May 30, 2025 • 54 mins
Watch Tom and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Surveillance hosted by Tom Keene & Paul SweeneyMay 30th, 2025
Featuring:
1) Greg Boutle, Head of US Equity & Derivative Strategy at BNP Paribas, Aoifinn Devitt, Chief Global Strategist at Moneta, and Ira Jersey, Chief US Interest Rates Strategist with Bloomberg Intelligence. react to PCE. April’s so-called core personal consumption expenditures price index, which excludes food and energy items, rose 0.1% from March. From a year ago, it advanced 2.5%, Bureau of Economic Analysis data out Friday showed. Both readings were in line with economists’ forecast.
2) Seema Shah, Chief Global Strategist at Principal Asset Management, joins to talk about any potential upheaval that could come as continued on-again, off-again tariffs. The Trump administration is exploring alternative options to pursue tariffs, including using other legal authorities, but these options may be more complicated and time-consuming, and could take months to execute. As a result, traders are reassessing their appetite for riskier assets amid concerns over weaker growth and fiscal strain.
3) Pat Haskell, Head: Muni Bond Group at BlackRock, on muni performance through 2025 and how munis function as a safe haven amid tariff uncertainty. Investors are also parsing data for clues on how the policies are affecting the economy amid concerns over weaker growth and fiscal strain.
4) Lindsey Piegza, Chief Economist at Stifel, brings us into the market open and talks about the outlook for inflation in the US after today's PCE report. Meanwhile in Washington, President Trump pushed Federal Reserve Chair Jerome Powell to lower interest rates at their first in-person meeting since the president's inauguration. Powell stressed that the path of policy will depend on incoming economic information.
5) Phillip Diehl, President of US Money Reserve and 35th Director of the US Mint, talks about recent fluctuations in gold prices and gold buying trends among consumers. Gold fell, putting it on track for an almost 2% weekly loss, amid a technical pullback in prices ahead of key US economic data. Despite the declines, bullion's haven appeal remains intact due to uncertainties surrounding Trump's tariff agenda and tensions with China.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Surveillance Podcast. Catch us live weekdays at seven am Eastern
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Listen on demand wherever you get your podcasts, or watch
(00:25):
us live on YouTube.
Speaker 2 (00:27):
Right now, what we're going to do is get to
the economic data at Greg Boudele with us here to
wrap around it on the mathiness and derivative moment. This weekend,
all financial publications will tell the American public give up
the upside hedge, taking a higher income when you hedge,
and you'll be happy. You're the pro at this. Should
(00:50):
we be doing that? Should we be giving up upside
potential in bringing in a premium income to goose our
dividend to goose so sure, buyback.
Speaker 3 (01:01):
That's certainly how we feel about things.
Speaker 2 (01:03):
In the short run.
Speaker 3 (01:04):
We titled I Not Yesterday tariff fatigue. The market is
starting to look a little bit tired. Some of the
imbalances in position in which we think drove the extent
of this rally have started to become worked through a
little bit, and we think we are in an environment
where it would be easier for the market to tread water.
When we look at the options complex, there are places
where we think it is better to extract premium and
(01:24):
others where we think it is better to own that optionality.
Speaker 4 (01:28):
So if we think the markets are going to kind
of tread water a little bit, am I writing options
these days? Is that what people are doing?
Speaker 5 (01:35):
So?
Speaker 3 (01:35):
I think like one of the kind of oldest option
strategies out there is the covered core boom owning the
equity selling some upside against that. What you're basically doing
is giving up some of the right tail of the
distribution the short term in exchange for some income.
Speaker 4 (01:49):
See I paid attention in Futures and Options class Cam Harvey. Yeah,
I paid attention. There are people what do they feel
like in terms of the risk, Like, if I want
the I some protection here, is it expensive relative to
historic levels or where are we?
Speaker 3 (02:04):
So it kind of depends what you're looking at. If
we're talking broad US indices, then it's way off the highs.
Things got very expensive post Liberation Day, but we are
not back to those pre Liberation day levels. You know,
the equity market is we've been touching distance of all
time highs, but equity optionality is still a little bit
more elevated from where it was, particularly on the downside.
So yeah, if you're just going and buying US index hedges,
(02:27):
you have to be careful because it's not cheap.
Speaker 2 (02:28):
If you're buying individual stock edges, do you partition it
between fancy stocks where you could get crushed, taking in
premium where they take off like Microsoft this month of
May or and then there's four to eighty three other
stocks that you really can grab a premium. Is that
how it works? Yeah?
Speaker 3 (02:48):
I think you have to think about what are the
risks that you are worried about. What are you trying
to hedge. Is it more eosyncratic stock specific or are
we looking for more macro hedges. We've been talking more
about looking at macro hedges, but going a little bit
out the term structure, out to say the September expiry
where we think some of the macro weakness could start
to manifest a little bit more. I think the smaller midcaps,
so the Russell IWM is a part of the market
(03:12):
which I think looks attractive to use to hedge.
Speaker 2 (03:14):
Greg boutle ready for those compliance of BMP Perry, but
they don't even speak English in New York, it's in French.
They're even more ergus O mon dieux, Greg Bottle on
naked short selling.
Speaker 3 (03:24):
Go so, I think that if you want to be
naked short the market, then you have to be willing
to accept the risk that comes with it. For us,
we think there is better risk world profile and putting
on hedges on the downside owning optionality than there is
naked short selling.
Speaker 2 (03:40):
That was like road compliance. Yeah, that was really that
was a plus, say Greg Bodles answered that question before.
Naked short selling, folks, is not to be tried. Don't
do this at home. It's really really hazardous. You'll be
right four or five six times and boom and it
doesn't work out right. Be careful out there. Let's talk
(04:01):
to Paul Sweety about option you know, how to not
lose money in the or the de Jerrians one of
the two. I'm just going to make it as clear
as I can. I got economic data with some revisions here.
I got a sweet PCI year over year of two
point one percent, signaling some disinflation. I got a revision
(04:22):
showing personal income is better, and it doesn't care because
the president just tweeted yep, I mean, basically, there's no
dynamic with an SMP futurest Greg battle they're negative twenty,
they come up a little. In defense, they come up
negative twenty out of negative twenty five up the negative twenty.
Do we misjudge the American economy? Is that the issue
for people cautious on the equity market potentially?
Speaker 3 (04:45):
I think the question about the data is when is
it going to start to matter? At the moment, what
we see is backward looking data that maybe is starting
to capture the first impacts of the tariffs. But what
matters as much more as when we move through June July,
does the data stay very resilient case that's going to
create question marks for the bears. I think the consensus
is that the data will start to soften as we
(05:05):
moved through the summer. So I think at the moment
it's very hard to get a positive risk signal or
more clear from data.
Speaker 2 (05:12):
This is really important to continuing claims breaking out. Yesterday
Veronica Clark mentioned it's the end of May. We don't
have a clue except we said that at the end
of December.
Speaker 4 (05:22):
Lie exactly exactly as well.
Speaker 2 (05:24):
Here we go.
Speaker 4 (05:25):
So given that uncertainty, Greg do you find your clients.
Are they coming to you and say, I want to
have more protection around my portfolio than typically or are
they just saying I can't worry about this stuff.
Speaker 3 (05:38):
I think people are more defensively positioned. We look at
this through quantitative lens where we aggregate a lot of
the flows in the equity market, and we've produced this
composite equity positioning indicator and it scales from zero to
one hundred, so it's pretty easy to read we are
euphoric levels at the end of last year almost ninety
seven hour of one hundred. Things got very washed out
(05:59):
post liberation, and now we've made our way back into
this more neutral territory. That indicator sits in the mid forties,
so points to a market where people are more defensively positioned.
But we're not as barishes as we were from a
positioning landscape a month ago.
Speaker 4 (06:14):
Ninety seven reading I kind of remember those days. It
was like we have in an administration that's going to
be pro growth, you know, less regulatory and boy times
have changed.
Speaker 3 (06:25):
Six months ago, but it feels like a lot longer
than it does it does.
Speaker 4 (06:28):
What's kind of the smart trade you've somebody's come up
to you with recently when your clients are called gym
say hey, we like to do this, and you're like, really.
Speaker 3 (06:37):
I think the things that people have been doing have
been more nuanced. As we were discussing earlier, it is
looking at ways to fun trade. So if you're looking
at the optionality complex and like, I do you think
maybe there's value in owning some of that September optionality
where the data starts to matter a little bit more
through the summer. It's looking at smart ways to try
and finance that. So you know, one of the things
that we were talking about in our tariffy yesterday was
(07:01):
how to fund those hedges. So we think looking at
things like cover calls and things like the energy space
is probably probably an interesting way.
Speaker 4 (07:06):
So what's a covered call in the energy space?
Speaker 2 (07:09):
Like that?
Speaker 3 (07:09):
So a cover call is simply if you are long
the stock and you are selling optionality against that such
that you are not nakedly short that option. And in
terms of the energy space, that could be one of
the energy ETFs such as Yahoo or some of the
some of the large energy stocks. It's a very benign strategy,
but a way to eke out a little bit of
yield that we think you can spend on hedges.
Speaker 2 (07:31):
We got a great set of people. Robert from uh
I think it's it's up and it's colder than Union College.
He was upset at our Union College discussion of D
one hockey with Pat Haskell Blackrock. Robert comes in and
says Hamilton College is destined D one hockey. He notes
Paul the complete return of the trade deficit. It is
(07:56):
a spring back from a negative one six zero, stunning
back to negative nine zero. That's not I wonder if
the President will bring that up at the press conference today.
Our policies are working. We're getting rid of the trade deficence.
Speaker 4 (08:12):
Awesome, that would be the promise than with Italy with
the purchase.
Speaker 2 (08:18):
Wait a couple of weeks. If you're gonna have a
trade deficit, you're gonna be on the Spanish steps and
you looked out that's that. You look down that street,
a gauntlet of stores. It's it's it's Lisa, what's it
called its avenue tradio deficit? You o something like that? Greg,
thank you for coming in, Thank you for the explanation
(08:40):
there and getting through the compliance moment un naked naked
you know you nailed it, Greg Botle, don't be a stranger.
Thank you. With b MP Perry by just wonderful through
some of the sous on VMP Perry BA has had
a really really excellent, uh excellent moment there, I should
say as well, again when we set this up and
(09:02):
Eric did a great job with the interns, we wanted
a broader view. Even Devid can give that to us
right now. She has been wonderful, particularly with a transatlantic view.
All of that important into the President's press conference today.
Ifan Devid joins us from Manetta. If and what are
you writing into the month of June.
Speaker 6 (09:23):
Excellent question.
Speaker 7 (09:24):
I think we're going to see a continuation of this
type of volatility. We're obviously going to see getting close
to drop dead dates and some of these tariffree negotiations.
We'll see how the negotiations actually play out. We're going
to see more and more clarity in terms of the
actual impact of tariffs on prices. We've only seen really
sporadic clarity up to now, and we're probably going to
(09:47):
see more resolution in terms of the legality of these tariffs.
We're going to this day now that's been placed on
the Court of Trade decision. There should be an appeal
and we should see the outcome of that. So lots
going on. It's not going to be is silly in
the quiet summer.
Speaker 2 (10:01):
Are Europeans returning to American investment, leaving American investment? Are
they waiting for Paul's arrival in Rome? Which is it?
Speaker 7 (10:12):
I'd say at this point there is not a net
increase in US investment. There has been an overweight to
the US for the most part. It has played out
very well. The strong dollar has worked very well for them.
Right now it seems that the US investment story is
losing a little bit of its charm, its cachet. The
weaker dollar is the course affecting that. And then we're
hearing just about this anti perhaps foreign student movement, the
(10:36):
lack of travel into the US, perhaps the sense that
there might be a revenge that was a headline today.
So all that all adds to the uncertainty. And I
would say, now there is often taking and timing back.
Speaker 2 (10:47):
I mean, Paul, think about it ending to give in
school where kids are like I got to get up
and go to thermodynamics, and I got to put up
with all this protest and angst and passports and all that.
Why don't I just go to Trinity College Dublin. I mean,
you know, Boom, you're there.
Speaker 4 (11:03):
I'd be right there. They would love me there. Even
where do we go here? I mean, Tom's been long
bitcoin and just laughing all the way to the bank.
But how about for the rest of us? How much
risk are your clients feel like they need to take
these days? Or it's just too much noise out there?
Speaker 6 (11:22):
It's an excellent question.
Speaker 7 (11:23):
There definitely is not sort of satisfaction with sitting in
cash right now. We know that cash is not a drag,
but there's still that that four between four and five percent,
it's still not great. After inflation, there's a real sense
that inflation is going to be with us for a
very long time and that we will have to invest
in growth assets. So where are clients comfortable taking risk.
They're still quite comfortable in the equity markets, and that's
(11:45):
a good thing because that will have to be their
engine of growth for some time. They're increasingly more comfortable
in the private segments, private equity, private credit. They're not
as comfortable in real estate as before. Perhaps there is
a little bit of muscle memory or even trauma around
previous downturns and something like infrastructure or income generating.
Speaker 6 (12:03):
That's really something for the institutions.
Speaker 7 (12:04):
It's not something I see a ton of interest among
private wealth clients in Interesting would on Frenday College seven
Trendy College, telln is an excellent place to visit.
Speaker 2 (12:13):
Ephan Devin, stay with us, please Interesting Friday Morning across
a nation. Good morning from the early morning Left Coast
out there and Android Auto Apple car play Major. Good
morning to Sirius XM Channel one twenty one, huge distribution
for US ninety nine one FM in Washington, ninety two
nine FM in Boston, and Bloomberg eleventh three to zero
(12:37):
in New York. We say good morning on YouTube building
every month. Paul and I just dumbfounded by the success
of Bloomberg podcast. Thank you so much for your attention there,
particularly your global attention. The evening of the Pacific at RIM,
futures are negative twenty five off the President's tweet. They
come up a little bit off buoyant personal income spending
(12:58):
quite essent inflation at the margin. Futures go negative twenty
five up the negative twenty.
Speaker 4 (13:05):
If and you mentioned private equity, private credit I'm surprised
that at the level of exposure that a lot of
family offices and their clients have to alternative investments. What
do you think is a reasonable allocation because there's so
many opportunities now, hedge funds, private equity, now private credit
has become such a big market opportunity. What's your expertise, I'd.
Speaker 7 (13:29):
Say, depending of course on the size of that family office.
But we're seeing anything from fifteen to thirty percent in
alternative assets. Certainly would lower be lower at the dipping
the toe in the water stage, and you have five
percent ten percent, I'd say less than five percent, it's
not really worth the extra work and due diligence involved
and this sacrifice sub liquidity. It's important to really understand
(13:50):
the segment all about relationships. You're in there for the
long haul, and I have to be a meaningful allocation.
But between five and fifteen absolutely normal, and if you
really have high conviction going higher.
Speaker 4 (14:00):
And that again, if we saw a movement of capital
investment capital out of the US earlier this year, when
the uncertainty was maybe at its peak around tariffs and
economic impacts, was that just a short term trade or
as you talk to your clients, do they feel less
likely or less confident investing in the US markets?
Speaker 7 (14:21):
Yeah, definitely, there is I'd say a wariness around having
too much in the US right now, and our clients
have always had global exposure, and that global piece was
a little difficult to defend recently, especially in the last
over fifteen years under performance that is definitely by definition
difficult to defend and with a strong dollar two. Now
that some of those movements have reversed, our clients are
(14:43):
taking are quite confident now in their non US holdings,
and I would say that the non US story it
tends to get crowded out a lot by some of
the flooding of the zone that occurs in the US,
and that the Trump administration the US developments are on
everyone's lips no matter where you are, particularly in Europe.
But behind US and Europe there is by stealth. I
would call it a steady growth of investment in the sector,
(15:05):
in the industrial complex, really coming back from rock bottom
in terms of confidence.
Speaker 6 (15:10):
And just innovation and a lot more focus of that.
Speaker 7 (15:13):
I think we have to start looking beyond some of
the noise in the US.
Speaker 2 (15:16):
Ivan Devid, thank you so much for the brief from
Minetta this morning. Here in a Friday where we set
up conversations to get you into the month of June
features negative twenty five lift to negative nineteen, the Vics
nineteen zero point five to one dead tape two hours ago.
The President with a tweet makes it more sprightly here
with angst about China, Paul, you gotta believe China responds
(15:40):
in some way towards the Asia Monday opening of seven PMSH.
Speaker 4 (15:46):
Yeah, you know, I'm not really sure what the president's
referencing in his tweet here as it relates to discussions
with China, but obviously he doesn't like what he sees
and maybe hears from China. But it just kind of
brings back into the discussion and a little bit of
heightened trade uncertainty, which seems to be the background.
Speaker 2 (16:04):
I'm going to go by to the Peterson Institute and
the iconic work of William Klein here the idea of
bilateral or unilateral discussions. It's a multilateral world joining us
right now on the short term bond market where he
is world acclaimed. Ira Jersey just off testimony to I
believe the House of Representatives joins us this morning, driving
(16:24):
all a fixed income at Bloomberg Intelligence. I rate just
simple into June. Is you and your team right, do
you have like a theme or are you as confused
as everyone else? Yeah?
Speaker 8 (16:41):
Well I think the theme is confusion. Uh, And you
know certainly that we're going to continue to probably have
these headlines right like we're trying to and the market
is trying to find where the endgame is likely to
be in terms of all of these policy actions that
the president's doing. And of course, when you have court
decisions that seem to you know, are going to might
(17:02):
force the president to backtrack, and some of these tariffs
unwined because there's an overreach of executive orders, that again
puts another layer of confusion into things. So I think
what that means is that you're not necessarily going to
see a whole lot of directional moves in the rates
market in particular, right, So the treasury market will probably
(17:24):
just be kind of range bound, but you're going to
see a lot of volatility within that range, and that
that's certainly what you've seen the last two months.
Speaker 4 (17:30):
We got some inflation data today core pc E n
X a month to month zero point one percent on
an annualized basis two point five percent. That's right in
line with expectations. It doesn't seem like some of these
tariffs are impacting inflation yet. I guess, how's your market
kind of digesting this?
Speaker 8 (17:52):
Yeah, So certainly that the yet is what matters in
that sentence there, Paul, because if you look at the
durable goods, like if within the PC data you can
break out durable goods and non durable goods, which are
things like consumables and the like, and then services. What
you saw is it was actually a decline in prices
for both of those goods sectors, but a three point
three percent increase in prices month on month for for
(18:19):
the services sector. So you still have services driving inflation
at the moment. And the continued fear is that with
a significantly lower amount of imports coming in that eventually
that's going to go through prices. So as inventories are
drawn down, you're going to see, you know, new prices
for what the imported goods were. So look at the
(18:39):
trade number. You know, I haven't heard you in the
last couple of minutes anyway talk about the trade data.
But twenty percent draw down a twenty percent decline in
imports is pretty significant, right, and you know that this
is only for one month, and the first month where
tariffs were imposed. It might be even worse as we
get the May data, right, and so when we end
(19:01):
up getting higher prices than in the future. For that
the rates market, though, you know, you look at inflation
break evens right now, they haven't moved very much, right
tenure inflation break evens two point three three percent. Even
though you might have an uptakeing inflation briefly, the market
certainly doesn't think it's going to be very sticky.
Speaker 2 (19:17):
Well, thanks to Bob a professor up at Hamilton College
for that mentioned in the trade deficit really came back
as mister Jersey mentions the interest rates as well. Ira Jersey,
did you buy we're talking UNI bonds earlier? Did you
take a position in the two hundred million dollars of
Georgia's Fayette County Development Authority bonds to build the new
(19:39):
headquarters for the US Soccer Federation.
Speaker 8 (19:44):
So I did not, but I am very excited to
have a home for US Soccer that's in a single location.
I think Atlanta was an interesting place because we do
have a lot of players going over to Europe, so
easier to have something in the East Coast than in
the Central or West Coast time zones for a lot
of those players when they come back to play for
their national teams.
Speaker 2 (20:03):
IRA one final question sliding into June July fifth. It's
called the sold out Stadium. I mean it's every content there,
I mean, lamars sold out. Are you going to go
to Back to Beginning? I mean, this is like a
huge deal for the United Kingdom. This is like a
massive fund raise. Are you going to be there?
Speaker 8 (20:25):
Ira, So I I I plan on it. Yeah, I'm
going to take it. We're in the middle of our
semi pro Socra season that we're in right now, but
I'm going to take that that long weekend off to
the jet set over there and uh and go watch
some Black Sabbath and uh and a few other for Pinterra.
Speaker 2 (20:44):
Sure, Okay, there you go, Lisa, there's your road trip.
You know.
Speaker 4 (20:49):
So I just never got into metal.
Speaker 2 (20:51):
It's up North. It's up North. Okay, it's the Land
of Metal. Okay, Yeah, it's it's a huge deal. It's
called Back to the Beginning Villa Park, Ira, Jersey, be
there and this is in support of huge causes for Birmingham,
including the Birmingham Children's Hospital and the Acorn Children's Hospice,
as well serious stuff by Black Sabbath and all the
(21:12):
metal heads up there. Futures going negative twenty five to
negative seventeen. It's well the next.
Speaker 4 (21:18):
Nineteen point high a Jersey metalhead, I never would have
picked that.
Speaker 2 (21:22):
We you know, that's what happens when you read Fobosi.
Speaker 1 (21:31):
You're listening to the Bloomberg Surveillance podcast. Catch us live
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Speaker 2 (21:44):
Seema shop chief Global strategiest of principles. She has been
wonderful about a persistent view on the market. Seema. Do
you have to rewrite your view this weekend or is
it even possible?
Speaker 9 (21:57):
Hi?
Speaker 6 (21:58):
Tom No, I think look yesterday's news, it didn't change
anything for us, the tariff story. This is absolutely not
the end of the road. I don't think President Trump
would permit it to be the end of the road.
So I think it's been really important for inverses, for
everyone to really try and look away from some of
that noise, some of it is meaningful, some of that
is going to be sustained. Per Certainly, the news from
this week is not something that is changing our views.
Speaker 2 (22:19):
You just metten out with a note she's up at
three am this morning. You see that she's so productive
all night. Right, Seema shot SMB five hundred, up six
point two percent. If we close out the month and
this huge advance, what do people do who didn't participate,
What do you do with cash? With an equity outlook
right now?
Speaker 6 (22:41):
Yes, we have still a slightly positive view for the
rest of the year. The reason is is that we're
not anticipating recession. And so even if you just have
slightly modest positive growth, so expecting one and a half
percent growth for this year, that is still a scenario
where you can get positive earnings growth. And if you've
got postive earnings growth, you should see the equity market
(23:01):
still get positive returns. The thing is it's not going
to be They're not going to be significant positive gains,
nothing like what we've seen in previous years. And it's
important for investors remember there will be a ton of noise.
We're expecting volatility to stay fairly high over the coming months,
and so it's going to be important that if you
aren't invested, to get invested, but also once you're invested,
stop looking at every single headline because that could be very,
(23:25):
very disruptive.
Speaker 4 (23:26):
So siman, just looking back on year to date, I
mean it's been a glass half full, glass half empty.
I mean we had that twenty percent sell off in
the marketplace, but then we've retraced most of that coming
back higher. What are the markers that you're looking at
the to really give you a sense of how this
market might perform for the rest of the year. What
should we be focusing on.
Speaker 6 (23:47):
Yeah, this is a really important question. So when we're
talking about the horizons, we're seeing that there is a
bit of a difference coming through. So over a three
month horizon, there is a lot of concerns. We do
think there are a number of potholes that are coming
that you could start to see a couple of market
pullbacks come through. If you're looking at a twelve month horizon,
it's a slightly more positive outlook where we do see
those positive returns coming through. So within the next three months,
(24:09):
the things that we can be looking at for is
of course can be the economic data. At the moment,
the market has been I think inspired by the fact
that the hard data has remained really strong. It will
likely slow down in Q three, So that's potential pothole.
And the other thing is of course going to be inflation.
We're anticipate painting a spike in inflation again in Q three,
and I think at that point there'll be some discussions
(24:30):
around the FED is going to do, and that's where
you start to see a few potential disturbances to the market.
Speaker 2 (24:36):
The heart of the matter, and Seema we're hearing is
from a lot of people, is if we get this
redo and inflation PC today folks on a Friday, a
lot of economic data for you at eight thirty and
at ten o'clock as well. But Seema, if we get it,
then we get a nominal GDP pop. Do you just
pull that indu sustained earning surprises to the upside?
Speaker 6 (24:59):
I mean, I think so. I mean, I think to
some extent there was so much negativity about a month ago,
so there's still some upgrades to go in terms of
where I think a lot of people are pricing in
for earnings and you know, inflation, it can be positive,
of course you talk about the normal growth side, but
it can have it's certainly its negative impact in terms
of margins. So when we're thinking about earnings, when we're
(25:20):
thinking about forward guidance, that's really the key thing that
we're looking at is how much pricing power do these
companies have. Are they able to pass on those price
increases or are they having to absorb themselves? And that,
to me, I think is one of the key things
that we're going to be looking out for over the
coming months and quarters.
Speaker 4 (25:37):
Sima, we just kind of got through earning share we had.
We've kind of finished up the earning season on a
pretty high note with Nvidia giving some some good numbers
out But still I think there are concerns out there
in the marketplace that earnings estimates out there is still
maybe too high. How do you think about the earning
story out there?
Speaker 6 (25:56):
Well, I think it's also worth keeping in mind that
on a general annual basis, you do see this continuous
down grade to earning forecast as the year progresses. This
is going to be no different for this year. The
question is, are even from that perspective, are earning still
a little bit too optimistic? Given if you kind of
think through the agrads that are likely in a normal
seasonal fashion, I think there is still some negativity to come,
(26:21):
but I don't want to exaggerate that.
Speaker 2 (26:23):
Then.
Speaker 6 (26:23):
I think it's going to be really important that you
think about in terms of which are the pockets, which
are the sectors which are going to be most exposed,
because there will be our areas of opportunity. I mean,
the ones that we like from sectoral perspective are going
to be the financials. We're going to like utilities, and
we like energy. So there's still a lot of good
news from a deregulation perspective. It's just that maybe in
the near term there could be some disappointment which can
(26:45):
then ideally be reversed as you get through to the
second half of the year.
Speaker 2 (26:48):
Journalist this morning, Sea Michelle. We do continue with her
with principal asset manager, who welcome all of you to
cross the nation and your commute. I was run again
had a driver, you staid the Bentley was in the garage?
Ye serious? Xam is normous? Is It's like like, cy
help me out in the control rooms? I wake up.
I know you're up with the Nick slate. Serious Exam
(27:10):
is a big deal. It's a big deal. It's like
very general, enormous Channel one Good Mornings, I Serious Exam
for June. That's going to be my focus here in
our wonderful distribution. You mentioned we're on Bloomberg Originals. Yeah. Absolutely,
this is TV like Roku.
Speaker 4 (27:26):
If you got like a Samsung Smart, the Smart TV's
time where you don't even need cable or anything like that.
Speaker 2 (27:31):
They just got the soft and watches in the United Kingdom.
Speaker 4 (27:34):
You just search Bloomberg original look at that.
Speaker 2 (27:36):
It's amazing on YouTube. Good morning. Subscribe to Bloomberg Podcasts,
curring each and every day. Really excited. Can we do
a shout out Tracy and Joe. Sure, they're killing it
on outline. They're really helping out Bloomberg Podcasts. Thank you
to odd Lots for all your support. There. Seema show
with us with futures at negative three.
Speaker 4 (27:53):
In the fixed income market here, I look at it
to your treasury, I'm getting close to four percent here.
That's a that's not a bad way to make a
lit there. Do I take credit risk on top of that?
How do you guys think about that?
Speaker 8 (28:04):
Yeah?
Speaker 6 (28:05):
I think you can take a bit of credit risk. Erny.
As long as we're not anticipating recession, then defaults they're
going to rise likely, but they're not going to spike.
We would be focused a bit more on the high
quality part of the market because we are expecting an
economic slowdown. And if you're looking across the treasury curve,
like where do you want to be focused, it's probably
in the short duration side.
Speaker 5 (28:24):
You know.
Speaker 6 (28:24):
Thelongside is where you're continuing to see and I don't
think it's going to disappear. Some of those fiscal concerns
continuing to come through, and we think that's going to
be a persistent narrative. So for us, it's that short
duration and the high quality segments that we're most interested
in from a credit and from a treasury curve perspective.
Speaker 2 (28:42):
Seman, what does big tech look like from London? I mean,
I think it's just like this American thing. We're all
mental about Apple and Paul and I drive by the
Apple store at Central Park, South Central Park, and yeah,
Central Park and Fifth Avenue every day. But Sima, what
does mag seven look like from London? You've got a
nice distance to it.
Speaker 6 (29:04):
I think we're just as obsessed with it as the
US is when you're you know, when we're talking to
investors in the UK, it's the same kind of questions.
They're obsessed with the big tech trade. They want to
know which is going to persist or is it something
which has maybe run its course. But if you're looking
at it again O for a longer term perspective, you
don't see that investors are losing much interest. They're just
looking for what is a buying opportunity? When can we
(29:26):
really buy the dip if there is going to be another.
Speaker 2 (29:28):
Dip so sima.
Speaker 4 (29:30):
Earlier in this year, when we had the you know,
maybe the peak volatility in the US markets around the terrace,
we still have a pronounced shift of capital out of
the US to other parts of the world, most notably
European equity markets. Is that still the trade here? Do
people feel like Europe is a good place to move
money visa the the US?
Speaker 6 (29:53):
Well, I think that trade has lost a bit of
it shine in the last couple of weeks. What we're
seeing is that investors really questioning. They know that there
is maybe a potential upside, but they almost at the
point where they're saying, show us some money when is
Europe really going to start to outperform on is it
really going to start talking about deregulation? And only at
that point can they start to think about the increase
in potential growth rate for Europe. So it is a discussion.
(30:16):
It's certing more a different discussion than it was in
prior years. But I think in the last couple of
weeks you are studying to get to that point where
investors are becoming a little bit more skeptic and they
want to see that Europe is realistically going to come
through on some of the plans that people have been
talking about.
Speaker 2 (30:30):
To me, the great divide of may Sey Mischa has
been the mood of retail in America versus institutional Wall Street.
Do you see the same thing in the city.
Speaker 6 (30:42):
Yeah, I think so. In a way, it's been interesting
because the retail money is the money that's been really smart.
They stayed invested through the last couple of months. They
didn't come out of their trades when things got a
little bit rocky. So I think there is a divide
in the behavior. And certainly if you know for institutions
that they're trying to get back into the market if
(31:03):
they did exit it was retail to State Investige.
Speaker 2 (31:05):
Seema Nixer Pacers.
Speaker 6 (31:09):
I'm going to say, Nick, look at.
Speaker 2 (31:11):
That right on top of it. Thank you, Semashawe really appreciated.
Speaker 1 (31:16):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Corplay and Android
Auto with the Bloomberg Business App. You can also listen
live on Amazon Alexa from our flagship New York station.
Just say Alexa play Bloomberg eleven thirty.
Speaker 2 (31:32):
We really wanted the tax of brain folks. You went
through the rolodex and said, okay, who can spouse connected
the Pat Askell joins us right now. Municipal bonds. We
really Paul's been on fire about this, taking advantage of
tax free bonds right now. Our airport bought you your
union college. It's connected the years ago before a lot
(31:53):
of years, a few years ago before. Help me here
with airport. It's is there an opportunity with all the
gloom about airports aviation, our municipal bonds of LaGuardia or
o hair A vailue. Now, yes, we like the airport sector.
Speaker 10 (32:13):
You know, the financials, the planes are full, the off
the off putty contracts like the there's a lot of
opportunity there. I mean, you look at LaGuardia, it's a
beautiful project. Now that it's done, JFK is going through
the construction. You know, other airports in the country are
going to continue to uh to be the opportunities for us.
Speaker 2 (32:30):
Can a little guy buy those bonds? Can I go
out and say, hey, the uber pick up at LaGuardia
was actually pretty good. I want to buy ten thousand
dollars at Laguardian. Yeah you can do that. Yeah, sure
you can.
Speaker 10 (32:42):
You can definitely do It's easier to do it during
the new issue process because the bonds tend to get
put away, but sure, mom, pop can still buy me
any bonds. It's it's easier, you know, to to buy
manage products on those kind of denominations. But certainly you
can do it.
Speaker 4 (32:55):
Pat the minisial bombs just going at the the on
the Bloomberg I end go function, Bloomberg index browser underperforming
the US agg pretty substantially this year.
Speaker 10 (33:04):
Underperforming this year, outperforming in the last month, so you know,
pretty good relative value coming into April when we had
VAUL kick up in the beginning of April based on
due to the post Liberation Day market moves, communis underperformed
since then have done very well. And I think there's
really three things. The relative value that you pointed out
to other fixing a masset classes the technicals. We're going
(33:25):
into a positive technical as we go into the summer,
as supply as supply wanes, and some of the policy
concerns we had out there as we have the tax
bill was first come out of committee in Congress. Looks
like unions are relatively unscathed.
Speaker 4 (33:37):
That's the key point, because that was a I guess
it's always a point. I guess what I've learned from
new municipal guys is every administration comes in, you always
have the risk that the tax deductibility of municipal bonds
may be reduced or eliminated. And that's true in this administration, but.
Speaker 10 (33:53):
True in the Obama administration. True and Trump one point oh,
true and Trump two point oh. That at least it
gets discussed, and I think at the end of the
day we get back to the same thing at all times.
There's very few things that pull well on both sides
of the aisle in our country. One of them's infrastructure.
This is the market that we build most of our
infrastructure in our country, and the exemption to keep the
borrowing costs or state local governments stays in place to
(34:13):
keep that borrowing cost lower.
Speaker 2 (34:15):
Why would anyone call, by full faith in credit taxable
over a certain income level. I just don't get it.
I mean, the yield pickup inural state, I mean a
black crop is there's no debate. No, the yield pickup
is stunning.
Speaker 10 (34:30):
The when you think about investment grade municipals on a
tax equivalent yield basis behind six percent and a high
yield municipal basis behind nine percent.
Speaker 2 (34:41):
It's they offer incredible value.
Speaker 10 (34:43):
I mean, this is the first time we think about
it since pre financial crisis. Will we be able to
get this level of yields embedded in portfolios with the
exception of a few times of crisis you go back
to seven?
Speaker 4 (34:52):
Yeah, what's the credit outlook out there for municipalities? Because
I know during the coming out of the during the pandemic,
I thought, oh my goodness, we're going to have the
first left and right. But there's so much liquidity pumped
in by the government that that did not happen.
Speaker 10 (35:06):
The rough numbers are you know, state and local governments
came out of the pandemic short about one hundred and
forty billion through a variety of federal programs to airports, universities,
and local governments. The feds gave the muni sector about
three hundred billion, so that we really came out of
the pandemic in very good stead and that continues to
be the case. I mean, you know some of the
(35:26):
noise you have around universities right now, on some of
these flagship universities, even if they were downgraded, they're triple
A to double A, right, you know they're going to
have instead of seven times coverage, they're gonna have four
point seven times coverage, right. And I think we'd all
agree on most of the universities that are in the press,
the demand from a student perspective pretty and elastic.
Speaker 2 (35:43):
I'm looking at the black Rock, New York State municipal
buying front. It's had a really rocky one year two
year in twenty twenty, it was like world class performing
ninety fifth percentile? Is that how your world roles where
there's a challenge in a churn and you know you
make your coupon and reinvest it or whatever, and then
there's one big year where you really get the total return.
Speaker 10 (36:07):
Now, I actually think most people buy our products for income.
Speaker 2 (36:10):
I would take it the other way. They take the coupon.
Speaker 10 (36:12):
Yeah, where they want, they want the coupon. I mean,
you know, in general terms, I always say, when the
fixed in fixed income is larger, it's more attractive, it
makes better.
Speaker 2 (36:20):
Ballast in the portfolio.
Speaker 10 (36:22):
So we we don't try to hit home runs in
terms of total return in any one given year.
Speaker 4 (36:26):
What's total what's the new issue market look like, what's
the calendar look like?
Speaker 10 (36:29):
It's it's busy that you were going to have another
Last year was a record year. Last year is a
record year. This year it could be like, Yeah, last
year was north of five hundred billion. It looks like
we're going to come in around five and a quarter
to five thirty this year. That's what it's looking like
right now. And it's it's it's being absorbed in a
better orderly fashioned again, with the exception of the two
weeks you know, kind of following Liberation Day, where markets
(36:49):
all over the globe war we're in fuegos so, but
it's been relatively well received.
Speaker 2 (36:54):
So to get back to airlines. Say Atlanta Hartsfield, they're
doing a big building project, it's empty million. Do they
make four phone calls to Blackrock Fidelity in the rest or?
Is it distributed like the old days? It's it's distributed,
you know.
Speaker 10 (37:08):
Look, it's the retail or period is not as dominant
as it was in the in the old days that
we're going to go back kind of seventies and eighties. However,
there still is a retail or period, and it's you know,
an issue like Hartfield, for example, that'd be out there
and you know they would be doing a rango for
two or three weeks and they'd have one hundred investors
in the book.
Speaker 2 (37:26):
You're committed to one of the great schools in America.
Full disclosure, My uncle was a professor there years ago.
Union College Connected in New York. It's rated top forty
schools in the nation for value as well.
Speaker 1 (37:40):
There.
Speaker 2 (37:41):
Yeah, it's the new engineering. It's such our ci. It's
a one after thoughts. Friends got into RPI and you
know it's great. How'd the admission season go? You guys
prospering in all this education turmoil, you.
Speaker 10 (37:54):
Know, it looks small, smaller Upstate universities are. You know,
in New England, universities are are an intense competition for students.
Union is doing well, but it's just like all its counterparts,
you know, the you know, you bring up R P I,
R I T a lot of the schools that we
know about their excellent institutions. But because there's that demographic
waste they're going through right now where there's a few
(38:14):
less students out there, there's a lot of competition that
they and they don't have, you know, the really really
significant endowments to some of the college.
Speaker 2 (38:21):
So your selling point is it's warm. Schenectady is warmer
than Rochester is.
Speaker 10 (38:27):
At the selling point, we're warmer than Rochester. We're getting
a new hockey rank. We're excited about school rink, not
the Hasspital rank, but the might be involved a little bit.
Speaker 2 (38:37):
But the I'm afraid to ask cowmedy. See, so you
keeping it under.
Speaker 10 (38:40):
Ten thousand, they were keeping it under ten thousand. This
is gonna this is gonna be a really cool addition.
Downtown Schenectady has gone through real boon in the last
twenty years. As ge he has come back very cool.
I didn't know that it's exciting to.
Speaker 2 (38:51):
Watch, which is a remote in the fall. I promise
I'd learned how to spell D one. Hockey is like
an addiction, isn't it?
Speaker 10 (39:00):
College hockey with these smaller five days and you're right
on top of the ice.
Speaker 2 (39:05):
It's exciting, it really is. Now, Pat Haskell, thank you
so much from Union College. Also by way of black
Rock as.
Speaker 1 (39:11):
Well, this is the Bloomberg Surveillance Podcast. Listen live each
weekday starting at seven am Eastern on Apple Corplay and
Android Auto with the Bloomberg Business app. You can also
watch us live every weekday on YouTube and always on
the Bloomberg terminal.
Speaker 2 (39:32):
Right, economis of the year last year, Lindsay Pigs that
joins us on chief economists at Stefel and Lindzie with
great respect, let's go short term. My head is spinning
looking at the Eco co screen all the different things
in Michigan to come on. One year inflation seven point
one percent, five to ten year inflation four point six percent.
How are you framing out? A Q three Q four
(39:55):
call at Steefel? Can you count up the American economy? Right?
Speaker 5 (40:00):
No, Well, we have to be careful when we're looking
at the soft data. The soft data seems to be
pricing in more of a worst case scenario, consumers vocalizing
all of this concern. But as we saw this morning,
in the hard data, the consumer is still out in
the marketplace spending, so there seems to be again more
of this erosion of confidence than an actual change in behavior.
(40:21):
We see that on the court side as well.
Speaker 2 (40:22):
So what's your number forward? I'm sorry, what's your number forward?
You're real GDP?
Speaker 5 (40:29):
I think GDP in the second half of the year
is going to recover to about a one and a
half one point seven percent pace, So positive, we're back
in positive territory, but certainly nothing to write home about.
But again I think against that backdrop of almost two
percent growth upside risk to inflation, the conversation for the
FED is going to shift dramatically from where it is
(40:51):
right now, as FED officials are saying we're well positioned
or they're looking for potential justification for additional policy easing.
Speaker 4 (41:00):
So do we have have we taken recession off the table? Lindsay,
because say earlier in New Year, when people were trying
to run their models in there thinking about one hundred
and plus percent tariffs in various countries. That was very
much the talk of the town. But is that off
the table now?
Speaker 5 (41:16):
Well, remember recession was never in our base case scenario.
We were looking for a slowdown in momentum, and we
certainly saw that come to fruition in the first quarter,
but by Q two we are looking for a return
to minimal positive growth. So yes, that does remove the
near term fear of a recession. Now again, things can change,
so recession is not necessarily off the table, but our
(41:37):
base case says that the worst of the brunt of
that anticipation, that concern around tariffs has already been felt.
January to March.
Speaker 4 (41:46):
Lindsay, we've seen a lot of risk assets, particularly the
US equity markets, bounce back nicely. Big exception is the
US dollar. What's your view there, Well, there's.
Speaker 5 (41:56):
Going to continue to be a lot of volatility, I
think as the currency market is trying to gauge, just
like investors broadly are trying to gauge what the endgame
for tariffs is going to be. Now, of course, this
back and forth that the most recent disappointing news in
terms of trade talks with China, This is going to
continue to put pressure or at least volatility on the
(42:17):
US dollar, and I think this is going to be
a storyline that we're not going to be able to
shake maybe through the year end.
Speaker 2 (42:24):
Helping here with the asset move, we're going to see
if we have tariffs up and Lisa Mateo's reporting the
gap is having some challenges. They go from twenty eight
to twenty three right now on stock price. Do we
just see lindsay in your world and asset erosion due
(42:46):
to well stagflation sense.
Speaker 5 (42:49):
I think stagflation is the biggest concern because again, as
we talk about our forecast for growth in the second
half of the year, while moving back into positive territory,
a one and a half percent growth rate is is
well below the bare minimum. Let's say that you should
expect for a developed economy one percent from productivity gains
one percent from population growth, so two percent is really
(43:10):
the minimum, and we're expected to fall below that, so
it's essentially a non accelerating economy. Then you layer on
the upside risks of price pressures, which I do think
will filter back in as tariffs become more solidified in
terms of their implementation, and stagflation is going to be
a very real scenario when you think about what keeps
(43:31):
you up at night, it's not the recessionary scenario.
Speaker 6 (43:33):
There we get the.
Speaker 5 (43:34):
Recovery boomed, but the stagflation scenario limits the impact of
market policy on either side and could be a lingering
scenario for years to come.
Speaker 2 (43:45):
This is a major May insight, folks. Is this new
rewaighting of modest or if you're gloomy, tangible stagflation. She's
recovering from primes right now with the market opening here,
don't stop believing, Lisa Matteo, Lisa, what do you got it?
Speaker 11 (44:01):
And we've got a lower open. That's what we have
right now. This is the last trading day of the month.
S and P five hundred down two tens a percent,
fourteen points, five thousand, eight hundred ninety seven, the Dow
off two tens of percent eighty five points forty two thousand,
one hundred twenty three, and the NA deck down about
two tens percent fifty five points and nineteen thousand, one
hundred and twenty taking it to the two year yield
three point nine four percent, that's little change, and the
(44:23):
yield on the tenure four point four two percent, that
is little change. We'll check in with commodities. We have
spot gold down about six tens of percent, three thousand,
two hundred and ninety five dollars an ounce. Over to
oil Brent crude down three tens of percent, sixty three
dollars a barrel, WTI crewed sixty dollars a barrel. The
Bloomberg dollars Spot Index up about a ten to percent,
and Bitcoin down half a percent at just above one
(44:44):
hundred five thousand. That is your Bloomberg opening Bell report.
Speaker 2 (44:47):
All in, Tom, thanks so much, Lisa, greatly appreciate that. Again,
negative one twenty six on the Dow Vix, not out
your twenty but getting there again. The presidential press conference
with mister I guess I'm calling it a press conference.
I think it's okay. With Elon Musk, we'll see that
at one thirty. An important tweet here in China an
hour an hour and a half ago. Maybe we'll get more.
(45:07):
Lindsay piigser with us here. Lindsey a lot of and
I sort of like the chart. It's an elegant chart.
Continuing claims reach out to a new worser, going back
to the pandemic, going back to twenty twenty two, twenty one.
Is there a significance at once twice three four five
(45:30):
On the six try we break through nineteen hundred on claims.
Speaker 5 (45:36):
I think the claims data wall well, very volatile, has
been more indicative of this slow loss of momentum in
the labor market. The second part of the labor equation,
fears about losing one's job, is not overly robust at
this point, and when we look at the job creation component,
that's still relatively positive as well, again down from an
(45:58):
earlier more robust pace. We're talking about second derivative decline here,
But overall, the labor market picture is still very solid,
and that's the component that continues to support the momentum
of the consumer out in the marketplace. This thesis of
resilience on the part of the consumer, it's coming from
these ongoing solid conditions in the labor market. So I'm
(46:18):
not overly concerned about the volatility of the continuing or
initial jobless claims data.
Speaker 4 (46:25):
So the consumer is resilient. But we keep hearing about
a bifurcated view of the consumer. The higher ends doing fine,
maybe even better than fine, and the lower ends really
facing the challenges out there, how sustainable is that?
Speaker 5 (46:41):
Well, we are facing challenges. I don't want to over
sell the strength of the consumer. The average American, the
average household is feeling pain from higher prices over the
past years, higher borrowing costs, the resumption of student debt payments,
and now you layer on the fear of changes to
trade policy or additional tariffs.
Speaker 6 (47:00):
There absolutely is.
Speaker 5 (47:01):
Pain being felt, and we see that in that loss
of momentum. But nominally, across the board, consumers are still spending.
Now you're right in the middle and the upper end
of the income spectrum, we see consumers benefiting more from
this massive run up in household net worth thanks to
an accumulation of asset prices which the lower end is
largely precluded from enjoying. Just statistically speaking, they're less likely
(47:24):
to have a stake in the equity market, less likely
to own property, and so again having enjoyed this run
up in household net worth that many Americans have. But
when we look where consumers are spending, even those at
the lower end are still benefiting from that more organic
growth in income from the access to additional short term
(47:44):
spending options such as buy now, pay later four oh
one K hardship withdrawals an intergenerational wealth transfer, so there
are still a number of inorganic factors supporting consumers. But
even at the lower end, income growth component is really
a positive notion.
Speaker 2 (48:01):
I hate you. I've got eight more questions in no time,
Lindsay Pigs, thank you so much, Chief Economists and Steve
O my Economists of the Year. Last year, her optimism
on the economy really measured. She was just really, really,
really good job day to day, grinding out the view
for the crystal ball and this American economy.
Speaker 1 (48:21):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Applecarplay and Android Auto
with the Bloomberg Business app. You can also listen live
on Amazon Alexa from our flagship New York station. Just
say Alexa play Bloomberg eleven thirty something different right now.
Speaker 2 (48:39):
Philip Deal joins as president of US Money Reserve. Also
Tory duty at the US men is public service to
the nation. Showed he could join us here. It's on
gold and you know the usual krugarands. Yeah, you know that,
Philip dial Just to cut to the chase, what's the
biggest misconception Lisa Matteo, and I'm keen about the US Mint.
Speaker 9 (49:04):
About the US Mint, well, it's a fortune five hundred
sized company has a marketing and and manufacturing component, but
it also protects the gold at Fort Knock, so that's
one of its major claims to fame.
Speaker 2 (49:22):
Is a penny going away? Excuse me?
Speaker 4 (49:25):
Yeah, that's a good question, I think.
Speaker 2 (49:26):
Phil, What do you think about?
Speaker 8 (49:27):
Mean?
Speaker 2 (49:28):
Come on, I had a coin collection. Did you have
a coin collection? Phil? Did you have a little punching
blue things on the floor?
Speaker 9 (49:34):
Director of the United States meant then I did.
Speaker 4 (49:37):
Ye, not a big coin collection. What is happening with
the US penny? Do we have any We have a
conclusion there.
Speaker 9 (49:45):
Yes, US penny's going away by executive order. The President
has ordered the penny production to stop. The penny is
going to continue in circulation. It's not being demonetized, right,
but I think a period of a few years it's
going to it's gonna wind its way out of the
(50:06):
economy and right be an item of the past, just
like the halfpenny.
Speaker 2 (50:10):
Is you Phil? I'm gonna cut to the chase. The
whole thing with gold, the perception as well as a
bunch of flakes. You're not a flake, You're like an
actual adult with real world experience with this. What's the
most efficacious way to acquire tangible gold? Now, like my
mother bought Kruger rans a million years ago.
Speaker 9 (50:33):
Well, of course, being a former director of the United
States meant I like American Eagles the gold coin of
the United States, and it has been you know, it
dates back to the mid nineteen eighties. And my company
US Money Reserve sells eagles and that's our biggest seller,
but we have a wide range of products as well.
(50:55):
But the Eagle is legal tender of the United States
and it's back by the full faith and credit of
the United States for its purity of gold.
Speaker 4 (51:04):
Philip, why has gold been on such a tear recently.
Speaker 9 (51:10):
Well, there's a lot of history behind gold, of course,
about three thousand years history of being wealth insurance essentially.
And the story begins the day after the Harmas attack
on Israel, and that really illustrates one of the main
drivers of gold prices over decades, hundreds of years, and
(51:33):
that is war and great economic uncertainty. And as the
war spread through the Middle East, then gold really began
its ascent. The second major factor was in November of
twenty twenty three. About a month later, we got the
first report good inflation report from the Department of Commerce,
(51:57):
and with that report began that the Fed would began
lowering interest rates, and gold immediately responded to that. And
I'd say, there are other factors, but the other major
factor is central banks have buying gold hand over fist
for the last three years. Yes, and that has been
(52:18):
a major driver.
Speaker 2 (52:19):
So one more question. I think it's really important, and
Paul's been much better at this moment. I go Mental
filled deal like Texas A and m Mental. He said,
we got another valmore. No, I don't know what that's
about it, Phil, I go Texas A and m Mental.
When people tell me bitcoin is a gold equivalent, how
(52:41):
do you respond, is a former head of the Mint,
you're actually an adult in the gold coin business. When
somebody tells you bitcoin is a gold eagle equivalent.
Speaker 9 (52:54):
Yeah, I try to be more civil about it.
Speaker 2 (52:56):
But my reaction, my intern reaction is like yours.
Speaker 9 (53:00):
I mean, it's sort of ridiculous because gold is you know,
for hundreds of thousands of years, has been held and
today is being held by central banks and individuals as
a store of value, which means you can count on
its value. And can you do that with bitcoin? I mean,
what over the last several months it's gone up and
(53:23):
down thirty So no, it's not competition for gold at all.
And people who would put it in I mean, you
can't put it in your IRA, but it's not included
in federal government policy. But even if you could, I mean,
(53:44):
you'd have mighty disappointments, unlike with gold. I mean, so
what we've had with gold is sort of the best
of both worlds. Gold I've been seen for forever as
bad news investment, but it's been performing extraordinarily and good times.
Speaker 2 (54:01):
Your political hitter down there in Texas, phil Deal, I
need a and m longhorns Thanksgiving Day. That's what we
need to return here, Philip Deal with us money Reserve
of bustin Texas. Thank you for the time there.
Speaker 1 (54:14):
This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
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You can also watch us live every weekday on YouTube
(54:34):
and always on the Bloomberg terminal
Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
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Listen on demand wherever you get your podcasts, or watch
(00:25):
us live on YouTube.
Speaker 2 (00:27):
Right now, what we're going to do is get to
the economic data at Greg Boudele with us here to
wrap around it on the mathiness and derivative moment. This weekend,
all financial publications will tell the American public give up
the upside hedge, taking a higher income when you hedge,
and you'll be happy. You're the pro at this. Should
(00:50):
we be doing that? Should we be giving up upside
potential in bringing in a premium income to goose our
dividend to goose so sure, buyback.
Speaker 3 (01:01):
That's certainly how we feel about things.
Speaker 2 (01:03):
In the short run.
Speaker 3 (01:04):
We titled I Not Yesterday tariff fatigue. The market is
starting to look a little bit tired. Some of the
imbalances in position in which we think drove the extent
of this rally have started to become worked through a
little bit, and we think we are in an environment
where it would be easier for the market to tread water.
When we look at the options complex, there are places
where we think it is better to extract premium and
(01:24):
others where we think it is better to own that optionality.
Speaker 4 (01:28):
So if we think the markets are going to kind
of tread water a little bit, am I writing options
these days? Is that what people are doing?
Speaker 5 (01:35):
So?
Speaker 3 (01:35):
I think like one of the kind of oldest option
strategies out there is the covered core boom owning the
equity selling some upside against that. What you're basically doing
is giving up some of the right tail of the
distribution the short term in exchange for some income.
Speaker 4 (01:49):
See I paid attention in Futures and Options class Cam Harvey. Yeah,
I paid attention. There are people what do they feel
like in terms of the risk, Like, if I want
the I some protection here, is it expensive relative to
historic levels or where are we?
Speaker 3 (02:04):
So it kind of depends what you're looking at. If
we're talking broad US indices, then it's way off the highs.
Things got very expensive post Liberation Day, but we are
not back to those pre Liberation day levels. You know,
the equity market is we've been touching distance of all
time highs, but equity optionality is still a little bit
more elevated from where it was, particularly on the downside.
So yeah, if you're just going and buying US index hedges,
(02:27):
you have to be careful because it's not cheap.
Speaker 2 (02:28):
If you're buying individual stock edges, do you partition it
between fancy stocks where you could get crushed, taking in
premium where they take off like Microsoft this month of
May or and then there's four to eighty three other
stocks that you really can grab a premium. Is that
how it works? Yeah?
Speaker 3 (02:48):
I think you have to think about what are the
risks that you are worried about. What are you trying
to hedge. Is it more eosyncratic stock specific or are
we looking for more macro hedges. We've been talking more
about looking at macro hedges, but going a little bit
out the term structure, out to say the September expiry
where we think some of the macro weakness could start
to manifest a little bit more. I think the smaller midcaps,
so the Russell IWM is a part of the market
(03:12):
which I think looks attractive to use to hedge.
Speaker 2 (03:14):
Greg boutle ready for those compliance of BMP Perry, but
they don't even speak English in New York, it's in French.
They're even more ergus O mon dieux, Greg Bottle on
naked short selling.
Speaker 3 (03:24):
Go so, I think that if you want to be
naked short the market, then you have to be willing
to accept the risk that comes with it. For us,
we think there is better risk world profile and putting
on hedges on the downside owning optionality than there is
naked short selling.
Speaker 2 (03:40):
That was like road compliance. Yeah, that was really that
was a plus, say Greg Bodles answered that question before.
Naked short selling, folks, is not to be tried. Don't
do this at home. It's really really hazardous. You'll be
right four or five six times and boom and it
doesn't work out right. Be careful out there. Let's talk
(04:01):
to Paul Sweety about option you know, how to not
lose money in the or the de Jerrians one of
the two. I'm just going to make it as clear
as I can. I got economic data with some revisions here.
I got a sweet PCI year over year of two
point one percent, signaling some disinflation. I got a revision
(04:22):
showing personal income is better, and it doesn't care because
the president just tweeted yep, I mean, basically, there's no
dynamic with an SMP futurest Greg battle they're negative twenty,
they come up a little. In defense, they come up
negative twenty out of negative twenty five up the negative twenty.
Do we misjudge the American economy? Is that the issue
for people cautious on the equity market potentially?
Speaker 3 (04:45):
I think the question about the data is when is
it going to start to matter? At the moment, what
we see is backward looking data that maybe is starting
to capture the first impacts of the tariffs. But what
matters as much more as when we move through June July,
does the data stay very resilient case that's going to
create question marks for the bears. I think the consensus
is that the data will start to soften as we
(05:05):
moved through the summer. So I think at the moment
it's very hard to get a positive risk signal or
more clear from data.
Speaker 2 (05:12):
This is really important to continuing claims breaking out. Yesterday
Veronica Clark mentioned it's the end of May. We don't
have a clue except we said that at the end
of December.
Speaker 4 (05:22):
Lie exactly exactly as well.
Speaker 2 (05:24):
Here we go.
Speaker 4 (05:25):
So given that uncertainty, Greg do you find your clients.
Are they coming to you and say, I want to
have more protection around my portfolio than typically or are
they just saying I can't worry about this stuff.
Speaker 3 (05:38):
I think people are more defensively positioned. We look at
this through quantitative lens where we aggregate a lot of
the flows in the equity market, and we've produced this
composite equity positioning indicator and it scales from zero to
one hundred, so it's pretty easy to read we are
euphoric levels at the end of last year almost ninety
seven hour of one hundred. Things got very washed out
(05:59):
post liberation, and now we've made our way back into
this more neutral territory. That indicator sits in the mid forties,
so points to a market where people are more defensively positioned.
But we're not as barishes as we were from a
positioning landscape a month ago.
Speaker 4 (06:14):
Ninety seven reading I kind of remember those days. It
was like we have in an administration that's going to
be pro growth, you know, less regulatory and boy times
have changed.
Speaker 3 (06:25):
Six months ago, but it feels like a lot longer
than it does it does.
Speaker 4 (06:28):
What's kind of the smart trade you've somebody's come up
to you with recently when your clients are called gym
say hey, we like to do this, and you're like, really.
Speaker 3 (06:37):
I think the things that people have been doing have
been more nuanced. As we were discussing earlier, it is
looking at ways to fun trade. So if you're looking
at the optionality complex and like, I do you think
maybe there's value in owning some of that September optionality
where the data starts to matter a little bit more
through the summer. It's looking at smart ways to try
and finance that. So you know, one of the things
that we were talking about in our tariffy yesterday was
(07:01):
how to fund those hedges. So we think looking at
things like cover calls and things like the energy space
is probably probably an interesting way.
Speaker 4 (07:06):
So what's a covered call in the energy space?
Speaker 2 (07:09):
Like that?
Speaker 3 (07:09):
So a cover call is simply if you are long
the stock and you are selling optionality against that such
that you are not nakedly short that option. And in
terms of the energy space, that could be one of
the energy ETFs such as Yahoo or some of the
some of the large energy stocks. It's a very benign strategy,
but a way to eke out a little bit of
yield that we think you can spend on hedges.
Speaker 2 (07:31):
We got a great set of people. Robert from uh
I think it's it's up and it's colder than Union College.
He was upset at our Union College discussion of D
one hockey with Pat Haskell Blackrock. Robert comes in and
says Hamilton College is destined D one hockey. He notes
Paul the complete return of the trade deficit. It is
(07:56):
a spring back from a negative one six zero, stunning
back to negative nine zero. That's not I wonder if
the President will bring that up at the press conference today.
Our policies are working. We're getting rid of the trade deficence.
Speaker 4 (08:12):
Awesome, that would be the promise than with Italy with
the purchase.
Speaker 2 (08:18):
Wait a couple of weeks. If you're gonna have a
trade deficit, you're gonna be on the Spanish steps and
you looked out that's that. You look down that street,
a gauntlet of stores. It's it's it's Lisa, what's it
called its avenue tradio deficit? You o something like that? Greg,
thank you for coming in, Thank you for the explanation
(08:40):
there and getting through the compliance moment un naked naked
you know you nailed it, Greg Botle, don't be a stranger.
Thank you. With b MP Perry by just wonderful through
some of the sous on VMP Perry BA has had
a really really excellent, uh excellent moment there, I should
say as well, again when we set this up and
(09:02):
Eric did a great job with the interns, we wanted
a broader view. Even Devid can give that to us
right now. She has been wonderful, particularly with a transatlantic view.
All of that important into the President's press conference today.
Ifan Devid joins us from Manetta. If and what are
you writing into the month of June.
Speaker 6 (09:23):
Excellent question.
Speaker 7 (09:24):
I think we're going to see a continuation of this
type of volatility. We're obviously going to see getting close
to drop dead dates and some of these tariffree negotiations.
We'll see how the negotiations actually play out. We're going
to see more and more clarity in terms of the
actual impact of tariffs on prices. We've only seen really
sporadic clarity up to now, and we're probably going to
(09:47):
see more resolution in terms of the legality of these tariffs.
We're going to this day now that's been placed on
the Court of Trade decision. There should be an appeal
and we should see the outcome of that. So lots
going on. It's not going to be is silly in
the quiet summer.
Speaker 2 (10:01):
Are Europeans returning to American investment, leaving American investment? Are
they waiting for Paul's arrival in Rome? Which is it?
Speaker 7 (10:12):
I'd say at this point there is not a net
increase in US investment. There has been an overweight to
the US for the most part. It has played out
very well. The strong dollar has worked very well for them.
Right now it seems that the US investment story is
losing a little bit of its charm, its cachet. The
weaker dollar is the course affecting that. And then we're
hearing just about this anti perhaps foreign student movement, the
(10:36):
lack of travel into the US, perhaps the sense that
there might be a revenge that was a headline today.
So all that all adds to the uncertainty. And I
would say, now there is often taking and timing back.
Speaker 2 (10:47):
I mean, Paul, think about it ending to give in
school where kids are like I got to get up
and go to thermodynamics, and I got to put up
with all this protest and angst and passports and all that.
Why don't I just go to Trinity College Dublin. I mean,
you know, Boom, you're there.
Speaker 4 (11:03):
I'd be right there. They would love me there. Even
where do we go here? I mean, Tom's been long
bitcoin and just laughing all the way to the bank.
But how about for the rest of us? How much
risk are your clients feel like they need to take
these days? Or it's just too much noise out there?
Speaker 6 (11:22):
It's an excellent question.
Speaker 7 (11:23):
There definitely is not sort of satisfaction with sitting in
cash right now. We know that cash is not a drag,
but there's still that that four between four and five percent,
it's still not great. After inflation, there's a real sense
that inflation is going to be with us for a
very long time and that we will have to invest
in growth assets. So where are clients comfortable taking risk.
They're still quite comfortable in the equity markets, and that's
(11:45):
a good thing because that will have to be their
engine of growth for some time. They're increasingly more comfortable
in the private segments, private equity, private credit. They're not
as comfortable in real estate as before. Perhaps there is
a little bit of muscle memory or even trauma around
previous downturns and something like infrastructure or income generating.
Speaker 6 (12:03):
That's really something for the institutions.
Speaker 7 (12:04):
It's not something I see a ton of interest among
private wealth clients in Interesting would on Frenday College seven
Trendy College, telln is an excellent place to visit.
Speaker 2 (12:13):
Ephan Devin, stay with us, please Interesting Friday Morning across
a nation. Good morning from the early morning Left Coast
out there and Android Auto Apple car play Major. Good
morning to Sirius XM Channel one twenty one, huge distribution
for US ninety nine one FM in Washington, ninety two
nine FM in Boston, and Bloomberg eleventh three to zero
(12:37):
in New York. We say good morning on YouTube building
every month. Paul and I just dumbfounded by the success
of Bloomberg podcast. Thank you so much for your attention there,
particularly your global attention. The evening of the Pacific at RIM,
futures are negative twenty five off the President's tweet. They
come up a little bit off buoyant personal income spending
(12:58):
quite essent inflation at the margin. Futures go negative twenty
five up the negative twenty.
Speaker 4 (13:05):
If and you mentioned private equity, private credit I'm surprised
that at the level of exposure that a lot of
family offices and their clients have to alternative investments. What
do you think is a reasonable allocation because there's so
many opportunities now, hedge funds, private equity, now private credit
has become such a big market opportunity. What's your expertise, I'd.
Speaker 7 (13:29):
Say, depending of course on the size of that family office.
But we're seeing anything from fifteen to thirty percent in
alternative assets. Certainly would lower be lower at the dipping
the toe in the water stage, and you have five
percent ten percent, I'd say less than five percent, it's
not really worth the extra work and due diligence involved
and this sacrifice sub liquidity. It's important to really understand
(13:50):
the segment all about relationships. You're in there for the
long haul, and I have to be a meaningful allocation.
But between five and fifteen absolutely normal, and if you
really have high conviction going higher.
Speaker 4 (14:00):
And that again, if we saw a movement of capital
investment capital out of the US earlier this year, when
the uncertainty was maybe at its peak around tariffs and
economic impacts, was that just a short term trade or
as you talk to your clients, do they feel less
likely or less confident investing in the US markets?
Speaker 7 (14:21):
Yeah, definitely, there is I'd say a wariness around having
too much in the US right now, and our clients
have always had global exposure, and that global piece was
a little difficult to defend recently, especially in the last
over fifteen years under performance that is definitely by definition
difficult to defend and with a strong dollar two. Now
that some of those movements have reversed, our clients are
(14:43):
taking are quite confident now in their non US holdings,
and I would say that the non US story it
tends to get crowded out a lot by some of
the flooding of the zone that occurs in the US,
and that the Trump administration the US developments are on
everyone's lips no matter where you are, particularly in Europe.
But behind US and Europe there is by stealth. I
would call it a steady growth of investment in the sector,
(15:05):
in the industrial complex, really coming back from rock bottom
in terms of confidence.
Speaker 6 (15:10):
And just innovation and a lot more focus of that.
Speaker 7 (15:13):
I think we have to start looking beyond some of
the noise in the US.
Speaker 2 (15:16):
Ivan Devid, thank you so much for the brief from
Minetta this morning. Here in a Friday where we set
up conversations to get you into the month of June
features negative twenty five lift to negative nineteen, the Vics
nineteen zero point five to one dead tape two hours ago.
The President with a tweet makes it more sprightly here
with angst about China, Paul, you gotta believe China responds
(15:40):
in some way towards the Asia Monday opening of seven PMSH.
Speaker 4 (15:46):
Yeah, you know, I'm not really sure what the president's
referencing in his tweet here as it relates to discussions
with China, but obviously he doesn't like what he sees
and maybe hears from China. But it just kind of
brings back into the discussion and a little bit of
heightened trade uncertainty, which seems to be the background.
Speaker 2 (16:04):
I'm going to go by to the Peterson Institute and
the iconic work of William Klein here the idea of
bilateral or unilateral discussions. It's a multilateral world joining us
right now on the short term bond market where he
is world acclaimed. Ira Jersey just off testimony to I
believe the House of Representatives joins us this morning, driving
(16:24):
all a fixed income at Bloomberg Intelligence. I rate just
simple into June. Is you and your team right, do
you have like a theme or are you as confused
as everyone else? Yeah?
Speaker 8 (16:41):
Well I think the theme is confusion. Uh, And you
know certainly that we're going to continue to probably have
these headlines right like we're trying to and the market
is trying to find where the endgame is likely to
be in terms of all of these policy actions that
the president's doing. And of course, when you have court
decisions that seem to you know, are going to might
(17:02):
force the president to backtrack, and some of these tariffs
unwined because there's an overreach of executive orders, that again
puts another layer of confusion into things. So I think
what that means is that you're not necessarily going to
see a whole lot of directional moves in the rates
market in particular, right, So the treasury market will probably
(17:24):
just be kind of range bound, but you're going to
see a lot of volatility within that range, and that
that's certainly what you've seen the last two months.
Speaker 4 (17:30):
We got some inflation data today core pc E n
X a month to month zero point one percent on
an annualized basis two point five percent. That's right in
line with expectations. It doesn't seem like some of these
tariffs are impacting inflation yet. I guess, how's your market
kind of digesting this?
Speaker 8 (17:52):
Yeah, So certainly that the yet is what matters in
that sentence there, Paul, because if you look at the
durable goods, like if within the PC data you can
break out durable goods and non durable goods, which are
things like consumables and the like, and then services. What
you saw is it was actually a decline in prices
for both of those goods sectors, but a three point
three percent increase in prices month on month for for
(18:19):
the services sector. So you still have services driving inflation
at the moment. And the continued fear is that with
a significantly lower amount of imports coming in that eventually
that's going to go through prices. So as inventories are
drawn down, you're going to see, you know, new prices
for what the imported goods were. So look at the
(18:39):
trade number. You know, I haven't heard you in the
last couple of minutes anyway talk about the trade data.
But twenty percent draw down a twenty percent decline in
imports is pretty significant, right, and you know that this
is only for one month, and the first month where
tariffs were imposed. It might be even worse as we
get the May data, right, and so when we end
(19:01):
up getting higher prices than in the future. For that
the rates market, though, you know, you look at inflation
break evens right now, they haven't moved very much, right
tenure inflation break evens two point three three percent. Even
though you might have an uptakeing inflation briefly, the market
certainly doesn't think it's going to be very sticky.
Speaker 2 (19:17):
Well, thanks to Bob a professor up at Hamilton College
for that mentioned in the trade deficit really came back
as mister Jersey mentions the interest rates as well. Ira Jersey,
did you buy we're talking UNI bonds earlier? Did you
take a position in the two hundred million dollars of
Georgia's Fayette County Development Authority bonds to build the new
(19:39):
headquarters for the US Soccer Federation.
Speaker 8 (19:44):
So I did not, but I am very excited to
have a home for US Soccer that's in a single location.
I think Atlanta was an interesting place because we do
have a lot of players going over to Europe, so
easier to have something in the East Coast than in
the Central or West Coast time zones for a lot
of those players when they come back to play for
their national teams.
Speaker 2 (20:03):
IRA one final question sliding into June July fifth. It's
called the sold out Stadium. I mean it's every content there,
I mean, lamars sold out. Are you going to go
to Back to Beginning? I mean, this is like a
huge deal for the United Kingdom. This is like a
massive fund raise. Are you going to be there?
Speaker 8 (20:25):
Ira, So I I I plan on it. Yeah, I'm
going to take it. We're in the middle of our
semi pro Socra season that we're in right now, but
I'm going to take that that long weekend off to
the jet set over there and uh and go watch
some Black Sabbath and uh and a few other for Pinterra.
Speaker 2 (20:44):
Sure, Okay, there you go, Lisa, there's your road trip.
You know.
Speaker 4 (20:49):
So I just never got into metal.
Speaker 2 (20:51):
It's up North. It's up North. Okay, it's the Land
of Metal. Okay, Yeah, it's it's a huge deal. It's
called Back to the Beginning Villa Park, Ira, Jersey, be
there and this is in support of huge causes for Birmingham,
including the Birmingham Children's Hospital and the Acorn Children's Hospice,
as well serious stuff by Black Sabbath and all the
(21:12):
metal heads up there. Futures going negative twenty five to
negative seventeen. It's well the next.
Speaker 4 (21:18):
Nineteen point high a Jersey metalhead, I never would have
picked that.
Speaker 2 (21:22):
We you know, that's what happens when you read Fobosi.
Speaker 1 (21:31):
You're listening to the Bloomberg Surveillance podcast. Catch us live
weekday afternoons from seven to ten am Eastern. Listen on
Applecarplay and Android Otto with the Bloomberg Business app, or
watch us live on YouTube.
Speaker 2 (21:44):
Seema shop chief Global strategiest of principles. She has been
wonderful about a persistent view on the market. Seema. Do
you have to rewrite your view this weekend or is
it even possible?
Speaker 9 (21:57):
Hi?
Speaker 6 (21:58):
Tom No, I think look yesterday's news, it didn't change
anything for us, the tariff story. This is absolutely not
the end of the road. I don't think President Trump
would permit it to be the end of the road.
So I think it's been really important for inverses, for
everyone to really try and look away from some of
that noise, some of it is meaningful, some of that
is going to be sustained. Per Certainly, the news from
this week is not something that is changing our views.
Speaker 2 (22:19):
You just metten out with a note she's up at
three am this morning. You see that she's so productive
all night. Right, Seema shot SMB five hundred, up six
point two percent. If we close out the month and
this huge advance, what do people do who didn't participate,
What do you do with cash? With an equity outlook
right now?
Speaker 6 (22:41):
Yes, we have still a slightly positive view for the
rest of the year. The reason is is that we're
not anticipating recession. And so even if you just have
slightly modest positive growth, so expecting one and a half
percent growth for this year, that is still a scenario
where you can get positive earnings growth. And if you've
got postive earnings growth, you should see the equity market
(23:01):
still get positive returns. The thing is it's not going
to be They're not going to be significant positive gains,
nothing like what we've seen in previous years. And it's
important for investors remember there will be a ton of noise.
We're expecting volatility to stay fairly high over the coming months,
and so it's going to be important that if you
aren't invested, to get invested, but also once you're invested,
stop looking at every single headline because that could be very,
(23:25):
very disruptive.
Speaker 4 (23:26):
So siman, just looking back on year to date, I
mean it's been a glass half full, glass half empty.
I mean we had that twenty percent sell off in
the marketplace, but then we've retraced most of that coming
back higher. What are the markers that you're looking at
the to really give you a sense of how this
market might perform for the rest of the year. What
should we be focusing on.
Speaker 6 (23:47):
Yeah, this is a really important question. So when we're
talking about the horizons, we're seeing that there is a
bit of a difference coming through. So over a three
month horizon, there is a lot of concerns. We do
think there are a number of potholes that are coming
that you could start to see a couple of market
pullbacks come through. If you're looking at a twelve month horizon,
it's a slightly more positive outlook where we do see
those positive returns coming through. So within the next three months,
(24:09):
the things that we can be looking at for is
of course can be the economic data. At the moment,
the market has been I think inspired by the fact
that the hard data has remained really strong. It will
likely slow down in Q three, So that's potential pothole.
And the other thing is of course going to be inflation.
We're anticipate painting a spike in inflation again in Q three,
and I think at that point there'll be some discussions
(24:30):
around the FED is going to do, and that's where
you start to see a few potential disturbances to the market.
Speaker 2 (24:36):
The heart of the matter, and Seema we're hearing is
from a lot of people, is if we get this
redo and inflation PC today folks on a Friday, a
lot of economic data for you at eight thirty and
at ten o'clock as well. But Seema, if we get it,
then we get a nominal GDP pop. Do you just
pull that indu sustained earning surprises to the upside?
Speaker 6 (24:59):
I mean, I think so. I mean, I think to
some extent there was so much negativity about a month ago,
so there's still some upgrades to go in terms of
where I think a lot of people are pricing in
for earnings and you know, inflation, it can be positive,
of course you talk about the normal growth side, but
it can have it's certainly its negative impact in terms
of margins. So when we're thinking about earnings, when we're
(25:20):
thinking about forward guidance, that's really the key thing that
we're looking at is how much pricing power do these
companies have. Are they able to pass on those price
increases or are they having to absorb themselves? And that,
to me, I think is one of the key things
that we're going to be looking out for over the
coming months and quarters.
Speaker 4 (25:37):
Sima, we just kind of got through earning share we had.
We've kind of finished up the earning season on a
pretty high note with Nvidia giving some some good numbers
out But still I think there are concerns out there
in the marketplace that earnings estimates out there is still
maybe too high. How do you think about the earning
story out there?
Speaker 6 (25:56):
Well, I think it's also worth keeping in mind that
on a general annual basis, you do see this continuous
down grade to earning forecast as the year progresses. This
is going to be no different for this year. The
question is, are even from that perspective, are earning still
a little bit too optimistic? Given if you kind of
think through the agrads that are likely in a normal
seasonal fashion, I think there is still some negativity to come,
(26:21):
but I don't want to exaggerate that.
Speaker 2 (26:23):
Then.
Speaker 6 (26:23):
I think it's going to be really important that you
think about in terms of which are the pockets, which
are the sectors which are going to be most exposed,
because there will be our areas of opportunity. I mean,
the ones that we like from sectoral perspective are going
to be the financials. We're going to like utilities, and
we like energy. So there's still a lot of good
news from a deregulation perspective. It's just that maybe in
the near term there could be some disappointment which can
(26:45):
then ideally be reversed as you get through to the
second half of the year.
Speaker 2 (26:48):
Journalist this morning, Sea Michelle. We do continue with her
with principal asset manager, who welcome all of you to
cross the nation and your commute. I was run again
had a driver, you staid the Bentley was in the garage?
Ye serious? Xam is normous? Is It's like like, cy
help me out in the control rooms? I wake up.
I know you're up with the Nick slate. Serious Exam
(27:10):
is a big deal. It's a big deal. It's like
very general, enormous Channel one Good Mornings, I Serious Exam
for June. That's going to be my focus here in
our wonderful distribution. You mentioned we're on Bloomberg Originals. Yeah. Absolutely,
this is TV like Roku.
Speaker 4 (27:26):
If you got like a Samsung Smart, the Smart TV's
time where you don't even need cable or anything like that.
Speaker 2 (27:31):
They just got the soft and watches in the United Kingdom.
Speaker 4 (27:34):
You just search Bloomberg original look at that.
Speaker 2 (27:36):
It's amazing on YouTube. Good morning. Subscribe to Bloomberg Podcasts,
curring each and every day. Really excited. Can we do
a shout out Tracy and Joe. Sure, they're killing it
on outline. They're really helping out Bloomberg Podcasts. Thank you
to odd Lots for all your support. There. Seema show
with us with futures at negative three.
Speaker 4 (27:53):
In the fixed income market here, I look at it
to your treasury, I'm getting close to four percent here.
That's a that's not a bad way to make a
lit there. Do I take credit risk on top of that?
How do you guys think about that?
Speaker 8 (28:04):
Yeah?
Speaker 6 (28:05):
I think you can take a bit of credit risk. Erny.
As long as we're not anticipating recession, then defaults they're
going to rise likely, but they're not going to spike.
We would be focused a bit more on the high
quality part of the market because we are expecting an
economic slowdown. And if you're looking across the treasury curve,
like where do you want to be focused, it's probably
in the short duration side.
Speaker 5 (28:24):
You know.
Speaker 6 (28:24):
Thelongside is where you're continuing to see and I don't
think it's going to disappear. Some of those fiscal concerns
continuing to come through, and we think that's going to
be a persistent narrative. So for us, it's that short
duration and the high quality segments that we're most interested
in from a credit and from a treasury curve perspective.
Speaker 2 (28:42):
Seman, what does big tech look like from London? I mean,
I think it's just like this American thing. We're all
mental about Apple and Paul and I drive by the
Apple store at Central Park, South Central Park, and yeah,
Central Park and Fifth Avenue every day. But Sima, what
does mag seven look like from London? You've got a
nice distance to it.
Speaker 6 (29:04):
I think we're just as obsessed with it as the
US is when you're you know, when we're talking to
investors in the UK, it's the same kind of questions.
They're obsessed with the big tech trade. They want to
know which is going to persist or is it something
which has maybe run its course. But if you're looking
at it again O for a longer term perspective, you
don't see that investors are losing much interest. They're just
looking for what is a buying opportunity? When can we
(29:26):
really buy the dip if there is going to be another.
Speaker 2 (29:28):
Dip so sima.
Speaker 4 (29:30):
Earlier in this year, when we had the you know,
maybe the peak volatility in the US markets around the terrace,
we still have a pronounced shift of capital out of
the US to other parts of the world, most notably
European equity markets. Is that still the trade here? Do
people feel like Europe is a good place to move
money visa the the US?
Speaker 6 (29:53):
Well, I think that trade has lost a bit of
it shine in the last couple of weeks. What we're
seeing is that investors really questioning. They know that there
is maybe a potential upside, but they almost at the
point where they're saying, show us some money when is
Europe really going to start to outperform on is it
really going to start talking about deregulation? And only at
that point can they start to think about the increase
in potential growth rate for Europe. So it is a discussion.
(30:16):
It's certing more a different discussion than it was in
prior years. But I think in the last couple of
weeks you are studying to get to that point where
investors are becoming a little bit more skeptic and they
want to see that Europe is realistically going to come
through on some of the plans that people have been
talking about.
Speaker 2 (30:30):
To me, the great divide of may Sey Mischa has
been the mood of retail in America versus institutional Wall Street.
Do you see the same thing in the city.
Speaker 6 (30:42):
Yeah, I think so. In a way, it's been interesting
because the retail money is the money that's been really smart.
They stayed invested through the last couple of months. They
didn't come out of their trades when things got a
little bit rocky. So I think there is a divide
in the behavior. And certainly if you know for institutions
that they're trying to get back into the market if
(31:03):
they did exit it was retail to State Investige.
Speaker 2 (31:05):
Seema Nixer Pacers.
Speaker 6 (31:09):
I'm going to say, Nick, look at.
Speaker 2 (31:11):
That right on top of it. Thank you, Semashawe really appreciated.
Speaker 1 (31:16):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Corplay and Android
Auto with the Bloomberg Business App. You can also listen
live on Amazon Alexa from our flagship New York station.
Just say Alexa play Bloomberg eleven thirty.
Speaker 2 (31:32):
We really wanted the tax of brain folks. You went
through the rolodex and said, okay, who can spouse connected
the Pat Askell joins us right now. Municipal bonds. We
really Paul's been on fire about this, taking advantage of
tax free bonds right now. Our airport bought you your
union college. It's connected the years ago before a lot
(31:53):
of years, a few years ago before. Help me here
with airport. It's is there an opportunity with all the
gloom about airports aviation, our municipal bonds of LaGuardia or
o hair A vailue. Now, yes, we like the airport sector.
Speaker 10 (32:13):
You know, the financials, the planes are full, the off
the off putty contracts like the there's a lot of
opportunity there. I mean, you look at LaGuardia, it's a
beautiful project. Now that it's done, JFK is going through
the construction. You know, other airports in the country are
going to continue to uh to be the opportunities for us.
Speaker 2 (32:30):
Can a little guy buy those bonds? Can I go
out and say, hey, the uber pick up at LaGuardia
was actually pretty good. I want to buy ten thousand
dollars at Laguardian. Yeah you can do that. Yeah, sure
you can.
Speaker 10 (32:42):
You can definitely do It's easier to do it during
the new issue process because the bonds tend to get
put away, but sure, mom, pop can still buy me
any bonds. It's it's easier, you know, to to buy
manage products on those kind of denominations. But certainly you
can do it.
Speaker 4 (32:55):
Pat the minisial bombs just going at the the on
the Bloomberg I end go function, Bloomberg index browser underperforming
the US agg pretty substantially this year.
Speaker 10 (33:04):
Underperforming this year, outperforming in the last month, so you know,
pretty good relative value coming into April when we had
VAUL kick up in the beginning of April based on
due to the post Liberation Day market moves, communis underperformed
since then have done very well. And I think there's
really three things. The relative value that you pointed out
to other fixing a masset classes the technicals. We're going
(33:25):
into a positive technical as we go into the summer,
as supply as supply wanes, and some of the policy
concerns we had out there as we have the tax
bill was first come out of committee in Congress. Looks
like unions are relatively unscathed.
Speaker 4 (33:37):
That's the key point, because that was a I guess
it's always a point. I guess what I've learned from
new municipal guys is every administration comes in, you always
have the risk that the tax deductibility of municipal bonds
may be reduced or eliminated. And that's true in this administration, but.
Speaker 10 (33:53):
True in the Obama administration. True and Trump one point oh,
true and Trump two point oh. That at least it
gets discussed, and I think at the end of the
day we get back to the same thing at all times.
There's very few things that pull well on both sides
of the aisle in our country. One of them's infrastructure.
This is the market that we build most of our
infrastructure in our country, and the exemption to keep the
borrowing costs or state local governments stays in place to
(34:13):
keep that borrowing cost lower.
Speaker 2 (34:15):
Why would anyone call, by full faith in credit taxable
over a certain income level. I just don't get it.
I mean, the yield pickup inural state, I mean a
black crop is there's no debate. No, the yield pickup
is stunning.
Speaker 10 (34:30):
The when you think about investment grade municipals on a
tax equivalent yield basis behind six percent and a high
yield municipal basis behind nine percent.
Speaker 2 (34:41):
It's they offer incredible value.
Speaker 10 (34:43):
I mean, this is the first time we think about
it since pre financial crisis. Will we be able to
get this level of yields embedded in portfolios with the
exception of a few times of crisis you go back
to seven?
Speaker 4 (34:52):
Yeah, what's the credit outlook out there for municipalities? Because
I know during the coming out of the during the pandemic,
I thought, oh my goodness, we're going to have the
first left and right. But there's so much liquidity pumped
in by the government that that did not happen.
Speaker 10 (35:06):
The rough numbers are you know, state and local governments
came out of the pandemic short about one hundred and
forty billion through a variety of federal programs to airports, universities,
and local governments. The feds gave the muni sector about
three hundred billion, so that we really came out of
the pandemic in very good stead and that continues to
be the case. I mean, you know some of the
(35:26):
noise you have around universities right now, on some of
these flagship universities, even if they were downgraded, they're triple
A to double A, right, you know they're going to
have instead of seven times coverage, they're gonna have four
point seven times coverage, right. And I think we'd all
agree on most of the universities that are in the press,
the demand from a student perspective pretty and elastic.
Speaker 2 (35:43):
I'm looking at the black Rock, New York State municipal
buying front. It's had a really rocky one year two
year in twenty twenty, it was like world class performing
ninety fifth percentile? Is that how your world roles where
there's a challenge in a churn and you know you
make your coupon and reinvest it or whatever, and then
there's one big year where you really get the total return.
Speaker 10 (36:07):
Now, I actually think most people buy our products for income.
Speaker 2 (36:10):
I would take it the other way. They take the coupon.
Speaker 10 (36:12):
Yeah, where they want, they want the coupon. I mean,
you know, in general terms, I always say, when the
fixed in fixed income is larger, it's more attractive, it
makes better.
Speaker 2 (36:20):
Ballast in the portfolio.
Speaker 10 (36:22):
So we we don't try to hit home runs in
terms of total return in any one given year.
Speaker 4 (36:26):
What's total what's the new issue market look like, what's
the calendar look like?
Speaker 10 (36:29):
It's it's busy that you were going to have another
Last year was a record year. Last year is a
record year. This year it could be like, Yeah, last
year was north of five hundred billion. It looks like
we're going to come in around five and a quarter
to five thirty this year. That's what it's looking like
right now. And it's it's it's being absorbed in a
better orderly fashioned again, with the exception of the two
weeks you know, kind of following Liberation Day, where markets
(36:49):
all over the globe war we're in fuegos so, but
it's been relatively well received.
Speaker 2 (36:54):
So to get back to airlines. Say Atlanta Hartsfield, they're
doing a big building project, it's empty million. Do they
make four phone calls to Blackrock Fidelity in the rest or?
Is it distributed like the old days? It's it's distributed,
you know.
Speaker 10 (37:08):
Look, it's the retail or period is not as dominant
as it was in the in the old days that
we're going to go back kind of seventies and eighties. However,
there still is a retail or period, and it's you know,
an issue like Hartfield, for example, that'd be out there
and you know they would be doing a rango for
two or three weeks and they'd have one hundred investors
in the book.
Speaker 2 (37:26):
You're committed to one of the great schools in America.
Full disclosure, My uncle was a professor there years ago.
Union College Connected in New York. It's rated top forty
schools in the nation for value as well.
Speaker 1 (37:40):
There.
Speaker 2 (37:41):
Yeah, it's the new engineering. It's such our ci. It's
a one after thoughts. Friends got into RPI and you
know it's great. How'd the admission season go? You guys
prospering in all this education turmoil, you.
Speaker 10 (37:54):
Know, it looks small, smaller Upstate universities are. You know,
in New England, universities are are an intense competition for students.
Union is doing well, but it's just like all its counterparts,
you know, the you know, you bring up R P I,
R I T a lot of the schools that we
know about their excellent institutions. But because there's that demographic
waste they're going through right now where there's a few
(38:14):
less students out there, there's a lot of competition that
they and they don't have, you know, the really really
significant endowments to some of the college.
Speaker 2 (38:21):
So your selling point is it's warm. Schenectady is warmer
than Rochester is.
Speaker 10 (38:27):
At the selling point, we're warmer than Rochester. We're getting
a new hockey rank. We're excited about school rink, not
the Hasspital rank, but the might be involved a little bit.
Speaker 2 (38:37):
But the I'm afraid to ask cowmedy. See, so you
keeping it under.
Speaker 10 (38:40):
Ten thousand, they were keeping it under ten thousand. This
is gonna this is gonna be a really cool addition.
Downtown Schenectady has gone through real boon in the last
twenty years. As ge he has come back very cool.
I didn't know that it's exciting to.
Speaker 2 (38:51):
Watch, which is a remote in the fall. I promise
I'd learned how to spell D one. Hockey is like
an addiction, isn't it?
Speaker 10 (39:00):
College hockey with these smaller five days and you're right
on top of the ice.
Speaker 2 (39:05):
It's exciting, it really is. Now, Pat Haskell, thank you
so much from Union College. Also by way of black
Rock as.
Speaker 1 (39:11):
Well, this is the Bloomberg Surveillance Podcast. Listen live each
weekday starting at seven am Eastern on Apple Corplay and
Android Auto with the Bloomberg Business app. You can also
watch us live every weekday on YouTube and always on
the Bloomberg terminal.
Speaker 2 (39:32):
Right, economis of the year last year, Lindsay Pigs that
joins us on chief economists at Stefel and Lindzie with
great respect, let's go short term. My head is spinning
looking at the Eco co screen all the different things
in Michigan to come on. One year inflation seven point
one percent, five to ten year inflation four point six percent.
How are you framing out? A Q three Q four
(39:55):
call at Steefel? Can you count up the American economy? Right?
Speaker 5 (40:00):
No, Well, we have to be careful when we're looking
at the soft data. The soft data seems to be
pricing in more of a worst case scenario, consumers vocalizing
all of this concern. But as we saw this morning,
in the hard data, the consumer is still out in
the marketplace spending, so there seems to be again more
of this erosion of confidence than an actual change in behavior.
(40:21):
We see that on the court side as well.
Speaker 2 (40:22):
So what's your number forward? I'm sorry, what's your number forward?
You're real GDP?
Speaker 5 (40:29):
I think GDP in the second half of the year
is going to recover to about a one and a
half one point seven percent pace, So positive, we're back
in positive territory, but certainly nothing to write home about.
But again I think against that backdrop of almost two
percent growth upside risk to inflation, the conversation for the
FED is going to shift dramatically from where it is
(40:51):
right now, as FED officials are saying we're well positioned
or they're looking for potential justification for additional policy easing.
Speaker 4 (41:00):
So do we have have we taken recession off the table? Lindsay,
because say earlier in New Year, when people were trying
to run their models in there thinking about one hundred
and plus percent tariffs in various countries. That was very
much the talk of the town. But is that off
the table now?
Speaker 5 (41:16):
Well, remember recession was never in our base case scenario.
We were looking for a slowdown in momentum, and we
certainly saw that come to fruition in the first quarter,
but by Q two we are looking for a return
to minimal positive growth. So yes, that does remove the
near term fear of a recession. Now again, things can change,
so recession is not necessarily off the table, but our
(41:37):
base case says that the worst of the brunt of
that anticipation, that concern around tariffs has already been felt.
January to March.
Speaker 4 (41:46):
Lindsay, we've seen a lot of risk assets, particularly the
US equity markets, bounce back nicely. Big exception is the
US dollar. What's your view there, Well, there's.
Speaker 5 (41:56):
Going to continue to be a lot of volatility, I
think as the currency market is trying to gauge, just
like investors broadly are trying to gauge what the endgame
for tariffs is going to be. Now, of course, this
back and forth that the most recent disappointing news in
terms of trade talks with China, This is going to
continue to put pressure or at least volatility on the
(42:17):
US dollar, and I think this is going to be
a storyline that we're not going to be able to
shake maybe through the year end.
Speaker 2 (42:24):
Helping here with the asset move, we're going to see
if we have tariffs up and Lisa Mateo's reporting the
gap is having some challenges. They go from twenty eight
to twenty three right now on stock price. Do we
just see lindsay in your world and asset erosion due
(42:46):
to well stagflation sense.
Speaker 5 (42:49):
I think stagflation is the biggest concern because again, as
we talk about our forecast for growth in the second
half of the year, while moving back into positive territory,
a one and a half percent growth rate is is
well below the bare minimum. Let's say that you should
expect for a developed economy one percent from productivity gains
one percent from population growth, so two percent is really
(43:10):
the minimum, and we're expected to fall below that, so
it's essentially a non accelerating economy. Then you layer on
the upside risks of price pressures, which I do think
will filter back in as tariffs become more solidified in
terms of their implementation, and stagflation is going to be
a very real scenario when you think about what keeps
(43:31):
you up at night, it's not the recessionary scenario.
Speaker 6 (43:33):
There we get the.
Speaker 5 (43:34):
Recovery boomed, but the stagflation scenario limits the impact of
market policy on either side and could be a lingering
scenario for years to come.
Speaker 2 (43:45):
This is a major May insight, folks. Is this new
rewaighting of modest or if you're gloomy, tangible stagflation. She's
recovering from primes right now with the market opening here,
don't stop believing, Lisa Matteo, Lisa, what do you got it?
Speaker 11 (44:01):
And we've got a lower open. That's what we have
right now. This is the last trading day of the month.
S and P five hundred down two tens a percent,
fourteen points, five thousand, eight hundred ninety seven, the Dow
off two tens of percent eighty five points forty two thousand,
one hundred twenty three, and the NA deck down about
two tens percent fifty five points and nineteen thousand, one
hundred and twenty taking it to the two year yield
three point nine four percent, that's little change, and the
(44:23):
yield on the tenure four point four two percent, that
is little change. We'll check in with commodities. We have
spot gold down about six tens of percent, three thousand,
two hundred and ninety five dollars an ounce. Over to
oil Brent crude down three tens of percent, sixty three
dollars a barrel, WTI crewed sixty dollars a barrel. The
Bloomberg dollars Spot Index up about a ten to percent,
and Bitcoin down half a percent at just above one
(44:44):
hundred five thousand. That is your Bloomberg opening Bell report.
Speaker 2 (44:47):
All in, Tom, thanks so much, Lisa, greatly appreciate that. Again,
negative one twenty six on the Dow Vix, not out
your twenty but getting there again. The presidential press conference
with mister I guess I'm calling it a press conference.
I think it's okay. With Elon Musk, we'll see that
at one thirty. An important tweet here in China an
hour an hour and a half ago. Maybe we'll get more.
(45:07):
Lindsay piigser with us here. Lindsey a lot of and
I sort of like the chart. It's an elegant chart.
Continuing claims reach out to a new worser, going back
to the pandemic, going back to twenty twenty two, twenty one.
Is there a significance at once twice three four five
(45:30):
On the six try we break through nineteen hundred on claims.
Speaker 5 (45:36):
I think the claims data wall well, very volatile, has
been more indicative of this slow loss of momentum in
the labor market. The second part of the labor equation,
fears about losing one's job, is not overly robust at
this point, and when we look at the job creation component,
that's still relatively positive as well, again down from an
(45:58):
earlier more robust pace. We're talking about second derivative decline here,
But overall, the labor market picture is still very solid,
and that's the component that continues to support the momentum
of the consumer out in the marketplace. This thesis of
resilience on the part of the consumer, it's coming from
these ongoing solid conditions in the labor market. So I'm
(46:18):
not overly concerned about the volatility of the continuing or
initial jobless claims data.
Speaker 4 (46:25):
So the consumer is resilient. But we keep hearing about
a bifurcated view of the consumer. The higher ends doing fine,
maybe even better than fine, and the lower ends really
facing the challenges out there, how sustainable is that?
Speaker 5 (46:41):
Well, we are facing challenges. I don't want to over
sell the strength of the consumer. The average American, the
average household is feeling pain from higher prices over the
past years, higher borrowing costs, the resumption of student debt payments,
and now you layer on the fear of changes to
trade policy or additional tariffs.
Speaker 6 (47:00):
There absolutely is.
Speaker 5 (47:01):
Pain being felt, and we see that in that loss
of momentum. But nominally, across the board, consumers are still spending.
Now you're right in the middle and the upper end
of the income spectrum, we see consumers benefiting more from
this massive run up in household net worth thanks to
an accumulation of asset prices which the lower end is
largely precluded from enjoying. Just statistically speaking, they're less likely
(47:24):
to have a stake in the equity market, less likely
to own property, and so again having enjoyed this run
up in household net worth that many Americans have. But
when we look where consumers are spending, even those at
the lower end are still benefiting from that more organic
growth in income from the access to additional short term
(47:44):
spending options such as buy now, pay later four oh
one K hardship withdrawals an intergenerational wealth transfer, so there
are still a number of inorganic factors supporting consumers. But
even at the lower end, income growth component is really
a positive notion.
Speaker 2 (48:01):
I hate you. I've got eight more questions in no time,
Lindsay Pigs, thank you so much, Chief Economists and Steve
O my Economists of the Year. Last year, her optimism
on the economy really measured. She was just really, really,
really good job day to day, grinding out the view
for the crystal ball and this American economy.
Speaker 1 (48:21):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Applecarplay and Android Auto
with the Bloomberg Business app. You can also listen live
on Amazon Alexa from our flagship New York station. Just
say Alexa play Bloomberg eleven thirty something different right now.
Speaker 2 (48:39):
Philip Deal joins as president of US Money Reserve. Also
Tory duty at the US men is public service to
the nation. Showed he could join us here. It's on
gold and you know the usual krugarands. Yeah, you know that,
Philip dial Just to cut to the chase, what's the
biggest misconception Lisa Matteo, and I'm keen about the US Mint.
Speaker 9 (49:04):
About the US Mint, well, it's a fortune five hundred
sized company has a marketing and and manufacturing component, but
it also protects the gold at Fort Knock, so that's
one of its major claims to fame.
Speaker 2 (49:22):
Is a penny going away? Excuse me?
Speaker 4 (49:25):
Yeah, that's a good question, I think.
Speaker 2 (49:26):
Phil, What do you think about?
Speaker 8 (49:27):
Mean?
Speaker 2 (49:28):
Come on, I had a coin collection. Did you have
a coin collection? Phil? Did you have a little punching
blue things on the floor?
Speaker 9 (49:34):
Director of the United States meant then I did.
Speaker 4 (49:37):
Ye, not a big coin collection. What is happening with
the US penny? Do we have any We have a
conclusion there.
Speaker 9 (49:45):
Yes, US penny's going away by executive order. The President
has ordered the penny production to stop. The penny is
going to continue in circulation. It's not being demonetized, right,
but I think a period of a few years it's
going to it's gonna wind its way out of the
(50:06):
economy and right be an item of the past, just
like the halfpenny.
Speaker 2 (50:10):
Is you Phil? I'm gonna cut to the chase. The
whole thing with gold, the perception as well as a
bunch of flakes. You're not a flake, You're like an
actual adult with real world experience with this. What's the
most efficacious way to acquire tangible gold? Now, like my
mother bought Kruger rans a million years ago.
Speaker 9 (50:33):
Well, of course, being a former director of the United
States meant I like American Eagles the gold coin of
the United States, and it has been you know, it
dates back to the mid nineteen eighties. And my company
US Money Reserve sells eagles and that's our biggest seller,
but we have a wide range of products as well.
(50:55):
But the Eagle is legal tender of the United States
and it's back by the full faith and credit of
the United States for its purity of gold.
Speaker 4 (51:04):
Philip, why has gold been on such a tear recently.
Speaker 9 (51:10):
Well, there's a lot of history behind gold, of course,
about three thousand years history of being wealth insurance essentially.
And the story begins the day after the Harmas attack
on Israel, and that really illustrates one of the main
drivers of gold prices over decades, hundreds of years, and
(51:33):
that is war and great economic uncertainty. And as the
war spread through the Middle East, then gold really began
its ascent. The second major factor was in November of
twenty twenty three. About a month later, we got the
first report good inflation report from the Department of Commerce,
(51:57):
and with that report began that the Fed would began
lowering interest rates, and gold immediately responded to that. And
I'd say, there are other factors, but the other major
factor is central banks have buying gold hand over fist
for the last three years. Yes, and that has been
(52:18):
a major driver.
Speaker 2 (52:19):
So one more question. I think it's really important, and
Paul's been much better at this moment. I go Mental
filled deal like Texas A and m Mental. He said,
we got another valmore. No, I don't know what that's
about it, Phil, I go Texas A and m Mental.
When people tell me bitcoin is a gold equivalent, how
(52:41):
do you respond, is a former head of the Mint,
you're actually an adult in the gold coin business. When
somebody tells you bitcoin is a gold eagle equivalent.
Speaker 9 (52:54):
Yeah, I try to be more civil about it.
Speaker 2 (52:56):
But my reaction, my intern reaction is like yours.
Speaker 9 (53:00):
I mean, it's sort of ridiculous because gold is you know,
for hundreds of thousands of years, has been held and
today is being held by central banks and individuals as
a store of value, which means you can count on
its value. And can you do that with bitcoin? I mean,
what over the last several months it's gone up and
(53:23):
down thirty So no, it's not competition for gold at all.
And people who would put it in I mean, you
can't put it in your IRA, but it's not included
in federal government policy. But even if you could, I mean,
(53:44):
you'd have mighty disappointments, unlike with gold. I mean, so
what we've had with gold is sort of the best
of both worlds. Gold I've been seen for forever as
bad news investment, but it's been performing extraordinarily and good times.
Speaker 2 (54:01):
Your political hitter down there in Texas, phil Deal, I
need a and m longhorns Thanksgiving Day. That's what we
need to return here, Philip Deal with us money Reserve
of bustin Texas. Thank you for the time there.
Speaker 1 (54:14):
This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each
weekday seven to ten am Eastern on Bloomberg dot Com,
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You can also watch us live every weekday on YouTube
(54:34):
and always on the Bloomberg terminal
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