumbled on something last year, which is
Speaker 6: that if you looked at the industrial sector, the layoffs
Speaker 6: were pretty minimal. And we think that was because back
Speaker 6: in COVID in twenty twenty, they did GFC style you know,
Speaker 6: or sized layoffs, similar kinds of layoffs to what they
Speaker 6: did back in the tech bubble. Just really some of
Speaker 6: the most extreme periods of layoffs that have happened in industrials.
Speaker 6: The COVID layoffs match that. But then you look at financials,
Speaker 6: you look at technology, these sectors where they sent everyone
Speaker 6: to work from home during the pandemic, they don't really
Speaker 6: do that many layoffs. And so we think whether we
Speaker 6: were looking last year in the first quarter at all
Speaker 6: the tech layoffs, or if we're looking at the tech
Speaker 6: and financial layoffs that have been going on, you know,
Speaker 6: so far this year, it's really because there wasn't a
Speaker 6: lot of cleanup in those industries that happened during the
Speaker 6: COVID period, so there's kind of a pin up need
Speaker 6: to restructure and right size the businesses. I am watching
Speaker 6: what's going on with industrials really closely. We're not seeing
Speaker 6: the major breakout in those layoffs yet, but we do
Speaker 6: want to keep an eye on that because we have
Speaker 6: had a few companies come out and talk about that.
Speaker 6: For now, the Challenger data is telling me to kind
Speaker 6: of ignore the news headlines a little bit, that it's
Speaker 6: still fairly concentrated in these sectors that had some overdue cleanup.
Speaker 6: But again, we do have to watch you just make
Speaker 6: sure that's not brought me out.
Speaker 4: Yeah, no, you mentioned the potential for overdue cleanup. What
Speaker 4: are the things that had come up on a call
Speaker 4: with an investor a few weeks ago? Was he basically said,
Speaker 4: in his view, these job cuts are a way of
Speaker 4: expanding margins. So that's one thing to keep an eye on.
Speaker 2: All Right, Lurie, thanks so much for joining us.
Speaker 1: Lori Calvacina, she is head of equity strategy at RBC
Speaker 1: Capital Markets. All Right, today's firm pritage headlines, Alis Matteo,
Speaker 1: what stories do you have for us here this morning?
Speaker 7: Sure, we're starting with the Financial Times. It says Iran
Speaker 7: using two of the UK's biggest banks to evade sanctions. Now,
Speaker 7: this is documents that the Financial Time saw. It says
Speaker 7: Lloyd's and Santanti UK it provided accounts of bridges to
Speaker 7: British front companies secretly owned by a sanctioned Iranian petrochemicals
Speaker 7: company that was actually based near Buckingham Palace. Now let
Speaker 7: me break it down for you. It's petrochemical commercial company
Speaker 7: and that was part of a network that the US
Speaker 7: accuses of raising hundreds of millions of dollars for part
Speaker 7: of the Iranian Revolutionary Guards Corps and also working with
Speaker 7: Russian intelligence agencies to raise money for Iranian proxy militias.
Speaker 7: This is a lot to take in. But the petrochemicals company,
Speaker 7: it's British subsidiary. They've been under US sanctioned since November
Speaker 7: of twoenty eighteen. That's what they're looking at. So these
Speaker 7: documents are showing that since then, this company has used
Speaker 7: companies in the UK to receive funds from Iranium front
Speaker 7: as and he's in China while hiding their real ownership
Speaker 7: through quote trustee agreements. It gets a little confusing, but
Speaker 7: the main gist of this is it's all coming because
Speaker 7: you have the Royal Air Force. They're joining the US
Speaker 7: air strikes against Iranian back hoothy rebels and Yemen. So
Speaker 7: it's a lot to take in as this right now
Speaker 7: is going on.
Speaker 1: I mean, these are real banks, real names. I mean,
Speaker 1: you know Lloyd's Banking Group. Sometimes they're the Bigture. I mean,
Speaker 1: these are major institutions here. So they're supposed to be
Speaker 1: complying with these sanctions, correct, correct.
Speaker 7: But that's they were supposed to be since twenty eighteen.
Speaker 7: But now they're saying, well that might not have happened.
Speaker 1: And they're saying basically, we can't come in on individual accounts.
Speaker 2: Right, okay, all right, well very good. What's next?
Speaker 7: All right, so we're going to the Wall Street Journal.
Speaker 7: They're talking about Spotify accounts. This I didn't know. So
Speaker 7: if you have a shared music account Loggin because you
Speaker 7: don't want to dish out the extra cash for the
Speaker 7: premium accounts. It's caused a lot of family battles because
Speaker 7: when you play your music. Let's say I'm listening to
Speaker 7: some soothing, you know whatever music, and all of a sudden,
Speaker 7: Metallica starts blasting, you know it switches things over. It's
Speaker 7: because someone on your shared account change the music.
Speaker 2: Do you have Spotify?
Speaker 7: I don't have Spotify. I have I have the free account,
Speaker 7: so so I can't relate.
Speaker 2: He's the demo here?
Speaker 4: Do you got too much money on it? If the
Speaker 4: Apple Family Plan? Because so with Spotify, my understanding is
Speaker 4: if my dad plays Metallica, Metallica comes from my phone.
Speaker 4: With Apple, if we share an account and I'm listening
Speaker 4: to say Zach Bryan, my dad starts playing Metallica, my
Speaker 4: music stops playing. So after going back and forth and
Speaker 4: I'm paying for it, I was kind of like, hey, dad,
Speaker 4: you've covered a lot of things.
Speaker 2: I got the Family Plan.
Speaker 4: Just make sure you use it because it's fifteen bucks
Speaker 4: a month, so it's not nine ninety nine.
Speaker 1: So all right, so you have Apple, I have Apple
Speaker 1: on Apples and so if one if a feat is
Speaker 1: playing for one person, you as the second person, don't
Speaker 1: get your feet, you get nothing.
Speaker 4: So if we're both.
Speaker 1: So there's only one feet at a time, it kept
Speaker 1: me simultaneous feeds.
Speaker 2: Going to all the family members, so I'd be on
Speaker 2: a walk.
Speaker 4: Well, with the family Plan, you're playing paying for separate accounts,
Speaker 4: so it's slightly different.
Speaker 6: But if we're.
Speaker 4: Sharing my individual sharing individual, and I'm listening to music
Speaker 4: on a walk and my dad presses play, he overrides me,
Speaker 4: and if I press play, I override him.
Speaker 1: Well, that's probably the way Apple and Spotify want it,
Speaker 1: because they don't want you sharing, right, they.
Speaker 4: Want you to pay for the bat pay for the
Speaker 4: family plan. The dumb thing is is that I pay
Speaker 4: for Apple Music and my fiance pays for Spotify because
Speaker 4: she likes their playlists. So we're supporting two companies spending
Speaker 4: Probably I don't want to know what the banker in
Speaker 4: you says, but I probably shouldn't.
Speaker 5: Be doing well.
Speaker 1: Yeah, well, I listened to free over there radio since
Speaker 1: I took fifteen radio companies public back in the day.
Speaker 1: But and maybe a little satellite serious XM kind of thing.
Speaker 2: That's it. But I'm not paying. I don't know.
Speaker 7: It's just causing problems because you have like yoga instructors
Speaker 7: who are doing a class and then all of a sudden,
Speaker 7: their husband clicks in and their yoga class.
Speaker 1: That's a great part of that delicious though.
Speaker 2: That's my question.
Speaker 1: How would you Well, she's the other story in the
Speaker 1: Wall Street Journal this yoga instructor kicked her husband off
Speaker 1: or both boyfriend off. You've done because anyway she came
Speaker 1: and your dad exactly all right, Now I am. I
Speaker 1: stand for my five hour shift and radio, yes, five hours,
Speaker 1: you know, breaking every union rule in the book.
Speaker 2: And I think that's better. But I don't know what
Speaker 2: do you? What do you got?
Speaker 1: You got a story here from the Washington Post, And
Speaker 1: you're right, it is.
Speaker 7: Better because I always admired you for that.
Speaker 1: I was like, man, I when I was managing a
Speaker 1: business in Bloomberg, we had to pay. There's a period
Speaker 1: of time, maybe six, seven, eight, nine years ago when
Speaker 1: all the rage was getting the stand up desk, so
Speaker 1: everybody wanted to stand this. That's fine, but it costs
Speaker 1: me like two three thousand dollars to my budget every
Speaker 1: time we had to install. And I'm like, and the
Speaker 1: kids would do it for like a day or two
Speaker 1: then go back to sitting.
Speaker 7: But it is, it's and the research shows it. So
Speaker 7: this is from the Washington Post. It says people who
Speaker 7: spend most of their worktime sitting were found to be
Speaker 7: at least sixteen percent more likely to die earlier than
Speaker 7: normal than those who don't. Sit as much, and so
Speaker 7: the sitters there risk from dying cardi vascular disease. It
Speaker 7: was thirty four percent higher than non sitters. So you
Speaker 7: see the difference there. How can you help well, they
Speaker 7: say to add more leisure time physical activity, So go home,
Speaker 7: maybe hop on the peloton for it says fifteen to
Speaker 7: thirty minutes a day. Back and help out all right,
Speaker 7: standing tables. Like you were talking about taking a break
Speaker 7: every thirty minutes. I know my watch tells me when
Speaker 7: I have.
Speaker 6: Just when I'm back.
Speaker 7: When I'm standing too much.
Speaker 1: I'll tell you, hey, Rich, I get take a break, buddy.
Speaker 7: Yeah, you can tell them take a break, and it
Speaker 7: says take a break every thirty minutes, Paul.
Speaker 2: So there, yeah, go okay, it's well Tom he comes back.
Speaker 1: So we're gonna have to work that into the holes.
Speaker 1: Are you a stand or standing.
Speaker 4: In the standing desk? I bounce back and forth. I
Speaker 4: do want one of the treadmills, though. I have friends
Speaker 4: who are with the big work from home. They have
Speaker 4: the treadmill. You have it go like a mile and
Speaker 4: a half an hour, so nothing too crazy, but you're
Speaker 4: getting steps in.
Speaker 1: This is the Bloomberg surveillance podcast, bringing you the best
Speaker 1: in economics, geopolitics, finance, and investment. You can also watch
Speaker 1: the show live on YouTube. Visit the Bloomberg Podcast channel
Speaker 1: on YouTube to see the show weekday mornings from seven
Speaker 1: to ten Eastern from our global headquarters in New York City.
Speaker 1: Subscribe to the podcast on Apple, Spotify, or anywhere else
Speaker 1: you listen, and as always on Bloomberg Radio, the Bloomberg Terminal,
Speaker 1: and the Bloomberg Business app.