WEBVTT - Bloomberg Surveillance TV: November 11th, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.480 --> 0:00:18.720 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.920 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:37.479 Terminal and the Bloomberg Business app. Ohmar Aguilar, Schwabasse and 0:00:37.560 --> 0:00:40.519 Management writing, we are getting some corrections within the frothy 0:00:40.560 --> 0:00:43.400 areas of the market. It is time to use volatility 0:00:43.680 --> 0:00:47.640 to rebalance exposures to reduce concentration. I'm joined us now 0:00:47.680 --> 0:00:49.960 for more. I'm always good to get your thoughts on things, sir. 0:00:50.040 --> 0:00:52.760 Let's get into it. What would you be reducing right now? 0:00:52.880 --> 0:00:54.320 What would you be taking advantage of? 0:00:55.160 --> 0:00:59.480 Well, we have been experiencing one of the biggest and 0:00:59.640 --> 0:01:03.440 largest momentum markets that we have had since the late nineties, 0:01:04.080 --> 0:01:07.039 and think, you know, the exposures that people may have 0:01:07.080 --> 0:01:10.680 had to the traditional that momentum you know type trades 0:01:10.800 --> 0:01:14.160 are very high, and I think we have been encouraging 0:01:14.200 --> 0:01:17.120 clients over the last you know, two months to try 0:01:17.120 --> 0:01:20.120 to use this periods of volatility to try to reduce 0:01:20.200 --> 0:01:24.040 exposure to that momentum trade. We have seen these, you know, 0:01:24.120 --> 0:01:27.160 that can actually go very quickly as you know, the 0:01:27.240 --> 0:01:31.319 AI trade expending on capex and increasing capex. Continue to 0:01:31.520 --> 0:01:34.679 just emphasize that sort of megacap you know, dominance that 0:01:34.760 --> 0:01:37.200 we have seen. You know, one of the statistics that 0:01:37.240 --> 0:01:40.480 we keep on showing is that you know, only seventeen 0:01:40.560 --> 0:01:42.919 percent of stocks within the S and P five hundred 0:01:42.959 --> 0:01:45.680 have been able to outperform the market this year. 0:01:46.120 --> 0:01:48.280 So that tells you a lot of that level. 0:01:48.000 --> 0:01:51.360 Of concentration that you know, if we go back in history, 0:01:51.560 --> 0:01:53.560 you know, when it comes down to momentum trades, they 0:01:53.600 --> 0:01:55.920 tend to be online very very quickly, and we have 0:01:56.000 --> 0:01:58.880 seen some of these headwachs already over the last. 0:01:58.880 --> 0:01:59.520 Couple of months. 0:01:59.760 --> 0:02:02.400 I've heard this sycrament repeatedly throughout the whole year, and 0:02:02.480 --> 0:02:04.800 if I listen to people as they offer that encouragement 0:02:04.840 --> 0:02:06.280 to move out of these names, I would have missed 0:02:06.280 --> 0:02:08.480 out on the rally because that's what supported the index. 0:02:09.040 --> 0:02:10.760 What are you suggesting paper should buy instead? 0:02:11.919 --> 0:02:14.160 Well, I think if you look at the fundamentals of 0:02:14.200 --> 0:02:16.960 the economy and you look at where what is happening. 0:02:17.200 --> 0:02:19.639 You know, we have been encouraging clients to just take 0:02:19.680 --> 0:02:22.520 this Barbelle approach and take a look at the fundamentals 0:02:22.520 --> 0:02:24.240 of what is the corporate. 0:02:23.880 --> 0:02:25.960 Earnings growth that you see on these areas. 0:02:26.200 --> 0:02:28.280 You know, normally what you see in this you know, 0:02:28.440 --> 0:02:31.480 probably not very clear economic picture because of the lack 0:02:31.520 --> 0:02:34.200 of data. You know, we have seen the softness in 0:02:34.240 --> 0:02:36.440 the labor market, We have seen softness in the house 0:02:36.560 --> 0:02:39.880 and market. We clearly see this deceleration of economic growth 0:02:39.880 --> 0:02:43.080 with inflation stays you know high, and what that would 0:02:43.120 --> 0:02:46.079 recommend is for people to start moving into the cyclical 0:02:46.120 --> 0:02:48.600 part of the market and being more defensive. We're not 0:02:48.639 --> 0:02:51.200 necessarily thinking that the economy is going to crush or 0:02:51.280 --> 0:02:52.960 is going to go into very hard landing. 0:02:53.200 --> 0:02:56.919 But clearly we see you know, the potential. 0:02:56.639 --> 0:02:58.520 For these to go to US law down and only 0:02:58.600 --> 0:03:01.600 companies with a strong balance will do. We actually saw 0:03:01.639 --> 0:03:04.640 on the performance of dividend payer stocks you know, this year. 0:03:04.840 --> 0:03:06.960 This is the this is the opportunity to take a 0:03:06.960 --> 0:03:08.520 look at those companies that can. 0:03:08.520 --> 0:03:09.400 Actually do well. 0:03:09.440 --> 0:03:11.680 So starting to go into that part of the market 0:03:11.680 --> 0:03:14.560 is started, well, interest rates were probably coming down if 0:03:14.600 --> 0:03:17.480 they already started the FED, you know, reducing rates. 0:03:17.600 --> 0:03:20.800 That also provides a little bit of ability. 0:03:20.280 --> 0:03:23.320 For cyclicals and sort of mid sized companies to start 0:03:23.360 --> 0:03:25.680 doing well. And I think I will emphasize the fact that, 0:03:25.760 --> 0:03:28.160 you know, earnings potentially is sort of the biggest part 0:03:28.160 --> 0:03:29.720 of what the market might look at. 0:03:29.919 --> 0:03:34.080 OMAR does Defensive means something different today than it meant, 0:03:34.080 --> 0:03:35.119 say five years ago. 0:03:37.160 --> 0:03:41.520 Stability, Lisa, stability is what we actually think about. Defensive 0:03:41.640 --> 0:03:45.040 is not the traditional consumer staples utilities trade and in fact, 0:03:45.160 --> 0:03:47.600 utilities tends to be more driven by AI these days 0:03:47.640 --> 0:03:49.280 than what is the traditional AI. 0:03:49.560 --> 0:03:50.520 But it's really more. 0:03:50.440 --> 0:03:53.880 Stability in earnings what we actually think about being defensive. 0:03:54.120 --> 0:03:57.200 You know, higher quality names in terms of profitability and 0:03:57.280 --> 0:04:01.280 profit margins. You know, stability is a big part of it. 0:04:01.320 --> 0:04:04.480 Do you think about it companies that did very well 0:04:04.480 --> 0:04:07.400 through all this period of uncertainty around targets and around 0:04:07.600 --> 0:04:10.680 you know, labor market costs increasing, et cetera. Where those 0:04:10.680 --> 0:04:14.680 companies that had very good profit margins, So the are 0:04:14.760 --> 0:04:18.040 the ones that are able to steal not necessarily pass 0:04:18.160 --> 0:04:21.240 through the increased prices to the consumers. You know, those 0:04:21.279 --> 0:04:24.440 companies that are squeezing their profit margins will have no 0:04:24.640 --> 0:04:26.720 choice to actually pass. 0:04:26.480 --> 0:04:28.320 Through those prices to the consumers. 0:04:28.360 --> 0:04:31.719 So we clearly emphasize that ability of continue to have 0:04:31.760 --> 0:04:36.080 sustainability of earnings, quality of earnings, and healthy profit margins. 0:04:36.279 --> 0:04:38.119 A number of people have come on the show this morning, 0:04:38.120 --> 0:04:40.080 and I've talked about how there still is quite a 0:04:40.120 --> 0:04:42.120 bit of dynamism under the surface, and you talked about 0:04:42.160 --> 0:04:45.080 the cyclical sides of the market that could potentially do better, 0:04:45.160 --> 0:04:46.679 especially if the Fed cuts rates. 0:04:46.520 --> 0:04:48.039 Again next month. 0:04:48.360 --> 0:04:50.839 At the same time, people are seeing more inflationary pressures 0:04:50.880 --> 0:04:54.359 come in, whether it's from stimulus efforts, whether it is 0:04:54.440 --> 0:04:57.800 from the energy costs. And I'm just wondering whether increasingly 0:04:58.120 --> 0:05:01.400 the idea of diversification is starting to look very different 0:05:01.480 --> 0:05:03.640 for you, with the bond market maybe not having the 0:05:03.640 --> 0:05:06.039 same kind of profiles it has in the past. 0:05:06.920 --> 0:05:09.960 Well, the versification is clearly the name of the game, 0:05:10.000 --> 0:05:12.400 and that has not going to change. I think the 0:05:13.400 --> 0:05:16.840 main concern that we continue to have is the fact that, yes, 0:05:16.880 --> 0:05:19.080 as we see in the bond market, you know, a 0:05:19.200 --> 0:05:23.240 steeper yield curve when we see inflation expectations continue to rise, 0:05:23.279 --> 0:05:25.679 and that is a big component of what I think, 0:05:25.760 --> 0:05:28.080 you know, we may see we were starting to see 0:05:28.080 --> 0:05:30.800 a little bit of movement on the credit market. 0:05:30.839 --> 0:05:32.840 Clearly this is the time where you. 0:05:32.760 --> 0:05:35.880 Know, diversification and maintain the levels of quality in the 0:05:35.920 --> 0:05:38.680 bond selection is actually a key part of it. I 0:05:38.680 --> 0:05:41.400 don't necessarily think that duration is sort of a play 0:05:41.440 --> 0:05:44.120 in the mode market at the moment, but I guess 0:05:44.160 --> 0:05:46.839 the expectations have been said. But I think the shape 0:05:46.839 --> 0:05:48.680 of the yield curve and the movements that you have 0:05:48.800 --> 0:05:51.640 as you see you know, sticky inflations and you see 0:05:52.640 --> 0:05:56.600 a continuation of that expectations that we're going to have 0:05:56.960 --> 0:05:59.000 a more steeper year cleve is sort of a big 0:05:59.000 --> 0:06:01.080 part of what we are encouraging clients to look at. 0:06:01.520 --> 0:06:04.440 On the equity side, again, you know earnings, you know potential, 0:06:04.440 --> 0:06:09.240 and diversification suggests reducing the concentration. And I cannot emphasize 0:06:09.240 --> 0:06:12.279 that even more because you know the level of concentration 0:06:12.440 --> 0:06:15.200 that there is in terms of the majority of portfolios, 0:06:15.320 --> 0:06:18.080 it is you know, pretty high, and I think diversifying 0:06:18.120 --> 0:06:20.560 away from it even if the means that having to 0:06:20.600 --> 0:06:23.560 buy some of the companies that have been underperforming this 0:06:23.680 --> 0:06:26.280 year is actually a healthy thing to do it for investors. 0:06:26.279 --> 0:06:28.880 And I can I just follow up because we get 0:06:28.920 --> 0:06:31.799 this argument so many times on this program. We can't 0:06:31.839 --> 0:06:33.760 just buy something counts for the sake of buying something, 0:06:33.800 --> 0:06:35.440 haunts for the sake of reducing concentration. 0:06:35.600 --> 0:06:35.800 Risk. 0:06:36.240 --> 0:06:38.880 Concentration has been a theme because that's where the earnings 0:06:38.920 --> 0:06:41.640 power has been. And I'm trying to understand why you 0:06:41.640 --> 0:06:43.919 want to go somewhere else. What is it about being 0:06:44.000 --> 0:06:46.240 somewhere else If it's just for the sake of being 0:06:46.279 --> 0:06:46.840 somewhere else. 0:06:48.240 --> 0:06:51.919 Well, I think the fundamentals or the corporations you know, 0:06:52.000 --> 0:06:54.440 tend to basically look at, you know, where the market 0:06:54.480 --> 0:06:56.680 and the price tends to be driven is about that 0:06:56.720 --> 0:07:00.200 earnings potential and the free type flow generation. And as 0:07:00.240 --> 0:07:02.800 you're right, you know, the companies that have done very 0:07:02.839 --> 0:07:05.320 well so far, you know, tend to be driven a 0:07:05.360 --> 0:07:09.080 lot by that earnings potential free cash flow generation, and 0:07:09.160 --> 0:07:12.280 in many cases that have provided a good performance. Now 0:07:12.280 --> 0:07:14.320 when you look at what that means in terms of 0:07:14.360 --> 0:07:17.920 sustaining that rate of earnings potential, that's where the risk 0:07:18.040 --> 0:07:20.840 you know stays and therefore you know the size of 0:07:20.880 --> 0:07:22.560 that you know, concentration. 0:07:22.680 --> 0:07:24.960 When you have companies that could be. 0:07:24.520 --> 0:07:27.680 Between three and four percent of the active risk that 0:07:27.760 --> 0:07:31.320 goes into your portfolios, that tends to be fairly risky. Now, 0:07:31.360 --> 0:07:35.080 there are areas that are still also generating significant amount 0:07:35.120 --> 0:07:38.760 of earnings that are significantly potential for free cas folow 0:07:38.760 --> 0:07:42.040 generation that are not you know, that high levels of valuation. 0:07:42.200 --> 0:07:45.920 So looking at those undervaluation companies that still have the 0:07:45.960 --> 0:07:48.720 same characteristics, the same factors with some of the others, 0:07:48.760 --> 0:07:51.240 but you don't necessarily have to go into these very 0:07:51.320 --> 0:07:54.000 high multiples is actually a very healthy thing to do. 0:07:54.080 --> 0:07:57.200 Where do I sign the moment? Where aren't they well, 0:07:57.320 --> 0:07:57.800 you know they. 0:07:58.040 --> 0:08:00.880 Are you know significant in areas in infrastructure, there are 0:08:00.920 --> 0:08:03.680 significant areas you know, within even technology. 0:08:03.720 --> 0:08:06.200 If you actually look just a technology excluding you. 0:08:06.240 --> 0:08:09.440 Know the max seven, you know there are components within 0:08:09.680 --> 0:08:11.880 you know, technology that are still pretty good that their 0:08:11.920 --> 0:08:15.120 capitals expenditure is still to increase their roes and the 0:08:15.280 --> 0:08:18.480 ros continue to use very healthy there are still being 0:08:18.520 --> 0:08:21.480 a very this is the time where stock selection matters 0:08:21.480 --> 0:08:24.720 and looking at factors that drive performance, you know matter 0:08:24.960 --> 0:08:28.160 you actually see areas within you know, the cyclical markets, 0:08:28.160 --> 0:08:31.320 whether it's in materials, whether it's in energy, in those 0:08:31.440 --> 0:08:34.040 you know, or is there's very very good opportunities that 0:08:34.120 --> 0:08:34.560 you can have. 0:08:34.880 --> 0:08:36.000 You know, again, we have been. 0:08:35.880 --> 0:08:37.760 Talking about it, you know, I've been talking into your 0:08:37.800 --> 0:08:40.440 program about you know, going into small caps. You know, 0:08:40.520 --> 0:08:43.160 we still think that it's early to go into small cap. 0:08:43.240 --> 0:08:45.920 There still need to be some structural pieces that could 0:08:45.920 --> 0:08:49.040 benefit those small cap companies. You don't necessarily have to 0:08:49.040 --> 0:08:51.200 go all the way and try to overweight small cap. 0:08:51.320 --> 0:08:53.160 But then looking at those you know that. 0:08:53.200 --> 0:08:56.080 Tend to be you know, multiples that are decent with 0:08:56.160 --> 0:08:58.920 earnings potential at Flickastion generation is the way to go. 0:09:00.120 --> 0:09:03.600 Stay with us more Bloomberg surveillance coming up after this. 0:09:13.080 --> 0:09:16.400 An increasing number of Democratic lawmakers calling for Senate Minority 0:09:16.480 --> 0:09:19.160 Leader Chuck Schumer to step aside after famous to stall 0:09:19.280 --> 0:09:21.520 members of his party from a Green to a Republican 0:09:21.559 --> 0:09:24.559 deal to reopen the government. Joining US now Henrida, Trace 0:09:24.800 --> 0:09:28.560 a Vader Partners Henrietta a reality check for politicians in Washington. 0:09:28.720 --> 0:09:31.040 They've had two already, they had one twelve months ago. 0:09:31.320 --> 0:09:35.000 In the general, the general public weren't happy with affordability, 0:09:35.040 --> 0:09:36.800 the cost of living in this country, and look to 0:09:36.840 --> 0:09:39.120 Republicans to try and fix it. And they're wanting to 0:09:39.200 --> 0:09:40.880 vote for whoever is going to come out with a 0:09:40.880 --> 0:09:44.560 good idea, and their ideology is not cemented, it's not fixed. 0:09:44.600 --> 0:09:47.160 They'll shift from one party to another with ease. You 0:09:47.200 --> 0:09:48.920 and I have talked about that. How do you think 0:09:48.920 --> 0:09:50.640 that sets us up for the midterms next year? 0:09:51.480 --> 0:09:54.320 Yeah, I mean, that's exactly what last Tuesday's election showed. 0:09:54.440 --> 0:09:57.840 It wasn't just that Democrats came out. The exit polling 0:09:57.920 --> 0:10:00.319 shows that it was Trump voters who went for him 0:10:00.320 --> 0:10:02.200 in twenty twenty four who swung right back to the 0:10:02.200 --> 0:10:04.920 Democratic Party this cycle. And that's a combination of the 0:10:04.960 --> 0:10:09.160 president's economic policies more than anything else. So what Democrats 0:10:09.200 --> 0:10:11.880 have done here with this shutdown is not keep an 0:10:11.880 --> 0:10:14.360 eye on affordability, which was of course the talking point 0:10:14.400 --> 0:10:21.480 of the Tuesday elections, but the inflation, grocery prices, healthcare prices. 0:10:21.520 --> 0:10:22.920 I mean, I'll be honest. 0:10:22.679 --> 0:10:24.520 You guys know I don't like healthcare even I know 0:10:24.600 --> 0:10:27.400 now that the insurance premiums for people over the age 0:10:27.400 --> 0:10:30.640 of sixty are going to increase nine hundred and nineteen 0:10:30.720 --> 0:10:33.760 dollars as a result of not extending these ACA subsidies. 0:10:33.760 --> 0:10:36.240 And we just spent forty one days saying that back 0:10:36.240 --> 0:10:37.560 to back. We're going to have a vote on it 0:10:37.600 --> 0:10:40.000 in December. We'll do it again in January. So I 0:10:40.040 --> 0:10:43.520 think that for the Democrats, just keeping this message alive 0:10:44.120 --> 0:10:47.719 is outside of the Beltway, sending the message that has 0:10:47.880 --> 0:10:49.800 just won an election and looks like it'll be a 0:10:49.800 --> 0:10:52.040 repeat of twenty eighteen based off what we're seeing in 0:10:52.120 --> 0:10:52.520 the polling. 0:10:52.880 --> 0:10:55.120 To build on that, Henrietta, do you think that this 0:10:55.240 --> 0:10:57.880 shutdown was futile for the Democrats or do you think 0:10:57.880 --> 0:10:59.960 that it actually yielded some political benefits. 0:11:00.800 --> 0:11:03.040 They get yielded a lot of political benefits. I'll cover 0:11:03.080 --> 0:11:05.480 a couple. Number one I think is setting up Schumer 0:11:05.520 --> 0:11:09.760 to step down and pave the way for the senator 0:11:09.760 --> 0:11:11.760 from Hawaii to come in and be the next Democratic 0:11:11.840 --> 0:11:15.679 leader in the Senate side. That's pretty plainly something that's 0:11:15.679 --> 0:11:17.920 building within the Democratic conference on the Senate side. I 0:11:17.920 --> 0:11:20.520 think that's something that Schumer is ushering in himself. And 0:11:20.559 --> 0:11:23.440 he took a lot of arrows by voting against this bill, 0:11:23.559 --> 0:11:26.720 by agreeing to let the eight moderates cross the line. 0:11:26.800 --> 0:11:29.480 It's exactly however many you needed. I think that's what 0:11:29.559 --> 0:11:31.960 leadership does, especially on the Democratic side. You've seen it 0:11:31.960 --> 0:11:34.200 in the past. Joe Biden just did it last year. 0:11:34.960 --> 0:11:39.240 On the messaging side, think about where the numbers are. 0:11:39.600 --> 0:11:44.160 President Trump's approval rating has cut again in half. You 0:11:44.200 --> 0:11:47.560 went from negative seven to negative thirteen in the polling 0:11:47.600 --> 0:11:50.880 averages just since October. And on the congressional ballot in 0:11:50.960 --> 0:11:54.320 generic polling, the Democrats went from plus one in the 0:11:54.320 --> 0:11:55.480 generic ballot. 0:11:55.240 --> 0:11:57.120 On October first to plus four. 0:11:57.200 --> 0:11:59.920 Now that's enough to get you the midterm House election, 0:12:00.240 --> 0:12:01.920 and that's the goal of leadership. 0:12:01.960 --> 0:12:02.559 There's a lot of. 0:12:02.480 --> 0:12:05.040 Time between now and the midterms, and it really includes 0:12:05.040 --> 0:12:07.199 the beginning part of next year when we could potentially 0:12:07.240 --> 0:12:11.000 get tax rebates. You can call them the tariff dividend, 0:12:11.040 --> 0:12:12.360 you can call them whatever you want. 0:12:12.400 --> 0:12:13.360 But a lot of people are. 0:12:13.280 --> 0:12:17.439 Expecting more money in people's pockets come January and February. 0:12:17.440 --> 0:12:19.720 How much do you expect that to really skew things 0:12:19.760 --> 0:12:23.040 the other direction back toward the Republicans heading into the midterms. 0:12:24.040 --> 0:12:27.640 Why do you need a two thousand dollars rebate? What's 0:12:27.679 --> 0:12:31.480 the problem is the inflation still rising? Is affordability still 0:12:31.480 --> 0:12:33.679 a problem? Didn't we just pass a one big, beautiful 0:12:33.679 --> 0:12:36.520 bill with three and a half trillion dollars of deficit increases. 0:12:36.800 --> 0:12:39.120 Why do we need a two thousand dollars dividend check. 0:12:39.080 --> 0:12:41.679 That, by the way, will not be paid for by 0:12:41.760 --> 0:12:44.280 tariffs because the tariffs don't bring in that kind of revenue. 0:12:44.440 --> 0:12:47.120 In the two thousand Cares Act, we passed the exact 0:12:47.120 --> 0:12:49.880 same kind of rebate check Trump is talking about right now. 0:12:50.040 --> 0:12:52.680 It costs two hundred and ninety two billion dollars. The 0:12:52.720 --> 0:12:55.839 tariffs have brought in eighty nine billion dollars. If we 0:12:55.960 --> 0:12:59.920 give two thousand dollars to every eligible American, that's off 0:13:00.080 --> 0:13:03.240 four hundred billion dollars spending provision. So you're going to 0:13:03.280 --> 0:13:07.160 increase the deficit to provide tax cuts to Americans who 0:13:07.160 --> 0:13:10.440 are suffering from inflation because of taris. I don't think 0:13:10.480 --> 0:13:11.760 that's a winning message. 0:13:11.400 --> 0:13:12.960 At a time when it's a question mark of the 0:13:12.960 --> 0:13:15.640 policy itself and whether it which stands. They screwtiny at 0:13:15.640 --> 0:13:18.720 the Supreme Court in the coming month as well, Henriette said, 0:13:18.840 --> 0:13:21.120 where do they have space to offer some kind of 0:13:21.120 --> 0:13:23.160 giveaways and change policy? 0:13:24.000 --> 0:13:27.200 You know, it's It's amazing because when I speak with Republicans, 0:13:27.240 --> 0:13:29.800 they plainly don't want to go through the very difficult 0:13:29.840 --> 0:13:32.640 activity of passing a fiscal year twenty six budget and 0:13:32.679 --> 0:13:36.040 a fiscal year twenty six reconciliation bill. Democrats wouldn't want 0:13:36.080 --> 0:13:39.040 to either. It's extremely difficult. Voters opens up all your 0:13:39.040 --> 0:13:41.200 members to vote e rama. But what you could do 0:13:41.320 --> 0:13:44.080 is you could get sixty votes to extend the ACA 0:13:44.120 --> 0:13:46.280 subsidies and then think about what we just talked about. 0:13:46.400 --> 0:13:49.120 You get every family with two sixty year olds in 0:13:49.160 --> 0:13:51.400 the House on Medicare and Medicaid, you can get nine 0:13:51.480 --> 0:13:53.920 hundred nineteen dollars for each of them back in their pockets. 0:13:54.000 --> 0:13:56.960 If you are a household with kids with twenty. 0:13:56.679 --> 0:13:59.160 Thirty forty year olds, the ACA subsidies get extended, you 0:13:59.200 --> 0:14:00.600 get two hundred up. 0:14:01.200 --> 0:14:03.000 So there's a pretty easy path to. 0:14:03.000 --> 0:14:05.600 Sixty votes if you want it, and we'll have those 0:14:05.640 --> 0:14:07.880 votes in December and then again in late January. And 0:14:07.880 --> 0:14:10.600 if you want ustimate the economy quickly get money back 0:14:10.600 --> 0:14:13.440 into consumers pockets, the AC s is a really fast 0:14:13.480 --> 0:14:15.360 way to do it, and a lot of Republicans would 0:14:15.400 --> 0:14:18.240 like to see that too. Look at Alabama, Boozyana, Mississippi. 0:14:18.240 --> 0:14:19.240 That's where those voters are. 0:14:20.080 --> 0:14:20.720 Stay with us. 0:14:21.040 --> 0:14:33.120 More Bloomberg surveillance coming up after this. Dan Skelley of 0:14:33.160 --> 0:14:35.960 Mork and Stanley writing, while the fundamental backdrop for the 0:14:36.000 --> 0:14:40.160 market has improved from the panic stricken spring, our current valuations, 0:14:40.200 --> 0:14:42.720 investors are not being compensated for a high degree of 0:14:42.760 --> 0:14:44.480 policy and earnings risk. 0:14:44.560 --> 0:14:46.400 Dan joins a snap for more dank and monic. 0:14:46.200 --> 0:14:46.680 Morning, John. 0:14:46.680 --> 0:14:48.560 Do you think that catches the pushback we're seeing across 0:14:48.600 --> 0:14:50.360 several single names out of the past few weeks. 0:14:50.640 --> 0:14:51.040 Definitely. 0:14:51.080 --> 0:14:53.600 And by the way, I think the volatility in the 0:14:53.680 --> 0:14:56.920 rotation that we're seeing among single names is healthy. I mean, 0:14:56.960 --> 0:14:59.680 the idea is if everything was going up euphorically, then 0:14:59.720 --> 0:15:02.120 maybe we could talk more about a bubble. But you 0:15:02.200 --> 0:15:06.440 are seeing the market reward winners and penalized losers, and 0:15:06.440 --> 0:15:08.520 so I think that's a healthy trend. I think, frankly, 0:15:09.000 --> 0:15:11.880 there's seemingly a bubble and everyone guessing whether or not 0:15:11.880 --> 0:15:12.760 we're in a bubble or not. 0:15:13.160 --> 0:15:15.680 A bubble in bubbles correct, not in the credit market, 0:15:15.800 --> 0:15:16.800 credit markets wide open. 0:15:16.840 --> 0:15:19.080 Suppose somebody is spending. Do you think that reminds the case? 0:15:19.200 --> 0:15:21.360 I think that remains the case and is likely to 0:15:21.400 --> 0:15:24.040 be so for the foreseeable future. You've seen some of 0:15:24.080 --> 0:15:26.560 these bond deals way over subscribed, as you know, in 0:15:26.600 --> 0:15:29.200 the last couple of months, and so we're just not 0:15:29.280 --> 0:15:31.080 yet at that point where things are starting to look 0:15:31.080 --> 0:15:31.680 more concerning. 0:15:32.120 --> 0:15:36.320 Bubble of a bubble, bubble in bubble and bubble took. Okay, honestly, 0:15:36.400 --> 0:15:37.640 this is so derivative. 0:15:37.680 --> 0:15:40.840 I'm having a hard time increase. 0:15:40.440 --> 0:15:42.840 Of the bubble in bubble talk, I know, but it's true. 0:15:42.960 --> 0:15:44.520 There is this feeling that right now there is a 0:15:44.520 --> 0:15:46.080 lot of fear out there. I just want to go 0:15:46.080 --> 0:15:47.480 back to the point that you made that it's healthy 0:15:47.480 --> 0:15:50.080 to see swings like this. It's healthy to see swings 0:15:50.160 --> 0:15:54.040 in one stock name evaluations mark evaluations of two hundred 0:15:54.080 --> 0:15:57.080 and sixty four billion dollars. 0:15:56.600 --> 0:15:57.320 In one day. 0:15:57.600 --> 0:15:59.840 The idea that we saw that kind of gain just 0:16:00.040 --> 0:16:02.440 on Monday alone in the likes of Nvidia, after seeing 0:16:02.440 --> 0:16:05.080 two hundred million dollars lost in one day, how is 0:16:05.120 --> 0:16:08.320 this healthy? Doesn't it really point to concentration risk in 0:16:08.360 --> 0:16:10.080 another kind of way in the index? 0:16:10.400 --> 0:16:13.240 Sure, it's an excellent point, Lisace. I'll say a couple 0:16:13.280 --> 0:16:16.120 of things. So first is what I'm describing is among 0:16:16.160 --> 0:16:19.400 the mag seven themselves, you saw a handful half of 0:16:19.440 --> 0:16:21.680 them up on earnings and half of them down on earnings, 0:16:21.680 --> 0:16:23.960 And so I think that's really what we're looking at. 0:16:23.960 --> 0:16:26.720 But I think to your point, in terms of absolute 0:16:26.840 --> 0:16:30.880 market values, it certainly speaks to the crowding that's happened 0:16:30.880 --> 0:16:33.120 not only this year, but going back fifteen years. 0:16:33.320 --> 0:16:35.239 Really since eight. We've seen this winner. 0:16:35.040 --> 0:16:39.120 Take all phenomena for almost two decades now, and it 0:16:39.200 --> 0:16:42.160 speaks to just again just how much the market share 0:16:42.200 --> 0:16:46.480 winners have differentiated themselves versus everyone else. Last point, you 0:16:46.600 --> 0:16:48.800 reference ninety eight ninety nine, which we're starting to hear 0:16:48.880 --> 0:16:51.320 more and more of. Obviously, let's not forget that in 0:16:51.360 --> 0:16:54.680 the stretch from kind of the fall of ninety nine 0:16:54.760 --> 0:16:57.480 to the spring of two thousand and NASTAC doubled over 0:16:57.480 --> 0:16:58.840 a seven or eight month period. 0:16:59.200 --> 0:17:01.360 That is truly what a blowoff top looks like. We 0:17:01.400 --> 0:17:02.440 haven't seen that of yet. 0:17:02.560 --> 0:17:03.280 There's also this. 0:17:03.280 --> 0:17:07.000 Question of how far the AI trend is diverging from 0:17:07.000 --> 0:17:09.680 the underlying economy, and we keep going back to this 0:17:10.040 --> 0:17:12.480 how difficult it is to get a gauge on what's 0:17:12.520 --> 0:17:15.760 happening with people feeling pretty negative on the economy, pretty 0:17:15.760 --> 0:17:18.280 negative about their spending power. At the same time that 0:17:18.320 --> 0:17:20.840 you're seeing these runaway gains and these expectations for all 0:17:20.880 --> 0:17:22.280 this profitability and efficiency. 0:17:22.480 --> 0:17:23.400 How do you scare that? 0:17:23.800 --> 0:17:27.080 So it's a case shaped market economy, it's a case 0:17:27.080 --> 0:17:32.560 shaped socioeconomic recovery. Post COVID, everything is diverging. We wrote 0:17:32.600 --> 0:17:35.440 about this recently in our letter, talking about the market 0:17:35.440 --> 0:17:37.320 is not the economy. The economy is not the market. 0:17:37.680 --> 0:17:39.560 And when you look at the changing nature of this 0:17:39.640 --> 0:17:42.879 economy really since COVID, but going back I'll say a 0:17:42.920 --> 0:17:46.640 decade plus, it's a services led economy. All we've done 0:17:46.720 --> 0:17:49.480 is wring our hands around tariffs and trade. This year 0:17:49.640 --> 0:17:52.680 trade is eleven percent of GDP. This is a service's economy. 0:17:53.000 --> 0:17:56.920 AI spending is being funded largely by cash flow, so 0:17:56.960 --> 0:17:59.560 we're seeing that as being somewhat more insulated from ebbs 0:17:59.600 --> 0:18:02.280 and flows in the economy. And increasingly it's a high 0:18:02.359 --> 0:18:04.720 end consumption market. I mean, one of the things we 0:18:04.760 --> 0:18:07.200 haven't talked about enough, we think is that ten percent 0:18:07.240 --> 0:18:09.520 of the population controls forty. 0:18:09.240 --> 0:18:10.520 To fifty percent of the spending. 0:18:10.880 --> 0:18:13.320 And that's a cohort that's been reflated in terms of 0:18:13.320 --> 0:18:17.880 wealth effect exposure to acid prices, houses and stock markets, 0:18:18.280 --> 0:18:22.080 and so we're seeing that bifurcation across not just the market, 0:18:22.240 --> 0:18:25.000 but every component of the changing nature of our economy. 0:18:25.080 --> 0:18:27.239 Does that make you want to expand out to some 0:18:27.320 --> 0:18:30.960 of the areas that are more susceptible to spending, whether 0:18:31.000 --> 0:18:32.760 it's on the high income, which seems like an AI 0:18:32.840 --> 0:18:35.560 trade at this point, or whether it's on the lower income. 0:18:35.640 --> 0:18:38.359 The sort of bet on some sort of cyclical improvement. 0:18:38.520 --> 0:18:42.159 Very selectively where there's also a fundamental catalyst. So we 0:18:42.200 --> 0:18:45.479